Exhibit 4(e)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of November 1, 2000, by and between MERCURY TARGET
SELECT EQUITY FUND, INC. (the "Fund") and FUND ASSET MANAGEMENT, L.P., doing
business as MERCURY ADVISORS (hereinafter referred to as the "Investment
Adviser"), a Delaware limited partnership.
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act");
WHEREAS, the Directors of the Fund (the "Directors") have determined that
the Fund will operate as a feeder fund that seeks to achieve its investment
objectives by investing all of its assets in shares of a master fund or other
pooled investment vehicle with the same investment objectives and policies as
the Fund, and the Directors intend such arrangement to continue indefinitely;
WHEREAS, the Directors may, at some future time, direct the Fund to
withdraw all of its assets from the shares of a master fund or other pooled
investment vehicle and invest directly in portfolio securities in accordance
with its investment objectives and policies;
WHEREAS, the Investment Adviser is engaged principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940;
WHEREAS, the Fund desires to retain the Investment Adviser to provide
management and investment advisory services to the Fund in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Fund on the terms and conditions hereafter
set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree as
follows:
ARTICLE I
DUTIES OF THE INVESTMENT ADVISER
The Fund hereby employs the Investment Adviser to act as a manager and
investment adviser of the Fund and to furnish, or arrange for other persons or
entities (including, without limitation, affiliates of the Investment Adviser)
to furnish, the management and investment advisory services
described below, subject to the policies of, review by and overall control of
the Directors, for the period and on the terms and conditions set forth in this
Agreement. The Investment Adviser hereby accepts such employment and agrees
during such period, at its own expense, to render, or arrange for the rendering
of, such services and to assume the obligations herein set forth for the
compensation provided for herein. The Investment Adviser and its affiliates
shall for all purposes herein be deemed to be independent contractors and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Fund in any way or otherwise be deemed agents of the Fund.
(a) Management Services. The Investment Adviser shall perform (or
arrange for the performance of) the management and administrative services
necessary for the operation of the Fund, to the extent such services are
not otherwise provided for pursuant to an Administration Agreement to
which the Fund is a party. The Investment Adviser shall provide the Fund
with office space, facilities, equipment and necessary personnel and such
other services as the Investment Adviser, subject to review by the
Directors, shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement. The Investment Adviser shall
also, on behalf of the Fund, conduct relations (or arrange for the conduct
of such relations) with custodians, depositories, transfer agents,
dividend disbursing agents, other shareholder servicing agents,
accountants, attorneys, underwriters, brokers and dealers, corporate
fiduciaries, insurers, banks and such other persons in any such other
capacity deemed to be necessary or desirable. The Investment Adviser shall
generally monitor (or arrange for the monitoring of) the Fund's compliance
with investment policies and restrictions as set forth in the Registration
Statement of the Fund filed with the Securities and Exchange Commission
under the Investment Company Act, as amended from time to time (the
"Registration Statement"). The Investment Adviser shall make reports (or
arrange for the making of such reports) to the Directors of its
performance of obligations hereunder and furnish advice and
recommendations with respect to such other aspects of the business and
affairs of the Fund as it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall
provide (or arrange for the provision of) the Fund with such investment
research, advice and supervision as the latter may from time to time
consider necessary for the proper supervision of the assets of the Fund,
shall furnish (or arrange for the furnishing of) continuously an
investment program for the Fund and shall determine (or arrange for the
determination of) from time to time which securities shall be purchased,
sold or exchanged and what portion of the assets of the Fund shall be held
in the various securities and other financial instruments in which the
Fund invests or cash, subject always to the restrictions of the Articles
of Incorporation and By-Laws of the Fund, as amended from time to time,
the provisions of the Investment Company Act and the statements relating
to the Fund's investment objectives, investment policies and investment
restrictions as the same are set forth in the Fund's current Registration
Statement. The Investment Adviser shall make decisions (or arrange for the
making of such decisions) for the Fund as to the manner in which voting
rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities
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shall be exercised. Should the Directors at any time, however, make any
definite determination as to investment policy and notify the Investment
Adviser thereof in writing, the Investment Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The
Investment Adviser shall take, on behalf of the Fund, all actions (or
arrange for the taking of all such actions) which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio
securities for the Fund's account with brokers or dealers selected by it,
and to that end, the Investment Adviser is authorized as the agent of the
Fund to give instructions to the custodian of the Fund as to deliveries of
securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such
orders with respect to assets of the Fund, the Investment Adviser is
directed at all times to seek to obtain execution and price within the
policy guidelines determined by the Directors and set forth in the then
current Registration Statement. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of
1934, as amended, and other applicable provisions of law, the Investment
Adviser may select brokers or dealers with which it or the Fund is
affiliated.
(c) Sub-Advisers. In carrying out its responsibilities hereunder,
the Investment Adviser may employ, retain or otherwise avail itself of the
services of other persons or entities (including without limitation,
affiliates of the Investment Adviser), on such terms as the Investment
Adviser shall determine to be necessary, desirable or appropriate.
However, if the Investment Adviser chooses to retain or avail itself of
the services of another person or entity to manage assets of the Fund, or
any portion thereof as determined by the Investment Adviser such other
person or entity must be (i) retained at the Investment Adviser's own cost
and expense and (ii) retained subject to the requirements of Section 15 of
the Investment Company Act. Retention of one or more sub-advisers, or the
employment or retention of other persons or entities to perform services,
shall in no way reduce the responsibilities or obligations of the
Investment Adviser under this Agreement and the Investment Adviser shall
be responsible for all acts and omissions of such sub-advisers, or other
persons or entities, in connection with the performance of the Investment
Adviser's duties hereunder.
(d) Notice Upon Change in Partners of the Investment Adviser. The
Investment Adviser is a limited partnership and its limited partner is
Xxxxxxx Xxxxx & Co., Inc. and its general partner is Princeton Services,
Inc. The Investment Adviser will notify the Fund of any change in the
membership of the partnership within a reasonable time after such change.
(e) The Investment Adviser shall have no obligation to perform
pursuant to this Article I unless and until the Directors direct the Fund
to withdraw all of its assets from shares of a master fund or other pooled
investment vehicle and direct the Investment Adviser to directly manage
the Fund's assets in the manner and on the terms set forth in this
Agreement.
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ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Investment Adviser. The Investment Adviser shall assume and
shall pay, or cause its affiliate to pay, for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, facilities and
necessary personnel which it is obligated to provide under Article I
hereof. The Investment Adviser shall pay, or cause its affiliate to pay,
compensation of all Officers and all Directors of the Fund who are
affiliated persons of the Investment Adviser or any sub-adviser, or of an
affiliate of the Investment Adviser or any sub-adviser.
(b) The Fund. The Fund shall assume and shall pay or cause to be
paid all other expenses of the Fund (except for the expenses paid by FAM
Distributors, Inc. (the "Distributor")), including, without limitation:
taxes, expenses for legal and auditing services, costs of printing
proxies, shareholder reports, copies of the Registration Statement,
charges of the custodian, any sub-custodian and transfer agent, expenses
of portfolio transactions, expenses of redemption of shares, Securities
and Exchange Commission fees, expenses of registering the shares under
Federal, state and foreign laws, fees and actual out-of-pocket expenses of
Directors who are not affiliated persons of the Investment Adviser or any
sub-adviser, or of an affiliate of the Investment Adviser or any
sub-adviser, accounting and pricing costs (including the daily calculation
of the net asset value), insurance, interest, brokerage costs, litigation
and other extraordinary or non-recurring expenses, and other expenses
properly payable by the Fund. It is also understood that the Fund shall
reimburse the Investment Adviser or an affiliate of the Investment Adviser
for its costs in providing accounting services to the Fund. The
Distributor will pay certain of the expenses of the Fund incurred in
connection with the continuous offering of shares of beneficial interest
of the Fund.
(c) No payment or reimbursement of charges and expenses shall be
accrued or payable under this Article II by either the Fund or the
Investment Adviser unless and until the Directors direct that the Fund
withdraw all of its assets from shares of a master fund or other pooled
investment vehicle and direct the Investment Adviser to directly manage
the Fund's assets in the manner and on the terms set forth in this
Agreement.
ARTICLE III
COMPENSATION OF THE INVESTMENT ADVISER
(a) Management and Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Investment Adviser, the Fund
shall pay to the Investment Adviser at the end of each calendar month a fee
based upon the average daily value of the net assets of the Fund, as determined
and computed in accordance with the description of the determination of net
asset value contained in the Registration Statement, at the annual rate of
1.0625% of the average daily net assets of the Fund, commencing on the day
following effectiveness hereof. If this
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Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fee as set forth above. Payment of the Investment
Adviser's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated above. During any
period when the determination of net asset value is suspended by the Directors,
the net asset value of a share as of the last business day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.
(b) The Fund shall have no obligation to perform pursuant to this Article
III unless and until the Directors direct that the Fund withdraw all of its
assets from shares of a master fund or other pooled investment vehicle and
direct the Investment Adviser to directly manage the Fund's assets in the manner
and on the terms set forth in this Agreement. Upon such direction, the
obligation of the Fund to compensate the Investment Adviser in the manner set
forth in this Article III shall accrue upon an effective date to be determined
by the Directors.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER
The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder. As used in this
Article IV, the term "Investment Adviser" shall include any affiliates of the
Investment Adviser performing services for the Fund contemplated hereby and
partners, directors, officers and employees of the Investment Adviser and such
affiliates.
ARTICLE V
ACTIVITIES OF THE INVESTMENT ADVISER
The services of the Investment Adviser to the Fund are not to be deemed to
be exclusive, and the Investment Adviser and each affiliate and subadviser, if
any, is free to render services to others. It is understood that Directors,
officers, employees and shareholders of the Fund are or may become interested in
the Investment Adviser and its affiliates, as directors, officers, employees,
partners and shareholders or otherwise, and that the Investment Adviser and
directors, officers, employees, partners and shareholders of the Investment
Adviser and its affiliates are or may become similarly interested in the Fund as
shareholders or otherwise.
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ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written,
and shall remain in force for two years thereafter, and thereafter continue from
year to year, but only so long as such continuance is specifically approved at
least annually by (i) the Directors, or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors or by the vote of a majority of the outstanding voting
securities of the Fund, or by the Investment Adviser, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written. This Agreement may be executed by
the parties hereto on any number of counterparts, all of which together shall
constitute one and the same instrument.
MERCURY TARGET SELECT EQUITY FUND, INC.
By: Xxxxx X. Xxxxx
------------------------------------
Title: Executive Vice President
FUND ASSET MANAGEMENT, L.P., doing business
as MERCURY ADVISORS
By: PRINCETON SERVICES, INC.,
GENERAL PARTNER
By: Xxxxx X. Xxxxx
------------------------------------
Title: Executive Vice President
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