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EXHIBIT (d)(1)
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of August 1, 2001, by and between XXXXXXX
INVESTMENTS, a Massachusetts business trust (the "Trust"), with respect to its
series of shares shown on Schedule A attached hereto, as the same may be amended
from time to time, and XXXXXXX ASSET MANAGEMENT, INC., a Michigan corporation
(the "Adviser").
The Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management investment
company. The Adviser is registered under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), as an investment adviser and engages in the
business of acting as an investment adviser. The Trust's Agreement and
Declaration of Trust (the "Declaration of Trust") authorizes the Board of
Trustees of the Trust (the "Board of Trustees") to create separate series of
shares of beneficial interest in the Trust (such portfolios and any other
portfolios hereafter added to the Trust being referred to collectively herein as
the "Funds"). The Trust desires to retain the Adviser to render or contract to
obtain as hereinafter provided investment advisory services to the Funds listed
on Schedule A (as it may be amended from time to time), and the Adviser is
willing to render such investment advisory services upon the terms and
conditions hereinafter set forth.
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
1. APPOINTMENT AS ADVISER. The Trust hereby appoints the Adviser to act
as Adviser of the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. Subject to the
approval of the Board of Trustees, the Adviser is authorized to enter into a
subadvisory agreement (a "Subadvisory Agreement") with any other registered
investment adviser, whether or not affiliated with the Adviser (a "Subadviser"),
pursuant to which such Subadviser shall furnish to one or more of the Funds
continuous portfolio management services in connection with the management of
such Funds. The Adviser will continue to have responsibility for all investment
advisory services furnished pursuant to any Subadvisory Agreement. The Trust and
Adviser understand and agree that the Adviser may manage the Funds in a
"manager-of-managers" style with either a single or multiple Subadvisers, which
contemplates that the Adviser will, among other things and pursuant to an Order
issued by the Securities and Exchange Commission (SEC):
(a) continually evaluate the performance of each Subadviser to the
Funds through quantitative and qualitative analysis and consultations
with each Subadviser;
(b) periodically make recommendations to the Board of Trustees as to
whether the contract with one or more Subadvisers should be renewed,
modified, or terminated; and
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(c) periodically report to the Board of Trustees regarding the
results of its evaluation and monitoring functions.
The Trust recognizes that, subject to the approval of the Board of Trustees, a
Subadviser's services may be terminated or modified pursuant to the
"manager-of-managers" process and that the Adviser may appoint a new Subadviser
for a Subadviser that is so removed.
2. MANAGEMENT OF ASSETS. Subject to the supervision of the Board of
Trustees and subject to Section 1 hereof and any Subadvisory Agreement, the
Adviser shall manage the investment operations of the Funds and the composition
of the Funds' portfolios including the purchase, retention and disposition
thereof, in accordance with each Fund's investment objectives, policies and
restrictions as stated in each Fund's SEC registration statement, and subject to
the following understandings:
(a) The Adviser (or a Subadviser under the Adviser's supervision)
shall provide supervision of each Fund's investments, and shall
determine from time to time what investments or securities will be
purchased, retained, sold, or loaned by each Fund, and what portion of
the assets will be invested or held uninvested as cash;
(b) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of
Trust and By-Laws of the Trust and each Fund's SEC registration
statement and with the instructions and directions of the Board of
Trustees, and will conform to and comply with the requirements of the
1940 Act and all other applicable federal and state laws and
regulations. In connection therewith, the Adviser shall, among other
things, prepare and file (or cause to be prepared and filed) such
reports as are, or may in the future be, required by the SEC.
(c) The Adviser (or the Subadviser under the Adviser's supervision)
shall determine the securities to be purchased or sold by each Fund,
and will place orders pursuant to its determinations with or through
such persons, brokers or dealers (including but not limited to any
broker or dealer affiliated with the Subadviser) to carry out the
policy with respect to brokerage as set forth in each Fund's
registration statement or as the Board of Trustees may direct from time
to time. In providing the Funds with investment supervision, it is
recognized that the Adviser (or the Subadviser under the Adviser's
supervision) will give primary consideration to securing the most
favorable price and efficient execution. Consistent with this policy,
the Adviser (or a Subadviser under the Adviser's supervision) may
consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may
effect or be a party to any such transaction or other transactions to
which other clients of the Adviser (or Subadviser) may be a party. It
is understood that any broker or dealer affiliated with the Adviser (or
Subadviser) may be used as principal broker for securities
transactions, but that no formula has been adopted for allocation of
the Funds' investment transaction business. It is also understood that
it is desirable for each Fund that the Adviser (or Subadviser) have
access to supplemental
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investment and market research and security and economic analysis
provided by brokers, and that such brokers may execute brokerage
transactions at a higher cost to the Funds than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Adviser (or the
Subadviser under the Adviser's supervision) is authorized to pay higher
brokerage commissions for the purchase and sale of securities for the
Funds to brokers who provide such research and analysis, subject to
review by the Board of Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the
services provided by such broker may be useful to the Adviser (or the
Subadviser) in connection with its services to other clients. On
occasions when the Adviser (or a Subadviser under the Adviser's
supervision) deems the purchase or sale of a security to be in the best
interest of the Funds as well as other clients of the Adviser (or the
Subadviser), the Adviser (or Subadviser), to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be so sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Adviser (or the Subadviser) in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
(d) The Adviser (or the Subadviser under the Adviser's supervision)
shall maintain all books and records with respect to the each Fund's
portfolio transactions and shall render to the Board of Trustees such
periodic and special reports as the Board may reasonably request.
(e) The Adviser (or the Subadviser under the Adviser's supervision)
shall be responsible for the financial and accounting records
maintained by the Funds (including those being maintained by the Funds'
Custodian).
(f) The Adviser (or the Subadviser under the Adviser's supervision)
shall provide the Funds' Custodian on each business day information
relating to all transactions concerning each Fund's assets.
(g) The investment management services of the Adviser to the Funds
under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others.
(h) The Adviser shall make reasonably available its employees and
officers for consultation with any of the Trustees or officers or
employees of the Trust with respect to any matter discussed herein,
including, without limitation, the valuation of each Fund's securities.
3. DELIVERY OF DOCUMENTS. The Trust has delivered to the Adviser copies
of each of the following documents and will deliver to it all future amendments
and supplements, if any:
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(a) Declaration of Trust;
(b) By-Laws of the Trust (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of Trustees authorizing the
appointment of the Adviser and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the "Registration Statement"), as
filed with the SEC relating to each Fund and its shares of beneficial
interest and all amendments thereto; and
(e) Prospectus and Statement of Additional Information of each Fund.
4. SERVICE AS OFFICERS OF TRUST. The Adviser shall authorize and permit
any of its officers and employees who may be elected as Trustees or officers of
the Trust to serve in the capacities in which they are elected. All services to
be furnished by the Adviser under this Agreement may be furnished through the
medium of any such officers or employees of the Adviser.
5. MAINTENANCE OF BOOKS AND RECORDS. The Adviser shall keep the Funds'
books and records required to be maintained by it pursuant to Section 2 hereof.
The Adviser agrees that all records which it maintains for the Funds are the
property of the respective Fund, and it will surrender promptly to the Funds any
such records upon the respective Fund's request, provided however that the
Adviser may retain a copy of such records. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by the Adviser pursuant to Section 2
hereof.
6. EXPENSES.
(a) During the term of this Agreement, the Adviser shall pay the
following expenses:
(i) the salaries and expenses of all employees of the Funds
and the Adviser, except the fees and expenses of Trustees who are
not affiliated persons of the Adviser or any Subadviser.
(ii) all expenses incurred by the Adviser in connection with
managing the ordinary course of the Funds' business, other than
those assumed by the Funds herein; and
(iii) the fees, costs and expenses payable to a Subadviser
pursuant to a Subadvisory Agreement.
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(b) During the term of this agreement, the Trust shall pay the
following expenses:
(i) the fees and expenses incurred by the Trust in connection
with the management of the investment and reinvestment of the
Funds' assets,
(ii) the fees and expenses of the Board of Trustees who are not
"interested persons" of the Trust within the meaning of the 1940
Act,
(iii) the fees and expenses of the Custodian that relate to the
custodial function and the recordkeeping connected therewith,
preparing and maintaining the general accounting records of the
Funds and the provision of any such records to the Adviser useful
to the Adviser in connection with the Adviser's responsibility for
the accounting records of the Funds pursuant to Section 31 of the
1940 Act and the rules promulgated thereunder, the pricing or
valuation of the shares of the Funds, including the cost of any
pricing or valuation service or services which may be retained
pursuant to the authorization of the Board of Trustees, and for
both mail and wire orders, the cashiering function in connection
with the issuance and redemption of the Funds' securities,
(iv) the fees and expenses of the Funds' Transfer and Dividend
Disbursing Agent that relate to the maintenance of each shareholder
account,
(v) the charges and expenses of legal counsel and independent
accountants for the Trust and any counsel retained by the
independent Trustees,
(vi) brokers' commissions and any issue or transfer taxes
chargeable to the Funds in connection with their securities
transactions,
(vii) all taxes and corporate fees payable by the Funds to
federal, state or other governmental agencies,
(viii) the fees of any trade association of which the Trust may
be a member,
(ix) the cost of share certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the
Funds.
(x) the cost of fidelity, directors' and officers' and errors
and omissions insurance,
(xi) the fees and expenses involved in registering and
maintaining registration of the each Fund and its shares with the
Securities and Exchange Commission, and paying notice filing fees
under state securities laws, including the preparation and printing
of the Funds' registration statements and the Funds'
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prospectuses and statements of additional information for filing
under federal and state securities laws for such purposes,
(xii) allocable communications expenses with respect to
investor services and all expenses of shareholders' and Trustees'
meetings and of preparing, printing and mailing reports and notices
to shareholders in the amount necessary for distribution to the
shareholders.
(xiii) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of each
Fund's business, and
(xiv) any expenses assumed by the Funds pursuant to a
Distribution and Service Plan adopted in a manner that is
consistent with Rule 12b-1 under the 1940 Act.
7. COMPENSATION OF ADVISER. For the services provided and the expenses
assumed pursuant to this Agreement on and after the Effective Date, each Fund
will pay to the Adviser as full compensation therefor a fee at the annual rates
described on Schedule A with respect to the average daily net assets of each
Fund. This fee will be computed daily, and will be paid to the Adviser monthly.
Such fee shall be calculated by applying the annual rates set forth on Schedule
A to the average daily net assets of each Fund for the calendar year computed in
the manner used for the determination of the net asset value of shares of such
Fund. For the fiscal years of the Trust ending June 30, 2002 and 2003, the
Adviser agrees to waive a portion of its annual advisory fee in order to assure
that the Total Operating Expenses of each Fund will not exceed the maximum
amount (expressed as a percentage of the Fund's average daily net assets) set
forth on Schedule A. In addition, until such time as the Adviser enters into a
Subadvisory Agreement for a particular Fund that has been approved by the Board
of Trustees, the Adviser also agrees to waive a portion of its annual advisory
fee so that the annual advisory fees will not exceed the maximum amount
(expressed as a percentage of a Fund's average daily net assets) set forth on
Schedule B.
8. LIMITATION ON LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or for any loss suffered by a Fund in connection with
the matters to which this Agreement relates, except 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 0000 Xxx) or 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. Any liability of the Adviser to one Fund shall
not automatically impart liability on the part of the Adviser to any other Fund.
No Fund shall be liable for the obligations of any other Fund.
9. EFFECTIVE DATE; TERM; TERMINATION. This Agreement becomes effective
(i) on August 1, 2001, for each Fund whose shareholders have approved this
Agreement prior to such date by a vote of a majority of the outstanding voting
securities as defined in Section 2(a)(42) of the 1940
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Act and (ii) on such later date, for each Fund whose shareholders shall have
approved this Agreement after August 1, 2001 by a vote of a majority of the
outstanding voting securities as defined in Section 2(a)(42) of the 1940 Act and
shall continue in effect until July 31, 2003 and from year-to-year thereafter,
but only so long as such continuance is specifically approved at least annually
in conformity with the requirements of the 1940 Act. This Agreement may be
terminated with respect to the Trust or as to one or more of the Funds at any
time, without payment of any penalty, by the Board of Trustees or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the applicable Fund, or by the Adviser at any time, without payment of any
penalty, on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
10. NO RESTRICTION ON ADVISER. Nothing in this Agreement shall limit or
restrict the right of any officer or employee of the Adviser who may also be a
Trustee, officer, or employee of the Trust 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 business, whether of a similar or dissimilar nature, nor limit or
restrict the right of the Adviser to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
11. SERVICE FOR OTHER CLIENTS. The Trust understands that the 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 manager or adviser to
other investment companies or accounts, provided that whenever the Trust and one
or more other investment companies or accounts managed or advised by the Manager
have available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a formula believed to be equitable to
each company and account. The Trust recognizes that in some cases this procedure
may adversely affect the size of the positions obtainable and the prices
realized for the Funds.
12. INDEPENDENT CONTRACTOR STATUS. Except as otherwise provided herein
or authorized by the Board of Trustees from time to time, the Adviser shall for
all purposes herein be deemed to be an independent contractor, and shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
13. PROVISION OF MATERIALS. During the term of this Agreement, the
Trust agrees to furnish the Adviser at its principal office all prospectuses,
proxy statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Funds or the public, which
refer in any way to the Adviser, prior to use thereof and not to use such
material if the Adviser reasonably objects in writing within five business days
(or such other time as may be mutually agreed) after receipt thereof. In the
event of termination of this Agreement, the Trust will continue to furnish to
the Adviser copies of any of the above-mentioned materials which refer in any
way to the Adviser. Sales literature may be furnished to the Adviser hereunder
by first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Trust shall furnish or otherwise make available to the Adviser
such other information relating to the business affairs of the Trust as the
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Adviser at any time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
14. AMENDMENT. No amendment of this Agreement shall be effective unless
it is in writing and signed by the party against which enforcement of the
amendment is sought.
15 NOTICES. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Adviser at 000 Xxxx Xxxx Xxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxx, Chairman; or
(2) to the Trust at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx
00000, Attention: Xxxx X. Xxxxx, Vice President. Either party may change its
address for notices hereunder by giving written notice of such change to the
other party in the manner provided in this Section 15.
16. GOVERNING LAW. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said Acts. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the Commonwealth of Massachusetts.
17. LIMITATION OF TRUST LIABILITY. The Declaration of Trust
establishing Xxxxxxx Investments, dated July 19, 1993, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name "Xxxxxxx
Investments" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Xxxxxxx Investments, shall be held to any personal
liability, nor shall result be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Xxxxxxx Investments, but the Trust Estate only shall be liable.
18. USE OF NAME "XXXXXXX". The Trust shall have the non-exclusive right
to use the name "Xxxxxxx" to designate any current or future series of shares
only so long as the Adviser serves as investment manager or adviser to the Trust
with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
XXXXXXX INVESTMENTS XXXXXXX ASSET MANAGEMENT, INC.
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By :____________________________ By: ____________________________
Title: __________________________ Title: __________________________
SCHEDULE A
The Trust shall pay the Adviser, out of the assets of a Fund, as full
compensation for all services rendered, a management fee for such Fund set forth
below, based on the net assets of each Fund:
ANNUAL RATE
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FIRST $500 $500 TO OVER
MILLION $1 BILLION $1 BILLION
------- ---------- ----------
Xxxxxxx Growth and Income Fund (formerly
Xxxxxxx Asset Allocation Fund)..................0.70% 0.65% 0.60%
Xxxxxxx Large-Cap Growth Fund............................0.80 0.75 0.70
Xxxxxxx Small-Cap Growth Fund............................0.95 0.90 0.85
Xxxxxxx Communications Funds (formerly
Xxxxxxx Utility Fund)...........................1.00 0.90 0.85
Xxxxxxx Market Neutral Fund..............................1.00 1.00 1.00
Xxxxxxx Government Money Market Fund.....................0.15 0.15 0.15
The following chart sets forth the maximum amount of Total Operating
Expenses that the Adviser has agreed to permit each Fund to incur, in each case
as a percentage of average daily net assets of each Fund:
MAXIMUM TOTAL
OPERATING EXPENSE
-----------------
Xxxxxxx Growth and Income Fund (formerly
Xxxxxxx Asset Allocation Fund)................... 1.25%
Xxxxxxx Large-Cap Growth Fund............................. 1.35%
Xxxxxxx Small-Cap Growth Fund............................. 1.50%
Xxxxxxx Communications Funds (formerly
Xxxxxxx Utility Fund)............................ 1.55%
Xxxxxxx Market Neutral Fund............................... 2.18%
Xxxxxxx Government Money Market Fund...................... 0.50%
The above schedule may be amended from time to time, as evidenced by
the signatures of the officers of the Trust and the Adviser indicated below.
XXXXXXX INVESTMENTS XXXXXXX ASSET MANAGEMENT, INC.
By: ______________________________ By: ______________________________
Its: _____________________________ Its: _____________________________
Effective Date: __________________
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SCHEDULE B
As set forth in Section 7 of the Agreement, until such time as the
Adviser enters into a Subadvisory Agreement with a particular Fund that has been
approved by the Board of Trustees, the Adviser agrees to waive that portion of
its annual advisory fee set forth in Schedule A such that the annual advisory
fees will not exceed the maximum amount (expressed as a percentage of the Fund's
average daily net assets) set forth below:
XXXXXXX GROWTH AND INCOME FUND
(formerly Xxxxxxx Asset Allocation Fund)
Net Assets Annual Rate
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First $50 million ..................................... 0.70%
Next $150 million ..................................... 0.60%
Over $200 million ..................................... 0.50%
XXXXXXX LARGE-CAP GROWTH FUND
Net Assets Annual Rate
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First $50 million ..................................... 0.70%
Next $350 million ..................................... 0.60%
Over $400 million ..................................... 0.50%
XXXXXXX SMALL-CAP GROWTH FUND
Net Assets Annual Rate
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First $50 million ..................................... 0.70%
Next $150 million ..................................... 0.60%
Over $200 million ..................................... 0.50%
XXXXXXX COMMUNICATIONS FUND
(formerly Xxxxxxx Utility Fund)
Net Assets Annual Rate
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First $50 million ..................................... 0.70%
Next $150 million ..................................... 0.60%
Over $200 million ..................................... 0.50%
XXXXXXX MARKET NEUTRAL FUND
Net Assets Annual Rate
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All Assets ..................................... 1.00%
XXXXXXX GOVERNMENT MONEY MARKET FUND
Net Assets Annual Rate
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All Assets ..................................... 0.15%
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