EXHIBIT 5.5
INVESTMENT ADVISORY AGREEMENT
Acorn Investment Trust, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company ("Acorn"), and Xxxxxx Asset Management, L.P., a
Delaware limited partnership registered under the Investment Advisers Act of
1940 as an investment adviser ("WAM"), agree that:
1. Engagement of WAM. Acorn appoints WAM to furnish investment advisory
and other services to Acorn for its series designated Acorn Fund, Acorn
International and Acorn USA (each, a "Fund"), and WAM accepts that appointment,
for the period and on the terms set forth in this agreement.
If Acorn establishes one or more series in addition to the Funds named
above with respect to which it desires to retain WAM as investment adviser
hereunder, and if WAM is willing to provide such services under this agreement,
Acorn and WAM may add such new series to this agreement, by written supplement
to this agreement. Such supplement shall include a schedule of compensation to
be paid to WAM by Acorn with respect to such series and such other modifications
of the terms of this agreement with respect to such series as Acorn and WAM may
agree. Upon execution of such a supplement by Acorn and WAM, that series will
become a Fund hereunder and shall be subject to the provisions of this agreement
to the same extent as the Funds named above, except as modified by the
supplement.
2. Services of WAM.
(a) Investment Management. Subject to the overall supervision and control
of Acorn's board of trustees (the "Board"), WAM shall have supervisory
responsibility for the general management and investment of the Funds' assets.
WAM shall comply with the 1940 Act and with all applicable rules and regulations
of the Securities and Exchange Commission, the provisions of the Internal
Revenue Code applicable to the Funds as regulated investment companies, the
investment policies and restrictions, portfolio transaction policies and the
other statements concerning the Funds in Acorn's agreement and declaration of
trust, bylaws, and registration statements under the 1940 Act and the Securities
Act of 1933 (the "1933 Act"), and policy decisions and procedures adopted by the
Board from time to time.
WAM is authorized to make the decisions to buy and sell securities and
other assets for the Funds, to place the Funds' portfolio transactions with
broker-dealers, and to negotiate the terms of such transactions including
brokerage commissions on brokerage transactions, on behalf of the Funds. WAM is
authorized to exercise discretion within the Funds' policy concerning allocation
of its portfolio brokerage, as permitted by law, including but not limited to
section 28(e) of the Securities Exchange Act of 1934, and in so doing shall not
be required to make any reduction in its investment advisory fees.
(b) Reports and Information. WAM shall furnish to the Board periodic
reports on the investment strategy and performance of the Funds and such
additional reports and information as the Board or the officers of Acorn may
reasonably request.
(c) Customers of Financial Institutions. It is understood that WAM may,
but shall not be obligated to, make payments from its own resources to financial
institutions (which may include banks, broker-dealers, recordkeepers,
administrators and others) that provide, either directly or through agents,
administrative and other services with respect to shareholders who are customers
of such institutions, including establishing shareholder accounts, assisting
Acorn's transfer agent with respect to recording purchase and redemption
transactions, advising shareholders about the status of their accounts, current
yield and dividends declared and such related services as the shareholders or
the Funds may request.
(d) Confidentiality. WAM shall treat confidentially and as proprietary
information of Acorn all records and other information relating to Acorn or to
prior, present or potential shareholders of Acorn, and will not use such records
or information for any purpose other than in the performance of its
responsibilities and duties hereunder, except (i) after prior notification to
and approval by Acorn, (ii) when so requested by Acorn, or (iii) as required by
applicable law or regulation, provided that, in the case of any disclosure
pursuant to applicable law or regulation, WAM shall, to the extent it is
reasonably able to do so, provide Acorn with prior notice in order to allow
Acorn to contest such request, requirement or order.
(e) Books and Records. In compliance with the requirements of Rule 31a-3
under the 0000 Xxx, XXX agrees to maintain records relating to its services
under this agreement, and further agrees that all records that it maintains for
Acorn are the property of Acorn and to surrender promptly to Acorn any of such
records upon Acorn's request. WAM further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 3la-1 under the 1940 Act.
(f) Status of WAM. WAM shall for all purposes herein be deemed to be an
independent contractor and not an agent of Acorn and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent
Acorn in any way. WAM agrees to notify the Trust promptly of any change in the
identity of WAM's general partner.
3. Expenses to be Paid by Trust. Except as otherwise provided in this
agreement or any other contract to which Acorn is a party, Acorn shall pay all
expenses incidental to its organization, operations and business, including,
without limitation:
(a) all charges of depositories, custodians, sub-custodians and other
agencies for the safekeeping and servicing of its cash, securities and
other property and of its transfer agents and registrars and its
dividend disbursing and redemption agents, if any;
(b) all charges of its administrator, if any;
(c) all charges of legal counsel and of independent auditors;
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(d) all compensation of trustees other than those affiliated with WAM or
Acorn's administrator, if any, and all expenses incurred in connection
with their services to Acorn;
(e) all expenses of preparing, printing and distributing notices, proxy
solicitation materials and reports to shareholders of the Funds;
(f) all expenses of meetings of shareholders of the Funds;
(g) all expenses of registering and maintaining the registration of Acorn
under the 1940 Act and of shares of the Funds under the 1933 Act,
including all expenses of preparation, filing and printing of annual
or more frequent revisions of the Funds' registration statements under
the 1940 Act and 1933 Act, and of supplying each then existing
shareholder or beneficial owner of shares of the Funds of a copy of
each revised prospectus or supplement thereto, and of supplying a copy
of the statement of additional information upon request to any then
existing shareholder;
(h) all costs of borrowing money;
(i) all expenses of publication of notices and reports to shareholders and
to governmental bodies or regulatory agencies;
(j) all taxes and fees payable to federal, state or other governmental
agencies, domestic or foreign, and all stamp or other taxes;
(k) all expenses of printing and mailing certificates for shares of a
Fund;
(l) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board;
(m) all expenses of qualifying and maintaining qualification of, or
providing appropriate notification of intention to sell relating to,
shares of the Funds under the securities laws of the various states
and other jurisdictions, and of registration and qualification of
Acorn under any other laws applicable to Acorn or its business
activities;
(n) all fees, dues and other expenses related to membership of Acorn in
any trade association or other investment company organization; and
(o) any extraordinary expenses.
In addition to the payment of expenses, Acorn shall also pay all brokers'
commissions and other charges relating to the purchase and sale of portfolio
securities for each Fund.
4. Allocation of Expenses Paid by Acorn. Any expenses paid by Acorn that
are attributable solely to the organization, operation or business of a Fund or
Funds shall be paid solely out of the assets of that Fund or Funds. Any expense
paid by Acorn that is not solely attributable to a Fund or Funds, nor solely to
any other series of Acorn, shall be apportioned in such manner as Acorn or
Acorn's administrator determines is fair and appropriate, or as otherwise
specified by the Board.
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5. Expenses to be Paid by WAM. WAM shall furnish to Acorn, at WAM's own
expense, office space and all necessary office facilities, equipment and
personnel required to provide its services pursuant to this agreement. WAM shall
also assume and pay all expenses of marketing shares of the Funds and all
expenses of placement of securities orders and related bookkeeping.
6. Compensation of WAM. For the services to be rendered and the expenses
to be assumed and to be paid by WAM under this agreement, Acorn shall pay to WAM
fees accrued daily and paid monthly at the annual rates shown below:
Acorn Fund
Assets Rate of Fee
------ -----------
First $700 million 0.75%
$700 million to $2 billion 0.70%
In excess of $2 billion 0.65%
Acorn International
Assets Rate of Fee
------ -----------
First $100 million 1.20%
$100 million to $500 million 0.95%
In excess of $500 million 0.75%
Acorn USA
Assets Rate of Fee
------ -----------
First $200 million 0.95%
In excess of $200 million 0.90%
The fees attributable to each Fund shall be a separate charge to such Fund and
shall be the several (and not joint or joint and several) obligation of each
such Fund.
7. Services of WAM Not Exclusive. The services of WAM to Acorn under this
agreement are not exclusive, and WAM shall be free to render similar services to
others so long as its services under this agreement are not impaired by such
other activities.
8. Services Other Than as Adviser. Within the limits permitted by law,
WAM may receive compensation from Acorn for other services performed by it for
Acorn which are not within the scope of the duties of WAM under this agreement,
including the provision of brokerage services.
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9. Standard of Care. To the extent permitted by applicable law, neither
WAM nor any of its partners, officers, agents or employees shall be liable to
Acorn or its shareholders for any loss suffered by Acorn or its shareholders as
a result of any error of judgment, or any loss arising out of any investment, or
as a consequence of any other act or omission of WAM in the performance of its
duties under this agreement, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the part of WAM, or by reason of
reckless disregard by WAM of its obligations and duties under this agreement.
10. Effective Date, Duration and Renewal. This agreement shall become
effective on January 1, 1998. Unless terminated as provided in Section 11, this
agreement shall continue in effect as to a Fund until June 30, 1999 and
thereafter from year to year only so long as such continuance is specifically
approved at least annually (a) by a majority of those trustees who are not
interested persons of Acorn or of WAM, voting in person at a meeting called for
the purpose of voting on such approval, and (b) by either the Board or vote of
the holders of a "majority of the outstanding shares" of that Fund (which term
as used throughout this agreement shall be construed in accordance with the
definition of "vote of a majority of the outstanding voting securities of a
company" in section 2(a)(42) of the 1940 Act).
11. Termination. This agreement may be terminated as to a Fund at any
time, without payment of any penalty, by the Board, or by a vote of the holders
of a majority of the outstanding shares of that Fund, upon 60 days' written
notice to WAM. This agreement may be terminated by WAM at any time upon 60 days'
written notice to Acorn. This agreement shall terminate automatically in the
event of its assignment (as defined in Section 2(a)(4) of the 1940 Act).
12. Amendment. This agreement may not be amended as to a Fund without the
affirmative vote (a) of a majority of those trustees who are not "interested
persons" (as defined in section 2(a)(19) of the 0000 Xxx) of Acorn or of WAM,
voting in person at a meeting called for the purpose of voting on such approval,
and (b) of the holders of a majority of the outstanding shares of that Fund.
13. Non-Liability of Trustees and Shareholders. All obligations of Acorn
hereunder shall be binding only upon the assets of Acorn (or the appropriate
Fund) and shall not be binding upon any trustee, officer, employee, agent or
shareholder of Acorn. Neither the authorization of any action by the Trustees or
shareholders of Acorn nor the execution of this agreement on behalf of Acorn
shall impose any liability upon any trustee, officer or shareholder of Acorn.
14. Notices. Any notice, demand, change of address or other communication
to be given in connection with this agreement shall be given in writing and
shall be given by personal delivery, by registered or certified mail or by
transmittal by facsimile or other electronic medium addressed to the recipient
as follows:
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If to WAM: Xxxxxx Asset Management, L.P.
Attention: Xxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
If to Acorn: Acorn Investment Trust
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
with a copy to:
Xxxx, Xxxx & Xxxxx
Attention: Xxxxx X. Xxxxx
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 312/000-0000
Facsimile: 312/372-2098
All notices shall be conclusively deemed to have been given on the day of
actual delivery thereof and, if given by registered or certified mail, on the
fifth business day following the deposit thereof in the mail and, if given by
facsimile or other electronic medium, on the day of transmittal thereof.
15. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Illinois and the laws of the United
States of America applicable to contracts executed and to be performed therein.
Dated: January 1, 1998
ACORN INVESTMENT TRUST
By
-----------------------
Xxxxx Xxxxxx, President
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XXXXXX ASSET MANAGEMENT, L.P.
By Xxxxxx Asset Management, Ltd.,
Its General Partner
By ______________________________
Xxxxx Xxxxxx, President
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