INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This
Investment Advisory and Management Agreement (this “Agreement”),
is
made and entered into as of this 9th
day of
November, 2005, by and between MARKETOCRACY FUNDS, a Delaware statutory trust
(the “Trust”),
and
ALESCO GLOBAL ADVISORS LLC, a California limited liability company (the
“Adviser”).
WITNESSETH:
WHEREAS,
the Trust is engaged in business as an open-end management investment company
and is registered with the U.S. Securities and Exchange Commission (the
“SEC”)
as
such under the Investment Company Act of 1940, as amended (the “1940
Act”);
and
WHEREAS,
the Adviser is engaged in the business of rendering investment advisory and
management services to its clients, including investment companies, and is
registered as such with the SEC under the Investment Advisers Act of 1940,
as
amended; and
WHEREAS,
the Trust wishes to retain the Adviser to provide investment advisory and
management services to each of the series and classes thereof listed on
Exhibit A
hereto
(each, the “Fund”)
in the
manner and on the terms hereinafter set forth; and
WHERAS,
the Adviser is willing to furnish such services in the manner and on the terms
hereinafter set forth;
NOW
THEREFORE, in consideration of the foregoing premises and the terms hereinafter
set forth, the parties hereto agree as follows:
1. Engagement
of the Adviser.
The
Trust hereby engages and appoints the Adviser to manage the investment and
reinvestment of assets of the Fund subject to the direction of the Board of
Trustees (the “Board”)
and
the officers of the Trust, for the period and in the manner and on the terms
set
forth in this Agreement. The Adviser accepts such appointment and agrees to
render the services and assume the obligations herein set forth for the
compensation herein provided.
2. Fund
Assets and Documents.
The
Fund shall at all times inform the Adviser as to the securities owned by it,
the
funds available or to become available for investment by it, and generally
as to
the condition of its affairs. The Fund shall furnish the Adviser with such
other
documents and information with regard to its affairs as the Adviser may from
time to time reasonably request to carry out its obligations
hereunder.
3. Portfolio
Management.
a. Subject
to the direction and control of the Board, the Adviser shall regularly provide
the Fund with investment research, advice, management and supervision and shall
furnish a continuous investment program for the Fund’s portfolios consistent
with the Fund’s investment objectives, policies, and limitations as stated in
the Fund’s current Prospectus and Statement of Additional Information. The
Adviser shall determine from time to time what securities will be purchased,
retained or sold by the Fund, and shall implement those decisions, all subject
to the provisions of the Fund’s Declaration of Trust, amended, the 1940 Act, the
applicable rules and regulations of the SEC, and other applicable federal and
state laws, as well as the investment objectives, policies, and limitations
of
the Fund set forth in the Fund’s current Prospectus and Statement of Additional
Information.
b. In
placing orders for the Fund with brokers and dealers with respect to the
execution of the Fund’s securities transactions, the Adviser shall attempt to
obtain the best net results. In doing so, the Adviser may consider such factors
which it deems relevant to the Fund’s best interest, such as price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions. The Adviser shall have
the
discretionary authority to use certain broker-dealers even though it may result
in the payment by the Fund of an amount of commission for effecting a securities
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction; provided,
however,
that
the Adviser has determined that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by the
broker-dealer effecting the transaction. In no instance will portfolio
securities be purchased from or sold to the Adviser or any affiliated person
thereof except in accordance with the rules and regulations promulgated by
the
SEC pursuant to the 1940 Act.
c. The
Adviser shall also provide advice and recommendations with respect to other
aspects of the business and affairs of the Fund and shall perform such other
functions of management and supervision as may be directed by the Board,
provided that in no event shall the Adviser be responsible for any expense
occasioned by the performance of such functions. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, any records that the Adviser
maintains for the Fund are the property of the Fund, and the Adviser shall
surrender promptly to the Fund any of such records upon the Fund’s request. The
Adviser further agrees to arrange for the preservation of the records required
to be maintained by Rule 31a-1 under the 1940 Act for the periods prescribed
by
Rule 31a-2 under the 1940 Act.
4. Use
of
Subadvisers.
In
providing the services and assuming the obligations set forth herein, in
connection with any investment portfolios of the Fund, the Adviser may at its
expense employ one or more subadvisers and may enter into such service
agreements as the Adviser deems appropriate in connection with the performance
of its duties and obligations hereunder. Reference herein to the duties and
responsibilities of the Adviser shall include any subadviser employed by the
Adviser to the extent that the Adviser shall delegate such duties and
responsibilities to any such subadviser. Any agreement between the Adviser
and a
subadviser shall be subject to the approval of the Trust, the Board, and the
owners of interests issued by any portfolio affected thereby, as required by
the
1940 Act, and any such subadviser shall at all times be subject to the direction
of the Board or any officer of the Trust acting pursuant to the authority of
the
Board. The Adviser shall perform ongoing due diligence oversight of any such
subadviser in order to assure continuing quality of performance by said
subadviser.
2
5. Compensation.
a. The
Adviser is responsible for (1) compensation of any of the Trust's trustees,
officers and employees who are interested persons of the Adviser and (2)
compensation of the Adviser's personnel and other expenses incurred in
connection with the provisions of portfolio management services under this
Agreement. Other than as herein specifically indicated, the Adviser shall not
be
responsible for Fund expenses. Specifically, the Adviser shall not be
responsible, except to the extent of the reasonable compensation of employees
of
the Fund whose services may be used by the Adviser hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund:
legal
and audit expenses, organization expenses; interest; taxes; governmental fees;
fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; the cost (including without
limitation brokerage commissions, markups or markdowns or other charges, if
any)
of securities purchased or sold by the Fund and any losses incurred in
connection therewith; expenses of holding or carrying the Fund's securities,
including without limitation expenses of dividends on stock borrowed to cover
a
short sale and interest, fees or other charges incurred in connection with
the
Fund's leverage and related borrowings, fees of custodian, transfer agents,
registrars or other agents; distribution fees; expenses of preparing share
certificates; expenses relating to the redemption or purchase of the Fund's
shares; expenses of registering and qualifying the Fund’s shares for sale under
applicable federal and state law and maintaining such registrations and
qualification; expenses of preparing, setting in print, printing and
distributing prospectuses, proxy statements, reports, notices and dividends
to
the Fund’s shareholders; cost of stationery; costs of shareholders and other
meetings of the Fund; compensation and expenses of the independent trustees
of
the Trust; and the Fund’s pro rata portion of premiums of any fidelity bond and
other insurance covering the Fund and/or the Trust’s officers and
trustees.
b. No
trustee, officer or employee of the Trust shall receive from the Trust any
salary or other compensation as such trustee, officer or employee while at
the
same time a director, officer or employee of the Adviser or any affiliated
company of the Adviser. This Section 5.c shall not apply to trustees, executive
committee members, consultants and other persons who are not regular members
of
the Adviser's or any affiliated company's staff.
c. As
compensation for the services performed by the Adviser, the Fund shall pay
the
Adviser, as promptly as possible after the last day of each month, a fee,
accrued each calendar day (including weekends and holidays) based the
percentages at the annual rates specified opposite the Fund’s name on
Exhibit
A
hereto
of the Fund’s average annual net assets as determined and computed in accordance
with the description of the method of determination of net asset value contained
in the Fund’s Prospectus and Statement of Additional Information. The Adviser
shall reduce such fee or, if necessary, make expense reimbursements to the
Fund,
to the extent required to limit the total annual operating expenses of the
Fund
to the percentages at the annual rates specified opposite the Fund’s name on
Exhibit
A
hereto
of the Fund’s average annual net assets as determined and computed in accordance
with the description of the method of determination of net asset value contained
in the Fund’s Prospectus and Statement of Additional Information (excluding in
all cases, however, expenses due to holding or carrying a Fund's securities,
including without limitation expenses of dividends on stock borrowed to cover
a
short sale or interest, and fees or other charges incurred in connection with
a
Fund's leverage and related borrowings, to the extent such expenses cause total
annual operating expenses to exceed such limits, which limits shall be referred
to hereinafter as the “Fund Expense Limitations”). Each payment of compensation
to the Adviser shall be accompanied by a report of the Trust prepared either
by
the Trust or by a reputable firm of independent accountants showing the amount
properly payable to the Adviser under this Agreement and the detailed
computation thereof.
3
6. Non-Exclusivity.
Nothing
in this Agreement shall limit or restrict the right of any director, officer,
or
employee of the Adviser who also may be a trustee, officer, or employee of
the
Trust, to engage in any other business or to devote his time and attention
in
part to the management or other aspects of any other business, whether of a
similar nature or a dissimilar nature, nor to limit or restrict the right of
the
Adviser to engage in any other business or to render services of any kind,
including investment advisory and management services, to any other corporation,
firm, individual or association.
7. Independent
Contractor.
The
Adviser shall be an independent contractor and shall have no authority to act
for or represent the Fund in its investment commitments unless otherwise
provided herein. No agreement, bid, offer, commitment, contract or other
engagement entered into by the Adviser, whether on behalf of the Adviser or
whether purporting to have been entered unto on behalf of the Fund, shall be
binding upon the Fund, and all acts authorized to be done by the Adviser under
this Agreement shall be done by it as an independent contractor and not as
an
agent of the Fund or the Trust.
8. Liabilities
of the Adviser.
The
Adviser assumes no responsibility under this Agreement other than to render
the
services called for hereunder in good faith and shall not be responsible for
any
action of the Board in the following or declining to follow any advice or
recommendation of the Adviser; provided,
however,
that
nothing in this Agreement shall protect the Adviser against any liability to
the
Fund, its stockholders or the Trust to which it would otherwise be subject
by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties hereunder.
9. Definitions.
As used
in this Agreement, the terms "assignment," "interested person," and "majority
of
the outstanding voting securities" shall have the meanings given to them by
Section 2(a) of the 1940 Act, subject to such exemptions as may be granted
by
the SEC by any rule, regulation or order. If the Fund is a class of a series
of
the Trust having more than one class outstanding, the voting rights of the
Fund’s shares shall be determined in accordance with requirements of SEC Rule
18f-3 under the 1940 Act.
10. Effectiveness
and Term.
This
Agreement shall become effective with respect to the Fund on the date specified
opposite the Fund’s name on Exhibit
A
hereto
and shall continue in effect for two years thereafter, and then from year to
year thereafter only so long as specifically approved annually, (a) by vote
of a
majority of the trustees of the Trust who are not parties to this Agreement
or
interested persons of such parties, cast in person at a meeting called for
that
purpose, and, (b) either by vote of the holders of a majority of the outstanding
voting securities of the Fund or by a majority vote of the Board.
4
11. Termination.
This
Agreement shall terminate automatically with respect to the Fund in the event
of
its assignment by the Adviser and shall not be assignable by the Trust without
the prior written consent of the Adviser. This Agreement also may be terminated
with respect to the Fund at any time, without the payment of penalty, by the
Trust or by the Adviser on sixty (60) days' notice.
12. Amendments.
No
provision of this Agreement may be changed, waived, discharged or terminated
orally, except by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and
no
materials amendment of this Agreement shall be effective until approved by
vote
of the holders of a majority of the Fund’s outstanding voting
securities.
13. Notices.
Any and
all notices or other communications required or permitted under this Agreement
shall be in writing and shall be deemed sufficient when mailed by U.S. certified
mail, return receipt requested, or delivered in person against receipt to the
party to whom it is to be given, at the address of such party set forth below:
If
to the
Adviser:
Alesco
Global Advisors LLC
000
X. Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
If
to the
Fund or the Trust:
0000
Xxxx
Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
or
to
such other address as the receiving party shall have furnished in writing in
accordance with the provisions of this Section 13 at least ten (10) days to
prior to change of address is to be effective.
14. Severability.
The
provisions of this Agreement are severable and if any provision of this
Agreement shall be held or made invalid, illegal or unenforceable by an
applicable court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and shall be construed in all respects
as if such invalid, illegal or unenforceable provision were omitted. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
15. Headings.
Any
section, paragraph or other headings in this Agreement are for convenience
of
reference only and shall be given no effect in the construction and
interpretation of this Agreement or any term or provision hereof.
5
16. Governing
Law.
This
Agreement and each of its terms and provisions shall be governed by, and shall
be construed and interpreted in accordance with, the laws of the State of
California as applied to agreements between California residents entered into
and performed entirely within the State of California.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers as the day and year first above written.
By: /s/
Xxxxxx X. Roth____________
Xxxxxx
X.
Xxxx
Its:
Chairman
ALESCO
GLOBAL ADVISORS LLC
By:
/s/
Xxx X. Xxxxx
Xxx
X.
Xxxxx
Its:
Chief Executive Officer
6
EXHIBIT
A
to
(as
of
November 9, 2005)
|
Fund
|
Compensation
/ Fund Expense Limitations
(Annual
% of Average Annual Net Assets)
|
Effective
Date
|
|
|
AGA
Total Return Real Fund - Class A
|
November
9, 2005
|
||
|
Compensation
|
1.25%
|
||
|
Expense
Limitations
|
|||
|
Less
than $200 million
|
1.50%
|
||
|
$200 million
to $500 million
|
1.45%
|
||
|
From
$500 million to $1 billion
|
1.40%
|
||
|
Excess
of $1 billion
|
1.35%
|
||
|
AGA
Total Return Real Fund - Class K
|
November
9, 2005
|
||
|
Compensation
|
1.25%
|
||
|
Expense
Limitations
|
|||
|
Less
than $200 million
|
1.95%
|
||
|
$200 million
to $500 million
|
1.90%
|
||
|
From
$500 million to $1 billion
|
1.85%
|
||
|
Excess
of $1 billion
|
1.80%
|
||
7
