SIERRA TRUST FUNDS
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated January 30, 1998,
between the Sierra Trust Funds, a Massachusetts business trust, (the "Trust"),
on behalf of each of its series which are listed on the signature page of this
Agreement (each referred to herein as a "Fund" and, collectively, the "Funds")
and Composite Research & Management Co., a Washington corporation (the
"Manager").
W I T N E S S E T H
-------------------
WHEREAS, the Trust is an open-end series management investment company,
registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust, desires to retain the Manager to render investment
management services to each Fund, and the Manager is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Manager to act as investment
manager to each Fund for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Management. Subject to the supervision of the Board of Trustees of the
Trust, the Manager shall manage the investment operations of each Fund and the
composition of each Fund's portfolio, including the purchase, retention and
disposition of securities therefor, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as such terms are hereinafter defined) and
resolutions of the Trust's Board of Trustees and subject to the following
understandings:
(a) The Manager shall provide supervision of each Fund's investments,
furnish a continuous investment program for each Fund's portfolio and
determine from time to time what securities will be purchased, retained, or
sold by each Fund, and what portion of the assets will be invested or held
as cash.
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Master Trust
Agreement of the Trust and the investment policies of the Funds as
determined by the Board of Trustees of the Trust.
(c) The Manager shall determine the securities to be purchased or
sold by each Fund and shall place orders for the purchase and sale of
portfolio securities pursuant to its determinations with brokers or dealers
selected by the Manager. In executing portfolio transactions and selecting
brokers or dealers, the Manager shall use its best efforts to seek on
behalf of each Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the Manager
may consider all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the size of the
transaction, the timing of the transaction, the reputation, financial
condition, experience, and execution capability of a broker or dealer, the
amount of commission, and the value of any brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934, provided by a broker or dealer. The Manager is authorized to pay
to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting the transaction if the Manager 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 the overall
responsibilities of the Manager to the Fund and/or other accounts over
which the Manager exercises investment discretion.
(d) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of a Fund as well as other fiduciary
accounts for which it has investment responsibility, the Manager, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so sold or purchased in order to obtain the best
execution, most favorable net price or lower brokerage commissions.
(e) Subject to the provisions of the Master Trust Agreement of the
Trust and the 1940 Act, the Manager, at its expense, may select and
contract with one or more investment advisers (the "Sub-adviser") for each
Fund to perform some or all of the services for which it is responsible
pursuant to this Section 2. The Manager shall be solely responsible for
the compensation of any Sub-adviser of a Fund for its services to such
Fund. The Manager may terminate the services of any Sub-adviser at any
time in its sole discretion, and shall at such time assume the
responsibilities of such Sub-adviser unless and until a successor Sub-
adviser is selected. To the extent that more than one Sub-adviser is
selected, the Manager shall, in its sole discretion, determine the amount
of the Fund's assets allocated to each such Sub-adviser.
3. Services Not Exclusive. The investment management services rendered by the
Manager hereunder to the Funds are not to be deemed exclusive, and the Manager
shall have the right to render similar services to others, including, without
limitation, other investment companies.
4. Expenses. During the term of this Agreement, the Manager shall pay all
expenses incurred by it in connection with its activities under this Agreement
including the salaries and expenses of any of the officers or employees of the
Manager who act as officers, Trustees or employees of the Trust but excluding
the cost of securities purchased for the Funds and the amount of any brokerage
fees and commissions incurred in executing portfolio transactions for the Funds,
and shall provide the Funds with suitable office space. Other expenses to be
incurred in the operation of the Funds (other than those borne by any third
party), including without limitation, taxes, interest, brokerage fees and
commissions, fees of Trustees who are
2
not officers, directors, or employees of the Manager, federal registration fees
and state Blue Sky qualification fees, administration fees, bookkeeping, charges
of custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal expenses, costs
of maintaining the Funds' or the Trust's existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of preparing, printing and
distributing prospectuses to existing shareholders, costs of stockholders'
reports and meetings of shareholders and Trustees of the Funds or the Trust, as
applicable, and any extraordinary expenses will be borne by the Fund.
5. Compensation. For the services provided pursuant to this Agreement, the
Trust shall pay to the Manager as full compensation therefor a monthly fee
computed on the average daily net assets at the annual rate for each Fund as
stated in Schedule A attached hereto. The Trust acknowledges that the Manager,
as agent for the Funds, will allocate a portion of the fee equal to the sub-
advisory fee payable to the sub-advisor, if any, under its sub-advisory
agreement to the sub-advisor for sub-advisory services. The Trust acknowledges
that the Manager, as agent for the Funds, will allocate a portion of the fee to
Xxxxxxx Xxxxx Securities Services, Inc. for administrative services, portfolio
accounting and regulatory compliance systems. The Manager also from time to
time and in such amounts as it shall determine in its sole discretion may
allocate a portion of the fee to Composite Funds Distributor, Inc. for
facilitating distribution of the Fund. This payment would be made from revenue
which otherwise would be considered profit to the Manager for its services.
This disclosure is being made to the Trust solely for the purpose of conforming
with requirements of the Washington Department of Revenue for exclusion of
revenue from the Washington Business and Occupation Tax.
6. Limitation of Liability. The Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
7. Delivery of Documents. The Trust has heretofore delivered to the Manager
true and complete copies of each of the following documents and shall promptly
deliver to it all future amendments and supplements thereto, if any:
(a) Master Trust Agreement as presently in effect and as amended from time
to time;
(b) Bylaws of the Trust;
(c) Registration Statement under the Securities Act of 1933 and under the
1940 Act of the Trust on Form N-1A, and all amendments thereto, as filed
with the Securities and Exchange Commission (the "Registration Statement")
relating to the Trust and the shares of the Funds;
3
(d) Notification of Registration of the Trust under the 1940 Act on Form
N-8A;
(e) Prospectuses of the Trust relating to shares of the Funds (such
prospectuses as presently in effect and/or as amended or supplemented from
time to time, the "Prospectus"); and
(f) Statement of Additional Information of the Trust relating to shares of
the Funds (such statement as presently in effect and/or as amended or
supplemented from time to time, the "Statement of Additional Information").
8. Duration and Termination. This Agreement shall become effective as of the
date first above-written for an initial period of two years and shall continue
thereafter so long as such continuance is specifically approved at least
annually (a) by the vote of the Board of Trustees including a majority of those
members of the Trust's Board of Trustees who are not parties to this Agreement
or "interested persons" of any such party, cast in person at a meeting called
for that purpose, or by vote of a majority of the outstanding voting securities
of each Fund. Notwithstanding the foregoing, (a) this Agreement may be
terminated with respect to any Fund at any time, without the payment of any
penalty, by either the Trust (by vote of the Trust's Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund) or the
Manager, on sixty (60) days prior written notice to the other and (b) shall
automatically terminate in the event of its assignment. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the meanings assigned to such
terms in the 1940 Act.
9. Amendments. No provision of this Agreement may be amended, modified,
waived or supplemented except by a written instrument signed by the party
against which enforcement is sought. No amendment of this Agreement shall be
effective until approved in accordance with any applicable provisions of the
1940 Act.
10. Use of Name and Logo. The Trust agrees that it shall furnish to the
Manager, prior to any use or distribution thereof, copies of all prospectuses,
statements of additional information, proxy statements, reports to stockholders,
sales literature, advertisements, and other material prepared for distribution
to stockholders of the Trust or to the public, which in any way refer to or
describe the Manager or which include any trade names, trademarks or logos of
the Manager or of any affiliate of the Manager. The Trust further agrees that
it shall not use or distribute any such material if the Manager reasonably
objects in writing to such use or distribution within five (5) business days
after the date such material is furnished to the Manager.
The Manager and/or its affiliates own the names "Sierra", "Composite" and
any other names which may be listed from time to time on a Schedule B to be
attached hereto that they may develop for use in connection with the Trust,
which names may be used by the Trust only with the consent of the Manager and/or
its affiliates. The Manager, on behalf of itself and/or its affiliates,
consents to the use by the Trust of such names or any other names embodying such
names, but only on condition and so long as (i) this Agreement shall remain
4
in full force, (ii) the Fund and the Trust shall fully perform, fulfill and
comply with all provisions of this Agreement expressed herein to be performed,
fulfilled or complied with by it, and (iii) the Manager is the manager of each
Fund of the Trust. No such name shall be used by the Trust at any time or in any
place or for any purposes or under any conditions except as provided in this
section. The foregoing authorization by the Manager, on behalf of itself and/or
its affiliates, the Trust to use such names as part of a business or name is not
exclusive of the right of the Manager and/or its affiliates themselves to use,
or to authorize others to use, the same; each Fund and the Trust acknowledges
and agrees that as between the Manager and/or its affiliates and a Fund or the
Trust, the Manager and/or its affiliates have the exclusive right so to use, or
authorize others to use, such names, and the Trust agrees to take such action as
may reasonably be requested by the Manager, on behalf of itself and/or its
affiliates, to give full effect to the provisions of this section (including,
without limitation, consenting to such use of such names). Without limiting the
generality of the foregoing, the Trust agrees that, upon (i) any violation of
the provisions of this Agreement by the Trust or (ii) any termination of this
Agreement, by either party or otherwise, the Trust will, at the request of the
Manager, on behalf of itself and/or its affiliates, made within six months after
such violation or termination, use its best efforts to change the name of the
Trust so as to eliminate all reference, if any, to such names and will not
thereafter transact any business in a name containing such names in any form or
combination whatsoever, or designate itself as the same entity as or successor
to an entity of such names, or otherwise use such names or any other reference
to the Manager and/or its affiliates, except as may be required by law. Such
covenants on the part of the Trust shall be binding upon it, its Trustees,
officers, shareholders, creditors and all other persons claiming under or
through it.
The provisions of this section shall survive termination of this Agreement.
11. Notices. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, if to the Trust: 000 X. Xxxx Xxx., Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000; or if to the Manager: 0000 Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000; or to either party at such other address as
such party shall designate to the other by a notice given in accordance with the
provisions of this section.
12. Miscellaneous.
(a) Except as otherwise expressly provided herein or authorized by
the Board of Trustees of the Trust from time to time, the Manager for all
purposes herein shall be deemed to be an independent contractor and shall
have no authority to act for or represent the Trust in any way or otherwise
be deemed an agent of the Trust.
(b) The Trust shall furnish or otherwise make available to the
Manager such information relating to the business affairs of the Trust as
the Manager at any time or from time to time reasonably requests in order
to discharge its obligations hereunder.
5
(c) This Agreement shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts and shall inure to the
benefit of the parties hereto and their respective successors.
(d) If any provision of this Agreement shall be held or made invalid
or by any court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13. Declaration of Trust and Limitation of Liability. A copy of the Master
Trust Agreement of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed by an officer of the Trust on behalf of the Trustees of the Trust, as
trustees and not individually, on further behalf of the Funds, and that the
obligations of this Agreement with respect to a Fund shall be binding upon the
assets and properties of that Fund only and shall not be binding upon the assets
and properties of any other Fund or series of the Trust or upon any of the
Trustees, officers, employees, agents or shareholders of the Funds or the Trust
individually.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first above-written.
SIERRA TRUST FUNDS, on behalf of its series
SHORT TERM HIGH QUALITY BOND FUND,
CALIFORNIA MONEY FUND, and
TARGET MATURITY 2002 FUND
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: President
Attest:
By: /s/ Xxxxxxx X. Goth
----------------------------------
Name: Xxxxxxx X. Goth
Title: Senior Vice President
COMPOSITE RESEARCH &
MANAGEMENT CO.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
President
Attest:
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
Secretary
7
SCHEDULE A - SIERRA TRUST FUNDS
INVESTMENT MANAGEMENT AGREEMENT
The fees to be charged to Sierra Trust Funds services provided under this
Agreement (including any sub-advisory fees) are as follows:
ALL
ASSETS
------
Target Maturity 2002............................................. 0.250%
FIRST AFTER $200M OVER
$200M NEXT $300M $500M
------ ----------- ------
California Money Fund..................... 0.500% 0.500% 0.400%
Short Term High Quality Bond Fund......... 0.500% 0.450% 0.400%
