Exhibit 77Q1(e)
Xxxxxx Strategic Income Fund
Form N-SAR for the period ended 05/31/98
File No. 811-8382
INVESTMENT MANAGEMENT AGREEMENT
Xxxxxx Strategic Income Fund
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
December 31, 1997
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Management Agreement
Ladies and Gentlemen:
XXXXXX STRATEGIC INCOME FUND (the "Fund") has been established as
a Massachusetts business trust to engage in the business of an
investment company. The Fund has issued shares of beneficial
interest (the "Shares").
The Fund has selected you to act as the investment manager of the
Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the
terms and conditions hereinafter set forth. Accordingly, the
Fund agrees with you as follows:
1. Delivery of Documents. The Fund engages in the business of
investing and reinvesting its assets in the manner and in
accordance with its investment objectives, policies and
restrictions. The Fund has furnished you with copies properly
certified or authenticated of each of the following documents
related to the Fund:
(a) The Declaration of Trust ("Declaration"), as amended to
date.
(b) By-Laws of the Fund as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Fund and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
The Fund will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements,
if any, to the foregoing.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with its investment
objectives, policies and restrictions; the applicable provisions
of the Investment Company Act of 1940 (the "1940 Act") and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Fund s Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Fund. You shall
also make available to the Fund promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist
the Fund in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall
furnish to regulatory authorities having the requisite authority
any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in
order to ascertain whether the operations of the Fund are being
conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies. You shall determine what portion of the Fund's
portfolio shall be invested in securities and other assets and
what portion, if any, should be held uninvested.
You shall furnish to the Fund's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Fund's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
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designated by you) shall render to the Fund administrative
services on behalf of the Fund necessary for operating as a
closed-end investment company and not provided by persons not
parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Fund's Board
of Trustees and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, to the
extent appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Fund s Registration
Statement, and semi-annual reports on Form N-SAR; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in
the preparation and filing of the Fund's federal, state and local
tax returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund s operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Fund as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Fund's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
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4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Fund (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Fund, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Fund;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
accounting agent for which the Fund is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Fund
business) of Trustees, officers and employees of the Fund who are
not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and statements of additional information of the Fund
and supplements thereto; costs of stationery; any litigation
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expenses; indemnification of Trustees and officers of the Fund;
and costs of shareholders' and other meetings.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Fund shall pay you in United States
Dollars on the last day of each month the unpaid balance of a fee
equal to the excess of (a) 1/12 of .85 of 1 percent of the
average weekly net assets of the Fund for such month; over
(b) any compensation waived by you from time to time (as more
fully described below). You shall be entitled to receive during
any month such interim payments of your fee hereunder as you
shall request, provided that no such payment shall exceed 75
percent of the amount of your fee then accrued on the books of
the Fund and unpaid.
The net asset value of the Fund shall be calculated at such time
or times as the Trustees may determine in accordance with the
provisions of the 1940 Act. On each day when net asset value is
not calculated, the net asset value shall be deemed to be the net
asset value as of the close of business on the last day on which
such calculation was made for the purpose of the foregoing
computations.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund s
account with brokers or dealers selected by you in accordance
with Fund policies. If any occasion should arise in which you
give any advice to clients of yours concerning the Shares of the
Fund, you shall act solely as investment counsel for such clients
and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Fund. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
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procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Fund agrees that you shall not be liable under this Agreement
for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall
be deemed to protect or purport to protect you against any
liability to the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties, or by
reason of your reckless disregard of your obligations and duties
hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until April 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Fund, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Fund's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Fund. This Agreement
shall terminate automatically in the event of its assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. 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 whom
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enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Xxxxxx Strategic Income Fund" refers to
the Trustees under the Declaration collectively as Trustees and
not as individuals or personally, and that no shareholder of the
Fund, or Trustee, officer, employee or agent of the Fund, shall
be subject to claims against or obligations of the Fund to any
extent whatsoever, but that the Fund estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Fund pursuant to this Agreement shall
be limited in all cases to the Fund and its assets, and you shall
not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Fund, or from any Trustee,
officer, employee or agent of the Fund.
11. Miscellaneous. The captions in 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. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Fund.
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If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Fund, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
XXXXXX STRATEGIC INCOME FUND
By: /s/ Xxxx X. Xxxx
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
XXXXXXX XXXXXX INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Vice President
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