Exhibit d.1
INVESTMENT ADVISORY AGREEMENT
LIBERTY ACORN TRUST, a Massachusetts business trust registered under
the Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company ("Liberty Acorn"), and LIBERTY XXXXXX ASSET
MANAGEMENT, L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser ("Liberty WAM"), agree that:
1. ENGAGEMENT OF LIBERTY WAM. Liberty Acorn appoints Liberty WAM to
furnish investment advisory and other services to Liberty Acorn for its series
designated Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA,
Liberty Acorn Twenty and Liberty Acorn Foreign Forty (each, a "Fund," and
collectively, the "Funds")), and Liberty WAM accepts that appointment, for the
period and on the terms set forth in this agreement.
If Liberty Acorn establishes one or more series in addition to the
Funds named above with respect to which it desires to retain Liberty WAM as
investment adviser hereunder, and if Liberty WAM is willing to provide such
services under this agreement, Liberty Acorn and Liberty WAM may add such new
series to this agreement, by written supplement to this agreement. Such
supplement shall include a schedule of compensation to be paid to Liberty WAM by
Liberty Acorn with respect to such series and such other modifications of the
terms of this agreement with respect to such series as Liberty Acorn and Liberty
WAM may agree. Upon execution of such a supplement by Liberty Acorn and Liberty
WAM, that series will become a Fund hereunder and shall be subject to the
provisions of this agreement to the same extent as the Funds named above, except
as modified by the supplement.
2. SERVICES OF LIBERTY WAM.
(a) INVESTMENT MANAGEMENT. Subject to the overall supervision and
control of Liberty Acorn's board of trustees (the "Board"), Liberty WAM shall
have supervisory responsibility for the general management and investment of the
Funds' assets. Liberty WAM shall comply with the 1940 Act and with all
applicable rules and regulations of the Securities and Exchange Commission, the
provisions of the Internal Revenue Code applicable to the Funds as regulated
investment companies, the investment policies and restrictions, portfolio
transaction policies and the other statements concerning the Funds in Liberty
Acorn's agreement and declaration of trust, bylaws, and registration statements
under the 1940 Act and the Securities Act of 1933 (the "1933 Act"), and policy
decisions and procedures adopted by the Board from time to time.
Liberty WAM is authorized to make the decisions to buy and sell
securities and other assets for the Funds, to place the Funds' portfolio
transactions with broker-dealers, and to negotiate the terms of such
transactions including brokerage commissions on brokerage transactions, on
behalf of the Funds. Liberty WAM is authorized to exercise discretion within the
Funds' policy concerning allocation of its portfolio brokerage, as permitted by
law, including but not limited to section 28(e) of the Securities Exchange Act
of 1934, and in so doing shall not be required to make any reduction in its
investment advisory fees. Liberty Acorn hereby authorizes any entity or person
associated with Liberty WAM that is a member of a national securities exchange
to effect any transaction on the exchange for the account of a Fund to the
extent permitted by and in accordance with Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder. Liberty Acorn hereby
consents to the retention by such entity or person of compensation for such
transactions in accordance with Rule 11a-2(T)(a)(iv).
Liberty WAM may, where it deems it to be advisable, aggregate orders
with other securities of the same type to be sold or purchased by one or more
Funds with like orders on behalf of other clients of Liberty WAM (as well as
clients of other investment advisers affiliated with Liberty WAM, in the event
that Liberty WAM and such affiliated investment advisers share common trading
facilities). In such event, Liberty WAM (or Liberty WAM and its affiliated
advisers, as the case may be) will allocate the shares so sold or purchased, as
well as the expenses incurred in the transaction, in a manner it (or it and
they) consider to be equitable and fair and consistent with its (or its or
their) fiduciary obligations to clients.
(b) REPORTS AND INFORMATION. Liberty WAM shall furnish to the Board
periodic reports on the investment strategy and performance of the Funds and
such additional reports and information as the Board or the officers of Liberty
Acorn may reasonably request. Liberty Acorn shall furnish or otherwise make
available to Liberty WAM such copies of financial statements, proxy statements,
reports, and other information relating to the business and affairs of each Fund
as Liberty WAM may, at any time or from time to time, reasonably require in
order to discharge its obligations under this agreement.
(c) CUSTOMERS OF FINANCIAL INSTITUTIONS. It is understood that Liberty
WAM may, but shall not be obligated to, make payments from its own resources to
financial institutions (which may include banks, broker-dealers, recordkeepers,
administrators and others) that provide, either directly or through agents,
administrative and other services with respect to shareholders who are customers
of such institutions, including establishing shareholder accounts, assisting
Liberty Acorn's transfer agent with respect to recording purchase and redemption
transactions, advising shareholders about the status of their accounts, current
yield and dividends declared and such related services as the shareholders or
the Funds may request.
(d) BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, Liberty WAM agrees to maintain records relating to its
services under this agreement, and further agrees that all records that it
maintains for Liberty Acorn are the property of Liberty Acorn and to surrender
promptly to Liberty Acorn any of such records upon Liberty Acorn's request;
provided that Liberty WAM may at its own expense make and retain copies of any
such records. Liberty WAM 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.
(e) STATUS OF LIBERTY WAM. Liberty WAM shall for all purposes herein be
deemed to be an independent contractor and not an agent of Liberty Acorn and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent Liberty Acorn in any way. Liberty WAM agrees to notify the
Trust promptly of any change in the identity of Liberty WAM's general partner.
3. ADMINISTRATIVE SERVICES. Liberty WAM shall supervise the business
and affairs of Liberty Acorn and each Fund and shall provide such services and
facilities as may be required for effective administration of Liberty Acorn and
the Funds as are not provided by employees or other agents engaged by Liberty
Acorn; provided that Liberty WAM shall not have any obligation to provide under
this agreement any such services which are the subject of a separate agreement
or arrangement between Liberty Acorn and Liberty WAM, any affiliate of Liberty
WAM, or any third party administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with
the services to be provided by Liberty WAM under this agreement, Liberty WAM
may, to the extent it deems appropriate, and subject to compliance with the
requirements of applicable laws and regulations and upon receipt of approval of
the Trustees, make use of (i) its affiliated companies and their directors,
trustees, officers, and employees and (ii) subcontractors selected by Liberty
WAM, provided that Liberty WAM shall supervise and remain fully responsible for
the services of all such third parties in accordance with and to the extent
provided by this agreement. All costs and expenses associated with services
provided by any such third parties shall be borne by Liberty WAM or such
parties.
5. EXPENSES TO BE PAID BY LIBERTY ACORN. Except as otherwise provided
in this agreement or any other contract to which Liberty Acorn is a party,
Liberty Acorn shall pay all expenses incidental to its organization, operations
and business, including, without limitation:
(a) all charges of depositories, custodians, sub-custodians and
other agencies for the safekeeping and servicing of its cash,
securities and other property and of its transfer agents and
registrars and its dividend disbursing and redemption agents,
if any;
(b) all charges of its administrator, if any;
(c) all charges of legal counsel and of independent auditors;
(d) all compensation of trustees other than those affiliated with
Liberty WAM or Liberty Acorn's administrator, if any, and all
expenses incurred in connection with their services to Liberty
Acorn;
(e) all expenses of preparing, printing and distributing notices,
proxy solicitation materials and reports to shareholders of
the Funds;
(f) all expenses of meetings of shareholders of the Funds;
(g) all expenses of registering and maintaining the registration
of Liberty Acorn under the 1940 Act and of shares of the Funds
under the 1933 Act, including all expenses of preparation,
filing and printing of annual or more frequent revisions of
the Funds' registration statements under the 1940 Act and 1933
Act, and of supplying each then existing shareholder or
beneficial owner of shares of the Funds of a copy of each
revised prospectus or supplement thereto, and of supplying a
copy of the statement of additional information upon request
to any then existing shareholder;
(h) all costs of borrowing money;
(i) all expenses of publication of notices and reports to
shareholders and to governmental bodies or regulatory
agencies;
(j) all taxes and fees payable to federal, state or other
governmental agencies, domestic or foreign, and all stamp or
other taxes;
(k) all expenses of printing and mailing certificates for shares
of a Fund;
(l) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board;
(m) all expenses of qualifying and maintaining qualification of,
or providing appropriate notification of intention to sell
relating to, shares of the Funds under the securities laws of
the various states and other jurisdictions, and of
registration and qualification of Liberty Acorn under any
other laws applicable to Liberty Acorn or its business
activities;
(n) all fees, dues and other expenses related to membership of
Liberty Acorn in any trade association or other investment
company organization; and
(o) any extraordinary expenses.
In addition to the payment of expenses, Liberty Acorn shall also pay
all brokers' commissions and other charges relating to the purchase and sale of
portfolio securities for each Fund.
6. ALLOCATION OF EXPENSES PAID BY LIBERTY ACORN. Any expenses paid by
Liberty Acorn that are attributable solely to the organization, operation or
business of a Fund or Funds shall be paid solely out of the assets of that Fund
or Funds. Any expense paid by Liberty Acorn that is not solely attributable to a
Fund or Funds, nor solely to any other series of Liberty Acorn, shall be
apportioned in such manner as Liberty Acorn or Liberty Acorn's administrator
determines is fair and appropriate, or as otherwise specified by the Board.
7. EXPENSES TO BE PAID BY LIBERTY WAM. Liberty WAM shall furnish to
Liberty Acorn, at Liberty WAM's own expense, office space and all necessary
office facilities, equipment and personnel required to provide its services
pursuant to this agreement. Liberty WAM shall also assume and pay all expenses
of placement of securities orders and related bookkeeping.
8. COMPENSATION OF LIBERTY WAM. For the services to be rendered and the
expenses to be assumed and to be paid by Liberty WAM under this agreement,
Liberty Acorn on behalf of the respective Funds shall pay to Liberty WAM fees
accrued daily and paid monthly at the annual rates (as a percentage of the
Fund's net assets) shown below:
LIBERTY ACORN FUND
ASSETS RATE OF FEE
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First $700 million 0.75%
$700 million to $2 billion 0.70%
In excess of $2 billion 0.65%
LIBERTY ACORN INTERNATIONAL
ASSETS RATE OF FEE
------ -----------
First $100 million 1.20%
$100 million to $500 million 0.95%
In excess of $500 million 0.75%
LIBERTY ACORN USA
ASSETS RATE OF FEE
------ -----------
First $200 million 0.95%
In excess of $200 million 0.90%
LIBERTY ACORN TWENTY
ALL ASSETS 0.90%
LIBERTY ACORN FOREIGN FORTY
ALL ASSETS 0.95%
The fees attributable to each Fund shall be a separate charge to such Fund and
shall be the several (and not joint or joint and several) obligation of each
such Fund.
9. SERVICES OF LIBERTY WAM NOT EXCLUSIVE. The services of Liberty WAM
to Liberty Acorn under this agreement are not exclusive, and Liberty WAM shall
be free to render similar services to others so long as its services under this
agreement are not impaired by such other activities.
10. SERVICES OTHER THAN AS ADVISER. Within the limits permitted by law,
Liberty WAM or an affiliate of Liberty WAM may receive compensation from Liberty
Acorn for other services performed by it for Liberty Acorn which are not within
the scope of the duties of Liberty WAM under this agreement, including the
provision of brokerage services.
11. STANDARD OF CARE. To the extent permitted by applicable law,
neither Liberty WAM nor any of its partners, officers, agents, employees or
affiliates shall be liable to Liberty Acorn or its shareholders for any loss
suffered by Liberty Acorn or its shareholders as a result of any error of
judgment, or any loss arising out of any investment, or as a consequence of any
other act or omission of Liberty WAM or any of its affiliates in the performance
of Liberty WAM's duties under this agreement, except for liability resulting
from willful misfeasance, bad faith or gross negligence on the part of Liberty
WAM or such affiliate, or by reason of reckless disregard by Liberty WAM or such
affiliate of the obligations and duties of Liberty WAM under this agreement.
12. EFFECTIVE DATE, DURATION AND RENEWAL. This agreement shall become
effective on November 1, 2001. Unless terminated as provided in Section 13, this
agreement shall continue in effect as to a Fund until July 31, 2003 and
thereafter from year to year only so long as such continuance is specifically
approved at least annually (a) by a majority of those trustees who are not
interested persons of Liberty Acorn or of Liberty WAM, voting in person
at a meeting called for the purpose of voting on such approval, and (b) by
either the Board or vote of the holders of a "majority of the outstanding
shares" of that Fund (which term as used throughout this agreement shall be
construed in accordance with the definition of "vote of a majority of the
outstanding voting securities of a company" in section 2(a)(42) of the 1940
Act).
13. TERMINATION. This agreement may be terminated as to a Fund at any
time, without payment of any penalty, by the Board, or by a vote of the holders
of a majority of the outstanding shares of that Fund, upon 60 days' written
notice to Liberty WAM. This agreement may be terminated by Liberty WAM at any
time upon 60 days' written notice to Liberty Acorn. This agreement shall
terminate automatically in the event of its assignment (as defined in Section
2(a)(4) of the 1940 Act).
14. AMENDMENT. This agreement may be amended in accordance with the
1940 Act.
15. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. A copy of the
declaration of trust of Liberty Acorn is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of Liberty Acorn by its officers as officers and not
individually. All obligations of Liberty Acorn hereunder shall be binding only
upon the assets of Liberty Acorn (or the appropriate Fund) and shall not be
binding upon any trustee, officer, employee, agent or shareholder of Liberty
Acorn. Neither the authorization of any action by the trustees or shareholders
of Liberty Acorn nor the execution of this agreement on behalf of Liberty Acorn
shall impose any liability upon any trustee, officer or shareholder of Liberty
Acorn.
16. USE OF MANAGER'S NAME. Liberty Acorn may use the name "Liberty" or
any other name derived from the name "Liberty" only for so long as this
agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization that shall remain
affiliated with Liberty Financial Companies, Inc. and shall have succeeded to
the business of Liberty WAM as investment adviser. At such time as this
agreement or any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, Liberty Acorn will (by amendment of its
agreement and declaration of trust if necessary) cease to use any name derived
from the name "Liberty" or otherwise connected with Liberty WAM, or with any
organization that shall have succeeded to Liberty WAM's business as investment
adviser.
17. NOTICES. Any notice, demand, change of address or other
communication to be given in connection with this agreement shall be given in
writing and shall be given by personal delivery, by registered or certified mail
or by transmittal by facsimile or other electronic medium addressed to the
recipient as follows (or at such other address or addresses as a party may
provide to the other from time to time, by notice):
If to Liberty WAM: Liberty Xxxxxx Asset Management, L.P.
Attention: Xxxxx X. Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
with a copy to:
If to Liberty Acorn: Liberty Acorn Trust
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
with a copy to:
Xxxx, Xxxx & Xxxxx LLC
Attention: Xxxxxxx X. Xxxxx
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 312/000-0000
Facsimile: 312/372-2098
All notices shall be conclusively deemed to have been given on the day
of actual delivery thereof and, if given by registered or certified mail, on the
fifth business day following the deposit thereof in the mail and, if given by
facsimile or other electronic medium, on the day of transmittal thereof (upon
electronic confirmation of receipt thereof).
18. GOVERNING LAW. This agreement shall be construed and interpreted in
accordance with the laws of the State of Illinois and the laws of the United
States of America applicable to contracts executed and to be performed therein.
Dated as of November 1, 2001
LIBERTY ACORN TRUST
By /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
LIBERTY XXXXXX ASSET MANAGEMENT, L.P.
By WAM Acquisition GP, Inc.
Its General Partner
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
