Exhibit (d)(1)
INVESTMENT ADVISORY AGREEMENT WITH
CATHOLIC FINANCIAL SERVICES CORPORATION
THE CATHOLIC ALLIANCE FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this 17th day of February, 1999, by and
between The Catholic Alliance Funds, Inc. ("CAF"), a Maryland corporation
registered under the Investment Company Act of 1940 ("1940 Act") as an
open-end diversified management investment company, and Catholic Financial
Services Corporation ("Manager"), a Wisconsin corporation registered under
the Investment Advisers Act of 1940 as an investment adviser.
1. APPOINTMENT. CAF hereby appoints Manager to furnish investment
advisory and portfolio management services with respect to the
portion of its assets represented by the shares of common stock
issued in each series listed in SCHEDULE A hereto, as such
schedule may be amended from time to time (each such series
hereinafter referred to as a "Fund"). Manager accepts such
appointment and agrees to perform the services described herein.
Manager shall use its best efforts and judgment in rendering the
advice and performing the services contemplated by this Agreement.
2. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the
investment operations of CAF and each Fund, subject to the terms
of this Agreement and to the supervision and control of CAF's
Board of Directors ("Directors"). Manager agrees to perform,
or arrange for the performance of, the following services with
respect to each Fund:
(a) to obtain and evaluate such information relating to
economies, in dustries, businesses, securities and
commodities markets, and individual securities,
commodities and indices as it may deem necessary or
useful in discharging its responsibilities hereunder;
(b) to formulate and maintain a continuing investment
program in a manner consistent with and subject to
(i) CAF's articles of incorporation and bylaws; (ii)
the Fund's investment objectives, policies, and
restrictions as set forth in written documents
furnished by CAF to Manager; (iii) all securities,
commodities, and tax laws and regulations applicable
to the Fund and CAF; and (iv) any other written
limits or directions furnished by the Directors to
Manager;
(c) unless otherwise directed by the Directors, to
determine from time to time, securities, commodities,
interests, or other investments to be purchased,
sold, retained, or lent by the Fund, and to implement
those decisions, including the selection of entities
with or through which such purchases, sales, or loans
are to be effected;
(d) to use reasonable efforts to manage the Fund so that
it will qualify as a regulated investment company
under subchapter M of the Internal Revenue Code of
1986, as amended;
(e) to make recommendations as to the manner in which
voting rights, rights to consent to CAF or Fund
action, and any other rights pertaining to CAF or the
Fund shall be exercised; provided the Manager shall
have no authority or responsibility to execute any
voting proxies or consents on behalf of CAF or any
Fund, but rather shall promptly forward to CAF all
proxy and other solicitation materials it receives
with respect to any such voting rights or consents;
(f) to make available to CAF promptly upon request all of
the Fund's records and ledgers, and any reports or
information reasonably re quested by CAF; and
(g) to the extent required by law, to furnish to
regulatory authorities any information or reports
relating to the services provided pursuant this
Agreement.
Except as otherwise instructed from time to time by the
Directors, with respect to execution of transactions for CAF
on behalf of a Fund, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans either
directly with the issuer or with a broker-dealer, or other
counterparty or agent selected by Manager. In connection with
the selection of all such parties for the placement of all
such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole
discretion as a secondary factor, purchase and sell portfolio
securities from and to broker-dealers who provide research and
analysis to Manager which Manager may lawfully and
appropriately use in its investment management and advisory
capacities, whether or not such research and analysis may also
be useful to Manager in connection with its services to other
clients. In recognition of such services or brokerage services
provided by a broker or dealer, Manager is hereby authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if Manager determines in good faith that
the commission or spread is reasonable in relation to the
value of the services so provided.
CAF hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a
Fund to the extent permitted by and in ac cordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. CAF hereby consents to the retention by
such entity or person of compensation for such transaction in
accordance with Rule 11a2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the
same type to be sold or purchased for CAF, one or more Funds,
and/or other clients of Manager in order to obtain best
execution or lower brokerage commissions. In such event,
Manager shall allocate the shares so purchased or sold, as
well as
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the expense incurred in the transaction, in a manner
it considers to be equitable and fair, and consistent with its
fiduciary obligations to CAF, the Funds, and Manager's other
customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of CAF and shall, unless otherwise
expressly provided or authorized, have no authority to act for
or represent CAF in any way.
3. ADMINISTRATIVE SERVICES. Manager shall supervise the business
and affairs of CAF and each Fund, and shall provide such
services and facilities as may be required for effective
administration of CAF and Funds as are not provided by
employees or other agents engaged by CAF; provided that
Manager shall not have any obligation to provide under this
Agreement any such services which are the subject of a
separate agreement or arrangement between CAF and Manager, any
affiliate of Manager, or any third-party administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with
the services to be provided by Manager under this Agreement,
Manager may, to the extent it deems appropriate, and subject to
compliance with the requirements of applicable laws and regulations
and upon receipt of written approval of the Directors, make use of
(i) its affiliated companies, if any, and their directors,
trustees, officers, and employees and (ii) subcontractors selected
by Manager, provided that Manager shall supervise and remain fully
responsible for the services of all such third parties in
accordance with and to the extent provided by this Agreement. All
costs and expenses associated with services provided by any such
third parties shall be borne by Manager or such parties.
5. EXPENSES BORNE BY CAF. Except to the extent expressly assumed
by Manager herein or under a separate agreement between CAF
and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any
costs or expense incidental to the organization, operations,
or business of CAF. Without limitation, such costs and expense
shall include, but not be limited to:
(a) all charges of depositories, custodians, and other agencies
for the safekeeping and servicing of its cash, securities,
and other property;
(b) all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the
Funds (including, without limitation, fund accounting
and administration agents);
(c) all charges for equipment or services used for
obtaining price quotations or for communication
between Manager and CAF and the custodian, transfer
agent, or any other agent selected by CAF;
(d) all charges for administrative and accounting
services provided to CAF by Manager, or
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any other provider of such services;
(e) all charges for services of CAF's independent
auditors and for services to CAF by legal counsel;
(f) all compensation of Directors, other than those
affiliated with Manager, all expenses incurred in
connection with their services to CAF, and all
expenses of meetings of the Directors or committees
thereof;
(g) all expenses incidental to holding meetings of
shareholders of CAF ("Shareholders"), including
printing and supplying to each record-date
Shareholder notice and proxy solicitation material,
and all other proxy solicitation expense;
(h) all expenses of printing of annual or more frequent
revisions of CAF prospectus(es) and of supplying to
each then existing Shareholder a copy of a revised
prospectus;
(i) all expenses related to preparing and transmitting
certificates, if any, representing shares of CAF;
(j) all expenses of bond and insurance coverage required
by law or deemed advisable by the Board of Directors;
(k) all brokers' commissions and other normal charges
incident to the purchase, sale, or lending of
portfolio securities;
(l) all taxes and governmental fees payable to federal,
state, or other governmental agencies, domestic or
foreign, including all stamp or other transfer taxes;
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(m) all expenses of registering and maintaining the
registration of CAF under the 1940 Act and, to the
extent no exemption is available, expenses of
registering CAF's shares under the Securities Act of
1933, of qualifying and maintaining qualification of
CAF and CAF's shares for sale under securities laws
of various states or other jurisdictions, and of
registration and qualification of CAF under all other
laws applicable to CAF or its business activities;
(n) all interest on indebtedness, if any, incurred by CAF or a
Fund; and
(o) all fees, dues, and other expenses incurred by CAF in
connection with membership of CAF in any trade
association or other investment company organization.
6. ALLOCATION OF EXPENSES BORNE BY CAF. Any expenses borne by CAF
that are attributable solely to the organization, operation,
or business of a Fund shall be paid solely out of Fund assets.
Any expense borne by CAF which is not solely attributable to a
Fund, nor solely to any other series of shares of CAF, shall
be apportioned in such manner as Manager determines is fair
and appropriate or as otherwise specified by the Board of
Directors.
7. EXPENSES BORNE BY MANAGER. Manager at its own expense shall
furnish all executive and other personnel, office space, and office
facilities required to render the investment management and
administrative services set forth in this Agreement. Manager shall
pay all expenses of establishing, maintaining, and servicing the
accounts of Shareholders in each Fund listed in Schedule A to this
Agreement. However, Manager shall not be required to pay or provide
any credit for services provided by CAF's custodian or other agents
without additional cost to CAF.
In the event that Manager pays or assumes any expense of CAF
or a Fund not required to be paid or assumed by Manager under
this Agreement, Manager shall not be obligated hereby to pay
or assume the same or similar expense in the future; provided,
however, that nothing contained herein shall be deemed to
relieve Manager of any obligation to CAF or a Fund under any
separate agreement or arrangement between the parties.
8. MANAGEMENT FEE; REDUCTION OF COMPENSATION AND REIMBURSEMENT OF
EXPENSES. For the services rendered, facilities provided, and
charges assumed and paid by Manager hereunder, CAF shall pay
to Manager out of the assets of each Fund fees at the annual
rate for such Fund set forth in Schedule A to this Agreement.
For each Fund, the management fee shall accrue on each
calendar day, and shall be payable monthly on the first business
day of the next succeeding calendar month. The daily fee accrual
shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the applicable annual
rate of fee, and multiplying this product by the net assets of
the Fund, determined in the manner established by the Board of
Directors, as of the close of business on the last preceding
business day on which the Fund's net asset value was
determined.
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Manager may voluntarily reduce any portion of the compensation
or re imbursement of expenses due to it pursuant to this
Agreement and may agree to make payments to limit the expenses
which are the responsibility of a Fund under this Agreement.
Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an
agreement to reduce any future compensation or reimbursement
due to Manager hereunder or to continue future payments. Any
such reduction will be agreed upon prior to accrual of the
related expense or fee and will be estimated daily. In this
regard, Manager hereby agrees to waive fees and reimburse
expenses for CAF's fiscal year ending September 30, 1999 so
that the net operating expenses for that period, on an
annualized basis, will not exceed 1.75% for the Large-Cap
Growth and Disciplined Capital Appreciation Funds and 1.65%
for the Equity Income Fund.
Any Fund expense paid by Manager voluntarily or pursuant to an
agreed expense limitation (including the expense limitation
described in the foregoing for fiscal 1999) shall be
reimbursed by the appropriate Fund to Manager in the first,
second or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction, or
payment to the extent permitted by applicable law if the
aggregate expenses for the next succeeding fiscal year, second
succeeding fiscal year, or third succeeding fiscal year do not
exceed any limitation to which Manager has agreed. Such
reimbursement may be paid prior to the Fund's payment of
current expenses if so requested by Manager even if such
payment may require Manager to waive or reduce its fees
hereunder or to pay current Fund expenses. Manager may agree
not to require payment of any portion of the compensation or
reimbursement of expenses.
9. RETENTION OF SUBADVISER. Subject to obtaining the initial and
periodic approvals required under Section 15 of the 1940 Act,
Manager may retain one or more subadvisers at Manager's own cost
and expense for the purpose of furnishing one or more of the
services described in Section 2 hereof with respect to CAF or
one or more Funds. Retention of a subadviser shall in no way
reduce the responsibilities or obligations of Manager under this
Agreement, and Manager shall be responsible to CAF and its Funds
for all acts or omissions of any subadviser in connection with the
performance of Manager's duties hereunder.
10. NONEXCLUSIVITY. The services of Manager to CAF hereunder are not
to be deemed exclusive, and Manager shall be free to render
similar services to others.
11. STANDARD OF CARE. Neither Manager, nor any of its directors,
officers, share holders, agents, or employees shall be liable to
CAF or its Shareholders for any error of judgment, mistake of
law, loss arising out of any investment, or any other act or
omission in the performance by Manager of its duties under this
Agreement, except for loss or liability resulting from willful
misfeasance, bad faith, or gross negligence on Manager's part or
from reckless disregard by Manager of its obligations and duties
under this Agreement. Nothing in this Agreement shall be
construed to protect any officer of Manager from liability for
violation of Section 17(h) or (i) of the 1940 Act.
12. ABSENCE OF LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any
obligation of CAF hereunder shall be
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binding only upon the assets of CAF (or the applicable Fund
thereof) and shall not be binding upon any Director, officer,
employee, agent, or Shareholder of CAF. Neither the authorization
of any action by the Directors or Shareholders of CAF nor the
execution of this Agreement on behalf of CAF shall impose any
liability upon any Director or any Shareholder. Nothing in this
Agreement shall be construed to protect any Director or officer
of CAF from liability for violation of Section 17(h) or (i) of
the 1940 Act.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records
required to be maintained and preserved by CAF pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations that are maintained and preserved by Manager
on behalf of CAF and any other records the parties mutually agree
shall be maintained by Manager on behalf of CAF are the property
of CAF and shall be surrendered by Manager promptly on request by
CAF; provided, however, that Manager may at its own expense make
and retain copies of any such records.
CAF shall furnish or otherwise make available to Manager such
copies of financial statements, proxy statement, reports, and
other information relating to the business and affairs of each
Shareholder in a Fund as Manager may, at any time or from time
to time, reasonably require in order to discharge its
obligations under this Agreement.
Manager shall prepare and furnish to CAF as to each Fund
statistical data and other information in such form at such
intervals as CAF may reasonably request.
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14. USE OF MANAGER'S NAME. CAF may use the name "The Catholic
Alliance Funds, Inc." and the names of the Funds listed in
SCHEDULE A or any other name derived from the name "The
Catholic Alliance Funds, Inc." only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall
have succeeded to the business of Manager as investment adviser.
At such time as this Agreement or any extension, renewal, or
amendment hereof, or such other similar agreement shall no longer
be in effect, CAF will cease to use any name derived from the name
"The Catholic Alliance Funds, Inc." or otherwise connected with
Manager, or with any organization which shall have succeeded to
Manager's business as investment adviser.
15. AMENDMENT. This Agreement may not be materially amended with
respect to CAF or any Fund without the affirmative votes (a) of a
majority of the Board of Directors, including a majority of those
Directors who are not "interested persons" of CAF or of Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) of a "majority of the outstanding shares"
of CAF or, with respect to an amendment affecting an individual
Fund, a "majority of the outstanding shares" of the Fund. The
terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their
respective definitions in the 1940 Act and, with respect to the
latter term, in accordance with Rule 18f-2 under the 1940 Act.
16. EFFECTIVE DATE AND TERMINATION. This Agreement shall become
effective with respect to any Fund as of the effective date for
that Fund specified in SCHEDULE A hereto. This Agreement may be
terminated at any time, without payment of any penalty, as to any
Fund by the Board of Directors of CAF, or by a vote of a majority
of the outstanding shares of that Fund, upon at least sixty (60)
days' written notice to Manager. This Agreement may be terminated
by Manager at any time upon at least sixty (60) days' written
notice to CAF. This Agreement shall terminate automatically in the
event of its "assignment" (as defined in the 1940 Act). Unless
terminated as hereinbefore provided, this Agreement shall continue
in effect with respect to any Fund for a period of two years
following the effective date for such Fund specified in
SCHEDULE A, and shall remain in effect thereafter from year to
year only so long as such continuance is specifically approved
with respect to the Fund at least annually (a) by a majority of
those Directors who are not interested persons of CAF or Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) by either the Board of Directors or CAF,
or by a "vote of a majority of the outstanding shares" of the
Fund.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
18. HEADINGS. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
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THE CATHOLIC ALLIANCE FUNDS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------
Xxxxx X. Xxxxx, President
CATHOLIC FINANCIAL SERVICES CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------
Xxxxx X. Xxxxx, President
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THE CATHOLIC ALLIANCE FUNDS, INC.
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of The Catholic Alliance Funds, Inc. currently subject to
this Agreement are as follows:
1. Equity Income Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.80 of 1% of the average daily net
assets of the Fund.
2. Large-Cap Growth Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.90 of 1% of the average daily net
assets of the Fund.
3. Disciplined Capital Appreciation Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.90 of 1% of the average daily net
assets of the Fund.
