PORTFOLIO MANAGEMENT AGREEMENT
THIS AGREEMENT dated and effective as of September 25, 2001, among
Northstar Capital Management, Inc., a Florida corporation (the "Sub-Advisor");
Fremont Investment Advisors, Inc., a Delaware corporation (the "Advisor"); and
Fremont Mutual Funds, Inc., a Maryland corporation (the "Fund").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, diversified management investment
company and is authorized to issue separate series (the "Series"), each of which
may offer a separate class of shares of beneficial interest, each Series having
its own investment objective, policies and limitations; and
WHEREAS, the Fund offers shares of a particular series named the Fremont
New Era Growth Fund (the "New Era Growth Series"); and
WHEREAS, the Fund has retained the Advisor to render investment management
and administrative services to the New Era Growth Series; and
WHEREAS, the Advisor and the Fund desire to retain the Sub-Advisor to
furnish portfolio management services to the New Era Growth Series in connection
with Advisor's investment management activities on behalf of the Series, and the
Sub-Advisor is willing to furnish such services to the Advisor and the New Era
Growth Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Sub-Advisor, the Advisor and the Fund as
follows:
1. APPOINTMENT. The Advisor and the Fund hereby appoint Sub-Advisor to
provide portfolio management services to the Advisor and the Fund with respect
to certain assets of the New Era Growth Series for the periods and on the terms
set forth in this Agreement. The Sub-Advisor accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein provided.
2. SUB-ADVISOR DUTIES. Subject to the supervision of the Advisor, the
Sub-Advisor shall have full discretionary authority as agent and
attorney-in-fact with respect to the portion of assets of the New Era Growth
Series' portfolio assigned to the Sub-Advisor, from time to time by the Advisor
or the Board of Directors, including authority to: (a) buy, sell, exchange,
convert or otherwise trade in any stocks and other marketable securities, in
accordance with the investment guidelines set forth in Appendix A and (b) place
orders for the execution of such securities transactions with or through such
brokers, dealers, or issuers as Sub-Advisor may select. The Sub-Advisor will
provide the services under this Agreement in accordance with the New Era Growth
Series' registration statement filed with the Securities and Exchange Commission
("SEC"), as amended and supplemented from time to time. The Advisor will provide
the Sub-Advisor with a copy of each registration statement, amendment and
supplement promptly after it has been filed with the SEC. The parties
acknowledge that the Sub-Advisor's performance objective is as set forth in
Appendix A; however, failure to satisfy such objective shall not
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constitute a break of this Agreement. Subject to the foregoing, the Sub-Advisor
will vote proxies with respect to the securities and investments purchased with
the assets of the New Era Growth Series' portfolio managed by the Sub-Advisor.
The Sub-Advisor further agrees that it will:
(a) conform with all applicable rules and regulations of the
Securities and Exchange Commission.
(b) select brokers and dealers to execute portfolio transactions for
the New Era Growth Series and select the markets on or in which the transaction
will be executed. In providing the New Era Growth Series with investment
management, it is recognized that the Sub-Advisor will give primary
consideration to securing the most favorable price and efficient execution
considering all circumstances. Within the framework of this policy, the
Sub-Advisor may consider the financial responsibility, research and investment
information and other research services and products provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which the Sub-Advisor's other clients may be a party. It is
understood that it is desirable for the Fund that the Sub-Advisor have access to
brokerage and research services and products and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher cost to
the New Era Growth Series than broker-dealers that do not provide such brokerage
and research services. Therefore, in compliance with Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act"), the Sub-Advisor is authorized
to place orders for the purchase and sale of securities for the New Era Growth
Series with such brokers, that provide brokerage and research products and/or
services that charge an amount of commission for effecting securities
transactions in excess of the amount of commission another broker would have
charged for effecting that transaction, provided the Sub-Advisor determines in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research products and/or services provided by such
broker viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Advisor for this or other advisory accounts, subject
to review by the Fund from time to time with respect to the extent and
continuation of this practice. It is understood that the information, services
and products provided by such brokers may be useful to the Sub-Advisor in
connection with the Sub-Advisor's services to other clients. On occasions when
the Sub-Advisor deems the purchase or sale of a security to be in the best
interest of the New Era Growth Series as well as other clients of the
Sub-Advisor, the Sub-Advisor, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be sold or purchased in order to obtain the most favorable price of lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, shall be made by the Sub-Advisor in the manner the Sub-Advisor
considers to be the most equitable and consistent with its fiduciary obligations
to the New Era Growth Series and to such other clients.
(c) make available to the Advisor and the Fund's Board of Directors
promptly upon their request all its investment records and ledgers relating to
the New Era Growth Series to assist the Advisor and the Fund in their compliance
with respect to the New Era Growth Series' securities transactions as required
by the 1940 Act and the Investment Advisers Act of 1940 ("Advisers Act"), as
well as other applicable laws. The Sub-Advisor will furnish the Fund's Board of
Directors with respect to the New Era Growth Series such periodic and special
reports as the
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Advisor and the Directors may reasonably request in writing.
(d) maintain detailed records of the Fund's assets managed by the
Sub-Advisor as well as all investments, receipts, disbursements and other
transactions made with such assets. Such records shall be open to inspection and
audit during Sub-Advisor's normal business hours upon reasonable notice by any
person designated by the Advisor or the Fund. The Sub-Advisor shall provide to
the Advisor or the Fund and any other party designated by either the Advisor or
the Fund: (i) monthly statements of the activities with regard to the assets for
the month and of the assets showing each asset at its cost and, for each
security listed on any national securities exchange, its value at the last
quoted sale price reported on the composite tape on the valuation date or, in
the cases of securities not so reported, by the principal exchange on which the
security traded or, if no trade was made on the valuation date or if such
security is not listed on any exchange, its value as determined by a nationally
recognized pricing service used by the Sub-Advisor specified by such pricing
service on the valuation date, and for any other security or asset in a manner
determined in good faith by the Sub-Advisor to reflect its then fair market
value; (ii) statements evidencing any purchases and sales as soon as practicable
after such transaction has taken place, and (iii) a quarterly review of the
assets under management.
3. Expenses and Compensation.
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(a) During the term of this Agreement, the Sub-Advisor will pay all
expenses incurred by it, its staff and their activities, in connection with its
portfolio management activities under this Agreement (except that brokerage
costs shall be paid by the Fund). The Sub-Advisor shall not be responsible for
any expense incurred by the Advisor or the Fund, except as provided in Section 6
below.
(b) For the services provided to the New Era Growth Series, the
Advisor will pay the Sub-Advisor the fees as set forth in Appendix B hereto at
the times set forth in Appendix B hereto.
4. Representations and Warranties.
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(a) ADVISOR AND FUND. The Advisor and the Fund each represents and
warrants to the Sub-Advisor that (i) the retention of the Sub-Advisor as
contemplated by this Agreement is authorized by the respective governing
documents of the Fund and the Advisor; (ii) the execution, delivery and
performance of each of this Agreement and the Advisory Agreement does not
violate any obligation by which the Fund or the Advisor or their respective
property is bound, whether arising by contract, operation of law or otherwise;
and (iii) each of this Agreement and the Advisory Agreement has been duly
authorized by appropriate action of the Fund and the Advisor and when executed
and delivered by the Advisor will be the legal, valid and binding obligation of
the Fund and the Advisor, enforceable against the Fund and Advisor in accordance
with its terms hereof subject, as to enforcement, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or law).
(b) SUB-ADVISOR. The Sub-Advisor represents and warrants to the
Advisor and the
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Fund that (i) the retention of the Sub-Advisor as contemplated by this Agreement
is authorized by the Sub-Advisor's governing documents; (ii) the execution,
delivery and performance of this Agreement does not violate any obligation by
which the Sub-Advisor or its property is bound, whether arising by contract,
operation of law or otherwise; and (iii) this Agreement has been duly authorized
by appropriate action of the Sub-Advisor and when executed and delivered by the
Sub-Advisor will be the legal, valid and binding obligation of the Sub-Advisor,
enforceable against the Sub-Advisor in accordance with its terms hereof,
subject, as to enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or law).
5. Books and Records; Custody.
---------------------------
(a) In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Sub-Advisor hereby agrees that all records which it maintains for the
New Era Growth Series are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act with respect to the New Era Growth Series and to preserve the records
required by Rule 204-2 under the Advisers Act with respect to the New Era Growth
Series for the period specified in the Rule.
(b) Title to all investments shall be made in the name of the Fund,
provided that for convenience in buying, selling, and exchanging securities
(stocks, bonds, commercial paper, etc.), title to such securities may be held in
the name of the Fund's custodian bank, or its nominee or as otherwise provided
in the Fund's custody agreement. The Fund shall notify the Sub-Advisor of the
identity of its custodian bank and shall give the Sub-Advisor 15 days written
notice of any changes in such custody arrangements.
Neither the Sub-Advisor, nor any parent, subsidiary or related firm,
shall take possession of or handle any cash or securities, or other indicia of
ownership of the Fund's investments, or otherwise act as custodian of such
investments. All cash and the indicia of ownership of all other investments
shall be held by the Fund's custodian bank.
The Fund shall instruct its custodian bank to (a) carry out all
investment instructions as may be directed by the Sub-Advisor with respect
thereto (which may be orally given if confirmed in writing); and (b) provide the
Sub-Advisor with all operational information necessary for the Sub-Advisor to
trade on behalf of the Fund.
6. INDEMNIFICATION. The Sub-Advisor agrees to indemnify and hold
harmless the Advisor, the Fund, any affiliated person within the meaning of
Section 2(a)(3) of the 1940 Act ("affiliated person") of the Advisor or the Fund
(other than the Sub-Advisor) and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") the Advisor or the Fund against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Advisor, the Fund or such affiliated person or
controlling person may become subject under the 1933 Act,
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1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise, which (1) may be based upon any wrongful act or omission by the
Sub-Advisor, any of its employees or representatives or any affiliate of or any
person acting on behalf of the Sub-Advisor or (2) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering the shares of the Fund or any
amendment thereof or any supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such a statement or omission was
made in reliance upon and accurately and completely reflects information
furnished to the Fund or any affiliated person of the Fund by the Sub-Advisor or
any affiliated person of the Sub-Advisor; provided, however, that in no case is
the Sub-Advisor's indemnity in favor of the Advisor or the Fund or any
affiliated person or controlling person of the Advisor or the Fund deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of his or its duties or by reason of his or its reckless
disregard of obligations and duties under this Agreement or by reason of its
violation of applicable law or regulations.
The Fund and the Advisor each agrees not to hold the Sub-Advisor or
any of its officers or employees liable for, and to indemnify and hold harmless,
the Sub-Advisor and its directors, officers, employees, affiliated persons and
controlling persons ("Indemnified Parties"), any act or omission of any other
Sub-Advisor providing investment management services to the Fund, and against
any costs and liabilities the Indemnified Parties may incur as a result of a
claim against the Indemnified Parties regarding actions taken in good faith
exercise of their powers and responsibilities hereunder excepting matters as to
which the Indemnified Parties have been negligent, engaged in willful
misfeasance, bad faith, reckless disregard of the obligations and duties under
this Agreement or have been in violation of applicable law or regulations.
7. OTHER INVESTMENT ACTIVITIES OF SUBADVISOR. The Fund and Advisor
acknowledge that the Subadvisor, may have investment responsibilities or render
investment advice to, or perform other investment advisory services for, other
individuals or entities ("Affiliated Accounts"). It is also understood that the
services of the Subadvisor provide a competitive advantage to the Fund and the
Advisor, and the Subadvisor agrees that it will not provide investment advisory
or subadvisory services to any other United States, publicly offered, SEC
registered investment company with investment objectives and policies similar to
those of the New Era Growth Series for the duration of this agreement. Subject
to the provisions of paragraph 2 hereof, the Fund agrees that the Subadvisor may
give advice or exercise investment responsibility and take other action with
respect to other Affiliated Accounts which may differ from advice given or the
timing or nature of action taken with respect to the New Era Growth Series;
provided that the Subadvisor acts in good faith, and provided further that it is
the Subadvisor's policy to allocate, within its reasonable discretion,
investment opportunities to the New Era Growth Series over a period of time on a
fair and equitable basis relative to the Affiliated Accounts, taking into
account the investment objectives and policies of the New Era Growth Series and
any specific investment restrictions applicable thereto. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the New Era Growth Series may have an interest from time to time,
whether in transactions which may involve the New Era Growth Series or
otherwise. Subadvisor shall have no obligation to acquire for the New Era Growth
Series a position in any
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investment which any Affiliated Account may acquire, and the Fund shall have no
first refusal, co-investment or other rights in respect of any such investment
either for the New Era Growth Series or otherwise.
8. (a) DURATION. This Agreement shall become effective on the date
hereof. Unless terminated as herein provided, this Agreement shall remain in
full force and effective for a period of two years from the date of this
Agreement, and shall continue in full force and effect for periods of one year
thereafter so long as such continuance is approved at least annually (i) by
either the Board of Directors of the Fund or by a vote of a majority (as defined
in the 0000 Xxx) of the outstanding voting securities of the New Era Growth
Series, and (ii) by the Advisor, and (iii) by the vote of a majority of the
Board of Directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Directors of the Fund or by the
vote of a majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the New Era Growth Series, or by the Advisor, on thirty (30) days
written notice to the Sub-Advisor, or by the Sub-Advisor on like notice to the
Board of Directors of the Fund and to the Advisor. Payment of fees earned
through the date of termination shall not be construed as a penalty.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically and
immediately terminate in the event of its assignment (within the meaning of the
1940 Act).
9. AMENDMENTS. 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 shall be effective
until approved by a vote of a majority of the outstanding voting securities of
the New Era Growth Series, if such approval is required by applicable law.
10. Miscellaneous.
--------------
(a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Sub-Advisor
as an agent of the Fund or the Advisor.
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(e) This Agreement supersedes any prior agreement relating to the
subject matter hereof between the parties.
(f) This Agreement may be executed in counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered, shall be deemed an original and all of which
counterparts shall constitute but one and the same agreement.
11. USE OF NAME. It is understood that the name "Northstar Capital
Management, Inc.," or the name of any of its affiliates, or any derivative
associated with those names, are the valuable property of the Sub-Advisor and
its affiliates and that the Fund and/or the Fund's distributor have the right to
use such name(s) or derivative(s) in offering materials and sales literature of
the Fund so long as this Agreement is in effect. Upon termination of the
Agreement the Fund shall forthwith cease to use such name(s) or derivative(s).
12. RECEIPT OF BROCHURE. The Advisor and the Fund have received from
Northstar Capital Management, Inc., the disclosure statement or "brochure"
required to be delivered pursuant to Rule 204-3 of the Advisers Act, which
disclosure statement or brochure was received by the Advisor and the Fund more
than 48 hours prior to entering into this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
NORTHSTAR CAPITAL MANAGEMENT, INC.
By: ____________________________________
Title: _________________________________
FREMONT INVESTMENT ADVISORS, INC.
By: ____________________________________
Title: _________________________________
FREMONT MUTUAL FUNDS, INC.
By _____________________________________
Title: _________________________________
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APPENDIX A
TO PORTFOLIO MANAGEMENT AGREEMENT
Northstar Capital Management, Inc.
Sub-Advisor to the Fremont New Era Growth Fund
INVESTMENT OBJECTIVES AND GUIDELINES
Overall Investment Objective:
-----------------------------
The objective of the Fremont New Era Growth Fund is to seek long-term
capital appreciation.
Normally, the Fund will invest in at least 80% of its total assets in a
concentrated selection of common stocks of large U.S. companies. The Fund
invests in companies that Fund management believes demonstrate superior earnings
growth characteristics, a strong business outlook and above-average potential
for capital appreciation. The Fund normally will invest in a concentrated
portfolio of 20-30 stocks.
Policy and Guidelines for Sub-Advisor:
--------------------------------------
The Sub-Advisor will adhere to the Investment Objective and to policies in
the Fremont New Era Growth Fund prospectus and Statement of Additional
Information.
Performance Objective for Sub-Advisor:
--------------------------------------
The Sub-Advisor is expected to achieve a competitive rate of return over a
3 to 5 year time horizon and/or a complete market cycle, relative to other large
cap growth funds as compiled by Lipper Analytical Services and/or Morningstar. A
competitive rate of return is defined as Fund performance in the top one-third
of such funds. Performance may be compared to other investments or indices of
comparable quality as outlined in the Statement of Additional Information.
.................................................................................
Notwithstanding anything to the contrary in this Agreement, in the event of
a conflict between this Appendix A and the New Era Growth Series' registration
statement filed with the SEC, as amended and supplemented from time to time
(collectively, the "Prospectus"), the term of the Prospectus shall govern.
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XXXXXXXX X
TO PORTFOLIO MANAGEMENT AGREEMENT
Northstar Capital Management, Inc.
Sub-Advisor to the Fremont New Era Growth Fund
SCHEDULE OF FEES
Fremont Investment Advisors, Inc. will pay to Northstar Capital Management,
Inc., on an aggregate basis, an annual fee computed as a percentage of the
average daily assets of the New Era Growth Fund under management by Northstar
Capital Management, Inc. The management fees specified below shall be the fees
charged. The annual rate is determined as follows:
0.50% on the first $100 million
0.40% on the next $200 million
0.35% on the next $700 million
0.25% on the amount above $1 billion
Fees will be billed after the end of each calendar month. Fees will be prorated
for any period less than one month and shall be due and payable within thirty
(30) days after an invoice has been delivered to the Advisor.
The Portfolio Management Agreement with the Sub-Advisor may be terminated by the
Advisor or the Investment Company upon 30 days' written notice. The Advisor has
day-to-day authority to increase or decrease the amount of the Fund's assets
under management by the Sub-Advisor.
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