MONETTA TRUST
INVESTMENT ADVISORY AGREEMENT
This investment advisory agreement is made as of the 1st day of February,
1997, between MONETTA TRUST, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company (the "Trust"), and MONETTA FINANCIAL SERVICES,
INC., a Delaware corporation registered under the Investment Advisers Act of
1940 as an investment adviser (the "Adviser").
The Trust is authorized to issue shares of beneficial interest in separate
series with each such series representing interests in a separate portfolio of
securities and other assets.
The Trust is now authorized to offer shares in six series: Monetta Small-
Cap Equity Fund, Monetta Mid-Cap Equity Fund, Monetta Large Cap Equity Fund,
Monetta Balanced Fund, Monetta Intermediate Bond Fund and Monetta Government
Money Market Fund, which are referred to in this Agreement individually as a
"Fund" and together as the "Funds". The term "Funds" also means the Funds and
any other series of the Trust that has become a "Fund" under paragraph 1(b) of
this Agreement.
The Trust and the Adviser agree:
1. Appointment of Adviser. (a) The Trust appoints the Adviser to act as
manager and investment adviser to the Funds for the period and on the terms
provided in this Agreement. The Adviser accepts that appointment and agrees to
provide the services described in this Agreement, for the compensation provided
in paragraph 6.
(b) If the Trust establishes one or more series of shares other than
the Funds with respect to which it wants to appoint the Adviser as manager and
investment adviser under this Agreement, it shall notify the Adviser in writing,
indicating the advisory fee which will be payable with respect to the additional
series of shares. If the Adviser is willing to accept that appointment, it
shall notify the Trust in writing, whereupon such series of shares shall become
a Fund hereunder.
2. Services of Adviser. (a) The Adviser shall manage the investment and
reinvestment of the assets of each Fund and the general business affairs of each
Fund and of the Trust, subject to the supervision of the board of trustees of
the Trust. The Adviser shall give due consideration to the investment policies
and restrictions and the other statements concerning each Fund in the Trust's
Agreement and Declaration of Trust, bylaws and registration statements under the
1940 Act and the Securities Act of 1933 (the "1933 Act"), and to the provisions
of the Internal Revenue Code applicable to the Trust as a regulated investment
company. The Adviser shall be deemed for all purposes to be an independent
contractor and not an agent of the Trust or the Funds, and unless otherwise
expressly provided or authorized, shall have no authority to act or represent
the Trust or the Funds in any way.
(b) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with brokers or dealers
selected by the Adviser, although each Fund will pay the brokerage commissions
on its portfolio transactions in accordance with Paragraph 4. In executing
portfolio transactions and selecting brokers or dealers, the Adviser will use
its best efforts to seek on behalf of each Fund the best overall terms available
for any transaction. The Adviser shall consider all factors it deems relevant,
including the 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 the commission, if any (for the specific transaction and
on a continuing basis).
(c) To the extent contemplated by the Trust's registration statement
under the 1933 Act, in evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Adviser or an affiliate of the Adviser
exercises investment discretion. The Adviser is authorized to pay to a broker
or dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking the most
favorable combination of net price and execution available, the Adviser may
consider sales of shares of a Fund as a factor in the selection of broker-
dealers to execute portfolio transactions for that Fund.
3. Services other than as Adviser. The Adviser (or an affiliate of the
Adviser) may act as broker for a Fund in connection with the purchase or sale of
securities by or to a Fund if and to the extent permitted by procedures adopted
from time to time by the board of trustees of the Trust. Such brokerage
services are not within the scope of the duties of the Adviser under this
agreement, and, within the limits permitted by law and the trustees, the Adviser
(or an affiliate of the Adviser) may receive brokerage commissions, fees or
other remuneration from a Fund or the Trust for such services in addition to its
fee for services as Adviser. Within the limits permitted by law, the Adviser
may receive compensation from the Trust for other services performed by or for
the Trust which are not within the scope of the duties of the Adviser under this
agreement.
4. Expenses to be paid by Adviser. The Adviser shall furnish to the
Trust, at its own expense, all office space, facilities, equipment and personnel
necessary to provide the services set forth in paragraph 2 above. The Adviser
shall also assume and pay all other expenses incurred by it in connection with
managing the assets of the Funds, all expenses of marketing shares of the Funds
under the 1933 Act and of qualifying and maintaining qualification or
notification of shares of the Funds under the securities laws of such United
States jurisdictions as the Funds may from time to time reasonably designate,
except to the extent such expenses are paid by a
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Fund pursuant to any plan as in effect from time to time pursuant to rule 12b-1
under the 1940 Act; all expenses in determination of daily price computations,
placement of securities orders and related bookkeeping; and all other expenses
of the Funds not allocated to the Trust pursuant to section 5.
5. Expenses to be paid by the Trust. The Trust shall pay the fees of the
Adviser pursuant to section 6; all expenses pursuant to any plan as in effect
from time to time adopted pursuant to rule 12b-1 under the 1940 Act; all charges
of depositories, custodians and other agencies for the safekeeping and servicing
of cash, securities and other property of the Funds and of their transfer agents
and registrars and their dividend disbursing and redemption agents, if any; all
compensation of trustees other than those affiliated with the Adviser and all
expenses incurred in connection with their services to the Trust; all taxes and
corporate fees payable to federal, state or other governmental agencies,
domestic or foreign; all stamp or other transfer taxes; all expenses of printing
and mailing certificates for shares of the Funds, if any; all costs of borrowing
money by the Funds; and all extraordinary expenses, including litigation
expenses, not incurred in the ordinary course of the Funds' operations. In
addition to the payment of expenses, the Trust shall also pay all brokers'
commissions and other charges relative to the purchase and sale of portfolio
securities of the Funds.
6. Compensation of Adviser. (a) For the services to be provided and the
expenses to be assumed and to be paid by the Adviser hereunder, the Trust shall
pay to the Adviser, solely out of assets of each Fund, a monthly fee, based upon
the average net assets of each Fund, which shall be computed as of the close of
business each day and accrued daily, at the annual rate set forth below:
ADVISORY FEE SCHEDULE
Fee Rate as a Percentage of Average Net Assets
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Monetta Small-Cap Equity Fund 0.75%
Monetta Mid-Cap Equity Fund 0.75%
Monetta Large Cap Fund 0.75%
Monetta Balanced Fund 0.40%
Monetta Intermediate Bond Fund 0.35%
Monetta Government Money Market Fund 0.20%
7. Limitation of expenses of any Fund. The Adviser may, from time to time,
undertake to limit the expenses of a Fund by agreeing for a stated period of
time (which may be a period containing until terminated by the Adviser on not
less than [60] days' notice to the Trust) to reimburse such Fund for sums
expended for expenses in excess of a stated amount or percentage of assets, or
assuming for a stated period of time (which may be a period containing until
terminated by the Adviser on not less than [60] days' notice to the Trust) an
obligation to pay an expense that would otherwise be paid by the Trust pursuant
to paragraph 5 of this Agreement. Any such undertaking shall be in writing and
shall be considered a part of this Agreement.
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8. Services of Adviser not Exclusive. The services of the Adviser to the
Trust hereunder are not exclusive, and the Adviser is free to provide similar
services to others so long as its services under this agreement are not impaired
by such other activities.
9. Liability of Adviser. The Adviser shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of the Adviser, or of any of the
partners, employees or agents of the Adviser, in connection with or pursuant to
this agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or by
reason of reckless disregard by the Adviser of its obligations and duties under
this agreement.
10. Liability of Trust. The obligations of the Trust hereunder shall not
be binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust of the Trust.
11. Use of Adviser's name. The Trust and the Funds may use the name
"Monetta Trust" or any other name derived from the name "Monetta" only for so
long as this agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the business of the Adviser as investment adviser. At such time as
this agreement or any extension, renewal or amendment hereof, or such other
similar agreement shall no longer be in effect, the Trust will (by amendment of
its Agreement and Declaration of Trust, if necessary) cease to use, in its name
and in the names of the Funds, any name derived from the name "Monetta", any
name similar thereto or any other name indicating that it is advised by or
otherwise connected with the Adviser, or with any organization which shall have
succeeded to the Adviser's business as investment adviser. The consent of the
Adviser to the use of such names by the Trust shall not prevent the Adviser's
permitting any other enterprise, including another investment company, to use
such name or names.
12. Duration and renewal. (a) Unless terminated as provided in section
13, this agreement shall become effective with respect to the Initial Funds on
the date hereof and, with respect to any additional Fund, on the date of receipt
by the Trust of notice from the Adviser in accordance with Paragraph 1 (b)
hereof that the Adviser is willing to serve as Adviser with respect to such
Fund. Unless terminated as herein provided, this Agreement shall remain in
full force and effect until February 1, 1999, with respect to the Funds and
shall continue in full force and effect for periods of one year thereafter with
respect to each Fund so long as such continuance with respect to any such Fund
is approved at least annually (i) by either the trustees or by vote of a
majority of the outstanding voting shares (as defined in the 0000 Xxx) of such
Fund, and (ii) in either event by the vote of a majority of the trustees who are
not parties to this Agreement or "interested persons" (as defined in the 0000
Xxx) of any such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) Any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of any Fund shall be effective
to continue this
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Agreement with respect to any such Fund notwithstanding (i) that this Agreement
has not been approved by the holders of a majority of the outstanding shares of
any other Fund affected thereby, and (ii) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
13. Termination. This Agreement may be terminated with respect to a Fund
at any time, without payment of any penalty, by vote of the trustees or by vote
of a majority of the outstanding shares (as defined in the 0000 Xxx) of that
Fund, or by the Adviser on sixty (60) days' written notice to the other party.
This Agreement shall automatically and immediately terminate in the event of its
assignment (as defined in section 2(a)(4) of the 1940 Act).
14. Amendment. This agreement may not be amended as to a Fund without the
affirmative vote (a) of a majority of those trustees who are not "interested
persons" (as defined in Section 2(a)(19) of the 0000 Xxx) of the Trust and (b)
of the holders of a majority of the outstanding shares of that Fund.
MONETTA TRUST
By:
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Xxxxxx X. Xxxxxxxxx
President
MONETTA FINANCIAL SERVICES, INC.
By:
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Xxxxxx X. Xxxxxxxx
President
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