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EXHIBIT (5)(ee)
[FORM]
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of _____________, 1995 between THE PNC(R)
FUND, a Massachusetts business trust (the "Fund"), and PNC ASSET MANAGEMENT
GROUP, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain Adviser to furnish
investment advisory services to the Fund and the Adviser is willing to so
furnish such services;
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
a. The Fund hereby appoints Adviser to act as
investment adviser to the Fund's Money Market Portfolio; Government Money
Market Portfolio; Municipal Money Market Portfolio; Pennsylvania Municipal
Money Market Portfolio; North Carolina Municipal Money Market Portfolio;
Xxxxxxx Municipal Money Market Portfolio; Ohio Municipal Money Market
Portfolio; New Jersey Municipal Money Market Portfolio; Tax-Free Income
Portfolio; Managed Income Portfolio; Intermediate Government Portfolio;
Intermediate-Term Bond Portfolio; Short-Term Bond Portfolio; Government Income
Portfolio; Pennsylvania Tax-Free Income Portfolio; Ohio Tax-Free Income
Portfolio; New Jersey Tax-Free Income Portfolio; Core Fixed Income Portfolio;
International Fixed Income Portfolio; Balanced Portfolio; International Equity
Portfolio; International Emerging Markets Portfolio; Core Equity Portfolio;
Growth Equity Portfolio; Small Cap Growth Equity Portfolio; Value Equity
Portfolio; and Small Cap Value Equity Portfolio (the "Portfolios") for the
period and on the terms set forth in this Agreement. Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
b. In the event that the Fund establishes one or
more portfolios other than the Portfolios with respect to which it desires to
retain Adviser to act as investment adviser hereunder, the Fund shall notify
Adviser in writing. If Adviser is willing to render such services under this
Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Paragraph 10 hereof, such
portfolio shall become a Portfolio hereunder and shall be subject
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to the provisions of this Agreement to the same extent as the Portfolios named
above in subparagraph (a) except to the extent that said provisions (including
those relating to the compensation payable by the Fund to Adviser) are modified
with respect to such portfolio in writing by the Fund and Adviser at the time.
2. Sub-Contractors. It is understood that Adviser will
from time to time employ or associate with such person or persons as Adviser
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be paid by Adviser and that Adviser shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions. Such person or persons shall be employed pursuant to
sub-advisory agreements agreeable to the Fund and approved in accordance with
the provisions of the 1940 Act.
3. Delivery of Documents. The Fund has furnished
Adviser with copies, properly certified or authenticated, of each of the
following:
a. Resolutions of the Fund's Board of Trustees
authorizing the appointment of Adviser as the Portfolio's
adviser and approving this Agreement;
b. The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk on December 22, 1988;
c. The Fund's Code of Regulations;
d. The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") on December 23, 1988;
e. The Fund's Registration Statement on Form
N-1A under the Securities Act of 1933 and the 1940 Act, as
filed with the SEC on December 23, 1988, and all amendments
thereto (the "Registration Statement"); and
f. The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with the related
statements of additional information, as currently in effect
and all amendments and supplements thereto, are herein called
"Prospectuses").
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The Fund will furnish Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Adviser will (either directly or through the sub-advisers
and other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for the Portfolio, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Portfolios. Adviser will (either directly or through
the sub-advisers and other sub-contractors employed by it in accordance with
Paragraph 2 hereof) determine from time to time what securities and other
investments will be purchased, retained or sold by the Portfolios and will
place the daily orders for the purchase or sale of securities. Adviser will
provide the services rendered by it under this Agreement in accordance with
each Portfolio's investment objective, policies and restrictions as stated in
such Portfolio's Prospectus (as currently in effect and as it may be amended or
supplemented from time to time) and the resolutions of the Fund's Board of
Trustees. Adviser further agrees that it:
a. will comply with all applicable rules and
regulations of the SEC and will in addition conduct its
activities under this Agreement in accordance with other
applicable law;
b. will place orders either directly with the
issuer or with any broker or dealer. Subject to the other
provisions of this paragraph, in placing orders with brokers
and dealers, Adviser will attempt to obtain the best price and
the most favorable execution of its orders. In placing
orders, Adviser will consider the experience and skill of the
firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with
this obligation, Adviser may, subject to the approval of the
Fund's Board of Trustees, select brokers on the basis of the
research, statistical and pricing services they provide to a
Portfolio and other clients of Adviser or a sub-adviser.
Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be
performed by Adviser hereunder. A commission paid to such
brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction,
provided that Adviser determines in good faith that such
commission is reasonable in terms of either the transaction or
the overall responsibility of Adviser and sub-advisers to the
Portfolios and their other clients and that the total
commissions paid by a
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Portfolio will be reasonable in relation to the benefits to
the Portfolio over the long-term. In addition, Adviser is
authorized to take into account the sale of shares of the Fund
in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and
dealers that are affiliated with Adviser, the sub-advisers or
the Fund's distributor) in compliance with applicable law. In
no instance, however, will a Portfolio's securities be
purchased from or sold to Adviser, the sub-advisers, the
Fund's distributor or any affiliated person thereof, except to
the extent permitted by the SEC or by applicable law;
c. will maintain books and records with respect
to each Portfolio's securities transactions and will furnish
the Fund's Board of Trustees such periodic and special reports
as the Board may request;
d. will maintain a policy and practice of
conducting its investment advisory services hereunder
independently of the commercial banking operations of its
affiliates. When Adviser makes investment recommendations for
a Portfolio, its investment advisory personnel will not
inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's
account are customers of the commercial departments of its
affiliates. In dealing with commercial customers, Adviser and
the sub-advisers will not inquire or take into consideration
whether securities of those customers are held by the Fund;
and
e. will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, any of the Portfolio's and the Fund's
prior, current 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 Fund, which approval shall not be unreasonably withheld
and may not be withheld where Adviser 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 Fund.
5. Services Not Exclusive. Adviser's services hereunder
are not deemed to be exclusive, and Adviser shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
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6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Adviser hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Adviser 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.
7. Expenses. During the term of this Agreement, Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for the Portfolios.
8. Compensation.
a. For the services provided and the expenses
assumed pursuant to this Agreement, the Fund will pay Adviser and Adviser will
accept as full compensation therefor a fee, computed daily and paid monthly, at
the following annual rates: for the Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Virginia Municipal Money
Market and New Jersey Municipal Money Market Portfolios: .45% of the first $1
billion of each Portfolio's average daily net assets, .40% of the next $1
billion of each Portfolio's average daily net assets, .375% of the next $1
billion of each Portfolio's average daily net assets and .35% of the average
daily net assets of the Portfolio in excess of $3 billion; for the Value
Equity, Growth Equity, Small Cap Value Equity, Balanced, Small Cap Growth
Equity, Core Equity and International Fixed Income Portfolios: .55% of the
first $1 billion of each Portfolio's average daily net assets, .50% of the next
$1 billion of each Portfolio's average daily net assets, .475% of the next $1
billion of each Portfolio's average daily net assets and .45% of the average
daily net assets of the Portfolio in excess of $3 billion; for the Core Fixed
Income, Managed Income, Tax-Free Income, Intermediate Government, New Jersey
Tax-Free Income, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate-Term Bond and Government Income Portfolios: .50% of the
first $1 billion of each Portfolio's average daily net assets, .45% of the next
$1 billion of each Portfolio's average daily net assets, .425% of the next $1
billion of each Portfolio's average daily net assets and .40% of the average
daily net assets of the Portfolio in excess of $3 billion; for the
International Equity Portfolio: .75% of the first $1 billion of the Portfolio's
average daily net assets, .70% of the next $1 billion of the Portfolio's
average daily net assets, .675% of the next $1 billion of the Portfolio's
average daily net assets and .65% of the average daily net assets of the
Portfolio in excess
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of $3 billion; and for the International Emerging Markets Portfolio: 1.25% of
the first $1 billion of the Portfolio's average daily net assets, 1.20% of the
next $1 billion of the Portfolio's average daily net assets, 1.155% of the next
$1 billion of the Portfolio's average daily net assets and 1.10% of the average
daily net assets of the Portfolio in excess of $3 billion. Such fee as is
attributable to each Portfolio shall be a separate charge to such Portfolio and
shall be the several (and not joint or joint and several) obligation of such
Portfolio.
b. If in any fiscal year the aggregate expenses
of the Portfolios (as defined under the securities regulations of any state
having jurisdiction over the Fund) exceeds the expense limitations of any such
state, Adviser will bear its share of the amount of such excess in proportion
to the aggregate fees otherwise payable to it hereunder and to the Fund's
co-administrators under their administration agreements with the Fund. The
obligation of the Adviser to reimburse the Fund under this Paragraph 8(b) is
limited in any fiscal year to the amount of its fees otherwise payable
hereunder attributable to the Portfolio for such fiscal year, provided,
however, that notwithstanding the foregoing, Adviser shall reimburse the Fund
for the full amount of its share of any such excess expenses regardless of the
amount of fees otherwise payable to it during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Limitation of Liability. Adviser 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 performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or 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 or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to each Portfolio listed in
Section 1(a) hereof and, with respect to any additional Portfolio, on the date
of receipt by the Fund of notice from the Adviser in accordance with Section
1(b) hereof that the Adviser is willing to serve as investment adviser with
respect to such portfolio, provided that this Agreement (as supplemented by the
terms specified in any notice and agreement pursuant to Section 1(b) hereof)
shall have been approved by the shareholders of the Portfolio in accordance
with the requirements of the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect with respect to each such Portfolio
until March 31, 1997. Thereafter, if not terminated,
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this Agreement shall continue in effect with respect to the particular
Portfolio for successive annual periods ending on March 31, provided such
continuance is specifically approved at least annually (a) by vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by vote of a majority of the outstanding voting securities of
such Portfolio. Notwithstanding the foregoing, this Agreement may be
terminated with respect to the Portfolio at any time, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Trustees or by vote of
a majority of the outstanding voting securities of the Portfolio), or by
Adviser on sixty days' written notice. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meanings as such terms in the 1940 Act.)
11. 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. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. "The PNC Fund" and "Trustees of The PNC
Fund" refer respectively to the trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Fund. The obligations of "The
PNC Fund" entered into in the name or on behalf thereof by any of the Trustees,
officers, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, Shareholders,
officers, representatives or agents of the Fund personally, but bind only the
Trust Property (as defined in the Declaration of Trust), and all persons
dealing with any class of shares of the Fund must look solely to the Trust
Property belonging to such class for the enforcement of any claims against the
Fund.
13. Miscellaneous. The captions in this Agreement are
included for convenience or reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
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14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: THE PNC FUND
[SEAL] By:
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PNC ASSET MANAGEMENT
GROUP, INC.
[SEAL] By:
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its:
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