INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of April 1, 2003, by and between Allied Investment
Advisors, Inc., a Maryland corporation (the "Adviser"), Govett Investment
Management Limited, a corporation organized under the laws of England (the
"Sub-Adviser"), and ARK Funds, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
offers for public sale distinct series of shares of beneficial interest (each a
"Portfolio"); and
WHEREAS, the Adviser is the investment adviser for each of the Portfolios
of the Trust; and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for each Portfolio listed in Schedule A
(each a "Fund" and collectively, the "Funds");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Adviser to provide
certain sub-investment advisory services to the Funds for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts on March 19, 1993,
and all amendments and supplements thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time to time be
amended or restated, is herein called the "Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), (File No. 33-53690)
and under the 1940 Act (File No. 811-7310), as filed with the Securities
and Exchange Commission ("SEC") and all amendments thereto insofar as such
Registration Statement and such amendments relate to the Funds; and
(e) The Trust's most recent prospectus and statement of additional
information for the Funds (such prospectus and statement of additional
information, as presently in effect, and all amendments and supplements
thereto, are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees
and the Adviser, the Sub-Adviser will furnish an investment program in respect
of, and make investment decisions for, all assets of the Funds and place all
orders for the purchase and sale of securities, all on behalf of the
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Funds. In the performance of its duties, the Sub-Adviser will satisfy its
fiduciary duties to the Funds (as set forth in Section 8, below), and will
monitor the investments of each of the Funds, and will comply with the
provisions of the Trust's Declaration of Trust and By-Laws, as amended from time
to time, and the stated investment objectives, policies and restrictions of the
respective Funds. The Sub-Adviser and the Adviser will each make its officers
and employees available to the other from time to time at reasonable times to
review investment policies of the Funds and to consult with each other regarding
the investment affairs of the Funds. The Sub-Adviser shall also make itself
available to the Board of Trustees at such times as the Board of Trustees shall
reasonably request.
The Sub-Adviser represents and warrants that it is in compliance with
all applicable rules and regulations of the SEC pertaining to its investment
advisory activities and agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable rules and regulations of the SEC
pertaining to its investment advisory activities;
(c) will place orders pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Sub-Adviser will attempt to
obtain the best combination of prompt execution of orders in an effective
manner and at the most favorable price. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are
comparable, the Sub-Adviser may, in its discretion, purchase and sell
portfolio securities to and from brokers and dealers who provide the
Sub-Adviser with research, analysis, advice and other services. In no
instance will portfolio securities be purchased from or sold to any
affiliated person of either the Trust, the Adviser, or the Sub-Adviser,
except as may be permitted under the 1940 Act;
(d) will report regularly to the Adviser and will make appropriate
persons available for the purpose of reviewing at reasonable times with
representatives of the Adviser and the Board of Trustees the management of
each of the Funds, including, without limitation, review of the respective
investment strategies of the Funds, the performance of the Funds in
relation to standard industry indices, interest rate considerations and
general conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Adviser;
(e) will maintain books and records with respect to the Funds'
securities transactions and will furnish the Adviser and the Trust's Board
of Trustees such periodic and special reports as the Board of Trustees or
the Adviser may request; and
(f) will act upon instructions from the Adviser not inconsistent with
the fiduciary duties hereunder.
The Sub-Adviser shall have the right to execute and deliver, or cause its
nominee to execute and deliver, all proxies and notices of meetings and other
notices affecting or relating to the securities of each of the Funds.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Funds, on behalf of the Trust, are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records upon
the Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement.
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6. COMPENSATION. For the services to be provided by the Sub-Adviser
pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee
as set forth on Schedule A attached to this Agreement.
7. SERVICES TO OTHERS. The Adviser understands, and has advised the Trust's
Board of Trustees, that the Sub-Adviser now acts, and may in the future act, as
an investment adviser to fiduciary and other managed accounts, and as investment
adviser, sub-investment adviser, and/or administrator to the other investment
companies. The Adviser has no objection to the Sub-Adviser's acting in such
capacities, provided that whenever the Fund and one or more other investment
companies advised by the Sub-Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed by the Sub-Adviser to be equitable to each company. The
Adviser recognizes, and has advised the Trust's Board of Trustees, that in some
cases this procedure may adversely affect the size of the position that a Fund
may obtain in a particular security. In addition, the Adviser understands, and
has advised the Trust's Board of Trustees, that the persons employed by the
Sub-Adviser to assist in the Sub-Adviser's duties under this Agreement will not
devote their full time to such service and nothing contained in this Agreement
will be deemed to limit or restrict the right of the Sub-Adviser or any of its
affiliates to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature so long as its services under this
Agreement are not impaired thereby.
8. LIMITATION OF LIABILITY OF SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds or the Adviser in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of the Funds, except a loss resulting from the willful misfeasance, bad
faith or gross negligence of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. DURATION AND TERMINATION. As to each Fund, this Agreement will become
effective as of the date set forth on Schedule A provided that it has been
approved by vote of a majority of the outstanding voting securities of the
respective Fund in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, will continue in effect for
successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date for such Fund in each year,
PROVIDED that such continuation is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not interested persons of the Trust, the Sub-Adviser, or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) by the vote of a majority of the Trust's Board of Trustees or, as to each
Fund, by the vote of the holders of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any
or all Funds at any time, without the payment of any penalty, by the Adviser, by
vote of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund on sixty (60) days' written notice to
the Sub-Adviser and by the Sub-Adviser on sixty (60) days' written notice to the
Adviser and the Trust. This Agreement will terminate automatically upon
termination of the investment advisory agreement between the Trust and the
Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" have the
same meanings of such terms in the 1940 Act). Termination of this Agreement with
respect to any Fund shall in no way affect the continued validity of this
Agreement or the performance thereunder with respect to any other Fund.
10. AMENDMENT OF THIS AGREEMENT. No material provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
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effect. If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
The names "ARK Funds" and "Trustees of ARK Funds" refer respectively to the
Trust created by, and the Trustees, as trustees but not individually or
personally, acting from time to time under, the Declaration of Trust, 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 "ARK Funds" entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only 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. Persons dealing with a Fund must look solely to the assets
of the Trust belonging to the Fund for the enforcement of any claims against the
Trust.
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.
ALLIED INVESTMENT ADVISORS, INC.
By: /S/ J. XXXX XXX
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Name: J. XXXX XXX
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Title: CHIEF INVESTMENT OFFICER
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GOVETT INVESTMENT MANAGEMENT LIMITED
By: /S/ COLIN KREIDEWOLF
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Name: COLIN KREIDEWOLF
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Title:
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ARK FUNDS
By: /S/ XXXXXXX XXXXXX
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Name: XXXXXXX XXXXXX
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Title: VICE PRESIDENT
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SCHEDULE A
For the services provided and the expenses assumed by the Sub-Adviser under
the terms of the Agreement, the Adviser shall pay to the Sub-Adviser a monthly
fee at the following annual rate:
Percent of
Average Daily Effective
Fund Net Assets Date
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ARK Emerging Markets Equity Portfolio 0.50% April 1, 2003
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