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EXHIBIT (d)(ii)(I)
AMERICAN AADVANTAGE MILEAGE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 16th day of January, 1998 by and between AMR
Investment Services, Inc., a Delaware Corporation (the "Manager"), and
Brandywine Asset Management, Inc., a wholly owned subsidiary of Xxxx Xxxxx, Inc.
(the "Adviser");
WHEREAS, American AAdvantage Mileage Funds (the "Trust"), a
Massachusetts Business Trust, is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act"), consisting of several portfolios of shares, each having its own
investment policies; and
WHEREAS, the Trust has retained the Manager to provide the Trust with
business and asset management services, subject to the control of the Trust's
Board of Trustees;
WHEREAS, the Trust's agreement with the Manager permits the Manager to
delegate to other parties certain of its asset management responsibilities; and
WHEREAS, the Manager desires to retain the Adviser to render investment
management services to the Trust with respect to certain of its investment
portfolios and such other investment portfolios as the Trust and the Adviser may
agree upon and so specify in the Schedule(s) attached hereto (collectively, the
"Portfolios") and as described in the Trust's registration statement on Form
N-1A as amended from time to time, and the Adviser is willing to render such
services;
NOW THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF ADVISER. The Manager employs the Adviser to manage the
investment and reinvestment of such portion, if any, of the Portfolios' assets
as is designated by the Manager from time to time, and, with respect to such
assets, to continuously review, supervise, and administer the investment program
of the Portfolios, to determine in the Adviser's discretion the securities to be
purchased or sold, to provide the Manager and the Trust with records concerning
the Adviser's activities which the Trust is required to maintain, and to render
regular reports to the Manager and to the Trust's officers and Trustees
concerning the Adviser's discharge of the foregoing
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responsibilities. The Adviser shall discharge the foregoing responsibilities
subject to the Manager's oversight and the control of the officers and the
Trustees of the Trust and in compliance with such policies as the Trustees may
from time to time establish, and in compliance with the objectives, policies,
and limitations for each such Portfolio set forth in the Trust's current
registration statement as amended from time to time, and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services for the compensation specified herein and to provide at its own expense
the office space, furnishings and equipment and the personnel required by it to
perform the services on the terms and for the compensation provided herein.
(With respect to any of the Portfolio assets allocated for management by the
Adviser, the Adviser can request that the Manager make the investment decisions
with respect to that portion of assets which the Adviser deems should be
invested in short-term money market instruments. The Manager agrees to provide
this service.) The Manager will instruct the Trust's Custodian(s) to hold and/or
transfer the Portfolios' assets in accordance with Proper Instructions received
from the Adviser. (For this purpose, the term "Proper Instructions" shall have
the meaning(s) specified in the applicable agreement(s) between the Trust and
its custodian(s).) The Adviser will not be responsible for the cost of
securities or brokerage commissions or any other Trust expenses except as
specified in this Agreement.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers (including, to the extent permitted by law and applicable
Trust guidelines, the Adviser or any of its affiliates) that will execute the
purchases and sales of portfolio securities for the Portfolios and is directed
to use its best efforts to obtain the best net results with respect to brokers'
commissions and discounts as described in the Trust's current registration
statement as amended from time to time. In selecting brokers or dealers, the
Adviser may give consideration to factors other than price, including, but not
limited to, research services and market information. Any such services or
information which the Adviser receives in connection with activities for the
Trust may also be used for the benefit of other clients and customers of the
Adviser or any of its affiliates. The Adviser will promptly communicate to the
Manager and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by
the Adviser as provided in Sections 1 and 2 of this
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Agreement, the Manager shall pay to the Adviser compensation at the rate
specified in Schedule A attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser quarterly in arrears, and shall be
calculated by applying the annual percentage rate(s) as specified in the
attached Schedule A to the average month-end assets of the specified portfolios
during the relevant quarter. Solely for the purpose of calculating the
applicable annual percentage rates specified in the attached Schedule(s), there
shall be included such other assets as are specified in said Schedule(s).
The Adviser agrees that the fee charged to the Manager will be no more
than that charged for any other client of similar type. Furthermore, the Adviser
agrees to notify the Manager on a timely basis of any fee schedule it enters
into with any other client of similar type which is lower than the fee paid by
the Manager.
4. OTHER SERVICES. At the request of the Trust or the Manager, the
Adviser in its discretion may make available to the Trust office facilities,
equipment, personnel, and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Adviser and
billed to the Trust or the Manager at a price to be agreed upon by the Adviser
and the Trust or the Manager.
5. REPORTS. The Manager (on behalf of the Trust) and the Adviser agree
to furnish to each other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified statements of financial condition, and such
other information with regard to their affairs as each may reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser and its directors, officers, employees
and affiliates shall be free to render similar services to others so long as its
services to the Trust are not impaired thereby. The Adviser shall be deemed to
be an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Manager or the Trust
in any way or otherwise be deemed an agent to the Manager or the Trust.
7. 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 maintained by the Adviser on behalf of the
Manager or the Trust
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are the property of the Manager or the Trust and will be surrendered promptly to
the Manager or Trust on request.
8. LIABILITY OF ADVISER. No provision of this Agreement shall be deemed
to protect the Adviser against any liability to the Trust or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance, bad
faith, or gross negligence in the performance of its duties or the reckless
disregard of its obligations under this Agreement.
9. PERMISSIBLE INTERESTS. To the extent permitted by law, Trustees,
agents, and shareholders of the Trust are or may be interested in the Adviser
(or any successor thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of the
Adviser are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor thereof) is or may be interested in
the Trust as a shareholder or otherwise; provided that all such interests shall
be fully disclosed between the parties on an ongoing basis and in the Trust's
registration statement as required by law.
10. DURATION AND TERMINATION. This Agreement, unless sooner terminated
as provided herein, shall continue for two years after its initial approval as
to each Portfolio and thereafter for periods of one year for 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 each
Portfolio; provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to serve
hereunder in the manner and to the extent permitted by the 1940 Act and rules
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 and the rules and regulations thereunder. This
Agreement may be terminated as to any Portfolio at any time, without the payment
of any penalty, by the Manager, by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Portfolio on not less than 30 days' nor more than 60 days' written notice to the
Adviser, or by the Adviser at any time without the payment of any penalty, on 60
days' written notice to the Trust. This Agreement will automatically and
immediately terminate in the
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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 the
primary office of such party, unless such party has previously designated
another address.
As used in this Section 10, the terms "assignment," "interested
persons," and a "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
11. 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.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is not binding upon any of the Trustees, officers, or
shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
Brandywine Asset Management, Inc. AMR Investment Services, Inc.
By By
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Title Title President
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Amendment dated October 15, 1998 to
Schedule A of the
American AAdvantage Mileage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Brandywine Asset Management, Inc.
AMR Investment Services, Inc. shall pay compensation to Brandywine
Asset Management Inc. pursuant to section 3 of the Investment Advisory Agreement
between said for rendering investment management services with respect to the
Growth and Income, Balanced and Small Cap Value Funds in accordance with the
following annual percentage rates:
Balanced Fund and Growth and Income Fund
For assets up to $500 million:
Growth and Income Fund: 0.25%
Balanced Fund: 0.225%
For assets $500 - 600 million: 0.225%
For assets over $600 million: 0.20%
In calculating the amount of assets under management solely for the
purpose of determining the applicable percentage rate, there shall be included
all other assets or trust assets of American Airlines, Inc. also under
management by the Adviser.
For purposes of calculating the fee for assets between $500 million and
$600 million, the reduced fee rate will be applied pro rata based on assets for
each equity portfolio. For purposes of calculating the fee for assets over $600
million, the reduced fee rate will be applied pro rata based on assets for each
portfolio, except the Small Cap Value Portfolio.
Small Cap Value Fund
0.50% for assets up to $100 million
0.45% for assets between $100 million and $250 million
0.40% for assets over $250 million
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another investment company, however, no portion of the
advisory fee attributable to that Fund as specified above shall be paid for the
period that such Fund's assets are so invested.
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IN WITNESS WHEREOF, the parties have executed the foregoing amendment
effective as of October 15, 1998.
Brandywine Asset Management AMR Investment Services,Inc.
By By
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Xxxxxxx X. Xxxxx
President
Title
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