INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 8th day of December 2004, by and between Xxxxxxxxxxx
Portfolio Series (the "Trust"), and OppenheimerFunds, Inc. ("OFI").
WHEREAS, the Trust is an open-end series investment company registered as
such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940 (the "Investment Company Act"), and OFI
is a registered investment adviser;
WHEREAS, the Trust is registered under the Investment Company Act, as amended
as an open-end management investment company and may issue shares of common
stock in separately designated series representing separate funds with their
own investment objectives, policies and purposes; and
WHEREAS, the Trust desires that OFI shall act as its investment adviser with
respect to each of its four series, Conservative Investor Fund, Moderate
Investor Fund, Aggressive Investor Fund and Active Allocation Fund (each, a
"Fund" and collectively, the "Funds") pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. General Provision.
The Trust hereby employs OFI and OFI hereby undertakes to act as the
investment adviser of the Funds and to perform for the Funds such other
duties and functions as are hereinafter set forth. OFI shall, in all
matters, give to the Funds and its Board of Trustees the benefit of its best
judgment, effort, advice and recommendations and shall, at all times conform
to, and use its best efforts to enable the Funds to conform to (i) the
provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or federal law;
(iii) the provisions of the Declaration of Trust and By-Laws of the Trust as
amended from time to time; (iv) policies and determinations of the Board of
Trustees of the Trust; (v) the fundamental policies and investment
restrictions of the Funds as reflected in the Trust's registration statement
under the Investment Company Act or as such policies may, from time to time,
be amended by the Funds' shareholders; and (vi) the Prospectus and Statement
of Additional Information of the Trust in effect from time to time. The
appropriate officers and employees of OFI shall be available upon reasonable
notice for consultation with any of the Trustees and officers of the Trust
with respect to any matters dealing with the business and affairs of the
Trust including the valuation of the portfolio securities of the Funds which
are either not registered for public sale or not being traded on any
securities market.
2. Investment Management.
(a) OFI shall, subject to the direction and control by the Trust's
Board of Trustees, (i) regularly provide investment advice and
recommendations to the Funds with respect to its investments, investment
policies and the purchase and sale of securities; (ii) supervise continuously
the investment program of the Funds and the composition of its portfolio and
determine what securities shall be purchased or sold by the Funds; and (iii)
arrange, subject to the provisions of paragraph "7" hereof, for the purchase
of securities and other investments for the Funds and the sale of securities
and other investments held in the portfolio of the Funds.
(b) Provided that the Trust shall not be required to pay any
compensation other than as provided by the terms of this Agreement and
subject to the provisions of paragraph "7" hereof, OFI may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment
management services, including entering into sub-advisory agreements with
other affiliated or unaffiliated registered investment advisors to obtain
specialized services.
(c) Provided that nothing herein shall be deemed to protect OFI from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OFI shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this
Agreement relates.
(d) Nothing in this Agreement shall prevent OFI or any officer thereof
from acting as investment adviser for any other person, firm or corporation
or in any way limit or restrict OFI or any of its directors, officers,
stockholders or employees from buying, selling or trading any securities for
its own account or for the account of others for whom it or they may be
acting, provided that such activities will not adversely affect or otherwise
impair the performance by OFI of its duties and obligations under this
Agreement and under the Investment Advisers Act of 1940.
3. Other Duties of OFI.
OFI shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Funds, including the compilation
and maintenance of such records with respect to its operations as may
reasonably be required; the preparation and filing of such reports with
respect thereto as shall be required by the Commission; composition of
periodic reports with respect to its operations for the shareholders of the
Funds; composition of proxy materials for meetings of the Funds'
shareholders and the composition of such registration statements as may be
required by federal securities laws for continuous public sale of shares of
the Funds. OFI shall, at its own cost and expense, also provide the Funds
with adequate office space, facilities and equipment. OFI shall, at its own
expense, provide such officers for the Trust as the Trust's Board may request.
4. Allocation of Expenses.
All other costs and expenses of the Funds not expressly assumed by OFI
under this Agreement, or to be paid by the Distributor of the shares of the
Funds, shall be paid by the applicable Fund or Funds, including, but not
limited to (i) interest and taxes; (ii) brokerage commissions; (iii) premiums
for fidelity and other insurance coverage requisite to its operations; (iv)
the fees and expenses of its Trustees; (v) legal and audit expenses; (vi)
custodian and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its shares; (viii) expenses incident to the issuance of
its shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and expenses, other than as hereinabove provided, incident
to the registration under federal securities laws of shares of the Funds for
public sale; (x) expenses of printing and mailing reports, notices and proxy
materials to shareholders of the Funds; (xi) except as noted above, all other
expenses incidental to holding meetings of the Funds' shareholders; and (xii)
such extraordinary non-recurring expenses as may arise, including litigation
affecting the Funds and any legal obligation which the Trust may have on
behalf of the Funds to indemnify its officers and Trustees with respect
thereto. Any officers or employees of OFI or any entity controlling,
controlled by or under common control with OFI, who may also serve as
officers, Trustees or employees of the Trust shall not receive any
compensation from the Trust for their services.
5. Compensation of OFI.
The Trust agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee computed on the total
net asset value of each Fund of the Trust as of the close of each business
day and payable monthly at the annual rate for each Fund set forth below.
For Conservative Investor Fund, the Trust will not pay a management fee
but rather OFI will collect indirect management fees from investments in the
Underlying Funds.
For Moderate Investor Fund, the Trust will not pay a management fee but
rather OFI will collect indirect management fees from investments in the
Underlying Funds.
For Aggressive Investor Fund, the Trust will not pay a management fee
but rather OFI will collect indirect management fees from investments in the
Underlying Funds.
For Active Allocation Fund, the Trust will not pay a management fee but
rather OFI will collect an asset allocation fee of 10 bps of total net
assets, as well as indirect management fees from investments in the
Underlying Funds.
6. Use of Name "Xxxxxxxxxxx."
OFI hereby grants to the Trust a royalty-free, non-exclusive license to
use the name "Xxxxxxxxxxx" in the name of the Trust and the Funds for the
duration of this Agreement and any extensions or renewals thereof. To the
extent necessary to protect OFI's rights to the name "Xxxxxxxxxxx" under
applicable law, such license shall allow OFI to inspect, and subject to
control by the Trust's Board, control the name and quality of services
offered by the Funds under either such name. Such license may, upon
termination of this Agreement, be terminated by OFI, in which event the Trust
shall promptly take whatever action may be necessary to change its name and
the name of the Funds and discontinue any further use of the name
"Xxxxxxxxxxx" in the name of the Trust or the Funds or otherwise. The name
"Xxxxxxxxxxx" may be used by OFI in connection with any of its activities or
licensed by OFI to any other party.
7. Portfolio Transactions and Brokerage.
(a) OFI (and any Sub-Advisor) is authorized, in arranging the Funds'
portfolio transactions, to employ or deal with such members of securities or
commodities exchanges, brokers or dealers, including "affiliated" broker
dealers (as that term is defined in the Investment Company Act) (hereinafter
"broker-dealers"), as may, in its best judgment, implement the policy of the
Funds to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable security price obtainable) of the
Funds' portfolio transactions as well as to obtain, consistent with the
provisions of subparagraph "(c)" of this paragraph "7," the benefit of such
investment information or research as may be of significant assistance to the
performance by OFI (and any Sub-Advisor) of its investment management
functions.
(b) OFI (and any Sub-Advisor) shall select broker-dealers to effect the
Funds' portfolio transactions on the basis of its estimate of their ability
to obtain best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by OFI (or any Sub-Advisor) on the
basis of all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to facilitate
the Funds' portfolio transactions by participating therein for its own
account; the importance to the Funds of speed, efficiency or confidentiality;
the broker-dealer's apparent familiarity with sources from or to whom
particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and
related transactions of the Funds.
(c) OFI (and any Sub-Advisor) shall have discretion, in the interests
of the Funds, to allocate brokerage on the Funds' portfolio transactions to
broker-dealers qualified to obtain best execution of such transactions who
provide brokerage and/or research services (as such services are defined in
Section 23(e)(3) of the Securities Exchange Act of 1934) for the Funds and/or
other accounts for which OFI and its affiliates (and any Sub-Advisor)
exercise "investment discretion" (as that term is defined in Section 3(a)(35)
of the Securities Exchange Act of 1934) and to cause the Funds to pay such
broker-dealers, other than affiliated broker dealers, a commission for
effecting a portfolio transaction for the Funds that is in excess of the
amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OFI
(or any Sub-Advisor) determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research services
provided by such broker-dealer, viewed in terms of either that particular
transaction or the overall responsibilities of OFI and its investment
advisory affiliates (and any Sub-Advisor) with respect to the accounts as to
which they exercise investment discretion. In reaching such determination,
OFI (or any Sub-Advisor) will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services provided or
being provided by such broker-dealer. In demonstrating that such
determinations were made in good faith, OFI (and any Sub-Advisor) shall be
prepared to show that all commissions were allocated for the purposes
contemplated by this Agreement and that the total commissions paid by the
Funds over a representative period selected by the Funds' trustees were
reasonable in relation to the benefits to the Funds.
(d) OFI (or any Sub-Advisor) shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate applicable
to any particular portfolio transactions or to select any broker-dealer on
the basis of its purported or "posted" commission rate but will, to the best
of its ability, endeavor to be aware of the current level of the charges of
eligible broker-dealers and to minimize the expense incurred by the Funds for
effecting its portfolio transactions to the extent consistent with the
interests and policies of the Funds as established by the determinations of
its Board of Trustees and the provisions of this paragraph "7."
(e) The Trust recognizes that an affiliated broker-dealer (i) may act
as one of the Funds' regular brokers so long as it is lawful for it so to
act; (ii) may be a major recipient of brokerage commissions paid by the
Trust; and (iii) may effect portfolio transactions for the Funds only if the
commissions, fees or other remuneration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation
or order adopted under the Investment Company Act for determining the
permissible level of such commissions.
8. Duration.
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 9 hereof, this Agreement
shall remain in effect for two years from the date of execution hereof, and
thereafter will continue in effect from year to year with respect to each
Fund, so long as such continuance shall be approved at least annually by the
Trust's Board of Trustees on behalf of the Fund, including the vote of the
majority of the trustees of the Trust who are not parties to this Agreement
or "interested persons" (as defined in the Investment Company Act) of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, or by the holders of a "majority" (as defined in the
Investment Company Act) of the outstanding voting securities of the Fund and
by such a vote of the Trust's Board of Trustees.
9. Termination.
This Agreement may be terminated with respect to any Fund (i) by OFI at
any time without penalty upon giving the Fund sixty days' written notice
(which notice may be waived by the Fund); or (ii) by the Fund at any time
without penalty upon sixty days' written notice to OFI (which notice may be
waived by OFI) provided that such termination by the Fund shall be directed
or approved by the vote of a majority of all of the Trustees of the Trust, on
behalf of the Fund, then in office or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Fund.
10. Assignment or Amendment.
This Agreement may not be amended with respect to any Fund without the
affirmative vote or written consent of the holders of a "majority" of the
outstanding voting securities of the Fund or Funds affected by this
amendment, and shall automatically and immediately terminate in the event of
its "assignment," as defined in the Investment Company Act.
11. Disclaimer of Shareholder Liability.
OFI understands that the obligations of the Trust under this Agreement
are not binding upon any Trustee or shareholder of the Trust or Funds
personally, but bind only the Trust, but only with respect to the Funds'
property. OFI represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming trustee or shareholder
liability for acts or obligations of the Trust.
12. Definitions.
The terms and provisions of this Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions of the
Investment Company Act.
Xxxxxxxxxxx Portfolio Series
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, Secretary
OppenheimerFunds, Inc.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, Executive Vice
President and General Counsel
