INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this 22nd day of December, 2010, by
and between FIRST TRUST SERIES FUND, a Massachusetts business trust (the
"Trust"), and FIRST TRUST ADVISORS L.P., an Illinois limited partnership (the
"Adviser") registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust desires to retain the Adviser as investment adviser, to
furnish certain investment advisory, portfolio management and administrative
services to the Trust with respect to the Series of the Trust listed on Schedule
A, as such schedule may be amended from time to time (each such series
hereinafter referred to as a "Fund"), and the Adviser is willing to furnish such
services.
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Trust hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of, each Fund
in accordance with such Fund's investment objectives and policies and
limitations, and to administer each Fund's affairs to the extent requested by
and subject to the supervision of the Board of Trustees of the Trust (the "Board
of Trustees") for the period and upon the terms herein set forth. The investment
of each Fund's assets shall be subject to the respective Fund's policies,
restrictions and limitations with respect to portfolio investments as set forth
in the Fund's then current registration statement under the 1940 Act, and all
applicable laws and the regulations of the Securities and Exchange Commission
relating to the management of registered open-end management investment
companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Fund's transfer agent, administrator or other service providers)
for the Fund, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected or appointed to
such positions, and to assume the obligations herein set forth for the
compensation herein provided. The Adviser shall at its own expense furnish all
executive and other personnel, office space, and office facilities required to
render the investment management and administrative services set forth in this
Agreement. In the event that the Adviser pays or assumes any expenses of a Fund
not required to be paid or assumed by the Adviser under this Agreement, the
Adviser shall not be obligated hereby to pay or assume the same or similar
expense in the future; provided that nothing contained herein shall be deemed to
relieve the Adviser of any obligation to a Fund under any separate agreement or
arrangement between the parties.
2. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall neither have the authority to act for nor represent the Trust
in any way, nor otherwise be deemed an agent of the Trust.
3. For the services rendered, facilities provided and charges assumed and
paid by Adviser hereunder, a Fund will pay to the Adviser out of the assets of
such Fund, at the end of each calendar month, and the Adviser agrees to accept
as full compensation therefor, an investment management fee equal to the annual
rate of such Fund's average daily net assets as set forth in Schedule A to this
Agreement so long as the Adviser has not waived all or a portion of such
compensation.
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 shall have been in effect during the month and year,
respectively. The services of the Adviser to the Trust and Fund under this
Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
4. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Trust or a Fund, as
trustees, officers or agents of the Trust, if duly elected or appointed to such
positions, and subject to their individual consent and to any limitations
imposed by law.
5. For purposes of this Agreement, brokerage commissions paid by a Fund
upon the purchase or sale of the Fund's portfolio securities shall be considered
a cost of securities of the Fund and shall be paid by the Fund.
6. The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of a Fund's securities on behalf of 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 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 to the
extent permitted by and in conformance with applicable law and the rules and
regulations thereunder (including Rule 17e-1 of the 1940 Act), the Adviser may
select brokers or dealers affiliated with the Adviser. It is understood that the
Adviser will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Trust, or be in breach of any obligation owing to the
Trust under this Agreement, or otherwise, solely by reason of its having caused
a 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 Adviser determines in good faith that the commission paid was
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reasonable in relation to the brokerage or research services provided by such
member, broker or dealer, viewed in terms of that particular transaction or the
Adviser's overall responsibilities with respect to its accounts, including the
Fund, as to which it exercises investment discretion.
In addition, the Adviser may, to the extent permitted by applicable law
and the rules and regulation thereunder, aggregate purchase and sale orders of
securities with similar orders being made simultaneously for other accounts
managed by the Adviser or its affiliates, if in the 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 a Fund occurs as part of any aggregate sale or purchase orders, the objective
of the Adviser and any of its affiliates involved in such transaction shall be
to allocate the securities so purchased or sold, as well as expenses incurred in
the transaction, among the Fund and other accounts in an equitable manner.
Nevertheless, each Fund acknowledges that under some circumstances, such
allocation may adversely affect the Fund with respect to the price or size of
the securities positions obtainable or salable. Whenever a Fund and one or more
other investment advisory clients of the Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in a
manner believed by the 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 Adviser
and its affiliates may purchase securities of an issuer for one client and at
approximately the same time recommend selling or sell the same or similar types
of securities for another client.
The Adviser will not arrange purchases or sales of securities between a
Fund and other accounts advised by the Adviser or its affiliates unless (a) such
purchases or sales are in accordance with applicable law and the rules and
regulations thereunder (including Rule 17a-7 of the 0000 Xxx) and the Trust's
policies and procedures, (b) the Adviser determines the purchase or sale is in
the best interests of the applicable Fund, and (c) the Board of Trustees have
approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts the
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use commercially reasonable efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees of the Trust
such information relating to transactions for the Trust as they may reasonably
request. In no instance will portfolio securities be purchased by or sold to the
Adviser or any affiliated person of either the Fund or the Adviser, except as
may be permitted under the 1940 Act, the rules and regulations thereunder or any
applicable exemptive orders.
The Adviser further agrees that it:
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(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will (i) conform in all material respects to all applicable
rules and regulations of the Securities and Exchange Commission, (ii)
comply in all material respects with all policies and procedures adopted
by the Board of Trustees for the Fund and communicated to the Adviser and,
(iii) conduct its activities under this Agreement in all material respects
in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees (generally on a
quarterly basis) and will make appropriate persons available for the
purpose of reviewing with representatives of the Board of Trustees on a
regular basis at reasonable times 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 Board of Trustees; and
(d) will prepare and maintain such books and records with respect
to a Fund's securities and other transactions as required under applicable
law and will prepare and furnish the Board of Trustees such periodic and
special reports as the Board of Trustees may reasonably request. The
Adviser further agrees that all records which it maintains for the Fund
are the property of the Fund and the Adviser will surrender promptly to
the Fund any such records upon the request of the Fund (provided, however,
that 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 Advisers Act or other applicable law and
the rules and regulations thereunder.
7. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Trust are, or may be, interested persons
(as such term is defined in the 1940 Act and rules and regulations thereunder)
of the Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Trust otherwise than as trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained by reason of
the purchase, sale or retention of any security, whether or not such purchase,
sale or retention shall have been based upon the investigation and research made
by any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
9. Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act (provided shareholder approval will not be required
if an exemption by rule, order or other applicable law is available), the
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Adviser may retain one or more sub-advisers at the Adviser's own cost and
expense for the purpose of furnishing one or more of the services described in
Section 1 hereof with respect to a Fund. Retention of a sub-adviser shall in no
way reduce the responsibilities or obligations of the Adviser under this
Agreement and the Adviser shall be responsible to such Fund for all acts or
omissions of any sub-adviser in connection with the performance of the Adviser's
duties hereunder.
10. The Trust acknowledges that the Adviser now acts, and intends in the
future to act, as an investment adviser to other managed accounts and as
investment adviser or investment sub-adviser to one or more other investment
companies that are not a series of the Trust. In addition, the Trust
acknowledges that the persons employed by the Adviser to assist in the Adviser's
duties under this Agreement will not devote their full time to such efforts. It
is also agreed that the Adviser may use any supplemental research obtained for
the benefit of the Trust in providing investment advice to its other investment
advisory accounts and for managing its own accounts.
11. This Agreement shall be effective on the date provided on Schedule A
for the respective Fund, provided it has been approved in the manner required by
the 1940 Act. This Agreement shall continue in effect until the two-year
anniversary of the date of its effectiveness, unless and until terminated by
either party as hereinafter provided, and shall continue in force from year to
year thereafter, but only as long as such continuance is specifically approved,
at least annually, in the manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time as to a Fund without the payment
of any penalty by such Fund or by the Adviser upon sixty (60) days' written
notice to the other party. A Fund may effect termination by action of the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund, accompanied by appropriate notice. This Agreement may be terminated, at
any time, without the payment of any penalty, by the Board of Trustees, or by
vote of a majority of the outstanding voting securities of the applicable Fund,
in the event that it shall have been established by a court of competent
jurisdiction that the Adviser, or any officer or director of the Adviser, has
taken any action which results in a breach of the material covenants of the
Adviser set forth herein. Termination of this Agreement shall not affect the
right of the Adviser to receive payments on any unpaid balance of the
compensation, described in Section 3, earned prior to such termination and for
any additional period during which the Adviser serves as such for the Fund,
subject to applicable law. The terms "assignment" and "vote of the majority of
outstanding voting securities" shall have the same meanings set forth in the
1940 Act and the rules and regulations thereunder.
12. This Agreement may be amended or modified only by a written instrument
executed by both parties.
13. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
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14. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
15. 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. This Agreement is executed
on behalf of the Trust and Fund by the Trust's officers as officers and not
individually and the obligations imposed upon the Trust and Fund by this
Agreement are not binding upon any of the Trust's Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the respective Fund, and persons dealing with a Fund must look solely to the
assets of the Fund and those assets belonging to the subject Fund, for the
enforcement of any claims.
16. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 15 hereof which shall be construed in
accordance with the laws of Massachusetts) the laws of the State of Illinois.
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IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.
FIRST TRUST SERIES FUND
By: /s/ Xxxxx X. Xxxxx
___________________
Name: Xxxxx X. Xxxxx
Title: President
ATTEST: /s/ Xxxx X. Xxxxxxx
_________________________
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
FIRST TRUST ADVISORS L.P.
By: /s/ Xxxxx X. Xxxxx
_____________________
Name: Xxxxx X. Xxxxx
Title: President
ATTEST: /s/ Xxxx X. Xxxxxxx
_________________________
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
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SCHEDULE A
FUNDS
NAME OF FUND ANNUAL RATE OF AVERAGE EFFECTIVE DATE
DAILY NET
ASSETS
First Trust Preferred Securities and .80%
Income Fund
First Trust/Confluence Small Cap 1.00%
Value Fund
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