EXHIBIT 5(a)
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT dated this 10th day of November, 1998 (the "Agreement"),
between XXXXX XXXXXXX INVESTMENT COMPANY, a Massachusetts business trust
hereinafter called the "Trust" and XXXXX XXXXXXX INVESTMENT MANAGEMENT COMPANY,
a Washington Corporation hereinafter called the "Manager."
WHEREAS, the Trust has been organized by and at the expense of a company
affiliated with the Manager and operates as an investment company of the
"series" type registered under the Investment Company Act of 1940 ("1940 Act")
for the purpose of investing and reinvesting its assets in portfolios of
securities, each of which has distinct investment objectives and policies (each
distinct portfolio being referred to herein as a "Sub-Trust"), as set forth more
fully in its Master Trust Agreement, its By-Laws and its Registration Statements
under the 1940 Act and the Securities Act of 1933, all as heretofore amended and
supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance, and facilities of a manager and to have a
manager perform for it various statistical, research, money manager selection,
investment management, and other services; and
WHEREAS, the Manager is registered as an investment adviser under the Investment
Adviser's Act of 1940 and will engage in the business of rendering investment
advisor, counseling, money manager recommendation, and supervisory services to
investment consulting clients; and the Manager and its affiliated corporations
have undertaken the initiative and expense of organizing the Trust in order to
have a means to commingle assets for certain investors to have access to and
utilize the "Multi-Style, Multi-Manager" method of investment and to provide
services to the Trust in consideration of and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, Trust and the Manager agree as follows:
1. Employment of the Manager. The Trust hereby employs the Manager to manage
the investment and reinvestment of the Trust's assets and to act as a
discretionary Money Manager to certain of the Sub-Trusts in the manner set
forth in Section 2(B)of this Agreement, subject to the direction of the
Board of Trustees and the officers of the Trust, for the period, in the
manner, and on the terms hereinafter set forth. The Manager hereby accepts
such employment and agrees during such period to render the services and to
assume the obligations herein set forth. The Manager shall for all purposes
herein be deemed to be an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way.
2. Obligations of and Services to be Provided by the Manager. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. [Reserved]
B. Investment Management Services.
(1) The Trust intends to appoint one or more persons or companies
("Money manager[s]") for each of the Sub-Trusts or segments
thereof, and each Money Manager shall have full investment
discretion and shall make all determinations with respect to the
investment of a Sub-Trust's assets assigned to the Money Manager
and the purchase and sale of portfolio securities with those
assets, and such steps as may be necessary to implement its
decision. The Manager shall not be responsible or liable
for the investment merits of any decision by a Money Manager to
purchase, hold, or sell a security for a Sub-Trust portfolio.
(2) The Manager shall, subject to and in accordance with the
investment objectives and policies of the Trust and each Sub-
Trust and any directions which the Trust's Board of Trustee may
issue to the Manager, have: (i) overall supervisory
responsibility for the general management and investment of the
Trust's assets and securities portfolios; and (ii) full
investment discretion to make all determinations with respect to
the investment of Sub-Trust assets not assigned to a Money
Manager.
(3) The Manager shall develop overall investment programs and
strategies for each Sub-Trust, or segments thereof, shall revise
such programs as necessary, an shall monitor and report
periodically to the Board of Trustees concerning the
implementation of the programs.
(4) The Manager shall research and evaluate Money Managers and shall
advise the Board of Trustees of the Trust of the Money Managers
which the Manager believes are best suited to invest the assets
of each Sub-Trust; shall monitor and evaluate the investment
performance of each Money Manager employed by the Trust; shall
determine the portion of each Sub-Trust's assets to be managed by
each Money Manager; shall recommend changes or additions of Money
Managers when appropriate; shall coordinate the investment
activities of the Money Managers; and acting as a fiduciary for
the Trust shall compensate the Money Managers.
(5) The Manager shall render to the Trust's Board of Trustees such
periodic reports concerning the Trust's and Sub-Trust's business
and investments as the Board of Trustees shall reasonably
request.
C. Use of Xxxxx Xxxxxxx Company Research.
The Manager is hereby authorized and expected to utilize the research
and other resources of Xxxxx Xxxxxxx Company, its corporate parent, or
any predecessor organization, in providing the Investment Management
Services specified in Subsection "B," above. Neither the Manager nor
the Trust shall be obligated to pay any fee to Xxxxx Xxxxxxx Company
for these services.
D. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Manager will make available and provide financial, accounting, and
statistical information required by the Trust for the preparation of
registration statements, reports, and other documents required by
federal and state securities laws, and with such information as the
Trust may reasonably request for use in the preparation of such
documents or of other materials necessary or helpful for the
underwriting and distribution of the Trust's shares.
E. Other Obligations and Services.
The Manager shall make available its officers and employees to the
Board of Trustees and officers of the Trust for consultation and
discussions regarding the management of the Trust and its investment
activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. The Manager
or the Money Managers, subject to and in accordance with any directions
which the Trust's Board of Trustees may issue from time to
time, shall place, in the name of the Trust, orders for the execution of
the Sub-Trusts' portfolio transactions. When placing such orders, the
primary objective of the Manager and Money Managers shall be to obtain the
best net price and execution for the Trust, but this requirement shall not
be deemed to obligate the Manager or a Money Manager to place any order
solely on the basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The Trust
recognizes that there are likely to be many cases in which different
brokers are equally able to provide such best price and execution and that,
in selecting among such brokers with respect to particular trades, it is
desirable to choose those brokers who furnish "brokerage and research
services" (as defined in Section 28(e) (3) of the Securities Exchange Act
of 1934) or statistical quotations and other information to the Trust, the
Manager and/or the Money Managers in accord with the standards set forth
below. Moreover, to the extent that it continues to be lawful to do so and
so long as the Board determines as a matter of general policy that the
Trust will benefit, directly or indirectly, by doing so, the Manager or a
Money Manager may place orders with a broker who charges a commission for
that transaction which is in excess of the amount of commission that
another broker would have charged for effecting that transaction, provided
that the excess commission is reasonable in relation to the value of
brokerage and research services provided by that broker. Accordingly, the
Trust and the Manager agree that the Manager and the Money Managers shall
select brokers for the execution of the Sub-Trusts' portfolio transactions
from among:
A. Those brokers and dealers who provide brokerage and research services,
or statistical quotations and other information to the Trust,
specifically including the quotations necessary to determine the
Trust's net assets, in such amount of total brokerage as may
reasonably be required in light of such services;
B. Those brokers and dealers who supply brokerage and research services
to the Manager and/or its affiliated corporations, or the Money
Managers, which relate directly to portfolio securities, actual or
potential, of the Trust, or which place the Manager or Money Managers
in a better position to make decisions in connection with the
management of the Trust's assets and portfolios, whether or not such
data may also be useful to the Manager and its affiliates, or the
Money Managers and their affiliates, in managing other portfolios or
advising other clients, in such amount of total brokerage as may
reasonably be required; and
C. Xxxxx Xxxxxxx Securities, Inc., an affiliate of Manager, when the
Manager or Money Manager has determined that the Trust will receive
competitive execution, price, and commissions. The Manager shall
render regular reports to the Trust, not more frequently than
quarterly, of how much total brokerage business has been placed with
Xxxxx Xxxxxxx Securities, Inc., and the manner in which the allocation
has been accomplished.
The Manager agrees and each Money Manager will be required to agree,
that no investment decision will be made or influenced by a desire to
provide brokerage for allocation in accordance with the foregoing, and
that the right to make such allocation of brokerage shall not
interfere with the Managers' or Money Managers' primary duty to obtain
the best net price and execution for the Trust.
4. Expenses of the Trust. It is understood that the Trust will pay all its
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Trust shall include:
A. Fees for the services of the Money Managers;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, dividend disbursing agent, and
shareholder recordkeeping services;
D. Expenses of custodial services including recordkeeping services
provided by the Custodian;
E. Expenses of obtaining quotations for calculating the value of the
Trust's net assets;
F. Expenses of obtaining Portfolio Activity Reports and Analyses of
International Management reports for each portfolio of each Sub-Trust;
G. Expenses of maintaining each Sub-Trust's tax records;
H. Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Manager;
I. Taxes levied against the Trust;
J. Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Trust;
K. Costs, including the interest expense, of borrowing money;
L. Costs and/or fees incident to meetings of the Trust, the preparation
and mailings of prospectuses and reports of the Trust to its
Shareholders, the filing of reports with regulatory bodies, the
maintenance of the Trust's existence, and the registration of shares
with federal and state securities authorities;
M. Legal fees, including the legal fees related to the registration and
continued qualification of the Trust shares for sale;
N. Costs of printing stock certificates representing shares of the Trust;
O. Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Manager or any of its affiliates;
P. The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
Q. Association membership dues; and
R. Extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, other claims, and the legal
obligations of the Trust to indemnify its Trustees, officers,
employees, shareholders, distributors, and agents with respect
thereto.
5. Activities and Affiliates of the Manager.
A. The services of the Manager and its affiliated corporations to the
Trust hereunder are not to be deemed exclusive, and the Manager and
any of its affiliates shall be free to render similar services to
others.
(1) The Manager and its affiliated corporations shall use the same
skill and care in the management of the Sub-Trust's portfolios as
they use in the administration of other accounts to which they
provide
asset management consulting and manager selection services, but
they shall not be obligated to give the Trust more favorable or
preferential treatment vis-a-vis their other clients.
(2) The Trust expressly recognizes that Xxxxx Xxxxxxx Trust Company
("Trust Company"), a corporation affiliated with the Manager, is
also a client of a corporation affiliated with the Manager and
receives substantially the same portfolio structuring and money
manager selection services from the affiliate as does the Trust;
that Trust Company has, or may have, commingled investment funds
with substantially the same investment objectives, strategies,
and programs as the Trust; that the Trust was organized by and at
the expense of a corporation affiliated with the Manager for the
express purpose of offering the same type of investment
management services to the Trust's shareholders, at least some of
whom could not obtain these services through Trust Company, as
Trust Company provides to its trust customers; and that over time
Trust Company and the Trust may utilize some of the same money
managers and have similar portfolio securities holdings.
B. Subject to and in accordance with the Master Trust Agreement (as
defined below) and By-Laws of the Trust and to Section 10(a) of the
1940 Act, it is understood that Trustees, officers, agents, and
shareholders of the Trust are or may be interested in the Manager or
its affiliates directors, agents, or shareholders of the Manager or
its affiliates; that directors, officers, agents, and shareholders of
the Manager or its affiliates are or may be interested in the Trust as
Trustees, officers, agents, shareholders, or otherwise; that the
Manager or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such interests
shall be governed by said Master Trust Agreement, By-Laws, and the
0000 Xxx.
6. Compensation of the Manager.
A. As consideration for the Manager's services to the following Sub-
Trusts, the Manager shall receive from each of these Sub-Trusts an
annual management fee, accrued daily at the rate of 1/365th of the
applicable management fee and payable following the last day of each
month, of the following annual percentages of each Sub-Trust's average
daily net assets during the month:
Diversified Equity .73%
Special Growth .90%
Equity Income .75%
Quantitative Equity .73%
Diversified Bond .40%
International Securities .90%
Multistrategy Bond .60%
Tax Exempt Bond .30%
U.S. Government Money Market .20%
Tax Free Money Market .20%
Real Estate Securities .80%
Emerging Markets 1.15%
Money Market .20%
Equity I .55%
Equity II .70%
Equity III .55%
Equity Q .55%
International .70%
Fixed Income I .25%
Short-Term Bond .45%
Fixed Income III .50%
Equity T .70%
Aggressive Strategy .20%
Balanced Strategy .20%
Moderate Strategy .20%
Conservative Strategy .20%
Equity Balanced Strategy .20%
From this management fee, the Manager shall compensate the Money
Managers as a fiduciary of the Trust.
B. When a Sub-Trust holds cash, securities or other investment assets
which are not treated as net assets of the Sub-Trust for the purpose
of determining the net asset value per share of such Sub-Trust, the
Manager may receive an additional annual fee, accrued daily at the
rate of 1/365th of the fee and payable following the last day of each
month, of 0.07% of the value of such assets for the exercise of
investment supervision over such assets.
7. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder or on the part
of the Manager or its corporate affiliates, the Manager and its
corporate affiliates shall not be subject to liability to the Trust or
to any Shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding, or sale of any security.
B. No provision of this Agreement shall be construed to protect any,
trustee or officer of the Trust, or the Manager and its corporate
affiliates, from liability in violation of Sections 17(h) and (i) of
the 1940 Act.
8. Renewal and Termination.
A. This Agreement shall become effective on and as of November 10, 1998
and shall continue in effect as to each Sub-Trust until April 30,
2000. The Agreement is renewable annually thereafter for successive
one-year periods (a) by a vote of a majority of the Trustees of the
Trust, or (b) as to any Sub-Trust, by a vote of a majority of the
outstanding voting securities of that Sub-Trust, and in either case by
a majority of the Trustees who are not parties to the Agreement or
interested persons of any parties to the Agreement (other than as
Trustees of the Trust) cast in person at a meeting called for purposes
of voting on the Agreement; provided, however, that if the
shareholders of any one or more Sub-Trusts fail to approve the
Agreement as provided herein, the Manager may continue to serve in
such capacity in the manner and to the extent permitted by the 1940
Act and Rules and Regulation thereunder.
B. This Agreement:
(a) May at any time be terminated without the payment of any penalty
either by vote of the Board of Trustees of the Trust or, as to
any Sub-Trust, by vote of a majority of the outstanding voting
securities of the Sub-Trust, on 60 days' written notice to the
Manager;
(b) Shall immediately terminate in the event of its assignment; and
(c) May be terminated by the Manager on 60 days' written notice to
the Trust.
C. As used in this Section 8, the terms of "assignment", "interested
person" and "vote of a majority of the outstanding voting securities"
shall have the meanings set forth for any such terms in the 1940 Act.
D. Any notice under this Agreement shall be given in writing addressed
and delivered, or mailed postpaid, to the other party at any office of
such party.
9. 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.
10. Reservation of Name. The parties hereto acknowledge that Xxxxx Xxxxxxx
Company has reserved the right to grant the non-exclusive use of the name
"Xxxxx Xxxxxxx," or any derivative thereof, to any other investment
company, investment advisor, distributor or other business enterprise, and
to withdraw from the Trust the use of the name "Xxxxx Xxxxxxx." In the
event that Xxxxx Xxxxxxx Company should elect to withdraw the use of the
name "Xxxxx Xxxxxxx" from the Trust, the Trust will submit the question of
continuing this Agreement to a vote of its Shareholders.
11. Limitation of Liability. The Master Trust Agreement dated July 26, 1984,
as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name Xxxxx Xxxxxxx
Investment Company means the Trustees from time to time serving (as
Trustees but not personally) under said Master Trust Agreement. It is
expressly acknowledged and agreed that the obligations of the Trust
hereunder shall not be binding upon
any of the Shareholders, Trustees, officers, employees, or agents of the
Trust, personally, but shall bind only the trust property of the Trust, as
provided in its Master Trust Agreement. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by
the President of the Trust, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property
of the Trust as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
XXXXX XXXXXXX INVESTMENT COMPANY
By:
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Xxxx X. Xxx, Secretary Xxxx X. Xxxxxxxx, President
XXXXX XXXXXXX INVESTMENT MANAGEMENT COMPANY
By:
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Xxxx X. Xxx, Secretary Xxxx X. Xxxxxxx, President
XXXXX XXXXXXX COMPANY agrees to provide consulting services without charge to
the Investment Company upon the request of the Board of Trustees or officers of
the Trust, or upon the request of manager pursuant to Section 2(C).
XXXXX XXXXXXX COMPANY
By:
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Xxxx X. Xxx, Secretary Xxxxxxx X. X. Xxxxxxxx, President
