Exhibit (d)4.1
Portfolio Management Contract
[Insert Money Manager's Name]
And
Xxxxx Xxxxxxx Investment Company
Effective Date:
Termination Date: April 30, _____
PORTFOLIO MANAGEMENT CONTRACT
Dated ________________________________, _____.
Between:
Xxxxx Xxxxxxx Investment Company ("Investment Company") and Xxxxx Xxxxxxx
Investment Management Company, as fiduciary for Investment Company ("FRIMCo");
and
____________________________ ("Money Manager").
WHEREAS, Investment Company, a Massachusetts business trust, is a diversified
open-end management investment company registered as an investment company under
the Investment Company Act of 1940 (the "Act") and is subject to the rules and
regulations promulgated thereunder (the "Rules"). The Investment Company is a
"series" company. The Investment Company issues shares evidencing beneficial
interests in separate investment portfolios, each with different investment
objectives and policies (individually, a "Fund" and collectively, the "Funds").
WHEREAS, XXXXXx acts as the advisor and administrator of the Investment Company
pursuant to the terms of an Advisory Agreement and an Administrative Agreement,
and is an "investment adviser" to the Investment Company as defined in Section
2(a)(20) of the Act. FRIMCo is responsible for the day-to-day management and
administration of the Investment Company and for the coordination of investment
of each Fund's assets in portfolio securities. However, specific portfolio
purchases and sales for each Fund's investment portfolio, or a portion thereof,
are to be made by portfolio management organizations recommended and selected by
XXXXXx, and appointed by, and subject to the approval of, the Board of Trustees
of the Investment Company (the "Board").
Now, therefore, in consideration of the foregoing and of the mutual
covenants contained herein, the parties agree as follows:
1. Appointment as a Money Manager. Investment Company, being duly
authorized, hereby appoints and employs Money Manager as a discretionary money
manager to the Fund(s) designated on Exhibit A, on the terms and conditions set
forth herein, for those assets of the Fund(s) which FRIMCo, as a fiduciary for
Investment Company, determines to assign to Money Manager (those assets being
referred to for the Fund(s) individually and collectively as the "Fund
Account").
2. Acceptance of Appointment. Money Manager accepts the appointment as a
discretionary money manager and agrees to manage the Fund Account in accordance
with the terms and conditions of this Contract.
3. Standard of Performance. The Money Manager shall exercise all due
diligence and vigilance in carrying out its functions, powers and duties under
this Contract including the degree of care, diligence and skill that a
reasonably prudent manager would exercise under the circumstances.
4. Portfolio Management Services of Money Manager.
(a) Money Manager is hereby employed and authorized to select portfolio
securities for investment by the Fund Account, to determine to purchase and
sell securities of the Fund Account, and upon making any purchase or sale
decision, to place orders for the execution of such portfolio transactions
in accordance with this Contract, including Exhibit B hereto (as amended
from time to time).
(b) In providing portfolio management services to and in exercising any
investment discretion for the Fund Account, Money Manager shall be subject
to and shall comply with:
(i) the Act, the Rules and any other requirement of state or federal laws
including the rules, regulations and policy statements approved or
issued by the Securities and Exchange Commission thereunder and all
applicable securities laws in the jurisdiction where the Money
Manager is located or in which the Fund Account invests, as amended
from time to time (collectively, "Relevant Law");
(ii) the Investment Guidelines (as defined in Section 5) of the Fund
Account furnished pursuant to Section 5,
(iii) this Contract,
(iv) the investment restrictions, objectives, strategies and policies set
forth in the then current prospectus and statement of additional
information of the Fund(s), as amended from time to time (the
"Disclosure Documents"),
(v) the supervision and control of the Board,
(vi) such specific instructions as the Board, Investment Company or FRIMCo
may adopt and communicate to Money Manager, and
(vii) any other instructions from FRIMCo.
Money Manager shall immediately notify Investment Company and FRIMCo if it
is unable to comply with any of the foregoing.
(c) Money Manager shall monitor its compliance with the Investment Guidelines
and the Disclosure Documents at all times and shall report to Investment
Company immediately any transactions or holdings that may be in violation
of the Investment Guidelines or the Disclosure Documents. Money Manager
shall have the sole obligation to correct any
violation of the Investment Guidelines and shall reimburse Investment
Company, FRIMCo, the Fund(s) or Fund Account for any and all losses, costs
or damages resulting from such violation if such violation was due to the
negligence of the Money Manager.
(d) If for any reason which is beyond the control of the Money Manager,
including market movements, contributions to or withdrawals from the Fund
Account or a change in the nature of any investment (whether through change
in business activity or credit rating), the Fund Account ceases to comply
with the Investment Guidelines or the Disclosure Documents, then the Money
Manager must promptly remedy the non-compliance.
(e) FRIMCo may, at any time, instruct Money Manager in the performance of Money
Manager's functions. Money Manager is not required to act on any
instructions which it knows would violate Relevant Law, provided it advises
FRIMCo in writing and provides reasonable detail regarding the reason(s)
for noncompliance.
(f) At Investment Company's or XXXXXx's reasonable request, Money Manager will
consult with Investment Company or with FRIMCo, with respect to any
decision made by it with respect to the investments of the Fund Account.
(g) FRIMCo, in its sole discretion, may authorize a withdrawal from the Fund
Account in cash or in assets of the Fund Account. Money Manager must use
reasonable endeavors to satisfy such instruction promptly.
(h) FRIMCo must advise Money Manager of any additional money made available for
investment and management pursuant to this Contract, prior to transfer into
the Fund Account's account at the Custodian.
[X]
5. Investment Objectives, Policies and Restrictions. The Investment Company
shall provide Money Manager with a statement of the investment objectives and
policies of the Fund Account and any specific investment restrictions applicable
thereto as established by the Investment Company, as amended from time to time
(the "Investment Guidelines") and with the Disclosure Documents. Investment
Company retains the right, on written notice to Money Manager from the
Investment Company or FRIMCo, to modify the Investment Guidelines in any manner
at any time and Money Manager shall comply with the amended Investment
Guidelines in accordance with the timelines established for such change. The
Investment Guidelines, as amended from time to time, are hereby incorporated
into this Contract.
6. Transaction Procedures.
(a) All transactions in the assets of the Fund Account will be consummated by
payment to or delivery by State Street Bank & Trust Company (State Street
or any successor custodian identified in writing by Investment Company to
Money Manager, the "Custodian"), or such depositories, or agents, as may be
designated by the Custodian, as custodian for the Investment Company, of
all cash and/or securities due to or from the Fund Account. Money Manager
shall not have possession or custody of any assets of the Fund Account.
(b) Money Manager shall advise Custodian and confirm in writing to Investment
Company all investment orders for the Fund Account placed by it with
brokers and dealers at the time and in the manner and as set forth in
Exhibit B hereto (as amended from time to time) and shall reconcile its
Fund Account records to the month end statements from the Custodian within
the later of ten (10) business days following month end or three (3)
business days after receipt and resolve any differences with the Custodian.
Money Manager will provide copies of these monthly reconciliations to
Investment Company if requested.
(c) Investment Company shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated
by Money Manager. Investment Company shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and upon
giving proper instructions to the Custodian, Money Manager shall have no
responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
7. Allocation of Brokerage. Subject to the provisions of this Section 7 and
any restrictions described in Section 4, Money Manager shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by Money Manager, and for the selection of the markets on/in which the
transaction will be executed.
(a) In doing so, the Money Manager's primary objective shall be to seek to
select a broker-dealer that can be expected to obtain the best net price
and execution for the Investment Company. However, this responsibility
shall not be deemed to obligate the Money Manager to solicit competitive
bids for each transaction; and Money Manager shall have no obligation to
seek the lowest available commission cost to Investment Company, so long as
Money Manager believes in good faith, based upon its knowledge of the
capabilities of the firm selected, that the broker or dealer can be
expected to obtain the best price on a particular transaction and that the
commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available by the
broker to Money Manager viewed in terms of either that particular
transaction or of Money Manager's overall responsibilities with respect to
its clients, including the Investment Company, as to which Money Manager
exercises investment discretion, ]notwithstanding that Investment Company
may not be the direct or exclusive beneficiary of any such services or that
another broker may be willing to charge Investment Company a lower
commission on the particular transaction.
(b) FRIMCo shall retain the right to request that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by FRIMCo and Money
Manager, shall be executed by brokers and dealers which provide brokerage
or research services to FRIMCo, or as to which an ongoing relationship will
be of value to FRIMCo in its management of the Fund(s), which services and
relationship may, but need not, be of direct benefit to the Fund Account,
so long as (i) Money Manager believes in good faith, based upon its
knowledge of the capabilities of the firm selected, that the broker or
dealer can be expected to obtain the best price on a particular transaction
and (ii) FRIMCo determines that the commission cost is reasonable in
relation to the total quality and
reliability of the brokerage and research services made available to FRIMCo
for the benefit of its clients for which it exercises investment
discretion, notwithstanding that the Fund Account may not be the direct or
exclusive beneficiary of any such service or that another broker may be
willing to charge a lower commission on the particular transaction.
(c) Money Manager agrees that it will not execute any portfolio transactions
with a broker or dealer which is an "affiliated person" (as defined in the
Act) of the Investment Company without the prior written approval of the
Investment Company. Investment Company agrees that it will provide Money
Manager with a list of brokers and dealers that are "affiliated persons" of
the Investment Company.
(d) As used in this Section 7, "brokerage and research services" shall have the
meaning defined in Section 28(e)(3) of the Securities Exchange Act of 1934.
8. Exercise of Voting Rights. Unless FRIMCo gives written instructions to
the contrary, Money Manager shall vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Fund Account may be
invested. Money Manager shall use its best good faith judgment to vote such
proxies in a manner which best serves the interests of the Investment Company's
shareholders.
9. Reports and Records.
(a) Money Manager shall:
(i) maintain on behalf of the Investment Company the records listed in
Exhibit C hereto (as amended from time to time),
(ii) provide, upon request, information which is complete and accurate in
all material respects to the extent the necessary information is
within the reasonable control of Money Manager, as to the making of,
and return on, the investments in the Fund Account and as is
necessary to enable Investment Company to assess the capability of
the Money Manager to manage the investments of the Fund Account, and
otherwise to comply with Relevant Law,
(iii) keep the Fund Account under review and confer with Investment Company
as Investment Company may reasonably request regarding the investment
and management of the Fund Account,
(iv) provide Investment Company with such periodic reports concerning the
status of the Fund Account as Investment Company may from time to
time reasonably request,
(v) With the consent of Investment Company, or as required by law upon
notice to Investment Company, give any information and assistance and
make available any records relating to the Fund Account reasonably
required by the auditors of
the Fund, or to any other governmental or regulatory authority or as
required by law or any court of competent jurisdiction.
(vi) Promptly provide to Investment Company any other information
required by Investment Company to fulfill Investment Company's
obligation under the its Master Trust Agreement or any Relevant Law
and complete returns to regulatory authorities, including taxation
authorities, and, if requested by Investment Company, promptly
provide the information required by Investment Company to fulfill
its obligations.
(vii) Provide access to, and a copy of, the accounts and other records
relating to the Fund Account whenever reasonably requested by
Investment Company to any person duly authorized by Investment
Company.
(viii) within ten (10) business days of each calendar quarter end, Money
Manager's compliance officer shall execute and deliver a compliance
questionnaire, the current form of which is attached as Exhibit G,
certifying that no material breaches of policy or procedures have
occurred in relation to the Fund Account.
(b) Investment Company shall provide Money Manager with such periodic reports
concerning the status of the Fund Account as Money Manager may from time to time
reasonably request.
10. Fees for Services. The compensation of Money Manager for its services
under this Contract shall be calculated and paid by XXXXXx, acting as a
fiduciary for Investment Company, in accordance with the attached Exhibit D. To
the extent that the Investment Company, as principal, has discharged or been
relieved of, its duty to pay over to FRIMCo, by reason of its payment of FRIMCo,
in its capacity as a fiduciary for Investment Company, any or all amounts
payable to the Money Manager, the Money Manager agrees to look to FRIMCo for
payment of amounts payable to Money Manager hereunder. Money Manager xxxxxx
agrees to contact the Secretary of the Investment Company if payment is not
received from FRIMCo. Money Manager shall account to Investment Company for any
monetary benefit, fee or commission received by it or any affiliate in relation
to the investment of the Fund Account.
11. Other Investment Activities of Money Manager. Investment Company
acknowledges that Money Manager, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities ("Affiliated
Accounts"). Subject to the provisions of Section 3 hereof, Investment Company
agrees that Money Manager or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from advice given or the timing or nature
of action taken with respect to the Fund Account, provided that Money Manager
acts in good faith, and provided, further, that it is Money Manager's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
Account over a period of time on a fair and equitable basis relative to the
Affiliated Accounts, taking into account the investment objectives and policies
of the Fund Account and any specific investment restrictions applicable thereto.
Investment Company acknowledges that one or more of the Affiliated Accounts may
at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Fund Account may have an interest from time to time, whether in
transactions which may involve the Fund Account or otherwise. Money Manager
shall have no obligation to acquire for the Fund Account a position in any
investment which any Affiliated Account may acquire, and the Investment Company
shall have no first refusal, coinvestment or other rights in respect of any such
investment, either for the Fund Account or otherwise.
12. Certificate of Authority. Each party shall provide to the other from
time to time a certified list of officers and employees who are authorized to
act on its behalf (the "Authorized Persons"). Each party may rely on any
instruction that it reasonably believes to have been given by an Authorized
Person. Exhibit H sets forth those persons who are authorized to (a) execute
this Contract and any amendments to the Contract and (b) amend the Investment
Guidelines.
13. Limitation of Liability. Money Manager shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Contract, or in accordance with (or
in the absence of) specific directions or instructions from Investment Company;
provided, however, that such acts or omissions shall not have resulted from
Money Manager's willful misfeasance, bad faith or negligence, violation of the
standard of care established by and applicable to Money Manager in its actions
under this Contract, or breach of its duty or of its obligations hereunder.
Notwithstanding the forgoing, federal and state securities laws (and ERISA if
applicable) impose liability under certain circumstances on persons who act in
good faith, and therefore nothing herein shall in any way constitute a waiver or
limitation of any rights which Investment Company and FRIMCo may have under
federal or state securities laws of the United States of America or the rights
which may not be waived; under any other applicable law (including ERISA if
applicable).
14. Confidentiality. Subject to the right of each Money Manager and
Investment Company to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction over it, the parties hereto
shall treat as confidential all information pertaining to the Fund Account and
the actions of each Money Manager and Investment Company in respect thereof.
15. Assignment. No assignment, as that term is defined in Section 2(a)(4)
of the Act, of this Contract shall be made by Money Manager, and this Contract
shall terminate automatically in the event that it is assigned. Money Manager
shall notify Investment Company in writing sufficiently in advance of any
proposed change of control, as defined in Section 2(a)(9) of the Act, as will
enable Investment Company to: (a) consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur, (b) take the steps necessary to enter
into a new Contract with Money Manager and (c) create, file and deliver a
supplement to its Disclosure Documents. Money Manager agrees to bear the
reasonable expenses of supplementing the Disclosure Documents and any marketing
or other materials and of notifying Fund(s) shareholders and regulators of any
such assignment by Money Manager or change in control of Money Manager as
Investment Company reasonably deems necessary.
16. Representations, Warranties and Agreements of the Investment Company.
The Investment Company represents, warrants and agrees that:
(a) Money Manager has been duly appointed by the Board to provide investment
services to the Fund Account as contemplated hereby.
(b) Investment Company will deliver to Money Manager a true and complete copy
of its current Disclosure Documents as effective from time to time, such
other documents or instruments governing the investments of Fund Account,
and such other information as is necessary for Money Manager to carry out
its obligations under this Contract.
(c) The organization of the Investment Company and the conduct of the business
of Fund(s) and the Fund Account as contemplated by this Contract, complies,
and shall at all times comply, with the requirements imposed upon the
Investment Company by applicable law.
17. Representations, Warranties and Agreements of Money Manager. Money
Manager represents, warrants and agrees that:
(a) Money Manager is registered as an "investment adviser" under the Investment
Advisers Act of 1940 ("Advisers Act") or an "insurance company" as defined
in Section 202(a)(12) of the Advisers Act.
(b) Money Manager will maintain, keep current and preserve on behalf of the
Investment Company, in the manner required or permitted by the Act, the
records identified in Exhibit C. Money Manager agrees that such records
(other than those required by No. 4 of Exhibit C) are the property of the
Investment Company, and will be surrendered to the Investment Company
promptly upon request.
(c) Money Manager has adopted, maintains and enforces a written code of ethics
complying with the requirements of Rule 17j-1 under the Act, will provide
to the Investment Company a copy of the code of ethics and evidence of its
adoption, and will make such reports to the Investment Company as required
by Rule 17j-1 under the Act.
(d) If Money Manager is a partnership, Money Manager will notify the Investment
Company of any changes in the membership of its partnership within a
reasonable time after such change.
(e) It is not currently the subject of, and has not been the subject of during
the last three years, any enforcement action by a regulator.
(f) It maintains insurance coverage in an appropriate amount and shall upon
request provide to Investment Company any information it may reasonably
require concerning the amount of or scope of such insurance.
(g) Money Manager is not, except as set forth in Exhibit F hereto, and will not
become a party to any non-compete agreement or any other agreement,
arrangement, or
understanding that would restrict, limit, or otherwise interfere with the
ability of FRIMCo or the Investment Company or any of their affiliates to
employ or engage any person or organization, now or in the future, to
manage the Fund Account, any other Investment Company assets, or any other
assets managed by FRIMCo or any of its affiliates.
18. Amendment. This Contract may be amended at any time, but only by
written agreement between Money Manager and Investment Company, which amendment,
other than amendments to Exhibits B and C, must be approved by the Board in the
manner required by the Act. The Investment Guidelines may be amended by specific
written instruction from an Authorized Person of FRIMCo to the Money Manager.
19. Effective Date; Term. This Contract shall become effective for the
Fund(s) on the effective date set forth on the cover page of this Contract, and
shall continue in effect until the termination date set forth on the cover page
of this Contract. Thereafter, the Contract shall continue in effect for
successive annual periods only so long as its continuance has been specifically
approved at least annually by the Board in the manner required by the Act.
20. Termination.
(a) This Contract may be terminated without the payment of any penalty (i) at
any time by the Investment Company upon written notice to the Money
Manager, and (ii) by Money Manager upon thirty (30) days written notice to
the Investment Company.
(b) Termination of this Contract does not affect any:
(i) Transactions properly entered into prior to termination;
(ii) Claims by Money Manager in respect of accrued management fees and
expenses incurred in respect of the period prior to termination; or
(iii) Other claims which either party may have against the other.
(c) Promptly after any written notice of any termination of this Contract,
Money Manager shall:
(i) Notify Investment Company and the Custodian of any transactions that
remain unsettled as of the termination date;
(ii) Notify Investment Company and the Custodian of any fees, charges and
expenses due Money Manager through the termination date;
(iii) Deliver to Investment Company (or as Investment Company directs)
copies of all records which may be reasonably required by Investment
Company in respect of the Fund Account; and
(iv) Provide Investment Company with a report on the Fund Account as of
the termination date, including all transactions in the Fund Account
since the last report.
Investment Company will take all reasonable steps to facilitate the
transfer of the Fund Account from Money Manager.
21. Applicable Law. To the extent that state law shall not have been
preempted by the provisions of any laws of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Contract
shall be administered, construed, and enforced according to the laws of the
State of Washington excluding the laws relating to conflicts of laws.
22. No Waiver. No failure to exercise and no delay in exercising any right,
power or remedy under this Contract will operate as a waiver. Nor will any
single or partial exercise of any right, power or remedy preclude any other or
further exercise of that or any other right, power or remedy.
23. Entire Agreement. This Contract contains the entire agreement between
the parties with respect to its subject matter. It supersedes all earlier
conduct by the parties or prior agreement between the parties with respect to
its subject matter.
24. Severance. Any provision of this Contract that is prohibited or
unenforceable in any jurisdiction will be ineffective in that jurisdiction to
the extent of the prohibition or unenforceability. That will not invalidate the
remaining provisions of this Contract nor affect the validity or enforceability
of that provision in any other jurisdiction.
25. Counterparts. This Contract may be executed in any number of
counterparts. All counterparts taken together will be deemed to constitute one
document.
26. Notices.
(a) The Money Manager shall (i) notify Investment Company immediately of any
instruction given to it pursuant to the terms of this Contract (including
the Investment Guidelines) or of any Relevant Law which has not been
complied with; (ii) notify Investment Company immediately of any event
having a significant adverse effect on the financial position of the Fund
Account, with such particulars as Investment Company may reasonably require;
and (iii) notify Investment Company immediately if Money Manager is , or if
Money Manager is of the opinion that it may soon be, in breach of any of the
representations, warranties or agreements set out in this Contract.
(b) Any notice given under this Contract shall be in writing and shall be sent
to the address or facsimile number as set out in Exhibit I or to any other
address or facsimile number that either party may specify in writing to the
other. A notice shall be deemed to have been delivered: (i) in the case of
delivery in person or by post or by reputable courier service, when
delivered, received or left at the party's address; and (ii) in the case of
delivery by facsimile, on production of a transmission report by the machine
from which the facsimile was sent which indicates that the facsimile was
sent in its entirety to the number of the recipient.
If delivery or receipt occurs on a day which is not a business day or is later
than 4:00 p.m. (local time) it shall be taken to have been duly given at the
commencement of the next business day.
27. Notice of Liability Letter. Money Manager will notify, in writing, any
organization with whom it places orders for the execution of Investment Company
portfolio transactions that the organization will be: (i) executing portfolio
transactions of a Massachusetts business trust; and (ii) that the Investment
Company's Master Trust Agreement contains an express disclaimer of shareholder,
officer or Trustee liability for acts or obligations of the Investment Company
and requires that all obligations of the Investment Company be satisfied out of
its assets. Mailing a notice substantially similar to Exhibit E will be deemed
to be compliance with this Section 27.
28. Master Trust Agreement Limitation of Liability. The Master Trust
Agreement dated July 26, 1984, as amended from time to time, establishing the
Investment Company, which is hereby referred to and a copy of which is on file
with the Secretary of The Commonwealth of Massachusetts, provides that the name
Xxxxx Xxxxxxx Investment Company means the Trustees from time to time serving
(as Trustees but not personally) under said Master Trust Agreement. It is
expressly acknowledged and agreed that the obligations of the Investment Company
hereunder shall not be binding upon any of the shareholders, Trustees, officers,
employees or agents of the Investment Company, personally, but shall bind only
the trust property of the Investment Company, as provided in its Master Trust
Agreement. The execution and delivery of this Contract has been authorized by
the Trustees of the Investment Company and signed by an officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Investment Company as
provided in its Master Trust Agreement.
This Portfolio Management Contract is executed effective as of the date set
forth on the cover page hereof.
[Money Manager] Xxxxx Xxxxxxx Investment Company
Xxxxx Xxxxxxx Investment Management
Company, as a fiduciary for Xxxxx
Xxxxxxx Investment Company
BY: __________________________ BY: _____________________________________
Xxxxxx X. Xxxxxx, CFA
Director, Portfolio Implementation
DATE: ________________________ DATE: ____________________________________
EXHIBITS: A. Fund(s) Subject to the Contract
B. Operational Procedures (including Schedules 1 and 2)
C. Records to be Maintained by the Money Manager
X. Xxxx for Investment Management Services
E. Notice of Liability Letter
F. Description of Money Manager's Non-Compete Agreement
G. Form of Quarterly Compliance Questionnaire
H. Authorized Persons
I. Notice Information
EXHIBIT A
Funds Subject to Portfolio Management Contract
A-1
EXHIBIT B
OPERATIONAL PROCEDURES
Money Manager shall abide by certain rules and procedures in order to minimize
operational problems. Money Manager will be required to have various records and
files (as required by regulatory agencies) at their offices. Money Manager will
have to maintain a certain flow of information to State Street Bank & Trust
Company, the custodian bank for Investment Company ("Custodian").
Money Manager will be required to furnish the Custodian with daily information
as to executed trades. The Custodian should receive this data no later than the
morning following the day of the trade. The necessary information should be
transmitted to the Custodian (1) via facsimile machine with a cover sheet
including the number of pages sent (the direct line to the facsimile machine is
000-000-0000, alternate number of 617-985-1717) or (2) via an electronic
communications system ("System") approved by the Custodian that meets the
following criteria:
[X] The System must provide a method by which the Custodian can reasonably
ensure that each communication received by it through the System
actually originated from Money Manager.
[X] Only persons properly authorized by Money Manager's senior operations
officer shall be authorized to access the System and enter
information, and Money Manager must employ reasonable procedures to
permit only authorized persons to have access to the System.
[X] Money Manager will create separate System files containing the daily
executed securities trade information with respect to each Fund
Account it manages, or Money Manager will transmit separately the
trades for each such portfolio.
[X] The Custodian, through System or otherwise, will provide to Money
Manager prompt certification or acknowledgment of the Custodian's
receipt of each transmission by Money Manager of executed trade
information.
[X] If the System malfunctions, Money Manager will transmit all trade
information via facsimile transmission.
Upon receipt of brokers' confirmations, Money Manager or the Custodian will be
required to notify the other party if any differences exist. The reporting of
trades by the Money Manager to the Custodian must include the following:
[X] Purchase or Sale
[X] Security name
[X] Number of shares or principal amount
[X] Price per share or bond
[X] Commission rate per share or bond, or if a net trade
[X] Executing broker, including their DTC Fins number
[X] Trade date
B-1
[X] Settlement date
[X] Bank Identifier Codes (BIC's), for international securities only
[X] If security is not eligible for DTC
[X] This information can be reported using your forms, if applicable
When opening accounts with brokers for Investment Company, the account should be
a cash account. No margin accounts are to be maintained. The broker should be
advised to use the Custodian IDC's ID system number (No. 20997) to facilitate
the receipt of information by the Custodian. If this procedure is followed, DK
problems will be held down to a minimum and additional costs of security trades
will not become an important factor in doing business. Delivery and receipt
instructions are attached as Schedule 1.
Money Manager will be required to submit to the Custodian a daily trade
authorization report, either through a System or, if a facsimile transmission is
used, on a form signed by two authorized individuals prior to settlement date
and a list of authorized persons with specimen signatures must have previously
been sent to the Custodian (see Schedule 2). The daily trade authorization
report will contain information on which the Custodian can rely to either accept
delivery or deliver out of the account, securities as per Money Manager trades.
If facsimile transmission is used, a preprinted form will be supplied to Money
Manager by Investment Company, or Money Manager can use an equivalent form
acceptable to the Custodian and Investment Company.
B-2
Schedule 1
Mailing Instructions and Delivery Instructions:
Confirmation Instructions (Copy of Broker Advice):
State Street Bank and Trust Company
Mutual Fund Services
0000 Xxxxxxxx Xxxxx (X0X)
Xxxxx Xxxxxx, XX 00000
Attn: Fund Name/Fund Number
For the account of Xxxxx Xxxxxxx Investment Company
(FUND NAME)
Delivery Instructions:
All DTC Eligible Securities:
Depository Trust Company (DTC) #997 Custodian Services
#20997 Agent Bank
All Ineligible DTC Securities (i.e., Commercial Paper)
State Street Bank and Trust Company
State Street Boston-Securities Corp.
00 Xxxxxxxx
Xxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
"VS Payment" (Federal Funds on Commercial Paper Only)
For the account of Xxxxx Xxxxxxx Investment Company
(FUND NAME)
All Government Issues:
Delivered through Book Entry of Federal Reserve Bank to:
State St Bos/Spec/Fund Name/Fund #
(VS Payment Federal Funds)
Foreign Holdings:
Please confer with Xxxx Xxxxx, State Street Bank,
(Phone: 000-000-0000) to obtain delivery instructions
of the State Street Global Custody Network
B-3
Schedule 2
EXAMPLE OF AUTHORIZED SIGNATURE LETTER
(To Be Typed on Your Letterhead)
[DATE]
State Street Bank and Trust
Mutual Fund Services
0000 Xxxxxxxx Xxxxx (X0X)
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx Investment Company
RE: Persons Authorized to Execute Trades For The ___________________
Fund
The following list of individuals are authorized to execute and report trade
instructions on behalf of the Fund. Should there be any changes to the
authorized persons listed below, we will notify you immediately of those
changes.
NAME SIGNATURE
Sincerely yours,
[Insert Money Manager's Name]
B-4
EXHIBIT C
RECORDS TO BE MAINTAINED BY MONEY MANAGER
*1. A record of each brokerage order, and all other portfolio purchases and
sales, given by Money Manager or on behalf of the Investment Company for,
or in connection with, the purchase or sale of securities, whether executed
or unexecuted. Such records shall include:
A. The name of the broker,
X. The terms and conditions of the order, and of any modification or
cancellation thereof,
C. The time of entry or cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of the Investment
Company (1940 Act Rule, 31a-1(b)(5) and (6)).
*2. A record for each fiscal quarter, completed within ten (10) days after the
end of the quarter, showing specifically the basis or bases upon which the
allocation of orders for the purchase and sale of portfolio securities to
brokers or dealers, and the division of brokerage commissions or other
compensation on such purchase and sale orders. The record:
A. Shall include the consideration given to:
(i) The sale of shares of the Investment Company.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Investment Company,
(b) The Investment Management Company,
(c) Yourself (i.e., the Money Manager), and
(d) Any person other than the foregoing.
(iii) Any other considerations other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
X. Xxxxx describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
C-1
D. The identities of the persons responsible for making the determination
of such allocation and such division of brokerage commissions or other
compensation (1940 Act, Rule 31a-1(b)(9)).
*3. A record in the form of an appropriate memorandum identifying the person or
persons, committees, or groups authorizing the purchase or sale of
portfolio securities. Where an authorization is made by a committee or
group, a record shall be kept of the names of its members who participate
in the authorization. There shall be retained as part of this record any
memorandum, recommendation, or instruction supporting or authorizing the
purchase or sale of portfolio securities (1940 Act, Rule 31a-1(b)(10)) and
such other information as is appropriate to support the authorization.**
4. Such accounts, books and other documents as are required to be maintained
by registered investment advisers by rule adopted under Section 204 of the
Investment Advisers Act of 1940, to the extent such records are necessary
or appropriate to record Money Manager's transactions with the Investment
Company. (1940 Act, Rule 31a-1(f)).
_____________________
* Maintained as property of the Investment Company pursuant to 1940 Act Rule
31a-3(a).
** Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendations, i.e., buy, sell, hold), and any internal
reports or portfolio manager reviews.
C-2
EXHIBIT D
XXXXX XXXXXXX INVESTMENT COMPANY
FEES FOR INVESTMENT MANAGEMENT SERVICES
[INSERT MONEY MANAGER'S NAME]
[INSERT FUND NAME]
[redacted]
D-1
EXHIBIT E
Gentlemen:
Xxxxx Xxxxxxx Investment Company, a Massachusetts business trust (the "Trust")
and an SEC-registered investment company, has requested that I correspond with
you concerning purchases and/or sales of the Trust's portfolio instruments that
will be made on behalf of the Trust with your organization.
The Trust is required under its Master Trust Agreement to inform you that
although the Trust is organized as a Massachusetts business trust, the Trust's
Master Trust Agreement contains an express disclaimer of shareholder, officer
and trustee liability for acts or obligations of the Trust and requires that all
obligations of the Trust be satisfied out of its assets. The purpose of this
disclaimer is for the Trust's shareholders, officers and Trustees to have the
same protection against being liable for the Trust's obligations as
shareholders, officers and Directors of a corporation. The responsibility of the
Trust for its transactions with you is not changed by this notice. No action is
needed on your part in response to this notice.
Should you have any questions concerning the information contained herein,
please contact Xxxxxx Xxxxxx at (000) 000-0000.
Sincerely yours,
E-1
EXHIBIT F
DESCRIPTION OF MONEY MANAGER'S NON-COMPETE AGREEMENT
F-1
EXHIBIT G
Xxxxx Xxxxxxx Investment Company (FRIC) and Xxxxxxx Insurance Funds (RIF)
Quarterly Portfolio Manager Questionnaire
For the Quarter Ended March 31, 2001
================================================================================
Whenresponding to the following questions, please respond only in regard to
the holdings or transactions during the quarter ended March 31, 2001. For
each question that refers to "Portfolio," please respond only in regard to
the assets which you manage.
--------------------------------------------------------------------------------
Please Fax or e-mail to: Xxxx XxXxxxx at (000) 000-0000 or xxxxxxxx@xxxxxxx.xxx
no later than 4/15/02
--------------------------------------------------------------------------------
Firm Name Specifically Identify
And Address EACH Portfolio
Under Management
_____________________________ ________________________
_____________________________ ________________________
_____________________________ ________________________
_____________________ ________________
Please indicate compliance contact that future correspondence should be
sent to:
Name ____________________
Title ____________________
Telephone # ____________________
Fax # ____________________
E-mail ____________________
G-1
CERTIFICATION
I, _____________________________________, in my capacity as
______________________ of _______________________________ certify that the
following answers are true and correct.
___________________________________
Name of Firm
By:________________________________
___________________________________
Title
___________________________________
Date
G-2
1. Repurchase Agreement Guidelines. ICA (S)12(d)(3). Has the portfolio entered
into any Repurchase or Tri-Party Repurchase transactions?
[_] YES [_] NO
If yes, did the transactions comply with FRIC and RIF procedures?
[_] YES [_] NO
2. Transactions with Affiliated Persons. SEC Rules 17a-7; 17e-1. In accordance
with the procedures established by the board of trustee/1/.
A. Has the portfolio engaged in any Rule 17a-7 transactions?
[_] YES [_] NO
If yes, and you have not previously forwarded a completed Rule 17a-7
Transaction Form as required by the procedures outlined in the Money
Manager Compliance Manual, please provide it with your response to this
questionnaire.
B. Has the Portfolio engaged in any Rule 17e-1 (affiliated brokerage)
Transactions?
[_] YES [_] NO
If yes, please provide a statement of these transactions which includes
the following information.
Fund Name; Buy or Sell; Trade date; Affiliated broker; Security name;
Share amount; Commission paid; Principal value; Commission per share
3. Transactions with Affiliated Underwriters. SEC Rule 10f-3.
Has the Firm purchased any securities pursuant to Rule 10f-3/1/?
[_] YES, completed FRIC Form 10f-3 attached/1/.
[_] NO
4. Leveraging and Segregated Accounts. ICA (S)18(f) Capital Structure/1/
Has the portfolio entered into any of the following transactions:
uncovered futures contracts, written options, foreign currency forwards,
forward commitments, and reverse repurchase agreements?
[_] YES [_] NO
If yes, did the portfolio comply with the asset coverage and leveraging
limitations of Section 18(f) by segregating appropriate collateral?
[_] YES [_] NO
**Please attach a list of each item of exposure which is described
above and its corresponding segregated collateral as of quarter end.
5. Diversification. ICA (S)5(b); SEC Rules 5b-1 and 5b-2.
______________
/1/ Refer to the Money Manager Compliance Manual for Details
G-3
Has the Firm met the following guidelines with respect to the Portfolio?
A. At least 75% of the value of the Portfolio's assets are invested in
the following qualifying assets: cash or cash items, U.S. Government
securities, securities of other funds (if disclosed in the Fund's
prospectus), and other securities; provided, however, that such other
securities are limited, in respect to any one issuer to no more than
(i) 5% of the value of the Portfolio's total assets, and
(ii) 10% of the outstanding voting securities of such issuer.
B. The remaining 25% of the Portfolio's assets (or portions thereof) may
be invested in the securities of one issuer.
[_] YES [_] NO, Attach list of exceptions.
6. Other Investment Companies. ICA (S)12(d)(1) Did the portfolio invest in
investment companies, other than FRIC's Money Market Funds/1/?
[_] YES, Attach list of exceptions. [_] NO
7. Restricted Securities. Securities Act of `33 Rule 144A and (S) 4(2)
Commercial Paper. Has the portfolio manager followed the applicable FRIC
and/or RIF Board of Trustees' Liquidity Determination Procedures/1/ for
Purchases and Sales of Rule 144A Securities and (S) 4(2) Commercial
Paper?
[_] YES
[_] NO, Attach list of exceptions. [_] N/A
8. Soft Dollar Regulations. Securities Exchange Act of `34 (S) 28(e). If the
Firm is participating in soft dollar arrangements related to FRIC or RIF
fund brokerage, do those arrangements meet the conditions set forth in
Section 28(e) of the 1934 Act? If not, please provide detailed
information about any soft dollar arrangement that does not meet the
conditions.
[_] YES [_] N/A
[_] NO, Provide description of soft dollar arrangement.
Please provide a detailed statement of the amount of soft dollars
generated by transactions in the FRIC/RIF portfolios that you manage.
Please include the identity of participating brokers and funds as well
as the ultimate use of the soft dollars.
9. Record retention requirement. SEC Rules 31a-1 through 31a-3. Has the
Firm created and maintained records of its activities on behalf of the
Fund as identified in Exhibit B to the Firm's contract with Xxxxx
Xxxxxxx Investment Company?
[_] YES [_] NO, Attach a list of
exceptions.
______________
/1/ Refer to the Money Manager Compliance Manual for Details
G-4
10. Prospectus. Illiquid Securities**.
Did the Portfolio purchase or acquire securities which caused more than 15% (10%
in the case of U.S. Government Money Market, Money Market, and Tax Free Money
Market Funds) of the portfolio's then current value to be invested in the
following securities:
.. repurchase agreements of more than seven days' duration
.. securities that are illiquid by virtue of the absence of a readily
available market which will allow sale or disposition within five business
days
.. securities which have legal or contractual restrictions on resale
.. 144A designated securities (unless determined to be liquid)
.. 4(2) commercial paper (unless determined to be liquid)
.. Interest-only and Principal-only mortgage-backed securities; other than
those issued by the U.S. government or its agencies or instrumentalities
which are backed by fixed-rate mortgages
[_] YES [_] NO
**Please identify EVERY illiquid security that you held at quarter end.
For each, please provide the quantity held and the value of the security.
11. With respect to your Firm's Portfolio(s), the Portfolio DID NOT:
A. Except for U.S. Government securities, state/municipal
governments and their political subdivisions' securities, and
real estate securities for Real Estate Securities Fund, purchase
any securities which would cause more than 25% of the value of
the Portfolio's total assets at the time of purchase to be
invested in the securities of issuers conducting their principal
business activities in the same industry.
B. Purchase or sell real estate. (excluding securities secured by
real estate or interests therein or issued by companies which
invest in real estate or interests therein)
C. Purchase or sell commodities or commodities contracts. (excluding
stock index and financial futures contracts)
D. Borrow amounts in excess of 5% of its total assets taken at cost
or at market value.
E. Purchase or sell securities on margin or effected short sales,
except as necessary for clearance of transactions.
X. Xxxxxx in the business of underwriting securities.
G. Participate in a joint or a joint and several basis in any
trading account in securities.
G-5
X. Xxxxxxxx or sell securities to interested persons of the Fund,
including the Firm and its affiliates, except as provided by the
1940 Act, its rules or exemptive orders.
I. Purchase or sell real estate partnerships that are not readily
marketable.
[_] TRUE [_] FALSE, list of exceptions attached.
12. Futures and Option Limitations. Prospectus. Has the Portfolio purchased or
sold futures and/or options except to the extent permitted by the
policies in the applicable Prospectus(es) as set forth in the
Statement of Additional Information?
[_] YES, please attach list of each investment. [_] NO
13. Are you aware of any violations in compliance with rules or guidelines
of the SEC; the Investment Company Act; the fund's Prospectus or any
other rules, regulations or guidelines related to the portfolio you
manage?
[_] YES, please attach a description. [_] NO
14. During the time period for which you are completing this questionnaire,
was your firm examined by the SEC or any other agency responsible for
securities regulation?
[_] YES [_] NO
If yes, please provide details or the examination and any negative
findings which were made as during the examination.
[_] YES [_] NO
G-6
Representation Letter
Transactions with Affiliates*
By signing this letter you represent that you and your Affiliated
Broker-Dealers, as defined in ICA (S) 2(a)(3), have complied, and intend to
comply, with FRIC's and/or RIF's Statement of Policy Regarding Placement of
Portfolio Transactions by Affiliated Broker-Dealers. The signing and returning
of this form by you results in FRIMCo's approval to execute affiliated agency
transactions involving the payment of commissions as detailed under the policy
which requires prior approval to use affiliated broker-dealers. Only affiliates,
which FRIMCo has been notified of, are included under these terms.
Attn.: X. Xxxxxxx XxXxxxx, Xx., Esq.
Senior Compliance Specialist
Fax (000) 000-0000
E-mail xxxxxxxx@xxxxxxx.xxx
Name of Money Manager:_______________________________________________
Address:_____________________________________________________________
Contact Name:________________________________________________________
Contact Phone Number:________________________________________________
Signature:___________________________________________________________
Title:_______________________________________________________________
Date:________________________________________________________________
Exceptions (if any):
____________________
* Please review and sign this letter. Its return is not optional.
G-7
Representation Letter
Affiliated Broker-Dealer(s)/Underwriter(s)*
Please provide the name(s) of the Broker-Dealer(s)/Underwriter(s) with whom you
are affiliated in the space provided below; or state that you have no such
changes in affiliations by checking the ( ) below.
Please Forward To:
Attn.: X. Xxxxxxx XxXxxxx, Xx., Esq.
Senior Compliance Specialist
Fax (000) 000-0000
Name:__________________________________
Address:_______________________________
_______________________________________
Name:__________________________________
Address:_______________________________
_______________________________________
Name:__________________________________
Address:_______________________________
_______________________________________
Name:__________________________________
Address:_______________________________
( ) Did Not Have Any Affiliated Broker-Dealer(s)/Underwriter(s) Changes.
Name of Money Manager:______________________________________________________
Address:____________________________________________________________________
Contact Name:_______________________________________________________________
Contact Phone Number:_______________________________________________________
Signature:__________________________________________________________________
Title:______________________________________________________________________
Date:_______________________________________________________________________
____________________
* Please review and sign this letter. Its return is not optional.
G-8
EXHIBIT H
AUTHORIZED PERSONS
Authorized Persons of Investment Company:
Authorized Persons of Money Manager
H-1
EXHIBIT I
NOTICE INFORMATION
1. INVESTMENT COMPANY
Attention:
Address:
Facsimile:
2. [INSERT MONEY MANAGER'S NAME}
Attention:
Address:
Facsimile:
I-1
