EXHIBIT (d)(3)
INVESTMENT SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the 1st
day of August, 2007, by and among AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
("ACIM"), a Delaware corporation, and NORTHERN TRUST INVESTMENTS, N.A. (the
"Subadvisor"), an Illinois corporation.
WITNESSETH:
WHEREAS, ACIM is the investment advisor to the funds listed on Exhibit A
hereto (each a "Fund" and collectively the "Funds"), each of which is a series
of shares of American Century Capital Portfolios, Inc. ("ACCP") and is an
open-end management investment company registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, ACIM and the Subadvisor are both investment advisors registered
with the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended; and
WHEREAS, ACCP has engaged ACIM to serve as the investment manager for the
Funds pursuant to a Management Agreement dated August 1, 2006; and
WHEREAS, ACIM desires to engage the Subadvisor as a subadvisor for the
Funds, and the Subadvisor desires to accept such engagement; and
WHEREAS, the Boards of Directors of ACIM and the Subadvisor have determined
that it is advisable to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. INVESTMENT DESCRIPTION - APPOINTMENT. ACIM hereby appoints the
Subadvisor to provide the advisory services described herein to the Funds in
accordance with each Fund's Prospectus and Statement of Additional Information
as in effect and as amended from time to time, subject to the oversight and
direction of each Fund's Board of Directors and ACIM. ACIM will promptly provide
the Subadvisor copies of all amendments to each Fund's Prospectus and Statement
of Additional Information on an ongoing basis. In consideration for the
compensation set forth below, the Subadvisor accepts the appointment and agrees
to furnish the services described herein.
2. SERVICES AS INVESTMENT SUBADVISOR.
(a) Subject to the general supervision of each Fund's Board of Directors
and of ACIM, the Subadvisor will (i) act in conformity with each Fund's
Prospectus and Statement of Additional Information, the Investment Company Act,
the Investment Advisers Act of 1940 (the "Investment Advisers Act"), the
Internal Revenue Code (the "Code") and all other applicable federal and state
laws and regulations, as the same may from time to time be amended; (ii) make
investment decisions for each Fund in accordance with such Fund's investment
objective and policies as stated in such Fund's Prospectus and Statement of
Additional Information and with such written guidelines as ACIM may from time to
time provide to the Subadvisor; (iii) place purchase and sale orders on behalf
of the Funds; (iv) maintain books and records with respect to the securities
transactions of each Fund; and (v) furnish the Funds' Board of Directors such
periodic, regular and special reports with respect to the Funds and its services
hereunder as the Board may reasonably request or as may be required by
applicable law or regulation.
(b) In providing those services, the Subadvisor will supervise the Fund's
investments and conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Funds' assets. In addition, the
Subadvisor will furnish ACCP or ACIM whatever information, including statistical
data, ACCP or ACIM may reasonably request with respect to the instruments that
any Fund may hold or contemplate purchasing.
(c) The Subadvisor will at all times comply with the policies adopted by
the Funds' Board of Directors of which it has received written notice. Any
change to any such policies shall be approved by the Funds' Board of Directors
prior to the implementation of such change, and Subadvisor will be given
reasonable notice of the anticipated change.
(d) All cash, securities and other assets of the Funds shall be held at all
times by such entity or entities engaged by ACCP to be the custodian
(collectively, the "CUSTODIAN") in compliance with Section 17(f) of the
Investment Company Act. The Subadvisor shall not be responsible for any custody
arrangements involving any assets of the Funds or for the payment of any
custodial charges or fees, nor shall the Subadvisor have possession or custody
of any such assets. All payments, distributions and other transactions in cash,
securities or other assets in respect of the Funds shall be made directly to or
from the custodian. ACIM shall provide, or shall direct the custodian to
provide, to the Subadvisor from time to time such reports concerning assets,
receipts and disbursements with respect to the Funds as the Subadvisor may
request, including daily information on cash balances available for investment,
Fund redemption activity and market value of the securities held by the Funds.
(e) ACIM acknowledges and agrees that the Subadvisor is not the Funds'
pricing agent, and is not responsible for pricing the securities held by any
Fund, however the Subadvisor will provide reasonable assistance to the Funds'
pricing agents in valuing securities held by each Fund for which market
quotations are not readily available.
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(f) The Subadvisor makes no representations or warranties, express or
implied, that any level of performance or investment results will be achieved by
the Funds or that the Funds will perform comparably with any standard, including
any other clients of the Subadvisor or index.
(g) The Subadvisor will not consult with any other subadvisors of the Funds
or other subadvisors to a series under common control with any Fund concerning
transactions of the Funds in securities or other assets.
(h) The Subadvisor will not advise or act for the Funds in any legal
proceedings, including bankruptcies or class actions, involving securities held
in the Funds or issues of those securities, unless otherwise agreed.
3. BROKERAGE.
(a) In executing transactions for the Funds and selecting brokers or
dealers, the Subadvisor will seek to obtain the best price and execution
available and shall execute or direct the execution of all such transactions as
permitted by law and in a manner that is consistent with its fiduciary
obligations to the Funds and its other clients. In assessing the best price and
execution available for any Fund transaction, the Subadvisor will consider all
factors it deems relevant including, but not limited to, breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Consistent
with this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Subadvisor may, at its discretion,
execute transactions with brokers and dealers who provide the Funds and/or other
accounts over which the Subadvisor exercises investment discretion with research
advice and other services, but in all instances best price and execution shall
control. The Subadvisor is authorized to place purchase and sale orders for the
Funds with brokers and/or dealers subject to the supervision of ACIM and the
Board of Directors of the Funds and in accordance with the limitations set forth
in the registration statement for the Fund shares then in effect.
(b) On occasions when the Subadvisor deems the purchase or sale of a
security to be in the best interest of a Fund as well as one or more of its
other clients, the Subadvisor may to the extent permitted by applicable law, but
shall not be obligated to, aggregate the securities to be sold or purchased with
those of its other clients. In such event, allocation of the securities so
purchased or sold will be made by the Subadvisor in a manner it considers to be
equitable and consistent with its fiduciary obligations to ACCP and to such
other clients. ACIM recognizes that, in some cases, this procedure may limit the
size of the position that may be acquired or sold for a Fund.
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4. INFORMATION PROVIDED TO ACCP.
(a) The Subadvisor will keep ACCP and ACIM informed of developments
materially affecting the Funds and will take initiative to furnish ACCP and ACIM
on at least a quarterly basis with whatever information the Subadvisor and ACIM
believe is appropriate for this purpose. Such regular quarterly reports shall
include information reasonably requested by the Funds' Board of Directors from
time to time.
(b) The Subadvisor will provide ACCP and ACIM with such investment records,
ledgers, accounting and statistical data, and other information as ACCP and ACIM
reasonably request for the preparation of registration statements, periodic and
other reports and other documents required by federal and state laws and
regulations, and particularly as may be required for the periodic review,
renewal, amendment or termination of this Agreement, and such additional
documents and information as ACCP and ACIM may reasonably request for the
management of their affairs. The Subadvisor understands that the Funds and ACIM
will rely on such information in the preparation of the Funds' registration
statements, the Funds' financial statements, and any such reports, and hereby
covenants that any such information derived from the investment records, ledgers
and accounting records maintained by the Subadvisor shall be true and complete
in all material respects.
(c) At the request of the Board of Directors, a representative of the
Subadvisor shall attend meetings of the Board of Directors to make a
presentation on each Fund's performance and such other matters as the Board of
Directors, the Subadvisor and ACIM believe is appropriate.
(d) The Subadvisor shall furnish to regulatory authorities any information
or reports in connection with such services as may be lawfully requested,
provided, however, that the Subadvisor shall not otherwise be responsible for
the preparation and filing of any other reports or statements (including,
without limitation, any tax returns or financial statements) required of the
Funds by any governmental or regulatory agency, except as expressly agreed to in
writing. The Subadvisor shall also, at ACCP's request, certify to ACCP's
independent auditors that sales or purchases aggregated with those of other
clients of the Subadvisor, as described in Section 3 above, were allocated in a
manner it considers to be equitable.
(e) In compliance with the requirements of the Investment Company Act, the
Subadvisor hereby agrees that all records that it maintains for the Funds are
the property of ACCP and further agrees to surrender to ACCP promptly upon
ACCP's written request any of such records. In addition, the Subadvisor agrees
to cooperate with ACCP and ACIM when either of them is being examined by any
regulatory authorities, and specifically agrees to promptly comply with any
request by such authorities to provide information or records. The Subadvisor
further agrees to preserve for the periods of time prescribed by the Investment
Company Act and the Investment Advisers Act the records it maintains in
accordance with Section 2(a)(iv).
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(f) ACIM will vote each Fund's investment securities in accordance with its
proxy voting policy and procedures. The Subadvisor shall not be responsible for
any such voting.
(g) In connection with the purchase and sale of securities of the Fund, the
Subadvisor shall arrange for the transmission to ACIM and the custodian for the
Fund on a daily basis such confirmation, trade tickets and other documents as
may be reasonably necessary to enable them to perform their administrative
responsibilities with respect to the Fund's investment portfolio. With respect
to portfolio securities to be purchased or sold through the Depository Trust
Company, the Subadvisor shall arrange for the automatic transmission of the I.D.
confirmation of the trade to the custodian of the Fund. The Subadvisor will be
responsible for providing portfolio trades to the Fund's accounting agent for
inclusion in the daily calculation of the Fund's NAV in a manner, and in
accordance with such time requirements as ACIM and the Subadvisor shall agree
on. In the event trade data is not delivered by the Subadvisor in accordance
with such requirements and the Subadvisor's failure causes an error that is
material to the Fund, the subadvisor shall reimburse the Fund pursuant to ACIM's
NAV Error Policy.
5. CONFIDENTIALITY. The parties to this Agreement agree that each shall
treat as confidential in accordance with its policies and procedures to protect
similar confidential information, and with applicable law, all information
provided by a party to the others regarding such party's business and
operations, including without limitation the investment activities, holdings, or
identities of shareholders of the Funds. All confidential information provided
by a party hereto shall be used by any other parties hereto solely for the
purposes of rendering services pursuant to this Agreement and, except as may be
required in carrying out the terms of this Agreement, shall not be disclosed to
any third party without the prior consent of such providing party. The foregoing
shall not be applicable to any information that is publicly available when
provided or which thereafter becomes publicly available other than in
contravention of this paragraph. The foregoing also shall not apply to any
information which is required to be disclosed by any regulatory authority in the
lawful and appropriate exercise of its jurisdiction over a party, by any auditor
of the parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation; provided, however, that the disclosing party shall
provide reasonable notice to the other parties hereto prior to any such
disclosure.
6. COMPENSATION.
(a) In consideration of the services rendered pursuant to this Agreement,
ACIM will pay the Subadvisor a management fee, payable monthly in arrears on the
first business day of each month. The fee for the each month shall equal the sum
of the product of the "Applicable Fee" for each Fund as set forth on Exhibit A
attached hereto, times the net assets of such Fund on that day, and further
dividing that product by 365 (366 for leap years), for each calendar day in such
month.
(b) In the event that the Board of Directors of ACCP shall determine to
issue any additional series of shares for which it is proposed that the
Subadvisor serve as investment manager, and for which the Subadvisor desires to
so serve, ACIM and the Subadvisor shall
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amend Exhibit A to this Agreement setting forth the name of the series, the
Applicable Fee and such other terms and conditions as are applicable to the
management of such series of shares.
(c) The Subadvisor shall have no right to obtain compensation directly from
any Fund or ACCP for services provided hereunder and agrees to look solely to
ACIM for payment of fees due. Upon termination of this Agreement before the end
of a month, or in the event the Agreement begins after the beginning of the
month, the fee for that month shall be prorated according to the proportion that
such period bears to the full monthly period and shall be payable upon the date
of termination of this Agreement.
7. EXPENSES. ACIM, ACCP, and the Funds shall assume and pay their
respective organizational, operational and business expenses not specifically
assumed or agreed to be paid by the Subadvisor pursuant to this Agreement. The
Subadvisor shall pay its own organizational, operational and business expenses
but shall not be obligated to pay any expenses of ACIM, ACCP, and the Funds,
including, without limitation: (a) brokerage fees or commissions in connection
with the execution of securities transactions, (b) taxes and interest; and (c)
custodian fees and expenses.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS. ACIM understands that the
Subadvisor or its affiliates may act as investment advisor to other clients and
ACIM has no objection to the Subadvisor so acting. In addition, ACIM understands
that the persons employed by the Subadvisor to assist in the performance of the
Subadvisor's duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict the right of
the Subadvisor or any affiliate of the Subadvisor to engage in and devote time
and attention to other business or to render services of whatever kind or
nature.
9. TERM AND TERMINATION OF AGREEMENT.
(a) This Agreement shall become effective as of the date first written
above and shall continue until July 31, 2009, and shall continue thereafter so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of ACCP or (ii) a vote of a majority of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not interested
persons (as defined in the Investment Company Act) of any party to this
Agreement, by a vote cast at a meeting called for the purpose of voting on such
approval. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year if given within a period beginning not
more than ninety (90) days prior to July 31 of each applicable year,
notwithstanding the fact that more than three hundred sixty-five (365) days may
have elapsed since the date on which such approval was last given.
(b) This Agreement is terminable without penalty as to any Fund on 60 days'
written notice by (i) the Board of Directors of ACCP, (ii) by vote of holders of
a majority of a Fund's shares, (iii) by ACIM, or (iv) by the Subadvisor, and
will terminate automatically upon any termination of the investment management
agreement between ACCP and ACIM. This
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Agreement will terminate automatically in the event of its assignment. The
Subadvisor agrees to notify ACIM of any circumstances that might result in this
Agreement being deemed to be assigned.
10. REPRESENTATIONS.
(a) ACIM and the Subadvisor each represents that it is registered as an
investment advisor under the Investment Advisers Act, that it will use its
reasonable best efforts to maintain such registration, and that it will promptly
notify the other if it ceases to be so registered, if its registration is
suspended for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its registration
should not be suspended or terminated. ACIM and the Subadvisor each further
represents that it is registered under the laws of all jurisdictions in which
the conduct of its business hereunder requires such registration.
(b) ACIM represents and warrants that (i) the appointment of the Subadvisor
has been duly authorized; (ii) it has full power and authority to execute and
deliver this Agreement and to perform the services contemplated hereunder, and
such execution, delivery and performance will not cause it to be in violation of
its Articles of Incorporation, Bylaws, or any material laws; and (iii) it has
received a copy of Part II of the Subadvisor's Form ADV no less than 48 hours
prior to entering into this Agreement.
(c) The Subadvisor represents and warrants that (i) its service as
subadvisor hereunder has been duly authorized; (ii) it has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause it to be in violation of its organizational documents, its Bylaws or
material laws; (iii) it will at all times in the performance of its duties
hereunder comply in all material respects with the provisions of the Investment
Company Act, the Investment Advisers Act, the Code and all other applicable
federal and state laws and regulations, as the same may be amended from time to
time; and (iv) it has all controls necessary to perform its obligations under
and comply with the representations and warranties it made in this Agreement.
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter described herein.
13. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Subadvisor is and shall be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent ACCP or ACIM in any way, or otherwise be deemed to be an agent of ACCP
or ACIM.
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14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or similar authority, the remainder of
this Agreement shall not be affected thereby.
15. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopy, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Subadvisor:
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx, X-0
Xxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
To ACIM:
American Century Investments
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
16. DISCLOSURE. ACIM shall not, without the prior written consent of the
Subadvisor, make representations regarding or reference the Subadvisor or any
affiliates in any disclosure document, advertisement, sales literature or other
promotional materials; PROVIDED, HOWEVER, the Subadvisor need not review or
consent to any reference to its name only or any language that it has previously
approved for use in another document.
17. LIABILITY OF SUBADVISOR.
(a) The Subadvisor shall not be liable for any loss due solely to a mistake
of investment judgment, but shall be liable for any loss which is incurred by
reason of an act or omission of its employee, partner, director or affiliate, if
such act or omission involves willful misfeasance, bad faith or gross
negligence, or breach of its duties or obligations hereunder, whether express or
implied. Nothing in this paragraph shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
(b) The Subadvisor shall not be liable for any failure, delay or
interruption in the performance of its obligations hereunder if such failure,
delay or interruption results from the
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occurrence of any acts, events or circumstances beyond the Subadvisor's
reasonable control, and the Subadvisor shall have no responsibility of any kind
for any loss or damage thereby incurred or suffered by ACIM or ACCP. In such
case, the terms of this Agreement shall continue in full force and effect and
the Subadvisor obligations shall be performed or carried out as soon as legally
and practicably possible after the cessation of such acts, events or
circumstances.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first written
above.
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
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Title: Vice President
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NORTHERN TRUST INVESTMENTS, N.A.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
-------------------------------------
Title: Senior Vice President
-------------------------------------
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EXHIBIT A
FUNDS AND APPLICABLE FEES
FUND APPLICABLE FEE
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American Century Equity Index Fund 0.02% of the first $500,000,000
0.01% on all assets over $500,000,000
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