EXHIBIT 5.1
INVESTMENT ADVISORY AGREEMENT
FOR
THE OAKMARK FUND
XXXXXX ASSOCIATES INVESTMENT TRUST, a Massachusetts business trust
registered under the Investment Company Act of 1940 (the "1940 Act") as an open-
end diversified management investment company (the "Trust"), and XXXXXX
ASSOCIATES L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser (the "Adviser"), agree as follows:
1. APPOINTMENT OF ADVISER. The Trust appoints the Adviser to act as
manager and investment adviser to The Oakmark Fund (the "Fund"), a series of the
Trust, for the period and on the terms herein set forth. The Adviser accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. SERVICES OF ADVISER.
(a) The Adviser shall manage the investment and reinvestment of the
assets of the Fund, subject to the supervision of the board of trustees of the
Trust, for the period and on the terms set forth in this agreement. The Adviser
shall give due consideration to the investment policies and restrictions and the
other statements concerning the Fund in the Trust's Agreement and Declaration of
Trust, bylaws and registration statements under the 1940 Act and the Securities
Act of 1933 (the "1933 Act"), and to the provisions of the Internal Revenue Code
applicable to the Trust as a regulated investment company. The Adviser shall be
deemed for all purposes to be an independent contractor and not an agent of the
Trust or the Fund, and unless otherwise expressly provided or authorized, shall
have no authority to act or represent the Trust or the Fund in any way.
(b) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with brokers or dealers
selected by the Adviser, although the Fund will pay the actual brokerage
commissions on portfolio transactions in accordance with Paragraph 4. In
executing portfolio transactions and selecting brokers or dealers, the Adviser
will use its best efforts to seek on behalf of the Fund the best overall terms
available for any transaction. The Adviser shall consider all factors it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis).
(c) To the extent contemplated by the Trust's registration statement
under the 1933 Act, in evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Adviser or an affiliate of the Adviser
exercises investment discretion. Consistent with the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. and subject to seeking the
most favorable combination of net price and execution available, the Adviser may
consider sales of shares of the Fund as a factor in the selection of broker-
dealers to execute portfolio transactions for the Fund. The Adviser is
authorized to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
3. SERVICES OTHER THAN AS ADVISER. The Adviser (or an affiliate of the
Adviser) may act as broker for the Trust in connection with the purchase or sale
of securities by or to the Trust if and to the extent permitted by procedures
adopted from time to time by the board of trustees of the Trust. Such brokerage
services are not within the scope of the duties of the Adviser under this
agreement, and, within the limits permitted by law and the trustees, the Adviser
(or an affiliate of the Adviser) may receive brokerage commissions, fees or
other remuneration from the Trust for such services in addition to its fee for
services as Adviser. Within the limits permitted by law, the Adviser may
receive compensation from the Trust for other services performed by or for the
Trust which are not within the scope of the duties of the Adviser under this
agreement.
4. EXPENSES TO BE PAID BY ADVISER. The Adviser shall furnish to the
Trust, at its own expense, such office space and all office facilities,
equipment and personnel necessary to render the services set forth in paragraph
2 above. The Adviser shall also assume and pay all expenses incurred by it
related to the placement of securities orders, and all expenses of marketing
shares of the Trust.
5. EXPENSES TO BE PAID BY THE TRUST. The Trust shall pay all expenses not
expressly assumed by the Adviser, including but not limited to: all charges of
depositories, custodians and other agencies for the safekeeping and servicing of
its cash, securities and other property and of its transfer agents, fund
accounting agents, registrars and its dividend disbursing and redemption agents,
if any; all charges of legal counsel and of independent auditors; all
compensation of trustees other than those affiliated with the Adviser and all
expenses incurred in connection with their services to the Trust; all costs of
borrowing money; all expenses of publication of notices and reports to its
shareholders and to governmental bodies or regulatory agencies; all expenses of
proxy solicitations of the Trust or its board of trustees with respect to the
Fund; all expenses of shareholder meetings; all expenses of typesetting of the
Fund's prospectus and of printing and mailing copies of the prospectus furnished
to each then-existing shareholder or beneficial owner; all taxes and fees
payable to federal, state or other governmental agencies, domestic or foreign;
all stamp or other transfer taxes; all expenses of printing and mailing
certificates for shares of the Trust; all expenses of bond and insurance
coverage required by law or deemed advisable by the Trust's board of trustees;
all expenses of maintaining the registration of shares of the Trust under the
1933 Act and of qualifying and maintaining qualification of shares of the Trust
under the securities laws of such United States jurisdictions as the Trust may
from time to time reasonably designate and all expenses of maintaining the
registration of the Trust under the 1940 Act; and all fees, dues and other
expenses related to membership of the Trust in any trade association or other
investment company organization. In addition to the payment of expenses, the
Trust shall also pay all brokers' commissions and other charges relating to the
purchase and sale of portfolio securities.
6. COMPENSATION OF ADVISER. For the services to be rendered and the
charges and expenses to be assumed and to be paid by the Adviser hereunder, the
Trust shall pay out of Fund assets to the Adviser a monthly fee, based on the
Fund's net assets as of the last business day of the preceding month, at the
annual rate of 1.00% on the first $2.5 billion of net assets, .95% on the next
$1.25 billion, .90% on the next $1.25 billion of net assets and .85% on net
assets in excess of $5 billion. The fee for a month shall be paid as soon as
practicable after the last day of that month. The fee payable hereunder shall
be reduced proportionately during any month in which this agreement is not in
effect for the entire month.
7. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the Fund,
exclusive of taxes, interest and extraordinary litigation expenses, but
including fees paid to the Adviser, shall not in any fiscal year of the Trust
exceed the most restrictive limits prescribed by any state in which Fund shares
are then being offered for sale, and the Adviser agrees to reimburse the Fund
for any sums expended for such expenses in excess of that amount. Brokers'
commissions and other charges relating to the purchase and sale of portfolio
securities shall not be regarded as expenses.
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8. SERVICES OF ADVISER NOT EXCLUSIVE. The services of the Adviser to the
Trust hereunder are not exclusive, and the Adviser shall be free to render
similar services to others so long as its services under this agreement are not
impaired by such other activities.
9. LIABILITY OF ADVISER. The Adviser shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of the Adviser, or of any of the
partners, employees or agents of the Adviser, in connection with or pursuant to
this agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or by
reason of reckless disregard by the Adviser of its obligations and duties under
this agreement.
10. LIABILITY OF TRUST. The obligations of the Trust hereunder shall not
be binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust of the Trust.
11. USE OF ADVISER'S NAME. The Trust may use the name "Xxxxxx Associates
Investment Trust," or any other name derived from the name "Xxxxxx Associates,"
and the name "Oakmark" only for so long as this agreement or any extension,
renewal or amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the business of the Adviser
as investment adviser. At such time as this agreement or any extension, renewal
or amendment hereof, or such other similar agreement shall no longer be in
effect, the Trust will (by amendment of its Agreement and Declaration of Trust,
if necessary) cease to use any name derived from the name "Xxxxxx Associates,"
any name similar thereto or any other name indicating that it is advised by or
otherwise connected with the Adviser, or with any organization which shall have
succeeded to the Adviser's business as investment adviser, and shall cease to
use the name "Oakmark" or any name derived from the name "Oakmark." The consent
of the Adviser to the use of such names by the Trust shall not prevent the
Adviser's permitting any other enterprise, including another investment company,
to use such name or names.
12. DURATION AND RENEWAL.
(a) Unless terminated as provided in section 13, this agreement shall
continue in effect until September 30, 1997, and thereafter from year to year
only so long as such continuance is specifically approved at least annually (a)
by a majority of those trustees who are not interested persons of the Trust or
of the Adviser, voting in person at a meeting called for the purpose of voting
on such approval, and (b) by either the board of trustees of the Trust or a vote
of the holders of a majority of the outstanding shares of the Fund (which term
as used throughout this agreement shall be construed in accordance with the
definition of "vote of a majority of the outstanding voting securities of a
company" in section 2(a)(42) of the 1940 Act).
(b) Any approval of this agreement by the holders of a majority of the
outstanding shares of the Fund shall be effective to continue this agreement
notwithstanding that it has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be required by any
other applicable law or otherwise.
13. TERMINATION. This agreement may be terminated at any time, without
payment of any penalty, by the board of trustees of the Trust, or by a vote of
the holders of a majority of the outstanding shares of the Fund, upon 60 days'
written notice to the Adviser. This agreement may be terminated by the Adviser
at any time upon 60 days' written notice to the Trust. This agreement shall
terminate automatically in the event of its assignment (as defined in section
2(a)(4) of the 1940 Act).
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14. AMENDMENT. This agreement may not be amended without the affirmative
vote (a) of a majority of those trustees who are not "interested persons" (as
defined in Section 2(a)(19) of the 0000 Xxx) of the Trust and (b) of the holders
of a majority of the outstanding shares of the Fund.
Dated: August 30, 1996
XXXXXX ASSOCIATES INVESTMENT TRUST
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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XXXXXX ASSOCIATES L.P.
by Xxxxxx Associates, Inc.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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