PORTFOLIO MANAGEMENT AGREEMENT
THIS PORTFOLIO MANAGEMENT AGREEMENT (the "Agreement") is dated and
effective as of March 31, 2003, among Alliance Capital Management L.P., a
Delaware limited partnership (the "Sub-Advisor"); Fremont Investment Advisors,
Inc., a Delaware corporation (the "Advisor"); and Fremont Mutual Funds, Inc., a
Maryland corporation (the "Fund").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company and is authorized to issue separate series (the "Series"),
each of which may offer a separate class of shares of beneficial interest, each
Series having its own investment objective, policies and limitations; and
WHEREAS, the Fund offers shares of a particular series named the
Fremont Large Cap Value Fund (the "Large Cap Value Series"); and
WHEREAS, the Fund has retained the Advisor to render investment
management and administrative services to the Large Cap Value Series; and
WHEREAS, the Advisor and the Fund desire to retain the Sub-Advisor to
furnish portfolio management services to the Large Cap Value Series in
connection with Advisor's investment management activities on behalf of the
Series, and the Sub-Advisor is willing to furnish such services to the Advisor
and the Large Cap Value Series;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Sub-Advisor, the Advisor and the Fund
as follows:
1. Appointment. The Advisor and the Fund hereby appoint Sub-Advisor to
provide portfolio management services to the Advisor and the Fund with respect
to certain assets of the Large Cap Value Series for the periods and on the terms
set forth in this Agreement. The Sub-Advisor accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein provided.
2. Sub-Advisor Duties. Subject to the supervision of the Advisor, the
Sub-Advisor shall have full discretionary authority as agent and
attorney-in-fact with respect to the portion of assets of the Large Cap Value
Series' portfolio assigned to the Sub-Advisor (the "Allocated Assets"), from
time to time by the Advisor or the Board of Directors, including authority to:
(a) buy, sell, exchange, convert or otherwise trade in any stocks and other
marketable securities, in accordance with the investment guidelines set forth in
Appendix A and (b) place orders for the execution of such securities
transactions with or through such brokers, dealers, or issuers as Sub-Advisor
may select. The Sub-Advisor will provide the services under this Agreement in
accordance with the Large Cap Value Series' registration statement filed with
the Securities and Exchange Commission
("SEC"), as that registration statement is amended and supplemented from time to
time. The Advisor will provide the Sub-Advisor with a copy of each registration
statement, amendment and supplement promptly after it has been filed with the
SEC. The parties acknowledge that the Sub-Advisor's performance objective of the
Allocated Assets is as set forth in Appendix A (as such may be revised from time
to time at the discretion of the Advisor); however, failure to satisfy such
objective shall not constitute a breach of this Agreement. The Sub-Advisor
further agrees that:
The Sub-Advisor will conform with all applicable rules and regulations
of the SEC and of all other federal and state regulatory agencies having
jurisdiction over the Sub-Advisor in performance of its duties under this
Agreement. As reasonably requested by the Advisor or the Fund, the Sub-Advisor
will provide information requested by the Advisor or the Fund to comply with the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated by the SEC
thereunder.
The Sub-Advisor will select broker-dealers or trading systems to
execute portfolio transactions for the Large Cap Value Series and select the
markets on or in which the transactions will be executed. In providing the Large
Cap Value Series with investment advisory services, it is recognized that the
Sub-Advisor will give primary consideration to securing the most favorable price
and efficient execution of orders so that the Fund's total cost or proceeds in
each transactions will be the most favorable under the circumstances. Within the
framework of this policy, the Sub-Advisor may consider the financial condition
of the broker-dealer or trading system, the investment information, brokerage,
research, analyses, trading services and other products provided by the
broker-dealer or trading system who may effect or be a party to any such
transaction or other transactions to which the Sub-Advisor's other clients may
be a party.
It is understood that it is desirable for the Fund that the Sub-Advisor
and the Advisor have access to research, analyses and trading services provided
by broker-dealers and trading systems that may execute brokerage transactions at
a higher cost to the Large Cap Value Series than might result from the
allocation of brokerage to other broker- dealers or trading systems that do not
provide such services. Therefore, in compliance with Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act"), the Sub- Advisor is authorized
to place orders for the purchase and sale of securities for the Large Cap Value
Series with broker-dealers or trading systems that provide research, analyses
and trading services and may charge an amount of commission for effecting
securities transactions in excess of the amount of commission another
broker-dealer or trading system would have charged for effecting that
transaction, provided the Sub-Advisor (or in the case of research, analyses and
trading services provided to the Advisor, that the Advisor) determines in good
faith that such amount of commission was reasonable in relation to the value of
the research, analyses and trading services provided by such broker-dealers or
trading systems viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Advisor or the Advisor for this or other
advisory accounts, subject to review by the Fund's Board of Directors from time
to time with
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respect to the extent and continuation of this practice to determine whether the
Fund benefits, directly or indirectly, from such practice.
It is understood that the research, analyses and trading services
provided by such broker-dealers or trading systems may be useful to the
Sub-Advisor or the Advisor in connection with the other clients of the
Sub-Advisor or the Advisor. On occasions when the Sub-Advisor deems the purchase
or sale of a security to be in the best interest of the Large Cap Value Series
as well as other clients of the Sub-Advisor or the Advisor, the Sub-Advisor, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price of lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, shall be made by the
Sub-Advisor in the manner the Sub- Advisor considers to be the most equitable
and consistent with its fiduciary obligations to the Large Cap Value Series and
to such other clients.
The Sub-Advisor agrees to use its best efforts to direct brokerage to
certain broker-dealers or trading systems as may be requested from time to time
by the Advisor; however, such directed brokerage decisions shall be made in the
discretion of the Sub- Advisor and shall be consistent with the Sub-Advisor's
obligation to use its best efforts to obtain best execution as required by the
policy discussed above in this section. Such directed brokerage may be used to
obtain research used by the Advisor or for other purposes determined by the
Advisor, such as offsetting the operating expenses of the Fund. The Sub-Advisor,
at the request of the Advisor, shall render reports to the Advisor in such form
and at such times as may be reasonably required, setting forth the amount of
total brokerage business which has been placed by it and the allocation thereof
among broker-dealers and trading systems and specifically indicating those
broker-dealers and trading systems which provided research, analyses and trading
services.
The Sub-Advisor will make available to the Advisor and the Fund's Board
of Directors promptly upon their request copies of all its investment records
and ledgers relating to the Large Cap Value Series to assist the Advisor and the
Fund in their compliance with respect to the Large Cap Value Series' securities
transactions as required by the 1940 Act and the Investment Advisers Act of 1940
(the "Advisers Act"), as well as other applicable laws. The Sub-Advisor will
furnish the Fund's Board of Directors with respect to the Large Cap Value Series
such periodic and special reports as the Advisor and the Directors may
reasonably request in writing. The Sub-Advisor will maintain detailed records of
the Allocated Assets as well as all investments, receipts, disbursements and
other transactions made with such assets. Such records shall be open to
inspection and audit during Sub-Advisor's normal business hours upon reasonable
notice by any person designated by the Advisor or the Fund. The Sub-Advisor
shall provide to the Advisor or the Fund and any other party designated by
either the Advisor or the Fund: (i) monthly statements of the activities with
regard to the
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Allocated Assets during the month and a list of such assets showing each asset
at its cost and, for each security listed on any national securities exchange,
its value at the last quoted sale price reported on the composite tape on the
valuation date or, in the cases of securities not so reported, by the principal
exchange on which the security traded or, if no trade was made on the valuation
date or if such security is not listed on any exchange, its value as determined
by a nationally recognized pricing service used by the Sub-Advisor specified by
such pricing service on the valuation date, and for any other security or asset
in a manner determined in good faith by the Sub-Advisor to reflect its then fair
market value; (ii) statements evidencing any purchases and sales as soon as
practicable after such transaction has taken place, and (iii) a quarterly review
of the Allocated Assets.
The Sub-Advisor shall use its best judgment and efforts in rendering
the advice and services to the Advisor as contemplated by this Agreement.
Proxy Voting. The Advisor hereby delegates to the Sub-Advisor, the
Advisor's discretionary authority to exercise voting rights with respect to the
securities and other investments in the Allocated Assets. The Sub-Advisor's
proxy voting policies shall comply with any rules or regulations promulgated by
the SEC. The Sub-Advisor shall maintain and preserve a record, in an
easily-accessible place for a period of not less than three (3) years (or
longer, if required by law), of the Sub-Advisor's voting procedures, of the
Sub-Advisor's actual votes, and such other information required for the Fund to
comply with any rules or regulations promulgated by the SEC. The Sub-Advisor
shall supply updates of this record to the Advisor or any authorized
representative of the Advisor, or to the Fund on a quarterly basis (or more
frequently, if required by law). The Sub-Advisor shall provide the Advisor and
the Fund with information regarding the policies and procedures that the
Sub-Advisor uses to determine how to vote proxies relating to the Allocated
Assets.
Code of Ethics. The Sub-Advisor (i) has adopted a written code of
ethics pursuant to Rule 17j-l under the 1940 Act; (ii) has provided the Advisor
with a copy of evidence of the adoption of the code of ethics by the
Sub-Advisor; and (iii) will make such reports to the Advisor and the Fund as are
required by Rule 17j-1 under the 1940 Act. The Sub- Advisor agrees to provide
the Advisor and the Fund with any information required to satisfy the code of
ethics reporting or disclosure requirements of the Xxxxxxxx-Xxxxx Act and any
rules or regulations promulgated by the SEC thereunder. To the extent the
Sub-Advisor has adopted a separate code of ethics or has amended its code of
ethics to comply with such rules or regulations, the Sub-Advisor shall provide
the Advisor with a copy of such code of ethics and any amendments thereto.
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3. Independent Contractor.
The Sub-Advisor shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized to do so, have no authority to act for or represent the Company or
the Advisor in any way, or in any way be deemed an agent for the Advisor or the
Company.
4. Expenses and Compensation.
During the term of this Agreement, the Sub-Advisor will pay all
expenses incurred by it, its staff and their activities, in connection with its
portfolio management activities under this Agreement (except that brokerage
costs shall be paid by the Fund). The Sub-Advisor shall not be responsible for
any expense incurred by the Advisor or the Fund, except as provided in Section 6
below.
For the services provided to the Large Cap Value Series, the Advisor
will pay the Sub-Advisor the fees as set forth in Appendix B hereto at the times
set forth in Appendix B hereto.
5. Representations and Warranties.
Advisor and Fund. The Advisor and the Fund each represents and warrants
to the Sub-Advisor that (i) the retention of the Sub-Advisor as contemplated by
this Agreement is authorized by the respective governing documents of the Fund
and the Advisor; (ii) the execution, delivery and performance of each of this
Agreement and the Advisory Agreement does not violate any obligation by which
the Fund or the Advisor or their respective property is bound, whether arising
by contract, operation of law or otherwise; and (iii) each of this Agreement and
the Advisory Agreement has been duly authorized by appropriate action of the
Fund and the Advisor and when executed and delivered by the Advisor will be the
legal, valid and binding obligation of the Fund and the Advisor, enforceable
against the Fund and Advisor in accordance with its terms hereof subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or law).
Sub-Advisor. The Sub-Advisor represents and warrants to the Advisor and
the Fund that (i) the retention of the Sub-Advisor as contemplated by this
Agreement is authorized by the Sub-Advisor's governing documents; (ii) the
execution, delivery and performance of this Agreement does not violate any
obligation by which the Sub-Advisor or its property is bound, whether arising by
contract, operation of law or otherwise; and (iii) this Agreement has been duly
authorized by appropriate action of the Sub-Advisor and when executed and
delivered by the Sub-Advisor will be the legal, valid and binding obligation of
the Sub-Advisor, enforceable against the Sub-Advisor in accordance with its
terms hereof, subject, as to enforcement, to applicable bankruptcy, insolvency
and
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similar laws affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or law).
6. Books and Records; Custody.
In compliance with the requirements of Rule 31 a-3 under the 1940 Act,
the Sub- Advisor hereby agrees that all records which it maintains for the Large
Cap Value Series are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any of such records upon the Fund's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31 a-2
under the 1940 Act the records required to be maintained by Rule 31 a-i under
the 1940 Act with respect to the Large Cap Value Series and to preserve the
records required by Rule 204-2 under the Advisers Act with respect to the Large
Cap Value Series for the period specified in the Rule.
Title to all investments shall be made in the name of the Fund,
provided that for convenience in buying, selling, and exchanging securities
(stocks, bonds, commercial paper, etc.), title to such securities may be held in
the name of the Fund's custodian bank, or its nominee or as otherwise provided
in the Fund's custody agreement. The Fund shall notify the Sub-Advisor of the
identity of its custodian bank and shall give the Sub- Advisor fifteen (15)
days' written notice of any changes in such custody arrangements.
Neither the Sub-Advisor, nor any parent, subsidiary or related firm,
shall take possession of or handle any cash or securities, mortgages or deeds of
trust, or other indicia of ownership of the Fund's investments, or otherwise act
as custodian of such investments. All cash and the indicia of ownership of all
other investments shall be held by the Fund's custodian bank.
The Fund shall instruct its custodian bank to (a) carry out all
investment instructions as may be directed by the Sub-Advisor with respect
thereto (which may be orally given if confirmed in writing); and (b) provide the
Sub-Advisor with all operational information necessary for the Sub-Advisor to
trade on behalf of the Fund.
7. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
the Advisor, the Fund, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Advisor or the Fund (other
than the Sub-Advisor) and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") the Advisor or the Fund against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Advisor, the Fund or such affiliated person or
controlling person may become subject under the 1933 Act, 1940 Act, the Advisers
Act, or under any other statute, at common law or otherwise, which (1) may be
based upon any wrongful act or omission by the Sub-Advisor, any of its employees
or representatives or any affiliate of or any person acting on behalf of the
Sub-Advisor or (2) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the shares of the Large Cap Value Series or
6
any amendment thereof or any supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such a statement or
omission was made in reliance upon and accurately and completely reflects
information furnished to the Fund or any affiliated person of the Fund by the
Sub-Advisor or any affiliated person of the Sub- Advisor; provided, however,
that in no case is the Sub-Advisor's indemnity in favor of the Advisor or the
Fund or any affiliated person or controlling person of the Advisor or the Fund
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of such person's duties or by reason of such
person's reckless disregard of the obligations and duties under this Agreement
or by reason of such person's violation of applicable law or regulations.
The Fund and the Advisor each agrees not to hold the Sub-Advisor or any
of its officers or employees liable for, and to indemnify and hold harmless, the
Sub-Advisor and its directors, officers, employees, affiliated persons and
controlling persons (the "Indemnified Parties"), any act or omission of any
other Sub-Advisor providing investment management services to the Fund, and
against any costs and liabilities the Indemnified Parties may incur as a result
of a claim against the Indemnified Parties regarding actions taken in good faith
exercise of their powers and responsibilities hereunder excepting matters as to
which the Indemnified Parties have been negligent, engaged in willful
misfeasance, bad faith, reckless disregard of the obligations and duties under
this Agreement or have been in violation of applicable law or regulations.
8. Other Investment Activities of Sub-Advisor. The Fund and Advisor
acknowledge that the Sub-Advisor, has investment responsibilities and renders
investment advice to, and performs other investment advisory services for, other
individuals or entities ("Affiliated Accounts"). Subject to the provisions of
Section 2 hereof, the Fund agrees that the Sub-Advisor may give advice or
exercise investment responsibility and take other action with respect to the
Affiliated Accounts which may differ from advice given or the timing or nature
of action taken with respect to the Large Cap Value Series; provided that the
Sub-Advisor acts in good faith, and provided further that it is the
Sub-Advisor's policy to allocate, within its reasonable discretion, investment
opportunities to the Large Cap Value Series over a period of time on a fair and
equitable basis relative to the Affiliated Accounts, taking into account the
investment objectives and policies of the Large Cap Value Series and any
specific investment restrictions applicable thereto. The Fund acknowledges that
one or more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Large Cap Value Series may have an interest from time to time, whether in
transactions which may involve the Large Cap Value Series or otherwise. The Sub-
Advisor shall have no obligation to acquire for the Large Cap Value Series a
position in any investment which any Affiliated Account may acquire, and the
Fund shall have no first refusal, co-investment or other rights in respect of
any such investment either for the Large Cap Value Series or otherwise.
7
9. Term This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall remain in full force and
effective for a period of two years from the date of this Agreement, and shall
continue in full force and effect for periods of one year thereafter so long as
such continuance is approved at least annually (i) by either the Board of
Directors of the Fund or by a vote of a majority (as defined in the 0000 Xxx) of
the outstanding voting securities of the Large Cap Value Series, and (ii) by the
Advisor, and (iii) by the vote of a majority of the Board of Directors of the
Fund 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.
Termination. This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Directors of the Fund or by the vote of
a majority (as defined in the 0000 Xxx) of the outstanding voting securities of
the Large Cap Value Series, or by the Advisor, on thirty (30) days' written
notice to the Sub-Advisor, or by the Sub-Advisor on like notice to the Board of
Directors of the Fund and to the Advisor. Payment of fees earned through the
date of termination shall not be construed as a penalty.
Automatic Termination. This Agreement shall automatically and
immediately terminated in the event of its transfer or assignment (within the
meaning of the 1940 Act).
10. Amendments. No provision of this agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought and no amendment of this Agreement shall be effective
until approved by a vote of a majority of the outstanding voting securities of
the Large Cap Value Series, if such approval is required by applicable law.
11. Miscellaneous.
Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the Advisers Act, and any
rules, regulations, and orders promulgated thereunder.
Captions. The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Severability. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, or rule or shall be otherwise rendered invalid,
the remainder of this Agreement shall not be affected thereby and, to this
extent, the provisions of this Agreement shall be deemed to be severable.
8
Agency. Nothing herein shall be construed as Constituting the Sub-Advisor as an
agent of the Fund or the Advisor.
Prior Agreement. This Agreement supersedes any prior agreement relating to the
subject matter hereof between the parties.
Counterparts. This Agreement may be executed in counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered, shall be deemed an original and all of which
counterparts shall constitute but one and the same agreement.
12. Notice of Articles of Incorporation. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations of the Fund's liability as
set forth in its Articles of incorporation The Sub-Advisor agrees that the
Fund's obligations under this Agreein0 shall be limited to Large Cap Value
Series and to its assets, and that the Sub- Advisor shall not seek satisfaction
of any such obligation from the shareholders of the Large Cap Value Series nor
from any director officer employee or agent of the Fund.
13. Use of Name. It is understood that the name "Alliance Capital L.P." or
the name of any of its affiliates, or any derivative associated with those
names, are the valuable property of the Sub-Advisor and its affiliates and that
the Fund, the Advisor and the Fund's distributor have the right to use such
name(s) or derivative(s) in offering materials and sales literature of the Fund
only with the prior Written approval of the Sub- Advisor which approval shall
not be unreasonably withheld or delayed so long as this Agreement is in effect.
Other than as permitted above in this section, neither the Fund nor the Advisor
shall, without the prior written consent of the Sub-Advisor make any
representations regarding or reference to the Sub-Advisor or any affiliates in
any disclosure document advertisement sales literature or other promotional
materials.
14. Receipt of Brochure. The Advisor and the Fund have received from
Sub-Advisor the disclosure statement or "brochure" required to be delivered
pursuant to Rule 204-3 of the Advisers Act, which disclosure statement or
brochure was received by the Advisor and the Fund more than 48 hours prior to
entering into this Agreement.
15. Notices. Any notice under this Agreement shall be given in writing and
shall be deemed to have been duly given when delivered by hand, on the date
indicated as the date of receipt on a return receipt, or at the time of receipt
if sent to the other party at the principal office of such party by regular
mail, commercial courier service telex, facsimile or telecopier.
16. Nonpublic Personal Information. Notwithstanding any provision herein to
the Contrary, the Sub-Advisor hereto agrees on behalf of itself and its
directors, trustees, shareholders officers, and employees (1) to treat
confidentially and as proprietary information of the Advisor (on behalf of
itself am d the Fund) (a) all records and other information relative to the
Fund's prior, present, or potential shareholders (and clients of
9
said shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Gramrn-Xxxxx-Xxxxxx Act (the "Privacy Act"), and (2) except after prior
notification to and approval in writing by the Advisor, not to use such records
and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by Regulation
S-P or the Privacy Act, and if in compliance therewith, the privacy policies
adopted by the Advisor and the Fund and communicated in writing to the
Sub-Advisor. Such written approval shall not be unreasonably withheld by the
Advisor and may not be withheld where the Sub-Advisor may be exposed to civil or
criminal contempt or other proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
17. Anti-Money Laundering Compliance. The Sub-Advisor acknowledges that, in
compliance with the Bank Secrecy Act, as amended, and implementing regulations
("BSA"), the Fund has adopted an Anti-Money Laundering Policy. The Sub-Advisor
agrees to comply with the Fund's Anti-Money Laundering Policy and the BSA, as
the same may apply to the Sub-Advisor, now or in the future. The Sub-Advisor
further agrees to provide to the Fund and/or the Advisor such reports,
certifications and contractual assurances as may be requested by the Fund or the
Advisor. The Advisor may disclose information respecting the Sub-Advisor to
governmental and/or regulatory or self- regulatory authorities to the extent
required by applicable law or regulation and may file reports with such
authorities as may be required by applicable law or regulation.
18. Confidentiality. Each party to this Agreement shall not, directly or
indirectly, permit its affiliates, directors, trustees, officers, members,
employees, or agents to, in any form or by any means, use, disclose, or furnish
to any person or entity, records or information concerning the business of any
of the other parties except as necessary for the performance of duties under
this Agreement or as required by law, without prior written notice to and
approval of the relevant other parties, which approval shall not be unreasonably
withheld by such other parties.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its general partner
By: /s/
-------------------------------
Title: Assistant Secretary
------------------------------
FREMONT INVESTMENT ADVISORS, INC.
By: /s/
-------------------------------
Title: President & CEO
------------------------------
FREMONT MUTUAL FUNDS, INC.
By: /s/
-------------------------------
Title: Vice President - Secretary
------------------------------
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APPENDIX A
TO PORTFOLIO MANAGEMENT AGREEMENT
Alliance Capital Management L.P.
Sub-Advisor to the Fremont Large Cap Value Fund
INVESTMENT OBJECTIVES AND GUIDELINES
I. Overall Investment Objective
The objective of the Fremont Large Cap Value Fund is to provide returns
primarily through long-term capital appreciation. Normally, the Fund
will invest at least 80% of its total assets iii large-cap domestic
stocks. The Fund invests in companies that management deems to be
selling at a discount to its peers and/or to its intrinsic value.
II. Overall Policy and Guidelines for the Manager
The Sub-Advisor will manage a portfolio consisting primarily of
large-cap domestic value stocks. The Sub-Advisor will adhere to the
Investment Objective and to policies in the Fremont Large Cap Value
Fund prospectus and Statement of Additional Information.
III. Specific Policy and Guidelines for the Manager
A. The following investments will not be used:
o Securities purchased on margin.
o Short sales.
o Puts and calls.
o Letter stock/private placements.
o Securities of the sponsor organization, or its
subsidiaries or affiliates.
B. Individual securities are limited to 6 percent of the
portfolio at market.
C. The manager will not hold more than 10% of the portfolio in
cash, cash equivalents, or short-term assets. Short-term
assets will be diversified by issuer, above average in
quality, and have a maturity of no more than one year.
D. The manager will not hold more than 10% of the portfolio in
foreign stocks.
E. There shall be no restrictions regarding:
o Portfolio asset turnover.
o Realization of gains or losses.
o Dividends or earnings on the stock of companies held
in the portfolio.
Performance Objectives for the Manager
The Manager is expected to achieve a competitive rate of return over a trailing
3-year time period relative to the Xxxxxxx 1000 Value Index and to the Xxxxxx
Mutual Fund Large Cap Value Style peer universe. A competitive rate of return is
defined as Fund performance in the top one-third of finds in the Xxxxxx Mutual
Fund Large Cap Value Style universe. Performance may be compared to other
investments or indices of comparable quality as outlined in the Statement of
Additional Information.
--------------------------------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, in the event of a
conflict between this Appendix A and the Large Cap Value Series' registration
statement filed with the SEC, as that registration statement is amended and
supplemented from time to time (collectively, the "Prospectus"), the term of the
Prospectus shall govern.
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APPENDIX B
TO PORTFOLIO MANAGEMENT AGREEMENT
Alliance Capital Management L.P.
Sub-Advisor to the Fremont Large Cap Value Fund
SCHEDULE OF FEES
Fremont Investment Advisors, Inc. will pay to Alliance Capital Management L.P.,
on an aggregate basis, an annual fee computed as a Percentage of the average
daily assets of the Large Cap Value Fund under management by Alliance Capital
Management L. P. The management fees specified below shall be the fees charged.
The annual rate is determined as follows
0.60% (60 basis Points) on all assets
Fees will be billed after the end of each calendar month Fees will be prorated
for any period less than one month and shall be due and payable within thirty
(30) days after an Invoice has been delivered to the Advisor.
The Portfolio Manage Agree with the Sub-Advisor may be terminated by the Advisor
or the Investment Company upon 30 days' written notice. The Advisor has day-
to-day authority to increase or decrease the amount of the Fund's assets under
management by the Sub-Advisor.
3
