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Exhibit 5
INVESTMENT ADVISORY AGREEMENT
July 19, 1996
Sierra Investment Services Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
Sierra Asset Management Portfolios (the "Trust"), an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts,
hereby agrees with Sierra Investment Services Corporation ("Sierra Services"), a
corporation organized under the laws of the state of California, as follows:
1. Investment Description; Appointment
The Trust desires to employ the capital of the Trust's Income, Value,
Balanced, Growth and Capital Growth Portfolios (each, a "Portfolio," and
together, the "Portfolios") by investing and reinvesting in investments of the
kind and in accordance with the limitations specified in the Trust's Agreement
and Declaration of Trust, as amended (the "Trust Agreement"), and in its
prospectus(es) and statement(s) of additional information relating to the
Portfolios as from time to time in effect (the "Prospectus" and the "Statement
of Additional Information", respectively), and in such manner and to such extent
as may from time to time be approved by the Board of Trustees of the Trust.
Copies of the Prospectus, Statement of Additional Information and Trust
Agreement have been or will be submitted to Sierra Services. The Trust agrees to
provide copies of all amendments to the Prospectus, Statement of Additional
Information and Trust Agreement to Sierra Services on an on-going basis. The
Trust desires to employ and hereby appoints Sierra Services to act as investment
advisor to the Portfolios. Sierra Services accepts the appointment and agrees to
furnish the services described herein for the compensation set forth below.
2. Services as Investment Advisor
Subject to the supervision and direction of the Board of Trustees of
the Trust, Sierra Services has general oversight responsibility for the
investment advisory services provided to the
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Portfolios and will exercise this responsibility in accordance with the Trust
Agreement, the Investment Company Act of 1940, as amended (the "1940 Act"), and
the Investment Advisers Act of 1940, as amended, and with the Portfolios'
investment objectives and policies as stated in the Prospectus and Statement of
Additional Information relating to the Portfolios as from time to time in
effect. In connection therewith, Sierra Services will, among other things, (a)
participate in the formulation of the Portfolios' investment policies, (b)
analyze economic trends affecting the Portfolios, (c) monitor the expenses
incurred by the Portfolios, (d) monitor the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended) that are provided to each Portfolio and may be considered by the
Portfolio's investment advisor or sub-advisor, if any, in selecting brokers or
dealers to execute particular transactions and (e) monitor and evaluate the
services provided by each Portfolio's investment sub-advisor, if any, under its
investment sub-advisory agreement, including, without limitation, the
sub-advisor's adherence to the Portfolio's investment objective and policies and
the Portfolio's investment performance.
3. Information Provided to the Trust
Sierra Services will keep the Trust informed of developments materially
affecting the Portfolios, and will, on its own initiative, furnish the Trust
from time to time with whatever information Sierra Services believes is
appropriate for this purpose.
4. Standard of Care
Sierra Services shall exercise its best judgment in rendering the
services described in paragraph 2 above. Sierra Services shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolios in connection with the matters to which this Agreement relates,
except (a) a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
0000 Xxx) or (b) a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement (each such
breach, act or omission described in (a) or (b) shall be referred to as
"Disqualifying Conduct").
5. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Trust will pay Sierra Services on the first business day of each month a fee
for the previous month at the rate specified in the Schedule(s) which is
attached hereto and made part of this Agreement. The fee will be calculated
based on each Portfolio's average daily net assets. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated
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according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to Sierra Services, the value of each
Portfolio's average daily net assets shall be computed at the times and in the
manner specified in the Prospectus or Statement of Additional Information
relating to the Portfolio as from time to time in effect.
6. Expenses
Sierra Services will bear all expenses in connection with the
performance of its services under this Agreement. The Trust will bear certain
other expenses to be incurred in its operation, including but not limited to:
organizational expenses; taxes, interest, brokerage fees and commissions, if
any; fees of Trustees of the Trust who are not officers, directors, or employees
of Sierra Services, the Portfolios' sub-administrator or any of their
affiliates; Securities and Exchange Commission fees and state Blue Sky
registration or qualification fees; transfer agent fees; out-of-pocket expenses
of custodians, transfer and dividend disbursing agents and the Portfolios'
sub-administrator and transaction charges of custodians; insurance premiums;
outside auditing and legal expenses; costs of maintenance of the Trust's
existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Trust and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses. In addition, each class
of shares of each Portfolio pays a distribution fee pursuant to the terms of a
distribution plan applicable to such class adopted under Rule 12b-1 of the 1940
Act.
7. Reimbursement to the Trust
If in any fiscal year of a Portfolio the aggregate expenses of the
Portfolio (including fees pursuant to this Agreement and the Portfolios'
transfer agency, administration and sub-administration agreements, but
excluding interest, taxes, brokerage, distribution fees relating to the
Portfolio paid pursuant to the Portfolio's Rule 12b-1 distribution plan(s) and,
if permitted by the relevant state securities commissions, extraordinary
expenses) exceed the expense limitations of any state having jurisdiction over
the Portfolio, Sierra Services will reimburse the Portfolio for the excess
expense to the extent required by state law. A fee reduction pursuant to this
paragraph 7, if any, will be estimated and reconciled monthly. Sierra Services
shall not be required to reimburse any amount in excess of the advisory fee paid
to it pursuant to this Agreement.
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8. Services to Other Companies or Accounts
The Trust understands that Sierra Services now acts as investment
advisor to each of the Portfolios, and may act now or in the future as
investment advisor to (i) other series of the Trust; (ii) fiduciary and other
managed accounts; and (iii) one or more other investment companies or series of
investment companies; and the Trust has no objection to Sierra Services so
acting. The Trust understands that the persons employed by Sierra Services to
assist in the performance of Sierra Services' duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of Sierra Services or any affiliate of Sierra
Services to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written
above and shall continue for an initial two-year term and shall continue
thereafter with respect to any of the Portfolios so long as such continuance is
specifically approved at least annually by (i) the Board of Trustees of the
Trust or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of the
outstanding voting securities of such Portfolio; provided that in either event
the continuance is also approved by a majority of the Board of 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 such approval. This Agreement is terminable with respect to any of the
Portfolios, without penalty, on 60 days' written notice, by the Board of
Trustees of the Trust or by vote of holders of a majority of the outstanding
voting securities of such Portfolio, or upon 90 days' written notice, by Sierra
Services. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act). Sierra Services agrees to notify the
Trust of any circumstances that might result in this Agreement being deemed to
be assigned.
10. Representations of the Trust and Sierra Services
The Trust represents that (i) a copy of the Trust Agreement, dated
March 26, 1996, together with all amendments thereto, is on file in the office
of the Secretary of the Commonwealth of Massachusetts, (ii) the appointment of
Sierra Services has been duly authorized and (iii) it has acted and will
continue to act in conformity with the requirements of the 1940 Act and other
applicable laws.
Sierra Services represents that it is authorized to perform the
services described herein.
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11. Limitation of Liability
This Agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust. The
obligations of this Agreement shall be binding upon the assets and property of
the Portfolios only and not upon the assets and property of any other investment
fund (i.e., series) of the Trust and shall not be binding upon any Trustee,
officer or shareholder of the Portfolios and/or the Trust individually.
12. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
13. Governing Law
This Agreement shall be governed in accordance with laws of the
Commonwealth of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
SIERRA ASSET MANAGEMENT PORTFOLIOS
By /s/ F. Xxxxx Xxxxxx
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Name: F. Xxxxx Xxxxxx
Title: Chairman and President
Accepted:
SIERRA INVESTMENT SERVICES CORPORATION
By /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Senior Vice President and Secretary
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Schedule A to the Investment Advisory Agreement
Pursuant to paragraph 5, the Trust will pay the Advisor compensation at an
annual rate as follows:
Portfolio Name Fee
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Income Portfolio 0.15%
Value Portfolio 0.15%
Balanced Portfolio 0.15%
Growth Portfolio 0.15%
Capital Growth Portfolio 0.15%
