Exhibit 77Q1(e)
Xxxxxx Target Equity Fund
Form N-SAR for the period ended 12/31/96
File No. 811-5896
SUB-ADVISORY AGREEMENT
(Form 2 Series)
AGREEMENT made this 1st day of December,
1996, by and
between ZURICH XXXXXX INVESTMENTS, INC., a
Delaware corporation
(the "Adviser") and ZURICH INVESTMENT MANAGEMENT
LIMITED, an
English corporation (the "Sub-Adviser").
WHEREAS, XXXXXX TARGET EQUITY FUND, a
Massachusetts business
trust (the "Fund") is a management investment
company registered
under the Investment Company Act of 1940;
WHEREAS, the Fund is authorized to issue
Shares in separate
series with each representing the interests in a
separate
portfolio of securities and other assets;
WHEREAS, the Fund has retained the Adviser to
render to it
investment advisory and management services with
regard to the
series of the Fund known as the Xxxxxx Retirement
Fund-Series I,
Xxxxxx Retirement Fund-Series II, Xxxxxx
Retirement Fund-Series
III, Xxxxxx Retirement Fund-Series IV, Xxxxxx
Retirement Fund-
Series V, Xxxxxx Retirement Fund-Series VI (the
"initial series")
pursuant to an Investment Management Agreement
(the "Management
Agreement"); and
WHEREAS, the Adviser desires at this time to
retain the
Sub-Adviser to render investment advisory and
management services
with respect to that portion of the portfolio of
the Fund's
initial series allocated to the Sub-Adviser by the
Adviser for
management of foreign securities, including
foreign currency
transactions and related investments, and the Sub-
Adviser is
willing to render such services;
NOW THEREFORE, in consideration of the mutual
covenants
hereinafter contained, it is hereby agreed by and
between the
parties hereto as follows:
1. The Adviser hereby employs the Sub-
Adviser to manage
the investment and reinvestment of the assets of
the initial
series of the Fund allocated by the Adviser in its
sole
discretion to the Sub-Adviser for management of
foreign
securities, including foreign currency
transactions and related
investments, in accordance with the applicable
investment
objectives, policies and limitations and subject
to the
supervision of the Adviser and the Board of
Trustees of the Fund
for the period and upon the terms herein set
forth, and to place
orders for the purchase or sale of portfolio
securities for the
Fund's account with brokers or dealers selected by
the
Sub-Adviser; and, in connection therewith, the Sub-
Adviser is
authorized as the agent of the Fund to give
instructions to the
Custodian of the Fund as to the deliveries of
securities and
payments of cash for the account of the Fund. In
connection with
the selection of such brokers or dealers and the
placing of such
orders, the Sub-Adviser is directed to seek for
the Fund best
execution of orders. Subject to such policies as
the Board of
Trustees of the Fund determines and subject to
satisfying the
requirements of Section 28(e) of the Securities
Exchange Act of
1934, the Sub-Adviser shall not be deemed to have
acted
unlawfully or to have breached any duty, created
by this
Agreement or otherwise, solely by reason of its
having caused the
Fund to pay a broker or dealer an amount of
commission for
effecting a securities transaction in excess of
the amount of
commission another broker or dealer would have
charged for
effecting that transaction, if the Sub-Adviser
determined in good
faith that such amount of commission was
reasonable in relation
to the value of the brokerage and research
services provided by
such broker or dealer viewed in terms of either
that particular
transaction or the Sub-Adviser's overall
responsibilities with
respect to the clients of the Sub-Adviser as to
which the
Sub-Adviser exercises investment discretion. The
Adviser
recognizes that all research services and research
that the
Sub-Adviser receives are available for all clients
of the
Sub-Adviser, and that the Fund and other clients
of the
Sub-Adviser may benefit thereby. The investment
of funds shall
be subject to all applicable restrictions of the
Agreement and
Declaration of Trust and By-Laws of the Fund as
may from time to
time be in force.
The Sub-Adviser accepts such employment and
agrees during
such period to render such investment management
services, to
furnish related office facilities and equipment
and clerical,
bookkeeping and administrative services for the
Fund, to permit
any of its officers or employees to serve without
compensation as
trustees or officers of the Fund if elected to
such positions and
to assume the obligations herein set forth for the
compensation
herein provided. The Sub-Adviser shall for all
purposes herein
provided be deemed to be an independent contractor
and, unless
otherwise expressly provided or authorized, shall
have no
authority to act for or represent the Fund or the
Adviser in any
way or otherwise be deemed an agent of the Fund or
the Adviser.
It is understood and agreed that the Sub-Adviser,
by separate
agreements with the Fund, may also serve the Fund
in other
capacities.
The Sub-Adviser will keep the Fund and the
Adviser informed
of developments materially affecting the Fund and
shall, on the
Sub-Adviser's own initiative and as reasonably
requested by the
Adviser or the Fund, furnish to the Fund and the
Adviser from
time to time whatever information the Adviser
reasonably believes
appropriate for this purpose.
The Sub-Adviser agrees that, in the
performance of the
duties required of it by this Agreement, it will
comply with the
Investment Advisers Act of 1940 and the Investment
Company Act of
1940, and all rules and regulations thereunder,
and all
applicable laws and regulations and with any
applicable
procedures adopted by the Fund's Board of Trustees
and identified
in writing to the Sub-Adviser.
The Sub-Adviser shall provide the Adviser
with such
investment portfolio accounting and shall maintain
and provide
such detailed records and reports as the Adviser
may from time to
time reasonably request, including without
limitation, daily
processing of investment transactions and cash
positions,
periodic valuations of investment portfolio
positions as required
by the Adviser, monthly reports of the investment
portfolio and
all investment transactions and the preparation of
such reports
and compilation of such data as may be required by
the Adviser to
comply with the obligations imposed upon it under
Management
Agreement.
The Sub-Adviser shall provide adequate
security with respect
to all materials, records, documents and data
relating to any of
its responsibilities pursuant to this Agreement
including any
means for the effecting of securities
transactions.
The Sub-Adviser agrees that it will make
available to the
Adviser and the Fund promptly upon their request
copies of all of
its investment records and ledgers with respect to
the Fund to
assist the Adviser and the Fund in monitoring
compliance with the
Investment Company Act of 1940 and the Investment
Advisers Act of
1940, as well as other applicable laws. The Sub-
Adviser will
furnish the Fund's Board of Trustees such periodic
and special
reports with respect to the portfolio of each
series subject to
this Agreement as the Adviser or the Board of
Trustees may
reasonably request.
In compliance with the requirements of Rule
31a-3 under the
Investment Company Act of 1940, the Sub-Adviser
hereby agrees
that any records that it maintains for the Fund
are the property
of the Fund and further agrees to surrender
promptly to the Fund
copies of any such records upon the Fund's
request. The Sub-
Adviser further agrees to preserve for the periods
prescribed by
Rule 31a-2 under the Investment Company Act of
1940 any records
with respect to the Sub-Adviser's duties hereunder
required to be
maintained by Rule 31a-1 under the such Act to the
extent that
the Sub-Adviser prepares and maintains such
records pursuant to
this Agreement and to preserve the records
required by Rule 204-2
under the Investment Advisers Act of 1940 for the
period
specified in that Rule.
The Sub-Adviser agrees that it will
immediately notify the
Adviser and the Fund in the event that the Sub-
Adviser: (i)
becomes subject to a statutory disqualification
that prevents the
Sub-Adviser from serving as an investment adviser
pursuant to
this Agreement; or (ii) is or expects to become
the subject of an
administrative proceeding or enforcement action by
the United
States Securities and Exchange Commission, the
Investment
Management Regulatory Organization ("IMRO") or
other regulatory
authority.
The Sub-Adviser represents that it is an
investment adviser
registered under the Investment Advisers Act of
1940 and other
applicable laws and it is regulated by IMRO and
will treat the
Fund as a Non-Private Customer as defined by IMRO.
The Sub-
Adviser agrees to maintain the completeness and
accuracy of its
registration on Form ADV in accordance with all
legal
requirements relating to that Form. The Sub-
Adviser acknowledges
that it is an "investment adviser" to the Fund
within the meaning
of the Investment Company Act of 1940 and the
Investment Advisers
Act of 1940.
The Sub-Adviser shall be responsible
maintaining an
appropriate compliance program to ensure that the
services
provided by it under this Agreement are performed
in a manner
consistent with applicable laws and the terms of
this Agreement.
Furthermore, the Sub-Adviser shall maintain and
enforce a Code of
Ethics that is in form and substance satisfactory
to the Adviser.
Sub-Adviser agrees to provide such reports and
certifications
regarding its compliance program as the Adviser
or the Fund
shall reasonably request from time to time.
2. In the event that there are, from time
to time, one or
more additional series of the Fund with respect to
which the
Adviser desires to retain the Sub-Adviser to
render investment
advisory and management services hereunder, the
Adviser shall
notify the Sub-Adviser in writing. If the Sub-
Adviser is willing
to render such services, it shall notify the
Adviser in writing
whereupon such additional series shall become
subject to this
Agreement.
3. For the services and facilities
described in Section 1,
the Adviser will pay to the Sub-Adviser, at the
end of each
calendar month, a sub-advisory fee computed at an
annual rate of
that portion of the average daily net assets of
the initial
series of the Fund that is allocated by the
Adviser to the
Sub-Adviser for management as specified below:
Series Annual
Rate
------ ---------
--
Xxxxxx Retirement Fund-Series I .35%
Xxxxxx Retirement Fund-Series II .35%
Xxxxxx Retirement Fund-Series III .35%
Xxxxxx Retirement Fund-Series IV .35%
Xxxxxx Retirement Fund-Series V .35%
Xxxxxx Retirement Fund-Series VI .35%
For the month and year in which this
Agreement becomes
effective or terminates, there shall be an
appropriate proration
on the basis of the number of days that the
Agreement is in
effect during the month and year, respectively.
4. The services of the Sub-Adviser under
this Agreement
are not to be deemed exclusive, and the Sub-
Adviser shall be free
to render similar services or other services to
others so long as
its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if
desired by the Fund,
for officers or employees of the Sub-Adviser to
serve, without
compensation from the Fund, as trustees, officers
or agents of
the Fund if duly elected or appointed to such
positions and
subject to their individual consent and to any
limitations
imposed by law.
6. The net asset value for each series of
the Fund
subject to this Agreement shall be calculated as
the Board of
Trustees of the Fund may determine from time to
time in
accordance with the provisions of the Investment
Company Act of
1940. On each day when net asset value is not
calculated, the
net asset value of a series shall be deemed to be
the net asset
value of such series as of the close of business
on the last day
on which such calculation was made for the purpose
of the
foregoing computations.
7. Subject to applicable statutes and
regulations, it is
understood that certain trustees, officers or
agents of the Fund
are or may be interested in the Sub-Adviser as
officers,
directors, agents, shareholders or otherwise, and
that the
officers, directors, shareholders and agents of
the Sub-Adviser
may be interested in the Fund otherwise than as a
trustee,
officer or agent.
8. The Sub-Adviser shall not be liable for
any error of
judgment or of law or for any loss suffered by the
Fund or the
Adviser in connection with the matters to which
this Agreement
relates, except loss resulting from willful
misfeasance, bad
faith or gross negligence on the part of the Sub-
Adviser in the
performance of its obligations and duties or by
reason of its
reckless disregard of its obligations and duties
under this
Agreement.
9. This Agreement shall become effective
with respect to
the initial series of the Fund on the date hereof
and shall
remain in full force until April 1, 1998, unless
sooner
terminated as hereinafter provided. This
Agreement shall
continue in force from year to year thereafter
with respect to
each such series, but only as long as such
continuance is
specifically approved for each series at least
annually in the
manner required by the Investment Company Act of
1940 and the
rules and regulations thereunder; provided,
however, that if the
continuation of this Agreement is not approved for
a series, the
Sub-Adviser may continue to serve in such capacity
for such
series in the manner and to the extent permitted
by the
Investment Company Act of 1940 and the rules and
regulations
thereunder.
This Agreement shall automatically terminate
in the event of
its assignment or in the event of the termination
of the
Management Agreement and may be terminated at any
time with
respect to any series subject to this Agreement
without the
payment of any penalty by the Adviser or by the
Sub-Adviser on
sixty (60) days written notice to the other party.
The Fund may
effect termination with respect to any such series
without
payment of any penalty by action of the Board of
Trustees or by
vote of a majority of the outstanding voting
securities of such
series on sixty (60) days written notice to the
Adviser and the
Sub-Adviser.
This Agreement may be terminated with respect
to any series
at any time without the payment of any penalty by
the Board of
Trustees of the Fund, by vote of a majority of the
outstanding
voting securities of such series or by the Adviser
in the event
that it shall have been established by a court of
competent
jurisdiction that the Sub-Adviser or any officer
or director of
the Sub-Adviser has taken any action which results
in a breach of
the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a
majority of the
outstanding voting securities" shall have the
meanings set forth
in the Investment Company Act of 1940 and the
rules and
regulations thereunder.
Termination of this Agreement shall not
affect the right of
the Sub-Adviser to receive payments on any unpaid
balance of the
compensation described in Section 3 earned prior
to such
termination.
10. If any provision of this Agreement shall
be held or
made invalid by a court decision, statute, rule or
otherwise, the
remainder shall not be thereby affected.
11. Any notice under this Agreement shall be
in writing,
addressed and delivered or mailed, postage
prepaid, to the other
party at such address as such other party may
designate for the
receipt of such notice.
12. This Agreement shall be construed in
accordance with
applicable federal law and the laws of the State
of Illinois.
13. This Agreement is the entire contract
between the
parties relating to the subject matter hereof and
supersedes all
prior agreements between the parties relating to
the subject
matter hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-
Adviser have
caused this Agreement to be executed as of the day
and year first
above written.
ZURICH XXXXXX
INVESTMENTS, INC.
By: /s/ Xxxxxxx X.
Xxxxxxx
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Title: Senior Vice
President
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ZURICH INVESTMENT
MANAGEMENT LIMITED
By: /s/ Xxxxxx X.
Xxxxx
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Title: Managing
Director
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