1
Exhibit 5(b)-1
INVESTMENT SUB-ADVISORY AGREEMENT
July 7, 1989
X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XX Xxxxxx Trust Funds (the "Company"), an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts, and Great Western
Financial Advisors Corporation ("GW Advisors"), a corporation organized under
the laws of the state of California, hereby agree with X.X. Xxxxxx Investment
Management Inc. (the "Sub-Adviser") as follows:
1. Investment Description; Appointment
The Company desires to employ the capital of GW Global Income Money
Market Fund (the "Fund") by investing and reinvesting in investments of the kind
and in accordance with the limitations specified in its Master Trust Agreement,
as amended, and in its Prospectus and Statement of Additional Information
relating to the Fund as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Trustees of the
Company. Copies of the Company's Prospectus, Statement of Additional Information
and Master Trust Agreement, as amended, have been or will be submitted to the
Sub- Adviser. The Company agrees to provide copies of all amendments to the
Company's Prospectus, Statement of Additional Information and Master Trust
Agreement to the Sub-Adviser on an on-going basis. The Company desires to employ
and hereby appoints the Sub-Adviser to act as investment sub-adviser to the
Fund. The Sub-Adviser accepts the appointment and agrees to furnish the services
described herein for the compensation set forth below.
2. Services as Investment Sub-Adviser
Subject to the supervision of the Board of Trustees of the Company and
of GW Advisors, the Fund's investment adviser, the Sub-Adviser will (a) act in
conformity with the Company's Master Trust Agreement, the Investment Company Act
of 1940 and the Investment Advisers Act of 1940, as the same may from time to
time be amended, (b) make investment decisions for the Fund in accordance with
the Fund's investment objective(s) and policies as stated in the Company's
Prospectus and Statement of
2
Additional Information as from time to time in effect and (c) place purchase and
sale orders on behalf of the Fund to effectuate the investment decisions made.
In providing those services, the Sub-Adviser will supervise the Fund's
investments and conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. In addition, the
Sub-Advisor will furnish the Fund or GW Advisors with whatever statistical
information the Fund or GW Advisors may reasonably request with respect to the
instruments that the Fund may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek the best overall
terms available. In assessing the best overall terms available for any Fund
transaction, the Sub-Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of any commission for the specific transaction
and on a continuing basis. In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available, the
Sub-Adviser may consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Sub-Adviser, GW Advisors or one of
their affiliates exercises investment discretion.
4. Information Provided to the Company
The Sub-Adviser will keep the Company and GW Advisors informed of
developments materially affecting the Fund, and will, on its own initiative,
furnish the Company and GW Advisors from time to time with whatever information
the Sub-Adviser believes is appropriate for this purpose.
5. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the
services described in Paragraphs 2 and 3 above. The Sub-Adviser shall not be
liable 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, except
(a) a loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services (in which case any award of damages shall be
limited to the period and the amount set forth in Section 36(b)(3) of the
Investment
-2-
3
Company Act of 1940) or (b) a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement
(each such breach, act or omission described in (a) or (b) shall be referred to
as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
GW Advisors will pay the Sub-Adviser on the first business day of each month a
fee for the previous month at the annual rate of .15% of the Fund's average
daily net assets. The Sub-Adviser shall have no right to obtain compensation
directly from the Fund or the Company for services provided hereunder and agrees
to look solely to GW Advisors for payment of fees due. The fee for the period
from the date the Company's initial registration statement is declared effective
by the Securities and Exchange Commission to the end of the month during which
the initial registration statement is declared effective shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for
such part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Sub-Adviser, the value of the Fund's net assets shall be computed at the
times and in the manner specified in the Company's Prospectus or Statement of
Additional Information relating to the Fund as from time to time in effect.
7. Expenses
The Sub-Adviser will bear all expenses in connection with the
performance of its services under this Agreement, which expenses shall not
include brokerage fees or commissions in connection with the effectuation of
securities transactions. The Company will bear certain other expenses to be
incurred in its operation, including but not limited to: organizational
expenses, taxes, interest, brokerage fees and commissions, if any; fees of
trustees of the Company who are not officers, directors or employees of the
Sub-Adviser, GW Advisors, the Fund's sub-administrator or any of their
affiliates; Securities and Exchange Commission fees and state Blue Sky
qualification fees; out-of-pocket expenses of custodians, transfer and dividend
disbursing agents and the Company's sub-administrator and transaction charges of
custodians; insurance premiums; outside auditing and legal expenses; costs of
maintenance of
-3-
4
the Company's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Fund and of the officers or
Board of Trustees of the Company; and any extraordinary expenses. In addition,
the Fund pays a distribution fee pursuant to the terms of a Distribution Plan
adopted under Rule 12b-1 of the Investment Company Act of 1940.
8. Services to Other Companies or Accounts
The Company understands that the Sub-Adviser now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment adviser to one or more other investment
companies or series of investment companies, and the Company has no objection to
the Sub-Adviser so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. The Company 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. In addition, the Company understands that the persons employed by the
Sub-Adviser to assist in the performance of the Sub-Adviser's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the Sub-Adviser or any
affiliate of the Sub-Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date the Fund commences
its investment operations and shall continue for an initial two-year term and
shall continue thereafter so long as such continuance is specifically approved
at least annually by (i) the Board of Trustees of the Company or (ii) a vote of
a "majority" (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Trustees who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on
-4-
5
such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Trustees of the Company or by vote of holders of
a majority of the Fund's shares, or upon 90 days' written notice, by the
Sub-Adviser or GW Advisors. This Agreement will also terminate automatically in
the event of its assignment (as defined in said Act). The Sub-Adviser agrees to
notify the Company of any circumstances that might result in this Agreement
being deemed to be assigned.
10. Representations of the Company and the Sub-Adviser
The Company represents that (i) a copy of its Master Trust Agreement,
dated February 22, 1989, together with all amendments thereto, is on file in the
office of the Secretary of the Commonwealth of Massachusetts, (ii) the
appointment of the Sub-Adviser has been duly authorized and (iii) it has acted
and will continue to act in conformity with the Investment Company Act of 1940
and other applicable laws.
The Sub-Adviser represents that it is authorized to perform the
services described herein.
11. Indemnification
GW Advisors shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys fees and other related expenses), howsoever arising from or in
connection with this Agreement or the performance by Sub-Adviser of its duties
hereunder; provided, however that nothing contained herein shall require that
the Sub-Adviser be indemnified for Disqualifying Conduct.
12. Limitation of Liability
This Agreement has been executed on behalf of the Company by the
undersigned officer of the Company in his capacity as an officer of the Company.
The obligations of this Agreement shall be binding upon the assets and property
of the Fund only and not upon the assets and property of any other investment
fund of the Company and shall not be binding upon any Trustee, officer or
shareholder of the Fund and/or the Company individually.
13. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
-5-
6
14. Governing Law
This Agreement shall be governed in accordance with the laws of the
State of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
XX XXXXXX TRUST FUNDS
By: /s/
--------------------------------
President
GREAT WESTERN FINANCIAL ADVISORS
CORPORATION
By: /s/
--------------------------------
Title:
Accepted:
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By: /s/
--------------------------------
Title: Vice President
-6-
