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EXHIBIT 99.B5(b)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of December, 1996, by and between ZURICH
XXXXXX INVESTMENTS, INC., a Delaware corporation (the "Adviser") and ZURICH
INVESTMENT MANAGEMENT LIMITED, an English corporation (the "Sub-Adviser").
WHEREAS, XXXXXX TOTAL RETURN FUND, a Massachusetts business trust (the
"Fund") is a management investment company registered under the Investment
Company Act of 1940;
WHEREAS, the Fund has retained the Adviser to render to it investment
advisory and management services with regard to the Fund's sole series (the
"initial series") pursuant to an Investment Management Agreement (the
"Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to
render investment advisory and management services with respect to that portion
of the portfolio of the Fund's initial series allocated to the Sub-Adviser by
the Adviser for management of foreign securities, including foreign currency
transactions and related investments, and the Sub-Adviser is willing to render
such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Adviser hereby employs the Sub-Adviser to manage the investment
and reinvestment of the assets of the initial series of the Fund allocated by
the Adviser in its sole discretion to the Sub-Adviser for management of foreign
securities, including foreign currency transactions and related investments, in
accordance with the applicable investment objectives, policies and limitations
and subject to the supervision of the Adviser and the Board of Trustees of the
Fund for the period and upon the terms herein set forth, and to place orders
for the purchase or sale of portfolio securities for the Fund's account with
brokers or dealers selected by the Sub-Adviser; and, in connection therewith,
the Sub-Adviser is authorized as the agent of the Fund to give instructions to
the Custodian of the Fund as to the deliveries of securities and payments of
cash for the account of the Fund. In connection with the selection of such
brokers or dealers and the placing of such orders, the Sub-Adviser is directed
to seek for the Fund best execution of orders. Subject to such policies as the
Board of Trustees of the Fund determines and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act of 1934, the
Sub-Adviser shall not be deemed to have acted
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unlawfully or to have breached any duty, created by this Agreement or
otherwise, solely by reason of its having caused the Fund to pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Adviser recognizes that all
research services and research that the Sub-Adviser receives are available for
all clients of the Sub-Adviser, and that the Fund and other clients of the
Sub-Adviser may benefit thereby. The investment of funds shall be subject to
all applicable restrictions of the Agreement and Declaration of Trust and
By-Laws of the Fund as may from time to time be in force.
The Sub-Adviser accepts such employment and agrees during such period to
render such investment management services, to furnish related office
facilities and equipment and clerical, bookkeeping and administrative services
for the Fund, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser shall for all purposes herein provided be deemed to
be an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Fund or the
Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.
It is understood and agreed that the Sub-Adviser, by separate agreements with
the Fund, may also serve the Fund in other capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of
developments materially affecting the Fund and shall, on the Sub-Adviser's own
initiative and as reasonably requested by the Adviser or the Fund, furnish to
the Fund and the Adviser from time to time whatever information the Adviser
reasonably believes appropriate for this purpose.
The Sub-Adviser agrees that, in the performance of the duties required of
it by this Agreement, it will comply with the Investment Advisers Act of 1940
and the Investment Company Act of 1940, and all rules and regulations
thereunder, and all applicable laws and regulations and with any applicable
procedures adopted by the Fund's Board of Trustees and identified in writing to
the Sub-Adviser.
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The Sub-Adviser shall provide the Adviser with such investment portfolio
accounting and shall maintain and provide such detailed records and reports as
the Adviser may from time to time reasonably request, including without
limitation, daily processing of investment transactions and cash positions,
periodic valuations of investment portfolio positions as required by the
Adviser, monthly reports of the investment portfolio and all investment
transactions and the preparation of such reports and compilation of such data
as may be required by the Adviser to comply with the obligations imposed upon
it under Management Agreement.
The Sub-Adviser shall provide adequate security with respect to all
materials, records, documents and data relating to any of its responsibilities
pursuant to this Agreement including any means for the effecting of securities
transactions.
The Sub-Adviser agrees that it will make available to the Adviser and the
Fund promptly upon their request copies of all of its investment records and
ledgers with respect to the Fund to assist the Adviser and the Fund in
monitoring compliance with the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, as well as other applicable laws. The
Sub-Adviser will furnish the Fund's Board of Trustees such periodic and special
reports with respect to the Fund's portfolio as the Adviser or the Board of
Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act of 1940, the Sub-Adviser hereby agrees that any records that it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund copies of any such records upon the Fund's
request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Investment Company Act of 1940 any records
with respect to the Sub-Adviser's duties hereunder required to be maintained by
Rule 31a-1 under the such Act to the extent that the Sub-Adviser prepares and
maintains such records pursuant to this Agreement and to preserve the records
required by Rule 204-2 under the Investment Advisers Act of 1940 for the period
specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the Adviser and the
Fund in the event that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the United States
Securities and Exchange Commission, the Investment Management Regulatory
Organization ("IMRO") or other regulatory authority.
The Sub-Adviser represents that it is an investment adviser registered
under the Investment Advisers Act of 1940 and other applicable laws and it is
regulated by IMRO and will treat the
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Fund as a Non-Private Customer as defined by IMRO. The Sub-Adviser agrees to
maintain the completeness and accuracy of its registration on Form ADV in
accordance with all legal requirements relating to that Form. The Sub-Adviser
acknowledges that it is an "investment adviser" to the Fund within the meaning
of the Investment Company Act of 1940 and the Investment Advisers Act of 1940.
The Sub-Adviser shall be responsible maintaining an appropriate compliance
program to ensure that the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and the terms of this
Agreement. Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser. Sub-Adviser
agrees to provide such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request from time to time.
2. In the event that there are, from time to time, one or more
additional series of the Fund with respect to which the Adviser desires to
retain the Sub-Adviser to render investment advisory and management services
hereunder, the Adviser shall notify the Sub-Adviser in writing. If the
Sub-Adviser is willing to render such services, it shall notify the Adviser in
writing whereupon such additional series shall become subject to this
Agreement.
3. For the services and facilities described in Section 1, the Adviser
will pay to the Sub-Adviser, at the end of each calendar month, a sub-advisory
fee computed at an annual rate of .35% of that portion of the average daily net
assets of the initial series of the Fund that is allocated by the Adviser to
the Sub-Adviser for management.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year,
respectively.
4. The services of the Sub-Adviser under this Agreement are not to be
deemed exclusive, and the Sub-Adviser shall be free to render similar services
or other services to others so long as its services hereunder are not impaired
thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for officers
or employees of the Sub-Adviser to serve, without compensation from the Fund,
as trustees, officers or agents of the Fund if duly elected or appointed to
such positions and subject to their individual consent and to any limitations
imposed by law.
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6. The net asset value for each series of the Fund subject to this
Agreement shall be calculated as the Board of Trustees of the Fund may
determine from time to time in accordance with the provisions of the Investment
Company Act of 1940. On each day when net asset value is not calculated, the
net asset value of a series shall be deemed to be the net asset value of such
series as of the close of business on the last day on which such calculation
was made for the purpose of the foregoing computations.
7. Subject to applicable statutes and regulations, it is understood that
certain trustees, officers or agents of the Fund are or may be interested in
the Sub-Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or of
law or for any loss suffered by the Fund or the Adviser in connection with the
matters to which this Agreement relates, except loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in
the performance of its obligations and duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
9. This Agreement shall become effective with respect to the initial
series of the Fund on the date hereof and shall remain in full force until
March 1, 1998, unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect to
each such series, but only as long as such continuance is specifically approved
for each series at least annually in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder; provided,
however, that if the continuation of this Agreement is not approved for a
series, the Sub-Adviser may continue to serve in such capacity for such series
in the manner and to the extent permitted by the Investment Company Act of 1940
and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Management Agreement and
may be terminated at any time with respect to any series subject to this
Agreement without the payment of any penalty by the Adviser or by the
Sub-Adviser on sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any such series without payment of any
penalty by action of the Board of Trustees or by vote of a majority of the
outstanding voting securities of such
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series on sixty (60) days written notice to the Adviser and the Sub-Adviser.
This Agreement may be terminated with respect to any series at any time
without the payment of any penalty by the Board of Trustees of the Fund, by
vote of a majority of the outstanding voting securities of such series or by
the Adviser in the event that it shall have been established by a court of
competent jurisdiction that the Sub-Adviser or any officer or director of the
Sub-Adviser has taken any action which results in a breach of the covenants of
the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable
federal law and the laws of the State of Illinois.
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13. This Agreement is the entire contract between the parties relating to
the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
ZURICH XXXXXX INVESTMENTS, INC.
By:
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Title:
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ZURICH INVESTMENT MANAGEMENT LIMITED
By:
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Title:
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