EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
September 15, 1998
ND Money Management, Inc.
0 Xxxxx Xxxx
Xxxxx, Xxxxx Xxxxxx 00000
Dear Sirs:
Integrity Small-Cap Fund of Funds, Inc. (the "Fund"), a corporation
organized under the laws of the State of North Dakota, herewith confirms its
agreement with ND Money Management, Inc. (the "Adviser"), as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Prospectus and Statement of Additional Information, as from time to time in
effect, and in such a manner and to such extent as may from time to time be
approved by the Board of Directors of the Fund. Copies of the Fund's
Prospectus and Statement of Additional Information have been or will be
submitted to the Adviser. The Fund desires to employ and hereby appoints the
Adviser to act as its investment adviser. The Adviser accepts the compensation
set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Directors of the
Fund, the Adviser will (a) act in conformity with the Investment Company Act of
1940 and the Investment Advisers Act of 1940, as the same may from time to time
be amended, (b) manage the Fund in accordance with the Fund's investment
objective(s) and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make investment
decisions for the Fund, and (d) place purchase and sale orders on behalf of the
Fund. In providing those services, the Adviser will provide investment
research and supervision of the Fund's investments and conduct a continual
program of investment, evaluation, and, if appropriate, sale and reinvestment
of the Fund's assets. In addition, the Adviser will furnish the Fund with
whatever statistical information the Fund may reasonably request with respect
to the securities that the Fund may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or dealers, the
Adviser will use its best efforts to seek the best overall terms available. In
assessing the best overall terms available for any Fund transaction, the
Adviser will consider all factors it deems relevant including, but not limited
to, 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 any commission for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, the Adviser may
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 exercises investment discretion.
The Adviser may utilize ND Capital, Inc., or any other affiliated person of the
Adviser as the broker for the purchase of mutual fund shares and other
securities.
4. Information Provided to the Fund
The Adviser will keep the Fund informed of developments materially affecting
the Fund and will, on its own initiative, furnish the Fund from time to time
with whatever information the Adviser believes is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Fund or to shareholders of the Fund to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence on its part in the performance of its duties or by reason
of the Adviser's reckless disregard of its obligations and duties under this
Agreement.
6. Independent Contractor
The Adviser shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Fund in any way or otherwise be deemed as
agent of the Fund.
7. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay the Adviser on the first business day of each month a fee for the
previous month at the annual rate of .90 of 1.00% of the Fund's average daily
net assets. The fee for the period from the date the Fund's initial
registration statement is declared effective by the Securities and Exchange
Commission to the end of the month during which the initial registration
statement is declared effective shall be prorated according to the proportion
that such period bears to the full monthly period. Upon any termination of
this Agreement before the end of a month, the fee for such part of that month
shall be prorated according to the proportion that such period bears to the
full monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Fund's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information as
from time to time in effect.
8. Expenses
The Adviser will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses to be
incurred in its operation, including: organization expenses; taxes; interest;
brokerage fees and commissions, if any; fees and expenses of directors and
officers of the Fund who are not officers or directors of the Adviser;
Securities and Exchange Commission fees and state securities laws fees; charges
of custodians, transfer and dividend disbursing agents, and accounting services
agents; insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Fund's existence; costs attributable to investor services,
including, without limitation, telephone and personnel expenses; costs of pre-
paring and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers and Board of Directors of the Fund; and any extraordinary expenses.
In addition, the Fund is expected to pay service fees to dealers for providing
personal services to shareholders and/or the maintenance of shareholder
accounts.
9. Services to Other Companies or Accounts
The Fund understands that the Adviser may act in the future as investment
adviser to fiduciary and other managed accounts and as investment adviser to
one or more other investment companies, and the Fund has no objection to the
Adviser so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Adviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. The Fund recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Fund. In addition, the Fund understands that the persons employed by the
Adviser to assist in the performance of the Adviser's duties hereunder will not
devote their full time to such service, and nothing contained herein shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall continue until September 15, 2000, and thereafter shall
continue automatically for successive annual periods ending on September 15 of
each year, provided such continuance is specifically approved at least annually
by (i) the Board of Directors of the Fund or (ii) a vote of a "majority" (as
defined in the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event the continuance is also approved by a
majority of the Board of Directors who are not "interested persons" (as defined
in said Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days' written notice by the Board of
Directors of the Fund or by vote of holders of a majority of the Fund's shares
or upon 90 days' written notice by the Adviser. This Agreement will also
terminate automatically in the event of its assignment (as defined in said
Act).
11. Limitation of Liability
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this Agreement shall be binding upon the assets and property of the Fund
only and shall not be binding upon any director, officer, or shareholder of the
Fund individually.
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
INTEGRITY SMALL-CAP FUND OF FUNDS, INC.
By: /Xxxxxx X. Xxxxxxx/
President
Accepted:
ND MONEY MANAGEMENT, INC.
By: /Xxxxxx X. Xxxxxxx/
Authorized Officer
