IDEX SERIES FUND
ON BEHALF OF IDEX VALUE EQUITY PORTFOLIO
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into as of October 30, 1996, is between IDEX SERIES
FUND, a Massachusetts business trust (referred to herein as the "Fund") and
INTERSECURITIES, INC., a Delaware corporation (referred to herein as
"InterSecurities"), to provide certain management and investment advisory
services to a certain series of shares of beneficial interest in the Trust,
namely, IDEX Series Fund Value Equity Portfolio (the "Portfolio").
The Fund is registered as an open-end investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and consists of more than one
series of shares, including the Portfolio. In managing the Portfolio, as well as
in the conduct of certain of its affairs, the Fund wishes to have the benefit of
the investment advisory services of InterSecurities and its assistance in
performing certain management, administrative and promotional functions.
InterSecurities desires to furnish such services for the Portfolio and to
perform the functions assigned to it under this Agreement for the considerations
provided. Accordingly, the parties have agreed as follows:
1. APPOINTMENT. The Fund hereby appoints InterSecurities as the Portfolio's
investment adviser and administrator for the period and on the terms set forth
in this Agreement. InterSecurities accepts such appointment and agrees to render
or cause to be rendered the services set forth for the compensation herein
specified. In all matters relating to the performance of this Agreement,
InterSecurities will act in conformity with the Fund's Declaration of Trust,
Bylaws and registration statement applicable to the Portfolio and with the
instructions and direction of the Board of Trustees of the Fund, and will
conform to and comply with the 1940 Act and all other applicable federal or
state laws and regulations.
2. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser to the
Portfolio, InterSecurities shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund as to the
acquisition, holding or disposition of any or all of the securities or
other assets which the Portfolio may own or contemplate acquiring from time
to time, consistent with the Fund's Declaration of Trust and the
Portfolio's investment objectives and policies adopted and declared by the
Board of Trustees and stated in the Portfolio's current Prospectus;
(b) to cause the officers of InterSecurities to attend meetings and furnish
oral or written reports, as the Fund may reasonably require, in order to
keep the Trustees and appropriate officers of the Fund fully informed as to
the conditions of the investment securities of the Portfolio, the
investment recommendations of InterSecurities, and the investment
considerations which have given rise to those recommendations; and
(c) to supervise the purchase and sale of securities as directed by the
appropriate officers of the Fund, including the selection of brokers and
dealers to execute such transactions, consistent with paragraph 10 hereof.
It is understood and agreed that InterSecurities intends to enter into an
Investment Counsel Agreement with NWQ Investment Company, Inc. ("NWQ"), a
Massachusetts corporation, under which NWQ would furnish investment information
and advice to assist InterSecurities in carrying out its responsibilities under
this Section 2. The compensation to be paid to NWQ for such services and the
other terms and conditions under which the services shall be rendered by NWQ
shall be set forth in the Investment Counsel Agreement; provided, however, that
such Agreement shall be approved by the Board of Trustees and by the holders of
the outstanding voting securities of the Portfolio in accordance with the
requirements of Section 15 of the 1940 Act, and shall otherwise be subject to,
and contain such provisions as shall be required by, the 1940 Act.
3. MANAGEMENT AND ADMINISTRATIVE SERVICES. InterSecurities shall furnish and
perform all administrative services, including recordkeeping, shareholder
relations, regulatory reporting and compliance, supervising and coordinating the
services of the Portfolio's custodian and transfer agent and such other
functions of the Portfolio, (other than the investment advisory services
provided for in Section 2), as the parties may agree. InterSecurities shall also
assist in the preparation of reports to
1
shareholders of the Portfolio and prepare sales literature promoting sale of the
Portfolio shares as requested by the Fund.
4. INTERSECURITIES EXPENSES. In addition to the expenses which InterSecurities
may incur in the performance of its services pursuant to Sections 2 and 3 above,
InterSecurities shall incur and pay the following expenses allocable to the
Portfolio's operations:
(a) Reasonable compensation, fees and related expenses of officers of the Fund
and of those Trustees of the Fund who are interested persons (as that term
is defined in Section 2(a)(19) of the 0000 Xxx) of InterSecurities; and
(b) Rental of offices for the Portfolio.
5. OBLIGATIONS OF FUND. The Fund shall have the following obligations under this
Agreement:
(a) to keep InterSecurities continuously and fully informed as to the
composition of the investment securities of the Portfolio and the nature of
all of its assets and liabilities from time to time;
(b) to furnish InterSecurities with a certified copy of any financial statement
or report prepared for the Portfolio by certified or independent public
accountants, and with copies of any financial statements or reports made to
its shareholders or to any governmental body or securities exchange;
(c) to furnish InterSecurities with any further materials or information which
InterSecurities may reasonably request to enable it to perform its
functions under this Agreement; and
(d) to compensate InterSecurities for its services in accordance with the
provisions of Section 6 hereof.
6. COMPENSATION. The Portfolio shall pay to InterSecurities for its services an
annual fee, computed daily and paid monthly, payable on the last day of each
month during which or part of which this Agreement is in effect, equal to 1.00%
of first $750 million of the Portfolio's average daily net assets, 0.90% of the
next $250 million of the Portfolio's average daily net assets, and 0.85% of the
average daily net assets of the Portfolio in excess of $1 billion. For the month
during which this Agreement becomes effective and the month during which it
terminates, however, there shall be an appropriate proration of the fee payable
for such month based on the number of calendar days of such month during which
this Agreement is effective.
7. EXPENSES PAID BY PORTFOLIO. Subject to the provisions of Section 8, below,
and except as provided in this paragraph, nothing in this Agreement shall be
construed to impose upon InterSecurities the obligation to incur, pay, or
reimburse the Portfolio for any expenses not specifically assumed by
InterSecurities under Sections 2, 3 and 4 above. The Fund shall pay all of its
other expenses (or pay such expenses of the Fund attributable to the Portfolio)
including, but not limited to, custodian and transfer agent fees; advisory fees;
brokerage commissions and all other expenses in connection with the execution of
portfolio transactions; administrative, clerical, recordkeeping, bookkeeping,
legal, auditing and accounting expenses; interest and taxes; expenses of
preparing tax returns; expenses of shareholders' meetings and of preparing,
printing and mailing proxy statements (unless otherwise agreed to by the Fund
and InterSecurities); expenses of preparing and typesetting periodic reports to
its shareholders (except for those reports the Portfolio permits to be used as
sales literature); its allocable share of the fees and expenses of the Fund's
non-interested Trustees; and the costs, including filing fees, of registering
and renewing or maintaining registration of the Portfolio's shares under federal
and state law. Nothing in this Section 7 shall prohibit the Fund from entering
into other agreements or adopting plans which provide for the allocation of
expenses of the Fund or the Portfolio to other entities, or the assumption of
other expenses by the Fund or the Portfolio.
8. LIMITATION ON EXPENSES OF PORTFOLIO. Whenever, for any fiscal year, the total
cost to the Portfolio for normal operating expenses chargeable to its income
account, including, but not limited to, the fees of the Portfolio's investment
adviser, the compensation of its custodian, transfer agent, registrar, auditors
and legal counsel, printing expenses, expenses incurred in complying with all
laws applicable to the sale of shares of the Portfolio and any compensation,
fees, or reimbursements which the Portfolio pays to Trustees of the Fund who are
not interested persons (as that phrase is defined in Section 2(a)(29) of the
0000 Xxx) of InterSecurities, but excluding all interest and all federal, state
and local taxes (such as stamp, excise, income, franchise and similar taxes),
exceeds any expense limitation imposed by applicable state law, InterSecurities
shall reimburse the Portfolio for the amount of said excess in the manner and to
the extent required by state law; provided, however, that InterSecurities shall
reimburse the Portfolio for the amount of such expenses, exclusive of expenses
incurred pursuant to the
2
Fund's Plan of Distribution under Rule 12b-1 of the 1940 Act, which exceed 2.50%
of the Fund's average daily net assets for the first full fiscal year of the
Portfolio, and 1.50% thereafter.
9. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolio, the Fund shall
treat the investment advice and recommendations of InterSecurities as being
advisory only, and shall retain full control over its own investment policies.
However, the Trustees of the Fund may delegate to the appropriate officers of
the Fund, or to a committee of Trustees, the power to authorize purchases, sales
or other actions affecting the securities of the Portfolio in the interim
between meetings of the Trustees, provided such action is consistent with the
established investment policy of the Fund and is reported to the Trustees at
their next meeting.
10. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage commissions
paid by the Portfolio upon the purchase or sale of its portfolio securities
shall be considered a cost of securities of the Portfolio and shall be paid by
the Portfolio. InterSecurities is authorized and directed to place the
Portfolio's securities transactions, or to delegate to NWQ the authority and
direction to place the Portfolio's securities transactions, only with brokers
and dealers who render satisfactory service in the execution of orders at the
most favorable prices and at reasonable commission rates; provided, however,
that InterSecurities or NWQ may pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
InterSecurities or NWQ 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 or dealer viewed in terms of either that particular
transaction or the overall responsibilities of InterSecurities or NWQ
InterSecurities and NWQ are also authorized to consider sales of Portfolio
shares by a broker-dealer or the recommendation of a broker-dealer to its
customers that they purchase Portfolio shares as a factor in selecting
broker-dealers to execute the Portfolio's securities transactions, provided that
in placing portfolio business with such broker-dealers, InterSecurities and NWQ
shall seek the best execution of each transaction and all such brokerage
placement shall be consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. Notwithstanding the foregoing, the Fund
shall retain the right to direct the placement of all securities transactions of
the Portfolio, and the Trustees may establish policies or guidelines to be
followed by InterSecurities and NWQ in placing securities transactions for the
Portfolio pursuant to the foregoing provisions. InterSecurities shall report on
the placement of portfolio transactions each quarter to the Trustees of the
Fund.
11. LIABILITY OF INTERSECURITIES. InterSecurities may rely on information
reasonable believed by it to be accurate and reliable. Except as may otherwise
be provided by the 1940 Act, neither InterSecurities nor its officers,
directors, employees or agents shall be subject to any liability to the Fund or
the Portfolio or any shareholder of the Portfolio for any error or judgment,
mistake of law or any loss arising out of any investment or other act or
omission in the course of, connected with or arising out of any service to be
rendered hereunder, except by reason of willful misfeasance, bad faith or gross
negligence in its performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
12. TERMINATION. This Agreement may be terminated at any time, without penalty,
by the Trustees of the Fund or by the shareholders of the Portfolio acting by
vote of at least a majority of its outstanding voting securities (as that phrase
is defined in Section 2(a)(42) of the 1940 Act), provided in either case that 60
days' written notice of termination be given to InterSecurities at its principal
place of business. This Agreement may be terminated by InterSecurities at any
time by giving 60 days' written notice of termination to the Fund, addressed to
its principal place of business.
13. ASSIGNMENT. This Agreement shall terminate automatically in the event of any
assignment (as the term is defined in Section 2(a)(4) of the 0000 Xxx) of this
Agreement.
14. TERM. This Agreement shall continue in effect, unless sooner terminated in
accordance with its terms, for an initial term ending April 22, 1998, and shall
continue in effect from year to year thereafter only so long as such continuance
is specifically approved at least annually by the vote of a majority of the
Trustees of the Fund who are not parties hereto or interested persons (as that
term is defined in Section 2(a)(19) of the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on the approval of the
terms of such renewal, and by either the Trustees of the Fund or the affirmative
vote of a majority of the outstanding voting securities of the Portfolio (as
that phrase is defined in Section 2(a)(42) of the 1940 Act).
15. AMENDMENTS. The terms of this Agreement may be amended only with the
approval by the affirmative vote of a majority of the outstanding voting
securities of the Portfolio (as that phrase is defined in Section 2(a)(42) of
the 0000 Xxx) and the approval by the vote of a majority of Trustees of the Fund
who are not parties hereto or interested persons (as that phrase
3
is defined in Section 2(a)(19) of the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on the approval of such
amendment, unless otherwise permitted in accordance with the 1940 Act.
16. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements between the
parties relating to the subject matter hereof, and all such prior agreements are
deemed terminated upon the effectiveness of this agreement.
17. LIMITATION OF LIABILITY. A copy of the Fund's Declaration of Trust is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this Agreement is executed on behalf of the Trustees as
Trustees of the Fund and not individually, and that the obligations under this
Agreement are not binding upon any of the Trustees, officers, shareholders,
agents or employees of the Fund individually, but binding only upon the assets
and property of the Portfolio.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
October 30, 1996.
ATTEST: INTERSECURITIES, INC.
/S/ /S/
By:
Xxxxxxx X. Xxxxxx, Secretary G. Xxxx Xxxxxx
President and Chief Executive Officer
ATTEST: IDEX SERIES FUND
/S/ By: /S/
Xxxxx X. Xxxxxxx, Secretary G. Xxxx Xxxxxx
President and Chief Executive Officer
4
