Valgro Funds, Inc.
Advisory Contract
By this contract, Valgro Investments, Inc. ("Adviser"), a California
corporation, agrees to be the investment adviser to the Valgro Fund of Valgro
Funds, Inc. ("Advisee"), an Illinois corporation, in exchange for which Xxxxxxx
agrees to pay Adviser the following fee. On each business day that the New
York Stock Exchange is open for trading, a fee of 0.9% of 1/250 of that day's
closing net assets (before adviser fees) is accrued. Accrued fees must be paid
at least monthly.
The contract shall commence upon approval by Xxxxxxx's shareholders. The
contract is for a term of one hundred years, provided its continuance is
approved at least annually by Advisee's board of directors or shareholders.
Advisee may terminate the contract at any time without penalty, Adviser may
terminate the contract with 60 days' notice, and the contract terminates
automatically upon its assignment.
Adviser shall be given discretionary authority over Xxxxxxx's brokerage
account, but not custody over Xxxxxxx's assets. Subject to Adviser's attached
code of ethics, Adviser shall be permitted to execute any trades that are
legally permitted for Advisee, consistent with the Advisee's investment
objectives as stated in Advisee's prospectus, and within Advisee's economic
means. Advisee or its transfer agent shall inform Adviser when cash is needed
for redemptions, distributions, and expenses, and when cash is available from
purchases, and Adviser shall make any securities trades necessary to accomodate
this.
Signed on March 1, 2000, in San Francisco, California:
Xxxxxx Xxxxxx
President & Chairman, Valgro Funds, Inc.
Xxxxxx Xxxxxx
President & Chairman, Valgro Investments, Inc.
Attachment: Code of Ethics of Valgro Investments
Valgro Investments has adopted the rules below to hinder "insiders" from
putting their interests above clients' interests. For the sake of this
discussion, "insider" means Valgro Investments itself and all related persons
who have nonpublic knowledge of client transactions, advice, advising methods,
or advice planning. As long as the rules are followed, insiders are explicitly
permitted to buy or sell securities they know will be, are being, or have been
traded in a client account. Insiders are required to pre-clear all trades and
to submit copies of their monthly statements from all their brokerage and
securities accounts, to ensure compliance with the rules.
For each of the 5 types of client trades (trades done on behalf of a
client), there is a "blackout" period during which no insider can trade a
security on the same side as the client (i.e., buy when the client buys
or sell when the client sells). This blackout ends once the client order is
submitted to the broker (even if the markets are closed at the time). If an
insider violates a blackout, then (1) he must submit a non-limit order
reversing his trade (selling the shares he bought or buying back the shares he
sold) before the client order is submitted, and (2) the blackout is extended
for him until the client trade is actually executed. The blackout exempts
trades done by an insider either (1) before he became an insider, or (2) before
the clients for whom a trade is being done became clients. For the blackout,
long calls and short puts are treated as securities purchases, while short
calls and long puts are treated as securities sales. The blackout only covers
trades where the amount of the insider's covered security is determined by the
insider; thus, it exempts dividend reinvestment plans, rights exercises, and
trades of mutual funds holding that security. The blackouts for the 5 types of
client trades are:
- When a security is purchased for a client not currently owning that
security, the blackout is 60 calendar days.
- When all shares of a security are sold for a client, the blackout is 60
calendar days. This blackout exempts insiders' sales done through the same
computer program or spreadsheet used in (3) below.
- On a regularly scheduled basis, a computer program or spreadsheet is used
to rebalance client portfolios. This may involve buying more, or selling some
but not all, of securities already owned. The blackout is 14 calendar days.
This blackout exempts insiders' trades done through the same computer program
or spreadsheet.
- On an unpredictable basis, a client may seek to deposit or withdraw cash.
This may result in a computer program or spreadsheet being used to rebalance a
client portfolio, as in (3) above. The blackout begins the moment the client
notifies Valgro Investments of its cash instructions.
- There is no blackout for trades done to correct previous trades, or for
offsetting purchases & sales done for tax purposes, or for any trade not
explicitly contained in the first 4 types of client trades above.
