The Deutsche Portfolios
INVESTMENT MANAGEMENT AGREEMENT
Agreement, made this 28th day of July, 1997, between the Deutsche
Portfolios, a trust organized under New York law (the "Trust"), and Deutsche
Fund Management, Inc., a Delaware corporation (the "Investment Manager"),
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and consists initially of the ten sub-trusts listed on Schedule A to this
Agreement (each such sub-trust, together with each other sub-trust of the Trust
hereafter established by the Trustees of the Trust and made subject to this
Agreement in accordance with Section 13 hereof, individually a "Portfolio" and,
collectively, the "Portfolios"); and
WHEREAS, the Board of Trustees of the Trust desires to retain the
Investment Manager to render various investment management services to each
Portfolio, and the Investment Manager is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual
promises hereinafter set forth, the parties hereto agree as follows:
The Trust hereby appoints the Investment
Manager to act as investment manager to each of the Portfolios for the period
and the terms set forth in this Agreement, with the understanding that it may
appoint an adviser to perform certain services relating to the management of the
investment operations of the Portfolios as set forth in Section 4. The
Investment Manager accepts such appointment and agrees to render or provide the
services herein set forth, for the compensation herein provided.
The activities of the Investment Manager or
any adviser appointed hereunder shall at all times be
subject to the supervision of the Trustees of the Trust.
NY12527: 44504.4
The Investment Manager shall manage, or appoint an adviser to
manage, the investment operations of the Portfolios and the composition of each
Portfolio's holdings of securities and investments, including cash, the
purchase, retention and disposition thereof and agreements relating thereto, in
accordance with such Portfolio's investment objectives and policies as stated in
the Registration Statement (as defined in paragraph 6(d) of this Agreement). The
Investment Manager, or in case it appoints an adviser, such adviser, shall
perform such services (the person performing such services being referred to
herein as the "Adviser") subject to the following understandings:
The Adviser in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust and By-Laws of the Trust and the Registration
Statement and with the instructions and directions of the Trustees of
the Trust and will conform to and comply with the requirements of the
1940 Act and all other applicable federal and state laws and
regulations;
the Adviser shall furnish a continuous investment program
for each Portfolio and determine from time to time what securities,
instruments and other investments, including futures contracts, will be
purchased, retained, sold or lent by such Portfolio, and what portion of
the assets will be invested or held uninvested as cash;
the Adviser shall use the same skill and care in the
management of each Portfolio's investments as it uses in the
administration of other accounts for which it has investment
responsibility as agent;
the Adviser shall determine the securities or other
investments to be purchased, sold or lent by each Portfolio and as agent
for each Portfolio will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker and/or
dealer in such securities, including a broker affiliated with the
Adviser; in placing orders with brokers and/or dealers the Adviser
intends to seek best price and execution for purchases and sales; the
Adviser shall also determine whether or not a Portfolio shall enter into
repurchase or reverse repurchase agreements;
On occasions when the Adviser deems the purchase or sale of a
security or other investment to be in the best interest of a Portfolio
as well as other customers
-2-
NY12527: 44504.4
of the Adviser, the Adviser may, to the extent permitted by applicable
laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased on behalf of such Portfolio and
such other customer of the Adviser in order to obtain best execution,
including lower brokerage commissions, if applicable. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to a Portfolio;
the Adviser shall maintain a set of books and records with
respect to each Portfolio's securities and other investment transactions
as required by the Advisers Act and other applicable laws and
regulations and shall render to the Trustees of the Trust such periodic
and special reports as the Trustees may reasonably request; and
the services of the Adviser to the Trust under this
Agreement are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others.
The Investment Manager is authorized to
appoint an investment adviser to carry out the aforementioned investment
operations of each Portfolio, as Adviser, on the above terms pursuant to an
investment advisory contract conforming to the requirements of the 1940 Act and
subject to approval of the Board of Trustees and the holders of beneficial
interests in the Trust as required by the 1940 Act. Any such investment advisory
contract shall provide that the Adviser is not authorized to make any business,
operational or management decisions on behalf of the Trust or any Portfolio
other than with respect to the investment operations and composition of a
Portfolio's holdings of securities and other investments as set forth herein.
The compensation of any such Adviser will be paid by the Investment Manager.
The Investment Manager shall also provide
certain supervisory and administrative services to the
Trust, including:
negotiating, maintaining, evaluating and coordinating
contractual arrangements with third-party service providers, including,
but not limited to, administrators, custodians, transfer agents, fund
-3-
NY12527: 44504.4
accounting agents, independent accountants, attorneys,
printers and insurers;
assisting the various third-party service providers
retained by or for the Trust by, among other things, providing any
information to such service providers as the Trustees of the Trust deem
appropriate, including information concerning Portfolio performance and
administration;
reviewing agendas for and minutes of meetings of Trustees
and committees of Trustees; and preparing such supporting documents for
such meetings as the Trustees may request the Investment Manager to
prepare;
arranging, if desired by the Trust, for directors,
officers or employees of the Investment Manager to serve as Trustees,
officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations
imposed by law; and
reviewing all registration statements, amendments thereto
and other documents as may be required for compliance by the Trust and
each Portfolio with all applicable laws and regulations and preparing
such portions thereof as the Trustees of the Trust may request the
Investment Manager to prepare.
Notwithstanding the foregoing, the Investment Manager shall not
be deemed to have assumed any duties under this Agreement with respect to, and
shall not be responsible for, functions specifically assumed by any
administrator, fund accounting agent custodian, private placement agent or
transfer agent of the Trust.
The Trust has delivered copies of each of the
following documents to the Investment Manager and will promptly notify and
deliver to it all future amendments and supplements, if any:
Declaration of Trust of the Trust (such Declaration of
Trust, as presently in effect and as amended from time to time, is
herein called the "Declaration of Trust");
By-Laws of the Trust (such By-Laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
-4-
NY12527: 44504.4
Certified resolutions of the Trustees of the Trust
authorizing the appointment of the Investment Manager and approving the
form of this Agreement;
The Trust's Notification of Registration on Form N-8A
under the 1940 Act, its Registration Statement on Form N-1A under the
1940 Act (No. ______) and the Registration Statement on Form N-1A of
Deutsche Funds, Inc. (No. 333-27709) under the Securities Act of 1933,
as amended, and the 1940 Act, as filed with the Securities and Exchange
Commission (the "Commission") on May 23, 1997, including all amendments
thereto (together with the Registration Statement of the Trust, the
"Registration Statement").
The Adviser shall keep the books and records
required to be maintained by it pursuant to paragraph 3(e). The Investment
Manager agrees that all records which it maintains for the Trust are the
property of the Trust and it will promptly surrender any of such records to the
Trust upon request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the Adviser with respect to the Portfolios
by Rule 31a-2 of the Commission under the 1940 Act.
During the term of this Agreement the
Investment Manager will pay all expenses, including personnel costs and
overhead, incurred by it in connection with the performance of its obligations
under this Agreement other than the cost of securities and investments purchased
for each Portfolio (including taxes and brokerage commissions, if any) and
extraordinary expenses and shall pay the salaries of Trustees and officers of
the Trust who are affiliated persons (as defined in the 0000 Xxx) of the
Investment Manager. The Investment Manager shall not be required to pay expenses
of any activity which is intended primarily to result in sales of shares of the
Portfolio.
For the services provided and the expenses
borne pursuant to this Agreement, each Portfolio will pay to the Investment
Manager as full compensation therefor a fee, computed daily and paid monthly in
arrears, at an annual rate equal to the percentage of the average daily net
assets of such Portfolio specified in Schedule A hereto.
The Investment Manager shall not be liable
for any error of judgment or mistake of law or for any loss or expense suffered
by the Trust or any Portfolio in connection with the matters to which this
Agreement relates, except a loss or expense resulting from willful misfeasance,
-5-
NY12527: 44504.4
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.
This Agreement shall continue in effect until
the date two years after its execution and shall continue in effect from year to
year thereafter with respect to each Portfolio if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Trust in its entirety or with respect to any Portfolio, at any time, without the
payment of any penalty, by vote of a majority of all the Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Trust or such Portfolio, as the case may be, on 60 days'
written notice to the Investment Manager, or by the Investment Manager at any
time, without the payment of any penalty, on 90 days' written notice to the
Trust. This Agreement will automatically and immediately terminate in the event
of its assignment (as defined in the 1940 Act).
The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Trustees of the Trust from time
to time, have no authority to act for or represent the Trust or any Portfolio in
any way or otherwise be deemed an agent of the Trust or any Portfolio.
This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by 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 amendment, and (b) by vote of a majority of the
outstanding voting securities of the Trust or, in the case of an amendment to
this Agreement affecting only one or several Portfolios, a majority of the
outstanding voting securities of each such Portfolio. In the event that the
Trustees of the Trust establish one or more additional sub-trusts with respect
to which they wish to retain the Investment Manager to act as investment
manager, the Trust and the Investment Manager may amend Schedule A hereto to add
each such sub-trust and specify the fee payable to the Investment Manager in
respect thereof, in which event such sub-trust shall become subject to the
provisions of this Agreement and be deemed a "Portfolio" hereunder to the same
extent as the existing Portfolios, except to the extent that such provisions may
be modified with respect to any additional Portfolio in writing by the
-6-
NY12527: 44504.4
Trust and the Investment Manager at the time of the addition of the Portfolio.
Notices of any kind to be given to the
Investment Manager by the Trust shall be in writing and shall be duly given if
mailed or delivered to the Investment Manager at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: President and Managing Director, or at such other
address or to such other individual as shall be specified by the Investment
Manager to the Trust. Notices of any kind to be given to the Trust by the
Investment Manager shall be in writing and shall be duly given if mailed or
delivered to the Trust at Cardinal Avenue, Grand Cayman, Cayman Islands, BWI or
at such other address or to such other individual as shall be specified by the
Trust to the Investment Manager.
The Trustees of the Trust have authorized the
execution of this Agreement in their capacity as Trustees and not individually
and the Investment Manager agrees that neither the holders of interests in the
Trust nor the Trustees nor any officer, employee, representative or agent of the
Trust shall be personally liable upon, or shall resort be had to their private
property for the satisfaction of, obligations given, executed or delivered on
behalf of or by the Trust or any Portfolio, that the interest holders of the
Portfolios and the trustees, officers, employees, representatives and agents of
the Trust shall not be personally liable hereunder, and that the Investment
Manager shall look solely to the property of the Trust for the satisfaction of
any claim hereunder.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an
original.
-7-
NY12527: 44504.4
This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the 28th day
of July, 1997.
DEUTSCHE PORTFOLIOS
By:__________________________________
Trustee
DEUTSCHE FUND MANAGEMENT, INC.
By:__________________________________
President and Managing Director
-8-
NY12527: 44504.4
Schedule A
Fee (annualized
% of average
daily net assets)
Portfolio
Top 50 World Portfolio 1.00%
Top 50 Europe Portfolio 1.00
Top 50 Asia Portfolio 1.00
Top 50 US Portfolio 1.00
Provesta Portfolio 0.85
Investa Portfolio 0.85
Japanese Equity Portfolio 0.85
Global Bond Portfolio 0.75
European Bond Portfolio 0.75
US Money Market Portfolio 0.15
-9-
NY12527: 44504.4
