AMERICAN SELECT FUNDS
MANAGEMENT AGREEMENT
Agreement made as of this _____ day of _______________, 1999 between the
American Select Funds, a Massachusetts business trust (the "Select Trust"), and
AMR Investment Services, Inc. (the "Manager"), a Delaware corporation.
WHEREAS, the Select Trust is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company consisting of one or more series (Funds) of shares, each having its own
investment policies; and
WHEREAS, the Manager is an investment adviser under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Select Trust desires to retain the Manager as investment
adviser and administrator to furnish administrative, investment advisory and
portfolio management services to the Select Trust with respect to such
portfolios as the Select Trust and the Manager shall agree upon from time to
time (collectively, the "Funds"), and the Manager is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Select Trust hereby appoints the Manager as investment
adviser and administrator of the Select Trust and each Fund listed on Schedule A
of this Agreement (as such schedule may be amended from time to time) for the
period and on the terms set forth in this Agreement. The Manager accepts such
appointment and agrees to render the services herein set forth. In the
performance of its duties, the Manager will act in the best interests of the
Select Trust and each Fund and will comply with (a) applicable laws and
regulations, including, but not limited to, the 1940 Act, (b) the terms of this
Agreement, (c) the Select Trust's Declaration of Trust, By-Laws and currently
effective registration statement under the Securities Act of 1933, as amended,
and the 1940 Act, and any amendments thereto, (d) relevant undertakings to state
securities regulators which have been provided to the Manager, (e) the stated
investment objective, policies and restrictions of each applicable Fund, and (f)
such other guidelines as the Board of Trustees of the Select Trust ("Board of
Trustees") reasonably may establish.
2. DUTIES AS INVESTMENT ADVISER.
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(a) Subject to the supervision of the Board of Trustees, the Manager will
provide a continuous investment program for each Fund, including investment
research and management with respect to all securities, investments and cash
equivalents in each Fund. The Manager will determine from time to time what
securities and other investments will be purchased, retained or sold by each
Fund. The Manager will exercise full discretion and act for each Fund in the
same manner and with the same force and effect as such Fund itself might or
could do with respect to purchases, sales, or other transactions, as well as
with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(b) The Manager will place orders pursuant to its investment
determinations for each Fund either directly with the issuer or through other
broker-dealers ("brokers"). In the selection of brokers and the placement of
orders for the purchase and sale of portfolio investments for the Funds, the
Manager shall use its best efforts to obtain for the Funds the most favorable
price and execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services as described
below. In using its best efforts to obtain the most favorable price and
execution available, the Manager, bearing in mind the Select Trust's best
interests at all times, shall consider all factors it deems relevant, including
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker involved and the quality of
service rendered by the broker in other transactions. Subject to such policies
as the Board of Trustees may determine, the Manager shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused a Fund to pay a broker that
provides brokerage and research services to the Manager an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting that transaction if
the Manager determines 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, viewed in terms of either that particular transaction
or the Manager's overall responsibilities with respect to the Select Trust and
to other clients of the Manager as to which the Manager exercises investment
discretion. The Select Trust agrees that any entity or person associated with
the Manager which is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of the Select Trust
which is permitted by Section 11(a) of the Securities Exchange Act of 1934, as
amended, and the Select Trust hereby consents to the retention of compensation
for such transactions.
(c) The Manager will provide the Board of Trustees on a regular basis with
economic and investment analyses and reports and make available to the Board
upon request any economic, statistical and investment services normally
available to institutional or other customers of the Manager.
(d) Any of the foregoing functions with respect to any or all Funds may be
delegated by the Manager, at the Manager's expense, to one or more appropriate
parties, including an affiliated party ("Advisers"), subject to such approval by
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the Board of Trustees and shareholders of each affected Fund as may be required
by the 1940 Act. In connection with any such delegation, the Manager shall:
(i) oversee the performance of delegated functions by any Adviser and
furnish the Select Trust with quarterly evaluations and analyses
concerning the performance of delegated responsibilities by those parties;
(ii) allocate the portion of each Fund's assets to be managed by an
Adviser and coordinate the investment activities of the Advisers;
(iii) if appropriate, recommend changes in Advisers or the addition of
Advisers, subject to the necessary approvals under the 1940 Act; and
(iv) be responsible for compensating the Advisers in the manner specified
in its advisory agreements with the Advisers.
3. DUTIES AS ADMINISTRATOR. The Manager will assist in administering the
affairs of the Select Trust subject to the supervision of the Board of Trustees
and the following understandings:
(a) The Manager will supervise all aspects of the operations of the Select
Trust except as hereinafter set forth; provided, however, that nothing herein
contained shall be deemed to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the Select Trust's affairs.
(b) The Manager will investigate and, with appropriate approval of the
Board of Trustees, select necessary service companies to conduct certain
operations of the Select Trust, including the Select Trust's custodian, transfer
agent, dividend disbursing agent, distributor, independent public accountant and
attorney.
(c) The Manager will provide the Select Trust with such administrative and
clerical services as are deemed necessary or advisable by the Board of Trustees,
including the maintenance of certain books and records of the Select Trust and
each Fund which are not maintained by the Select Trust's custodian or any
Adviser.
(d) The Manager will arrange, but not pay, for the periodic updating of
prospectuses and statements of additional information and supplements thereto,
proxy material, tax returns and reports to shareholders and the Securities and
Exchange Commission.
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(e) The Manager will provide the Select Trust with, or obtain for it,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
(f) The Manager will hold itself available to respond to shareholder
inquiries.
(g) Any of the foregoing functions with respect to any or all Funds may be
delegated by the Manager, at the Manager's expense, to another appropriate party
(including an affiliated party), subject to such approval by the Board of
Trustees. The Manager shall oversee the performance of delegated functions by
any such party and shall furnish to the Select Trust with quarterly evaluations
and analyses concerning the performance of delegated responsibilities by those
parties.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Manager hereunder
are not to be deemed exclusive and the Manager shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Select Trust are the property of the Select Trust and further
agrees to surrender promptly to the Select Trust any of such records upon the
Select Trust's request. The Manager further agrees to preserve for the periods
prescribed by Rule 3la-2 under the 1940 Act the records required to be
maintained by Rule 3la-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Select Trust will bear
all expenses not specifically assumed by the Manager incurred in its operations
and the offering of its shares. Expenses borne by the Select Trust will include,
but not be limited to, the following (or each Fund's proportionate share of the
following): (a) brokerage commissions relating to securities purchased or sold
by the Select Trust or any losses incurred in connection therewith; (b) fees
payable to and expenses incurred on behalf of the Select Trust by the Manager;
(c) expenses of organizing the Select Trust and the Funds; (d) filing fees and
expenses relating to the registration and qualification of the Select Trust's
shares and the Select Trust under federal or state securities laws and
maintaining such registrations and qualifications; (e) distribution fees, if
any; (f) fees and salaries payable to the members of the Board of Trustees and
officers who are not officers or employees of the Manager or interested persons
(as defined in the 0000 Xxx) of any investment adviser or distributor of the
Select Trust; (g) taxes (including any income or franchise taxes) and
governmental fees; (h) costs of any liability, uncollectible items of deposit
and other insurance or fidelity bonds; (i) any costs, expenses or losses arising
out of any liability of or claim for damage or other relief asserted against the
Select Trust for violation of any law; (j) legal, accounting and auditing
expenses, including legal fees of special counsel for the independent trustees;
(k) charges of custodians, transfer agents and other agents; (l) costs of
preparing share certificates; (m) expenses of setting in type and printing
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Prospectuses and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy material; (n) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Select Trust; and
(o) fees and other expenses incurred in connection with membership in investment
company organizations.
The Select Trust may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Manager and
acknowledged as otherwise payable by the Manager pursuant to this Agreement, the
Select Trust may reduce the fee payable to the Manager pursuant to paragraph 7
hereof by such amount. To the extent that such deductions exceed the fee payable
to the Manager on any monthly payment date, such excess shall be carried forward
and deducted in the same manner from the fee payable on succeeding monthly
payment dates.
In addition, if the expenses borne by the Select Trust or any Fund in any
fiscal year exceed the applicable expense limitations imposed by the securities
regulations of any state in which shares are registered or qualified for sale to
the public, the Manager will reimburse the Select Trust or Fund for any excess
up to the amount of the fee payable to it during that fiscal year pursuant to
paragraph 7 hereof.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Fund, the Select Trust will pay
the Manager, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from each Fund's assets at the annual rates as
percentages of that Fund's average daily net assets under Manager's management
as set forth in the attached Schedule A, which schedule can be modified from
time to time to reflect changes in annual rates or the addition or deletion of a
Fund from the terms of this Agreement, subject to appropriate approvals required
by the 0000 Xxx. To the extent that a Fund invests all of its investable assets
(i.e., securities and cash) in another registered investment company, however,
only that portion of the fee attributable to that Fund as specified in Schedule
A attached hereto shall be paid for the period that such Fund's assets are so
invested. If this Agreement becomes effective or terminates with respect to any
Fund before the end of any month, the fee for the period from the effective date
to the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
that such period bears to the full month in which such effectiveness or
termination occurs.
8. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Select Trust or any Fund in connection with the matters to which this Agreement
relate except a loss resulting from the willful misfeasance, 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. Any person,
even though also an officer, partner, employee, or agent of the Manager, who may
be or become an officer, trustee, employee or agent of the Select Trust shall be
deemed, when rendering services to the Select Trust or acting in any business of
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the Select Trust, to be rendering such services to or acting solely for the
Select Trust and not as an officer, partner, employee, or agent or one under the
control or direction of the Manager even though paid by it.
9. DURATION AND TERMINATION. This Agreement shall become effective upon
its execution; provided that, with respect to any Fund now existing or hereafter
created, this agreement shall not take effect unless it first has been approved
by a vote of the majority of those trustees of the Select Trust who are not
parties to this Agreement or interested persons of such party, cast in person at
a meeting called for the purpose of voting on such approval, and by vote of a
majority of that Fund's outstanding voting securities. This Agreement shall
remain in full force and effect continuously thereafter until terminated without
the payment of any penalty by any one of the following:
(a) By vote of a majority of its trustees, or by the affirmative vote of a
majority of the outstanding Shares of such Fund, the Select Trust may at any
time terminate this Agreement with respect to any or all Funds by providing not
more than 60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager at its principal offices.
(b) With respect to any Fund, if (i) the trustees or the shareholders of
that Fund by the affirmative vote of a majority of the outstanding shares of
such Fund, and (ii) a majority of the trustees who are not interested persons of
the Select Trust or of the Manager or of any Adviser, by vote cast in person at
a meeting called for the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then this Agreement
shall automatically terminate at the close of business on the second anniversary
of its execution, or upon the expiration of one year from the effective date of
the last such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of a Fund for
their approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Manager may continue to serve hereunder in a
manner consistent with the 1940 Act and the rules and regulations thereunder
with respect to that Fund.
(c) The Manager may at any time terminate this Agreement with respect to
any or all Funds by not less than 60 days' written notice delivered or mailed by
registered mail, postage prepaid to the Select Trust.
(d) This Agreement automatically and immediately will terminate in the
event of its assignment.
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, and no material amendment of this Agreement
with respect to any Fund shall be effective until approved by vote of the
holders of a majority of that Fund's outstanding voting securities.
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11. NAME OF SELECT TRUST. The Select Trust may use the name "American
Select" only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the Manager. At such
time as such an agreement shall no longer be in effect, the Select Trust will
(to the extent that it lawfully can) cease to use any name derived from American
Select Funds, or AMR Investment Services, Inc., or any successor organization.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
13. DEFINITIONS. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" shall have
the same meanings as such terms have in the 1940 Act.
14. 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. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
15. NOTICE. Notice hereby is given that the Select Trust's Declaration of
Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts and the Declaration of Trust and this Agreement are executed by
the Select Trust's Trustees and/or officers in their capacities as Trustees
and/or officers, and the obligations of the Declaration of Trust and this
Agreement are not binding upon any of them or the shareholders individually;
rather, they are binding only upon the assets and property of Select Trust.
16. MISCELLANEOUS. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Attest: AMERICAN SELECT FUNDS
By: ________________________ By: ______________________________
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Attest: AMR INVESTMENT SERVICES, INC.
By: ________________________ By: ______________________________
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SCHEDULE A
TO THE MANAGEMENT AGREEMENT BETWEEN
AMR INVESTMENT SERVICES, INC.
AND THE
AMERICAN SELECT FUNDS
As compensation pursuant to section 7 of the Management Agreement between
AMR Investment Services, Inc. (the "Manager") and American Select Funds (the
"Select Trust"), the Select Trust shall pay to the Manager a fee, computed daily
and paid monthly, at the annual rate of 0.10% of the net assets of the Cash
Reserve Fund, based on the Fund's average daily net assets.
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another registered investment company, however, the
Select Trust shall not pay the Manager a Management Fee.
DATED: ______________ , 1999
