Exhibit d-1
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 8th day of September, 2003 by and between Xxxx Xxxxx
Management Inc., a New York corporation ("the Adviser") and The China-U.S.
Growth Fund, a registered open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act") and an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts and (the "Fund" or the "Trust").
WHEREAS, the Adviser is an investment adviser registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Fund desires to retain the Adviser to render certain investment
advisory services to the Fund and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of the terms, conditions, and mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT
The Fund hereby appoints the Adviser to act as an investment advisor
for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation provided herein.
2. DELIVERY OF DOCUMENTS
a) The Fund has furnished the Adviser with copies of the
following documents and will furnish the Adviser with copies
of all future amendments and supplements thereto, if any:
i) the Trust's Agreement and Declaration of Trust, as
filed with the Secretary of State of The Commonwealth
of Massachusetts on February 14, 2003;
ii) the Trust's By-laws;
iii) resolutions of the Trust's Board of Trustees
("Board") authorizing the appointment of the Adviser
and the execution and delivery of this Agreement;
iv) the Fund's Registration Statement on Form N-1A
("Registration Statement") under the Securities Act
of 1933, as amended (the "1933 Act") and under the
1940 Act as filed with the U.S. Securities and
Exchange Commission (the "SEC");
v) the Fund's Notification of Registration under the
1940 Act on Form N-8A as filed with the SEC; and
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vi) the currently effective Prospectus and Statement of
Additional Information of the Fund (collectively the
"Prospectus").
b) The Fund has furnished the Adviser with copies of the
following documents and will furnish the Adviser with copies
of all future amendments and supplements thereto, if any:
i) the Adviser's Uniform Application for Investment
Adviser Registration Form ("Form ADV");
ii) any written supervisory and operation policies and
procedures of the Adviser that the Board may
reasonably request;
iii) the Adviser's Code of Ethics which complies with Rule
17j-1 under the 1940 Act and related policies and
procedures;
iv) certificates of liability insurance evidencing the
Adviser's Errors and Omissions and Directors and
Officers Liability and Fidelity Bond Coverage; and
v) any other documents that the Board may reasonably
request.
3. INVESTMENT ADVISORY SERVICES
a) MANAGEMENT OF THE FUND. The Adviser shall provide for the
overall management of the Fund, subject to the supervision of
the Board and in accordance with this Agreement and the
Prospectus. In furtherance of the foregoing, the Adviser
shall:
i) provide a continuous investment program for the Fund,
including investment research and management with
respect to all securities and investments;
ii) make decisions with respect to all purchases and
sales of assets of the Fund ("Fund Assets");
iii) place orders for the investment and reinvestment of
Fund Assets;
iv) furnish the Fund with clerical and accounting
services and office facilities, as the Adviser deems
appropriate or as the Fund may reasonably request,
subject to the requirements of any regulatory
authority to which the Adviser may be subject; and
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v) take on behalf of the Fund, all actions the Adviser
may deem necessary in order to carry into effect such
investment program and which are consistent with the
Adviser's functions as provided above.
b) EMPLOYMENT AND APPOINTMENT OF THIRD PARTIES. In connection
with the performance of its duties under this Agreement, from
time to time the Adviser may employ or associate itself with
such persons as the Adviser believes to be particularly fitted
to assist the Adviser in the execution of its duties
hereunder. The Adviser shall bear all costs of performance of
such duties and no obligation may be incurred on the Fund's
behalf in such respect.
c) COVENANTS. The Adviser shall carry out its investment advisory
responsibilities in a manner consistent with: (i) the
Prospectus; (ii) any applicable laws, including but not
limited to the 1940 Act, the Advisers Act, the 1933 Act, and
Subchapter M of the Internal Revenue Code of 1986, as amended,
(iii) the Trust's By-Laws; (iv) the Trust's Agreement and
Declaration of Trust; and (v) such other investment policies,
procedures and/or limitations as adopted by the Trust with
respect to the Fund.
d) BOOKS AND RECORDS. The Adviser shall keep the books and
records with respect to the Fund's securities transactions
required to be maintained by or on behalf of the fund with
respect to advisory services rendered hereunder in accordance
with Section 31(a) of the 1940 Act and will furnish such
periodic and special reports as the Board may reasonably
request. The Adviser further agrees to preserve such records
of the Fund for the periods prescribed by Rule 31a-2 of the
1940 Act and any such other applicable laws, rules, and
regulations. The Adviser agrees that such records are the
property of the Fund and further agrees to surrender promptly
to the Fund any such records upon the Fund's request.
e) REPORTS, EVALUATIONS, AND OTHER SERVICES. The Adviser shall
render reports, evaluations, information or analyses to the
Board with respect to the performance of its duties under this
Agreement and the Fund, in such form and manner as the Board
may request from time to time.
f) PURCHASE AND SALE OF SECURITIES. The Adviser shall place all
orders for the purchase and sale of portfolio securities for
the Fund Assets with brokers or dealers selected by the
Adviser, which may include brokers or dealers affiliated with
the Adviser to the extent permitted by the 1940 Act and the
Trust's policies and procedures. The Fund understands that
Xxxx Xxxxx & Company Incorporated may be used as principal
broker or dealer for securities transactions, to the extent
permitted by law, but that no formula has been adopted for
allocation of the Fund Assets' investment transaction
business. The Adviser shall obtain the best price and the most
favorable execution available for the Fund. In assessing the
best overall terms available for any transaction, the Adviser
may consider various factors, including but not limited to,
the
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breadth of the market in the security, the price of the
security, the financial condition and execution capability of
the broker or dealer, research services provided to the
Adviser, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis.
In no event shall the Adviser be under any duty to obtain the
lowest commission or the best net price for the Fund on any
particular transaction. In connection with the placement of
orders, the Sub-Adviser will create and maintain all necessary
brokerage records of the Fund in accordance with all
applicable laws, rules, and regulations, including but not
limited to Section 31(a) of the 1940 Act and Section 3(d) of
this Agreement.
g) BROKERS OR DEALERS. The Adviser may, to the extent permitted
by law, including but not limited to Section 28(e) of the
Securities Exchange Act of 1934 (the "Exchange Act"), pay a
broker or dealer who provides research services to the Adviser
a commission for executing a portfolio transaction in excess
of the amount of commission another broker or dealer would
have charged for effecting such transaction if the Adviser
determines in good faith that the excess commission is
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in
terms of the particular transaction or the Adviser's overall
responsibilities with respect to the discretionary accounts
that it manages. The Adviser shall render a written report to
the Board, at least quarterly, regarding overall commissions
paid by the Fund and their reasonableness in relation to their
benefits to the Fund in accordance with Section 3(e) of this
Agreement.
h) AGGREGATION OF SECURITIES TRANSACTIONS. In executing portfolio
transactions for the Fund, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of its other clients if, in the Adviser's
reasonable judgment, such aggregation (i) will be likely to
result in an overall economic benefit to the Adviser's clients
as a whole, taking into consideration the advantageous selling
or purchase price, brokerage commission and other expenses,
and trading requirements and (ii) is not inconsistent with the
policies set forth in the Prospectus. In such event, the
Adviser will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable
manner and consistent with its fiduciary obligations to the
Fund.
4. REPRESENTATIONS AND WARRANTIES
a) The Adviser hereby represents and warrants to the Fund as follows:
i) The Adviser is a corporation duly organized and in
good standing under the laws of the State of New York
and is fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder;
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ii) The Adviser is registered as an investment adviser
with the SEC under the Advisers Act and shall
maintain such registration at all times during the
term of this Agreement;
iii) The Adviser at all times shall use its best judgment
and efforts in carrying out the Adviser's obligations
hereunder; and
iv) The Adviser shall maintain the following insurance
protection with respect to its obligations under this
Agreement: (i) Directors and Officers and Errors and
Omissions Insurance of such types and in such amounts
as the Adviser may reasonably deem necessary to
protect the Fund and its agents against loss from
errors or omission in performance of the Adviser's
duties and obligations described in or contemplated
by this Agreement; and (ii) Fidelity Bond Coverage of
Adviser personnel which may be required under
applicable law in connection with the Adviser's
services as Sub-Adviser under this Agreement. The
Adviser has provided the Fund with certificates of
liability insurance evidencing the foregoing,
attached hereto as Schedule A, and shall notify the
Fund of any material changes thereto.
b) The Fund hereby represents and warrants to the Adviser as
follows:
i) The Prospectus complies, in all material respects
with applicable regulatory and disclosure
requirements.
ii) The Trust has been duly organized as a business trust
under the laws of The Commonwealth of Massachusetts;
and
iii) The Trust is registered as an investment company with
the SEC under the 1940 Act, and shares of the Fund
are registered for offer and sale to the public under
the 1933 Act and all applicable state securities laws
where currently sold. Such registrations will be kept
in effect during the term of this Agreement.
5. COMPENSATION
As compensation for the services provided pursuant to this Agreement
the Fund shall pay the Adviser and the Adviser agrees to accept as full
compensation therefor an advisory fee, which shall be computed and
accrued daily and payable on the first business day of each calendar
month at the annual rate of 1.50% of the Fund's average daily net
assets. Such advisory fee shall begin to accrue on the date the
Registration Statement is declared effective by the SEC. If the
Registration Statement is declared effective by the SEC after the
beginning of a calendar month or this Agreement terminates prior to the
end of a
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calendar month, such advisory fee shall be prorated according to the
proportion which such portion of the month bears to the full calendar
month. For the purpose of determining the advisory fee payable to the
Adviser, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Prospectus, as in effect from
time to time. The Adviser shall have the right to waive or reduce any
portion of the advisory fee to which it is entitled under this
Agreement. Any such waiver shall be in writing.
6. LIMITATION OF LIABILITY OF THE TRUST
The Adviser acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its Declaration of
Trust.
7. LIMITATION OF ADVISER'S LIABILITY
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of
the Adviser or a breach of fiduciary duty with respect to receipt of
compensation, neither the Adviser nor any of its directors, officers,
shareholders, agents or employees shall be liable or responsible to the
Trust, the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any act or omission in the course of
or connected with rendering services hereunder or for any loss suffered
by the Trust, the Fund or any shareholder of the Fund in connection
with the performance of this Agreement. No warranty is given by the
Adviser as to the performance or profitability of any investments, cash
or other property forming part of or constituting the Fund. The Adviser
shall not take or omit to take any action which to the actual knowledge
of the individual taking or omitting to take such action would
prejudice the tax position of the Fund. Any stated limitations on
liability shall not relieve the Adviser from any responsibility or
liability the Advisor may have under state or federal statutes.
8. INDEMNIFICATION
The Fund agrees to fully indemnify the Adviser on demand from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, other than those directly resulting
from the willful misfeasance, bad faith or gross negligence on the part
of the Adviser, its directors, officers, or employees, which may be
imposed on, incurred by or asserted against the Adviser and related to
the services provided under this Agreement. The Adviser agrees to fully
indemnify the Fund on demand from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
directly resulting from the willful misfeasance, bad faith or gross
negligence on the part of the Adviser, its directors, trustees,
officers, or employees, which may be imposed on, incurred by or
asserted
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against the Fund related to the services provided under this Agreement.
The provisions of this Section 8 shall survive termination of this
Agreement.
9. NON-EXCLUSIVE SERVICES
The investment advisory and management services rendered by the Adviser
hereunder are not to be deemed exclusive and the Adviser shall be free
to provide similar investment advisory or management services to its
other clients, so long as its services under this Agreement are not
impaired thereby.
10. EFFECTIVE DATE, AMENDMENT, AND TERMINATION
a) This Agreement shall become effective as of the date on which
the Registration Statement becomes effective. The initial term
of this Agreement shall be for two (2) years. Thereafter, this
Agreement shall continue in effect for successive twelve (12)
month periods, provided such continuance is specifically
approved at least annually (i) by a vote of the majority of
the Board who are not parties to this Agreement or interested
persons of the Fund or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval and
(ii) by a vote of the Board or a majority of the outstanding
voting securities of the Fund.
b) This Agreement may be amended at any time by mutual consent of
the parties; the consent of the Trust must, except as
otherwise permitted by or under the 1940 Act, be approved (i)
by vote of a majority of the Board who are not parties to this
Agreement or interested persons of the Fund or the Adviser,
cast in person at a meeting called for the purpose of voting
on such amendment and (ii) by vote of a majority of the
outstanding voting securities of the Fund.
c) This Agreement may be terminated by either party as further
set forth in this Paragraph (c) at any time without payment of
any penalty. Upon termination, all advisory fees (as defined
in Section 5 of this Agreement) shall cease to accrue and
become due and payable. This Agreement may be terminated by
the Fund upon the vote of the Board or a majority of the
outstanding voting securities of the Fund on sixty (60) days'
prior written notice to the Adviser. This Agreement may be
terminated by the Adviser upon sixty (60) days' prior written
notice to the Fund. This Agreement shall terminate
automatically in the event of its assignment or termination of
this Agreement.
11. CERTAIN DEFINITIONS
The terms "majority of the outstanding voting securities,"
"assignment," and "interested persons," shall have the meanings set
forth in the 1940 Act.
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12. EXPENSES
During the term of this Agreement, the Adviser will bear its expenses
incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund. The Fund will bear certain other expenses,
including: payment of the advisory fee; custody, transfer and dividend
disbursing, and administration expenses; fees of Trustees who are not
affiliated persons of the Adviser; legal and auditing expenses,
clerical, accounting and other office costs; costs of preparing,
printing and distributing Prospectuses and Fund shareholder reports;
cost of maintaining the Fund's existence; interest charges, taxes,
brokerage fees and commissions; costs of stationary and supplies;
expenses and fees related to registration and filing with the SEC and
state regulatory authorities; costs of independent pricing service
retained to assist in valuing the Fund Assets; the Fund's proportionate
share of the insurance premiums; costs attributable to shareholder
services, including but not limited to, telephone and personnel
expenses; costs of Fund shareholder and Board meetings; and any
extraordinary expenses.
13. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of New York.
14. SEVERABILITY
If any provision of this Agreement shall become or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. NOTICES
All notices under this Agreement shall be given in writing and shall be
duly given if mailed or delivered to the Adviser at 000 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000 to the attention of Xxxxxxxxx X. Xxxx, Executive
Vice President and to the Fund at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
to the attention of Xxx X. Xxxxx, President. Notices shall be effective
upon delivery.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter herein and supersedes any prior
agreement or understanding between the parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the date written
above.
XXXX XXXXX MANAGEMENT, INC. THE CHINA-U.S. GROWTH FUND
By: /s/ XXXXXXXXX X. XXXX By: /s/ XXXXXXXXX X. XXXX
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Name: Xxxxxxxxx X. Xxxx Name: Xxxxxxxxx X. Xxxx
Title: Executive Vice President Title: Treasurer
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