XXXXX XXXXXX INVESTMENT TRUST
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
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This AGREEMENT made this 2nd day of April, 2002 by and between XXXXX
XXXXXX INVESTMENT TRUST, a Massachusetts business trust (the "Fund"), and XXXXX
XXXXXX MANAGEMENT COMPANY, an Illinois corporation (the "Adviser").
W I T N E S S E T H:
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WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"),
the units of beneficial interest ("Shares") of which are registered under the
Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers Shares in four (4) portfolios, the
Xxxxx Xxxxxx Growth Fund portfolio ("Growth Fund"), the Xxxxx Xxxxxx Income Fund
portfolio ("Income Fund"), the Xxxxx Xxxxxx Money Market Fund portfolio ("Money
Market Fund") and the Xxxxx Xxxxxx CorePortfolio Fund portfolio ("CorePortfolio
Fund") (hereinafter collectively referred to as the "Initial Portfolios" and,
together with any other portfolios of the Fund which may be established later
and served by the Adviser hereunder, collectively as the "Portfolios" and
individually as a "Portfolio"); and
WHEREAS, the Fund desires at this time to retain the Adviser to render
investment advisory and managerial services to the Fund, and the Adviser is
willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Initial Appointment of Adviser. The Fund hereby appoints the
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Adviser to act as investment adviser to the Initial Portfolios for the period
and on the terms set forth herein. The Adviser accepts such appointment and
agrees to render the services set forth herein, for the compensation herein
provided.
2. Subsequent Appointments of Adviser. In the event that the Fund
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establishes one or more portfolios other than the current Initial Portfolios
with respect to which it desires to retain the Adviser to render investment
advisory and managerial services hereunder, the Fund shall so notify the Adviser
in writing. If the Adviser is willing to render services to such portfolio or
portfolios hereunder, it shall so notify the Fund of its acceptance in writing.
Thereafter, upon approval by the initial shareholder(s) of such portfolio or
portfolios, such portfolio or portfolios shall become a Portfolio or Portfolios
hereunder.
3. Duties of and Expenses Borne by the Adviser. Subject to the general
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supervision of the Trustees of the Fund, the Adviser shall manage the investment
operations of the Portfolios and the composition of the Portfolios' assets,
including the purchase, retention and disposition thereof, in accordance with
the investment objectives, policies and restrictions of the respective Portfolio
as stated in the Fund's Prospectus and subject to the following understandings:
(a) The Adviser shall use the skill and care in the management of the
Portfolios as is required to be used in the discharge of fiduciary duties under
the 1940 Act, the Investment Advisers Act of 1940, the 1933 Act and the Internal
Revenue Code of 1986, as each may be amended from time to time.
(b) The Adviser shall provide supervision of Portfolio assets; furnish
a continuous investment program for such Portfolio; determine from time to time
what investments or securities will be purchased, retained or sold by the
Portfolio and what portion of the assets will be invested or held uninvested as
cash.
(c) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Agreement and Declaration
of Trust ("Trust Agreement), By-Laws, Registration Statement and Prospectus for
the Fund and with the instructions and directions of the Trustees of the Fund,
and will comply with and conform to the requirements of the 1940 Act, the
Investment Advisers Act of 1940, the 1933 Act and the Internal Revenue Code of
1986 (applicable to the Fund as a regulated investment company or otherwise), as
each may from time to time be amended, and all other applicable federal and
state laws, regulations and rulings.
(d) The Adviser shall determine the securities to be purchased or sold
by each Portfolio and will place orders in accordance with the practices set
forth in the Fund's Registration Statement, as amended from time to time,
including without limitation the aggregation of orders and the selection of
broker-dealers that supply research service to the Adviser.
(e) The Adviser shall render to the Trustees of the Fund such periodic
and special reports as the Trustees may reasonably request.
(f) The services of the Adviser to the Portfolio under this Agreement
are not to be deemed exclusive and the Adviser shall be free to render similar
or other services in the future to the Fund or to others so long as its services
under this Agreement are not impaired thereby.
(g) The Adviser shall provide the Fund with, or obtain for it,
adequate office space and such basic office equipment and services including
furnishings, telephone service, heat, utilities, stationery supplies and similar
items as may reasonably be necessary for managing the Portfolios and conducting
the business of the Fund (other than the distribution of the Fund Shares and the
furnishing of shareholder services) as well as employing or providing and
compensating officers and other personnel for the management of the Portfolios.
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(h) The Adviser shall arrange, but not pay for, the computation of
the net asset value of the Portfolios as provided in the Fund's current
Prospectus and bookkeeping services related thereto.
(i) The Adviser shall arrange, but not pay for, the periodic
updating of the Registration Statement, Prospectus and supplements thereto,
proxy materials, tax returns, reports to the Fund's shareholders and filings
with and reports to the Securities and Exchange Commission ("SEC") and state
securities authorities.
(j) The Adviser shall pay any salaries and fees of any officers of
the Fund and salaries and fees of all Trustees of the Fund who are officers,
directors, employees or control persons of the Adviser and of all other
personnel of the Adviser performing services relating to research, statistical
and investment activities.
4. Expenses Borne by the Fund. It is expressly understood that the Fund
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will pay all its expenses other than those expressly stated to be payable by the
Adviser pursuant to paragraph 3 hereunder, unless otherwise agreed in writing,
which expenses payable by the Fund shall include, without limitation:
(i) all federal, state and local or other governmental agency taxes
or fees levied against the Fund;
(ii) costs, including the interest expense, of borrowing money;
(iii) brokerage commissions and other transaction costs in connection
with the purchase or sale of Portfolio securities by the Adviser for the Fund;
(iv) fees and expenses of its Trustees (other than those who are
officers, directors, employees or control persons of the Adviser);
(v) expenses incident to holding meetings of the Fund's
shareholders, including proxy solicitations of the Fund or its Board of Trustees
with respect thereto, and meetings of the Board of Trustees and committees of
the Board of Trustees;
(vi) fees and expenses in connection with legal services rendered to
the Fund, the Board of Trustees of the Fund and duly appointed committees of the
Board of Trustees of the Fund, including fees and expenses of special counsel to
those Trustees who are not "interested persons" (as defined in the 0000 Xxx) of
the Fund and litigation;
(vii) audit and accounting expenses of the independent auditors;
(viii) custodian, transfer and dividend-paying agent fees and expenses
and shareholder service expenses;
(ix) fees and expenses related to the registering, qualifying and
maintaining registration and qualification of the Fund and its Shares for
distribution under federal, state and other applicable laws;
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(x) fees and expenses incident to preparation and filing reports
with regulatory agencies;
(xi) expenses of preparation, printing (including typesetting) and
mailing prospectuses, shareholder reports, proxy materials and notices to
shareholders of the Fund;
(xii) premiums for insurance carried by the Fund pursuant to the
requirements of Section 17(g) of the 1940 Act, or otherwise required by law or
deemed desirable by the Board of Trustees;
(xiii) fees and expenses incurred in connection with any investment
company organization or trade association of which the Fund may be a member;
(xiv) costs and expenses incurred for promotion or advertising of
Fund Shares, but only pursuant to a plan duly adopted in accordance with Rule
12b-1 under the 1940 Act and to the extent that such plan may from time to time
provide;
(xv) expenses related to issuance or redemption of Fund Shares; and
(xvi) expenses incident to the computation of the Fund's net asset
value.
5. Books and Records. The Adviser agrees that all records which it
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maintains for the Fund are the property of the Fund and it will surrender
promptly to the Fund any of such records upon the Fund's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 promulgated
under the 1940 Act and such records as are required to be maintained by Rule
31a-1 under said Act.
6. Compensation. Subject to the provisions of paragraph 7 of this
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Agreement, each Portfolio will pay to the Adviser for the services provided and
the expenses assumed by the Adviser pursuant to the Agreement, as full
compensation therefor, a fee based on average daily net assets of each
Portfolio, computed and accrued daily and paid monthly at the following annual
rates:
(i) For the Growth Fund:
.80 of 1% of the first $100 million of
average daily net assets; plus
.65% of 1% of the next $150 million of
average daily net assets; plus
.50 of 1% of the average daily net assets
in excess of $250 million
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(ii) For the Income Fund
.50 of 1% of the first $250 million of
average daily net assets; plus
.30 of 1% of the average daily net assets
in excess of $250 million
(iii) For the Money Market Fund:
Portion of Average Daily Net Assets Fee
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of Money Market Fund
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Up to $500 million 0.50%
In excess of $500 million but 0.425%
not exceeding $750 million
In excess of $750 million but 0.375%
not exceeding $1 billion
In excess of $1 billion but 0.350%
not exceeding $1.5 billion
In excess of $1.5 billion but 0.325%
not exceeding $2 billion
In excess of $2 billion but 0.300%
not exceeding $2.5 billion
In excess of $2.5 billion 0.275%
(iv) For the CorePortfolio Fund, .40% of
average daily assets.
In addition to the compensation provided above, each Portfolio shall
reimburse the Adviser on a monthly basis for those expenses that each Portfolio
has agreed to bear pursuant to the provisions of paragraph 4 of this Agreement,
which expenses may from time to time be incurred by the Adviser for the benefit
of such Portfolio in the performance of the Adviser's duties pursuant to
paragraph 3 hereunder.
7. Expense Limitation. In the event the operating expenses of a
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particular Portfolio of the Fund, including all investment advisory and
administrative fees with respect to such Portfolio, for any fiscal year (pro
rated appropriately in the event that the first fiscal year of such Portfolio is
for less than 12 calendar months) ending on a date on which this Agreement is in
effect exceed (a) 1.5% of the Portfolio's average daily net assets in the case
of the Growth Fund and the Income Fund, (b) 1% in the case of the Money Market
Fund and (c) .75 of 1% in the case
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of the CorePortfolio Fund, the Adviser shall reduce its investment advisory fee
to the extent of its share of such excess expenses and, if required, pursuant to
any such laws or regulations, will reimburse such Portfolio for its share of
annual operating expenses (as appropriately pro rated ) in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commissions, and
extraordinary expenses (including, but not limited to, legal claims and
liability and litigation costs and any indemnification related thereto) paid or
payable by the Fund and allocable to such Portfolio. Such reduction, if any,
shall be computed and accrued daily, shall be settled on a monthly basis and
shall be based upon the expense limitation applicable to the Portfolio as of the
end of the last business day of the month.
8. Limitation of the Adviser's Liability. Subject to Section 36 of the
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1940 Act, neither the Adviser nor any of its agents or employees shall be liable
for any error of judgment or mistake of law or for any loss suffered by any
Portfolio in connection with the matters to which this Agreement relates, except
liability to the Fund or the shareholders to which the Adviser would otherwise
be subject by reason of the Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
9. Effectiveness, Duration and Termination. This Agreement, unless sooner
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terminated as provided herein, shall become effective as of April 2, 2002, and
shall remain in force until July 31, 2003. Thereafter, this Agreement shall
continue in force from year to year, but only so long as such continuance is
specifically approved for each Portfolio at least annually in the manner
required by the 1940 Act and the rules and regulations thereunder; provided,
however, that if the continuation of this Agreement is not approved for a
certain Portfolio, the Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder. This Agreement may also be terminated with
respect to all or any of the Portfolios (i) by the Fund at any time, without the
payment of any penalty, upon sixty (60) days' written notice to the Adviser, by
the affirmative vote of a majority of the Trustees of the Fund or by the
affirmative vote of a majority of the outstanding Shares (as defined in the 0000
Xxx) representing the interests in each Portfolio with respect to which this
Agreement is to be terminated or (ii) by the Adviser at any time, without the
payment of any penalty, upon sixty (60) days' written notice to the Fund. This
Agreement will automatically and immediately terminate in the event of its
assignment, as such term is defined in the 1940 Act.
10. Status of Adviser as Independent Contractor. The Adviser shall for all
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purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized by the Trustees of the Fund
from time to time, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
11. Amendment of Agreement. This Agreement may be amended by mutual
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consent, but the consent of the Fund must be (a) by vote of a majority of those
Trustees of the Fund who are not parties to this Agreement or "interested
persons," as such term is defined in the 1940 Act, of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
as to each Portfolio affected by the amendment by vote of a majority of the
outstanding Shares (as defined in the 0000 Xxx) representing the interests in
such Portfolio.
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12. Limitation of Liability. This Agreement is executed by or on behalf of
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the Fund, and the Adviser is hereby expressly put on notice of the limitation of
shareholder liability, as set forth in the Trust Agreement, and agrees that the
obligations assumed by the Fund pursuant to this Agreement shall be limited in
all cases to the Fund and its assets. The Adviser shall not seek satisfaction of
any such obligations from the shareholders or any shareholder of the Fund. In
addition, the Adviser shall not seek satisfaction of any such obligations from
the Trustees or officers of the Fund or any individual Trustee or officer.
13. Miscellaneous. The captions of this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be construed in accordance with
applicable federal law and, except as to paragraph 12 hereof which shall be
construed in accordance with the laws of the Commonwealth of Massachusetts, the
laws of the State of Illinois and shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, subject to
paragraph 9 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ATTEST: XXXXX XXXXXX INVESTMENT TRUST
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Its Secretary Its President
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ATTEST: XXXXX XXXXXX MANAGEMENT COMPANY
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
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Its Secretary Its Vice President
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