INVESTMENT ADVISORY
AND
ADMINISTRATIVE AGREEMENT
THIS AGREEMENT, dated and effective as of the 31st day of December,
1997, is made and entered into by and between FREMONT MUTUAL FUNDS, INC., a
Maryland corporation (hereinafter called the "Company"), and FREMONT INVESTMENT
ADVISORS, INC., a California corporation (hereinafter called the "Advisor").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of
rendering investment advisory and management services and is so registered under
the Investment Advisers Act of 1940; and
WHEREAS, the Company is authorized to issue shares of capital stock in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Company intends to offer shares in a newly formed series,
the Fremont Real Estate Securities Fund (the "Series");
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. (a) The Company hereby appoints the Advisor to act as manager
and investment adviser to the Series for the period and on the terms herein set
forth. The Advisor accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
(b) The Advisor shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Company.
2. (a) The Advisor agrees to provide supervision of the portfolio
of the Series and to determine what securities or other property shall be
purchased or sold by the Series, subject to the engagement by the Advisor of any
subadvisor approved by the Board of Directors of the Company, giving due
consideration to the policies of the Series as expressed in the Company's
Articles of Incorporation, Bylaws, Form N-1A Registration Statement under the
1940 Act and under the Securities Act of 1933, as amended (the "1933 Act"), and
prospectus as in use from time to time, as well as to the factors affecting the
status of the Series as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended. In its duties hereunder, the Advisor shall
further be bound by any and all determinations by the Board of Directors of the
Company relating to investment policy, which determinations shall in writing be
communicated to the Advisor. Subject to the foregoing, the Advisor will exercise
all voting rights with respect to portfolio securities and may delegate such
voting rights to any subadvisor approved by the Board of Directors.
(b) To the extent authorized by the Board of Directors of the
Company, the Advisor shall make decisions for the Series as to foreign currency
matters and make determinations as to, and execute and perform, foreign exchange
contracts or may delegate such decisions to any subadvisor approved by the Board
of Directors.
(c) (i) The Advisor shall provide adequate facilities and
qualified personnel for the placement of, and shall place orders for the
purchase, or other acquisition, and sale, or other disposition, of portfolio
securities for the Series. With respect to such transactions, the Advisor,
subject to such direction as may be furnished from time to time by the Board of
Directors of the Company, shall endeavor as the primary objective to obtain the
most favorable prices and executions of orders. Subject to such primary
objective, the Advisor may place orders with brokerage firms which furnish
statistical and other information to the Advisor, taking into account the value
and quality of the brokerage services of such brokerage firms, including the
availability and quality of such statistical and other information. Receipt by
the Advisor of any such statistical and other information and services shall not
be deemed to give rise to any requirement for abatement of the advisory fee
payable to the Advisor pursuant to Section 5 hereof.
(ii) On occasions when the Advisor deems the purchase
or sale of a security to be in the best interests of the Series as well as other
clients of the Advisor, the Advisor, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be so sold or purchased when
the Advisor believes that to do so will be in the best interests of the Series.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
the Advisor considers to be the most equitable and consistent with its fiduciary
obligations to the Series and to such other clients.
3. The Advisor shall furnish the services of persons to perform the
executive, administrative, clerical, and bookkeeping functions of the Company.
The Advisor shall pay the compensation and travel expenses of all such persons,
and they shall serve without additional compensation from the Company. The
Advisor shall also, at its expense, provide such persons with suitable office
space; all necessary small office equipment and utilities; and general purpose
accounting forms, supplies, and postage.
4. The Series agrees to bear all of it own ordinary operating expenses
including, but not be limited to, computer services, fund accounting, custodian,
registrar, stock transfer and dividend disbursing fees and expenses; costs of
the designing, printing and mailing of reports, prospectuses, proxy statements,
and notices to its shareholders; taxes and insurance; expenses of the issuance
and redemption of shares of the Series (including stock certificates,
registration and qualification fees and expenses); legal and auditing expenses;
compensation, fees, and expenses paid to Directors; association dues; costs of
stationery and forms prepared exclusively for the Company; and costs of
assembling and storing shareholder account data. The Series shall pay also all
expenses relating to interest, brokerage commissions and other transaction
charges relating to investment activities of the Series, and extraordinary
expenses (including, for example, litigation expenses, if any) as determined by
a majority of disinterested directors of the Company.
5. (a) The Series shall pay to the Advisor on or before the tenth
(10th) day of each month, as compensation for the services rendered by the
Advisor during the preceding month, an amount to be computed at the annual rate
of 1.00% of the average value of the Series' daily net assets. The Series shall
also pay the Advisor a 12b-1 fee of .25% per annum of the average value of the
Series' daily net assets.
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(b) The fees payable to the Advisor shall be computed and
accrued daily at one three-hundred-sixty-fifth (1/365th) or one
three-hundred-sixty-sixth (1/366th), as appropriate, of the applicable rates set
forth therein. The net asset value of the Series shall be determined in the
manner set forth in the Articles of Incorporation and Prospectus of the Company
after the close of the New York Stock Exchange on each day on which said
Exchange is open, and in the case of Saturdays, Sundays, and other days on which
said exchange shall not be open, in the manner further set forth in said
Articles of Incorporation and Prospectus. In the event of termination other than
at the end of a calendar month, the monthly fee shall be prorated for the
portion of the month prior to termination and paid on or before the tenth (10th)
day subsequent to termination.
6. (a) The Advisor agrees to reduce the fee payable to it under
this Agreement by the amount by which the ordinary operating expenses of the
Company for any fiscal year of the Company shall exceed the annual rate of 1.50%
of the Series' average daily net assets. Costs incurred in connection with the
purchase or sale of portfolio securities, including brokerage fees and
commissions, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted for
as capital items and not as expenses. Proper accruals shall be made by the
Company for any projected reduction hereunder and corresponding amounts shall be
withheld from the fees paid by the Company to the Advisor. Any additional
reduction computed at the end of the fiscal year shall be deducted from the fee
for the last month of such fiscal year.
(b) Any fee reduction pursuant to this paragraph shall be
reimbursed by the Series to the Advisor in the first, second or third (or any
combination thereof) fiscal year next succeeding the fiscal year of the
reduction if the aggregate operating expenses for the next succeeding fiscal
year or second succeeding fiscal year or third succeeding fiscal year do not
exceed the annual rate of 1.50% of the Series' average daily net assets. The
Advisor generally may request and receive reimbursement for the oldest
reductions before payment for fees and expenses for the current year.
7. Nothing contained in this Agreement shall be construed to prohibit
the Advisor from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, or to
prohibit affiliates of the Advisor from engaging in such businesses or in other
related or unrelated businesses.
8. The Company agrees (i) not to hold the Advisor or any of its
officers, directors, agents or employees liable for, and (ii) to indemnify or
insure the Advisor and its officers, directors, agents and employees
("Indemnified Parties") against, any costs and liabilities the Indemnified
Parties may incur as a result of any claim against the Indemnified Parties in
the good faith exercise of their powers hereunder (excepting matters as to which
the Indemnified Parties shall be finally adjudged to have been guilty of willful
misconduct or gross negligence, or in violation of applicable law) or arising
out of an act or omission of the custodian, subadvisor or of any broker or agent
selected by the Advisor in a commercially reasonable manner.
9. (a) This Agreement shall become effective on the date hereof (the
"Effective Date"). Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two (2) years from the Effective Date, 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
Directors of the Company or by a vote of a majority (as defined in the 0000 Xxx)
of the outstanding voting securities of the Series, and (ii) in either event by
the vote of a majority of the Directors of the Company 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.
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(b) This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Directors of the Company or by the vote
of a majority (as defined in the 0000 Xxx) of the outstanding voting securities
of the Series, on thirty (30) days' written notice to the Advisor, or by the
Advisor on like notice to the Company.
(c) This Agreement shall automatically and immediately
terminate in the event of its assignment.
(d) This Agreement shall be governed by 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 or rules or orders of the SEC
thereunder.
(e) 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 Series, if such approval is required by applicable law.
10. (a) This Agreement supersedes any prior agreement relating to
the subject matter hereof between the parties.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
FREMONT MUTUAL FUNDS, INC. FREMONT INVESTMENT ADVISORS, INC.
By: By:
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Xxxxxxx X. Xxxxxx Xxxxx X. Redo
President President
ATTEST: ATTEST:
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Secretary Secretary
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