Exhibit (b)5(a)
MANAGEMENT AGREEMENT
BETWEEN
ISLAMIA GROUP OF FUNDS
AND
INCOME ACHIEVERS, INC.
ISLAMIA GROUP OF FUNDS, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management series investment company (the "Trust"), hereby appoints INCOME
ACHIEVERS, INC., an Illinois corporation registered under the Investment
Advisers Act of 1940 as an investment adviser (the "Manager"), to furnish
investment advisory and management services and certain administrative
services with respect to the assets represented by the shares of beneficial
interest issued in each series listed in Schedule A hereto, as such schedule
may be amended from time to time (each such series hereinafter referred to
as the "Fund"). The Trust and the Manager hereby agree that:
1. INVESTMENT MANAGEMENT SERVICES. The Manager shall manage the invest-
ment operations of the Trust and each Fund, subject to the terms of this
Agreement and to the supervision and control of the Trust's Board of
Trustees (the "Trustees"). The Manager agrees to perform, or arrange for
the performance of, the following services with respect to each Fund:
(a) to obtain and evaluate such information relating to economies, indus-
tries, businesses, securities and commodities markets, and individual secu-
rities, commodities and indices as it may deem necessary or useful in dis-
charging its responsibilities hereunder;
(b) to formulate and maintain a continuous investment program in a manner
consistent with and subject to (i) the Trust's Declaration of Trust and By-
laws; (ii) the Fund's investment objectives, policies, and restrictions as
set forth in written documents furnished by the Trust to the Manager; (iii)
all securities, commodities, and tax laws and regulations applicable to the
Fund and Trust; and (iv) any other written limits or directions furnished by
the Trustees to the Manager;
(c) unless otherwise directed by the Trustees, to determine from time to
time securities, commodities, interests or other investments to be pur-
chased, sold, retained or lent by the Fund, and to implement those deci-
sions, including the selection of entities with or through which such pur-
chases, sales or loans are to be effected;
(d) to determine if the securities purchased for a Fund are consistent with
Islamic principles as applicable pursuant to the Fund's investment object-
ives, policies and restrictions. In making such a determination, the
Manager shall make a good faith effort, using the best publicly available
information obtainable by it, to identify those companies and other issuers
of securities whose products, services and/or activities are substantially
consistent with core Islamic teachings;
(e) to use reasonable efforts to manage the Fund so that it will qualify
as a regulated investment company under subchapter M of the Internal Rev-
enue Code of 1986, as amended;
(f) to make the recommendations as to the manner in which voting rights,
rights to consent to the Trust or the Fund, and any other rights pertaining
to the Trust or the Fund shall be exercised;
(g) to make available to the Trust promptly upon request all of the Fund's
records and ledgers and any reports or information reasonably requested by
the Trust; and
(h) to the extent required by law, to furnish to regulatory authorities
any information or reports relating to the services provided pursuant to
this Agreement.
Except as otherwise instructed from time to time by the Trustees, with re-
spect to execution of transactions for the Trust on behalf of a Fund, the
Manager shall place, or arrange for the placement of, all orders for pur-
chases, sales, or loans with issuers, brokers, dealers or other counterparts
or agents selected by the Manager. In connection with the selection of all
such parties for the placement of all such orders, the Manager shall attempt
to obtain most favorable execution and price, but may nevertheless in its
sole discretion as a secondary factor, purchase and sell portfolio securities
from and to brokers and dealers who provide the Manager with statistical, re-
search and other information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a broker or
dealer, the Manager is hereby authorized to pay such broker or dealer a com-
mission or spread in excess of that which might be charged by another broker
or dealer for the same transaction if the Manager determines in good faith
that the commission or spread is reasonable in relation to the value of the
services so provided. The Manager may also act as broker to execute trades
on behalf of a Fund subject to the above policies and applicable federal and
state securities laws.
The Trust hereby authorizes any entity or person associated with the Manager
that is a member of a national securities exchange to effect any transaction
on the exchange for the account of a Fund to the extent permitted by and in
accordance with Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder. The Trust hereby consents to the retention by
such entity or person of compensation for such transactions in accordance
with Rule 11a-2-2(T)(a)(iv).
Transactions for each Fund managed by the Manager generally will be effected
independently. The Manager, however, may, where it deems to be advisable,
aggregate orders for its other customers together with any securities of
the same type to be sold or purchased for the Trust or one or more Funds in
order to obtain best execution or lower brokerage commissions. In such
event, the Manager shall allocate the shares so purchased or sold, as well
as the expenses incurred in the transaction, in a manner it considers to be
equitable and fair and consistent with its fiduciary obligations to the
Trust, the Funds, and the Manager's other customers.
The Manager shall for all purposes be deemed to be an independent contractor
and not an agent of the Trust and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in any way.
2. Administrative Services. Subject to the terms of this Agreement and to
the supervision and control of the Trustees, the Manager shall provide to
the Trust facilities, equipment, statistical and research data, clerical,
accounting and bookkeeping services, internal auditing and legal services,
and personnel to carry out all management services required for operation of
the business and affairs of the Funds other than those services to be per-
formed by the Trust's Distributor pursuant to the Distribution Agreement,
those services to be performed by the Trust's Custodian pursuant to the
Custody Agreement, those services to be performed by the Trust's Transfer
Agent pursuant to the Transfer Agency Agreement, those services to be pro-
vided by the Trust's accountant pursuant to the Accounting Agreement and
those services normally performed by the Trust's counsel and auditors.
3. Use of Affiliated Companies and Subcontractors. In connection with the
services to be provided by the Manager under this Agreement, the Manager
may, to the extent it deems appropriate, and subject to compliance with the
requirements of applicable laws and regulations, make use of (i) its affil-
iated companies and their directors, trustees, officers, and employees and
(ii) subcontractors selected by the Manager, provided that the Manager shall
supervise and remain fully responsible for the services of all such third
parties in accordance with and to the extent provided by this Agreement.
All costs and expenses associated with services provided by any such third
parties shall be borne by the Manager of such parties.
4. Expenses Borne by the Trust. Except to the extent expressly assumed by
the Manager herein or under a separate agreement between the Trust and the
Manager and except to the extent required by law to be paid by the Manager,
the Manager shall not be obligated to pay any costs or expenses incidental
to the organization, operations or business of the Trust. Without limita-
tion, such costs and expenses shall include but not be limited to:
(a) all charges of depositories, custodians and other agencies for the safe-
keeping and servicing of its cash, securities, and other property;
(b) all charges for equipment or services used for obtaining price quota-
tions or for communication between the Manager or the Trust and the custo-
xxxx, transfer agent or any other agent selected by the Trust;
(c) all charges for and accounting services provided to the Trust by the
Manager, or any other provider of such services;
(d) all charges for services of the Trust's independent auditors and for
services to the Trust by legal counsel;
(e) all compensation of the Trustees, other than those affiliated with the
Manager, all expenses incurred in connection with their services to the
Trust, and all expenses of meetings of the Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of shares of
interest in the Trust ("Shareholders"), including printing and of supplying
each record-date Shareholder with notice and proxy solicitation material,
and all other proxy solicitation expenses;
(g) all expenses of printing of annual or more frequent revisions of the
Trust prospectus(es) and of supplying each then-existing Shareholder with
a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting certificates (if
any) representing the Trust shares;
(i) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or other
governmental agencies, domestic or foreign, including all stamp or other
transfer taxes;
(l) all expenses of registering and maintaining the registration of the
Trust under the 1940 Act and, to the extent no exemption is available,
expenses of registering the Trust's shares under the 1933 Act, of qualifying
and maintaining qualification of the Trust and of the Trust's shares for
sale under securities laws of various states or other jurisdictions and of
registration and qualification of the Trust under all other laws applicable
to the Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by the Trust or a
Fund; and
(n) all fees, dues and other expenses incurred by the Trust in connection
with membership of the Trust in any trade association or other investment
company organization.
5. Allocation of Expenses Borne by the Trust. Any expenses borne by the
Trust that are attributable solely to the organization, operation or
business of a Fund shall be paid solely out of Fund assets. Any expense
borne by the Trust which is not solely attributable to a Fund, nor solely
to any other series of shares of the Trust, shall be apportioned in such
manner as the Manager determines is fair and appropriate, or as otherwise
specified by the Board of Trustees.
6. Expenses Borne by the Manager. The Manager at its own expense shall
furnish all executive and other personnel, office space, and office faci-
lities required to render the investment management and administrative
services set forth in this Agreement.
In the event that the Manager pays or assumes any expenses of the Trust or
a Fund not required to be paid or assumed by the Manager under this Agree-
ment, the Manager shall not be obligated hereby to pay or assume the same
or similar expense in the future; provided that nothing contained herein
shall be deemed to relieve the Manager of any obligation to the Trust or a
Fund under any separate agreement or arrangement between the parties.
7. Management Fee. For the services rendered, facilities provided, and
charges assumed and paid by the Manager hereunder, the Trust shall pay to
the Manager out of the assets of each Fund fees at the annual rate for such
Fund as set forth in Schedule B to this Agreement. For each Fund, the manage-
ment fee shall accrue on each calendar day, and shall be payable monthly on
the first business day of the next succeeding calendar month. The daily fee
accrual shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of the Fund, determined in
the manner established by the Board of Trustees, as of the close of busi-
ness on the last preceding business day on which the Fund's net asset value
was determined.
8. Retention of Sub-Adviser. Subject to obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Manager may retain
one or more sub-advisers at the Manager's own cost and expense for the pur-
pose of furnishing one or more of the services described in Section 1 hereof
with respect to the Trust or one or more Funds. Retention of a sub-adviser
shall in no way reduce the responsibilities or obligations of the Manager
under this Agreement, and the Manager shall be responsible to the Trust and
its Funds for all acts or omissions of any sub-adviser in connection with
the performance of the Manager's duties hereunder.
9. Non-Exclusivity. The services of the Manager to the Trust hereunder are
not to be deemed exclusive and the Manager shall be free to render similar
services to others.
10. Standard of Care. The Manager shall not be liable for any loss sus-
tained by reason of the purchase, sale or retention of any security, whether
or not such purchase, sale or retention shall have been based upon the inves-
tigation and research made by any other individual, firm or corporation, if
such recommendation shall have been selected with due care and in good
faith, except loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Manager in the performance of its obligations
and duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
11. Amendment. This Agreement may not be amended as to the Trust or any
Fund without the affirmative votes (a) of a majority of the Board of
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust or of the Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) of a "majority
of the outstanding shares" of the Trust or, with respect to any amendment
affecting an individual Fund, a "majority of the outstanding shares" of
that Fund. The terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter term, in accor-
dance with Rule 18f-2 under the 1940 Act.
12. Effective Date and Termination. This Agreement shall become effective
as to any Fund as of the effective date for that Fund specified in Schedule
A hereto. This Agreement may be terminated at any time, without payment of
any penalty, as to any Fund by the Board of Trustees of the Trust, or by a
vote of a majority of the outstanding shares of that fund, upon at least
sixty (60) days' written notice to the Manager. This Agreement may be ter-
minated by the Manager at any time upon at least sixty (60) days' written
notice to the Trust. This Agreement shall terminate automatically in the
event of its "assignment" (as defined in the 1940 Act). Unless terminated
as provided above, this Agreement shall continue in effect with respect to
any Fund until the end of the initial term applicable to that Fund specified
in Schedule A and thereafter from year to year only so long as such continu-
ance is specifically approved with respect to that Fund at least annually
(a) by a majority of those Trustees who are not interested persons of the
Trust or of the Manager, voting in person at a meeting called for the pur-
pose of voting on such approval, and (b) by either the Board of Trustees of
the Trust or by a "vote of a majority of the outstanding shares" of the Fund.
13. Ownership of Records; Interparty Reporting. All records required to be
maintained and preserved by the Trust pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of
the 1940 Act or other applicable laws or regulations which are maintained
and preserved by the Manager on behalf of the Trust and any other records
the parties mutually agree shall be maintained by the Manager on behalf of
the Trust, are the property of the Trust and shall be surrendered by the
Manager promptly on request by the Trust; provided that the Manager may at
its own expense make and retain copies of any such records.
The Trust shall furnish or otherwise make available to the Manager such
copies of the financial statements, proxy statements, reports, and other
information relating to the business and affairs of each Fund as the Manager
may, at any time or from time to time, reasonably require in order to dis-
charge its obligations under this Agreement.
The Manager shall prepare and furnish to the Trust as to each Fund statis-
tical data and other information in such form and at such intervals as the
Trust may reasonably request.
14. Non-Liability of Trustees and Shareholders. Any obligation of the
Trust hereunder shall be binding only upon the assets of the Trust (or the
applicable Fund thereof) and shall not be binding upon any Trustee, officer,
employee, agent or shareholder of the Trust. Neither the authorization of
any action by the Trustees or shareholders of the Trust nor the execution
of this Agreement on behalf of the Trust shall impose any liability upon
any Trustee or any shareholder.
15. References and Headings. In this Agreement and in any such amendment,
references to this Agreement and all expressions such as "herein," "hereof,"
and "hereunder'" shall be deemed to refer to this Agreement as amended or
affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or
affect the meaning, construction, or effect of this Agreement. This Agree-
ment may be executed in any number of counterparts, each of which shall be
deemed an original.
Dated: ____________
ISLAMIA GROUP OF FUNDS
ATTEST By __________________________
INCOME ACHIEVERS, INC.
ATTEST By _________________________________-
ISLAMIA GROUP OF FUNDS
SCHEDULE A
The Funds of the Trust currently subject to this Agreement and the effective
date of each are as follows:
FUND EFFECTIVE DATE INITIAL TERM
Islamia Growth Fund __________________ ________________
Islamia Income Fund __________________ ________________
ISLAMIA GROUP OF FUNDS
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be calculated
with respect to each Fund in accordance with the following rate: .80 of 1%
of the average daily net assets of the Fund annually.
