PORTFOLIO MANAGEMENT AGREEMENT
THIS AGREEMENT dated and effective as of March 1, 2001, among Bridgewater
Associates, Inc. (the "Sub-Advisor"); Fremont Investment Advisors, Inc. (the
"Advisor"), a Delaware corporation; and Fremont Mutual Funds, Inc. (the "Fund"),
a Maryland corporation.
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company and is authorized to issue separate series (the "Series"),
each of which may offer a separate class of shares of beneficial interest, each
series having its own investment objective, policies and limitations; and
WHEREAS, the Fund presently offers shares of a particular series named
the Fremont Global Fund (the "Global Series"); and
WHEREAS, the Fund has retained the Advisor to render investment
management and administrative services to the Global Series; and
WHEREAS, the Advisor and the Fund desire to retain the Sub-Advisor to
furnish portfolio management services to the Global Series in connection with
Advisor's investment management activities on behalf of the Series, and the
Sub-Advisor is willing to furnish such services to the Advisor and the Global
Series;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Sub-Advisor, the Advisor and the Fund
as follows:
1. APPOINTMENT. The Advisor and the Fund hereby appoint Sub-Advisor
to act as Sub-Advisor with respect to certain assets of the Global Series for
the periods and on the terms set forth in this Agreement. The Sub-Advisor
accepts such appointment and agrees to furnish the services herein set forth,
for the compensation herein provided.
2. SUB-ADVISOR DUTIES. Subject to the supervision of the Advisor and
the Fund's Board of Directors, the Sub-Advisor shall have full discretionary
authority as agent and attorney-in-fact with respect to the portion of assets of
the Global Series' portfolio assigned to the Sub-Advisor, from time to time by
the Advisor or the Board of Directors, including authority to: (a) buy, sell,
exchange, convert or otherwise trade without limitation financial securities as
set forth in Appendix A hereto and (b) place orders for the execution of such
securities transactions with or through such brokers, dealers, or issuers as
Sub-Advisor may select. The Sub-Advisor will provide the services under this
Agreement in accordance with the Global Series' registration statement filed
with the Securities and Exchange Commission ("SEC"), as amended. Investments by
the Sub-Advisor shall conform with the provisions of Appendix A attached hereto,
as such may be revised from time to time at the discretion of the Advisor and
the Fund. Subject to the foregoing, the Sub-Advisor will vote proxies with
respect to the securities
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and investments purchased with the assets of the Global Series' portfolio
managed by the Sub-Advisor and will provide regular reports of proxy voting. The
Sub-Advisor further agrees that it will:
(a) conform with all applicable rules and regulations of the
Securities and Exchange Commission.
(b) sign and execute all documents including futures account
agreements and related acknowledgements and disclosures, foreign exchange
netting agreements, repurchase agreements, and swap agreements, all either
individually or under an umbrella agreement and to take all other action that
the Sub- Advisor reasonably considers necessary or advisable in order to carry
out its duties under this Agreement
(c) place orders pursuant to its investment determinations for
the Global Series either directly with the issuer or with any broker or dealer.
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 it with research advice and other services of lawful assistance to the
Sub-Advisor in serving the Global Series as the Sub-Advisor or who sell the
Global Series' shares.
(d) make available to the Advisor and the Fund promptly upon
their request all its investment records and ledgers to assist the Advisor and
the Fund in their compliance with respect to the Global Series' securities
transactions as required by the 1940 Act and the Investment Advisers Act of 1940
("Advisers Act"), as well as other applicable laws. The Sub-Advisor will furnish
the Fund's Board of Directors with respect to the Global Series such periodic
and special reports as the Advisor and the Directors may reasonably request.
(e) maintain detailed records of the assets managed by the
Sub-Advisor as well as all investments, receipts, disbursements and other
transactions made with such assets. Such records shall be open to inspection and
audit at reasonable times by any person designated by the Advisor or the Fund.
The Sub-Advisor shall provide to the Advisor or the Fund and any other party
either the Advisor or the Fund designates: (i) monthly statements of the
activities with regard to the assets for the month and of the assets showing
each asset at its cost and, for each security listed on any national securities
exchange, its value at the last quoted sale price reported on the composite tape
on the valuation date or, in the cases of securities not so reported, by the
principal exchange on which the security is traded, or, if no trade was made on
the valuation date or if such security is not listed on any exchange, its value
as determined by a nationally recognized pricing service used by the Sub-Advisor
to value securities in their client accounts, at the value specified by such
pricing service on the valuation date, and for any other security or asset in a
manner determined in good faith by the Sub-Advisor to reflect its then fair
market value; (ii) statements evidencing any purchases and sales as soon as
practicable after such transaction has taken place; (iii) a quarterly review of
the
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assets under management; and (iv) tax information as requested, on a monthly
basis, to the Fund's custodian bank.
3. EXPENSES. During the term of this Agreement, the Sub-Advisor will
pay all expenses incurred by it, its staff and their activities, in connection
with its portfolio management activities under this Agreement.
4. COMPENSATION. For the services provided to the Global Series, the
Advisor will pay the Sub-Advisor the fees as set forth in Appendix B hereto at
the times set forth in Appendix B hereto.
5. BOOKS AND RECORDS; CUSTODY. (a) In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees
that all records which it maintains for the Global Series are the property of
the Fund and further agrees to surrender promptly to the Fund any of such
records upon the Fund's request. The Sub-Advisor further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act and to preserve the records
required by Rule 204-2 under the Advisers Act for the period specified in the
Rule.
(b) Title to all investments shall be made in the name of the
Fund, provided that for convenience in buying, selling, and exchanging
securities (stocks, bonds, commercial paper, etc.), title to such securities may
be held in the name of the Fund's custodian bank, or its nominee. The Fund shall
advise the Sub-Advisor of the identity of its custodian bank and shall give the
Sub-Advisor 15 days written notice of any changes in such custody arrangements.
Neither the Sub-Advisor, nor any parent, subsidiary or related
firm, shall take possession of or handle any cash, securities, mortgages or
deeds of trust, or other indicia of ownership of the Fund's investments, or
otherwise act as custodian of such investments. All cash and the indicia of
ownership of all other investments shall be held by the Fund's custodian bank.
The Fund shall instruct its custodian bank to (a) carry out all
investment instructions as may be directed by the Sub-Advisor with respect
thereto (which may be orally given if confirmed in writing); and (b) provide the
Sub-Advisor with all operational information necessary for the Sub-Advisor to
trade on behalf of the Fund.
6. INDEMNIFICATION. The Sub-Advisor agrees to indemnify and hold
harmless, the Advisor, the Fund, any affiliated person within the meaning of
Section 2(a)(3) of the 1940 Act ("affiliated person") of the Advisor or the Fund
(other than the Sub-Advisor) and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") the Advisor or the Fund against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses),
to which the Advisor, the Fund or such affiliated person or controlling person
may become subject under the 1933 Act, 1940 Act, the Advisers Act,
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or under any other statute, at common law or otherwise, which (1) may be based
upon any wrongful act or omission by the Sub-Advisor, any of its employees or
representatives or any affiliate of the Sub-Advisor in the fulfillment of its
duties under this Agreement or (2) may be based upon any untrue statement of a
material fact contained in a registration statement or prospectus covering the
shares of the Global Series or any amendment thereof or any supplement thereto
or the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished to the Fund or any
affiliated person of the Fund by the Sub-Advisor or any affiliated person of the
Sub-Advisor; provided, however, that in no case is the Sub-Advisor's indemnity
in favor of the Advisor or the Fund or any affiliated person or controlling
person of the Advisor or the Fund deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith or negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement.
The Advisor and the Fund jointly and severally agree to indemnify and
hold harmless, the Sub-Advisor, any affiliated person within the meaning of
Section 2(a)(3) of the 1940 Act ("affiliated person") of the Sub-Advisor, and
each person, if any, who, within the meaning of Section 15 of the Securities Act
of 1933 (the "1933 Act"), controls ("controlling person") the Sub-Advisor
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Sub-Advisor, or such
affiliated person or controlling person may become subject under the 1933 Act,
1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise, which (1) may be based upon any wrongful act or omission by the
Advisor or the Fund, or any of their employees or representatives or any
affiliate of the Advisor or the Fund or (2) may be based upon any untrue
statement of a material fact contained in a registration statement or prospectus
covering the shares of the Global Series or any amendment thereof or any
supplement thereto or the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such a statement or omission was made in reliance upon information furnished to
the Sub-Fund or any affiliated person of the Sub-Advisor by the Advisor or the
Fund or any affiliated person of the Advisor or the Fund; provided, however,
that in no case is the Advisor's or the Fund's indemnity in favor of the
Sub-Advisor or any affiliated person or controlling person of the Sub-Advisor
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement.
The Fund agrees not to hold the Sub-Advisor or any of its officers or
employees liable for, and to indemnify and insure the Sub-Advisor, its officers,
employees, representatives, and affiliates ("Indemnified Parties") against any
act or omission of any other Sub-Advisor providing investment management
services to the Fund, and against any costs and liabilities the Indemnified
Parties may incur as a result of a claim against the Indemnified Parties
regarding actions taken in good faith exercise of their powers hereunder
excepting matters as to which the Indemnified Parties have been negligent,
engaged in willful misfeasance, bad faith, reckless disregard of the obligations
and duties under this Agreement or have been in violation of applicable law or
regulations.
-4-
7. SERVICES NOT EXCLUSIVE. The Fund and the Advisor acknowledges
that they do not have an exclusive arrangement with the Sub-Advisor and that the
Sub-Advisor is and shall be free to (i) advise other clients as to the purchase
and sale of as well as trade for the Sub-Advisor's own account and (ii) to trade
other accounts using the same or different methods, models and strategies and
formulas.
The Sub-Advisor shall be deemed not to be favoring or preferring another
client's account over the Fund's if the Sub-Advisor manages or trades such other
client's account either (i) in accordance with specific written or oral
instructions of a client, (ii) in accordance with Sub-Advisor money management
approach based upon the amount of equity and/or profits in such account, or
(iii) in accordance with another trading program, system, method, model,
strategy and/or formula. Trading different portfolios for other accounts,
trading other accounts at different leverage, or charging different fees to
different accounts shall similarly not be considered to constitute favoring or
preferring such accounts over the Fund's account. The parties hereto acknowledge
that the Fund's account may significantly under perform the other accounts or
programs managed by the Sub-Advisor. The reasons for this include numerous
material differences among accounts, including: (1) the period during which
accounts are active; (2) the trading approach used--although all accounts may be
traded in accordance with the same trading approach, such approach can and does
change periodically as a result of an ongoing program of research and
development by the Sub-Advisor; (3) the size of accounts--which influences the
trading activity of the account; (4) investor's goals and policies by which
accounts are traded--some accounts are more highly leveraged at the investor's
request producing commensurately larger gains or losses than other accounts; (5)
the rates of brokerage commissions paid by accounts and when such commissions
are charged to accounts; (6) the amount of interest income, if earned by
accounts, which will depend on the portion of the account's assets invested in
interest-bearing obligations such as United States Treasury Bills; (7) the rate
of management and/or incentive fees and amount of administrative cost paid by
accounts--some pay management and incentive fees, some pay incentive fees only,
and some pay no fees at all; (8) the timing of orders to open or close
positions; and (9) the market conditions in which accounts are traded, which in
part determines the quality of trade executions; and (10) different inflows or
outflows of equity; and (11) client restrictions on permitted executing brokers,
dealers or counterparties.
The Fund consents and agrees that, to the extent permitted by
applicable law, the Sub-Adviser may (but is not required to) aggregate
investments sale and purchase orders for the Fund with similar orders being made
contemporaneously for other accounts managed by the Sub- Adviser or with
accounts of affiliates of the Sub- Adviser if, in the Sub-Adviser's reasonable
judgment, such aggregation is reasonably likely to result in an overall economic
benefit to the Fund, based on an evaluation that the Fund is benefited by
relatively better purchase or sale prices, lower commission expenses or
beneficial timing of transactions, or a combination of these and other factors.
In many instances, the purchase or sale of investments for the Fund shall be
effected substantially simultaneously with the purchase or sale of like
investments for the accounts of other clients of the Sub-Adviser and its
affiliates.
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8. (a) DURATION. This Agreement shall become effective on the date
first written above. Unless terminated as herein provided, this Agreement shall
remain in full force and effective for no more than two (2) years and shall
continue in full force and effect for periods of one year thereafter so long as
such continuance is approved at least annually (i) by either the Directors of
the Fund or by a vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Global Series, and (ii) by the Advisor, and
(iii) in either event by the vote of a majority of the Directors of the Fund who
are not parties of 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.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Trustees of the Fund or by the
vote of a majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the Global Series, or by the Advisor, on thirty (30) days written
notice to the Sub-Advisor, or by the Sub-Advisor on like notice to the Fund and
to the Advisor.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically
and immediately terminate in the event of its assignment.
9. AMENDMENTS. 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 and no amendment of this Agreement shall be effective
until approved by a vote of a majority of the outstanding voting securities of
the Global Series, if such approval is required by applicable law.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the
Sub-Advisor as an agent of the Fund or the Advisor.
(e) This Agreement supersedes any prior agreement relating to
the subject matter hereof between the parties.
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(f) The Fund and the Advisor agree that the Fund account will be
an exempt account under C.F.T.C. rule 4.7.
11. CONFIDENTIALITY. The Advisor and the Fund acknowledge that the
methods, models, and strategies of the Sub-Advisor, including the details of the
transactions entered into by the Sub-Advisor on behalf of the Fund (the Trading
Approach) are all confidential property of the Sub-Advisor. Nothing in this
Agreement shall require the Sub-Advisor to disclose any details of its Trading
Approach. The Advisor and the Fund further agree that they will keep
confidential and will not disseminate the Sub-Advisor's Trading Approach, except
as, and to the extent that, (i) is necessary for monitoring the activity of the
Sub-Advisor on behalf of the Fund or (ii) is expressly required by law or
regulation
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS, THIS BROCHURE OR ACCOUNT
DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE
COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING
COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR
ACCOUNT DOCUMENT.
BRIDGEWATER ASSOCIATES, INC.
By:
------------------------------------
(Title)
FREMONT INVESTMENT ADVISORS, INC.
By:
-------------------------------------
(Title)
FREMONT MUTUAL FUNDS, INC.
By:
-------------------------------------
Xxxxx X. La Tronica
Vice President
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APPENDIX A
TO PORTFOLIO MANAGEMENT AGREEMENT
BRIDGEWATER ASSOCIATES, INC.
SUB-ADVISOR TO THE FREMONT GLOBAL FUND
INVESTMENT OBJECTIVES AND GUIDELINES
------------------------------------
Overall Investment Objective:
-----------------------------
The objective of the Fremont Global Fund is to maximize total return while
reducing risk. The Fund seeks to provide a systematic, disciplined approach to
reduce overall portfolio risk through asset diversification and to weight the
portfolio toward asset categories which, at the time of evaluation, appear to
have the best expected total return.
Policy and Guidelines for Sub-Advisor:
--------------------------------------
The Sub-Advisor will manage a portfolio of global fixed income securities
denominated in foreign currencies and the U.S. dollar. Under normal
circumstances, at least 65% of the portfolio's assets will be invested in fixed
income securities of issuers located in at least three countries (one of which
may be the United States). Based on the Sub-Advisor's fundamental and systematic
market assessment, the average portfolio duration will normally vary within a
0-to-8-year time frame.
Foreign Bonds: - Dependent on the Sub-Advisor's outlook for interest rates
and currency trends investments in the securities of issuers located
outside the United States will normally vary between 25% and 75% of the
portfolio's assets.
U.S. Dollar-Denominated Debt Securities: - The Sub-Advisor may invest in
the following: obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; U.S. dollar-denominated corporate debt
securities of domestic or foreign issuers; mortgage and other asset-backed
securities; variable and floating rate debt securities; convertible bonds;
U.S. dollar-denominated obligations of a foreign government, or any of its
political subdivisions, authorities, agencies or instrumentalities or by
supranational organizations (such as the World Bank); and securities that
are eligible as short-term cash equivalents. The Sub-Advisor will not
invest more than 15% of its net assets in variable and floating rate debt
securities, nor will the Sub-Advisor invest more than 5% of its net assets
in guaranteed investment contracts. The Sub-Advisor may invest in interest
rate futures and options on such futures.
This portfolio will also be able to utilize futures, options, OTC options,
and foreign currency forwards.
The Sub-Advisor may invest up to 10% of its assets in corporate debt
securities rated Ba by Xxxxx'x or BB by S&P, (sometimes referred to as
"junk bonds") which will have speculative characteristics, including the
possibility of default or bankruptcy of the issuers of such securities,
market price volatility based upon interest rate sensitivity, questionable
creditworthiness and relative liquidity of the
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secondary trading market. The minimum credit quality of any portfolio
holding is B; no more than 10% of the portfolio can be in any securities
rated below BBB or Baa.
Other than the requirement that the portfolio be invested in a minimum of 3
countries at any one time, there is no restriction on the amount of US
government, agency or instrumentality-issued securities that can be held.
Holdings in one non-US government issuer may comprise up to 66% of the
assets of the portfolio. Beyond that, all other issuers are limited to an
individual maximum of 13% of the portfolio.
The maximum aggregate net short position is 13%. For purposes of meeting
this objective, net short positions will be counted on a country (issuer)
by country (issuer) basis first, and then aggregated across countries
(issuers).
Compliance by the Sub-Advisor to the Investment Objectives and Policies in the
Fremont Global Fund Prospectus, Statement of Additional Information and this
Appendix A will be based on the total assets of the Global Fund and not solely
based on the portion of the assets allocated to the Sub-Advisor.
Performance Objective for Sub-Advisor:
--------------------------------------
The Sub-Advisor is expected to achieve a competitive rate of return over a
3 to 5 year time horizon and/or a complete market cycle when compared to the
X.X. Xxxxxx Global Government Bond Index (hedged).
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XXXXXXXX X
TO PORTFOLIO MANAGEMENT AGREEMENT
BRIDGEWATER ASSOCIATES, INC.
SUB-ADVISOR TO THE FREMONT GLOBAL FUND
SCHEDULE OF FEES
Fremont Investment Advisors, Inc. will pay to Bridgewater Associates, Inc., on
an aggregate basis, an annual fee computed as a percentage of the average daily
assets for investment management services for all accounts managed by the
Sub-Advisor for the Advisor. The management fees specified below shall be the
fees charged. The annual rate is determined as follows:
50 basis points (0.50%) of the first $20 million
40 basis points (0.40%) of the next $20 million
30 basis points (0.30%) of the next $60 million
20 basis points (0.20%) of the next $50 million
15 basis points (0.15%) of the average value of the daily assets in excess
of $150 million.
The Portfolio Management Agreement with the Sub-Advisor may be terminated by the
Advisor or the Fund upon 30 days written notice. The Advisor has day-to-day
authority to increase or decrease the amount of the Global Series' assets under
management by the Sub-Advisor.
Fees will be billed after the end of each calendar month. Fees will be prorated
for any period less than one month and shall be due and payable within thirty
(30) days after an invoice has been delivered to the Advisor.
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PORTFOLIO MANAGEMENT AGREEMENT
THIS AGREEMENT dated and effective as of ______________ 2001, among
Delaware International Advisers Ltd., a United Kingdom corporation (the
"Sub-Advisor"); Fremont Investment Advisors, Inc., a Delaware corporation (the
"Advisor"); and Fremont Mutual Funds, Inc., a Maryland corporation (the "Fund").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, diversified management investment
company and is authorized to issue separate series (the "Series"), each of which
may offer a separate class of shares of beneficial interest, each Series having
its own investment objective, policies and limitations; and
WHEREAS, the Fund presently offers shares of a particular series named the
Fremont Global Fund (the "Global Series"); and
WHEREAS, the Fund has retained the Advisor to render investment management
and administrative services to the Global Series; and
WHEREAS, the Advisor and the Fund desire to retain the Sub-Advisor to
furnish portfolio management services to the Global Series in connection with
Advisor's investment management activities on behalf of the Series, and the
Sub-Advisor is willing to furnish such services to the Advisor and the Global
Series;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Sub-Advisor, the Advisor and the Fund as
follows:
1. APPOINTMENT. The Advisor and the Fund hereby appoint Sub-Advisor to
provide sub-investment advisory services to the Advisor and the Fund with
respect to certain assets of the Global Series for the periods and on the terms
set forth in this Agreement. The Sub-Advisor accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein provided.
2. SUB-ADVISOR DUTIES. Subject to the supervision of the Advisor and the
Fund's Board of Directors, the Sub-Advisor shall have full discretionary
authority as agent and attorney-in-fact with respect to the portion of assets of
the Global Series' portfolio assigned to the Sub-Advisor, from time to time by
the Advisor or the Board of Directors, including authority to: (a) buy, sell,
exchange, convert or otherwise trade in any stocks without limitation and (b)
place orders for the execution of such securities transactions with or through
such brokers, dealers, or issuers as Sub-Advisor may select. The Sub-Advisor
will provide the services under this Agreement in accordance with the Global
Series' registration statement filed with the Securities and Exchange Commission
("SEC"), as amended. Investments by the Sub-Advisor shall conform with the
provisions of Appendix A attached hereto, as such may be revised from time to
time at the discretion of the Advisor and the Fund and as provided to the
Sub-Advisor. Subject to the foregoing, the Sub-Advisor will vote proxies with
respect to the securities and investments
1
purchased with the assets of the Global Series' portfolio managed by the
Sub-Advisor and will provide regular reports of proxy voting. The Sub-Advisor
further agrees that it will:
(a) conform with all applicable rules and regulations of the
Securities and Exchange Commission.
(b) select brokers and dealers to execute portfolio transactions for
the Global Series and select the markets on or in which the transaction will be
executed. In providing the Global Series with investment management, it is
recognized that the Sub-Advisor will give primary consideration to seeking best
execution for all portfolio transactions and in doing so the Sub-Advisor may
consider the financial responsibility, research and investment information and
other research services and products provided by brokers or dealers who may
effect or be a party to any such transaction or other transactions to which the
Sub-Advisor's other clients may be a party. It is understood that it is
desirable for the Fund that the Sub-Advisor have access to brokerage and
research services and products and security and economic analysis provided by
brokers who may execute brokerage transactions at a higher cost to the Global
Series than broker-dealers that do not provide such brokerage and research
services. Therefore, in compliance with Section 28(e) of the Securities Exchange
Act of 1934 (the "1934 Act"), the Sub-Advisor is authorized to place orders for
the purchase and sale of securities for the Global Series with such brokers,
that provide brokerage and research products and/or services that charge an
amount of commission for effecting securities transactions in excess of the
amount of commission another broker would have charged for effecting that
transaction, provided the Sub-Advisor determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research products and/or services provided by such broker viewed in terms of
either that particular transaction or the overall responsibilities of the
Sub-Advisor for this or other advisory accounts, subject to review by the Fund
from time to time with respect to the extent and continuation of this practice.
It is understood that the information, services and products provided by such
brokers may be useful to the Sub-Advisor in connection with the Sub-Advisor's
services to other clients. On occasions when the Sub-Advisor deems the purchase
or sale of a security to be in the best interest of the Global Series as well as
other clients of the Sub-Advisor, the Sub-Advisor, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased subject to best execution. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, shall be made by the Sub-Advisor in the
manner the Sub-Advisor considers to be the most equitable and consistent with
its fiduciary obligations to the Global Series and to such other clients.
(c) make available to the Advisor and the Fund's Board of Directors
promptly upon their request all its investment records and ledgers relating to
the Global Series to assist the Advisor and the Fund in their compliance with
respect to the Global Series' securities transactions as required by the 1940
Act and the Investment Advisers Act of 1940 ("Advisers Act"), as well as other
applicable laws. The Sub-Advisor will furnish the Fund's Board of Directors with
respect to the Global Series such periodic and special reports as the Advisor
and the Directors may reasonably request.
(d) maintain detailed records of the assets managed by the
Sub-Advisor as well as all investments, receipts, disbursements and other
transactions made with such assets. Such records shall be open to inspection and
audit during Sub-Advisor's normal business hours upon reasonable notice by any
person designated by the Advisor or the Fund. The Sub-Advisor shall provide to
the Advisor or the Fund
2
and any other party designated by either the Advisor or the Fund: (i) monthly
statements of the activities with regard to the assets for the month and of the
assets showing each asset at its cost and, for each security listed on any
national securities exchange, its value at the last quoted sale price reported
on the composite tape on the valuation date or, in the cases of securities not
so reported, by the principal exchange on which the security is traded, or, if
no trade was made on the valuation date or if such security is not listed on any
exchange, its value as determined by a nationally recognized pricing service
used by the Sub-Advisor to value securities in their client accounts, at the
value specified by such pricing service on the valuation date, and for any other
security or asset in a manner determined in good faith by the Sub-Advisor to
reflect its then fair market value; (ii) statements evidencing any purchases and
sales as soon as practicable after such transaction has taken place; (iii) a
quarterly review of the assets under management; and (iv) tax information as
requested, on a monthly basis, to the Fund's custodian bank.
3. EXPENSES. During the term of this Agreement, the Sub-Advisor will pay
all expenses incurred by it, its staff and their activities, in connection with
its portfolio management activities under this Agreement.
4. COMPENSATION. For the services provided to the Global Series, the
Advisor will pay the Sub-Advisor the fees as set forth in Appendix B hereto at
the times set forth in Appendix B hereto.
5. BOOKS AND RECORDS; CUSTODY. (a) In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records
which it maintains for the Global Series are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act and to preserve the records required
by Rule 204-2 under the Advisers Act for the period specified in the Rule.
(b) Title to all investments shall be made in the name of the Fund,
provided that for convenience in buying, selling, and exchanging securities
(stocks, bonds, commercial paper, etc.), title to such securities may be held in
the name of the Fund's custodian bank, or its nominee. The Fund shall advise the
Sub-Advisor of the identity of its custodian bank and shall give the Sub-Advisor
15 days' written notice of any changes in such custody arrangements.
Neither the Sub-Advisor, nor any parent, subsidiary or related firm,
shall take possession of or handle any cash, securities, mortgages or deeds of
trust, or other indicia of ownership of the Fund's investments, or otherwise act
as custodian of such investments. All cash and the indicia of ownership of all
other investments shall be held by the Fund's custodian bank. The Sub-Advisor
shall have no liability with respect to custody arrangements or the acts,
conduct or omission of the Fund's custodian.
The Fund shall instruct its custodian bank to (a) carry out all
investment instructions as may be directed by the Sub-Advisor with respect
thereto (which may be orally given if confirmed in writing); and (b) provide the
Sub-Advisor with all operational information necessary for the Sub-Advisor to
trade on behalf of the Fund.
3
7. INDEMNIFICATION. The Sub-Advisor agrees to indemnify and hold harmless
the Advisor, the Fund, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Advisor or the Fund (other
than the Sub-Advisor) and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") the Advisor or the Fund (collectively, the "Indemnified
Advisor Parties") against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) to which the Advisor,
the Fund or such affiliated person or controlling person may become subject
under the 1933 Act, 1940 Act, the Advisers Act, or under any other statute, at
common law or otherwise, which (1) may be based upon the willful misconduct, bad
faith or negligence by the Sub-Advisor, any of its employees or representatives
or any affiliate of or any person acting on behalf of the Sub-Advisor (it being
understood that broker/dealers are not deemed to be acting on behalf of the
Sub-Advisor) or (2) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the shares of the Fund or any amendment thereof or any supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made with reasonable reliance
upon written information furnished to the Fund or any affiliated person of the
Fund by the Sub-Advisor or any affiliated person of the Sub-Advisor supplied for
the express purpose of inclusion in such registration statement or prospectus;
provided, however, that in no case is the Sub-Advisor's indemnity in favor of
the Advisor or the Fund or any affiliated person or controlling person of the
Advisor or the Fund deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful misconduct, bad
faith or negligence in the performance of his or its duties or by reason of his
or its reckless disregard of obligations and duties under this Agreement or
under any law applicable to the Advisor.
The Advisor and the Fund agree to indemnify and hold harmless the
Sub-Advisor, its affiliates, and their respective directors, officers, employees
and affiliated persons and controlling persons (collectively, the "Indemnified
Sub-Advisor Parties") against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses) to which any of
the Indemnified Sub-Advisor Parties may become subject under the 1933 Act, 1940
Act, the Advisers Act, or under any other statute, at common law or otherwise
which does not require the Sub-Advisor to provide an indemnity under the
previous paragraph, provided that none of the Indemnified Sub-Advisor Party has
acted in a manner that involves willful misconduct, bad faith or negligence in
the performance of his or its duties or by reason of his or its reckless
disregard of obligations and duties under this Agreement or under any law
applicable to the Sub-Advisor.
8. OTHER INVESTMENT ACTIVITIES OF SUB-ADVISOR. The Fund and Advisor
acknowledge that Sub-Advisor, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities ("Affiliated
Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees
that the Sub-Advisor or its affiliates may give advice or exercise investment
responsibility and take other action with respect to other Affiliated Accounts
which may differ from advice given or the timing or nature of action taken with
respect to the Global Series; provided that the Sub-Advisor acts in good faith,
and provided further that it is the Sub-Advisor's policy to allocate, within its
reasonable discretion, investment opportunities to the Global Series over a
period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the
Global Series and any specific investment
4
restrictions applicable thereto. The Fund acknowledges that one or more of the
Affiliated Accounts may at any time hold, acquire, increase, decrease, dispose
of or otherwise deal with positions in investments in which the Global Series
may have an interest from time to time, whether in transactions which may
involve the Global Series or otherwise. Sub-Advisor shall have no obligation to
acquire for the Global Series a position in any investment which any Affiliated
Account may acquire, and the Fund shall have no first refusal, co-investment or
other rights in respect of any such investment either for the Global Series or
otherwise.
9. (a) DURATION. This Agreement shall become effective on the date
hereof. Unless terminated as herein provided, this Agreement shall remain in
full force and effective for a period of two years from the date of this
Agreement, and shall continue in full force and effect for periods of one year
thereafter so long as such continuance is approved at least annually (i) by
either the Board of Directors of the Fund or by a vote of a majority (as defined
in the 0000 Xxx) of the outstanding voting securities of the Global Series, and
(ii) by the Advisor, and (iii) by the vote of a majority of the Board of
Directors of the Fund 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.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Directors of the Fund or by the
vote of a majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the Global Series, or by the Advisor, on thirty (30) days' written
notice to the Sub-Advisor, or by the Sub-Advisor on like notice to the Board of
Directors of the Fund and to the Advisor. Payment of fees earned through the
date of termination shall not be construed as a penalty.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. AMENDMENTS. 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 and no amendment of this Agreement shall be effective
until approved by a vote of a majority of the outstanding voting securities of
the Global Series, if such approval is required by applicable law.
11. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
5
(d) Nothing herein shall be construed as constituting the Sub-Advisor
as an agent of the Fund or the Advisor except to the extent specifically stated
in paragraph 2.
(e) This Agreement supersedes any prior agreement relating to the
subject matter hereof between the parties.
(f) This Agreement may be executed in counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered, shall be deemed an original and all of which
counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
DELAWARE INTERNATIONAL ADVISERS LTD.
By: ___________________________
(Title) _______________________
FREMONT INVESTMENT ADVISORS, INC.
By: ___________________________
(Title) _______________________
FREMONT MUTUAL FUNDS, INC.
By: ___________________________
(Title) _______________________
6
APPENDIX A
TO PORTFOLIO MANAGEMENT AGREEMENT
Delaware International Advisers Ltd.
Sub-Advisor to the Fremont Global Fund
INVESTMENT OBJECTIVES AND GUIDELINES
------------------------------------
Overall Investment Objective:
-----------------------------
The objective of the Fremont Global Fund is to maximize total return while
reducing risk. The Global Series seeks to provide a systematic, disciplined
approach to reduce overall portfolio risk through asset diversification and to
weight the portfolio toward asset categories which, at the time of evaluation,
appear to have the best expected total return.
Policy and Guidelines for Sub-Advisor:
--------------------------------------
The Sub-Advisor will manage the account with an international equity mandate.
The account will invest in non-U.S. markets, no U.S. equities are allowed.
However, American Depository Receipts (ADRs) and foreign securities traded on a
U.S. exchange are permitted. The account may invest in common stocks, preferred
stocks, securities convertible into common stocks, stock warrants, forward
contracts, options futures and short-term reserves (fixed income securities with
maturities of less than one year). The account is permitted to hold gold and
gold related securities. Emerging market investments shall be permitted up to
10% of the portfolio. Investments should be made only in assets, which in the
Sub-Advisor's reasonable judgment at the time of purchase, have sufficient
liquidity to allow daily valuation.
The account may use foreign exchange forward contracts and currency options and
futures. Forward contracts can be negotiated with banks rated "AAA" through "A3"
by Xxxxx'x. Currency futures and option contracts must be transacted on a U.S.
exchange or executed with an appropriate rated bank as an OTC currency option.
The total value of foreign currency positions must be from zero to 100% of the
account's market value. All currency positions must be unleveraged and covered.
The Sub-Advisor will adhere to the Investment Objective and to policies in the
Fremont Global Fund prospectus and Statement of Additional Information.
Performance Objective for Sub-Advisor:
--------------------------------------
The Sub-Advisor is expected to achieve a competitive rate of return over a 3 to
5 year time horizon and/or a complete market cycle, relative to EAFE and/or to
the Xxxxxxx Xxxxx Barney BMI (ex. U.S.) index. As a peer comparison, the top
quartile of a screened Morningstar International Equity Fund Universe will be
used.
0
XXXXXXXX X
TO PORTFOLIO MANAGEMENT AGREEMENT
Delaware International Advisers Ltd.
Sub-Advisor to the Fremont Global Fund
SCHEDULE OF FEES
----------------
Fremont Investment Advisors, Inc. will pay to Delaware International Advisers
Ltd., on an aggregate basis, an annual fee computed as a percentage of the
average value of the daily assets for investment management services for all
accounts managed by the Sub-Advisor for the Advisor. The management fees
specified below shall be the fees charged. The annual rate is determined as
follows:
50 basis points (0.50%) on the first $50 million
35 basis points (0.35%) on the next $50 million
30 basis points (0.30%) on the amount in excess of $100 million.
The Portfolio Management Agreement with the Sub-Advisor may be terminated by the
Advisor or the Fund upon 30 days' written notice. The Advisor has day-to-day
authority to increase or decrease the amount of Fremont Global Fund's assets
under management by the Sub-Advisor.
Fee will be billed after the end of each calendar month. Fees will be prorated
for any period less than one month. Fees shall be due and payable within thirty
(30) days after an invoice has been delivered to the Advisors.
8
