1
Exhibit 5(b)-2
INVESTMENT SUB-ADVISORY AGREEMENT
July 7, 1989
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XX Xxxxxx Trust Funds (the "Company"), an unincorporated
business trust organized under the laws of the Commonwealth of
Massachusetts, and Great Western Financial Advisors Corporation ("GW
Advisors"), a corporation organized under the laws of the state of
California, hereby agree with Alliance Capital Management L.P. (the
"Sub-Adviser") as follows:
1. Investment Description; Appointment
The Company desires to employ the capital of GW U.S.
Government Money Market Fund (the "Fund") by investing and reinvesting
in investments of the kind and in accordance with the limitations
specified in its Master Trust Agreement, as amended, and in its
Prospectus and Statement of Additional Information relating to the
Fund as from time to time in effect, and in such manner and to such
extent as may from time to time be approved by the Board of Trustees
of the Company. Copies of the Company's Prospectus, Statement of
Additional Information and Master Trust Agreement, as amended, have
been or will be submitted to the Sub-Adviser. The Company agrees to
provide copies of all amendments to the Company's Prospectus,
Statement of Additional Information and Master Trust Agreement to the
Sub-Adviser on an on-going basis. The Company desires to employ and
hereby appoints the Sub-Adviser to act as investment sub-adviser to
the Fund. The Sub-Adviser accepts the appointment and agrees to
furnish the services described herein for the compensation set forth
below.
2. Services as Investment Sub-Adviser
Subject to the supervision of the Board of Trustees of the
Company and of GW Advisors, the Fund's investment adviser, the
Sub-Adviser will (a) act in conformity with the Company's Master Trust
Agreement, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, as the same may from time to time be amended,
(b) make investment decisions for the Fund in accordance with the
Fund's investment objective(s) and policies as stated in the Company's
Prospectus and Statement of
2
Additional Information as from time to time in effect and (c) place
purchase and sale orders on behalf of the Fund to effectuate the
investment decisions made. In providing those services, the Sub-
Adviser will supervise the Fund's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, the Sub-Adviser will
furnish the Fund or GW Advisors with whatever statistical information
the Fund or GW Advisors may reasonably request with respect to the
instruments that the Fund may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers
or dealers, the Sub-Adviser will use its best efforts to seek the best
overall terms available. In assessing the best overall terms available
for any Fund transaction, the Sub-Adviser will consider all factors it
deems relevant including, but not limited to, breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of
any commission for the specific transaction and on a continuing basis.
In selecting brokers or dealers to execute a particular transaction
and in evaluating the best overall terms available, the Sub-Adviser
may consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund and/or other accounts over which the Sub-
Adviser, GW Advisors or one of their affiliates exercises investment
discretion.
4. Information Provided to the Company
The Sub-Adviser will keep the Company and GW Advisors
informed of developments materially affecting the Fund, and will, on
its own initiative, furnish the Company and GW Advisors from time to
time with whatever information the Sub-Adviser believes is appropriate
for this purpose.
5. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering
the services described in Paragraphs 2 and 3 above. The Sub-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 matters to which
this Agreement relates, except (a) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to the
period and the amount set forth in Section 36(b)(3) of the Investment
-2-
3
Company Act of 1940) or (b) 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 and duties
under this Agreement (each such breach, act or omission described in
(a) or (b) shall be referred to as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, GW Advisors will pay the Sub-Adviser on the first business
day of each month a fee for the previous month at the annual rate of
.15% of the Fund's average daily net assets. The Sub-Adviser shall
have no right to obtain compensation directly from the Fund or the
Company for services provided hereunder and agrees to look solely to
GW Advisors for payment of fees due. The fee for the period from the
date the Company's initial registration statement is declared
effective by the Securities and Exchange Commission to the end of the
month during which the initial registration statement is declared
effective shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that
month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees
payable to the Sub-Adviser, the value of the Fund's net assets shall
be computed at the times and in the manner specified in the Company's
Prospectus or Statement of Additional Information relating to the Fund
as from time to time in effect.
7. Expenses
The Sub-Adviser will bear all expenses in connection with the
performance of its services under this Agreement, which expenses shall
not include brokerage fees or commissions in connection with the
effectuation of securities transactions. The Company will bear certain
other expenses to be incurred in its operation, including but not
limited to: organizational expenses, taxes, interest, brokerage fees
and commissions, if any; fees of trustees of the Company who are not
officers, directors or employees of the Sub-Adviser, GW Advisors, the
Fund's sub-administrator or any of their affiliates; Securities and
Exchange Commission fees and state Blue Sky qualification fees;
out-of-pocket expenses of custodians, transfer and dividend disbursing
agents and the Company's sub-administrator and transaction charges of
custodians; insurance premiums; outside auditing and legal expenses;
costs of maintenance of
-3-
4
the Company's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Fund and of the officers or
Board of Trustees of the Company; and any extraordinary expenses. In addition,
the Fund pays a distribution fee pursuant to the terms of a Distribution Plan
adopted under Rule 12b-1 of the Investment Company Act of 1940.
8. Services to Other Companies or Accounts
The Company understands that the Sub-Adviser now acts, will
continue to act and may act in the future as investment adviser to
fiduciary and other managed accounts and as investment adviser to one
or more other investment companies or series of investment companies,
and the Company has no objection to the Sub-Adviser so acting,
provided that whenever the Fund and one or more other accounts or
investment companies advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be
allocated in accordance with procedures believed to be equitable to
each entity. Similarly, opportunities to sell securities will be
allocated in an equitable manner. The Company recognizes that in some
cases this procedure may adversely affect the size of the position
that may be acquired or disposed of for the Fund. In addition, the
Company understands that the persons employed by the Sub-Adviser to
assist in the performance of the Sub-Adviser's duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of the
Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of
whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date the Fund
commences its investment operations and shall continue for an initial
two-year term and shall continue thereafter so long as such
continuance is specifically approved at least annually by (i) the
Board of Trustees of the Company or (ii) a vote of a "majority" (as
defined in the Investment Company Act of 1940) of the Fund's
outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees
who are not "interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on
-4-
5
such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Trustees of the Company or by vote of holders of
a majority of the Fund's shares, or upon 90 days' written notice, by the
Sub-Adviser, or GW Advisors. This Agreement will also terminate automatically in
the event of its assignment (as defined in said Act). The Sub-Adviser agrees to
notify the Company of any circumstances that might result in this Agreement
being deemed to be assigned. The Sub-Adviser agrees to notify the Company of any
changes in the membership of the general partners of the Sub-Advisor within a
reasonable time.
10. Representations of the Company and the Sub-Adviser
The Company represents that (i) a copy of its Master Trust
Agreement, dated February 22, 1989, together with all amendments
thereto, is on file in the office of the Secretary of the Commonwealth
of Massachusetts, (ii) the appointment of the Sub-Adviser has been
duly authorized and (iii) it has acted and will continue to act in
conformity with the Investment Company Act of 1940 and other
applicable laws.
The Sub-Adviser represents that it is authorized to perform
the services described herein.
11. Indemnification
GW Advisors shall indemnify and hold harmless the Sub-
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorneys fees and other related
expenses), howsoever arising from or in connection with this Agreement
or the performance by Sub-Adviser of its duties hereunder; provided,
however that nothing contained herein shall require that the
Sub-Adviser be indemnified for Disqualifying Conduct.
12. Limitation of Liability
This Agreement has been executed on behalf of the Company by
the undersigned officer of the Company in his capacity as an officer
of the Company. The obligations of this Agreement shall be binding
upon the assets and property of the Fund only and not upon the assets
and property of any other investment fund of the Company and shall not
be binding upon any Trustee, officer or shareholder of the Fund and/or
the Company individually.
13. Entire Agreement
This Agreement constitutes the entire agreement between the
parties hereto.
-5-
6
14. Governing Law
This Agreement shall be governed in accordance with the laws
of the State of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly
indicate your acceptance hereof by signing and returning the enclosed
copy hereof.
Very truly yours,
XX XXXXXX TRUST FUNDS
By: /s/
-------------------------------------
President
GREAT WESTERN FINANCIAL ADVISORS
CORPORATION
By: /s/
-------------------------------------
Title: President
Accepted:
Alliance Capital Management L.P.
By: Alliance Capital Management
Corporation, General Partner
/s/Xxxxx X. Xxxxxx
By:_______________________________
Title:Xxxxx X. Xxxxxx
Assistant Secretary
-6-
