XXXX XXXXXXX EQUITY TRUST
Xxxx Xxxxxxx Growth Trends Fund
Sub-Investment Management Contract
Dated: August 28, 2000
XXXX XXXXXXX ADVISERS, INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXX XXXXXXX EQUITY TRUST
- Xxxx Xxxxxxx Growth Trends Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
FUND ASSET MANAGEMENT, L.P.
d/b/a MERCURY ADVISORS
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Sub-Investment Management Contract
Ladies and Gentlemen:
Xxxx Xxxxxxx Equity Trust (the "Trust") has been organized as a business
trust under the laws of The Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial interest
may be classified into series, each series representing the entire undivided
interest in a separate portfolio of assets. Series may be established or
terminated from time to time by action of the Board of Trustees of the Trust.
As of the date hereof, the Trust has one series of shares, representing
interests in Xxxx Xxxxxxx Growth Trends Fund.
The Board of Trustees of the Trust (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, Inc. (the "Adviser") to provide overall investment advice
and management for the Xxxx Xxxxxxx Growth Trends Fund (the "Fund"), and to
provide certain other services, under the terms and conditions provided in the
Investment Management Contract, dated August 28, 2000, between the Trust, the
Fund and the Adviser (the "Investment Management Contract").
The Adviser and the Trustees have selected Fund Asset Management, L.P.
d/b/a Mercury Advisors (the "Sub-Adviser") to provide the Adviser and the Fund
with the advice and services set forth below, and the Sub-Adviser is willing
to provide such advice and services, subject to the review of the Trustees and
overall supervision of the Adviser, under the terms and conditions hereinafter
set forth. The Sub-Adviser hereby represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended. Accordingly, the Trust, on behalf of the Fund, and the Adviser
agree with the Sub-Adviser as follows:
1. Delivery of Documents. The Trust has furnished the Sub-Adviser with
copies, properly certified or otherwise authenticated, of each of the
following:
(a) Amended and Restated Declaration of Trust of the Trust, dated June
8, 1999, as amended from time to time (the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees approving the form of this Agreement
by and among the Adviser, the Sub-Adviser and the Trust, on behalf of
the Fund;
(d) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of the Investment Management
Contract;
(e) the Investment Management Contract;
(f) the Fund's portfolio compliance checklists;
(g) the Fund's current Registration Statement, including the Fund's
Prospectus and Statement of Additional Information; and
(h) the Fund's Code of Ethics.
The Trust will furnish to the Sub-Adviser from time to time copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment Services. The Sub-Adviser will use its best efforts to
provide to the Fund continuing and suitable investment advice with respect to
investments, consistent with the investment policies, objectives and
restrictions of the Fund as set forth in the Fund's Prospectus and Statement
of Additional Information. In the performance of the Sub-Adviser's duties
hereunder, subject always (x) to the provisions contained in the documents
delivered to the Sub-Adviser pursuant to Section 1, as each of the same may
from time to time be amended or supplemented, and (y) to the limitations set
forth in the Registration Statement of the Trust, on behalf of the Fund, as in
effect from time to time under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), the Sub-Adviser
will have investment discretion with respect to the Fund and will, at its own
expense:
(a) furnish the Adviser and the Fund with advice and recommendations,
consistent with the investment policies, objectives and restrictions of
the Fund as set forth in the Fund's Prospectus and Statement of
Additional Information, with respect to the purchase, holding and
disposition of portfolio securities including the purchase and sale of
options, futures and other permitted derivative instruments;
(b) furnish the Adviser and the Fund with advice as to the manner in
which voting rights, subscription rights, rights to consent to corporate
action and any other rights pertaining to the Fund's assets shall be
exercised, the Fund having the responsibility to exercise such voting
and other rights;
(c) furnish the Adviser and the Fund with research, economic and
statistical data in connection with the Fund's investments and
investment policies;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(e) engage in negotiations relating to the Fund's investments with
issuers, investment banking firms, securities brokers or dealers and
other institutions or investors;
(f) consistent with provisions of Section 8 of this Agreement, place
orders for the purchase, sale or exchange of portfolio securities with
brokers or dealers selected by the Adviser or the Sub-Adviser, provided
that in connection with the placing of such orders and the selection of
such brokers or dealers the Sub-Adviser shall seek to obtain execution
and pricing within the policy guidelines determined by the Trustees and
set forth in the Prospectus and Statement of Additional Information of
the Fund as in effect and furnished to the Sub-Adviser from time to
time;
(g) from time to time or at any time requested by the Adviser or the
Trustees, make reports to the Adviser or the Trustees of the Sub-
Adviser's performance of the foregoing services;
(h) subject to the supervision of the Adviser, maintain all books and
records with respect to the Fund's securities transactions required by
the 1940 Act, and preserve such records for the periods prescribed
therefor by the 1940 Act (the Sub-Adviser agrees that such records are
the property of the Trust and copies will be surrendered to the Trust
promptly upon request therefor);
(i) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash
for the account of the Fund, and advise the Adviser on the same day such
instructions are given; and
(j) co-operate generally with the Fund and the Adviser to provide
information necessary for the preparation of registration statements and
periodic reports to be filed with the Securities and Exchange
Commission, including Form N-1A, Form N-SAR, periodic statements,
shareholder communications and proxy materials furnished to holders of
shares of the Fund, filings with state "blue sky" authorities and with
United States agencies responsible for tax matters, and other reports
and filings of like nature.
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the cost of
maintaining the staff and personnel necessary for it to perform its
obligations under this Agreement, the expenses of office rent, telephone,
telecommunications and other facilities it is obligated to provide in order to
perform the services specified in Section 2, and any other expenses incurred
by it in connection with the performance of its duties hereunder.
4. Expenses of the Fund Not Paid by the Sub-Adviser. The Sub-Adviser will
not be required to pay any expenses which this Agreement does not expressly
make payable by the Sub-Adviser. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 3, the
Sub-Adviser will not be required to pay under this Agreement:
(a) the compensation and expenses of Trustees and of independent
advisers, independent contractors, consultants, managers and other
agents employed by the Trust or the Fund other than through the Sub-
Adviser;
(b) legal, accounting and auditing fees and expenses of the Trust or
the Fund;
(c) the fees and disbursements of custodians and depositories of the
Trust or the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(d) taxes and governmental fees assessed against the Trust or the
Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends, distributions,
reports, notices, prospectuses and proxy materials to shareholders of
the Trust or the Fund except that the Sub-Adviser shall bear the costs
of providing the information referred to in Section 2(j) to the Adviser;
(f) brokers' commissions and underwriting fees; and
(g) the expense of periodic calculations of the net asset value of the
shares of the Fund.
5. Compensation of the Sub-Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Sub-Adviser as herein
provided for the Fund, the Adviser will pay the Sub-Adviser quarterly, in
arrears, a fee at the annual rate of 0.33% of the Fund's average daily net
assets.
The "average daily net assets" of the Fund shall be determined on the
basis set forth in the Fund's Prospectus or otherwise consistent with the 1940
Act and the regulations promulgated thereunder. The Sub-Adviser will receive
a pro rata portion of such fee for any periods in which the Sub-Adviser
advises the Fund less than a full quarter. The Fund shall not be liable to
the Sub-Adviser for the Sub-Adviser's compensation hereunder. Calculations of
the Sub-Adviser's fee will be based on average net asset values as provided by
the Adviser.
In addition to the foregoing, the Sub-Adviser may from time to time
agree, upon its sole discretion, not to impose all or a portion of its fee
otherwise payable hereunder (in advance of the time such fee or portion
thereof would otherwise accrue) and/or undertake to pay or reimburse the Fund
for all or a portion of its expenses not otherwise required to be borne or
reimbursed by it. Any such fee reduction or undertaking may be discontinued
or modified by the Sub-Adviser at any time.
6. Other Activities of the Sub-Adviser and Its Affiliates. Nothing herein
contained shall prevent the Sub-Adviser or any associate or affiliate of the
Sub-Adviser from engaging in any other business or from acting as investment
adviser or investment manager for any other person or entity. It is
specifically understood that officers, directors and employees of the
Sub-Adviser or its affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, to other investment advisory clients of the Sub-Adviser or its
affiliates and to said affiliates themselves.
7. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the Sub-
Adviser nor any of its investment management subsidiaries nor any of such
investment management subsidiaries' directors, officers or employees will act
as principal or agent or receive any commission, except as may be permitted by
the 1940 Act and rules and regulations promulgated thereunder. The Sub-
Adviser shall not knowingly recommend that the Fund purchase, sell or retain
securities of any issuer in which the Sub-Adviser has a financial interest
without obtaining prior approval of the Adviser prior to the execution of any
such transaction.
Nothing herein contained shall limit or restrict the Sub-Adviser or any
of its officers, affiliates or employees from buying, selling or trading in
any securities for its or their own account or accounts. The Trust and Fund
acknowledge the Sub-Adviser and its officers, affiliates, and employees, and
its other clients may at any time have, acquire, increase, decrease or dispose
of positions in investments which are at the same time being acquired or
disposed of hereunder. The Sub-Adviser shall have no obligation to acquire
with respect to the Fund a position in any investment which the Sub-Adviser,
its officers, affiliates or employees may acquire for its or their own
accounts or for the account of another client, if in the sole discretion of
the Sub-Adviser, it is not feasible or desirable to acquire a position in such
investment on behalf of the Fund. Nothing herein contained shall prevent the
Sub-Adviser from purchasing or recommending the purchase of a particular
security for one or more funds or clients while other funds or clients may be
selling the same security.
8. No Partnership or Joint Venture. The Trust, the Fund, the Adviser and
the Sub-Adviser are not partners of or joint venturers with each other and
nothing herein shall be construed so as to make them such partners or joint
venturers or impose any liability as such on any of them.
9. Name of the Trust and the Fund. The Trust and the Fund may use the name
"Xxxx Xxxxxxx" or any name or names derived from or similar to the names "Xxxx
Xxxxxxx Advisers, Inc." or "Xxxx Xxxxxxx Life Insurance Company" only for so
long as this Agreement remains in effect. At such time as this Agreement
shall no longer be in effect, the Trust and the Fund will (to the extent that
they lawfully can) cease to use such a name or any other name indicating that
the Fund is advised by or otherwise connected with the Adviser. The Fund
acknowledges that it has adopted the name Xxxx Xxxxxxx Growth Trends Fund
through permission of Xxxx Xxxxxxx Life Insurance Company, a Massachusetts
insurance company, and agrees that Xxxx Xxxxxxx Life Insurance Company
reserves to itself and any successor to its business the right to grant the
nonexclusive right to use the name "Xxxx Xxxxxxx" or any similar name or names
to any other corporation or entity, including but not limited to any
investment company of which Xxxx Xxxxxxx Life Insurance Company or any
subsidiary or affiliate thereof shall be the investment adviser.
10. Limitation of Liability of Sub-Adviser. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust or the Fund or the Adviser in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Sub-Adviser's part in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement. Any person, even though also employed by the Sub-Adviser, who
may be or become an employee of and paid by the Trust or the Fund shall be
deemed, when acting within the scope of his employment by the Trust or the
Fund, to be acting in such employment solely for the Trust or the Fund and not
as the Sub-Adviser's employee or agent.
11. Duration and Termination of this Agreement. This Agreement shall remain
in force until June 30, 2002, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (a) a
majority of the Trustees who are not interested persons of the Adviser, the
Sub-Adviser, or (other than as Board members) of the Trust or the Fund, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) either (i) the Trustees or (ii) a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days' written notice, be
terminated at any time without the payment of any penalty by the Trust or the
Fund by vote of a majority of the outstanding voting securities of the Fund,
by the Trustees, the Adviser or the Sub-Adviser. Termination of this
Agreement with respect to the Fund shall not be deemed to terminate or
otherwise invalidate any provisions of any contract between the Sub-Adviser
and any other series of the Trust. This Agreement shall automatically
terminate in the event of its assignment or upon termination of the Investment
Management Contract. In interpreting the provisions of this Section 11, the
definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "assignment," "interested person" or "voting security"), shall
be applied.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until approved
by: (a) the Trustees, including a majority of the Trustees who are not
interested persons of the Adviser, the Sub-Adviser, or (other than as Board
members) of the Trust or the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and (b) a majority of the outstanding
voting securities of the Fund, as defined in the 1940 Act.
13. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts.
14. Severability. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other
or others of them may be deemed invalid or unenforceable in whole or in part.
15. Miscellaneous. (a) The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The name Xxxx Xxxxxxx Equity Trust is the
designation of the Trustees under the Amended and Restated Declaration of
Trust dated June 8, 1999, as amended from time to time. The Declaration of
Trust has been filed with the Secretary of the Commonwealth of Massachusetts.
The obligations of the Trust and the Fund are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the Fund's
property shall be bound. The Trust or the Fund shall not be liable for the
obligations of any other series of the Trust. (b) Any information supplied by
the Sub-Adviser, which is not otherwise in the public domain, in connection
with the performance of its duties hereunder is to be regarded as confidential
and for use only by the Fund and/or its agents, and only in connection with
the Fund and its investments.
Yours very truly,
XXXX XXXXXXX EQUITY TRUST
on behalf of Xxxx Xxxxxxx Growth Trends
Fund
By:
______________________________________
Xxxxxx X. Xxxx
Executive Vice President, Chief Financial Officer +
Treasurer
The foregoing contract is hereby agreed to as of the date hereof.
XXXX XXXXXXX ADVISERS, INC.
By: ______________________________________
Xxxxxx X. Xxxx
Executive Vice President, Chief Financial Officer + Treasurer
FUND ASSET MANAGEMENT, L.P.
d/b/a MERCURY ADVISORS
By: _______________________________________
Name:
Title:
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