MONITREND MUTUAL FUND
SUB-ADVISORY AGREEMENT
AGREEMENT made this 13th day of December, 1996, by and between
PACIFIC INCOME ADVISERS, INC., a Delaware corporation (the "Adviser"), and
CAMBORNE ADVISORS, INC., a Nevada corporation, (the "Sub-Adviser").
WITNESSETH:
WHEREAS, a series of Monitrend Mutual Fund (the "Trust") having
separate assets and liabilities exists entitled the "Government Series" or
the "Government Fund" (hereinafter the "Government Fund"); and
WHEREAS, the Adviser is the investment adviser to the Government
Fund and desires to retain the Sub-Adviser to perform certain services for
it and enter into a sub-advisory agreement (i.e., this Agreement) relating
to the Government Fund which shall apply only to the Government Fund; and
WHEREAS, this Agreement has been, or will be, approved by the
shareholders of the Government Fund and by the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested
persons," as defined in the Investment Company Act of 1940 ("1940 Act").
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed by and between the parties as
follows:
1. In General
The Sub-Adviser agrees, all as more fully set forth herein, to
act as sub-adviser to the Trust with respect to the investment of the
assets of the Government Fund and in connection therewith assist the
Adviser who shall supervise and arrange the purchase and sale of
securities held in the portfolio of the Government Fund and the Government
Fund's use of hedging instruments, if any.
2. Duties and Obligations of the Sub-Adviser with respect to
Investment of Assets of the Government Fund
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the Trust
and the Adviser, the Sub-Adviser shall provide regular advice to the
Adviser concerning those economic and market factors which influence the
Adviser's decisions concerning securities and hedging instruments to be
purchased or sold by the Trust with respect to the Government Fund and
when.
(b) The Sub-Adviser shall act in an advisory capacity at all
times and shall have no authority to direct the purchase and sale of
securities and hedging instruments for the Government Fund.
(c) The Sub-Adviser shall give the Trust and the Adviser the
benefit of its best judgment and effort in rendering services hereunder,
but the Sub-Adviser shall not be liable for any loss sustained by reason
of the purchase, sale or retention of any security or hedging instrument.
Nothing herein contained shall, however, be construed to protect the Sub-
Adviser against any liability to the Trust, its security holders or the
Adviser by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of
obligations and duties under this Agreement. The federal securities laws
impose liabilities under certain circumstances on persons who act in good
faith. Therefore, nothing herein shall in any way constitute a waiver or
limitation of any rights that the Trust may have under applicable state or
federal securities laws.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or
any affiliated person (as defined in the 0000 Xxx) of the Sub-Adviser from
acting as investment adviser or manager and/or principal underwriter for
any other person, firm or corporation and shall not in any way limit or
restrict the Sub-Adviser or any such affiliated person from buying,
selling or trading any securities or hedging instruments for its or their
own accounts or the accounts of others for whom it or they may be acting,
provided, however, that the Sub-Adviser expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(e) It is agreed that the Sub-Adviser shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act or the Securities Act of
1933 except for information supplied by the Sub-Adviser for inclusion
therein.
3. Allocation of Expenses
The Sub-Adviser, at its own expense and without reimbursement
from the Trust or the Adviser, shall furnish office space, and all office
facilities, equipment and executive personnel necessary for the
performance of the services required to be performed by it under the
Agreement. The Sub-Adviser will also pay all compensation of all
Trustees, officers and employees of the Trust who are affiliated persons
of the Sub-Adviser. All operating costs and expenses relating to the
Government Fund not expressly assumed by the Sub-Adviser under this
Agreement shall be paid by the Trust from the assets of the Government
Fund, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of
the Trust's Trustees other than those affiliated with the Trust's
investment advisers; (v) legal and audit expenses; (vi) fees and expenses
of the Adviser, the Trust's Administrator, custodian, shareholder
servicing or transfer agent and accounting services agent; (vii) expenses
incident to the issuance of the Government Fund's share, including
issuance on the payment of, or reinvestment of, dividends; (viii) fees and
expenses incident to the registration under Federal or state securities
laws of the Trust or the shares of the Government Fund; (ix) expenses of
preparing, printing and mailing reports and notices and proxy material to
shareholders of the Trust; (x) all other expenses incidental to holding
meetings of the Trust's shareholders; (xi) dues or assessments of or
contribution to the Investment Company Institute or any successor; (xii)
such non-recurring expenses as may arise, including litigation affecting
the Trust and the legal obligations which the Trust may have to indemnify
its officers and Trustees with respect thereto; and (xiii) all expenses
which the Trust or a series of the Trust agrees to bear in any
distribution agreement or in any plan adopted by the Trust and/or a series
of the Trust pursuant to Rule 12b-1 under the Act.
4. Compensation of the Sub-Adviser
(a) The Adviser agrees to pay the Sub-Adviser and the Sub-
Adviser agrees to accept as full compensation for all services rendered by
the Sub-Adviser hereunder, an annual management fee, payable monthly and
computed on the value of the net assets of the Government Fund as of the
close of business each business day at the following annual rates:
Assets Fee Rate
All asset levels 0.20%
(b) In the event that the expenses of the Government Fund
(including the fees of the Adviser and the Administrator and amortization
of organization expenses but excluding interest, taxes, brokerage
commissions, extraordinary expenses and sales charges and distribution
fees) for any fiscal year exceed the limits set by applicable regulations
of state securities commissions or the limits set forth in the Government
Fund's current prospectus or statement of additional information, the Sub-
Adviser will reimburse the Adviser the amount of such excess. Any such
reimbursements are subject to readjustment during the year.
5. Duration and Termination
(a) This Agreement shall go into effect when approved by the
holders of a "majority" (as defined in the 0000 Xxx) of the outstanding
voting securities of the Government Fund and shall, unless terminated as
hereinafter provided, continue in effect until December 31, 1997 and
thereafter from year to year, but only so long as such continuance is
specifically approved at least annually by the Trust's Board of Trustees,
including the vote of a majority of the Trustees 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, or by the vote of the holders of a "majority" (as so
defined) of the outstanding voting securities of the Government Fund and
by such a vote of the Trustees.
(b) This Agreement may be terminated by the Sub-Adviser at any
time without penalty upon giving the Adviser and the Trust sixty (60)
days' written notice (which notice may be waived by the Adviser and the
Trust) and may be terminated by the Adviser and the Trust at any time
without penalty upon giving the Sub-Adviser sixty (60) days' written
notice (which notice may be waived by the Sub-Adviser), provided that such
termination by the Trust shall be directed or approved by the vote of a
majority of all of its Trustees or approved by the vote of a majority of
all of its Trustees in office at the time or by the vote of the holders of
a majority (as defined in the 0000 Xxx) of the voting securities of the
Trust at the time outstanding and entitled to vote. This Agreement shall
automatically terminate in the event of its assignment (as so defined).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons all as of the day and
year first above written.
PACIFIC INCOME ADVISERS, INC.
By ____________________________
CAMBORNE ADVISORS, INC.
By ____________________________
