EX-99.(D)(5) 4 c73647a2exv99wxdyx5y.txt INVESTMENT SUB-ADVISORY AGREEMENT EX-99.(D)(5) INVESTMENT SUB-ADVISORY AGREEMENT (INTERNATIONAL BOND PORTFOLIO) THIS AGREEMENT, made as of the 11th day of April, 2003 by and between Advantus Capital Management, Inc., a Minnesota corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and Julius Baer Investment Management Inc., a Delaware corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser"). WHEREAS, the Adviser is the Investment Adviser to Advantus Series Fund, Inc. (the "Fund"), an open-end diversified management investment company organized as a series fund, registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio selection and related research and statistical services in connection with the Adviser's investment advisory activities on behalf of the Fund's International Bond Portfolio (hereinafter "Portfolio"), and the Sub-Adviser desires to furnish such services to the Adviser; NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows: 1. APPOINTMENT OF SUB-ADVISER In accordance with and subject to the Investment Advisory Agreement between the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for the investment and reinvestment of the Portfolio, subject to the control and direction of the Fund's Board of Directors, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation described herein. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized herein, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser. 2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY SUB-ADVISER (a) The Sub-Adviser shall provide the following services and assume the following obligations with respect to the Portfolio of the Fund: (1) INVESTMENT PLAN In carrying out its obligations to manage the investments and reinvestments of the assets of the Portfolio, the Sub-Adviser shall: (i) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Portfolio or are under consideration for inclusion therein; (ii) formulate and implement a continuous investment program for the Portfolio consistent with the investment objective and related investment policies for such Portfolio; and (iii) take such steps as are necessary to implement the aforementioned investment program by purchase and sale of securities, including financial futures contracts and currency exchange transactions, including the placing of orders for such purchases and sales. (2) INVESTMENT OBJECTIVES, POLICIES, PRACTICES AND RESTRICTIONS (i) The investment of the assets of the Portfolio shall at all times be subject to the applicable provisions of the Articles of Incorporation, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Fund and shall conform to the investment objectives, policies and restrictions of the Portfolio as set forth in such documents and as interpreted from time to time by the Board of Directors of the Fund and by the Adviser, including diversification of the holdings of the Portfolio as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5 thereunder, provided that Adviser shall be responsible for ensuring that the Fund as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Code and Regulation 1.817-5 thereunder. (ii) Within the framework of the investment objectives, policies and restrictions of the Portfolio, and subject to the supervision of the Adviser, the Sub-Adviser shall formulate and implement an overall continuing program for managing the investment of the assets of the Portfolio, and shall amend and update such program from time to time as financial and other economic conditions warrant. (iii) Adviser agrees to promptly inform the Sub-Adviser, in writing, of any changes in such documents or interpretations which may affect the Sub-Adviser's services hereunder, it being understood that such changes will be effective with respect to the Sub-Adviser upon the Sub-Adviser's receipt of such notice, provided, however, that Sub-Advisor shall have a reasonable period to effect any necessary Investment Sub-Advisory Agreement, International Bond Portfolio Page 2 of 10 portfolio changes to bring the assets into compliance with such changes or interpretations. (3) CASH MANAGEMENT AND SHORT-TERM INVESTMENT FUNDS (i) The Adviser shall arrange with the custodian of the Portfolio ("Custodian") to have two Short-Term Investment Funds ("STIF's") available to be used as sweep vehicles for the short-term investment of cash for the Portfolio. The Sub-Adviser agrees to use these STIF's for the short-term investment of cash, subject to the limitations on investments in shares of other investment companies set forth in the 1940 Act.. (ii) In addition, the Sub-Adviser agrees that the management of cash is the Sub-Adviser's responsibility, and agrees that cash will be managed in full compliance with any applicable restrictions, including the limitations on investments in shares of other investment companies set forth in the 1940 Act. (4) ELECTRONIC DELIVERY OF DAILY TRADE FILE AND DAILY HOLDINGS (i) In connection with the purchase and sale of securities of the Portfolio, the Sub-Adviser shall deliver to the Adviser by no later than 6:00 a.m. Central Time on trading day plus one, with respect to securities, including financial futures contracts and currency exchange transactions, purchased or sold on such trading day, if any, using a secure electronic system established by Adviser, confirmations relating to each transaction executed for the Portfolio. If trading day plus one is not a business day in the United Kingdom and in the United States, then confirmations will be delivered on the next business day. However, if trading day plus one is not a business day in the United Kingdom but is a business day in the United States, Sub-Adviser agrees to provide such confirmations on trade date. (ii) Failure to deliver confirmations by the stated deadline will result in a penalty of $500 per occurrence, payable by Sub-Adviser to Adviser, such penalty to be deducted from the quarterly sub-advisory fee paid to Sub-Adviser by Adviser, as described in Exhibit A, attached. (iii) Using a secure electronic system established by Adviser, Sub-Adviser will deliver to Adviser by no later than 5:00 p.m. Central Time, a complete list of investments held by the Portfolio on a daily basis. Sub-Adviser agrees to reconcile these holdings with the Custodian on a daily basis. (iv) Revisions to or cancellations of trades must be provided by Sub-Adviser to Adviser using a secure electronic system established by Adviser by no later than 2:00 p.m. Central Time on trade date plus one. Investment Sub-Advisory Agreement, International Bond Portfolio Page 3 of 10 (5) INVESTMENT IN NEW SECURITIES (i) When the Sub-Adviser makes an investment on behalf of the Portfolio in an issuer and/or security, including financial futures contracts and currency exchange transactions, which it has not previously held (a "New Security"), the Sub-Adviser agrees to provide, in an agreeable electronic format, all data related to such New Securities, to Adviser by no later than 3:00 p.m. Central Time on the date on which such investment is made. Such data includes, but is not limited to, the name of the new security and the CUSIP number, if any; and (ii) Sub-Adviser further agrees to provide ongoing security related information as is necessary (including, but not limited to payment discrepancies). (6) TRADE AFFIRMATION AND SETTLEMENT (i) The Sub-Adviser shall affirm and direct the Custodian to settle each trade made by the Sub-Adviser on behalf of the Account and shall advise brokers to list Adviser as an Interested Party on all Depository Trust Company "(DTC") confirms, supplying Adviser's DTC number as 71567. Sub-Adviser agrees that all trades will be affirmed by the Sub-Adviser by no later than 11:00 a.m. Central Time on trade date plus one. (ii) With respect to portfolio securities to be purchased or sold through DTC, the Sub-Adviser shall arrange for the automatic transmission of the I.D. confirmation of the trade to the Custodian of the Portfolio. For non-DTC eligible trades, Sub-Adviser will provide hard copy confirmation via facsimile or e-mail to Adviser by no later than 11:00 a.m. Central Time on trade date plus one. (iii) Sub-Adviser will work directly with Custodian and/or any applicable broker to resolve any trade-related issues (including, but not limited to re-registration of physical certificates, denominational breakdowns, exchanges, etc.). (iv) Sub-Adviser agrees to monitor any failing trades and work proactively to resolve these issues, and agrees to reimburse the Portfolio for any compensating interest due because of failing trades. (7) CORPORATE ACTIONS (i) Sub-Adviser will work with appropriate parties to facilitate voluntary corporate action processing; (ii) Sub-Adviser will notify Adviser of any voluntary corporate actions and the specific actions that will be taken; and Investment Sub-Advisory Agreement, International Bond Portfolio Page 4 of 10 (iii) Sub-Adviser will provide appropriate details related to all corporate actions, including any accounting data needed. (8) PROXY VOTING Sub-Adviser agrees to be solely responsible for voting all proxies on behalf of the securities held by the Portfolio in accordance with proxy voting policies and procedures adopted by the Fund and shall provide information regarding such proxy voting to Adviser. Adviser will not vote any such proxies. (9) SECURITIES LENDING The Adviser may have entered into, prior to the existence of this agreement, or may, at some point during the existence of this Agreement enter into a securities lending agreement with the Custodian or another party to have the securities of the Portfolio placed on loan for a fee. If the Adviser does enter into such agreement, the Adviser will notify the Sub-Adviser of such agreement. The Adviser agrees not to enter into such agreement without the counterparty agreeing to contractual settlement, thereby guaranteeing the return of any securities on loan when requested by the Custodian in connection with settlements of transactions initiated by Sub-Adviser. (10) DIRECTED BROKERAGE Sub-Adviser understands that Adviser may, on occasion, enter into agreements for directed brokerage with certain brokers. Sub-Adviser agrees to follow Adviser's direction regarding directed brokerage. (11) BROKER SELECTION Except as provided in paragraph 10, above, in placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Portfolio's transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Portfolio or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts. Investment Sub-Advisory Agreement, International Bond Portfolio Page 5 of 10 (12) AVAILABILITY AND RETENTION OF RECORDS The Sub-Adviser shall, in the name of the Portfolio, place or direct the placement of orders for the execution of portfolio transactions in accordance with its investment policies, as set forth in the Portfolio's investment objectives, policies and restrictions. In connection with the placement of orders for the execution of the Portfolio's portfolio transactions, the Sub-Adviser shall create and maintain all necessary records required to be created and maintained by an investment adviser under all applicable law, rules and regulations, including, but not limited to, records required by Section 31(a) of the 1940 Act . All records pertaining to the Sub-Adviser's management of the Portfolio shall be the property of the Fund and shall be available for inspection and use, upon reasonable notice and during normal business hours, by the Securities and Exchange Commission, state regulators, Adviser, or any person retained by the Fund. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act. (13) INVESTMENT ACTIVITY AND PORTFOLIO COMPOSITION REPORTING The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Directors concerning the investment activity and portfolio composition of the Portfolio in such form and at such intervals as the Adviser or the Board may from time to time reasonably request. (b) The Sub-Adviser shall use the same skill and care in providing services to the Portfolio as it uses in providing services to other fiduciary accounts for which it has investment responsibility. 3. EXPENSES During the term of this Agreement, the Sub-Adviser will pay all of its own expenses incurred in connection with its activities under this Agreement. All brokerage and custodial expenses relating to the operation of the Portfolio shall be borne by the Portfolio. 4. COMPENSATION In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the Sub-Adviser a fee, determined as described on Exhibit A, attached hereto and made a part hereof. 5. RENEWAL, AMENDMENT AND TERMINATION This Agreement shall not become effective unless and until it is approved by the Board of Directors of the Fund, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval. Investment Sub-Advisory Agreement, International Bond Portfolio Page 6 of 10 This Agreement shall continue in effect for a period more than two years from the date of this Agreement, only so long as such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of the Portfolio, or by a vote of the majority of the Fund's Board of Directors. And further provided that such continuance is also approved annually by a vote of the majority of the Fund's Board of Directors who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Fund's Board of Directors or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Portfolio on sixty (60) days' prior written notice, or (ii) by either party hereto upon sixty (60) days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Advisory Agreement between the Fund and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act. This Agreement may only be amended by mutual written agreement, signed by both parties. 6. LIABILITY The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government of exchange control restrictions which might affect the liquidity of the Portfolio's assets, or from acts or omissions of the Adviser, custodians, securities depositories or other third parties, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Portfolio to which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder. 7. NO GUARANTEE AS TO INVESTMENT PERFORMANCE The Adviser and the Fund's Board of Directors understand that the value of investments made for the Account may go up as well as down and is not guaranteed, and that investment decisions will not always be profitable. Neither the Adviser nor the Sub-Adviser has made or is making any guarantees, including any guarantee as to any specific level of performance of the Portfolio. The Adviser and the Fund's Board of Directors acknowledge that this Portfolio is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Portfolio by Sub-Adviser are subject to various market and business risks. Investment Sub-Advisory Agreement, International Bond Portfolio Page 7 of 10 8. OTHER CLIENTS OF SUB-ADVISER The Adviser understands that the Sub-Adviser now acts, or may act in the future, as investment adviser to other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Portfolio. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell, with respect to the Portfolio, any security which the Sub-Adviser may purchase or sell for its own account or for the account of any other client. 9. OTHER BUSINESS ACTIVITIES OF SUB-ADVISER Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, director or employee of the Fund, or persons otherwise affiliated with Fund (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association. 10. REPRESENTATIONS Sub-Adviser represents that it is registered as an investment advisor under the Investment Advisers Act of 1940 and that such registration is currently effective and will remain effective throughout the term of this Agreement. The Sub-Adviser will perform its duties hereunder with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims The Sub-Adviser acknowledges that it will be acting as a fiduciary for Adviser in the performance of its duties hereunder. The Sub-Adviser shall at no time have custody or physical control of any assets of the Portfolio. 11. DISCLOSURE STATEMENT Adviser acknowledges receipt of Sub-Adviser's Disclosure Statement, as required by Rule 204-3 under the Investment Advisors Act of 1940, not less than 48 hours prior to the date of execution of this Agreement shown below. 12. ENTIRE AGREEMENT, GOVERNING LAW AND WAIVER OF JURY TRIAL This Agreement constitutes the entire agreement of the parties with respect to management of the Portfolio and it supercedes and replaces any pre-existing agreement between the parties. This Investment Sub-Advisory Agreement, International Bond Portfolio Page 8 of 10 Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Minnesota. To the extent permitted by the Federal securities laws, the parties hereby waive their right to a jury trial. 13. ATTORNEYS' FEES In the event of any litigation between the parties with respect to the subject matter of this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief awarded by the court, its reasonable attorneys' fees and other costs of preparing for and participating in the litigation. 14. CAPTIONS The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. 15. SEVERABILITY Each provision of this Agreement is intended to be severable from the others so that if any provision or term is found to be invalid or illegal for any reason whatsoever, such invalidity or illegality shall not affect the validity or legality of the remaining provisions and terms hereof. 16. CONTACT INFORMATION Sub-Adviser agrees to provide to Adviser, and update as necessary, all specific contact information regarding individual's names, phone numbers, facsimile numbers, e-mail addresses, and similar information for all back-up personnel, for all personnel who have any individual responsibility for the operation of the Portfolio. 17. NOTICES Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre-paid to the appropriate party at the following address: The Adviser at: Advantus Capital Management 400 Robert Street North Mail Station 15-3175 St. Paul, Minnesota 55101-2098 Attn: Mr. Drew Smith Investment Sub-Advisory Agreement, International Bond Portfolio Page 9 of 10 and the Sub-Adviser at: Julius Baer Investment Management Inc. Bevis Marks House 24 Bevis Marks London EC3A 7NE Attn: Mr. Edward Dove 18. EFFECTIVE DATE The effective date of this agreement shall be May 1, 2003. IN WITNESS WHEREOF, the parties have duly executed this Agreement. ADVANTUS CAPITAL MANAGEMENT, INC. JULIUS BAER INVESTMENT MANAGEMENT INC. (ADVISER) (SUB-ADVISER) By: By: ------------------------------------ --------------------------------- ------------------------------------ --------------------------------- (printed or typed name and title) (printed or typed name and title) By: By: ------------------------------------ --------------------------------- ------------------------------------ --------------------------------- (printed or typed name and title) (printed or typed name and title) Investment Sub-Advisory Agreement, International Bond Portfolio Page 10 of 10 EXHIBIT A SCHEDULE OF FEES In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Portfolio, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Portfolio. The fee shall be accrued daily and shall be based on the net asset value of the Portfolio assets as determined as of the close of each business day. The fee shall be payable quarterly by Adviser to Sub-Adviser within 30 days after quarter end and shall be accompanied by a worksheet created by Adviser which sets forth the supporting documentation upon which Adviser relied to calculate such fee. The amount of such annual fee, as applied to the average daily value of the net assets of the Portfolio shall be as described in the schedule below: Assets Annual Fee All Assets of the Portfolio 30 basis points (0.30 %) Exhibit A Page 1 of 1