INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT made as of this 5th day of November,
2015, by and among the First Trust Series Fund, a Massachusetts business trust
(the "Trust"), First Trust Advisors L.P., an Illinois limited partnership (the
"Manager") and a registered investment adviser with the Securities and Exchange
Commission ("SEC"), and J.J.B. Xxxxxxxx, X.X. Xxxxx LLC, a Kentucky limited
liability company and a registered investment adviser with the SEC (the
"Sub-Adviser").
WHEREAS, the First Trust AQA(R) Equity Fund (the "Fund") is a series of
the Trust, an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust has retained the Manager to serve as the investment
adviser for the Fund pursuant to an Investment Management Agreement between the
Manager and the Trust on behalf of the Fund (as such agreement may be modified
from time to time, the "Management Agreement");
WHEREAS, the Management Agreement provides that the Manager may, subject
to the initial and periodic approvals required under Section 15 of the 1940 Act
(after taking into effect any exemptive order, no action assurances or other
relief, rule or regulation upon which the Fund may rely), appoint a sub-adviser
at its own cost and expense for the purpose of furnishing certain services
required under the Management Agreement; and
WHEREAS, the Trust and the Manager desire to retain the Sub-Adviser to
furnish investment advisory services for the Fund's investment portfolio, upon
the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. The Trust and the Manager hereby appoint the Sub-Adviser
to provide certain sub-investment advisory services to the Fund 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. The Sub-Adviser shall, for all purposes herein
provided, be deemed an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for nor represent the
Trust, Fund or the Manager in any way, nor otherwise be deemed an agent of the
Trust, Fund or the Manager.
2. Services to Be Performed. Subject always to the supervision of the
Trust's Board of Trustees (the "Board of Trustees" or the "Board") and the
Manager, the Sub-Adviser will act as sub-adviser for, and manage on a
discretionary basis the investment and reinvestment of the assets of the Fund,
furnish an investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities and other assets for
the Fund's investment portfolio, all on behalf of the Fund consistent with the
Fund's currently effective registration statement on Form N-1A as the same may
thereafter be amended from time to time. In the performance of its duties, the
Sub-Adviser will in all material respects (a) satisfy any applicable fiduciary
duties it may have to the Fund, (b) monitor the Fund's investments or other
instruments selected for the Fund by the Sub-Adviser, (c) comply with the
provisions of the Trust's Declaration of Trust and By-laws, as amended from time
to time and communicated by the Fund or the Manager to the Sub-Adviser in
writing, and the stated investment objectives, policies and restrictions of the
Fund as such objectives, policies and restrictions may subsequently be changed
by the Trust's Board of Trustees and communicated by the Fund or the Manager to
the Sub-Adviser in writing, (d) comply with (i) the investment objectives,
policies and restrictions stated in the Fund's most recently effective
prospectus and statement of additional information, (ii) such other investment
objectives, policies, restrictions or instructions as the Manager or Trust's
Board of Trustees may communicate to the Sub-Adviser in writing, and (iii) any
changes to the objectives, policies, restrictions or instructions required under
the foregoing (i) and (ii) as communicated to the Sub-Adviser in writing and (e)
assist in the valuation of portfolio assets held by the Fund as reasonably
requested by the Manager or the Fund. The Sub-Adviser and Manager will each make
its officers and employees available to the other from time to time at
reasonable times to review the investment objectives, policies and restrictions
of the Fund and to consult with each other regarding the investment affairs of
the Fund. The Fund or the Manager will provide the Sub-Adviser with current
copies of the Trust's Declaration of Trust, the Trust's By-laws, the Fund's
prospectus, the Fund's statement of additional information and any amendments
thereto, and any policies or limitations not appearing therein as they may be
relevant to the Sub-Adviser's performance under this Agreement.
Unless otherwise provided by the Manager, the Sub-Adviser is authorized to
select the brokers, dealers or futures commission merchants, banks or any other
agent or counterparty that will execute the purchases and sales of portfolio
investments for the Fund, and is directed to use its commercially reasonable
efforts to obtain best execution, which includes most favorable net results and
execution of the Fund's orders, taking into account all appropriate factors,
including among other things, price, dealer spread or commission, size and
difficulty of the transaction and research or other services provided. Subject
to approval by the Board of Trustees and compliance with the policies and
procedures adopted by the Board of Trustees for the Fund and to the extent
permitted by and in conformance with applicable law (including if applicable
Rule 17e-1 under the 1940 Act), the Sub-Adviser may select brokers or dealers
affiliated with the Sub-Adviser. It is understood that the Sub-Adviser will not
be deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust or the Fund, or be in breach of any obligation owing to the Trust or the
Fund under this Agreement, or otherwise, solely by reason of its having caused
the Fund to pay a member of a securities exchange, a broker or a dealer a
commission for effecting a securities transaction for the Fund in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged if the Sub-Adviser determined in good faith that the commission paid was
reasonable in relation to the value of the brokerage or research services
provided by such member, broker or dealer, viewed in terms of that particular
transaction or the Sub-Adviser's overall responsibilities with respect to its
accounts, including the Fund, as to which it exercises investment discretion.
In addition, the Sub-Adviser may, to the extent permitted by applicable
law, aggregate purchase and sale orders of securities or other instruments
placed with respect to the assets of the Fund with similar orders being made
simultaneously for other accounts managed by the Sub-Adviser or its affiliates,
if in the Sub-Adviser's reasonable judgment such aggregation shall result in an
overall economic benefit to the Fund, taking into consideration the selling or
purchase price, brokerage commissions and other expenses. In the event that a
purchase or sale of an asset of the Fund occurs as part of any aggregate sale or
purchase orders, the objective of the Sub-Adviser and any of its affiliates
involved in such transaction shall be to allocate the assets so purchased or
sold, as well as expenses incurred in the transaction, among the Fund and other
accounts in a fair and equitable manner. Nevertheless, the Fund and the Manager
acknowledge that under some circumstances, such allocation may adversely affect
the Fund with respect to, among other things, the price or size of the assets
obtainable or salable. Whenever the Fund and one or more other investment
advisory clients of the Sub-Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed by the Sub-Adviser to be equitable to each, although such allocation
may result in a delay in one or more client accounts being fully invested that
would not occur if such an allocation were not made. Moreover, it is possible
that due to differing investment objectives or for other reasons, the
Sub-Adviser and its affiliates may purchase securities or other instruments of
an issuer for one client and at approximately the same time recommend selling or
sell the same or similar types of securities, assets or instruments for another
client.
The Sub-Adviser will not arrange purchases or sales of securities or other
assets between the Fund and other accounts advised by the Sub-Adviser or its
affiliates unless (a) such purchases or sales are in accordance with applicable
law (including if applicable Rule 17a-7 under the 0000 Xxx) and the Fund's
policies and procedures, (b) the Sub-Adviser determines the purchase or sale is
in the best interests of the Fund, and (c) the Board of Trustees has approved
these types of transactions.
The Fund may adopt policies and procedures that modify or restrict the
Sub-Adviser's authority regarding the execution of the Fund's portfolio
transactions provided herein.
For purposes of complying with Rule 10f-3, Rule 12d3-1, Rule 17a-10 and
Rule 17e-1 under the 1940 Act, the Sub-Adviser hereby agrees that it will not
consult with any other sub-adviser of an investment company or a series of an
investment company that is advised by the Manager (the "First Trust Fund
complex") or an affiliated person of a sub-adviser (including any sub-adviser
that is a principal underwriter or an affiliated person of such principal
underwriter), concerning transactions for the Fund or any fund in the First
Trust Fund complex in securities or other fund assets. In addition, with respect
to a fund in the First Trust Fund complex with multiple sub-advisers, the
Sub-Adviser shall be limited to providing investment advice with respect to only
the discrete portion of the fund's portfolio as may be determined from
time-to-time by the Board of Trustees or the Manager, and shall not consult with
the sub-adviser (including any sub-adviser that is a principal underwriter or an
affiliated person of such principal underwriter) as to any other portion of the
fund's portfolio concerning transactions for the fund in securities or other
assets.
The Sub-Adviser will communicate to the officers and Trustees of the trust
such information relating to transactions for the Fund as they may reasonably
request. In no instance will the Fund's portfolio securities be purchased from
or sold to the Manager, the Sub-Adviser or any affiliated person of either the
Trust, the Manager, or the Sub-Adviser, except as may be permitted under the
1940 Act and under no circumstances will Sub-Adviser select brokers or dealers
for Fund transactions on the basis of Fund share sales by such brokers or
dealers.
The Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) will (i) conform in all material respects to all applicable
rules and regulations of the SEC, (ii) comply in all material respects
with all policies and procedures adopted by the Board of Trustees for the
Trust and communicated to the Sub-Adviser in writing and (iii) conduct its
activities under this Agreement in all material respects in accordance
with any applicable law and regulations of any governmental authority
pertaining to its investment advisory activities;
(c) will report to the Manager and to the Board of Trustees on a
quarterly basis and will make appropriate persons available for the
purpose of reviewing with representatives of the Manager and the Board of
Trustees on a regular basis at such times as the Manager or the Board of
Trustees may reasonably request in writing regarding the management of the
Fund, including, without limitation, review of the general investment
strategies of the Fund, the performance of the Fund's investment portfolio
in relation to relevant standard industry indices and general conditions
affecting the marketplace and will provide various other reports from time
to time as reasonably requested by the Manager or the Board of Trustees;
(d) will prepare and maintain such books and records with respect to
the Fund's assets and other transactions for the Fund's investment
portfolio as required for registered investment advisers performing such
services under applicable law, the Fund's compliance policies and
procedures or as otherwise requested by the Manager or the Board and will
prepare and furnish the Manager and the Board of Trustees such periodic
and special reports as the Board or the Manager may request. Such records
prepared and maintained by the Sub-Adviser as required hereunder shall be
open to inspection at all reasonable times by the Manager or the Fund and
any appropriate regulatory authorities. The Sub-Adviser further agrees
that all records that it maintains for the Fund are the property of the
Fund and the Sub-Adviser will surrender promptly to the Fund any such
records upon the request of the Manager or the Fund (provided, however,
that the Sub-Adviser shall be permitted to retain copies thereof); and
shall be permitted to retain originals (with copies to the Fund) to the
extent required under Rule 204-2 of the Investment Advisers Act of 1940 or
other applicable law; and
(e) will monitor the pricing of portfolio assets, and events
relating to the issuers of those assets and the markets in which the
securities or other assets trade in the ordinary course of managing the
portfolio investments of the Fund, and will notify the Manager promptly of
any issuer-specific or market events or other situations that occur
(particularly those that may occur after the close of a foreign market in
which the investments may primarily trade but before the time at which the
Fund's investments are priced on a given day) that may materially impact
the pricing of one or more securities or other assets in the Fund. In
addition, the Sub-Adviser will at the Manager's request assist the Manager
in evaluating the impact that such an event may have on the net asset
value of the Fund and in determining a recommended fair value of the
affected investment or investments.
3. 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 other than the cost of securities and other assets (including
brokerage commissions, if any) purchased for the Fund.
4. Additional Sub-Advisers. Subject to obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act and the approval of the
Manager, the Sub-Adviser may retain one or more additional sub-advisers at the
Sub-Adviser's own cost and expense for the purpose of furnishing one or more of
the services described in Section 2 hereof with respect to the Fund. Retention
of a sub-adviser hereunder shall in no way reduce the responsibilities or
obligations of the Sub-Adviser under this Agreement and the Sub-Adviser shall be
responsible to the Fund for all acts or omissions of any sub-adviser in
connection with the performance of the Sub-Adviser's duties hereunder.
5. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee (the "Management Fee") equal to the annual rate of 0.50% of the
average daily net assets of the Fund. The Management Fee shall be payable in
arrears on or about the first day of each month during the term of this
Agreement.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
6. Expense Reimbursement. Sub-Adviser recognizes that the Manager intends
to enter into an expense reimbursement, fee waiver and recovery agreement with
the Trust on behalf of the Fund, as such may be amended, updated or renewed from
time to time (the "Reimbursement Agreement"), pursuant to which the Manager
shall agree to waive management fees and reimburse other expenses borne by the
Fund (the "Reimbursed Amount") to prevent the Fund's expense ratio of each
applicable class from exceeding a specified expense cap as set forth in the
Reimbursement Agreement. Sub-Adviser hereby agrees to waive its Management Fee
and reimburse the Manager for one-half of the Reimbursed Amount borne by the
Manager under the respective Reimbursement Agreement, provided that Sub-Adviser
may seek restitution from the Manager for one-half of any portion of the
Reimbursed Amount recovered by the Manager in accordance with the terms of the
Reimbursement Agreement (the "Sub-Adviser Recovered Amount"). The Sub-Adviser
Recovered Amount shall be paid to the Sub-Adviser quarterly.
7. Limitation of Liability. The Sub-Adviser shall not be liable for, and
the Trust and the Manager will not take any action against the Sub-Adviser to
hold the Sub-Adviser liable for, any error of judgment or mistake of law or for
any loss suffered by the Fund or the Manager (including, without limitation, by
reason of the purchase, sale or retention of any security or other asset) in
connection with the performance of the Sub-Adviser's duties under this
Agreement, except 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
under this Agreement, or by reason of its reckless disregard of its obligations
and duties under this Agreement.
8. Term; Termination. This Agreement shall become effective on the same
date as the Management Agreement between the Trust and the Manager becomes
effective with respect to the Fund (it being understood that the Manager shall
notify the Sub-Adviser on the date of effectiveness of the Management Agreement
as soon as reasonably practical after effectiveness) provided that it has been
approved in the manner required by the 1940 Act (after taking into effect any
exemptive order, no action assurances, or other relief, rule or regulation upon
which the Fund may rely), and shall remain in full force until the two-year
anniversary of the date of its effectiveness unless sooner terminated as
hereinafter provided. This Agreement shall continue in force from year to year
thereafter, but only as long as such continuance is specifically approved for
the Fund at least annually in the manner required by the 1940 Act and the rules
and regulations thereunder (after taking into effect any exemptive order, no
action assurances, or other relief, rule or regulation upon which the Fund may
rely); provided, however, that if the continuation of this Agreement is not
approved for the Fund, the Sub-Adviser may continue to serve in such capacity
for the Fund in the manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Manager or the Sub-Adviser upon sixty (60) days' written notice to the
other parties. This Agreement may also be terminated by the Fund by action of
the Board of Trustees or by a vote of a majority of the outstanding voting
securities of the Fund upon sixty (60) days' written notice to the Sub-Adviser
by the Trust without payment of any penalty.
This Agreement may be terminated at any time without the payment of any
penalty by the Manager, the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund in the event that it shall have been
established by a court of competent jurisdiction that the Sub-Adviser or any
officer or director of the Sub-Adviser has taken any action that results in a
breach of the material covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the event the Management
Agreement between the Manager and the Trust on behalf of the Fund is terminated,
assigned or not renewed.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 5 earned prior to such termination and for any additional
period during which the Sub-Adviser serves as such for the Fund, subject to
applicable law.
9. Compliance Certification. From time to time the Sub-Adviser shall
provide on behalf of itself and its affiliates that provide services or
otherwise transact with the Fund (the "Affiliates") such certifications with
respect to Rule 38a-1 under the 1940 Act, as are reasonably requested by the
Fund or the Manager. In addition, the Sub-Adviser will, from time to time,
provide a written assessment of its and its Affiliates' compliance program(s) in
conformity with current industry standards that is reasonably acceptable to the
Fund to enable the Fund to fulfill its obligations under Rule 38a-1 under the
1940 Act.
10. Notice. Any notice under this Agreement shall be sufficient in all
respects if given in writing and delivered by commercial courier providing proof
of delivery and addressed as follows or addressed to such other person or
address as such party may designate for receipt of such notice.
If to the Manager or the Fund: If to the Sub-Adviser:
First Trust AQA(R) Equity Fund J.J.B. Xxxxxxxx, X.X. Xxxxx, LLC
First Trust Advisors L.P. 000 Xxxx Xxxxxxxxx Xxxxxx, Xxx. 000
000 X. Xxxxxxx Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
Xxxxxxx, Xxxxxxxx 00000 Attention: Legal Department
Attention: Secretary
11. Limitations on Liability. All parties hereto are expressly put on
notice of the Trust's Declaration of Trust and all amendments thereto, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein and a copy
of which has been provided to the Sub-Adviser prior to the date hereof. This
Agreement is executed by the Trust on behalf of the Fund by the Trust's officers
in their capacity as officers and not individually and is not binding upon any
of the Trustees, officers or shareholders of the Trust individually but the
obligations imposed upon the Trust or Fund by this Agreement are binding only
upon the assets and property of the Fund, and persons dealing with the Trust or
Fund must look solely to the assets of the Fund for the enforcement of any
claims.
12. 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 effect. This
Agreement will be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
13. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof, which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
14. Amendment. This Agreement may only be amended, or its provisions
modified or waived, in a writing signed by the party against which such
amendment, modification or waiver is sought to be enforced.
15. Authority. Each party represents to the others that it is duly
authorized and fully empowered to execute, deliver and perform this Agreement.
The Trust represents that engagement of the Sub-Adviser has been duly authorized
by the Trust and is in accordance with the Trust's Declaration of Trust, other
governing documents of the Fund and applicable law.
16. Severability. Each provision of this Agreement is intended to be
severable from the others so that if any provision or term hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remaining provisions and terms hereof; provided,
however, that the provisions governing payment of the Management Fee described
in Section 5 are not severable.
17. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties hereto with respect to the subject matter expressly set
forth herein.
IN WITNESS WHEREOF, the Trust on behalf of the Fund, the Manager and the
Sub-Adviser have caused this Agreement to be executed as of the day and year
first above written.
FIRST TRUST ADVISORS L.P. J.J.B. XXXXXXXX, X.X. XXXXX LLC
By /s/ Xxxx X. Xxxxxxx By /s/ Xxxxx X. Xxxxx
------------------------------ ------------------------------
Xxxx X. Xxxxxxx Xxxxx X. Xxxxx
Title: COO Title: CEO
FIRST TRUST SERIES FUND ON BEHALF OF
FIRST TRUST AQA(R) EQUITY FUND
By /s/ Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx
Title: CEO
