AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
Between
PENN SERIES FUNDS, INC.
and
PENN MUTUAL ASSET MANAGEMENT, LLC
This AMENDED AND RESTATED INVESTMENT ADVISORY
AGREEMENT, made as of October 1, 2017 by and between PENN SERIES
FUNDS, INC. ("Penn Series"), a corporation organized and
existing under the laws of the State of Maryland, and PENN
MUTUAL ASSET MANAGEMENT, LLC ("Adviser"), a limited liability
company organized and existing under the laws of the State of
Pennsylvania.
WITNESSETH:
WHEREAS, Penn Series is an open-end management
investment company registered as such under the Investment
Company Act of 1940, as amended (the "Act") and is authorized to
issue shares in separate series with each series representing
interests in a separate fund of securities and other assets; and
WHEREAS, Adviser is engaged principally in the
business of rendering investment advisory services and is
registered as an investment adviser under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, Penn Series desires Adviser to render
investment advisory services to Penn Series in the manner and on
the terms and conditions hereinafter set forth, and Adviser
desires to render such services under such terms and conditions;
and
WHEREAS, Penn Series and Adviser desire to amend and restate
the Investment Advisory Agreement dated May 1, 2000, as amended
May 1, 2002, August 22, 2008, December 15, 2010, May 1, 2014,
May 14, 2015, July 1, 2016, and May 18, 2017 to incorporate the
substance of the aforementioned amendments and reflect a
mutually agreed upon reduction in the advisory fee rate to be
paid by the XXXX Cap Value Fund to Adviser.
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Investment Advisory Services. Adviser shall serve as
investment adviser and shall supervise and direct the
investments of the investment funds of Penn Series set forth in
Schedule A to this Agreement (individually a "Fund" and
collectively the "Funds"), in accordance with the investment
objectives, program and restrictions applicable to the Fund as
provided in Penn Series' Prospectus and Statement of Additional
Information, as amended from time to time, and such other
limitations as may be imposed by law or as Penn Series may
impose with notice in writing to Adviser. No investment will be
made by Adviser for a Fund if that investment would be in
violation of the objectives, program, restrictions or
limitations of the Fund. Adviser shall not take custody of any
assets of Penn Series, but shall issue settlement instructions
to the custodian designated by Penn Series (the "Custodian").
Adviser shall obtain and evaluate such information relating to
the economy, industries, businesses, securities markets and
securities as it may deem necessary or useful in the discharge
of its obligations hereunder and shall formulate and implement a
continuing program for the management of the assets and
resources of each Fund in a manner consistent with the
investment objectives of the Fund. In furtherance of this duty,
Adviser, as agent and attorney-in-fact with respect to Penn
Series, is authorized, in its discretion and without prior
consultation with Penn Series, to:
(i) buy, sell, exchange, convert, lend,
and otherwise trade in any stocks, bonds, and other securities
or assets; and
(ii) place orders and negotiate the
commissions (if any) for the execution of transactions in
securities with or through such brokers, dealers, underwriters
or issuers as Adviser may select, in conformance with the
provisions of Paragraph 4 herein;
provided, however, that Adviser shall make no investment for a
Fund that is in violation of the objectives, program,
restrictions or limitations of the Fund.
2. Accounting and Related Services. Adviser agrees to
cooperate with the Accounting Services Agent appointed by Penn
Series pursuant to the Accounting Services Agreement entered
into by Penn Series and the Accounting Services Agent. As
requested from time to time, Adviser shall provide Penn Series
and its Accounting Services Agent with such information as may
be reasonably necessary to properly account for financial
transactions with respect to each Fund.
3. Investment Advisory Fees. For the services rendered
to Penn Series under this Agreement, Penn Series will pay
Adviser fees based on average daily net assets of each Fund at
the rates set forth in Schedule B to this Agreement. Each fee
shall be accrued for each calendar day and the sum of the daily
fee accruals shall be paid monthly to Adviser as of the first
business day of the next succeeding calendar month. The daily
fee will be computed by multiplying the fraction of one over the
number of calendar days in the year by the annual rate
applicable to the Fund as set forth above, and multiplying this
product by the net assets of the Fund. The Fund's net assets,
for purposes of the calculations described above, will be
determined in accordance with Penn Series' Prospectus and
Statement of Additional Information as of the close of business
on the most recent previous business day on which Penn Series
was open for business.
4. RESERVED.
5. Brokerage. In executing portfolio transactions and
selecting brokers or dealers for a Fund, Adviser will use its
best efforts to seek the best price and the most favorable
execution of its orders. In assessing the best price and the
most favorable execution for any transaction, Adviser shall
consider the breadth of the market in the security, the price of
the security, the skill, financial condition and execution
capability of the broker or dealer, and the reasonableness of
the commission, if any. Where best price and most favorable
execution will not be compromised, Adviser may take into account
the research and related services that the broker has provided
to Penn Series or the Adviser. It is understood that the Adviser
will not be deemed to have acted unlawfully or to have breached
a fiduciary duty to the Fund or be in breach of any obligation
owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the
Fund to a broker-dealer in compliance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934 or as
described from time to time in the Penn Series' Prospectus and
Statement of Additional Information. In addition, Adviser is
authorized to take into account the sale of variable contracts
which are invested in Penn Series shares in allocating to
brokers or dealers purchase and sale orders for portfolio
securities, provided that Adviser believes that the quality of
the transaction and commission are comparable to what they would
be with other qualified firms. Adviser shall regularly advise
Penn Series' Board of Directors as to all payments of
commissions and as to its brokerage policies and practices and
shall follow such instructions with respect thereto as may be,
given by Penn Series' board.
6. Use of the Services of Others. Adviser may (at its
cost except as contemplated in Section 5 of this Agreement)
employ, retain or otherwise avail itself of a sub-adviser or
sub-advisers to assist it in performing its duties and meeting
its responsibilities under this Agreement, and may delegate to
such sub-adviser or sub-advisers duties assumed by the Adviser
under this Agreement. In addition, Adviser may (at its cost,
except as contemplated in Section 5 of this Agreement) employ,
retain or otherwise avail itself of the services or facilities
of other persons or organizations for the purpose of providing
itself or Penn Series, as appropriate, with such statistical and
other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in
specific securities or such other information, advice or
assistance as Adviser may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or
otherwise helpful to Penn Series, or in the discharge of
Adviser's overall responsibilities with respect to the other
accounts which it serves as investment adviser.
7. Personnel, Office Space, and Facilities. Adviser
at its own expense shall furnish or provide and pay the cost of
such office space, office equipment, office personnel, and
office services as it, or any affiliated corporation of Adviser,
requires in the performance of services under this Agreement.
8. Ownership of Software and Related Material. All
computer programs, magnetic tapes, written procedures and
similar items developed and used by Adviser or any affiliate in
performance of this Agreement are the property of Adviser and
will not become the property of Penn Series.
9. Certain Personnel. Adviser agrees to permit
individuals who are officers or employees of Adviser to serve
(if duly elected or appointed) as officers, directors, members
of any committee of directors, members of any advisory board, or
members of any other committee of Penn Series, without
remuneration or other cost to Penn Series. Adviser shall pay all
salaries, expenses, and fees of officers and/or directors of
Penn Series who are affiliated with Adviser.
10. Reports to Penn Series and Cooperation with
Accountants. Adviser, and any affiliated corporation of Adviser
performing services for Penn Series described in this Agreement,
shall furnish to or place at the disposal of Penn Series, such
information, reports, evaluations, analyses and opinions as Penn
Series may, at any time or from time to time, reasonably request
or as Adviser may deem helpful, to reasonably ensure compliance
with applicable laws and regulations or for any other purpose.
Adviser and its affiliates shall cooperate with Penn Series'
independent public accountants and take all reasonable action in
the performance of services and obligations under this Agreement
to assure that the information needed by such accountants is
made available to them for the expression of their opinion
without any qualification as to the scope of their examination,
including, but not limited to, their opinion included in Penn
Series' annual report under the Act and annual amendment to Penn
Series' registration statement under the Act.
11. Reports to Adviser. Penn Series shall furnish or
otherwise make available to Adviser such prospectuses, financial
statements, proxy statements, reports, and other information
relating to the business and affairs of Penn Series, as Adviser
may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
12. Ownership of Records. All records required to be
maintained and kept current by Penn Series pursuant to the
provisions of rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the Act and that are
maintained and kept current by Adviser or any affiliated
corporation of Adviser, or by any sub-adviser or affiliated
corporation of a sub-adviser, on behalf of Penn Series are the
property of Penn Series. Such records will be preserved by
Adviser or an affiliated corporation, or by any sub-adviser or
affiliated corporation, for the periods prescribed in Rule 3la-2
under the Act, where applicable, or in such other applicable
rules that may be adopted from time to time under the Act. Such
records may be inspected by representatives of Penn Series at
reasonable times, and, in the event of termination of this
Agreement, will be promptly delivered to Penn Series.
13. Services to Other Clients. Nothing herein
contained shall limit the freedom of Adviser or any affiliated
person of Adviser to render investment supervisory and other
services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities. It is
understood that Adviser may give advice and take action for its
other clients which may differ from advice given, or the timing
or nature of action taken, for a Fund. Adviser is not obligated
to initiate transactions for a Fund in any security which
Adviser, its principals, affiliates or employees may purchase or
sell for its or their own accounts or for other clients.
14. Confidential Relationship. Information furnished
by one party to another, including a party's respective agents
and employees, is confidential and shall not be disclosed to
third parties unless required by law. Adviser, on behalf of
itself and its affiliates and representatives, agrees to keep
confidential all records and other information relating to Penn
Series, except after prior notification to and approval in
writing by Penn Series, which approval shall not be unreasonably
withheld, and may not be withheld where Adviser or any affiliate
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 Penn
Series.
15. Proxies. Subject to such direction and oversight
by Penn Series as the Board of Directors of Penn Series shall
deem appropriate, Adviser shall vote proxies solicited by or
with respect to the issuers of securities held in the Funds.
16. Instructions, Opinion of Counsel and Signatures.
At any time Adviser may apply to an officer of Penn Series for
instructions, and may consult legal counsel for Penn Series, in
respect of any matter arising in connection with this Agreement,
and Adviser shall not be liable for any action taken or omitted
by it or an affiliate in good faith in accordance with such
instructions or with the advice or opinion of Penn Series' legal
counsel. Adviser and its affiliates shall be protected in acting
upon any instruction, advice, or opinion provided by Penn Series
or its legal counsel and upon any other paper or document
delivered by Penn Series or its legal counsel believed by
Adviser to be genuine and to have been signed by the proper
person or persons and shall not be held to have notice of any
change of authority of any officer or agent of Penn Series,
until receipt of written notice thereof from Penn Series.
17. Compliance with Governmental Rules and
Regulations. Except as such responsibility may be placed upon
Adviser or any affiliate expressly by, or by fair implication
of, the terms of this Agreement, and except for the accuracy of
information furnished to Penn Series by Adviser or any
affiliate, Penn Series assumes full responsibility for the
preparation, contents and distribution of the prospectuses for
Penn Series, for complying with all applicable requirements of
the Act, the Securities Exchange Act of 1934, the Securities Act
of 1933, and any other laws, rules and regulations of
governmental authorities having jurisdiction over Penn Series.
18. Limitation of Liability. Neither Adviser nor any
of its affiliates, their officers, directors, employees or
agents, or any person performing executive, administrative,
trading, or other functions for Penn Series (at the direction or
request of Adviser), or Adviser or its affiliates in connection
with the discharge of obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any
error of judgment or mistake of law or for any loss suffered by
Penn Series in connection with the matters to which this
Agreement relates, except for such error, mistake or loss
resulting from willful misfeasance, bad faith, negligence or
misconduct in the performance of its, his or her duties on
behalf of Penn Series or constituting or resulting from a
failure to comply with any term of this Agreement. Adviser shall
not be responsible for any loss incurred by reason of any act or
omission of the Custodian Transfer Agent, Accounting Services
Agent, or other third party with which Company has a contractual
arrangement, or of any broker, dealer, underwriter or issuer
selected by Adviser with reasonable
care.
19. Obligations of Penn Series and Adviser. It is
expressly agreed that the obligations of Penn Series and Adviser
hereunder shall not be binding upon any of their directors,
shareholders, nominees, officers, agents or employees,
personally. The execution and delivery of this Agreement have
been authorized by the Board of Directors of Penn Series and
signed by an authorized officer of Penn Series, acting as such,
and shall bind Penn Series.
20. Indemnification by Penn Series. Penn Series will
indemnify and hold Adviser harmless from all loss, cost, damage
and expense, including reasonable expenses for legal counsel,
incurred by Adviser resulting from: (i) any action or omitting
to act by Adviser or any affiliated corporation, with respect to
any service described in this Agreement, upon instructions
reasonably believed by Adviser or any affiliated corporation to
have been executed by an individual who has been identified in
writing by Penn Series as a duly authorized officer of Penn
Series; or (ii) any action by Adviser or any affiliated
corporation, with respect to any service described in this
Agreement, upon information provided by Penn Series in form and
under policies agreed to by Adviser and Penn Series. Adviser
shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or willful
misconduct of Adviser or its affiliates, agents or contractors,
or constituting a failure by Adviser or any affiliate to comply
with any term of this Agreement. Prior to the confession of any
claim against Adviser which may be subject to this
indemnification, Adviser shall give Penn Series reasonable
opportunity to defend against said claim in its own name or in
the name of Adviser.
21. Indemnification by Adviser. Adviser will
indemnify and hold harmless Penn Series from all loss, cost,
damage and expense, including reasonable expenses for legal
counsel, incurred by Penn Series resulting from any claim,
demand, action or suit arising out of Adviser's or any
affiliate's failure to comply with any term of this Agreement or
which arise out of the willful misfeasance, bad faith,
negligence or misconduct of Adviser, its affiliates, their
agents or contractors. Penn Series shall not be entitled to such
indemnification in respect of actions or omissions constituting
negligence or willful misconduct of Penn Series or its agents or
contractors or constituting a failure by Penn Series to comply
with any term of this Agreement; provided, that such negligence
or misconduct is not attributable to Adviser or any person that
is an affiliate of Adviser or an affiliate of an affiliate of
Adviser. Prior to confessing any claim against it which may be
subject to this indemnification, Penn Series shall give Adviser
reasonable opportunity to defend against said claim in its own
name or in the name of Penn Series. For purposes of this Section
21 and of Section 20 hereof, no broker or dealer shall be deemed
to be acting as agent or contractor of Adviser or any affiliate
of Adviser, in effecting or executing any portfolio transaction
for a Fund.
22. Further Assurances. Each party agrees to perform
such further acts and execute such further documents as are
necessary to effectuate the purposes hereof.
23. Dual Interests. It is understood that some person
or persons may be, or from time to time become, directors,
officers, or shareholders of both Penn Series and Adviser
(including its affiliates), and that the existence of any such
dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided by a
specific provision of applicable law.
24. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect until two years from date of execution. Thereafter,
this Agreement shall continue in effect from year to year with
respect to the Fund, subject to the termination provisions and
all other terms and conditions hereof, so long as such
continuation shall be specifically approved at least annually
(a) by either the board of directors of Penn Series, or by a
vote of a majority of the outstanding voting securities of the
series of shares of Penn Series representing interests in the
Fund and (b) in either event by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a
majority of the directors of Penn Series who are not parties to
this Agreement or interested persons of any such party. Adviser
shall furnish to Penn Series, promptly upon its request, such
information as may reasonably be necessary to evaluate the terms
of this Agreement with respect to the Fund or any extension,
renewal or amendment hereof.
25. Amendment of Agreement. This Agreement may be
amended only by written agreement of Penn Series and the Adviser
and only in accordance with the provisions of the Act, the rules
and regulations promulgated under the Act and the provisions of
any other applicable law or regulation.
26. Assignment of Agreement. This Agreement shall
terminate automatically in the event of its assignment, as
required by the Act and rules and regulations promulgated
thereunder.
27. Termination of Agreement. This Agreement may be
terminated by Penn Series or by Adviser with respect to any
Fund, without the payment of any penalty, upon 60 days' prior
notice in writing from Penn Series to Adviser, or upon 90 days'
prior notice in writing from Adviser to Penn Series; provided,
that in the case of termination by Penn Series, such action
shall have been authorized by resolution of a majority of its
directors who are not interested persons of any party to this
Agreement, or by vote of a majority of the outstanding voting
securities of the series of shares of Penn Series representing
interests in the Fund.
28. Miscellaneous.
A. Captions. The captions in this Agreement are included
for convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect their
construction or effect.
B. Interpretation. Nothing herein contained shall be
deemed to require Penn Series to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the board of
directors of Penn Series of its responsibility for and control
of the conduct of the affairs of Penn Series.
C. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and
to interpretations thereof, if any, by the United States courts
or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and
Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding
voting securities," "interested person," "assignment," and
"affiliated person," as used herein, shall have the meanings
assigned to them by Section 2(a) of the Act. In addition, where
the effect of a requirement of the Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or
order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or
order.
D. Notice. Notice under the Agreement shall be in
writing, addressed and delivered or sent by registered or
certified mail, postage prepaid, to the addressed party at such
address as such party may designate for the receipt of such
notices. Until further notice, it is agreed that for this
purpose the address of Penn Series is Penn Series Funds, Inc.,
000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000, Attention: President, and
that of Adviser is Penn Mutual Asset Management, LLC, 000
Xxxxxxx Xxxx, Xxxxxxx, XX 00000, Attention: President.
E. State Law. The Agreement shall be construed and
enforced in accordance with and governed by the laws of the
State of Maryland except where such state laws have been
preempted by Federal law.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized as of the day and year first above written.
PENN SERIES FUNDS, INC.
By: /s/ Xxxxx X. X'Xxxxxx
---------------------------------
Xxxxx X. X'Xxxxxx
President
PENN MUTUAL ASSET MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Marketing Officer
Schedule A
to
INVESTMENT ADVISORY AGREEMENT
between
PENN SERIES FUNDS, INC.
and
PENN MUTUAL ASSET MANAGEMENT, LLC
Penn Series Funds
Money Market Fund
Limited Maturity Bond Fund
Quality Bond Fund
Aggressive Allocation Fund
Moderately Aggressive Allocation Fund
Moderate Allocation Fund
Moderately Conservative Allocation Fund
Conservative Allocation Fund
Balanced Fund
High Yield Bond Fund
Flexibly Managed Fund
Large Growth Stock Fund
Large Cap Growth Fund
Large Core Growth Fund
Large Cap Value Fund
Large Core Value Fund
Index 500 Fund
Mid Cap Growth Fund
Mid Cap Value Fund
Mid Core Value Fund
XXXX Cap Growth Fund
XXXX Cap Value Fund
Small Cap Growth Fund
Small Cap Value Fund
Small Cap Index Fund
Developed International Index Fund
International Equity Fund
Emerging Markets Equity Fund
Real Estate Securities Fund
Schedule B
to
INVESTMENT ADVISORY AGREEMENT
between
PENN SERIES FUNDS, INC.
and
PENN MUTUAL ASSET MANAGEMENT, LLC
NAME OF FUND
INVESTMENT ADVISORY FEES
(As a Percentage of the Average
Daily
Net Assets of the Fund)
Money Market Fund
0.33% of the first $200 million;
0.31% of the next $150 million;
0.29% of the next $150 million;
0.27% over $500 million.
Limited Maturity Bond Fund
0.46% of the first $200 million;
0.44% of the next $150 million;
0.42% of the next $150 million;
0.40% over $500 million.
Quality Bond Fund
0.46% of the first $200 million;
0.44% of the next $150 million;
0.42% of the next $150 million;
0.40% over $500 million.
Aggressive Allocation Fund
0.12% of the first $200 million;
0.11% of the next $150 million;
0.10% of the next $150 million;
0.09% over $500 million.
Moderately Aggressive
Allocation Fund
0.12% of the first $200 million;
0.11% of the next $150 million;
0.10% of the next $150 million;
0.09% over $500 million.
Moderate Allocation Fund
0.12% of the first $200 million;
0.11% of the next $150 million;
0.10% of the next $150 million;
0.09% over $500 million.
Moderately Conservative
Allocation Fund
0.12% of the first $200 million;
0.11% of the next $150 million;
0.10% of the next $150 million;
0.09% over $500 million.
Conservative Allocation Fund
0.12% of the first $200 million;
0.11% of the next $150 million;
0.10% of the next $150 million;
0.09% over $500 million.
Balanced Fund
0.00%
High Yield Bond Fund
0.56% of the first $250 million;
0.53% over $250 million.
Flexibly Managed Fund
0.72% of the first $500 million;
0.70% of the next $2 billion;
0.68% of the next $1.5 billion;
0.65% of the next $1 billion;
0.62% over $5 billion.
Large Growth Stock Fund
0.72% of the first $250 million;
0.68% of the next $250 million;
0.65% over $500 million.
Large Cap Growth Fund
0.55%
Large Core Growth Fund
0.60%
Large Cap Value Fund
0.67% of the first $150 million;
0.65% over $150 million.
Large Core Value Fund
0.67% of the first $150 million;
0.65% of the next $250 million;
0.60% over $400 million.
Index 500 Fund
0.14% of the first $150 million;
0.13% of the next $150 million;
0.12% over $300 million.
Mid Cap Growth Fund
0.70%
Mid Cap Value Fund
0.55% of the first $250 million;
0.525% of the next $250 million;
0.50% of the next $250 million;
0.475% of the next $250 million;
0.45% of the next $500 million;
0.425% over $1.5 billion.
Mid Core Value Fund
0.72%
XXXX Cap Growth Fund
0.75%
XXXX Cap Value Fund
0.84%
Small Cap Growth Fund
0.80% of the first $25 million;
0.75% of the next $25 million;
0.70% over $50 million.
Small Cap Value Fund
0.75% of the first $50 million;
0.725% of the next $50 million;
0.70% over $100 million.
Small Cap Index Fund
0.30%
Developed International
Index Fund
0.30%
International Equity Fund
0.86% of the first $227 million;
0.84% of the next $227 million;
0.82% over $454 million.
Emerging Markets Equity Fund
0.92%
Real Estate Securities Fund
0.70%
