MANAGEMENT CONTRACT
THIS AGREEMENT dated this 1st day of July, 1998 between Pioneer Capital
Growth Fund, a Delaware business trust (the "Trust"), and Pioneering Management
Corporation, a Delaware corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") for the purpose of registering its shares for public offering under
the Securities Act of 1933, as amended (the "1933 Act"),
WHEREAS, the parties hereto deem it mutually advantageous that the
Manager should be engaged, subject to the supervision of the Trust's Board of
Trustees and officers, to manage the Trust.
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Trust and the Manager do hereby agree as follows:
1. (a) The Manager will regularly provide the Trust with investment
research, advice and supervision and will furnish continuously an investment
program for the Trust, consistent with the investment objective and policies of
the Trust. The Manager will determine from time to time what securities shall be
purchased for the Trust, what securities shall be held or sold by the Trust and
what portion of the Trust's assets shall be held uninvested as cash, subject
always to the provisions of the Trust's Certificate of Trust, Agreement and
Declaration of Trust, By- Laws and its registration statements under the 1940
Act and under the 1933 Act covering the Trust's shares, as filed with the
Commission, and to the investment objective, policies and restrictions of the
Trust, as each of the same shall be from time to time in effect, and subject,
further, to such policies and instructions as the Board of Trustees of the Trust
may from time to time establish. To carry out such determinations, the Manager
will exercise full discretion and act for the Trust in the same manner and with
the same force and effect as the Trust itself might or could do with respect to
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
(b) The Manager will, to the extent reasonably required in the
conduct of the business of the Trust and upon the Trust's request, furnish to
the Trust research, statistical and
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advisory reports upon the industries, businesses, corporations or securities as
to which such requests shall be made, whether or not the Trust shall at the time
have any investment in such industries, businesses, corporations or securities.
The Manager will use its best efforts in the preparation of such reports and
will endeavor to consult the persons and sources believed by it to have
information available with respect to such industries, businesses, corporations
or entities.
(c) The Manager will maintain all books and records with
respect to the Trust's securities transactions required by subparagraphs (b)(5),
(6), (9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than
those records being maintained by the custodian or transfer agent appointed by
the Trust) and preserve such records for the periods prescribed therefor by Rule
31a-2 under the 1940 Act. The Manager will also provide to the Board of Trustees
such periodic and special reports as the Board may reasonably request.
2. (a) Except as otherwise provided herein, the Manager, at its own
expense, shall furnish to the Trust office space in the offices of the Manager
or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the Trust's
affairs and investments, and shall arrange, if desired by the Trust, for members
of the Manager's organization to serve as officers or agents of the Trust.
(b) The Manager shall pay directly or reimburse the Trust for:
(i) the compensation (if any) of the Trustees who are affiliated with, or
"interested persons" (as defined in the 0000 Xxx) of, the Manager and all
officers of the Trust as such; and (ii) all expenses not hereinafter
specifically assumed by the Trust where such expenses are incurred by the
Manager or by the Trust in connection with the management of the affairs of, and
the investment and reinvestment of the assets of, the Trust.
(c) The Trust shall assume and shall pay: (i) charges and
expenses for fund accounting, pricing and appraisal services and related
overhead, including, to the extent such services are performed by personnel of
the Manager, or its affiliates, office space and facilities and personnel
compensation, training and benefits; (ii) the charges and expenses of auditors;
(iii) the charges and expenses of any custodian, transfer agent, plan agent,
dividend disbursing agent and registrar appointed by the Trust; (iv) issue and
transfer taxes chargeable to the Trust in connection with securities
transactions to which the Trust is a party; (v) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (vi) fees and expenses involved in registering and maintaining
registrations of the Trust and/or its shares with the Commission, state
securities agencies and foreign jurisdictions, including the preparation of
prospectuses and statements of additional information for filing with such
regulatory agencies; (vii) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to
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governmental agencies; (viii) charges and expenses of legal counsel to the Trust
and the Trustees; (ix) if applicable, any distribution fees paid by the Trust in
accordance with Rule 12b-1 promulgated by the Commission pursuant to the 1940
Act; (x) compensation of those Trustees of the Trust who are not affiliated with
or interested persons of the Manager, the Trust (other than as Trustees), The
Pioneer Group, Inc. or Pioneer Funds Distributor, Inc.; (xi) the cost of
preparing and printing share certificates; and (xii) interest on borrowed money,
if any.
(d) In addition to the expenses described in Section 2(c)
above, the Trust shall pay all brokers' and underwriting commissions chargeable
to the Trust in connection with securities transactions to which the Trust is a
party.
3. (a) The Trust shall pay to the Manager, as compensation for the
Manager's services and expenses assumed hereunder, a fee as set forth below.
Management fees payable hereunder shall be computed daily and paid monthly in
arrears.
(i) The fee payable hereunder shall be composed of
the Basic Fee (defined below)and a Performance Adjustment (defined below) to the
Basic Fee based upon the investment performance of the Trust in relation to the
investment record of a securities index determined by the Trustees of the Trust
to be appropriate overthe same period. The Trustees have initially designated
the Lipper Growth Funds Index (the "Index") for this purpose. Prior to the
completion of the initialperformance period described in subsection (iii) below
the fee payable hereunder shall consist of the Basic Fee without a Performance
Adjustment.
(ii) From time to time, the Trustees may by a vote
of the Trustees of the Trust voting in person, including a majority of its
Trustees who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such parties, determine 1) that another
securities index is a more appropriate benchmark than the Index for purposes of
evaluating the performance of the Trust; and/or 2) that a Class of shares of the
Trust other than Class A is most appropriate for use in calculating the
Performance Adjustment. After ten days' written notice to the Manager, a
successor index (the "Successor Index") may be substituted for the Index in
prospectively calculating the Performance Adjustment; and/or a different Class
of Shares may be substituted in calculating the Performance Adjustment. However,
the calculation of that portion of the Performance Adjustment attributable to
any portion of the performance period prior to the adoption of the Successor
Index will still be based upon theTrust's performance compared to the Index. The
use of a different Class of shares for purposes of calculating the performance
Adjustment shall apply to theentire performance period so long as such Class was
outstanding at the beginning of such period. In the event that such Class of
shares was not outstanding for all or a portion of the Performance Period, it
may only be used in calculating that portion of the Performance Adjustment
attributable to the period during which such Class was outstanding and any prior
portion of the Performance Period shall be calculated using Class A shares.
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(iii) The Basic Fee is payable at an annual rate of
0.70% of the Trust's average daily net assets up to $500 million, 0.65% of
the next $500 million of such assets and 0.625% of the excess over $1 billion.
(iv) The Performance Adjustment consists of an
adjustment to the monthly Basic Fee to be made by applying a performance
adjustment rate to the average net assets of the Trust over the Performance
Period. The resulting dollar figure will be added to or subtracted from the
Basic Fee depending on whether the Trust experienced better or worse performance
than the Index.
The Performance Adjustment rate is 0.01% per annum for each percentage
point rounded to the nearer point (the higher point if exactly one-half point)
that the Trust's investment performance for the period was better or worse than
the record of the Index as then constituted. The maximum performance adjustment
is 0.10% per annum. In addition, as the Trust's average daily net assets over
the performance period may differ substantially from the Trust's average daily
net assets during the current year, the performance adjustment may be further
adjusted to the extent necessary to insure that the total adjustment to the
Basic Fee on an annualized basis does not exceed 0.10%.
The initial performance period will consist of the 12 month period
beginning May 1, 1998 and ending April 30, 1999. Each month thereafter, the
performance period shall consist of the current month plus the preceding months
until a period of 36 months is included in the performance period. In months
subsequent to a 36 month performance period having been reached, the performance
period will be a rolling 36 month period consisting of the most recently
completed month and the previous 35 months.
The Trust's investment performance will be measured by comparing the
(i) opening net asset value of one Class A share of the Trust on the first
business day of the performance period with (ii) the closing net asset value of
one Class A share of the Trust as of the last business day of such period. In
computing the investment performance of the Trust and the investment record of
the Index, distributions of realized capital gains, the value of capital gains
taxes per share paid or payable on undistributed realized long-term capital
gains accumulated to the end of such period and dividends paid out of investment
income on the part of the Trust, and all cash distributions of the companies
whose stock comprise the Index, will be treated as reinvested in accordance with
Rule 205-1 or any other applicable rule under the Investment Advisers Act of
1940, as the same from time to time may be amended.
The computation of the performance adjustment will not be cumulative. A
positive fee adjustment will apply even though the performance of the Trust over
some period of time shorter
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than the performance period has been behind that of the Index, and, conversely,
a negative fee adjustment will apply for the month even though the performance
of the Trust over some period of time shorter than the performance period has
been ahead of that of the Index.
(v) An appropriate percentage (based on the
number of days in the current month)of the annual Performance Adjustment rate
shall be multiplied by the average of the net assets of the Trust(computed in
the manner set forth in the Declaration of Trust of the Trust adjusted as
provided above, if applicable) determined as of the close of business on each
business day through out the performance period. The resulting dollar amount is
added to or deducted from the Basic Fee.
(vi) In the event of termination of this Agreement,
the Basic Fee then in effect shall be computed on the basis of the period ending
on the last business day on which this Agreement is in effect subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month. The amount of any
Performance Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36 month period ending on the last
business day on which this Agreement is in effect, provided that if this
Agreement has been in effect less than 36 months, the computation will be made
on the basis of the period of time during which it has been in effect.
(b) If the operating expenses of the Trust in any year exceed
the limits set by state securities laws or regulations in states in which shares
of the Trust are sold, the amount payable to the Manager under subsection (a)
above will be reduced (but not below $0), and the Manager shall make other
arrangements concerning expenses but, in each instance, only as and to the
extent required by such laws or regulations. If amounts have already been
advanced to the Manager under this Agreement, the Manager will return such
amounts to the Trust to the extent required by the preceding sentence.
(c) In addition to the foregoing, the Manager may from time to
time agree not to impose all or a portion of its fee otherwise payable hereunder
(in advance of the time such fee or a portion thereof would otherwise accrue)
and/or undertake to pay or reimburse the Trust for all or a portion of its
expenses not otherwise required to be borne or reimbursed by the Manager. Any
such fee reduction or undertaking may be discontinued or modified by the Manager
at any time.
4. It is understood that the Manager may employ one or more
sub-investment advisers (each a "Subadviser") to provide investment advisory
services to the Trust by entering into a written agreement with each such
Subadviser; PROVIDED, that any such agreement first shall be approved by the
vote of a majority of the Trustees, including a majority of the Trustees who
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are not "interested persons" (as defined in the 0000 Xxx) of the Trust, the
Manager or any such Subadviser, at a meeting of Trustees called for the purpose
of voting on such approval and by the affirmative vote of a "majority of the
outstanding voting securities" (as defined in the 0000 Xxx) of the Trust. The
authority given to the Manager in Sections 1 through 6 hereof may be delegated
by it under any such agreement; PROVIDED, that any Subadviser shall be subject
to the same restrictions and limitations on investments and brokerage discretion
as the Manager. The Trust agrees that the Manager shall not be accountable to
the Trust or the Trust's shareholders for any loss or other liability relating
to specific investments directed by any Subadviser, even though the Manager
retains the right to reverse any such investment, because, in the event a
Subadviser is retained, the Trust and the Manager will rely almost exclusively
on the expertise of such Subadviser for the selection and monitoring of specific
investments.
5. The Manager will not be liable for any error of judgment or mistake
of law or for any loss sustained by reason of the adoption of any investment
policy or the purchase, sale, or retention of any security on the recommendation
of the Manager, whether or not such recommendation shall have been based upon
its own investigation and research or upon investigation and research made by
any other individual, firm or corporation, but nothing contained herein will be
construed to protect the Manager against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
6. (a) Nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, directors, or employees from buying, selling or
trading in any securities for its or their own accounts or other accounts. The
Manager may act as an investment advisor to any other person, firm or
corporation, and may perform management and any other services for any other
person, association, corporation, firm or other entity pursuant to any contract
or otherwise, and take any action or do any thing in connection therewith or
related thereto; and no such performance of management or other services or
taking of any such action or doing of any such thing shall be in any manner
restricted or otherwise affected by any aspect of any relationship of the
Manager to or with the Trust or deemed to violate or give rise to any duty or
obligation of the Manager to the Trust except as otherwise imposed by law. The
Trust recognizes that the Manager, in effecting transactions for its various
accounts, may not always be able to take or liquidate investment positions in
the same security at the same time and at the same price.
(b) In connection with purchases or sales of securities for
the account of the Trust, neither the Manager nor any of its Trustees, officers
or employees will act as a principal or agent or receive any commission except
as permitted by the 1940 Act. The Manager shall arrange for the placing of all
orders for the purchase and sale of securities for the Trust's account with
brokers or dealers selected by the Manager. In the selection of such brokers or
dealers and
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the placing of such orders, the Manager is directed at all times to seek for the
Trust the most favorable execution and net price available except as described
herein. It is also understood that it is desirable for the Trust that the
Manager have access to supplemental investment and market research and security
and economic analyses provided by brokers who may execute brokerage transactions
at a higher cost to the Trust than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to place orders for the purchase
and sale of securities for the Trust with such brokers, subject to review by the
Trust's Trustees from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such brokers
may be useful to the Manager in connection with its or its affiliates' services
to other clients.
(c) On occasions when the Manager deems the purchase or sale
of a security to be in the best interest of the Trust as well as other clients,
the Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Trust and to
such clients.
7. This Agreement shall become effective on the date hereof and shall
remain in force until June 30, 1999 and from year to year thereafter, but only
so long as its continuance is approved annually by a vote of the Trustees of the
Trust voting in person, including a majority of its Trustees who are not parties
to this Agreement or "interested persons" (as defined in the 0000 Xxx) of any
such parties, at a meeting of Trustees called for the purpose of voting on such
approval or by a vote of a "majority of the outstanding voting securities" (as
defined in the 0000 Xxx) of the Trust, subject to the right of the Trust and the
Manager to terminate this contract as provided in Section 8 hereof.
8. Either party hereto may, without penalty, terminate this Agreement
by vote of its Board of Trustees or Directors, as the case may be, or by vote of
a "majority of its outstanding voting securities" (as defined in the 0000 Xxx)
and the giving of 60 days' written notice to the other party.
9. This Agreement shall automatically terminate in the event of its
assignment. For purposes of this Agreement, the term "assignment" shall have the
meaning given it by Section 2(a)(4) of the 1940 Act.
10. The Trust agrees that in the event that neither the Manager nor any
of its affiliates acts as an investment adviser to the Trust, the name of the
Trust will be changed to one that does
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not contain the name "Pioneer" or otherwise suggest an affiliation with the
Manager.
11. The Manager is an independent contractor and not an employee of the
Trust for any purpose. If any occasion should arise in which the Manager gives
any advice to its clients concerning the shares of the Trust, the Manager will
act solely as investment counsel for such clients and not in any way on behalf
of the Trust or any series thereof.
12. This Agreement states the entire agreement of the parties hereto,
and is intended to be the complete and exclusive statement of the terms hereof.
It may not be added to or changed orally, and may not be modified or rescinded
except by a writing signed by the parties hereto and in accordance with the 1940
Act, when applicable.
13. This Agreement and all performance hereunder shall be governed by
and construed in accordance with the laws of The Commonwealth of Massachusetts.
14. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their seal to be hereto affixed
as of the day and year first above written.
ATTEST: PIONEER CAPITAL GROWTH FUND
By:____________________________
Xxxxxx X. Xxxxx Xxxx X. Xxxxx, Xx.
Secretary Chairman and President
ATTEST: PIONEERING MANAGEMENT
CORPORATION
By:____________________________
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
Secretary President
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