INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This AGREEMENT, made as of this /s/20th day of /s/March, 1996, by and
between Voyageur Funds, Inc., a Minnesota corporation (the "Company"), and
Marquette Trust Company, a trust company organized under the laws of the State
of Minnesota (the "Adviser").
1. INVESTMENT ADVISORY AND MANAGEMENT SERVICES. The Company hereby engages
the Adviser, and the Adviser hereby agrees to act as investment adviser for, and
to manage the affairs, business and the investment of the assets of the Voyageur
Financial Institutions ("VFI") Intermediate Duration Portfolio and the VFI Core
Portfolio series of the Company (each a "Fund" and, collectively, the "Funds").
The investment of the assets of each Fund shall at all times be subject to
the applicable provisions of the Articles of Incorporation and Bylaws of the
Company and the Registration Statement on Form N1-A of the Funds and any
representations contained in the Prospectus and Statement of Additional
Information of the Funds and shall conform to the policies and purposes of each
Fund as set forth in such Registration Statement, Prospectus and Statement of
Additional Information and (a) as interpreted from time to time by the Board of
Directors of the Company and (b) as may be amended or limited from time to time
by such Board of Directors and/or the shareholders of each Fund as permitted by
the Investment Company Act of 1940, as amended. Within the framework of the
investment policies of each Fund, and subject to such other limitations and
directions as the Board of Directors may from time to time prescribe, the
Adviser shall have the sole and exclusive responsibility for the management of
each Fund's assets and the making and execution of all investment decisions for
each Fund, provided that the Adviser shall be authorized to retain a sub-adviser
to assist the Adviser in furnishing investment advice to each Fund, and provided
further that the Adviser shall be responsible for monitoring compliance by the
sub-adviser with the investment policies and restrictions of each Fund and with
such other limitations or directions as the Board of Directors of the Company
may from time to time prescribe. The Adviser shall report to the Board of
Directors of the Company regularly at such times and in such detail as the Board
may from time to time determine to be appropriate, in order to permit the Board
to determine the adherence of the Adviser to the investment policies of each
Fund.
The Adviser shall, at its own expense, furnish the Company with suitable
office space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Funds. The Adviser shall arrange, if requested
by the Company, for officers, employees or other Affiliated Persons (as defined
in Section 2(a)(3) of the Investment Company Act of 1940, as amended and the
rules, regulations and releases relating thereto) of the Adviser to serve
without compensation from the Company as directors, officers or employees of the
Company if duly elected to such positions by Fund shareholders or directors of
the Company.
The Adviser hereby acknowledges that all records necessary in the operation
of each Fund, including records pertaining to its shareholders and investments,
are the property of the Company, and in the event that a transfer of management
or investment advisory services to someone other than the Adviser should ever
occur, the Adviser will promptly, and at its own cost, take all steps necessary
to segregate such records and deliver them to the Company.
2. COMPENSATION FOR SERVICES. In payment for all services, facilities,
equipment and personnel, and for other costs of the Adviser hereunder, the
Company shall pay to the Adviser, from the assets of the respective Fund, a
monthly investment advisory fee equivalent on an annual basis to .20% of the
average daily net assets of each Fund (the "Basic Fee"). The Basic Fee shall be
subject to adjustment based on a comparison of the respective Fund's investment
performance for the applicable performance period to the investment records of a
comparison index (individually a "Comparison Index" and, collectively, the
"Comparison Indexes"), PROVIDED, HOWEVER, that the Basic Fee shall not be
subject to any performance adjustment for the first 12 full calendar months
following commencement of a Fund's operations. Following the expiration of such
period for a Fund, the Basic Fee for such Fund shall be subject to a performance
adjustment. For purposes of calculating such performance adjustment, the
applicable performance period shall be a rolling 12-month period comprised of
the most recent calendar month and the eleven immediately preceding calendar
months. The Basic Fee, plus or minus the performance adjustment, shall be
calculated and paid to the Adviser monthly. For each Fund, no change is made to
the Basic Fee to the extent the Fund's performance falls within _.05% of the
performance of the Fund's Comparison Index during the applicable performance
period. If a Fund's performance exceeds that of its Comparison Index by .06% or
more, the Basic Fee will be increased by the product of .002% and the number of
basis points by which the Fund's performance has exceeded that of its Comparison
Index, up to a maximum increase of .15% (on an annualized basis) for performance
which exceeds the Comparison Index by .75% or more. Corresponding decreases will
be made to the Basic Fee to the extent the Fund's performance falls below that
of its Comparison Index by more than .05%, up to a maximum decrease of .15% for
performance which falls .75% or more below that of the Comparison Index. The
Comparison Index for VFI Intermediate Duration Portfolio will be the Xxxxxx
Brothers Mutual Fund (1-5 year) U.S. Government Index. The Comparison Index for
VFI Core Portfolio will be the Xxxxxx Brothers Mutual Fund Government Mortgage
Index.
The following table sets forth examples of resulting increases or decreases
to the Basic Fee on an annualized basis given various performance results:
ADJUSTMENT
PERFORMANCE OF FUND RELATIVE TO BASIC FEE
TO COMPARISON INDEXES (ANNUALIZED)
--------------------- ------------
+.75 percentage +.15%
points or more
+.50 +.10
+.25 +.05
+.05 0
0 0
-.05 0
-.25 -.05
-.50 -.10
-.75 percentage -.15
points or more
In comparing the investment performance of a Fund to the investment record
of its Comparison Index, dividends and other distributions of the Fund and
dividends and other distributions made with respect to component securities of
the Comparison Index during the performance period will be treated as having
been reinvested. The investment performance of the Fund will be calculated based
on the total return of the Fund for the applicable period, which consists of the
total net asset value of the Fund at the end of the applicable period, including
reinvestment of dividends and distributions, less the net asset value of the
Fund at the commencement of the applicable period divided by the net asset value
of the Fund at the commencement of the applicable period. Fractions of a
percentage point are recorded to the nearest whole point (to the higher whole
point if exactly one-half).
For purposes of the calculation of such fee, "average daily net assets" for
a particular period shall be determined on the basis of a Fund's net assets as
determined as of the close of each business day of the month pursuant to the
currently effective prospectus of such Fund. Such fee shall be payable on the
fifth day of each calendar month for services performed hereunder during the
preceding month. If a Fund commences operations after the beginning of a month
or this agreement terminates prior to the end of a month, the fee for such Fund
shall be pro-rated according to the proportion which such portion of the month
bears to the full month.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fee described in Section 2 hereof, each Fund shall
pay all its costs and expenses which are not assumed by the Adviser. These Fund
expenses include, by way of example, but not by way of limitation, fees of the
directors who are not employees of the investment adviser or subadviser of any
series of the Company or of any affiliate of any such investment adviser or
subadviser, expenses of directors' and shareholders' meetings, including the
cost of printing and mailing proxies, expenses of insurance premiums for
fidelity and other coverage, expenses of redemption of shares, expenses of the
issue and sale of shares (to the extent not borne by Voyageur Fund Distributors,
Inc. (the "Underwriter") under its agreement with such Fund), expenses of
printing and mailing stock certificates representing shares of such Fund,
association membership dues, charges of such Fund's custodian, and bookkeeping,
auditing and legal expenses. Each Fund will also pay the fees and bear the
expense of registering and maintaining the registration of such Fund and its
shares with the Securities and Exchange Commission and registering or qualifying
its shares under state or other securities laws and the expense of preparing and
mailing prospectuses, reports and statements to shareholders.
(b) The Underwriter shall bear all advertising and promotional expenses in
connection with the distribution of each Fund's shares, including paying for
prospectuses for new shareholders, except that a Fund may use its assets to
finance costs incurred in connection with the distribution of its shares except
pursuant to a Plan of Distribution adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (as amended, the "Act").
4. LIMIT ON EXPENSES. If the total expenses of a Fund for any fiscal year
(including the fees payable to the Adviser but excluding interest, taxes,
brokerage commissions or other costs of acquiring or disposing of any of such
Fund's portfolio securities, distribution fees, litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
such Fund's business, all to the extent permitted by applicable state law and
regulation) exceed any expense limitation imposed by applicable state law, the
Adviser shall reimburse such Fund for such excess in the manner and to the
extent required by applicable state law; provided, however, that at no time
shall the Adviser be required to make reimbursements for any fiscal period in
excess of fees received pursuant to Section 2 hereof for that same period.
5. FREEDOM TO DEAL WITH THIRD PARTIES. The Adviser shall be free to render
services to others similar to those rendered under this Agreement or of a
different nature except as such services may conflict with the services to be
rendered or the duties to be assumed hereunder.
6. REPORTS TO DIRECTORS OF THE FUND. Appropriate officers of the Adviser
shall provide the directors of the Company with such information as is required
by any plan of distribution adopted by the Company on behalf of any Fund
pursuant to Rule 12b-1 under the Act.
7. EFFECTIVE DATE, DURATION AND TERMINATION OF Agreement. This Agreement
shall become effective with respect to each Fund on the effective date of the
post-effective amendment to the Company's Registration Statement on Form N1-A
first registering shares of the Funds. Wherever referred to in this Agreement,
the vote or approval of the holders of a majority of the outstanding shares of a
Fund shall mean the lesser of (i) the vote of 67% or more of the voting shares
of such Fund present at a regular or special meeting of shareholders duly
called, if more than 50% of the Fund's outstanding voting shares are present or
represented by proxy, or (ii) the vote of more than 50% of the outstanding
voting shares of such Fund.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect with respect to each Fund for a period of two years from the
date of its execution, and thereafter shall continue in effect only so long as
such continuance is specifically approved at least annually (i) by the Board of
Directors of the Company or by the vote of the holders of a majority of the
outstanding voting securities of the applicable Fund, and (ii) by the vote of a
majority of the directors of the Company who are not parties to this Agreement
or "interested persons", as defined in the Act, of the Adviser, the Sub-Adviser
or the Company, cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated with respect to either Fund at any time,
without the payment of any penalty, by the vote of the Board of Directors of the
Company or by the vote of the holders of a majority of the outstanding shares of
the respective Fund, or by the Adviser, upon sixty (60) days written notice to
the other party. Any such termination may be made effective with respect to both
the investment advisory and management services provided for in this Agreement
or with respect to either of such kinds of services. This Agreement shall
automatically terminate in the event of its assignment as defined in the
Investment Company Act of 1940 and the rules thereunder, provided, however, that
such automatic termination shall be prevented in a particular case by an order
of exemption from the Securities and Exchange Commission or a no-action letter
of the Staff of the Commission to the effect that such assignment does not
require termination as a statutory or regulatory matter. This Agreement shall
automatically terminate with respect to a Fund upon completion of the
dissolution, liquidation and winding up of such Fund.
8. LIMITATION OF LIABILITY. The Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by any Fund or its
shareholders in connection with the performance of its duties under this
Agreement, except a 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 duties under this Agreement.
9. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement shall
be effective until approved by the vote of: (i) the majority of the directors of
the Company who are not parties to this Agreement or "interested persons" (as
defined in the Act) of the Adviser or of the Company cast in person at a meeting
called for the purpose of voting on such approval; and (ii) the holders of a
majority of the outstanding shares of the applicable Fund.
10. NOTICES. Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Company and the Adviser have caused this Agreement
to be executed by their duly authorized officers as of the day and year
indicated below.
VOYAGEUR FUNDS, INC.
Date: /s/03/20/96 By: /s/ Xxxx X. Xxxx
-------------------------
Xxxx X. Xxxx
Title: /s/ President
--------------------
President
MARQUETTE TRUST COMPANY
Date: /s/03/20/96 By /s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
Title: /s/ President
--------------------
President
