Exhibit d.1
INVESTMENT ADVISORY AGREEMENT
Liberty Acorn Trust, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company ("Liberty Acorn"), and Liberty Xxxxxx Asset
Management, L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser ("Liberty WAM"), agree that:
1. Engagement of Liberty WAM. Liberty Acorn appoints Liberty WAM to
furnish investment advisory and other services to Liberty Acorn for its series
designated Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA,
Liberty Acorn Twenty and Liberty Acorn Foreign Forty (each, a "Fund," and
collectively, the "Funds")), and Liberty WAM accepts that appointment, for the
period and on the terms set forth in this agreement.
If Liberty Acorn establishes one or more series in addition to the Funds
named above with respect to which it desires to retain Liberty WAM as investment
adviser hereunder, and if Liberty WAM is willing to provide such services under
this agreement, Liberty Acorn and Liberty WAM may add such new series to this
agreement, by written supplement to this agreement. Such supplement shall
include a schedule of compensation to be paid to Liberty WAM by Liberty Acorn
with respect to such series and such other modifications of the terms of this
agreement with respect to such series as Liberty Acorn and Liberty WAM may
agree. Upon execution of such a supplement by Liberty Acorn and Liberty WAM,
that series will become a Fund hereunder and shall be subject to the provisions
of this agreement to the same extent as the Funds named above, except as
modified by the supplement.
2. Services of Liberty WAM.
(a) Investment Management. Subject to the overall supervision and control
of Liberty Acorn's board of trustees (the "Board"), Liberty WAM shall have
supervisory responsibility for the general management and investment of the
Funds' assets. Liberty WAM shall comply with the 1940 Act and with all
applicable rules and regulations of the Securities and Exchange Commission, the
provisions of the Internal Revenue Code applicable to the Funds as regulated
investment companies, the investment policies and restrictions, portfolio
transaction policies and the other statements concerning the Funds in Liberty
Acorn's agreement and declaration of trust, bylaws, and registration statements
under the 1940 Act and the Securities Act of 1933 (the "1933 Act"), and policy
decisions and procedures adopted by the Board from time to time.
Liberty WAM is authorized to make the decisions to buy and sell securities
and other assets for the Funds, to place the Funds' portfolio transactions with
broker-dealers, and to negotiate the terms of such transactions including
brokerage commissions on brokerage transactions, on behalf of the Funds.
Liberty WAM is authorized to exercise discretion within the Funds' policy
concerning allocation of its portfolio brokerage, as permitted by law, including
but not limited to section 28(e) of the Securities Exchange Act of 1934, and in
so doing shall not be required to make any reduction in its investment advisory
fees. Liberty Acorn hereby
authorizes any entity or person associated with Liberty WAM that is a member of
a national securities exchange to effect any transaction on the exchange for the
account of a Fund to the extent permitted by and in accordance with Section
11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
Liberty Acorn hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule 11a-2(T)(a)(iv).
Liberty WAM may, where it deems it to be advisable, aggregate orders with
other securities of the same type to be sold or purchased by one or more Funds
with like orders on behalf of other clients of Liberty WAM (as well as clients
of other investment advisers affiliated with Liberty WAM, in the event that
Liberty WAM and such affiliated investment advisers share common trading
facilities). In such event, Liberty WAM (or Liberty WAM and its affiliated
advisers, as the case may be) will allocate the shares so sold or purchased, as
well as the expenses incurred in the transaction, in a manner it (or it and
they) consider to be equitable and fair and consistent with its (or its or
their) fiduciary obligations to clients.
(b) Reports and Information. Liberty WAM shall furnish to the Board
periodic reports on the investment strategy and performance of the Funds and
such additional reports and information as the Board or the officers of Liberty
Acorn may reasonably request. Liberty Acorn shall furnish or otherwise make
available to Liberty WAM such copies of financial statements, proxy statements,
reports, and other information relating to the business and affairs of each Fund
as Liberty WAM may, at any time or from time to time, reasonably require in
order to discharge its obligations under this agreement.
(c) Customers of Financial Institutions. It is understood that Liberty WAM
may, but shall not be obligated to, make payments from its own resources to
financial institutions (which may include banks, broker-dealers, recordkeepers,
administrators and others) that provide, either directly or through agents,
administrative and other services with respect to shareholders who are customers
of such institutions, including establishing shareholder accounts, assisting
Liberty Acorn's transfer agent with respect to recording purchase and redemption
transactions, advising shareholders about the status of their accounts, current
yield and dividends declared and such related services as the shareholders or
the Funds may request.
(d) Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Liberty WAM agrees to maintain records relating to its
services under this agreement, and further agrees that all records that it
maintains for Liberty Acorn are the property of Liberty Acorn and to surrender
promptly to Liberty Acorn any of such records upon Liberty Acorn's request;
provided that Liberty WAM may at its own expense make and retain copies of any
such records. Liberty WAM further 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.
(e) Status of Liberty WAM. Liberty WAM shall for all purposes herein be
deemed to be an independent contractor and not an agent of Liberty Acorn and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent Liberty Acorn in any
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way. Liberty WAM agrees to notify the Trust promptly of any change in the
identity of Liberty WAM's general partner.
3. Administrative Services. Liberty WAM shall supervise the business and
affairs of Liberty Acorn and each Fund and shall provide such services and
facilities as may be required for effective administration of Liberty Acorn and
Funds as are not provided by employees or other agents engaged by Liberty Acorn;
provided that Liberty WAM shall not have any obligation to provide under this
agreement any such services which are the subject of a separate agreement or
arrangement between Liberty Acorn and Liberty WAM, any affiliate of Liberty WAM,
or any third party administrator.
4. Use of Affiliated Companies and Subcontractors. In connection with the
services to be provided by Liberty WAM under this agreement, Liberty WAM may, to
the extent it deems appropriate, and subject to compliance with the requirements
of applicable laws and regulations and upon receipt of approval of the Trustees,
make use of (i) its affiliated companies and their directors, trustees,
officers, and employees and (ii) subcontractors selected by Liberty WAM,
provided that Liberty WAM shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the extent provided
by this agreement. All costs and expenses associated with services provided by
any such third parties shall be borne by Liberty WAM or such parties.
5. Expenses to be Paid by Trust. Except as otherwise provided in this
agreement or any other contract to which Liberty Acorn is a party, Liberty Acorn
shall pay all expenses incidental to its organization, operations and business,
including, without limitation:
(a) all charges of depositories, custodians, sub-custodians and other
agencies for the safekeeping and servicing of its cash, securities and
other property and of its transfer agents and registrars and its
dividend disbursing and redemption agents, if any;
(b) all charges of its administrator, if any;
(c) all charges of legal counsel and of independent auditors;
(d) all compensation of trustees other than those affiliated with Liberty
WAM or Liberty Acorn's administrator, if any, and all expenses
incurred in connection with their services to Liberty Acorn;
(e) all expenses of preparing, printing and distributing notices, proxy
solicitation materials and reports to shareholders of the Funds;
(f) all expenses of meetings of shareholders of the Funds;
(g) all expenses of registering and maintaining the registration of
Liberty Acorn under the 1940 Act and of shares of the Funds under the
1933 Act, including all expenses of preparation, filing and printing
of annual or more frequent revisions of the Funds' registration
statements under the 1940 Act and 1933 Act, and of supplying each then
existing shareholder or beneficial owner of shares of the Funds of a
copy of each revised prospectus or supplement thereto, and of
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supplying a copy of the statement of additional information upon
request to any then existing shareholder;
(h) all costs of borrowing money;
(i) all expenses of publication of notices and reports to shareholders and
to governmental bodies or regulatory agencies;
(j) all taxes and fees payable to federal, state or other governmental
agencies, domestic or foreign, and all stamp or other taxes;
(k) all expenses of printing and mailing certificates for shares of a
Fund;
(l) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board;
(m) all expenses of qualifying and maintaining qualification of, or
providing appropriate notification of intention to sell relating to,
shares of the Funds under the securities laws of the various states
and other jurisdictions, and of registration and qualification of
Liberty Acorn under any other laws applicable to Liberty Acorn or its
business activities;
(n) all fees, dues and other expenses related to membership of Liberty
Acorn in any trade association or other investment company
organization; and
(o) any extraordinary expenses.
In addition to the payment of expenses, Liberty Acorn shall also pay all
brokers' commissions and other charges relating to the purchase and sale of
portfolio securities for each Fund.
6. Allocation of Expenses Paid by Liberty Acorn. Any expenses paid by
Liberty Acorn that are attributable solely to the organization, operation or
business of a Fund or Funds shall be paid solely out of the assets of that Fund
or Funds. Any expense paid by Liberty Acorn that is not solely attributable to a
Fund or Funds, nor solely to any other series of Liberty Acorn, shall be
apportioned in such manner as Liberty Acorn or Liberty Acorn's administrator
determines is fair and appropriate, or as otherwise specified by the Board.
7. Expenses to be Paid by Liberty WAM. Liberty WAM shall furnish to
Liberty Acorn, at Liberty WAM's own expense, office space and all necessary
office facilities, equipment and personnel required to provide its services
pursuant to this agreement. Liberty WAM shall also assume and pay all expenses
of placement of securities orders and related bookkeeping.
8. Compensation of Liberty WAM. For the services to be rendered and the
expenses to be assumed and to be paid by Liberty WAM under this agreement,
Liberty Acorn shall pay to Liberty WAM fees accrued daily and paid monthly at
the annual rates shown below:
Liberty Acorn Fund
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Assets Rate of Fee
------ -----------
First $700 million 0.75%
$700 million to $2 billion 0.70%
In excess of $2 billion 0.65%
Liberty Acorn International
Assets Rate of Fee
------ -----------
First $100 million 1.20%
$100 million to $500 million 0.95%
In excess of $500 million 0.75%
Liberty Acorn USA
Assets Rate of Fee
------ -----------
First $200 million 0.95%
In excess of $200 million 0.90%
Liberty Acorn Twenty
All Assets 0.90%
Liberty Acorn Foreign Forty
All Assets 0.95%
The fees attributable to each Fund shall be a separate charge to such Fund and
shall be the several (and not joint or joint and several) obligation of each
such Fund.
9. Services of Liberty WAM Not Exclusive. The services of Liberty WAM to
Liberty Acorn under this agreement are not exclusive, and Liberty WAM shall be
free to render similar services to others so long as its services under this
agreement are not impaired by such other activities.
10. Services Other Than as Adviser. Within the limits permitted by law,
Liberty WAM or an affiliate of Liberty WAM may receive compensation from Liberty
Acorn for other services performed by it for Liberty Acorn which are not within
the scope of the duties of Liberty WAM under this agreement, including the
provision of brokerage services.
11. Standard of Care. To the extent permitted by applicable law, neither
Liberty WAM nor any of its partners, officers, agents, employees or affiliates
shall be liable to Liberty Acorn or its shareholders for any loss suffered by
Liberty Acorn or its shareholders as a result of any error of judgment, or any
loss arising out of any investment, or as a consequence of any other act or
omission of Liberty WAM or any of its affiliates in the performance of Liberty
WAM's
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duties under this agreement, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the part of Liberty WAM or such
affiliate, or by reason of reckless disregard by Liberty WAM or such affiliate
of the obligations and duties of Liberty WAM under this agreement.
12. Effective Date, Duration and Renewal. This agreement shall become
effective at the Effective Time as defined in the Agreement and Plan of Merger
among Xxxxxx Asset Management, Ltd., Xxxxxx Asset Management, L.P. and Liberty
Financial Companies, Inc. and WAM Acquisition L.P. dated as of June 9, 2000 (the
"Merger Agreement"). Unless terminated as provided in Section 13, this
agreement shall continue in effect as to a Fund until the second anniversary of
the Effective Date (as defined in the Merger Agreement), and thereafter from
year to year only so long as such continuance is specifically approved at least
annually (a) by a majority of those trustees who are not interested persons of
Liberty Acorn or of Liberty WAM, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by either the Board or vote of the
holders of a "majority of the outstanding shares" of that Fund (which term as
used throughout this agreement shall be construed in accordance with the
definition of "vote of a majority of the outstanding voting securities of a
company" in section 2(a)(42) of the 1940 Act).
13. Termination. This agreement may be terminated as to a Fund at any
time, without payment of any penalty, by the Board, or by a vote of the holders
of a majority of the outstanding shares of that Fund, upon 60 days' written
notice to Liberty WAM. This agreement may be terminated by Liberty WAM at any
time upon 60 days' written notice to Liberty Acorn. This agreement shall
terminate automatically in the event of its assignment (as defined in Section
2(a)(4) of the 1940 Act).
14. Amendment. This agreement may be amended in accordance with the 1940
Act.
15. Non-Liability of Trustees and Shareholders. A copy of the Declaration
of Trust of Liberty Acorn Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of Liberty Acorn Trust by officers of Acorn Investment
Trust as officers and not individually. All obligations of Liberty Acorn
hereunder shall be binding only upon the assets of Liberty Acorn (or the
appropriate Fund) and shall not be binding upon any trustee, officer, employee,
agent or shareholder of Liberty Acorn. Neither the authorization of any action
by the Trustees or shareholders of Liberty Acorn nor the execution of this
agreement on behalf of Liberty Acorn shall impose any liability upon any
trustee, officer or shareholder of Liberty Acorn.
16. Use of Manager's Name. Liberty Acorn may use the name "Liberty" or any
other name derived from the name "Liberty" only for so long as this agreement or
any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization that shall remain affiliated with
Liberty Financial Companies, Inc. and shall have succeeded to the business of
Liberty WAM as investment adviser. At such time as this agreement or any
extension, renewal or amendment hereof, or such other similar agreement shall no
longer be in effect, Liberty Acorn will (by amendment of its agreement and
Declaration of
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Trust if necessary) cease to use any name derived from the name "Liberty" or
otherwise connected with Liberty WAM, or with any organization that shall have
succeeded to Liberty WAM's business as investment adviser.
17. Notices. Any notice, demand, change of address or other communication
to be given in connection with this agreement shall be given in writing and
shall be given by personal delivery, by registered or certified mail or by
transmittal by facsimile or other electronic medium addressed to the recipient
as follows (or at such other address or addresses as a party may provide to the
other from time to time, by notice):
If to Liberty Liberty Xxxxxx Asset Management, L.P.
WAM: Attention: Xxxxx X. Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
with a copy to:
Liberty Funds Group LLC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Liberty Liberty Acorn Trust
Acorn: 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
with a copy to:
Xxxx, Xxxx & Xxxxx LLC
Attention: Xxxxx X. Xxxxx
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 312/000-0000
Facsimile: 312/372-2098
All notices shall be conclusively deemed to have been given on the day of
actual delivery thereof and, if given by registered or certified mail, on the
fifth business day following the deposit thereof in the mail and, if given by
facsimile or other electronic medium, on the day of transmittal thereof (upon
electronic confirmation of receipt thereof).
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18. Governing Law. This agreement shall be construed and interpreted in
accordance with the laws of the State of Illinois and the laws of the United
States of America applicable to contracts executed and to be performed therein.
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Dated as of the effective date of this agreement.
LIBERTY ACORN TRUST
By __________________________________
LIBERTY XXXXXX ASSET
MANAGEMENT, L.P.
By __________________________________
Its General Partner
By __________________________________
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