SUB-INVESTMENT ADVISORY AGREEMENT
April 13, 1995
Emerging Markets Management
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Dear Sirs:
Xxxxxxxx Xxxxxxxx/Xxxxxx, Xxxxxxx Investment Trust II, a business
trust formed under the laws of the Commonwealth of Massachusetts (the 'Trust')
and Xxxxxxxx Xxxxxxxx Asset Management Inc. ('Xxxxxxxx Xxxxxxxx'), the Fund's
manager, confirm their agreement with Emerging Markets Management, a partnership
organized under the laws of the District of Columbia ('EMM'), with respect to
EMM's serving as the investment adviser of Xxxxxxxx Xxxxxxxx/Xxxxxx, Xxxxxxx
Emerging Markets Equity Fund (the 'Fund'), a series of the Trust, as follows:
Section 1. Services as Investment Adviser.
(a) The Trust anticipates that the Fund will employ its capital by
investing and reinvesting in investments of the type specified in the Trust's
Declaration of Trust dated August 10, 1992, as amended from time to time (the
'Declaration of Trust'), and in the current Prospectus and Statement of
Additional Information describing the Fund as from time to time in effect, and
in the manner and to the extent approved by the Board of Trustees of the Trust.
Copies of the current Prospectus and Statement of Additional Information
describing the Fund have been submitted to EMM and Xxxxxxxx Xxxxxxxx.
(b) Under an agreement dated as of April 13, 1995 between the Trust
and Xxxxxxxx Xxxxxxxx relating to the Fund (the 'Management Agreement'),
Xxxxxxxx Xxxxxxxx serves as the Fund's manager and has the responsibility of
selecting and compensating an investment adviser to the Fund. Acting pursuant to
the authority provided in the Management Agreement, Xxxxxxxx Xxxxxxxx selects
EMM
to serve as the Fund's investment adviser for the compensation set out in
Section 4 of this Agreement.
(c) Subject to the supervision and direction of the Trust's Board of
Trustees, and subject to review by Xxxxxxxx Xxxxxxxx, EMM, as the Fund's
investment adviser, will manage the Fund's portfolio in accordance with the
investment objective and stated policies of the Fund, will make investment
decisions for the Fund and will place purchase and sale orders for the Fund's
portfolio transactions.
(d) EMM will, at its own expense, maintain sufficient staff, and
employ or retain sufficient personnel and consult with any other persons that it
determines may be necessary or useful to the performance of its obligations
under this Agreement.
(e) EMM will notify Xxxxxxxx Xxxxxxxx and the Trust of any changes in
the membership of EMM within ten (10) days after that change has occurred.
Section 2. Selection of Investments on Behalf of the Fund.
Unless otherwise set forth in the current Prospectus describing the
Fund or directed by Xxxxxxxx Xxxxxxxx or the Trust, EMM will, in selecting
brokers or dealers to effect transactions on behalf of the Fund, give primary
consideration to securing the most favorable price and efficient execution. In
so doing, EMM may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any transaction to which the Fund is a party or other transactions
to which other clients of EMM may be a party. The Trust recognizes the
desirability of EMM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Fund than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes EMM, to the
extent permitted by applicable law and regulations, to pay higher brokerage
commissions for the purchase and sale of securities for the Fund to brokers who
provide supplemental investment and market research and security and economic
analyses, subject to review by the Trustees of the Trust and of Xxxxxxxx
Xxxxxxxx from time to time with respect to the extent and continuation of this
practice. The Trust understands that the services provided by those brokers may
be useful to EMM in connection with its services to other clients.
Section 3. Costs and Expenses.
EMM will bear the cost of rendering the services it is obligated to
provide under this Agreement and will, at its own
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expense, pay the salaries of all officers and employees who are employed by it.
EMM will provide the Fund with investment officers who are authorized by the
Trust's Board of Trustees to execute purchases and sales of securities on behalf
of the Fund and will employ a professional staff of portfolio managers who draw
upon a variety of sources for research information for the Fund. Other expenses
to be incurred in the operation of the Fund and not specifically borne by
Xxxxxxxx Xxxxxxxx or EMM will be borne by the Fund, including: Xxxxxxxx
Xxxxxxxx' fees for services rendered under the Management Agreement; shareholder
servicing and distribution fees paid to Xxxxxxxx Xxxxxxxx under the terms of the
Trust's plan adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the '1940 Act'); charges and expenses of any registrar,
custodian, transfer and dividend disbursing agent providing services to the
Trust in connection with the Fund; brokerage fees and commissions; taxes;
engraving and printing of the Fund's share certificates, if any; registration
costs of the Fund and its shares under federal and state securities laws; the
cost and expense of printing, including typesetting, and distributing of
prospectuses describing the Fund and supplements to those prospectuses to
regulatory authorities and the Fund's shareholders; all expenses incurred in
conducting meetings of the Fund's shareholders and meetings of the Trust's Board
of Trustees relating to the Fund; all expenses incurred in preparing, printing
and mailing proxy statements and reports to shareholders of the Fund; fees and
travel expenses of members of the Trust's Board of Trustees or members of any
advisory board or committee who are not employees of Xxxxxxxx Xxxxxxxx, EMM, or
any of their affiliates; all expenses incident to any dividend, withdrawal or
redemption options provided to Fund shareholders; charges and expenses of any
outside service used for pricing the Fund's portfolio securities and calculating
the net asset value of the Fund's shares; fees and expenses of legal counsel,
including counsel to the members of the Trust's Board of Trustees who are not
interested persons of the Fund, Xxxxxxxx Xxxxxxxx or EMM, and independent
auditors; membership dues of industry associations; interest on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Trust that inure to their benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto); and all other costs of the
Fund's operations.
Section 4. Compensation.
In consideration of services rendered pursuant to this Agreement,
Xxxxxxxx Xxxxxxxx will pay EMM on the Trust's first business day of each month a
fee that is accrued daily at the annual rate of 1.12% of the value of the Fund's
average daily net assets on assets up to $100 million and 0.90% on the fund's
average daily net assets equal to or in excess of $100 million. The fee for the
period from the date the Trust's registration statement
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describing the Fund (the 'Registration Statement') is declared effective by the
Securities and Exchange Commission (the 'Commission') to the end of the month
during which the Registration Statement is declared effective by the Commission
will be prorated according to the proportion that the period bears to the full
monthly period. Upon any termination of this Agreement before the end of a
month, the fee for the portion of the month in which this Agreement is in effect
will be prorated according to the proportion that the portion bears to the full
monthly period and will be payable upon the date of termination of this
Agreement. For the purposes of determining fees payable to EMM under this
Agreement, the value of the Fund's net assets will be computed in the manner
described in the Trust's current Prospectus and/or Statement of Additional
Information describing the Fund.
Section 5. Excess Expense Reimbursement.
If, in any fiscal year of the Fund, the aggregate expenses of the Fund
(including management fees, but excluding interest, taxes, brokerage and, with
the prior written consent of the necessary state securities authorities,
extraordinary expenses) exceed the expense limitation of any state having
jurisdiction over the Trust, EMM will not be required to reimburse Xxxxxxxx
Xxxxxxxx for any amount Xxxxxxxx Xxxxxxxx is required to reimburse the Trust
under the Management Agreement.
Section 6. Services to Other Companies or Accounts.
(a) The Trust and Xxxxxxxx Xxxxxxxx understand and acknowledge that
EMM now acts and will continue to act as investment manger or adviser to various
fiduciary or other managed accounts, and the Trust and Xxxxxxxx Xxxxxxxx have no
objection to EMM's so acting, so long as that when the Fund and any account
served by EMM are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be allocated in
a manner believed by EMM to be equitable to the Fund and the account. The Trust
and Xxxxxxxx Xxxxxxxx recognize that, in some cases, this procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtained or disposed of by the Fund.
(b) The Trust and Xxxxxxxx Xxxxxxxx understand and acknowledge that
the persons employed by EMM to assist in the performance of its duties under
this Agreement will not devote their full time to that service; nothing
contained in this Agreement will be deemed to limit or restrict the right of EMM
or any affiliate of EMM to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
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Section 7. Continuance and Termination of the Agreement.
(a) This Agreement will become effective as of April 13, 1995, and
will continue for an initial two-year term and will continue thereafter so long
as the continuance is specifically approved at least annually (a) by the
Trustees of the Trust or (b) by a vote of a majority of the Fund's outstanding
voting securities, as defined in the 1940 Act, provided that in either event the
continuance is also approved by a majority of the Trustees who are not
'interested persons' (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on the approval.
(b) This Agreement is terminable without penalty, by the Trust on not
more than 60 nor less than 30 days' notice to Xxxxxxxx Xxxxxxxx and EMM, by vote
of holders of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, or by Xxxxxxxx Xxxxxxxx or EMM on not more than 60 nor less
than 30 days' notice to the Trust.
(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).
Section 8. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts and with the Boston
City Clerk.
Section 9. Limitation of Liability.
(a) EMM will not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
management of the Fund, except for a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of EMM in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. The Trust, in respect of the Fund, shall reimburse to EMM its
reasonable attorneys' fees and other expenses incurred in the defense of any
suit or proceeding arising out of circumstances described in the preceding
sentence, provided that any such reimbursement is consistent with the statement
of the position of the staff of The Securities and Exchange Commission regarding
indemnification by investment companies (Investment Company Act Release No.
11330 (September 4, 1980) or any successor statement relating to indemnification
by investment companies and reimbursement of expenses related thereto. Any
person, even though
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also an officer, director, employee or agent of EMM, who may be or become an
officer, Trustee, employee or agent of the Trust, will be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
services to, or acting solely for, the Trust and not as an officer, director,
employee or agent, or one under the control or direction of, EMM even though
paid by EMM.
(b) The Trust, Xxxxxxxx Xxxxxxxx and EMM agree that the obligations of
the Trust under this Agreement will not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Trust, as provided in the Declaration of Trust. The execution
and delivery of this Agreement have been authorized by the Trustees of the
Trust, and signed by an authorized officer of the Trust, acting as such, and
neither the authorization by the Trustees nor the execution and delivery by the
officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the trust
property of the Trust as provided in the Declaration of Trust. No series of the
Trust, including the Fund, will be liable for any claims against any other
series.
Section 10. Choice of Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the choice of law
provisions thereof.
Section 11. Dates.
This Agreement has been executed by the Trust and Xxxxxxxx Xxxxxxxx as
of April 13, 1995 and will become effective as of that date.
* * * * * *
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If the terms and conditions described above are in accordance with
your understanding, kindly indicate your acceptance of this Agreement by signing
and returning to us the enclosed copy this Agreement.
XXXXXXXX XXXXXXXX/XXXXXX, XXXXXXX
INVESTMENT TRUST II
By:___________________________________
XXXXXXXX XXXXXXXX ASSET MANAGEMENT
INC.
By:_________________________________
Accepted:
EMERGING MARKETS MANAGEMENT
BY: EMERGING MARKETS INVESTORS CORPORATION
Managing Partner
By:______________________________
President
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