EXHIBIT (d)(iii)
SUB-ADVISORY AGREEMENT
AGREEMENT dated November 28, 2005, between FIFTH THIRD ASSET
MANAGEMENT, INC., an Ohio corporation (the "Adviser") and FORT WASHINGTON
INVESTMENT ADVISORS, INC., an Ohio corporation (the "Sub-Adviser"), and approved
by FIFTH THIRD FUNDS, a Massachusetts business trust (the "Trust")
WHEREAS, the Trust is a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Trust is authorized to issue shares of beneficial interest
in separate series with each such series representing an interest in a separate
portfolio of securities and other assets (each a "Fund");
WHEREAS, the Adviser is the investment adviser to the Trust;
WHEREAS, the Adviser and Sub-Adviser are each registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act");
WHEREAS, the Adviser wishes to retain the Sub-Adviser to assist the
Adviser in providing investment advisory services in connection with the Fifth
Third High Yield Bond Fund (the "Sub-Advised Portfolio"); and
WHEREAS, the Sub-Adviser is willing to provide such services to the
Adviser upon the terms and conditions and for the compensation set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
therein contained, and intending to be legally bound hereby, it is agreed
between the parties hereto as follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Advisor its
sub-adviser with respect to the Sub-Advised Portfolio as provided for in the
Investment Advisory Agreement between the Adviser and the Trust dated as of
April 30, 2001 (such Agreement or the most recent successor advisory agreement
between such parties is herein called the "Advisory Agreement"). The Sub-Adviser
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Adviser shall provide to the Sub-Adviser
copies of the Trust's most recent prospectus and statement of additional
information (including all supplements thereto) which relate to any class of
shares representing interests in the Fund (each such prospectus and statement of
additional information as presently in effect, and as they shall from time to
time be amended and supplemented, is herein respectively called a "Prospectus"
and a "Statement of Additional Information").
3. SUB-ADVISORY SERVICES TO THE SUB-ADVISED PORTFOLIO.
(a) Subject to the supervision of the Adviser, the Sub-Adviser
will perform the following services (i) provide investment research and credit
analysis concerning the Sub-Advised Portfolio's investments; (ii) conduct a
continual program of investment of the Sub-Advised Portfolio's assets; (iii)
place orders for all purchases and sales of the investments made for the
Sub-Advised Portfolio; (iv) maintain the books and records required in
connection with its duties hereunder; and (v) keep the Adviser informed of
material developments affecting the Sub-Advised Portfolio.
(b) The Sub-Adviser will use the same skill and care in
providing such services as it uses in providing services to other accounts for
which is has investment responsibilities; provided that, notwithstanding this
Paragraph 3(b), the liability of the Sub-Adviser for actions taken and
non-actions with respect to the performance of services under this Agreement
shall be subject to the limitations set forth in Paragraph 10(a) of this
Agreement.
(c) The Sub-Adviser will communicate to the Adviser and to the
Trust's custodian and fund accountants as instructed by the Adviser on each day
that a purchase or sale of a security is effected for the Sub-Advised Portfolio
(i) the name of the issuer, (ii) the amount of the purchase or sale, (iii) the
name of the broker or dealer, if any, through which the purchase or sale has
been affected, (iv) the CUSIP number of the security, if any, and (v) such other
information as the Adviser may reasonably require for purposes of fulfilling its
obligations to the Trust under the Advisory Agreement.
(d) The Sub-Adviser will provide the services rendered by it
hereafter in accordance with the Sub-Advised Portfolio's investment objectives,
policies and restrictions as stated in the Sub-Advised Portfolio's Prospectus
and the Funds' Statement of Additional Information.
(e) The Sub-Adviser will maintain records of the information
associated with this Agreement for the time required under the Investment
Advisers Act of 1940, as amended.
(f) The Sub-Adviser will promptly review all (1) reports of
current security holdings in the Sub-Advised Portfolio, (2) summary reports of
transactions and pending maturities (including the principal, cost and accrued
interest on each portfolio security in maturity date order) and (3) current cash
position reports (including cash available from portfolio sales and maturities
and sales of the Sub-Advised Portfolio's shares less cash needed for redemptions
and settlement of portfolio purchasers), all within a reasonable time after
receipt thereof from the Trust and will promptly report any errors or
discrepancies in such reports of which it is aware to the Trust or its designee
and Adviser.
4. BROKERAGE. The Sub-Adviser may place orders pursuant to its
investment determinations for the Sub-Advised Portfolio either directly with the
issuer or with any broker or dealer. In selecting brokers or dealers through
which to place orders, the Sub-Adviser will consider all relevant factors,
including, but not limited to, the experience and skill of the firm's securities
traders, as well as the firm's financial responsibility and administrative
efficiency. The Sub-Adviser will attempt to obtain the best price and the most
favorable execution of its orders. Consistent with these obligations, the
Sub-Adviser is authorized to select brokers on the basis of the research,
statistical and pricing services they provide to the Sub-Advised Portfolio. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that the
Sub-Adviser determines in good faith that such transaction is reasonable in
relation to the benefits in the Sub-Advised Portfolio over the long term. In no
instance will portfolio securities be purchased from or sold, on a principal
basis, to the Trust's principal underwriter, the Adviser or any affiliated
person thereof (as the term "affiliated person" is defined in the 1940 Act),
except to the extent permitted by SEC exemptive order or applicable law.
5. COMPLIANCE WITH LAWS; CONFIDENTIALITY; CONFLICTS OF INTEREST.
(a) The Sub-Adviser agrees that it will comply with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdiction over the Sub-Adviser in performance of its duties
hereunder (herein called the "Rules").
(b) The Sub-Adviser will treat confidentially and as
proprietary information of the Trust and the Adviser all records and information
relative to the Trust and the Adviser and prior, present or potential
shareholders (other than information that has been made public by the Trust or
Adviser), and will not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Trust or Adviser, as
appropriate, unless such notification and/or approval is not practicable under
the circumstance, which approval (i) shall not be unreasonably withheld and (ii)
may not be withheld where the Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
The terms of this section 5(b) shall survive the termination of this Agreement.
(c) Notwithstanding anything herein to the contrary,
Sub-Adviser may perform investment advisory services for various other clients,
including other investment companies.
6. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations concerning
the Sub-Advised Portfolio's investment program proposed by the Sub-Adviser to
the Sub-Advised Portfolio and the Adviser pursuant to this Agreement, as well as
any other activities undertaken by the Sub-Adviser on behalf of the Sub-Advised
Portfolio pursuant thereto shall at all times be subject to any lawful,
applicable directives of the Board of Trustees of the Trust.
7. BOOKS AND RECORDS. The Sub-Adviser shall maintain and preserve such
records related to the Sub-Advised Portfolio's portfolio transactions as
required under the Rules. The Adviser shall maintain and preserve all books and
other records not related to the Sub-Advised Portfolio's portfolio transactions
as required under the Rules. The Sub-Adviser agrees that all records that it
maintains for the Sub-Advised Portfolio are the property of the Trust and
further agrees to surrender copies of such records to the Trust promptly upon
the Trust's request. The terms of this section 7 shall survive the termination
of this Agreement.
8. EXPENSES. During the term of this Agreement, the Sub-Adviser will
bear all expenses incurred by it in connection with the performance of its
services under this Agreement other than the cost of securities, brokerage
commissions, custodian fees, auditor's fees, taxes, interest, expenses that are
undertaken by the Adviser or the Trust and other expenses related to the
operation of the Trust or any Fund.
9. AUDIT/COOPERATION.
(a) Adviser and Trust shall have the right to audit and
inspect the records, policies, procedures and premises of Sub-Adviser as
reasonably required to ensure compliance with the terms of this Agreement and
the Rules.
(b) Sub-Adviser shall cooperate fully with Adviser and Trust
in regards to any inquiry, examination or request for information from any
federal or state regulatory agencies having authority over the Trust, Adviser or
Funds.
10. COMPENSATION. For the services provided and the expenses borne by
the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser
an annual investment advisory fee equal to 0.40% up to $50 million in assets,
then 0.30% thereafter of the portion of the average daily net assets of the
Sub-Advised Portfolio managed by the Sub-Adviser. The compensation shall be
computed and accrued daily and paid to Sub-Adviser monthly, in arrears within 15
calendar days of Adviser receiving a detailed calculation of the compensation
due for the preceding month. Payment of this compensation shall be the sole
responsibility of the Adviser and shall in no way be an obligation of the
Sub-Advised Portfolio or of the Trust. If the Sub-Adviser serves in such
capacity for less than the whole of any period specified in Section 13, the
compensation to Sub-Adviser shall be prorated.
11. LIMITATION OF LIABILITY.
(a) The Sub-Adviser shall not be liable for any error of
judgment or mistake or law or for any loss suffered by the Adviser, the Trust or
the Sub-Advised Portfolio in connection with the matters to which this Agreement
relates, except that Sub-Adviser shall be liable to the Adviser for a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Sub-Adviser in the performance of its duties or from reckless disregard by
it of its obligations or duties under this Agreement. In no case shall the
Sub-Adviser be liable for actions taken or non-actions with respect to the
performance of services under this Agreement based upon specific information,
instructions or requests given or made to the Sub-Adviser by the Adviser.
(b) The Adviser shall be responsible at all times for
supervising the Sub-Adviser, and this Agreement does not in any way limit the
duties and responsibilities that the Adviser has agreed to under the Advisory
Agreement.
12. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless
the Trust and Adviser, each of its Trustees and each of their officers,
directors, employees and controlling persons from and against any losses,
expenses, (including reasonable attorneys' fees and court costs), damages or
liabilities to which the Trust or Adviser becomes subject in so much as such
losses, expenses, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) the willful misfeasance, bad faith, gross
negligence or material breach of this Agreement by the Sub-Adviser, or (ii)
statements or omissions, if any, made in the registration statement, Prospectus
or Statement of Additional Information or any amendment or supplement thereof in
reliance upon, and in conformity with, information furnished to the Trust or
Adviser with respect to the Sub-Adviser by or on behalf of the Sub-Adviser
expressly for use in the registration statement, Prospectus or Statement of
Additional Information or any amendment or supplement thereof. The terms of this
section 12 shall survive the termination of this Agreement.
13. DURATION AND TERMINATION. This Agreement shall become effective as
of the date hereof provided that it shall have been approved by vote of a
majority of the outstanding voting securities of the Sub-Advised Portfolio and,
unless sooner terminated as provided herein, shall continue with respect to the
Sub-Advised Portfolio until November 28, 2006. Thereafter, if not terminated,
this Agreement shall continue in effect for successive 12-month periods ending
on November 28 of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Board of
Trustees of the Trust who are not parties to this Agreement or interested
persons of this Trust or any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Sub-Advised Portfolio; provided, however, that this Agreement may be terminated
with respect to the Sub-Advised Portfolio without the payment of any penalty:
(i) by the Trust at any time upon 60 days' prior notice; (ii) by the vote of the
majority of the outstanding voting securities of the Sub-Advised Portfolio upon
60 days' prior notice, (iii) by the Adviser on 60 days written notice to the
Sub-Adviser, (iv) by the Sub-Adviser on 60 days written notice to the Adviser,
or (v) at any time, by the Adviser, the Board of Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the Sub-Advised
Portfolio in the event that a court of competent jurisdiction establishes that
the Sub-Adviser or any officer or director of the Sub-Adviser has taken any
action that results in a breach of this Agreement. This Agreement will also
immediately terminate in the event of its assignment or in the event of
termination of the Advisory Agreement for any reason whatsoever. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act and the rules and regulations thereunder.)
14. TRADEMARKS. Neither the Adviser nor the Trust shall use the name of
the Sub-Adviser in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved by Sub-Adviser, which
approval shall not be unreasonably withheld or delayed. Sub-Adviser will,
however, approve all uses of its name which merely refer in accurate terms to
its appointment under this Agreement or which are required by the SEC, any state
securities commission or other governmental body. The Sub-Adviser agrees to
submit any proposed sales literature for the Trust or for itself or its
affiliates which mentions the Trust or Sub-Advised Portfolio to the Trust's
distributor and the Adviser for review and approval, which shall not be
unreasonably withheld or delayed. Adviser and the Trust will respectively
approve the uses of their names that are required by the SEC, state securities
commission or other governmental body. Any and all communications pursuant to
this Section 14 will be sent to the Sub-Adviser at its address listed in the
Notices section below reflecting ATTN: Compliance Review. If the Sub-Adviser
does not respond to Adviser within 3 days of receipt of a communication pursuant
to this section, Adviser will be justified in relying on the fact that the
Sub-Adviser does not object to the material as presented to the Sub-Adviser by
the Adviser.
15. COMPLIANCE CERTIFICATION. The Sub-Adviser shall provide a
certification that its policies and procedures are reasonably designed to
prevent violations of the Advisers Act, as is reasonably requested by the Trust
or Adviser. In addition, the Sub-Adviser will provide annually a written report
of its policies and procedures reasonably designed to prevent violations of the
Advisers Act to enable the Trust to fulfill its obligations under Rule 38a-1 of
the 1940 Act. The summary report will describe the Sub-Adviser's policies and
procedures as they relate to the services it provides to the Sub-Advised
Portfolio, the types of compliance risks material to the Sub-Advised Portfolio,
and will discuss the adequacy of the Sub-Adviser's compliance controls.
16. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
17. FORCE MAJEURE. The Sub-Adviser shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including, but
not limited to, acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot or
failure of communication supply. When any of these events occurs, the
Sub-Adviser shall take reasonable steps to minimize service interruptions, but
shall not be liable for any such interruptions unless it fails to take the
reasonable measures required by this Section 17
18. NOTICE. Any notices under this Agreement shall be in writing,
addressed and delivered personally, by facsimile, by a national recognized
carrier or by postage-prepaid mail to the other party at such address as the
other party designates in accordance with this Section. Until further notice to
the other party, the addresses of the parties are, for the Adviser and the
Trust, 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, and for Sub-Adviser, 000 Xxxx
Xxxxxx Xx., Xxxxxxxxxx, XX 00000 with a copy to Western & Southern Financial
Group, Xxxxx Xxxxxxxxxx, 000 Xxxxxxxx, Xxxxxxxxxx, XX 00000.
19. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any provisions
hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be effected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties herein and their respective successors and shall be governed by the laws
of the State of Ohio.
The names "Fifth Third Funds" and "Board of Trustees of Fifth Third
Funds" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under an Declaration of
Trust dated as of September 15, 1988, as amended, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
The Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of
"Fifth Third Funds" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
[SIGNATURES FOLLOW; THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
FIFTH THIRD ASSET MANAGEMENT, INC.
By: /s/ X. X. Xxxxx
---------------
Name: X. X. Xxxxx
Title: President
FORT WASHINGTON INVESTMENT ADVISERS, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
Title: Managing Director
By: /s/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
Title: President, Chief Executive Officer
