Exhibit (d)(3)
INVESTMENT ADVISORY AGREEMENT
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THIS AGREEMENT is made as of the 20th day of August 2004 by and between
XXXXXXX ADVISOR FUNDS III, a Massachusetts business trust (the `Trust'), on
behalf of Lifecycle Long Range Fund (the `Series') and DEUTSCHE ASSET
MANAGEMENT, INC., a Delaware corporation (the `Advisor').
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the `1940 Act'). WHEREAS, the Advisor is registered as an investment
advisor under the Investment Advisers Act of 1940, as amended, and engages in
the business of acting as an investment advisor; and
WHEREAS, the Trust and the Advisor desire to enter into an agreement to
provide investment advisory services for the Series on the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Trust hereby appoints the
Advisor to act as the investment advisor to the Series. The Advisor shall manage
the Series' affairs and shall supervise all aspects of the Series' operations
(except as otherwise set forth herein), including the investment and
reinvestment of the cash, securities or other properties comprising the Series'
assets, subject at all times to the policies and control of the Board of
Trustees. The Advisor shall give the Series the benefit of its best judgment,
efforts and facilities in rendering its services as Advisor.
2. Delivery of Documents. The Trust has furnished the Advisor with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, filed with the State of
New York on December 11, 1991 and all amendments thereto (such
Declaration of Trust, as presently in effect and as it shall from time
to time be amended, is herein called the `Declaration of Trust');
(b) Resolutions of the Trust's Board of Trustees and
shareholders authorizing the appointment of the Advisor and approving
this Agreement;
(c) The Trust's Registration Statement on Form N-1A under the
Investment Company Act of 1940, as amended (File No. 811-06576) as
filed with the Securities and Exchange Commission (`SEC'); and
(d) The Series' most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called `Prospectus').
The Trust will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments or supplements to the foregoing,
if any, and all documents, notices and reports filed with the SEC.
The Advisor will provide the Trust with copies of its Form ADV,
including all amendments thereto, as filed with the SEC.
3. Duties of Investment Advisor. In carrying out its obligations under
Section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of the Series' operations,
except for distribution services;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment
objective and policies of the Series;
(c) provide the Trust with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, utilities, stationery, supplies and similar items
for the Trust's principal office;
(d) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Series, and whether concerning the individual issuers whose securities
are included in the Series' or the activities in which they engage, or
with respect to securities which the Advisor considers desirable for
inclusion in the Series';
(e) determine which issuers and securities shall be represented
in the Series' and regularly report thereon to the Trust's Board of
Trustees; and
(f) take all actions necessary to carry into effect the Series'
purchase and sale programs.
4. Series Transactions. The Advisor is authorized to select the brokers
or dealers that will execute the purchases and sales of Series securities for
the Series and is directed to use its reasonable best efforts to obtain the best
net results as described from time to time in the Series' prospectus and
statement of additional information. The Advisor will promptly communicate to
the Administrator and to the officers and the Trustees of the Trust such
information relating to Series transactions as they may reasonably request.
It is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in breach of
any obligation owing to the Trust under this Agreement, or otherwise, solely by
reason of its having directed a securities transaction on behalf of the Series
to a broker-dealer in compliance with the provisions of Section 28(e) of the
Securities Exchange Act of 1934 or as otherwise permitted from time to time by
the Series' prospectus and statement of additional information.
Subject to the policies established by the Board in compliance with
applicable law, the Advisor may direct DB Securities, Inc. (`DB Securities') or
any of its affiliates to execute Series transactions for the Series on an agency
basis. The commissions paid to DB Securities or any of its affiliates must be,
as required by Rule 17e-1 under the 1940 Act, `reasonable and fair compared to
the commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
.. . . during a comparable period of time.' If the purchase or sale of securities
consistent with the investment policies of the Series or one or more other
accounts of the Advisor is considered at or about the same time, transactions in
such securities will be allocated among the accounts in a manner deemed
equitable by the Advisor. DB Securities or any of its affiliates and the Advisor
may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable execution.
The Trust on behalf of the Series will not deal with the Advisor or DB
Securities or any of its affiliates in any transaction in which the Advisor or
DB Securities or any of its affiliates acts as a principal with respect to any
part of the Series' order, except in compliance with rules of the SEC. If DB
Securities or any of its affiliates is participating in an underwriting or
selling group, the Series may not buy Series securities from the group except in
accordance with policies established by the Board in compliance with rules of
the SEC.
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5. Control by Board of Trustees. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Advisor on behalf of the Series pursuant
thereto, shall at all times be subject to any applicable directives of the
Board.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Trust on
behalf of the Series under the 1933 Act and the 1940 Act;
(c) the provisions of the Declaration of Trust;
(d) any other applicable provisions of state and federal law.
7. Expenses. The expenses connected with the Trust on behalf of the
Series shall be allocable between the Trust and the Advisor as follows:
(a) The Advisor shall furnish, at its expense and without
cost to the Trust, the services of one or more officers of the
Advisor, to the extent that such officers may be required by the Trust
for the proper conduct of its affairs.
(b) The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust, including, without limitation: payments
to the Trust's distributor under the Trust's plan of distribution; the
charges and expenses of any registrar, any custodian or depository
appointed by the Trust for the safekeeping of its cash, Series
securities and other property, and any transfer, dividend or
accounting agent or agents appointed by the Trust; brokers'
commissions chargeable to the Trust in connection with Series
securities transactions to which the Trust is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by
the Trust to Federal, State or other governmental agencies; the costs
and expenses of engraving or printing of certificates representing
shares of the Trust; all costs and expenses in connection with the
registration and maintenance of registration of the Trust and its
shares with the SEC and various states and other jurisdictions
(including filing fees, legal fees and disbursements of counsel); the
costs and expenses of printing, including typesetting, and
distributing prospectuses and statements of additional information of
the Trust and supplements thereto to the Trust's shareholders; all
expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Trustees or Trustee members of any
advisory board or committee; all expenses incident to the payment of
any dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service used
for pricing of the Trust's shares; charges and expenses of legal
counsel, including counsel to the Trustees of the Trust who are not
interested persons (as defined in the 0000 Xxx) of the Trust and of
independent certified public accountants, in connection with any
matter relating to the Trust; membership dues of industry
associations; interest payable on Trust borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of
the Trust which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and all
other charges and costs of the Series' or Trust's operation unless
otherwise explicitly provided herein.
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8. Delegation of Advisory Services. Subject to the prior approval of a
majority of the members of the Trust's Boards of Trustees, including a majority
of the Trustees who are not `interested persons,' as defined in the 1940 Act,
the Advisor may, through a sub-advisory agreement or other arrangement, delegate
to any other company that the Advisor controls, is controlled by, or is under
common control with, or to specified employees of any such companies, or to more
than one such company, to the extent permitted by applicable law, certain of the
Advisor's duties enumerated in section 1 hereof, and may adjust the duties of
such entity, the portion of Series assets of the Series that such entity shall
manage and the fees to be paid to such entity, subject to the prior approval of
the members of the Trust's Board of Trustees who are not `interested persons,'
as defined in the 1940 Act; provided, that the Advisor shall continue to
supervise the services provided by such company or employees and any such
delegation shall not relieve the Advisor of any of its obligations hereunder.
9. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Trust shall pay to the Advisor monthly compensation
in accordance with Exhibit A.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above.
In the event of termination of this Agreement, the advisory fee shall
be computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the number
of days elapsed in the current month as a percentage of the total number of days
in such month.
In addition to the foregoing, the Advisor may from time to time agree
not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Trust on behalf of the Series for all or a
portion of its expenses not otherwise required to be borne or reimbursed by the
Advisor. Any such fee reduction or undertaking may be discontinued or modified
by the Advisor at any time.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this Agreement.
10. Non-Exclusivity. The services of the Advisor to the Trust on behalf
of each Series are not to be deemed to be exclusive, and the Advisor shall be
free to render investment advisory or other services to others (including other
investment companies) and to engage in other activities, so long as its services
under this Agreement are not impaired thereby. It is understood and agreed that
officers or directors of the Advisor may serve as officers or Trustees of the
Trust, and that officers or Trustees of the Trust may serve as officers or
directors of the Advisor to the extent permitted by law; and that the officers
and directors of the Advisor are not prohibited from engaging in any other
business activity or from rendering services to any other person, or from
serving as partners, officers, trustees or directors of any other firm, trust or
corporation, including other investment companies.
11. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall remain in effect with respect to the Trust on behalf
of the Series until two years from the date first set forth above, and
thereafter, for periods of one year so long as such continuance thereafter is
specifically approved at least annually (a) by the 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 approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Series, subject to the
right of the Trust and the Advisor to terminate
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this contract as provided in this Section 12; provided, however, that if the
shareholders of the Series fail to approve the Agreement as provided herein, the
Advisor may continue to serve hereunder in the manner and to the extent
permitted by the 1940 Act as modified or interpreted by any applicable order or
orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC thereunder. The foregoing requirement that continuance of
this Agreement be `specifically approved at least annually' shall be construed
in a manner consistent with the 1940 Act as modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC thereunder.
This Agreement may be terminated as to the Series at any time, without
the payment of any penalty by vote of a majority of the Trustees of the Trust or
by vote of a majority of the outstanding voting securities of the Series on not
less than 60 days' written notice to the Advisor, or by the Advisor 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. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this Section 12, the term `assignment' shall have the
meaning as set forth in the 1940 Act as modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC.
12. Limitation of Liability of the Advisor; Indemnification.
The Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Series in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Advisor in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
13. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Currently such addresses are as follows: if to the Trust, Xxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, if to the Advisor, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
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.
15. Entire Agreement. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act as modified or interpreted by any applicable order
or orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC, when applicable.
16. Reports. The Trust and the Advisor agree to furnish to each other,
if applicable, current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information with
regard to their affairs as each may reasonably request.
17. Certain Records. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act which are prepared or
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maintained by the Advisor on behalf of the Trust are the property of the Trust
and will be surrendered promptly to the Trust on request.
18. Questions of Interpretation. 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 1940 Act shall be resolved by reference to such
term or provision of the 1940 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 SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is modified or interpreted by any applicable
order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC thereunder, such provision shall be deemed
to incorporate the effect of such order, rule, regulation or interpretative
release. Otherwise the provisions of this Agreement shall be interpreted in
accordance with the laws of Maryland.
19. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
[SEAL] XXXXXXX ADVISOR FUNDS III, on behalf
of Lifecycle Long Range Fund
Attest: /s/Xxxx Xxxxx By: /s/Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Name: Xxxx Xxxxx Title: Vice President and
Assistant Secretary
[SEAL] DEUTSCHE ASSET MANAGEMENT, INC.
Attest: /s/Xxxx Xxxxx By: /s/Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Name: Xxxx Xxxxx Title: Director and Assistant
Secretary
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EXHIBIT A
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TO INVESTMENT ADVISORY AGREEMENT
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MADE AS OF AUGUST 20, 2004
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BETWEEN
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XXXXXXX ADVISOR FUNDS III AND DEUTSCHE ASSET MANAGEMENT, INC.
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Trust Fee
Lifecycle Long Range Fund 0.65%
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