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Exhibit 5(b)-5.3
INVESTMENT SUB-ADVISORY AGREEMENT
February 28, 1995
BlackRock Financial Management Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Sierra Trust Funds (the "Company"), an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts, and Sierra
Investment Advisors Corporation ("Sierra Advisors"), a corporation organized
under the laws of the state of California, hereby agree with BlackRock Financial
Management Inc. (the "Sub-Advisor"), a Delaware Corporation, as follows:
1. Investment Description; Appointment
The Company desires to employ the capital of the Company's U.S.
Government Fund (the "Fund") by investing and reinvesting in investments of the
kind and in accordance with the limitations specified in its Master Trust
Agreement, as amended, and in its Prospectus and Statement of Additional
Information relating to the Fund as in effect and which may be amended from time
to time, and in such manner and to such extent as may from time to time be
approved by the Board of Trustees of the Company. Copies of the Fund's
Prospectus and Statement of Additional Information and the Company's Master
Trust Agreement, as amended, have been or will be submitted to the Sub-Advisor.
The Company agrees to provide copies of all amendments to the Fund's Prospectus
and Statement of Additional Information and the Company's Master Trust Agreement
to the Sub-Advisor on an on-going basis. The Company desires to employ and
hereby appoints the Sub-Advisor to act as investment sub-advisor to the Fund.
The Sub-Advisor accepts the appointment and agrees to furnish the services
described herein for the compensation set forth below.
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2. Services as Investment Sub-Advisor
Subject to the supervision of the Board of Trustees of the Company and
of Sierra Advisors, the Fund's investment adviser, the Sub-Advisor will (a) act
in conformity with the Company's Master Trust Agreement, the Investment Company
Act of 1940 the Investment Advisors Act of 1940 and the Internal Revenue Code of
1986, as the same may from time to time be amended, (b) make investment
decisions for the Fund in accordance with the Fund's investment objective(s) and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as in effect and, after notice to the Sub-Advisor, and which may be
amended from time to time, (c) place purchase and sale orders on behalf of the
Fund to effectuate the investment decisions made, (d) maintain books and records
with respect to the securities transactions of the Fund and will furnish the
Company's Board of Trustees such periodic, regular and special reports as the
Board may request; and (e) treat confidentially and as proprietary information
of the Company, all records and other information relative to the Company and
prior, present or potential shareholders; and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably withheld and such records
may not be withheld where the Sub-Advisor may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. In providing those services, the Sub-Advisor will supervise the Fund's
investments and conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. In addition, the
Sub-Advisor will furnish the Fund or Sierra Advisors with whatever statistical
information the Fund or Sierra Advisors may reasonably request with respect to
the instruments that the Fund may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Sub-Advisor will use its best efforts to seek the best overall
terms available and shall execute or direct the execution of all such
transactions in a manner permitted by law and in a manner that is in the best
interest of the Fund and its shareholders. In assessing the best overall terms
available for any Fund transaction, the Sub-Advisor will consider all factors it
deems relevant including, but not limited to, breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission for
the specific transaction
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and on a continuing basis. Pursuant to its investment determinations for the
Fund, in placing orders with brokers and dealers, the Sub-Advisor will attempt
to obtain the best net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, the Sub-Advisor may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers who
provide the Company with research advice and other services.
4. Information Provided to the Company
The Sub-Advisor will keep the Company and Sierra Advisors informed of
developments materially affecting the Fund, and will on its own initiative,
furnish the Company and Sierra Advisors on at least a quarterly basis with
whatever information the Sub- Advisor believes is appropriate for this purpose.
5. Standard of Care
The Sub-Advisor shall exercise its best judgment in rendering the
services described in paragraphs 2 and 3 above. The Sub-Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates, except
(a) a loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services (in which case any award of damages shall be
limited to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act of 1940, as amended) or (b) a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement (each such breach, act or omission described in (a) or (b) shall be
referred to as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
Sierra Advisors will pay the Sub-Advisor on the first business day of each month
a fee for the previous month at the annual rate of: (i) .185% of the Fund's
average daily net assets if the combined average daily net assets of the Fund
and The Sierra Variable Trust's U.S. Government Fund (together, the "Combined
Assets") are equal to or less than $650,000,000; (ii) .15% of the Fund's average
daily net assets if the Combined Assets are more than $650,000,000 but less than
$1,000,000,000; or (iii) .10% of the Fund's average daily net assets if the
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Combined Assets are more than $1,000,000,000. The Sub-Advisor shall have no
right to obtain compensation directly from the Fund or the Company for services
provided hereunder and agrees to look solely to Sierra Advisors for payment of
fees due. Upon any termination of this Agreement before the end of a month, the
fee for such month shall be prorated according to the proportion that the period
prior to such termination bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. For the purposes of determining
fees payable to the Sub-Advisor, the value of the net assets of each of such
funds shall be computed at the times and in the manner specified in the
Prospectus or Statement of Additional Information relating to such fund as from
time to time in effect.
Notwithstanding the foregoing, in the event that any reduction in the
fees paid to Sierra Advisors under the Advisory Agreement shall be required as a
result of any statutory or regulatory limitation on investment company expenses,
there shall be a proportionate reduction in the fee payable to the Sub- Advisor
hereunder; PROVIDED THAT the Sub-Advisor will never be required to pay more than
the amount of fees it receives.
7. Expenses
The Sub-Advisor will bear all expenses in connection with the
performance of its services under this Agreement, which expenses shall not
include brokerage fees or commissions in connection with the effectuation of
securities transactions. The Company will bear certain other expenses to be
incurred in its operation, including but not limited to: organizational
expenses, taxes, interest, brokerage fees and commissions, if any; fees of
trustees of the Company who are not officers, directors or employees of the
Sub-Advisor, Sierra Advisors, the Fund's sub-administrator or any of their
affiliates; Securities and Exchange Commission fees and state Blue Sky
qualification fees; out-of-pocket expenses of custodians, transfer and dividend
disbursing agents and the Company's sub-administrator and transaction charges of
custodians; insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Company's existence; costs attributable to investor services,
including without limitation, telephone and personnel expenses; costs of
preparing and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers or Board of Trustees of the Company; and any extraordinary expenses. In
addition, the Fund pays a distribution fee pursuant to the terms of a
Distribution Plan adopted under Rule 12b-1 of the Investment Company Act of
1940, as amended.
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8. Services to Other Companies or Accounts
The Company understands that the Sub-Advisor now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment adviser to one or more other investment
companies or series of investment companies, and the Company has no objection to
the Sub-Advisor so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Advisor have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. The Company recognizes that in some cases this procedure may limit the
size of the position that may be acquired or disposed of for the Fund. In
addition, the Company understands that the persons employed by the Sub-Advisor
to assist in the performance of the Sub-Advisor's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Sub-Advisor or any affiliate of the
Sub-Advisor to engage in and devote time and attention to other business or to
render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written
above and shall continue for a one year term and shall continue thereafter so
long as such continuance is specifically approved at least annually by (i) the
Board of Trustees of the Company or (ii) a vote of a "majority" (as defined in
the Investment Company Act of 1940, as amended) of the Fund's outstanding voting
securities, provided that in either event the continuance is also approved by a
majority of the Board of Trustees who are not "interested persons" (as defined
in said Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on 30 days' written notice, by Sierra Advisors, the Board of
Trustees of the Company or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by the Sub-Advisor and, will terminate
automatically upon any termination of the advisory agreement between the Company
and Sierra Advisors. In addition, this Agreement will also terminate
automatically in the event of its assignment (as defined in said Act). The
Sub-Advisor agrees to notify the Company of any circumstances that might result
in this Agreement being deemed to be assigned.
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10. Representations of the Company and the Sub-Advisor
The Company represents that (i) a copy of its Master Trust Agreement,
dated February 22, 1989, together with all amendments thereto, is on file in the
office of the Secretary of the Commonwealth of Massachusetts, (ii) the
appointment of the Sub-Advisor has been duly authorized, and (iii) it has acted
and will continue to act in conformity with the Investment Company Act of 1940,
as amended, and other applicable laws.
Sierra Advisors represents that (i) it is authorized to perform the
services herein, (ii) the appointment of the Sub-Advisor has been duly
authorized, and (iii) it will act in conformity with the Investment Company Act
of 1940, as amended, and other applicable laws.
The Sub-Advisor represents that it is authorized to perform the
services described herein.
11. Indemnification
Sierra Advisors shall indemnify and hold harmless the Sub-Advisor from
and against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses), howsoever arising from
or in connection with this Agreement or the performance by the Sub-Advisor of
its duties hereunder; provided, however, that nothing contained herein shall
require that the Sub-Advisor be indemnified for Disqualifying Conduct.
12. Amendment of this Agreement
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. No amendment of this Agreement shall be effective with respect to any
Fund until approved by vote of a majority of the outstanding voting securities
of such Fund.
13. Limitation of Liability
This Agreement has been executed on behalf of the Company by the
undersigned officer of the Company in his capacity as an officer of the Company.
The obligations of this Agreement shall be binding upon the assets and property
of the Fund only and not upon the assets and property of any other investment
fund
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of the Company and shall not be binding upon any Trustee, officer or shareholder
of the Fund and/or the Company individually.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
15. Governing Law
This Agreement shall be governed in accordance with the laws of the
Commonwealth of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
SIERRA TRUST FUNDS
By /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Executive Vice President
SIERRA INVESTMENT ADVISORS
CORPORATION
By /s/ XXXXXXX X. GOTH
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Name: Xxxxxxx X. Goth
Title: Chief Operating Officer
Accepted:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By /s/ XXXXXXXX XXXX
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Name: Xxxxxxxx Xxxx
Title: President
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