EXHIBIT 5A
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
G.T. INVESTMENT FUNDS, INC. AND G.T. CAPITAL MANAGEMENT, INC.
Contract made as of April 19, 1989, between G. T. Investment Funds,
Inc. a Maryland corporation ("Company") and G.T. Capital Management, Inc.
("G.T."), a California corporation.
WHEREAS the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act") as an open-end management investment company,
and intends to offer for public sale shares of G.T. Global Government Income
Fund, G.T. Global Bond Fund, G.T. Portfolio Strategy Fund and G.T. Global
Health Care Fund each being a series of the Company's common stock; and
WHEREAS the Company hereafter may establish additional series of its
common stock (any such additional series, together with the G.T. Global
Government Income Fund, G.T. Global Bond Fund, G.T. Portfolio Strategy Fund
and G.T. Global Health Care Fund, are collectively referred to herein as the
"Funds", and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain G.T. as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Company and the Funds, and G. T. is
willing to furnish such services.
NOW, THEREFORE in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. APPOINTMENT. The Company hereby appoints G.T. as investment
manager and administrator of each Fund for the period and on the terms set
forth in this Contract. G.T. accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Company's Board of Directors
("Board"), G.T. will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities
and investments and cash equivalents of the Fund. G.T. will determine from
time to time what securities and other investments will be purchased,
retained or sold by each Fund, and the brokers and dealers through whom
trades will be executed.
(b) G.T. agrees that in placing orders with brokers and dealers it
will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation G.T. may, in its discretion, purchase and
sell portfolio securities to and from brokers and
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dealers who sell shares of the Funds or provide the Funds or G.T.'s other
clients with research analysis, advice and similar services. G.T. may pay to
brokers and dealers, in return for research and analysis, a higher commission
or spread than may be charged by other brokers and dealers, subject to G.T.'s
determining in good faith that such commission or spread is reasonable in
terms either of the particular transaction or of the overall responsibility
of G.T. to the Funds and its other clients and that the total commissions or
spreads paid by each Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to G.T. or any affiliated person thereof except in
accordance with the federal securities laws and the rules and regulations
thereunder. Wherever G.T. simultaneously places orders to purchase or sell
the same security on behalf of a Fund and one or more other accounts advised
by G.T., such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
(c) G.T. will oversee the maintenance of all books and records
with respect to the securities transactions of the Funds, and will furnish
the Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940
Act, G.T. hereby agrees that all records which it maintains for the Company
are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains
for the Company and which are required to be maintained by Rule 31a-1 under
the 1940 Act, and further agrees to surrender promptly to the Company any
records which it maintains for the Company upon request by the Company.
(d) G.T. will oversee the computation of the net asset value and
the net income of each Fund as described in the currently effective
registration statement of the Company under the Securities Act of 1933, as
amended, and 1940 Act and any supplements thereto ("Registration Statement")
or as more frequently requested by the Board.
3. DUTIES AS ADMINISTRATOR. G.T. will administer the affairs of
each Fund subject to the supervision of the Board and the following
understandings:
(a) G.T. will supervise all aspects of the operations of each
Fund, including the oversight of transfer agency, custodial, pricing and
accounting services, excepts as hereinafter set forth; provided, however,
that nothing herein contained shall be deemed to relieve or deprive the Board
of its responsibility for control of the conduct of the affairs of the Funds.
(b) At G.T.'s expense, G.T. will provide the Company and the Funds
with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
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(c) G.T. will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) G.T. will provide the Company and the Funds with, or obtain
for them, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies
and similar items.
4. FURTHER DUTIES. In all matters relating to the performance
of this Contract, G.T. will act in conformity with the Articles of
Incorporation, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder and all other applicable
federal and state laws and regulations.
5. DELEGATION OF G.T.'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to one or more of the Funds, G.T. may enter
into one or more contracts ("Sub-Advisory or Sub-Administration Contract")
with a sub-adviser or sub-administrator in which G.T. delegates to such
sub-advisor or sub-administrator the performance of any or all of the
services specified in Paragraph 2 and 3 of this Contract, provided that: (i)
each Sub-Advisory and Sub-Administration Contract imposes on the sub-adviser
or sub-administrator bound thereby all the duties and conditions to which G.
T. is subject with respect to the delegated services under Paragraphs 2, 3,
and 4 of this Contract; (ii) each Sub-Advisory or Sub-Administration Contract
meets all requirements of the 1940 Act and rules thereunder; and (iii) G.T.
shall not enter into a Sub-Advisory or Sub-Administration Contract unless it
is approved by the Board prior to implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by G.T.
hereunder are not to be deemed exclusive and G. T. shall be free to furnish
similar services to others so long as its services under this Contract are
not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of G.T., who may also be a
Director, officer or employee of the Company, to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
7. EXPENSES.
(a) During the term of this Contract, each Fund will bear all
expenses, not specifically assumed by G.T., incurred in its operations and
the offering of its shares.
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(b) Expenses borne by each Fund will include but not be limited to
the following (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Fund by G.T. under this Contract; (iii) expenses of organizing the
Company and the Fund; (iv) filing fees and expenses relating to the
registration and qualification of the Fund's shares and the Company under
federal and/or state securities laws and maintaining such registrations and
qualifications; (v) fees and salaries payable to the Company's Directors who
are not parties to this Contract or interested persons of any such party
("Independent Directors"); (vi) all expenses incurred in connection with the
Independent Directors' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii) costs
of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (ix) any costs, expenses or losses arising out of a liability
or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (x) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Directors; (xi)
charges of custodians, transfer agents, pricing agents and other agents;
(xii) costs of preparing share certificates; (xiii) with respect to existing
shareholders, expenses of setting in type, printing and mailing prospectuses
and supplements thereto, statements of additional information and supplements
thereto, reports and proxy materials for existing shareholders; (xiv) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Company is a party and the
expenses the Company may incur as a result of its legal obligations to
provide indemnification to its officer, Directors, employees and agents)
incurred by the Company or the Fund; (xv) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the
costs of investment company literature and other publications provided by the
Company to its Directors and officers; and (xviii) costs of mailing,
stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the
Funds shall be allocated among each Fund on a basis deemed fair and equitable
by G.T., subject to the Board's supervision.
(d) G.T. will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Directors of the Company who are not Independent Directors.
(e) The payment or assumption by G. T. of any expense of the
Company or any Fund that G.T. is not required by this Contact to pay or
assume shall not obligate G.T. to pay or assume the same or any similar
expense of the Company or any Fund on any subsequent occasion.
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8. COMPENSATION.
(a) For the services provided under this Agreement, G.T. Global
Government Income Fund and G.T. Global Bond Fund each will pay G.T. a fee,
computed daily and paid monthly, at the annualized rate of 0.75% of the
Fund's average daily net assets.
(b) For the services provided under this Agreement, G.T. Health
Care Fund and G.T. Portfolio Strategy Fund each will pay to G. T. a fee,
computed daily and paid monthly, at the annualized rate of 1.00% of the
Fund's average daily net assets.
(c) For the services provided under this Agreement, each Fund as
hereafter may be established will pay to G.T. a fee in an amount to be agreed
upon in a written fee agreement ("Fee Agreement") executed by the Company on
behalf of such Fund and by G.T. All such Fee Agreements shall provide that
they are subject to all terms and conditions of this Contract.
(d) The fee shall be computed daily and paid monthly to G.T. on or
before the last business day of the next succeeding calendar month.
(e) G.T. agrees to reduce the fee payable to it under this
Contract by the amount by which the ordinary operating expenses of a Fund for
any fiscal year, excluding interest, taxes, distribution and extraordinary
expenses, shall exceed the most stringent limits prescribed by any state in
which Fund shares are offered for sale. Costs incurred in connection with
the purchase or sale of portfolio securities, including brokerage fees and
commissions, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted
for as capital items and not expenses. Property accruals shall be made for a
Fund for any projected reduction hereunder and corresponding amounts shall be
withheld from the fees paid by that Fund to G.T. Any additional reduction
computed as being necessary at the end of the fiscal year shall be deducted
from the fee for the last month of such fiscal year. If the amount of the
fee payable by a Fund to G.T. is less than the amount by which the Fund's
expenses exceeds an applicable expense limitation, G.T. shall reimburse the
Fund's expenses in an amount sufficient to enable the Fund to meet such
limitation.
(f) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination,
as the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
9. LIMITATION OF LIABILITY OF G. T. AND INDEMNIFICATION. G.T.
shall not be liable, and each Fund shall indemnify G.T. and its directors,
officers and employees, for any costs or liabilities arising from any error
of judgment or mistake of law or any loss suffered by the Fund or the Company
in connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross
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negligence or the part of G.T. in the performance by G.T. of its duties or
from reckless disregard by G.T. of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee or
agent of G.T., who may be or become an officer, Director, employee or agent
of the Company shall be deemed, when rendering services to a Fund or the
Company or acting with respect to any business of a Fund or the Company, to
be rendering such service to or acting solely for the Fund or the Company and
not as an officer, partner, employee, or agent or one under the control or
direction of G.T. even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective on the date hereabove
written, provided that this Contract shall not take effect with respect to
any Fund unless it has first been approved (i) by a vote of a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting or such approval, and (ii) by vote of a majority of that Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, with respect to each Fund, this Contract shall
continue automatically for successive periods not to exceed twelve months
each, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Independent Directors, cast in
person at a meeting called for the purpose of voting on such approval and
(ii) by the Board or by vote of a majority of the outstanding voting
securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty,
by vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to G.T. or by G.T. at
any time, without the payment of any penalty, on sixty days' written notice
to the Company. Termination of this Contract with respect to one Fund shall
not affect the continued effectiveness of this Contract with respect to any
other Fund. This Contract will automatically terminate in the event of its
assignment.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract
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, and no amendment of this
Contract shall be effective until approved by vote of a majority of the
Fund's outstanding voting securities.
12. GOVERNING LAW. This Contract shall be construed in
accordance with the laws of the State of California and the 1940 Act. To the
extent that the applicable laws of the State of California conflict with the
applicable provisions of the 1940 Act, the latter shall control.
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13. MISCELLANEOUS. The captions in this Contract are included
for convenience of 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be
affected thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in
this Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell,"
and "security" shall have the same meaning as such terms have in the 1940 Act
subject to such exemption as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
made less restrictive by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: G. T. INVESTMENT FUNDS, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxx
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Attest: G.T. CAPITAL MANAGEMENT, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxx
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