EXHIBIT (d)(ii)(Q)
AMERICAN AADVANTAGE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this _____ day of October, 2001 by and between AMR
Investment Services, Inc., a Delaware Corporation (the "Manager"), and Hotchkis
and Wiley Capital Management LLC (the "Adviser");
WHEREAS, American AAdvantage Funds (the "Trust"), a Massachusetts
Business Trust, is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended, consisting of
several series (portfolios) of shares, each having its own investment policies;
and
WHEREAS, the Trust has retained the Manager to provide the Trust with
business and asset management services, subject to the control of the Board of
Trustees;
WHEREAS, the Trust's agreement with the Manager permits the Manager to
delegate to other parties certain of its asset management responsibilities; and
WHEREAS, the Manager desires to retain the Adviser to render investment
management services to the Trust with respect to certain of its investment
portfolios and such other investment portfolios as the Trust and the Adviser may
agree upon and so specify in the Schedule(s) attached hereto (collectively the
"Portfolios") and as described in the Trust's registration statement on Form
N-1A as amended from time to time, and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. Duties of the Adviser. The Manager employs the Adviser to manage the
investment and reinvestment of such portion, if any, of the Portfolios' assets
as is designated by the Manager from time to time, and, with respect to such
assets, to continuously review, supervise, and administer the investment program
of the Portfolios, to determine in the Adviser's discretion the securities to be
purchased or sold, to provide the Manager and the Trust with records concerning
the Adviser's activities which the Trust is required to maintain, and to render
regular reports to the Manager and to the Trust's officers and Trustees
concerning the Adviser's discharge of the foregoing responsibilities. The
Adviser shall discharge the foregoing responsibilities subject to the Manager's
oversight and the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for each such
Portfolio set forth in the Trust's current registration statement as amended
from time to time and applicable laws and regulations. The Adviser accepts such
employment and agrees to render the services for the compensation specified
herein and to provide at its own expense the office space, furnishings and
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein. (With respect to any of the Portfolio
assets allocated for management by the Adviser, the Adviser can request that the
Manager make the investment decisions with respect to
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that portion of assets which the Adviser deems should be invested in short-term
money market instruments. The Manager agrees to provide this service.) The
Manager will instruct the Trust's Custodian(s) to hold and/or transfer the
Portfolios' assets in accordance with Proper Instructions received from the
Adviser. (For this purpose, the term "Proper Instructions" shall have the
meaning(s) specified in the applicable agreement(s) between the Trust and its
custodian(s).) The Adviser will not be responsible for the cost of securities or
brokerage commissions or any other Trust expenses except as specified in this
Agreement.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers (including, to the extent permitted by law and applicable
Trust guidelines, the Adviser or any of its affiliates) that will execute the
purchases and sales of portfolio securities for the Portfolios and is directed
to use its best efforts to obtain the best net results with respect to brokers'
commissions and discounts as described in the Trust's current registration
statement as amended from time to time. In selecting brokers or dealers, the
Adviser may give consideration to factors other than price, including, but not
limited to, research services and market information. Any such services or
information which the Adviser receives in connection with activities for the
Trust may also be used for the benefit of other clients and customers of the
Adviser or any of its affiliates. The Adviser will promptly communicate to the
Manager and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Manager shall pay
to the Adviser compensation at the rate specified in Schedule(s) attached hereto
and made a part of this Agreement. Such compensation shall be paid to the
Adviser quarterly in arrears, and shall be calculated by applying the annual
percentage rate(s) as specified in the attached Schedule(s) to the average daily
assets of the specified Portfolios during the relevant quarter. Solely for the
purpose of calculating the applicable annual percentage rates specified in the
attached Schedule(s), there shall be included such other assets as are specified
in said Schedule(s).
The Adviser agrees that the fee charged to the Manager will be no more
than that charged for any other client of similar type. Furthermore, the Adviser
agrees to notify the Manager on a timely basis of any fee schedule it enters
into with any other client of similar type which is lower than the fee paid by
the Manager.
4. Other Services. At the request of the Trust or the Manager, the
Adviser in its discretion may make available to the Trust office facilities,
equipment, personnel, and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Adviser and
billed to the Trust or the Manager at a price to be agreed upon by the Adviser
and the Trust or the Manager.
5. Reports. The Manager (on behalf of the Trust) and the Adviser agree
to furnish to each other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial statements, and
such other information with regard to their affairs as each may reasonably
request.
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6. Status of Adviser. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser and its directors, officers, employees
and affiliates shall be free to render similar services to others so long as its
services to the Trust are not impaired thereby. The Adviser shall be deemed to
be an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Manager or the Trust
in any way or otherwise be deemed an agent to the Manager of the Trust.
7. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
Investment Company Act of 1940 which are prepared or maintained by the Adviser
on behalf of the Manager or the Trust are the property of the Manager or the
Trust and will be surrendered promptly to the Manager or Trust on request.
8. Liability of Adviser. No provision of this Agreement shall be deemed
to protect the Adviser against any liability to the Trust or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance, bad
faith, or gross negligence in the performance of its duties or the reckless
disregard of its obligations under this Agreement.
9. Permissible Interests. To the extent permitted by law, Trustees,
agents, and shareholders of the Trust are or may be interested in the Adviser
(or any successor thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of the
Adviser are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor thereof) is or may be interested in
the Trust as a shareholder or otherwise; provided that all such interests shall
be fully disclosed between the parties on an ongoing basis and in the Trust's
registration statement as required by law.
10. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue for two years after its initial approval as
to each Portfolio and thereafter for periods of one year for so long as such
continuance thereafter is specifically approved at least annually (a) by the
vote of a majority of those Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Trustees of
the Trust or by vote of a majority of the outstanding voting securities of each
Portfolio; provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to serve
hereunder in the manner and to the extent permitted by the Investment Company
Act of 1940 and rules thereunder. The foregoing requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the Investment Company Act of 1940 and the rules and
regulations thereunder. This Agreement may be terminated as to any Portfolio at
any time, without the payment of any penalty, by the Manager, by vote of a
majority of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any time
without the payment of any penalty, on 60 days written notice to the Trust. This
Agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in
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writing, addressed and delivered, or mailed postpaid, to the other party at the
primary office of such party, unless such party has previously designated
another address.
As used in this Section 10, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the Investment Company Act of 1940 and
the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission under said Act.
11. Severability. 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.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is not binding upon any of the Trustees, officers, or
shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
HOTCHKIS AND WILEY CAPITAL AMR INVESTMENT SERVICES, INC.
MANAGEMENT LLC
By: By:
------------------------------ --------------------------------
Xxxxxx Xxxxx Xxxxxxx X. Xxxxx
Chief Executive Officer President
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Schedule A to the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Hotchkis and Wiley Capital Management LLC
The Manager shall pay compensation to the Adviser pursuant to section 3
of the Investment Advisory Agreement between said parties for rendering
investment management services in accordance with the following annual
percentage rates:
Large Cap Equity Assets
0.60% on the first $10 million
0.50% on the next $40 million
0.30% on the next $100 million
0.20% on the next $250 million
0.15% on the next $400 million
0.125% on all excess assets
In calculating the amount of assets under management solely for the
purpose of determining the applicable percentage rate for Large Cap Equity
assets, there shall be included all other assets managed by the Investment
Manager on behalf of American Airlines, Inc, except for the Small Cap Value
Portfolio.
Small Cap Value Portfolio
0.50% on the first $100 million
0.45% on the next $150 million
0.40% on all excess assets
The fee rate to be charged for the Small Cap Value Portfolio will
commence with the applicable tier of the Small Cap Value Portfolio fee schedule
after taking into consideration the Large Cap Equity assets.
If the management of a Portfolio commences or terminates at any time
other than the beginning or end of a calendar quarter, the Fee shall be prorated
based on the portion of such calendar quarter during which the Agreement was in
force.
To the extent that a Portfolio invests all of its investable assets
(i.e., securities and cash) in another investment company, however, no portion
of the advisory fee attributable to the Portfolio as specified above shall be
paid for the period that the Portfolio's assets are so invested.
DATED: October ____, 2001
