FLAG INVESTORS PORTFOLIOS TRUST
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 29th day of September, 2000, by and
among FLAG INVESTORS PORTFOLIOS TRUST, a New York Trust (the "Trust") on behalf
of the COMMUNICATIONS PORTFOLIO (the "Portfolio"), INVESTMENT COMPANY CAPITAL
CORP., a Maryland corporation (the "Advisor"), and XXXX XXXXX INVESTMENT
MANAGEMENT, a Maryland limited partnership (the "Sub-Advisor").
WHEREAS, the Advisor is the investment advisor to the Trust, which is
an open-end, non-diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust and the Advisor wish to retain the Sub-Advisor for
purposes of rendering advisory services to the Portfolio and the Advisor in
connection with the Advisor's responsibilities to the Portfolio 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 SUB-ADVISOR. The Trust hereby appoints the
Sub-Advisor to act as the Portfolio's Sub-Advisor under the supervision of the
Trust's Board of Trustees and the Advisor, and the Sub-Advisor hereby accepts
such appointment, all subject to the terms and conditions contained herein.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Sub-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 and all amendments thereto (such Declaration of Trust, as
presently in effect and as they shall from time to time be amended, are
herein called the "Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
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(c) Resolutions of the Trust's Board of Trustees and
shareholders authorizing the appointment of the Sub-Advisor and approving
this Agreement;
(d) The Trust's Notification of Registration on Form N-8A
under the 1940 Act, it's Registration Statement on Form N-1A under the
1940 Act (No.811-8375), as filed with the Securities and Exchange
Commission (the "Commission") on May 23, 1997, including all amendments
thereto (together with the Registration Statement of the Trust, the
"Registration Statement").
The Trust will furnish the Sub-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.
3. DUTIES OF SUB-ADVISOR. In carrying out its obligations under
Section 1 hereof, the Sub-Advisor shall:
(a) provide the Portfolio with such executive, administrative
and clerical services as are deemed advisable by the Trust's Board of
Trustees;
(b) determine which issues and securities shall be represented
in the Portfolio and regularly report thereon to the Trust's Board of
Trustees;
(c) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly report
thereon to the Trust's Board of Trustees;
(d) take, on behalf of the Portfolio, all actions which appear
to the Trust necessary to carry into effect such purchase and sale
programs as aforesaid, including the placing of orders for the purchase
and sale of securities of the Portfolio; and
(e) 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 Portfolio, and whether concerning the individual issuers whose
securities are included in the Portfolio or the activities in which they
engage, or with respect to securities which the Advisor considers
desirable for inclusion in the Portfolio.
4. BROKER-DEALER RELATIONSHIPS. In circumstances when the
Sub-Advisor is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection, and negotiation of its brokerage commission
rates, the Sub-Advisor's primary consideration in effecting a security
transaction will be execution of orders at the most favorable price on an
overall basis. In performing this function the Sub-Advisor shall comply with
applicable policies established by the Board of Trustees and shall provide the
Board of Trustees with such reports as the Board of Trustees may require in
order to monitor the Portfolio's transaction activities. In
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selecting a broker-dealer to execute each particular transaction, the
Sub-Advisor will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Portfolio on a continuing basis. Accordingly, the price to the Portfolio
in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Trustees may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Portfolio to pay a broker-dealer that
provides brokerage and research services to the Sub-Advisor an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Advisor 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-dealer, viewed in terms of either that
particular transaction or the Sub-Advisor's overall responsibilities with
respect to the Portfolio. The Sub-Advisor is further authorized to allocate the
orders placed by it on behalf of the Portfolio to such broker-dealers who also
provide research or statistical material or other services to the Portfolio or
the Sub-Advisor. Such allocation shall be in such amounts and proportions as the
Sub-Advisor shall determine and the Sub-Advisor will report on said allocation
regularly to the Board of Trustees of the Trust, indicating the brokers to whom
such allocations have been made and the basis therefor.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Sub-Advisor may consider services in connection with the sale of shares of the
Portfolio as a factor in the selection of broker-dealers to execute portfolio
transactions for the Portfolio.
Subject to the policies established by the Board of Trustees in
compliance with applicable law, the Advisor may direct DB Alex. Xxxxx LLC ("DB
Alex. Xxxxx") to execute portfolio transactions for the Portfolio on an agency
basis. The commissions paid to DB Alex. Xxxxx 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 Portfolio or one or more other accounts of the
Sub-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 Sub-Advisor. DB Alex. Xxxxx and the Sub-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 will not deal with the Sub-Advisor or DB Alex. Xxxxx in any
transaction in which the Sub-Advisor or DB Alex. Xxxxx acts as a principal with
respect to any part of the Portfolio's order. If DB Alex. Xxxxx is participating
in an underwriting or selling
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group, the Portfolio may not buy portfolio securities from the group except in
accordance with policies established by the Board of Trustees in compliance with
rules of the SEC.
5. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations
concerning the Portfolio's investment program for the Portfolio proposed by the
Sub-Advisor to the Trust and the Advisor pursuant to this Agreement, as well as
any other activities undertaken by the Sub-Advisor on behalf of the Portfolio
pursuant hereto, shall at all times be subject to any applicable directives of
the Board of Trustees of the Trust.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Sub-Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder, as amended;
(b) the provisions of the Registration Statement of the Trust
under the 1940 Act;
(c) the provisions of the Declaration of Trust;
(d) the provision of the By-Laws; and
(e) any other applicable provisions of state and federal law.
7. EXPENSES. The expenses connected with the Portfolio shall be
allocable between the Trust, the Sub-Advisor and the Advisor as follows:
(a) The Sub-Advisor shall, subject to compliance with
applicable banking regulations, furnish, at its expense and without cost
to the Trust, the services of the President and certain Vice Presidents of
the Trust, to the extent that such officers may be required by the Trust
for the proper conduct of its affairs.
(b) The Sub-Advisor shall maintain, at its expense and without
cost to the Trust, a trading function in order to carry out its
obligations under Section 3 hereof to place orders for the purchase and
sale of portfolio securities for the Portfolio.
(c) The Trust assumes and shall pay or cause to be paid all
other expenses of the Portfolio, including, without limitation: payments
to the Advisor under the Investment Advisory Agreement between the Trust
and the Advisor, payment 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,
portfolio 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 portfolio securities
transactions to which the Portfolio is a party; all
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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 Trust 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 Portfolio'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 Trust's operation unless otherwise
explicitly provided herein.
8. COMPENSATION. For the services to be rendered hereunder by the
Sub-Advisor, the Advisor shall pay to the Sub-Advisor, as full compensation
therefor a fee calculated and accrued daily and the amounts of the daily
accruals paid monthly , at an annual rate equal to the percentage of the average
daily net assets of the Portfolio specified in Schedule A hereto. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last 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 calculations of the fees as set forth in Schedule A. Payment of the
Sub-Advisor's compensation for the preceding month shall be made as promptly as
possible.
9. DELEGATION OF RESPONSIBILITIES. The Sub-Advisor may, but shall
not be under any duty to, perform services on behalf of the Portfolio which are
not required by this Agreement upon the request of the Trust's Board of
Trustees. Such services will be performed on behalf of the Portfolio and the
Sub-Advisor's charges in rendering such services will be billed monthly to the
Trust, subject to examination by the Trust's independent certified public
accountants. Payment or assumption by the Sub-Advisor of any Trust expense that
the Sub-Advisor is not required to pay or assume under this Agreement shall not
relieve the Sub-Advisor of any of its obligations to the Trust nor obligate the
Sub-Advisor to pay or assume any similar Trust expenses on any subsequent
occasions.
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10. TERM. This Agreement shall become effective at 12:01 a.m. on the
date hereof and shall remain in force and effect, subject to Section 12 hereof,
for two years from the date hereof.
11. RENEWAL. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
(a)(i) by the Trust's Board of Trustees or (ii) by the vote of a
majority of the outstanding voting securities of the Trust or the
Portfolio (as defined in Section 2(a)(42) of the 1940 act); and
(b) by the affirmative vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of a party to this
Agreement (other than as Trustees of the Trust) by votes cast in person at
a meeting specifically called for such purpose.
12. TERMINATION. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Trust's Board of Trustees or
by vote of a majority of the outstanding voting securities of the Trust or the
Portfolio (as defined in Section 2(a)(42) of the 1940 Act), on sixty (60) days'
written notice to the Advisor and the Sub-Advisor. This Agreement may be
terminated at any time, without the payment of any penalty, by the Sub-Advisor
on sixty (60) days' written notice to the Trust and the Advisor. The notice
provided for herein may be waived by any person to whom such notice is required.
This Agreement shall automatically terminate in the event of its assignment (as
defined in Section 2(a)(4) of the 1940 Act).
13. NON-EXCLUSIVITY. The services of the Sub-Advisor to the Advisor
and the Trust are not to be deemed to be exclusive, and the Sub-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
partners of the Sub-Advisor may service as officers or Trustees of the Trust,
and that officers or Trustees of the Trust may serve as officers or partners
of the Sub-Advisor to the extent permitted by law; and that the partners of the
Sub-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 or directors of any other firm or corporation, including other
investment companies.
14. LIABILITY OF SUB-ADVISOR. In the performance of its duties
hereunder, the Sub-Advisor shall be obligated to exercise care and diligence and
to act in good faith and to use its best efforts within reasonable limits to
ensure the accuracy of all services performed under this Agreement, but the
Sub-Advisor shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of the
Sub-Advisor or its
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officers, directors or employees, or reckless disregard by the Sub-Advisor of
its duties under this Agreement.
15. 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. Until
further notice to the other party, it is agreed that the address of the Advisor
and of the Trust for this purpose shall be Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000. The address of the Sub-Advisor for this purpose shall be 000 Xxxx Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
16. 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 said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. Otherwise the provisions of this Agreement shall
be interpreted in accordance with the laws of Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date set forth above.
INVESTMENT COMPANY CAPITAL CORP.
/s/ Xxxxxxx X. Xxxx
-------------------
By: Xxxxxxx X. Xxxx
President
ALEX. XXXXX INVESTMENT MANAGEMENT
/s/ Xxxxx X. Xxxxxxx
--------------------
By: Xxxxx X. Xxxxxxx
Vice President and Principal
FLAG INVESTORS PORTFOLIOS TRUST on
behalf of COMMUNICATIONS PORTFOLIO
/s/ Xxx X. Xxxxxx
-----------------
By: Xxx X. Xxxxxx
Secretary
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SCHEDULE A
COMMUNICATIONS PORTFOLIO FEE
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(ANNUALIZED % OF AVERAGE
DAILY NET ASSETS)
0.65% OF FIRST $100 MILLION
0.60% OF NEXT $100 MILLION
0.55% OF NEXT $100 MILLION
0.50% OF NEXT $200 MILLION
0.45% OF NEXT $500 MILLION
0.42% OF NEXT $500 MILLION
0.40% OF PORTION IN EXCESS OF $1.5 BILLION
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