Exhibit 99.(d)(1)
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
Agreement made as of April 28, 2003 and amended and restated as of November
15, 2004, and amended as of June 21, 2005 and September 27, 2005, between
POWERSHARES EXCHANGE-TRADED FUND TRUST, a Massachusetts business trust
("TRUST"), and POWERSHARES CAPITAL MANAGEMENT LLC ("POWERSHARES CAPITAL
MANAGEMENT"), a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("ADVISERS ACT").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 ACT"), as an open-end management investment company; and
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Trust intends to initially offer shares in two series, the
PowerShares Dynamic Market Portfolio and the PowerShares Dynamic OTC Portfolio,
and any other series as to which this Agreement may hereafter be made applicable
and set forth on Schedule A hereto (each such series being herein referred to as
a "FUND", and collectively as the "FUNDS"); and
WHEREAS, the Trust desires to retain PowerShares Capital Management as
investment adviser, to furnish certain investment advisory and portfolio
management services to the Trust with respect to the Funds, and PowerShares
Capital Management is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints PowerShares Capital Management
as investment adviser of the Trust and each Fund for the period and on the terms
set forth in this Agreement. PowerShares Capital Management accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("BOARD"), PowerShares Capital Management will provide a continuous
investment program for a Fund, including investment research and management with
respect to all securities and investments and cash equivalents in the Fund.
PowerShares Capital Management will determine, from time to time, what
securities and other investments will be purchased, retained or sold by the
Fund. PowerShares Capital Management shall initially determine and make such
modifications to the identity and number of shares of the securities to be
accepted pursuant to such Fund's benchmark index in exchange for creation units
for each Fund and the securities that will be applicable that day to redemption
requests received for such Fund as may be necessary as a result of rebalancing
adjustments and corporate action events (and may give directions to the Trust's
custodian with respect to such designations).
(b) PowerShares Capital Management agrees that, in placing orders with
brokers, it will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of any Fund, PowerShares Capital Management
may, in its discretion, use brokers who provide PowerShares Capital Management
with research, analysis, advice and similar services, and PowerShares Capital
Management may cause a Fund to pay to those brokers in return for brokerage and
research services a higher commission than may be charged by other brokers,
subject to PowerShares Capital Management's
determining in good faith that such commission is reasonable in relation to the
research and execution services received. In no instance will portfolio
securities be purchased from or sold to PowerShares Capital Management, or any
affiliated person thereof, except in accordance with the federal securities laws
and the rules and regulations thereunder, or any applicable exemptive orders.
PowerShares Capital Management may aggregate sales and purchase orders with
respect to the assets of the Funds with similar orders being made simultaneously
for other accounts advised by PowerShares Capital Management or its affiliates.
Whenever PowerShares Capital Management simultaneously places orders to purchase
or sell the same security on behalf of a Fund and one or more other accounts
advised by PowerShares Capital Management, such orders will be allocated as to
price and amount among all such accounts in a manner believed to be equitable,
over time, to each account. The Trust recognizes that in some cases this
procedure may adversely affect the results obtained for the Funds.
(c) PowerShares Capital Management will oversee the maintenance of all
books and records with respect to the securities transactions of each Fund, and
will furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, PowerShares Capital Management hereby agrees that all records
which it maintains for the Funds are the property of the Trust, agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any records
which it maintains for the Trust and which are required to be maintained by Rule
31a-l under the 1940 Act, and further agrees to surrender promptly to the Trust
any records which it maintains for the Funds upon request by the Trust.
(d) PowerShares Capital Management will oversee the computation of the
net asset value and the net income of each Fund as described in the currently
effective registration statement of the Trust under the Securities Act of 1933,
as amended, and the 1940 Act, and any amendments or supplements thereto
("REGISTRATION STATEMENT") or as more frequently requested by the Board.
(e) The Trust hereby authorizes PowerShares Capital Management and any
entity or person associated with PowerShares Capital Management which is a
member of a national securities exchange to effect any transaction on such
exchange for the account of any Fund, which transaction is permitted by Section
11(a) of the Securities Exchange Act of 1934 and the rules thereunder, and the
Trust hereby consents to the retention of compensation by PowerShares Capital
Management or any person or entity associated with PowerShares Capital
Management for such transaction.
3. USE OF NAME. The Trust may use the name "PowerShares" or any variant
thereof in connection with the name of the Trust or any of the Funds, only for
so long as this Agreement or any extension, renewal or amendment hereof remains
in effect. At such time as this Agreement shall no longer be in effect, the
Trust shall cease to use such a name or any other similar name.
In no event shall the Trust use the name "PowerShares" or any variant
thereof if PowerShares Capital Management's functions are transferred or
assigned to a company over which PowerShares Capital Management does not have
control or with which it is not affiliated. In the event that this Agreement
shall no longer be in effect or PowerShares Capital Management's functions are
transferred or assigned to a company over which PowerShares Capital Management
does not have control or with which it is not affiliated, the Trust shall use
its best efforts to legally change its name by filing the required documentation
with appropriate state and federal agencies.
4. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, PowerShares Capital Management will act in conformity with the
Declaration of Trust, By-Laws, and Registration Statement of the Trust and with
the instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder, and all other applicable
federal and state laws and regulations applicable to the Trust and the Funds.
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5. SERVICES NOT EXCLUSIVE. The services furnished by PowerShares Capital
Management hereunder are not to be deemed exclusive and PowerShares Capital
Management shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby or unless otherwise
agreed to by the parties hereunder in writing. Nothing in this Agreement shall
limit or restrict the right of any director, officer or employee of PowerShares
Capital Management, who may also be a Trustee ("BOARD MEMBER"), officer or
employee of the Trust, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. EXPENSES.
(a) The Trust or a Fund may pay directly any expenses incurred by it in
its normal operations and, if any such payment is consented to by PowerShares
Capital Management and acknowledged as otherwise payable by PowerShares Capital
Management pursuant to this Agreement, the Fund may reduce the advisory fee
payable to PowerShares Capital Management pursuant to paragraph 7 hereof by such
amount. To the extent that such deductions exceed the fee payable to PowerShares
Capital Management on any monthly payment date, such excess shall be carried
forward and deducted in the same manner from the fee payable on succeeding
monthly payment dates to the extent not otherwise paid by PowerShares Capital
Management.
(b) PowerShares Capital Management will assume the cost of any
compensation for services provided to the Trust received by the officers of the
Trust and by those Board members who are "interested persons" of the Trust as
that term is defined in the 1940 Act.
(c) The payment or assumption by PowerShares Capital Management of any
expenses of the Trust or a Fund that PowerShares Capital Management is not
required by this Agreement to pay or assume shall not obligate PowerShares
Capital Management to pay or assume the same or any similar expense of the Trust
or a Fund on any subsequent occasion.
7. COMPENSATION.
(a) For the services to be provided by PowerShares Capital Management
hereunder with respect to each Fund, the Trust shall pay to PowerShares Capital
Management an annual advisory fee ("ADVISORY FEE") calculated based on average
daily net assets equal to the amounts set forth on Schedule A, attached hereto.
Each Fund is responsible for its own expenses, including, but not limited to,
investment advisory fees, costs of transfer agency, custody, fund
administration, legal, audit and other services, interest, taxes, brokerage
commissions and other expenses incurred in connection with the execution of
portfolio securities transactions on behalf of such Fund; expenses incurred in
connection with any distribution plan adopted by the Trust pursuant to Rule
12b-1 under the 1940 Act; licensing fees related to the use of the Fund's
benchmark index; litigation expenses; fees and salaries payable to the Trust's
Board members and officers who are not "interested persons" of the Trust or
PowerShares Capital Management; all expenses incurred in connection with the
Board members' services, including travel expenses and legal fees of counsel for
those members of the Board who are not "interested persons" of the Trust and
extraordinary expenses. PowerShares Capital Management hereby agrees to waive
the Advisory Fee and/or pay expenses as set forth on Schedule B attached hereto.
(b) The Advisory Fee shall be computed and accrued daily based on the
average daily net assets of each Fund and paid monthly to PowerShares Capital
Management on or before the first business day of the next succeeding calendar
month.
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(c) If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
(d) For the services provided and the expenses assumed pursuant to this
Agreement with respect each Fund listed on Schedule A attached hereto, as it may
be amended from time to time, the Trust will pay to PowerShares Capital
Management from the assets of such Fund a fee in an amount to be agreed upon
between the parties and set forth in Schedule A, attached hereto.
8. LIMITATION OF LIABILITY.
(a) PowerShares Capital Management shall not be liable for any error of
judgment or mistake of law or for any loss suffered by any Fund, the Trust or
any of its shareholders, in connection with the matters to which this Agreement
relates, except to the extent that such a loss results 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. Any person, even though also an officer, director, employee, or agent
of PowerShares Capital Management, who may be or become an officer, Board
member, employee or agent of the Trust shall be deemed, when rendering services
to any Fund or the Trust or acting with respect to any business of such Fund or
the Trust, to be rendering such service to or acting solely for the Fund or the
Trust and not as an officer, director, employee, or agent or one under the
control or direction of PowerShares Capital Management even though paid by it.
(b) PowerShares Capital Management is expressly put on notice of, and
hereby acknowledges and agrees to, the limitation of shareholder liability as
set forth in the Declaration of Trust of the Trust and agrees that the
obligations assumed by the Trust under this contract shall be limited in all
cases to the Trust and its assets. PowerShares Capital Management shall not seek
satisfaction of any such obligation from the shareholders or any shareholder of
the Trust, nor shall PowerShares Capital Management seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Trust.
PowerShares Capital Management understands that the rights and obligations of
each series of shares of the Trust under the Declaration of Trust are separate
and distinct from those of any and all other series.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective upon the date hereabove
written provided that, with respect to any Fund, this Agreement shall not take
effect unless it has first been approved (i) by a vote of a majority of those
Board members of the Trust who are not parties to this Agreement or "interested
persons" of any such party ("INDEPENDENT BOARD MEMBERS") cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by vote of a
majority of that Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect until the date set forth for each Fund in Schedule C attached
hereto. Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of twelve months each, provided that such
continuance is specifically approved at least annually: (i) by a vote of a
majority of the Independent Board Members of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the Board
or, with respect to any given Fund, by vote of a majority of the outstanding
voting securities of such Fund.
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(c) Notwithstanding the foregoing, with respect to any Fund, this
Agreement may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of such Fund, on sixty days' written notice to PowerShares Capital
Management or by PowerShares Capital Management at any time, without the payment
of any penalty, on sixty days' written notice to the Trust. Termination of this
Agreement with respect to any given Fund shall in no way affect the continued
validity of this Agreement or the performance thereunder with respect to any
other Fund. This Agreement will automatically terminate in the event of its
assignment.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement as to any
given Fund shall be effective until approved by vote of a majority of such
Fund's outstanding voting securities.
11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Illinois, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act, provided, however, that
to the extent that the applicable laws of the State of Illinois conflict with
the applicable provisions of the 1940 Act, the latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "national securities exchange," "net assets," "prospectus," "sale,"
"sell" and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. Where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
POWERSHARES EXCHANGE-TRADED
FUND TRUST
Attest:
By: /s/ Xxxxxx Xxxxx Xxxx
----------------------------
By: /s/ Xxxx X. Xxxxxxxx Name: Xxxxxx Xxxxx Xxxx
---------------------------------------- Title Chairman and CEO
Name: Xxxx X. Xxxxxxxx
Title: Treasurer
PowerShares Exchange-Traded Fund
Trust
POWERSHARES CAPITAL
MANAGEMENT LLC
Attest:
By: /s/ Xxxxxx Xxxxx Xxxx
----------------------------
By: /s/ Xxxx X. Xxxxxxxx Name Xxxxxx Xxxxx Xxxx
--------------------------------------- Title: President
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
PowerShares Capital Management
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SCHEDULE B
PowerShares Capital Management agrees to waive the Advisory fee and/or
reimburse expenses as specified below.
POWERSHARES DYNAMIC MARKET PORTFOLIO AND POWERSHARES DYNAMIC OTC PORTFOLIO
To the extent necessary to prevent the operating expenses of each Fund
(excluding interest expenses, brokerage commissions and other trading expenses,
taxes and extraordinary expenses) from exceeding 0.60% at least until April 30,
2006.
ALL OF THE OTHER FUNDS LISTED ON SCHEDULE A
To the extent necessary to prevent the operating expenses of each Fund
(excluding interest expenses, licensing fees, offering costs, brokerage
commissions and other trading expenses, taxes and extraordinary expenses) from
exceeding the percentage of average daily net assets set forth in Schedule C
attached hereto, at least until the date set forth in Schedule C. Except as set
forth in Schedule C, the offering costs excluded from the expense cap are: (a)
legal fees pertaining to the Trust's shares offered for sale; (b) SEC and state
registration fees; and (c) initial fees paid to be listed on an exchange.
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