Exhibit 5
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of _____________, 1997
between XXXXXXXX-XXXXXXXXX MUTUAL FUNDS, a Delaware business trust (the
"Trust"), and XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT, a California limited
partnership (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Xxxxxxxx-Xxxxxxxxx Global Blue Chip Fund and
Xxxxxxxx-Xxxxxxxxx Emerging Countries Bond Fund Series of the Trust (each a
"Fund" and collectively the "Funds");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Investment Adviser to serve as
investment adviser to each of the Funds for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that the Trust desires to retain the Investment
Adviser to serve as investment adviser hereunder with respect to one or more
series of the Trust other than the Funds, it will so notify the Investment
Adviser in writing. If the Investment Adviser is willing to render such
services under this Agreement it will so notify the Trust in writing, whereupon
such series will become a "Fund" (as defined hereunder) and will be subject to
the provisions of this Agreement to the same extent as the Funds except to the
extent that such provisions (including those relating to the compensation
payable by the Fund to the Investment Adviser) are modified with respect to such
Fund in writing by the Trust and the Adviser at the time.
2. SERVICES. Subject to the supervision of the Trust's Board of
Trustees (the "Board"), the Investment Adviser will provide a continuous
investment program for each of the Funds, including investment research and
management with respect to all securities and investments and cash equivalents
in the Funds. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Trust with respect to each Fund. The Investment Adviser will provide the
services under this Agreement in accordance with each Fund's investment
objective, policies and restrictions as stated in the Fund's prospectus and
statement of additional information, as currently in effect and as from time to
time amended (collectively, the "Prospectus"), and resolutions of the Board.
The Investment Adviser further agrees that it:
(b) Will conform with all applicable rules and regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law.
(c) Will place all orders for the purchase and sale of portfolio
securities for the account of each Fund with brokers or dealers selected by the
Investment Adviser. In executing portfolio transactions and selecting brokers
or dealers, the Investment Adviser will use its best efforts to seek on behalf
of the Trust and each Fund the best available price and execution. In assessing
the best overall terms available for any transaction, the Investment Adviser
will consider all factors it deems relevant, including the breadth of the market
in the security, the price of the security, the size of the order, the
difficulty and risk of execution, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Investment Adviser may
also consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
any Fund and/or other accounts over which the Investment Adviser or any
affiliate of the Investment Adviser exercises investment discretion. The
Investment Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission or spread for executing a portfolio
transaction for any Fund which is in excess of the amount of commission or
spread another broker or dealer would have charged for effecting that
transaction if, but only if, the Investment Adviser determines in good faith
that such commission or spread is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of that particular transaction or in terms of the overall responsibilities
of the Investment Adviser to the particular Fund and to the Trust. The
Investment Adviser may also select brokers who sell shares of the various series
of Xxxxxxxx-Xxxxxxxxx Mutual Funds to execute portfolio transactions. The
extent and continuation of these practices will be subject to periodic review by
the Board.
In executing portfolio transactions for any Fund, the Investment
Adviser may, but will not be obligated to, aggregate the securities to be sold
or purchased with those of other Funds and its other clients where such
aggregation is not inconsistent with the policies set forth in the Prospectus,
to the extent permitted by applicable laws and regulations. In such event, the
Investment Adviser will allocate the securities so purchased or sold, and the
expenses incurred in the transaction, in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Funds and such
other clients.
(d) Will maintain all books and records with respect to the
securities transactions of the Funds, keep books of account with respect to the
Funds and furnish the Board with such periodic and special reports as the Board
may request.
(e) Will treat confidentially and as proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust ("Shareholders") or those persons or entities who
respond to inquiries concerning investment in the Trust, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder or under any other agreement with the
Trust except after prior notification to and approval in writing by the Trust,
which approval will not be unreasonably withheld and may not be withheld where
the Investment Adviser may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust. Nothing contained
herein, however, will prohibit the Investment Adviser from advertising to or
soliciting the public generally with respect to other products or services,
including, but not limited to, any advertising or marketing via radio,
television, newspapers, magazines or direct mail solicitation, regardless of
whether such advertisement or solicitation may coincidentally include prior or
present Shareholders or those persons or entities who have responded to
inquiries regarding the Trust.
(e) Will obtain the prior written approval of the Board before
retaining the services of any sub-adviser to manage the assets and portfolio
investments of any Fund.
3. SERVICES NOT EXCLUSIVE. The Investment Adviser will for all
purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent. The investment management services furnished by
the Investment Adviser hereunder are not deemed exclusive, and the Investment
Adviser will be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. In
addition, the Investment Adviser agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
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5. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly (in arrears), at the annual rates set forth in Schedule A
hereto. Such fee as is attributable to each Fund will be a separate charge to
each such Fund and will be the several (and not joint or joint and several)
obligation of each such Fund.
The Investment Adviser may also from time to time agree to reduce its
fees or absorb other operating expenses to ensure that the expenses of a Fund do
not exceed certain limitations imposed by the Fund.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Trust represents and warrants to the Investment Adviser that:
(i) it is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware and is duly qualified to conduct its
business in the State of Delaware and in such other jurisdictions wherein the
nature of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is a registered open-end management investment
company under the 1940 Act; (iii) a registration statement on Form N-1A under
the Securities Act of 1933, as amended, on behalf of the Funds is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all shares
of the Funds being offered for sale; (iv) it is empowered under applicable laws
and by its Declaration of Trust and Bylaws to enter into and perform this
Agreement; and (v) all requisite trust proceedings have been taken to authorize
it to enter into and perform this Agreement.
(b) The Investment Adviser represents and warrants to the Trust that:
(i) it is a limited partnership duly organized and existing and in good standing
under the laws of the State of California and is duly qualified to conduct its
business in the State of California and in such other jurisdictions wherein the
nature of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is empowered under applicable laws and by its
partnership agreement to enter into and perform this Agreement; (iii) all
requisite partnership proceedings have been taken to authorize it to enter into
and perform this Agreement; and (iv) it is a registered investment adviser under
the Investment Advisers Act of 1940.
8. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) The Investment Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by a Fund or the Trust in
connection with the matters to which this Agreement relates, except for
liability resulting from willful misfeasance, bad faith or gross negligence on
the part of the Investment Adviser in the performance of its duties, or by
reason of the Investment Adviser's reckless disregard of its obligations and
duties under this Agreement.
The Trust will indemnify and hold harmless the Investment Adviser from and
against all liabilities, damages, costs and expenses that the Investment Adviser
may incur in connection with any action, suit, investigation or proceeding
arising out of or otherwise based on any action actually or allegedly taken or
omitted to be taken by the Investment Adviser with respect to the performance of
its duties or obligations hereunder or otherwise as an investment adviser of the
Trust and the Funds; provided, however, that the Investment Adviser will not be
entitled to indemnification with respect to any liability to the Trust or the
Shareholders by reason of willful misfeasance, bad faith or gross negligence on
the part of the Investment Adviser in the performance of its duties, or by
reason of the Investment Adviser's reckless disregard of its obligations and
duties under this Agreement.
(b) No trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever, in his or her official or
individual capacity, to any person, including the Investment Adviser, other than
the Trust or its Shareholders, in connection with Trust property or the affairs
of the Trust, save only that arising from his or
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her bad faith, willful misfeasance, gross negligence or reckless disregard of
his or her duty to such person; and all such persons shall look solely to the
Trust property for satisfaction of claims of any nature against a trustee,
officer, employee or agent of the Trust arising in connection with the affairs
of the Trust. Moreover, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a Fund shall be
enforceable against the assets and property of the Fund only, and not against
the assets and property of any other series of the Trust.
9. DURATION AND TERMINATION. This Agreement will become effective
with respect to each existing Fund on the date first written above. This
Agreement will become effective with respect to any additional Fund on the date
of receipt by the Trust of notice from the Investment Adviser in accordance with
Section 1(b) hereof that the Investment Adviser is willing to serve as
investment adviser with respect to such Fund.
Unless sooner terminated as provided herein, this Agreement will continue
in effect for a period of two years from the date hereof. Thereafter, if not
terminated, this Agreement will continue in effect as to a particular Fund for
successive annual periods, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Board who
are not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the Board
or by vote of a majority of the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by the Trust (by vote of the
Board or by vote of a majority of the outstanding voting securities of such
Fund), or by the Investment Adviser, upon not less than 60 days' written notice.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" have the same meanings as the
meanings of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement will be
effective as to a particular Fund until approved by vote of a majority of the
outstanding voting securities of such Fund, except as otherwise permitted by the
1940 Act.
11. NOTIFICATION OF CHANGE OF PARTNERS. During the term of this
Agreement, the Investment Adviser will notify the Trust of any change in the
membership of the Investment Adviser's partnership within a reasonable time
after such change.
12. NOTICES. Notices of any kind to be given to the Investment
Adviser hereunder by the Trust will be in writing and will be duly given if
mailed, delivered or communicated by answer back facsimile transmission to the
Investment Adviser at 000 Xxxx Xxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Facsimile:
(000) 000-0000, Attention: President, or at such other address or to such
individual as may be so specified by the Investment Adviser. Notices of any
kind to be given to the Trust hereunder by the Investment Adviser will be in
writing and will be duly given if mailed or delivered to the Trust at 000 Xxxx
Xxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Facsimile: (000) 000-0000, Attention:
President, or at such other address or to such individual as may be so specified
by the Trust to the Investment Adviser.
13. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(c) If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
(d) This Agreement will be binding upon and will inure to the benefit
of the parties hereto and
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their respective successors and will be governed by the internal laws, and not
the law of conflicts of laws, of the State of California; provided that nothing
herein will be construed in a manner inconsistent with the 1940 Act, the
Investment Advisers Act of 1940, as amended, or any rule or regulation of the
Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date first above written.
XXXXXXXX-XXXXXXXXX INVESTMENT TRUST
By:
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Xxxx X. Xxxxx, President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: Xxxxxxxx-Xxxxxxxxx Capital
Management Holdings, L.P.,
Its General Partner
By: Xxxxxxxx-Xxxxxxxxx Capital
Management Holdings, Inc.,
Its General Partner
By:
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Xxxxxx X. Xxxxxxxx,
President
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SCHEDULE A
INVESTMENT ADVISORY FEES
The Investment Adviser will be compensated for its services under the
Agreement with respect to the Funds at the following annual rates:
1. For the Global Blue Chip Fund, 0.80% of the Fund's average daily
net assets.
2. For the Emerging Markets Bond Fund, 0.70% of the Fund's average
daily net assets.
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