Exhibit (d)
AGREEMENT
made this ____ day of March, 2005, by and between the PARNASSUS FUNDS (the
“Trust”), a Massachusetts business trust, and PARNASSUS INVESTMENTS (the
“Adviser”).
W I T N E S S E T H :
In
consideration of the mutual promises and agreements herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed
by and between the parties hereto as follows:
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The
Adviser agrees, all as more fully set forth herein, to act as managerial investment
adviser to the Trust with respect to the investment of its assets and to supervise and
arrange the purchase and sale of securities held in the portfolio of the Trust and
generally administer the affairs of the Trust. |
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2. |
Duties
and Obligation of the Adviser with respect to Management of the Trust |
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(a) |
Subject
to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Trust, the
Adviser shall: |
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(i) |
Decide
what securities shall be purchased or sold by the Trust and when; |
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(ii) |
Arrange for
the purchase and the sale of securities held in the portfolio of the Trust by placing
purchase and sale orders for the Trust; and |
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(iii) |
Maintain
oversight and ultimate authority over invested collateral in connection with
the Fund’s securities lending program. |
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(b) |
Any
investment purchases or sales made by the Adviser shall at all times conform
to, and be in accordance with, any requirements imposed by: (1) the
provisions of the Investment Company Act of 1940 (the “Act”)
and of any rules or regulations in force thereunder; (2) any other
applicable provisions of law; (3) the provisions of the Declaration
of Trust and By-Laws of the Trust as amended from time to time; (5)
any policies and fundamental policies of the Trust, as reflected in
its registration statement under the Act, or as amended by the
shareholders of the Trust. |
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(c) |
The
Adviser shall also administer the affairs of the Trust and, in connection
therewith, shall be responsible for (i) maintaining the Trust’s
books and records (other than financial or accounting books and
records or those being maintained by the Trust’s custodian,
transfer agent or accounting services agent); (ii) overseeing the
Trust’s insurance relationships; |
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The
Adviser shall give the Trust the benefit of its best judgement and effort in rendering
services thereunder, but the Adviser shall not be liable for any loss sustained by reason
of the purchase, sale or retention of any security, whether or not such purchase, sale or
retention shall have been based upon its own investigation and research or upon
investigation and research made by any other individual, firm or corporation, if such
purchase, sale or retention shall have been made and such other individual, firm or
corporation shall have been selected in good faith. Nothing contained therein shall,
however, be construed to protect the Adviser against any liability to the Trust or its
security holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement. |
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The
Trust agrees that the word “Parnassus” in its name is derived from the name of
the Adviser and is the property of the Adviser for copyright and all other purposes and
that, therefore, such word may be freely used by the Adviser as to other investment
companies or other investment products. The Trust further agrees that, in the event that
the Adviser ceases to be the Trust’s investment adviser for any reason, the Trust
will (unless the Adviser otherwise consents in writing) promptly take all necessary steps
to change its name to a name not including the word “Parnassus”. |
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It
is agreed that the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Trust’s Registration Statement under the 1940 Act or the
Securities Act of 1933 except for information supplied by the Adviser for inclusion
therein. The Trust agrees to indemnify the Adviser to the full extent permitted by the
Trust’s Declaration of Trust. |
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3. |
Broker-Dealer
Relationships |
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In
connection with its duties set forth in Section 2(a)(ii) of this Agreement to arrange for
the purchase and the sale of securities held in the portfolio of the Trust by placing
purchase and sale orders for the Trust, the Adviser shall select such broker-dealers
(“brokers”) as shall, in the Adviser’s judgment, implement the policy of
the Trust to achieve “best execution”, i.e. prompt and efficient execution at
the most favorable securities price. In making such selection, the Adviser is authorized
to consider the reliability, integrity and financial condition of the broker.
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The
Adviser is also authorized to consider whether the broker provides brokerage and/or
research services to the Trust and/or other accounts of the Adviser. The commissions paid
to such brokers may be higher than another broker would have charged if a good faith
determination is made by the Adviser that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Adviser’s overall discretion. The Adviser shall use its judgment in determining that
the amount of commissions paid are reasonable in relation to the value of brokerage and
research services provided and need not place or attempt to place a specific dollar value
on such services or on the portion of commission rates reflecting such services. To
demonstrate that such determinations were in good faith and to show the overall
reasonableness of commissions paid, the Adviser shall be prepared to show that commissions
paid (i) were for purposes contemplated by this Agreement; (ii) were not allocated or paid
for products or services which were readily and customarily available and offered to the
public on a commercial basis; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such rates may
become known from available information. The Trust recognizes that, on any particular
transaction, a higher than usual commission may be paid due to the difficulty of the
transaction in question.
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4. |
Allocation
of Expenses |
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The
Adviser agrees that it will furnish the Trust, at the Adviser’s expense, with all
office space and facilities, and equipment and clerical personnel necessary for carrying
out its duties under this Agreement. The Adviser will also pay all compensation of all
Trustees, officers and employees of the Trust who are affiliated persons of the Adviser.
All costs and expenses not expressly assumed by the Adviser under this Agreement shall be
paid by the Trust, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its Trustees
other than those affiliated with the Adviser; (v) legal and audit expenses; (vi) fees and
expenses of the Trust’s custodian, shareholder servicing or transfer agent and
accounting services agent; (vii) expenses incident to the issuance of its shares,
including stock certificates and issuance of shares on the payment of, or reinvestment of,
dividends; (viii) fees and expenses incident to the registration under Federal or state
securities laws of the Trust or its shares; (ix) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders of the Trust; (x) all other
expenses incidental to holding meetings of the Trust’s shareholders; (xi) dues or
assessments of or contributions to the Investment Company Institute and the Social
Investment Forum or any successor; and (xii) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal obligations which the Trust may
have to indemnify its officers and Trustees with respect thereto.
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5. |
Compensation
of the Adviser |
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(a) |
The
Trust agrees to pay the Adviser and the Adviser agrees to accept as full
compensation for all services rendered by the Adviser hereunder, an
annual management fee payable monthly and computed at the following
annual percentages of each Fund’s average daily net assets: the
Parnassus Fund, 1.00% of the first $10 million in assets; 0.75% of
the amount above $10 million in assets up to $30 million; 0.70% of
the amount above $30 million up to $100 million; 0.65% of the amount
above $100 million up to $200 million; 0.60% of the amount above $200
million. For the Parnassus Mid-Cap Fund, the fee is 0.85% of the first $100
million in assets; 0.80% of the amount above $100 million in assets
up to $200 million; 0.75% of the amount above $200 million up to $500
million and 0.70% of the amount above $500 million. For the Parnassus
Small-Cap Fund, the fee is 1.00% of the first $100 million in assets;
0.90% of the amount above $100 million in assets up to $200 million;
0.85% of the amount above $200 million up to $500 million and 0.80%
of the amount above $500 million. For the Parnassus Workplace Fund,
the fee is 0.85% of the first $100 million in assets; 0.80% of the
amount above $100 million in assets up to $200 million; 0.75% of the amount
above $200 million up to $500 million and 0.70% of the amount above
$500 million. |
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(b) |
In
the event the expenses of the Trust (including the fees of the Adviser and
amortization of organization expenses but excluding interest, taxes,
brokerage commissions, extraordinary expenses and sales charges and
distribution fees) for any fiscal year exceed the limits set by
applicable regulations of state securities commissions, the Adviser
will reduce its fee by the amount of such excess. Any such reductions
are subject to readjustment during the year. The payment of the
management fee at the end of any month will be reduced or postponed
or, if necessary, a refund will be made to the Trust so that at no
time will there be any accrued but unpaid liability under this
expense limitation. |
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6. |
Duration
and Termination |
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(a) |
This
Agreement shall go into effect on the date set forth above and shall,
unless terminated as hereinafter provided, continue in effect until
April 30, 2006, and thereafter from year to year, but only so long as
such continuance is specifically approved at least annually by the
Trust’s Board of Trustees, including the vote of a majority of
the Trustees who are not parties to this Agreement or “interested
persons” (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such
approval, or by the vote of the holders of a “majority” (as
so defined) of the outstanding voting securities of the Trust and by
such a vote of the Trustees. |
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(b) |
This
Agreement may be terminated by the Adviser at any time without penalty upon
giving the Trust sixty (60) days’ written notice (which notice
may be waived by the Trust) and may be terminated by the Trust at any
time without penalty upon giving the Adviser sixty (60) days’ written
notice (which notice may be waived by the Adviser), provided that
such termination by the Trust shall be directed or approved by the
vote of a majority of all its Trustees in office at the time or by
the vote of the holders of a majority (as defined in the Act) of the
voting securities of the Trust at the time outstanding and entitled
to vote. This Agreement shall automatically terminate in the event of
its assignment (as so defined). |
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7. |
No
Shareholder Liability. |
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The
Adviser understands that the obligations of this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the Trust’s property. The Adviser
represents that it has notice of the provisions of the Trust’s Declaration of Trust
disclaiming shareholder liability for acts or obligations of the Trust. |
IN
WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be
executed by duly authorized persons and their seals to be hereunto affixed, all as of the
day and year first above written.
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PARNASSUS FUNDS |
Date: March __, 2005 |
By___________________________ |
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Xxxxxxx Xxxxxxxxx, Secretary |
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PARNASSUS INVESTMENTS |
Date: March __, 2005 |
By___________________________ |
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Xxxxxx X. Xxxxxx, President |
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Agreement
made this ___ day of March 2005, between Parnassus Investments, as investment adviser (the
“Adviser”), and the Parnassus Funds (the “Trust”).
WHEREAS,
the Trust is comprised of the following four funds: the Parnassus Fund, the Parnassus
Mid-Cap Fund, the Parnassus Small-Cap Fund, the Parnassus Workplace Fund; and
WHEREAS,
the Adviser intends to reimburse the Funds for expenses that exceed certain expense limits
and to commit to those limits for a period of time; and
WHEREAS,
shareholders of the Funds benefit from any expense limits agreed to by the Adviser.
NOW,
THEREFORE, the Trust and the Adviser agree to expense limits on the annual operating
expenses of the Funds, as follows:
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Expense Limit Effective 4/29/05 (as a |
Fund
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percentage of average net assets)
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| Parnassus Fund |
No limit |
| Mid-Cap Fund |
1.40% |
| Small-Cap Fund |
1.40% |
| Workplace Fund |
1.20% |
The Adviser agrees to continue the
foregoing expense limits through April 30, 2006.
IN
WITNESS WHEREOF, the parties have signed this agreement as of the day and year first above
written.
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PARNASSUS INVESTMENTS |
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By: |
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Name: |
Xxxxxx X. Xxxxxx
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Title: |
President
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Date: |
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PARNASUSS FUNDS |
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By: |
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Name: |
Xxxxxxx X. Xxxxxxxxx
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Title: |
Secretary
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Date: |
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