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EXHIBIT 99.(D)(2)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 6th day of October, 2000, by and between FUND
ASSET MANAGEMENT MASTER TRUST, a Delaware business trust (hereinafter referred
to as the "Trust"), and FUND ASSET MANAGEMENT, L.P., a Delaware limited
partnership (the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust intends to engage in business as an open-end,
diversified, management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Investment Adviser is engaged principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Investment Adviser to render
management and investment advisory services to the Total Return Bond Master
Portfolio of the Trust in the manner and on the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Total Return Bond Master Portfolio of the
Trust on the terms and conditions hereinafter set forth; and
WHEREAS, the Total Return Bond Master Portfolio of the Trust serves as
the "master" portfolio for one or more "feeder" funds (each, a "Fund") that
invest all of their assets in the Total Return Bond Master Portfolio of the
Trust and that have the same investment objective and policies as the Total
Return Bond Master Portfolio of the Trust.
NOW, THEREFORE, in consideration of the promises and the covenants
hereinafter contained, the Trust and the Investment Adviser hereby agree as
follows:
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ARTICLE I
Duties of the Investment Adviser
The Trust hereby employs the Investment Adviser to act as a manager and
investment adviser of the Total Return Bond Master Portfolio of the Trust and to
furnish, or arrange for affiliates to furnish, the management and investment
advisory services described below, subject to the policies of, review by and
overall control of the Board of Trustees of the Trust, for the period and on the
terms and conditions set forth in this Agreement. The Investment Adviser hereby
accepts such employment and agrees during such period, at its own expense, to
render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Investment Adviser and its affiliates shall for all purposes herein be deemed to
be independent contractors and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed agents of the Trust.
(a) Management Services. The Investment Adviser shall perform (or
arrange for the performance by affiliates of) the management and administrative
services necessary for the operation of the Trust including administering
shareholder accounts and handling shareholder relations for the Trust. It is
understood that the Investment Adviser or its affiliates may enter into separate
agreements with each Fund for the provision of management and administrative
services necessary for the operation of each Fund. The Investment Adviser shall
provide the Trust with office space, facilities, equipment and necessary
personnel and such other services as the Investment Adviser, subject to review
by the Board of Trustees, shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement. The Investment Adviser
shall also, on behalf of the Trust, conduct relations with custodians,
depositories, transfer agents, dividend disbursing agents, other shareholder
servicing agents, pricing agents, accountants, attorneys, underwriters, brokers
and dealers, corporate fiduciaries,
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insurers, banks and such other persons in any such other capacity deemed to be
necessary or desirable. The Investment Adviser shall generally monitor the
Trust's compliance with investment policies and restrictions as set forth in the
current registration statement relating to the Trust under the Investment
Company Act (the "Registration Statement"). The Investment Adviser shall make
reports to the Board of Trustees of its performance of obligations hereunder and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Trust as it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide
(or arrange for the provision by affiliates of) the Trust with such investment
research, advice and supervision as the latter may from time to time consider
necessary for the proper supervision of the assets of the Total Return Bond
Master Portfolio of the Trust, shall furnish continuously an investment program
for the Total Return Bond Master Portfolio of the Trust and shall determine from
time to time which securities shall be purchased, sold or exchanged and what
portion of the assets of the Total Return Bond Master Portfolio of the Trust
shall be held in the various securities in which the Total Return Bond Master
Portfolio of the Trust invests or cash, subject always to the restrictions set
forth in the Declaration of Trust and the By-Laws of the Trust, as amended from
time to time, the provisions of the Investment Company Act and the statements
relating to the Total Return Bond Master Portfolio of the Trust's investment
objectives, investment policies and investment restrictions as the same are set
forth in the Registration Statement. The Investment Adviser shall make decisions
for the Total Return Bond Master Portfolio of the Trust as to the manner in
which voting rights, rights to consent to corporate action and any other rights
pertaining to the Total Return Bond Master Portfolio of the Trust's portfolio
securities shall be exercised. Should the Board of Trustees at any time,
however, make any definite determination as to investment policy and notify the
Investment Adviser thereof in writing, the Investment Adviser shall be bound by
such determination for the period, if any, specified in such notice or
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until similarly notified that such determination has been revoked. The
Investment Adviser shall take, on behalf of the Trust, all actions which it
deems necessary to implement the investment policies determined as provided
above and, in particular, to place all orders for the purchase or sale of
portfolio securities for the Trust's account with brokers or dealers selected by
it, and to that end, the Investment Adviser is authorized as the agent of the
Trust to give instructions to the Custodian of the Trust as to deliveries of
securities and payments of cash for the account of the Trust. In connection with
the selection of such brokers or dealers and the placing of such orders with
respect to assets of the Trust, the Investment Adviser is directed at all times
to seek to obtain execution and prices within the policy guidelines determined
by the Board of Trustees as set forth in the Registration Statement. Subject to
this requirement and the provisions of the Investment Company Act, the
Securities Exchange Act of 1934, as amended, and other applicable provisions of
law, the Investment Adviser may select brokers or dealers with which it or the
Trust is affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Investment Adviser may employ, retain or otherwise avail itself
of the services of other persons or entities including without limitation,
affiliates of the Investment Adviser, on such terms as the Investment Adviser
shall determine to be necessary, desirable or appropriate. However, if the
Investment Adviser chooses to retain or avail itself of the services of another
person or entity to manage assets of the Trust, such other person or entity must
be (i) an affiliate of the Investment Adviser, (ii) retained at the Investment
Adviser's own cost and expense, and (iii) retained subject to the requirements
of Section 15 of the Investment Company Act. Retention of one or more affiliated
sub-advisers, or the employment or retention of other persons or entities to
perform services, shall in no way reduce the responsibilities or obligations of
the Investment Adviser under this Agreement and the Investment Adviser shall be
responsible for all acts and omissions
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of such affiliated sub-advisers, or other persons or entities, in connection
with the performance of the Investment Adviser's duties hereunder.
(d) Notice Upon Change in Partners of the Investment Adviser. The
Investment Adviser is a limited partnership and its limited partner is Xxxxxxx
Xxxxx & Co., Inc. and its general partner is Princeton Services, Inc. The
Investment Adviser will notify the Trust of any change in the membership of the
partnership within a reasonable time after such change.
ARTICLE II
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser assumes and shall pay
for maintaining the staff and personnel necessary to perform its obligations
under this Agreement, and shall at its own expense, provide the office space,
facilities, equipment and necessary personnel which it is obligated to provide
under Article I hereof, and shall pay all compensation of officers of the Trust
and all Trustees of the Trust who are affiliated persons of the Investment
Adviser.
(b) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Total Return Bond Master Portfolio of the Trust including,
without limitation: taxes, expenses for legal and auditing services, costs of
printing proxies, stock certificates, shareholder reports and Registration
Statements, charges of the custodian, any sub-custodian and transfer agent,
expenses of portfolio transactions, Securities and Exchange Commission fees,
expenses of registering the shares under Federal, state and foreign laws, fees
and actual out-of-pocket expenses of all Trustees of the Trust who are not
affiliated persons of the Investment Adviser, accounting and pricing costs
(including the daily calculation of the net asset value), insurance, interest
and brokerage costs, litigation and other extraordinary or non-recurring
expenses, and other expenses properly payable by the Trust.
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ARTICLE III
Compensation of the Investment Adviser
(a) Investment Advisory Fee. For the services rendered, the facilities
furnished and expenses assumed by the Investment Adviser, the Trust shall pay to
the Investment Adviser at the end of each calendar month a fee at the annual
rate of 0.30 of 1.0% of the average daily net assets of the Total Return Bond
Master Portfolio of the Trust, as determined and computed in accordance with the
description of the determination of net asset value contained in the
Registration Statement of the Trust. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fee as set
forth above. Subject to the provisions of subsection (b) hereof, payment of the
Investment Adviser's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
subsection (b) hereof. During any period when the determination of net asset
value is suspended by the Board of Trustees, the average net asset value of a
share for the day prior to such suspension shall for this purpose be deemed to
be the net asset value each succeeding day until it is again determined.
(b) Expense Limitations. In the event the operating expenses of the
Total Return Bond Master Portfolio of the Trust, including amounts payable to
the Investment Adviser pursuant to subsection (a) hereof, for any fiscal year
ending on a date on which this Agreement is in effect exceed the expense
limitations applicable to the Trust imposed by applicable state securities laws
or regulations thereunder, as such limitations may be raised, lowered or waived
from time to time, the Investment Adviser shall reduce its management and
investment advisory fee by the extent of such excess and, if required pursuant
to any such laws or regulations, will reimburse the Trust in the amount of such
excess; provided, however, to the extent permitted by law, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
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commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Trust. Whenever the expenses of the Total Return
Bond Master Portfolio of the Trust exceed a pro rata portion of the applicable
annual expense limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly payment of the
fee due to the Investment Adviser. Should two or more such expense limitations
be applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Adviser's
fee shall be applicable.
ARTICLE IV
Limitation of Liability of the Investment Adviser
The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the management of the Total Return Bond Master Portfolio of the
Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, the term "Investment Adviser"
shall include any affiliates of the Investment Adviser performing services for
the Trust contemplated hereby and directors, officers and employees of the
Investment Adviser and such affiliates.
ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Trust are not to be deemed
to be exclusive: the Investment Adviser and any person controlled by or under
common control with the Investment Adviser (for purposes of this Article V
referred to as "affiliates") are free to render services to others. It is
understood that the Board of Trustees, officers, employees and shareholders of
the Trust are or may become interested in the Investment Adviser and its
affiliates, as directors, officers, employees, partners, and shareholders or
otherwise and that
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directors, officers, employees, partners, and shareholders of the Investment
Adviser and its affiliates are or may become similarly interested in the Trust,
and that the Investment Adviser and directors, officers, employees, partners,
and shareholders of its affiliates may become interested in the Trust as
shareholders or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above written
and shall remain in force for a period of two years thereafter and thereafter
continue from year to year, but only so long as such continuance is specifically
approved at least annually by (i) the Board of Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the Total Return Bond
Master Portfolio of the Trust, and (ii) a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees or by vote of a majority of the outstanding
voting securities of the Total Return Bond Master Portfolio of the Trust, or by
the Investment Adviser, on sixty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of the Trustees, or by the vote of a
majority of the outstanding voting securities of the Total Return Bond Master
Portfolio of the Trust, and (ii) a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
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ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FUND ASSET MANAGEMENT MASTER TRUST
By /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
FUND ASSET MANAGEMENT, L.P.
By /s/ Xxxxx Xxxxx-Xxxxx
Name: Xxxxx Xxxxx-Xxxxx
Title: Managing Director
