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Exhibit 5(a)
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INVESTMENT ADVISORY AGREEMENT
______________ ___, 1998
BEA Associates
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Warburg, Xxxxxx [ ] Fund, Inc. (the "Fund"), a
corporation organized and existing under the laws of the State of Maryland,
herewith confirms its agreement with BEA Associates (the "Adviser"), a
partnership organized under the laws of New York, as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by
investing and reinvesting in investments of the kind and in accordance with the
limitations specified in its Articles of Incorporation, as may be amended from
time to time, and in the Fund's Prospectus(es) and Statement(s) of Additional
Information as from time to time in effect (the "Prospectus" and "SAI,"
respectively), and in such 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 SAI have been or will be submitted to the Adviser. The Fund desires to
employ and hereby appoints the Adviser to act as investment adviser to the Fund.
The Adviser accepts the appointment and agrees to furnish the services for 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 strict conformity with the
Fund's Articles of Incorporation, the Investment Company Act of 1940 (the "1940
Act") and the Investment Advisers Act of 1940, as the same may from time to time
be amended (the "Advisers Act"), (b) manage the Fund's assets in accordance with
the Fund's investment objective and policies as stated in the Fund's Prospectus
and SAI, (c) make investment decisions for the Fund, (d) place purchase and sale
orders for securities on behalf of the Fund, (e) exercise voting rights in
respect of portfolio securities and other investments for the Fund, and (f)
monitor and evaluate the services provided by the Fund's investment
sub-adviser(s), if any, under the terms of the applicable investment
sub-advisory agreement. 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
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information the Fund may reasonably request with respect to the securities that
the Fund may hold or contemplate purchasing.
Subject to the approval of the Board of Directors of the Fund
and, where required by law, the Fund's shareholders, the Adviser may engage an
investment sub-adviser or sub-advisers to provide advisory services in respect
of the Fund and may delegate to such investment sub-adviser(s) the
responsibilities described in subparagraphs (b), (c), (d) and (e) above. In the
event that an investment sub-adviser's engagement has been terminated, the
Adviser shall be responsible for furnishing the Fund with the services required
to be performed by such investment sub-adviser(s) under the applicable
investment sub-advisory agreement(s) or arranging for a successor investment
sub-adviser(s) to provide such services on terms and conditions acceptable to
the Fund and the Fund's Board of Directors and subject to the requirements of
the 1940 Act.
3. Brokerage
In executing transactions for the Fund, selecting brokers or
dealers and negotiating any brokerage commission rates, the Adviser will use its
best efforts to seek the best overall terms available. In assessing the best
overall terms available for any portfolio 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 for transactions executed through
the broker or dealer in the aggregate. 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,
as the same may from time to time be amended) provided to the Fund and/or other
accounts over which the Adviser or an affiliate exercises investment discretion.
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. Disclosure Regarding the Adviser
(a) The Adviser has reviewed the disclosure about the Adviser
contained in the Fund's registration statement and represents and warrants that,
with respect to such disclosure about the Adviser or information related,
directly or indirectly, to the Adviser, such registration statement contains, as
of the
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date hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which is required to be stated therein or necessary
to make the statements contained therein not misleading.
(b) The Adviser agrees to notify the Fund promptly of (i) any
statement about the Adviser contained in the Fund's registration statement that
becomes untrue in any material respect, (ii) any omission of a material fact
about the Adviser in the Fund's registration statement which is required to be
stated therein or necessary to make the statements contained therein not
misleading, (iii) any reorganization or change in the Adviser, including any
change in its ownership or key employees, or (iv) any change in the membership
of the Adviser, as long as the Adviser is a partnership.
(c) Prior to the Fund or any affiliated person (as defined in
the 1940 Act, an "Affiliate") of the Fund using or distributing sales literature
or other promotional material referring to the Adviser ("Promotional Material"),
the Fund shall forward such material to the Adviser and shall allow the Adviser
reasonable time to review the material. The Adviser will not act unreasonably in
its review of Promotional Material and the Fund will use all reasonable efforts
to ensure that all Promotional Material used or distributed by or on behalf of
the Fund will comply with the requirements of the Advisers Act, the 1940 Act and
the rules and regulations promulgated thereunder.
(d) The Adviser has supplied the Fund copies of its Form ADV
with all exhibits and attachments thereto and will hereinafter supply the Fund,
promptly upon preparation thereof, copies of all amendments or restatements of
such document.
6. Compliance
(a) The Adviser agrees that it shall promptly notify the Fund
(i) in the event that the SEC or any other regulatory authority has censured its
activities, functions or operations; suspended or revoked its registration as an
investment adviser; or has commenced proceedings or an investigation that may
result in any of these actions, (ii) in the event that there is a change in the
Adviser, financial or otherwise, that adversely affects its ability to perform
services under this Agreement or (iii) upon having a reasonable basis for
believing that, as a result of the Adviser's investing the Fund's assets, the
Fund's investment portfolio has ceased to adhere to the Fund's investment
objectives, policies and restrictions as stated in the Prospectus or SAI or is
otherwise in violation of applicable law.
(b) The Fund agrees that it shall promptly notify the Adviser
in the event that the SEC has censured the Fund; placed
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limitations upon any of its activities, functions or operations; or has
commenced proceedings or an investigation that may result in any of these
actions.
(c) The Fund shall be given access to the records of the
Adviser at reasonable times solely for the purpose of monitoring compliance with
the terms of this Agreement and the rules and regulations applicable to the
Adviser relating to its providing investment advisory services to the Fund,
including without limitation records relating to trading by employees of the
Adviser for their own accounts and on behalf of other clients. The Adviser
agrees to cooperate with the Fund and its representatives in connection with any
such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser hereby agrees that all records which it maintains for
the Fund are the property of the Fund and further agrees to surrender promptly
to the Fund any of such records upon request. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
therein.
(b) The Adviser agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of the Fund all records
and other information relative to the Fund and prior, present or potential
shareholders and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder except after prior
notification to and approval in writing of the Fund, which approval shall not be
unreasonably withheld and may not be withheld where the Adviser may be exposed
to civil or criminal contempt proceedings for failure to comply or when
requested to divulge such information by duly constituted authorities.
(c) The Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Adviser renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
8. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 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
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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.
9. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser an annual fee calculated at an annual
rate of [___%] 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 year during which the
initial registration statement is declared effective shall be prorated according
to the proportion that such period bears to the full yearly period. Upon any
termination of this Agreement before the end of a year, the fee for such part of
that year shall be prorated according to the proportion that such period bears
to the full yearly 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 SAI.
10. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement, including the fees payable to
any investment sub-adviser engaged pursuant to paragraph 2 of this Agreement.
The Fund will bear its proportionate share of certain other expenses to be
incurred in its operation, including: investment advisory and administration
fees; taxes, interest, brokerage fees and commissions, if any; fees of Directors
of the Fund who are not officers, directors, or employees of the Adviser or any
of its affiliates; fees of any pricing service employed to value shares of the
Fund; Securities and Exchange Commission fees and state blue sky qualification
fees; charges of custodians and transfer and dividend disbursing agents; the
Fund's proportionate share of 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 preparing 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 or Board of Directors of the Fund; and any
extraordinary expenses.
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The Fund will be responsible for nonrecurring expenses which
may arise, including costs of litigation to which the Fund is a party and of
indemnifying officers and Directors of the Fund with respect to such litigation
and other expenses as determined by the Directors.
11. Services to Other Companies or Accounts
The Fund understands that the Adviser now acts, will continue
to act and may act in the future as investment adviser to fiduciary and other
managed accounts and to one or more other investment companies or series of
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 or portfolios 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. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable 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, provided that
doing so does not adversely affect the ability of the Adviser to perform its
services under this Agreement.
12. Term of Agreement
This Agreement shall continue until April 17, 2000 and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (a) the Board of
Directors of the Fund or (b) a vote of a "majority" (as defined in the 0000 Xxx)
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).
13. Representations by the Parties
(a) The Adviser represents and warrants that it is a duly
registered investment adviser under the Advisers Act, a duly
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registered investment adviser in any and all states of the United States in
which the Adviser is required to be so registered and has obtained all necessary
licenses and approvals in order to perform the services provided in this
Agreement. The Adviser covenants to maintain all necessary registrations,
licenses and approvals in effect during the term of this Agreement.
(b) The Adviser represents that it has read and understands
the Prospectus and SAI and warrants that in investing the Fund's assets it will
use all reasonable efforts to adhere to the Fund's investment objectives,
policies and restrictions contained therein.
(c) The Adviser represents that it has adopted a written Code
of Ethics in compliance with Rule 17j-1 under the 1940 Act and will provide the
Fund with any amendments to such Code.
(d) The Fund represents that a copy of its Articles of
Incorporation, dated [ ], 1998, together with all amendments thereto, is
on file in the Department of Assessments and Taxation of the State of Maryland.
14. Miscellaneous
The Adviser represents that it is the sole owner of the name
and xxxx "XXX," as used with respect to investment vehicles or services. The
Adviser hereby grants to the Fund and its affiliates a non-exclusive license to
use the "BEA" name and xxxx in connection with the Fund, including, without
limitation, use of the "BEA" name and xxxx in any disclosure document,
advertisement, sales literature or other materials describing or promoting the
Fund. If the Adviser ceases to act as the investment adviser of the Fund's
shares, the Fund agrees that, at the Adviser's request, the Fund's license to
use the "BEA" name and xxxx will terminate and the Fund will take all necessary
action to discontinue any use of the "BEA" name and xxxx. The Adviser
acknowledges that the Fund has adopted the name "BEA Institutional Funds," in
connection with the offering of the Fund's Institutional Shares, with its
express permission.
The Adviser agrees that it will not use the name and xxxx
"Xxxxxxx Xxxxxx" except in regulatory filings or as expressly permitted by the
Fund in writing.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WARBURG, XXXXXX [ ] FUND, INC.
By: _______________________
Name: _____________________
Title: ____________________
Accepted:
BEA ASSOCIATES
By: _______________________
Name: _____________________
Title: ____________________
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FUND NAME INVESTMENT OBJECTIVE MANAGEMENT FEE+
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International Growth Fund Seeks long-term appreciation of capital by investing primarily .80%
in equity securities of non-U.S. issuers.
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Emerging Markets Growth Fund Seeks long-term appreciation of capital by investing primarily 1.00%*
in equity securities in emerging country markets.
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U.S. Core Equity Fund Seeks long-term appreciation of capital by investing primarily .75%
in U.S. equity securities.
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U.S. Core Fixed Income Fund Seeks high total return by investing primarily in domestic .375%
fixed-income securities consistent with comparable broad market
fixed income indices, such as the Xxxxxx Brothers Aggregate Bond
Index.
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High Yield Fund Seeks high total return by investing primarily in high yield .70%
fixed income securities issued by corporations, governments and
agencies, both domestic and foreign.
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Strategic Global Fixed Income Fund Seeks high total return by investing primarily in both foreign .50%*
and domestic fixed income securities.
------------------------------------- ------------------------------------------------------------------ -------------------------
Municipal Bond Fund Seeks high total return by investing primarily in municipal .70%
bonds issued by state and local authorities.
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Global Telecommunications Fund Seeks long-term appreciation of capital by investing primarily 1.00%
in equity securities of telecommunications companies, both
foreign and domestic.
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Select Economic Value Equity Fund Seeks long-term appreciation of capital by investing primarily .75%
in U.S. equity securities that the Adviser believes are
undervalued.
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Long-Short Market Neutral Fund Seeks long-term capital appreciation while minimizing exposure 1.50%**
to general equity market risk by taking long positions in stocks
that the Adviser has identified as undervalued and short
positions in such stocks that the Adviser has identified as
overvalued.
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Long-Short Equity Fund Seeks a total return greater than that of the Standard & Poor's .10%
500 Composite Stock Price Index (the "S&P Index") by investing
in shares of the Long-Short Market Neutral Fund while
simultaneously utilizing S&P Index futures, options on S&P
Index futures and equity swap contracts to gain exposure to
the equity market as measured by the S&P Index.
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+ As a percentage of average daily net assets.
* BEA will pay Credit Suisse Asset Management Limited, as sub-adviser to
the Emerging Markets Growth Fund and the Strategic Global Fixed Income
Fund, a quarterly fee equal to 30% of the net quarterly amount received
by BEA from each Fund for its services as the Fund's investment adviser.
** Represents a basic management fee that may be increased or decreased,
after the first year of operations, by applying a performance adjustment
formula ("Performance Adjustment"). The Performance Adjustment is
calculated monthly by comparing the Fund's investment performance to that
of the Xxxxxxx Xxxxx Xxxxxx U.S. 1-Month Treasury Xxxx Index plus 5
percentage points. The maximum annualized Performance Adjustment is .50%.
For additional information regarding calculation of the Performance
Adjustment, see the Fund's Prospectus under "Management of the Funds."
