INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the ____ day of _________, 2004 by and between TFS
Capital LLC (the "Investment Adviser"), a Virginia Limited Liability Company,
and TFS Capital Investment Trust (the "Trust"), an Ohio business trust.
WHEREAS, the Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"), and
is currently authorized to issue separate series of shares, each having its own
investment objective, policies and restrictions, all as more fully described in
the prospectus and the statement of additional information constituting parts of
the Trust's Registration Statement on Form N-1A filed the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Act (the "Registration Statement"); and
WHEREAS, the Trust is engaged in the business of investing and reinvesting the
assets of each of its series in securities ("the portfolio assets") of the type
and in accordance with the limitations specified in the Trust's Agreement and
Declaration of Trust (the "Declaration") and Registration Statement, and any
representations made in its prospectus and statement of additional information,
all in such manner and to such extent as may from time to time be authorized by
the Trustees; and
WHEREAS, the Trust established TFS Market Neutral Fund (the "Fund") as a series
of the Trust, and wishes to employ the Investment Adviser to manage the
investment and reinvestment of the Fund's portfolio assets as above specified
and, without limiting the generality of the foregoing, to provide management and
other services specified below and acknowledges that it has received prior to
entering into this Agreement a copy of Form ADV-Part II as filed by the
Investment Adviser with the Commission.
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Investment Adviser to supervise and direct
the investments of and for the Fund and as the Fund's agent and
attorney-in-fact with full discretionary and exclusive power and authority
to establish, maintain and trade in brokerage accounts for and in the name
of the Fund and to buy, sell and trade in all stocks, bonds and other
assets of the Fund. The Investment Adviser hereby accepts such appointment
and agrees to manage the portfolio assets in a manner consistent with the
investment objective, policies and restrictions of the Fund and with
applicable law.
2. Unless advised by the Trustees of the Trust of an objection, the Investment
Adviser may, to the extent permitted by applicable laws and regulations,
direct that a portion of the brokerage commissions that may be generated by
the Fund be applied to payment for brokerage and research services.
Brokerage and research services furnished by brokers may include, but are
not limited to, written information and analyses concerning specific
securities,
companies or sectors; market, financial and economic studies and forecasts
as well as discussions with research personnel; financial publications; and
statistic and pricing services utilized in the investment management
process. Brokerage and research services obtained by the use of commissions
arising from the Fund's portfolio transactions may be used by the
Investment Adviser in its other investment activities. In selecting brokers
and negotiating commission rates, the Investment Adviser will take into
account the financial stability and reputation of brokerage firms and the
brokerage, execution and research services provided by such brokers. The
benefits which the Fund may receive from such services may not be in direct
proportion to the commissions generated by the Fund. The Trust acknowledges
that since commission rates are generally negotiable, selecting brokers on
the basis of considerations which are not limited to applicable commission
rates may result in higher transaction costs that would otherwise by
obtainable.
3. The Investment Adviser may bunch orders for the Fund with orders for the
same security for other accounts managed by the Investment Adviser or its
affiliates. In such instances, the Fund will be charged the average price
per unit for the security in such transactions. Complete records of such
transactions will be maintained by the Investment Adviser and will be made
available to the Trust upon request.
4. The Investment Adviser shall report to the Board of Trustees at each
meeting thereof all changes in the portfolio assets since the prior report,
and will also keep the Trustees in touch with important developments
affecting the portfolio assets and on the Investment Adviser's own
initiative will furnish the Trustees from time to time with such
information as the Investment Adviser may believe appropriate for this
purpose, whether concerning the individual issuers whose securities are
included in the portfolio assets, the industries in which they engage, or
the conditions prevailing in the economy generally. The Investment Adviser
will also furnish the Trustees with such statistical and analytical
information with respect to the portfolio assets as the Investment Adviser
may believe appropriate or as the Trustees reasonably may request. In
making purchases and sales of the portfolio assets, the Investment Adviser
will bear in mind the policies set from time to time by the Board of
Trustees as well as the limitations imposed by the Trust's Agreement and
Declaration of Trust, and in the Trust's Registration Statement, in each
case as amended from time to time, the limitations in the Act and of the
Internal Revenue Code of 1986, as amended, in respect of regulated
investment companies and the investment objective, policies and practices,
including restrictions applicable to the Fund's portfolio.
5. The Investment Adviser shall not be liable for any mistake of judgment or
in any event whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to protect, the
Investment Adviser against any liability to the Fund or to its security
holders to which the
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Investment Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the Investment Adviser's reckless disregard of
its obligations and duties hereunder. It is understood that the Investment
Adviser performs various investment advisory and managerial services for
others, and the Trust agrees that the Investment Adviser may give advice
and take action in the performance of its duties with respect to others
which may differ from advice given or action taken with respect to the
Fund. Nothing contained herein shall in any way constitute a waiver or
limitation of any rights which the Fund or its shareholders may have under
common law, or any federal or state securities laws.
6. This Agreement shall become effective on the date hereof and shall remain
in effect until ______, 2006, and shall continue in effect from year to
year thereafter so long as its continuance is specifically approved at
least annually by the Board of Trustees or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Fund, and, in
either case, by a vote, cast in person at a meeting called for the purpose
of voting on such approval, of a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons, as defined in the Act,
of any party to this Agreement, and provided further, however, that if the
continuation of this Agreement is not approved, the Investment Adviser may
continue to render to the Fund the services described herein in the manner
and to the extent permitted by the Act and the rules and regulations
thereunder. Upon the effectiveness of this Agreement, it shall supersede
all previous agreements between the parties covering the subject matter
hereof. This Agreement may be terminated at any time, without the payment
of any penalty, by vote of a majority of the outstanding voting securities
(as defined in the Act) of the Fund, or by a vote of the Board of Trustees
on 60 days' written notice to the Investment Adviser, or by the Investment
Adviser on 60 days' written notice to the Trust.
7. This Agreement shall not be amended unless such amendment is approved by
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons, as defined in the Act, of any party to
this Agreement (other than as Trustees of the Trust), and, if required by
law, by vote of a majority of the outstanding voting securities (as defined
in the Act) of the Fund.
8. This Agreement may not be assigned by the Investment Adviser and shall
terminate automatically in the event of any assignment by the Investment
Adviser. The term "assignment" as used in this paragraph shall have the
meaning ascribed thereto by the Act and any regulations or interpretations
of the Commission thereunder.
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9. If the Investment Adviser ceases to act as investment adviser to the Fund,
or, in any event, if the Investment Adviser so requests in writing, the
Trust agrees to take all necessary action to change the names of the Trust
and the Fund to a name not including the term "TFS Capital." The Investment
Adviser may from time to time make available without charge to the Trust
for its use of such marks or symbols owned by the Investment Adviser,
including marks or symbols containing the term "TFS Capital" or any
variation thereof, as the Investment Adviser may consider appropriate. Any
such marks or symbols so made available will remain the Investment
Adviser's property and it shall have the right, upon notice in writing, to
require the Trust to cease the use of such xxxx or symbol at any time.
10. The Fund shall pay the Investment Adviser an investment advisory fee equal
to 2.25% per annum of the average daily net assets of the Fund. The
investment advisory fee will be paid monthly. The Investment Adviser's
compensation for the period from the date hereof through the last day of
the month of the effective date hereof will be prorated based on the
proportion that such period bears to the full month. In the event of any
termination of this Agreement, the Investment Adviser's compensation will
be calculated on the basis of a period ending on the last day on which this
Agreement is in effect, subject to proration based on the number of days
elapsed in the current period as a percentage of the total number of days
in such period.
11. Unless otherwise agreed to in writing by the parties, the Fund shall be
responsible and hereby assumes the obligation for payment of all of its
expenses, including: (a) payment to the Investment Adviser of the fee
provided for in the foregoing paragraph; (b) custody, transfer and dividend
disbursing expenses; (c) fees of trustees who are not affiliated persons of
the Investment Adviser or any administrator of the Trust; (d) legal and
auditing expenses; (e) clerical, accounting and other office costs; (f) the
cost of personnel providing services to the Fund; (g) costs of printing the
Fund's prospectuses and shareholder reports for existing shareholders; (h)
cost of maintenance of the Fund's corporate existence; (i) interest
charges, taxes, brokerage fees and commissions; (j) costs of stationery and
supplies; (k) expenses and fees related to registration and filing with the
Commission and with state regulatory authorities; and (l) such promotional,
shareholder servicing and other expenses as may be contemplated by one or
more effective plans pursuant to Rule 12b-1 under the Act or one or more
effective non-Rule 12b-1 shareholder servicing plans, in each case
provided, however, that the Fund's payment of such promotional, shareholder
servicing and other expenses shall be in the amounts, and in accordance
with the procedures, set forth in such plan or plans.
12. Except to the extent necessary to perform the Investment Adviser's
obligations hereunder, nothing herein shall be deemed to limit or restrict
the right of the Investment Adviser or its members, officers or employees
to
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engage in any other business or to devote time and attention to the
management of other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
individual or entity.
13. The validity of the Agreement and the rights and liabilities of the parties
hereunder shall be determined in accordance with the laws of the State of
Virginia without regard to its conflict of laws provisions, provided,
however, that nothing herein shall be construed as being inconsistent with
the Act.
14. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees of the Trust
and not individually and that the obligations of this instrument are not
binding upon any of the Trustees, officers or shareholders individually but
are binding only upon the assets and property of the Fund, and the
Investment Adviser shall look only to the assets of the Fund for the
satisfaction of such obligations.
15. The Investment Adviser shall promptly notify the Trust of any change in the
ownership or control of the Investment Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
TFS CAPITAL INVESTMENT TRUST
By:
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TFS CAPITAL LLC
By:
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