EXHIBIT 5(a)
IDEX FUND 3
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
This Management and Investment Advisory Agreement, entered into as of
April 22, 1991, is between IDEX Fund 3, a Massachusetts business trust (referred
to herein as the "Fund"), and IDEX MANAGEMENT, INC., a Delaware corporation
(referred to herein as "Idex Management").
The Fund is an open-end investment company registered under the
Investment Company Act of 1940 (the "1940 Act"), as amended, and as such will
maintain and manage a portfolio of investments. In managing its portfolio, as
well as in the conduct of certain of its affairs, it wishes to have the benefit
of the investment advisory services of Idex Management and its assistance in
performing certain administrative, investment advisory and portfolio management
services. Idex Management desires to furnish such services and to perform the
functions assigned to it under this Agreement for the considerations provided.
Accordingly, the parties have agreed as follows:
1. APPOINTMENT. The Fund hereby appoints Idex Management as the Fund's
investment adviser and administrator for the period and on the terms set forth
in this Agreement. Idex Management accepts such appointment and agrees to render
or cause to be rendered the services set forth for the compensation herein
specified. In all matters relating to the performance of this Agreement, Idex
Management will act in conformity with the Fund's Declaration of Trust, Bylaws
and Prospectus and with the instructions and direction of the Fund's Trustees,
and will conform to and comply with the 1940 Act and all other applicable
federal or state laws and regulations.
2. INVESTMENT ADVISORY SERVICES. In its capacity as investment
adviser to the Fund, Idex Management shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund as to
the acquisition, holding or disposition of any or all of the securities or other
assets which the Fund may own or contemplate acquiring from time to time,
consistent with the Fund's Declaration of Trust and the investment objectives
and policies adopted and declared by the Fund's Trustees and stated in the
Fund's current Prospectus;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to keep the
Trustees and appropriate officers of the Fund fully informed as to the
conditions of the investment portfolio of the Fund, the investment
recommendations of Idex Management, and the investment considerations which have
given rise to those recommendations; and
(c) to supervise the purchase and sale of securities, as directed by
the appropriate officers of the Fund, including the selectionof brokers and
dealers to execute such transactions, consistent with paragraph 8 hereof.
It is understood and agreed that Idex Management intends to enter into
an Investment Counsel Agreement with Janus Capital Corporation ("Janus
Capital"), a Colorado corporation, under which Janus Capital will furnish
investment information and advice to assist Idex Management in carrying out its
responsibilities under this Section 2. The compensation to be paid to Janus
Capital for such services and the other terms and conditions under which the
services shall be rendered by Janus Capital shall be set forth in the Investment
Counsel Agreement; provided, however, that such Agreement shall be approved by
the Trustees and by the holders of the outstanding voting securities of the Fund
in accordance with the requirements of Section 15 of the 1940 Act, and shall
otherwise be subject to, and contain such provisions as shall be required by,
the 1940 Act.
3. MANAGEMENT AND ADMINISTRATIVE SERVICES. Idex Management shall
furnish or make available to the Fund the services of executive and management
personnel to supervise the performance of all administrative, recordkeeping,
shareholder relations, regulatory reporting and compliance, and all other
functions of the Fund (other than the investment advisory services provided for
in Section 2), including supervising and coordinating the services of the Fund's
custodian and transfer agent. Idex Management shall also assist in the
preparation of reports to shareholders of the Fund and prepare sales literature
promoting sale of the Fund shares as requested by the Fund.
It is understood and agreed that Idex Management intends to enter into
an Administrative Services Agreement with InterSecurities, Inc. (formerly known
as Idex Distributors, Inc.) (the "Distributor"), a Delaware corporation, under
which the Distributor will furnish management and administrative personnel and
services to assist Idex Management in carrying out its responsibilities under
this Section 3. The compensation to be paid to the Distributor for such services
and the other terms and conditions under which the services shall be rendered by
the Distributor shall be set forth in the Administrative Services Agreement.
4. ALLOCATION OF EXPENSES. During the term of this Agreement, the Fund
will bear all expenses not expressly assumed by Idex Management incurred in the
operation of the Fund and the offering of its shares. Without limiting the
generality of the foregoing:
(a) The Fund shall pay (i) fees payable to Idex Management pursuant to
this Agreement; (ii) the cost (including brokerage commissions, if any) incurred
in connection with purchases and sales of the Fund's portfolio securities; (iii)
expenses of organizing the Fund; (iv) filing fees and expenses relating to
registering and qualifying and maintaining the registration and qualification of
Fund shares for sale under federal and state securities laws; (v) compensation,
fees and reimbursements paid to Trustees of the Fund who are not interested
persons (as defined in Section 2(a)(19) of the 0000 Xxx) of Idex Management;
(vi) compensation of the Fund's custodian, transfer agent, registrar, and
dividend disbursing agent; (vii) current legal and accounting expenses,
including costs of local representation in Massachusetts and fees of special
counsel, if any, for the independent Trustees; (viii) all federal, state and
local tax (including stamp, excise, income and franchise taxes and the
preparation and filing of all returns and reports in connection therewith; (ix)
cost of certificates and delivery to purchasers; (x) expenses of shareholders'
meetings and of preparing, printing and distributing proxy statements; (xi)
expenses of preparing and filing reports with federal and state regulatory
authorities; (xii) costs of any liability, uncollectible items of deposit and
other insurance or fidelity bonds; (xiii) any costs, expenses or losses arising
out of any liability of or claim for damage or other relief asserted against the
Fund for violation of any law; (xiv) expenses of preparing, typesetting and
printing prospectuses and supplements thereto for existing shareholders and of
reports and statements to shareholders; (xv) fees and expenses in connection
with membership in investment company organizations; and (xvi) any extraordinary
expenses incurred by the Fund.
(b) Idex Management shall pay (i) all expenses incurred by it in the
performance of its duties under this Agreement; and (ii) compensation, fees and
expenses of officers and Trustees of the Fund, except for such Trustees who are
not interested persons (as defined in the 0000 Xxx) of Idex Management;
(c) Idex Management or Pioneer Western Corporation will advance for the
account of the Fund all expenses of the Fund's initial organization and
registration with federal and state regulatory authorities, including related
legal and auditing fees and typesetting the prospectus, all of which expenses
will be amortized in equal daily amounts and repaid by the Fund without interest
in equal annual installments over five years commencing on the effective date of
the Fund's registration statement;
(d) If, for any fiscal year, the total expenses of the Fund, including
but not limited to the fee to Idex Management, compensation to its custodian,
transfer agent, registrar, auditors and legal counsel, printing expense, fees,
compensation and expenses to Trustees who are not interested persons, exceed any
expense limitation imposed by applicable state law, Idex Management shall
reimburse the Fund for such excess in the manner and to the extent required by
applicable state law; provided, however, that Idex Management shall reimburse
the Fund for the amount of such expenses which exceed 1-1/2% of the Fund's
average daily net assets. For purposes of this sub-paragraph, "total expenses"
shall not include interest, taxes, litigation expenses, brokerage commissions or
other costs incurred in
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acquiring or disposing of any of the Fund's portfolio securities or any costs
arising other than in the ordinary and necessary course of the Fund's business.
5. OBLIGATIONS OF FUND. The Fund shall have the following obligations
under this Agreement;
(a) to keep Idex Management continuously and fully informed as to the
composition of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish Idex Management with a certified copy of any financial
statement or report prepared for it by certified or independent public
accountants, and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish Idex Management with any further materials or
information which Idex Management may reasonably request to enable it to perform
its functions under this Agreement; and
(d) to compensate Idex Management for its services in accordance with
the provisions of Section 6 hereof.
6. COMPENSATION. The Fund shall pay to Idex Management for its services
a monthly fee, payable on the last day of each month during which or part of
which this Agreement is in effect, of 1/12 of 1% of that part of the average
daily total net assets of the Fund for such month. For the month during which
this Agreement becomes effective and the month during which it terminates,
however, there shall be an appropriate proration of the fee payable for such
month based on the number of calendar days of such month during which this
Agreement is effective.
7. TREATMENT OF INVESTMENT ADVICE. The Fund shall treat the investment
advice and recommendations of Idex Management as being advisory only, and shall
retain full control over its own investment policies. However, the Trustees of
the Fund may delegate to the appropriate officers of the Fund, or to a committee
of Trustees, the power to authorize purchases, sales or other actions affecting
the portfolio of the Fund in the interim between meetings of the Trustees,
provided such action is consistent with the established investment policy of the
Trustees and is reported to the Trustees at their next meeting.
8. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Idex Management is authorized and directed to place Fund
portfolio transactions, or to delegate to Janus Capital the authority and
direction to place Fund portfolio transactions, only with brokers and dealers
who render satisfactory service in the execution of orders at the most favorable
prices and at reasonable commission rates; provided, however, that Idex
Management or Janus Capital, may pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
Idex Management or Janus Capital determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services, provided by such broker or dealer viewed in terms of either that
particular transaction or the overall responsibilities of Idex Management or
Janus Capital. Idex Management and Janus Capital are also authorized to consider
sales of Fund shares (which shall be deemed to include also shares of other
registered investment companies with the same investment adviser) by a
broker-dealer or the recommendation of a broker-dealer to its customers that
they purchase Fund shares as a factor in selecting broker-dealers to execute
Fund portfolio transactions, provided that in placing portfolio business with
such broker-dealers, Idex Management and Janus Capital shall seek the best
execution of each transaction and all such brokerage placement shall be
consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. Notwithstanding the foregoing, the Fund shall retain
the right to direct the placement of all portfolio transactions, and the
Trustees may establish policies or guidelines to be followed by Idex Management
and Janus Capital in placing portfolio transactions for the Fund pursuant to the
foregoing provisions. Idex Management shall report on the placement of portfolio
transactions each quarter to the Trustees of the Fund.
9. PURCHASES BY AFFILIATES. Neither Idex Management nor any officer or
Director thereof shall take a long or short position in the securities issued by
the Fund. This prohibition, however, shall not prevent the purchase from
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the Fund of shares issued by the Fund, by the officers or Directors of Idex
Management (or by deferred benefit plans established for their benefit) at the
current price available to the public, or at such price with reductions in sales
charge as may be permitted by the Fund's current prospectus, in accordance with
Section 22(d) of the 1940 Act.
10. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for one year from the date hereof, and
shall continue in effect from year to year thereafter only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees of the Fund who are not parties hereto or interested persons (as
that term is defined in Section 2(a)(19) of the 1940 Act, as amended) of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Fund or
the affirmative vote of a majority of the outstanding voting securities of the
Fund (as that phrase is defined in Section 2(a)(42) of the 1940 Act, as
amended).
11. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Fund or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities (as that
phrase is defined in Section 2(a)(42) of the 1940 Act, as amended), provided in
either case that 60 days' written notice of termination be given to Idex
Management at its principal place of business. This Agreement may be terminated
by Idex Management at any time by giving 60 days' written notice of termination
to the Fund, addressed to its principal place of business.
12. USE OF NAME. If this Agreement is terminated and Idex Management no
longer serves as investment adviser to the Fund, Idex Management reserves the
right to withdraw from the Fund the use of the name "Idex" or any name
misleadingly implying a continuing relationship between the Fund and Idex
Management or any of its affiliates.
13. LIABILITY OF IDEX MANAGEMENT. Idex Management may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be provided by the 1940 Act, neither Idex Management nor its officers,
directors, employees or agents shall be subject to any liability to the Fund or
any shareholder of the Fund for any error of judgment, mistake of law or any
loss arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except by
reason of willful misfeasance, bad faith or gross negligence in its performance
of its duties or by reason of reckless disregard of its obligations and duties
under this Agreement.
14. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the 1940
Act, as amended) of this Agreement.
15. AMENDMENTS. This Agreement may be amended only with the approval by
the affirmative vote of a majority of the outstanding voting securities of the
Fund (as that phrase is defined in Section 2(a)(42) of the 1940 Act, as amended)
and the approval by the vote of a majority of Trustees of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act, as amended) of any such party, cast in person at a
meeting called for the purpose of voting on the approval of such amendment.
16. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements
between the parties relating to the subject matter hereof, and all such prior
agreements are deemed terminated upon the effectiveness of this Agreement.
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17. LIMITATION OF LIABILITY. A copy of the Fund's Declaration of Trust
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this Agreement is executed on behalf of the Trustees as
Trustees of the Fund and not individually, and that the obligations under this
Agreement are not binding upon any of the Trustees, officers, shareholders,
agents or employees of the Fund individually, but binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of April
22, 1991.
Attest: IDEX MANAGEMENT, INC.
/s/ XXXXXXX X. XXXXXX By: /s/ G. XXXX XXXXXX
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Xxxxxxx X. Xxxxxx, Secretary G. Xxxx Xxxxxx
President and Chief
Executive Officer
Attest: IDEX Fund 3
/s/ XXXXXX X. XXXX By: /s/ XXXX X. XXXXXX
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Xxxxxx X. Xxxx, Secretary Xxxx X. Xxxxxx
Chairman of the Board
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