77.Q1(e)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 8th day of September, 2003 by and between Xxxx Xxxxx
Management Inc., a New York corporation ("the Adviser") and The China-U.S.
Growth Fund, a registered open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act") and an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts and (the "Fund" or the "Trust").
WHEREAS, the Adviser is an investment adviser registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Fund desires to retain the Adviser to render certain investment
advisory services to the Fund and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of the terms, conditions, and mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT
The Fund hereby appoints the Adviser to act as an investment advisor for
the period and on the terms set forth in this Agreement. The Adviser
accepts such appointment and agrees to furnish the services herein set
forth for the compensation provided herein.
2. DELIVERY OF DOCUMENTS
a) The Fund has furnished the Adviser with copies of the following
documents and will furnish the Adviser with copies of all future
amendments and supplements thereto, if any:
i) the Trust's Agreement and Declaration of Trust, as filed
with the Secretary of State of The Commonwealth of
Massachusetts on February 14, 2003;
ii) the Trust's By-laws;
iii) resolutions of the Trust's Board of Trustees ("Board")
authorizing the appointment of the Adviser and the
execution and delivery of this Agreement;
iv) the Fund's Registration Statement on Form N-1A
("Registration Statement") under the Securities Act of
1933, as amended (the "1933 Act") and under the 1940 Act as
filed with the U.S. Securities and Exchange Commission (the
"SEC");
v) the Fund's Notification of Registration under the 1940 Act
on Form N-8A as filed with the SEC; and
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vi) the currently effective Prospectus and Statement of
Additional Information of the Fund (collectively the
"Prospectus").
b) The Fund has furnished the Adviser with copies of the following
documents and will furnish the Adviser with copies of all future
amendments and supplements thereto, if any:
i) the Adviser's Uniform Application for Investment Adviser
Registration Form ("Form ADV");
ii) any written supervisory and operation policies and
procedures of the Adviser that the Board may reasonably
request;
iii) the Adviser's Code of Ethics which complies with Rule 17j-l
under the 1940 Act and related policies and procedures;
iv) certificates of liability insurance evidencing the
Adviser's Errors and Omissions and Directors and Officers
Liability and Fidelity Bond Coverage; and
v) any other documents that the Board may reasonably request.
3. INVESTMENT ADVISORY SERVICES
a) MANAGEMENT OF THE FUND. The Adviser shall provide for the overall
management of the Fund, subject to the supervision of the Board
and in accordance with this Agreement and the Prospectus. In
furtherance of the foregoing, the Adviser shall:
i) provide a continuous investment program for the Fund,
including investment research and management with respect
to all securities and investments;
ii) make decisions with respect to all purchases and sales of
assets of the Fund ("Fund Assets");
iii) place orders for the investment and reinvestment of Fund
Assets;
iv) furnish the Fund with clerical and accounting services and
office facilities, as the Adviser deems appropriate or as
the Fund may reasonably request, subject to the
requirements of any regulatory authority to which the
Adviser may be subject; and
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v) take on behalf of the Fund, all actions the Adviser may
deem necessary in order to carry into effect such
investment program and which are consistent with the
Adviser's functions as provided above.
b) EMPLOYMENT AND APPOINTMENT OF THIRD PARTIES. In connection with
the performance of its duties under this Agreement, from time to
time the Adviser may employ or associate itself with such persons
as the Adviser believes to be particularly fitted to assist the
Adviser in the execution of its duties hereunder. The Adviser
shall bear all costs of performance of such duties and no
obligation may be incurred on the Fund's behalf in such respect.
c) COVENANTS. The Adviser shall carry out its investment advisory
responsibilities in a manner consistent with: (i) the Prospectus;
(ii) any applicable laws, including but not limited to the 1940
Act, the Advisers Act, the 1933 Act, and Subchapter M of the
Internal Revenue Code of 1986, as amended, (iii) the Trust's
By-Laws; (iv) the Trust's Agreement and Declaration of Trust; and
(v) such other investment policies, procedures and/or limitations
as adopted by the Trust with respect to the Fund.
d) BOOKS AND RECORDS. The Adviser shall keep the books and records
with respect to the Fund's securities transactions required to be
maintained by or on behalf of the fund with respect to advisory
services rendered hereunder in accordance with Section 31(a) of
the 1940 Act and will furnish such periodic and special reports as
the Board may reasonably request. The Adviser further agrees to
preserve such records of the Fund for the periods prescribed by
Rule 31a-2 of the 1940 Act and any such other applicable laws,
rules, and regulations. The Adviser agrees that such records are
the property of the Fund and further agrees to surrender promptly
to the Fund any such records upon the Fund's request.
e) REPORTS, EVALUATIONS, AND OTHER SERVICES. The Adviser shall render
reports, evaluations, information or analyses to the Board with
respect to the performance of its duties under this Agreement and
the Fund, in such form and manner as the Board may request from
time to time.
f) PURCHASE AND SALE OF SECURITIES. The Adviser shall place all
orders for the purchase and sale of portfolio securities for the
Fund Assets with brokers or dealers selected by the Adviser, which
may include brokers or dealers affiliated with the Adviser to the
extent permitted by the 1940 Act and the Trust's policies and
procedures. The Fund understands that Xxxx Xxxxx & Company
Incorporated may be used as principal broker or dealer for
securities transactions, to the extent permitted by law, but that
no formula has been adopted for allocation of the Fund Assets'
investment transaction business. The Adviser shall obtain the best
price and the most favorable execution available for the Fund. In
assessing the best overall terms available for any transaction,
the Adviser may consider various factors, including but not
limited to, the
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breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, research services provided to the Adviser, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In no event shall the
Adviser be under any duty to obtain the lowest commission or the
best net price for the Fund on any particular transaction. In
connection with the placement of orders, the Sub-Adviser will
create and maintain all necessary brokerage records of the Fund in
accordance with all applicable laws, rules, and regulations,
including but not limited to Section 31(a) of the 1940 Act and
Section 3(d) of this Agreement.
g) BROKERS OR DEALERS. The Adviser may, to the extent permitted by
law, including but not limited to Section 28(e) of the Securities
Exchange Act of 1934 (the "Exchange Act"), pay a broker or dealer
who provides research services to the Adviser a commission for
executing a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting such transaction if the Adviser determines in good faith
that the excess commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or
dealer viewed in terms of the particular transaction or the
Adviser's overall responsibilities with respect to the
discretionary accounts that it manages. The Adviser shall render a
written report to the Board, at least quarterly, regarding overall
commissions paid by the Fund and their reasonableness in relation
to their benefits to the Fund in accordance with Section 3(e) of
this Agreement.
h) AGGREGATION OF SECURITIES TRANSACTIONS. In executing portfolio
transactions for the Fund, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of its other clients if, in the Adviser's reasonable
judgment, such aggregation (i) will be likely to result in an
overall economic benefit to the Adviser's clients as a whole,
taking into consideration the advantageous selling or purchase
price, brokerage commission and other expenses, and trading
requirements and (ii) is not inconsistent with the policies set
forth in the Prospectus. In such event, the Adviser will allocate
the securities so purchased or sold, and the expenses incurred in
the transaction, in an equitable manner and consistent with its
fiduciary obligations to the Fund.
4. REPRESENTATIONS AND WARRANTIES
a) The Adviser hereby represents and warrants to the Fund as follows:
i) The Adviser is a corporation duly organized and in good
standing under the laws of the State of New York and is
fully authorized to enter into this Agreement and carry out
its duties and obligations hereunder;
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ii) The Adviser is registered as an investment adviser with the
SEC under the Advisers Act and shall maintain such
registration at all times during the term of this
Agreement;
iii) The Adviser at all times shall use its best judgment and
efforts in carrying out the Adviser's obligations
hereunder; and
iv) The Adviser shall maintain the following insurance
protection with respect to its obligations under this
Agreement: (i) Directors and Officers and Errors and
Omissions Insurance of such types and in such amounts as
the Adviser may reasonably deem necessary to protect the
Fund and its agents against loss from errors or omission in
performance of the Adviser's duties and obligations
described in or contemplated by this Agreement; and (ii)
Fidelity Bond Coverage of Adviser personnel which may be
required under applicable law in connection with the
Adviser's services as Sub-Adviser under this Agreement. The
Adviser has provided the Fund with certificates of
liability insurance evidencing the foregoing, attached
hereto as Schedule A, and shall notify the Fund of any
material changes thereto.
b) The Fund hereby represents and warrants to the Adviser as follows:
i) The Prospectus complies, in all material respects with
applicable regulatory and disclosure requirements.
ii) The Trust has been duly organized as a business trust under
the laws of The Commonwealth of Massachusetts; and
iii) The Trust is registered as an investment company with the
SEC under the 1940 Act, and shares of the Fund are
registered for offer and sale to the public under the 1933
Act and all applicable state securities laws where
currently sold. Such registrations will be kept in effect
during the term of this Agreement.
5. COMPENSATION
As compensation for the services provided pursuant to this Agreement the
Fund shall pay the Adviser and the Adviser agrees to accept as full
compensation therefor an advisory fee, which shall be computed and
accrued daily and payable on the first business day of each calendar
month at the annual rate of 1.50% of the Fund's average daily net assets.
Such advisory fee shall begin to accrue on the date the Registration
Statement is declared effective by the SEC. If the Registration Statement
is declared effective by the SEC after the beginning of a calendar month
or this Agreement terminates prior to the end of a
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calendar month, such advisory fee shall be prorated according to the
proportion which such portion of the month bears to the full calendar
month. For the purpose of determining the advisory fee payable to the
Adviser, the value of the Fund's net assets shall be computed at the time
and in the manner specified in the Prospectus, as in effect from time to
time. The Adviser shall have the right to waive or reduce any portion of
the advisory fee to which it is entitled under this Agreement. Any such
waiver shall be in writing.
6. LIMITATION OF LIABILITY OF THE TRUST
The Adviser acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its Declaration of
Trust.
7. LIMITATION OF ADVISER'S LIABILITY
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Adviser or a breach of fiduciary duty with respect to receipt of
compensation, neither the Adviser nor any of its directors, officers,
shareholders, agents or employees shall be liable or responsible to the
Trust, the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any act or omission in the course of or
connected with rendering services hereunder or for any loss suffered by
the Trust, the Fund or any shareholder of the Fund in connection with the
performance of this Agreement. No warranty is given by the Adviser as to
the performance or profitability of any investments, cash or other
property forming part of or constituting the Fund. The Adviser shall not
take or omit to take any action which to the actual knowledge of the
individual taking or omitting to take such action would prejudice the tax
position of the Fund. Any stated limitations on liability shall not
relieve the Adviser from any responsibility or liability the Advisor may
have under state or federal statutes.
8. INDEMNIFICATION
The Fund agrees to fully indemnify the Adviser on demand from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever, other than those directly resulting from the
willful misfeasance, bad faith or gross negligence on the part of the
Adviser, its directors, officers, or employees, which may be imposed on,
incurred by or asserted against the Adviser and related to the services
provided under this Agreement. The Adviser agrees to fully indemnify the
Fund on demand from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever directly resulting from
the willful misfeasance, bad faith or gross negligence on the part of the
Adviser, its directors, trustees, officers, or employees, which may be
imposed on, incurred by or asserted
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against the Fund related to the services provided under this Agreement.
The provisions of this Section 8 shall survive termination of this
Agreement.
9. NON-EXCLUSIVE SERVICES
The investment advisory and management services rendered by the Adviser
hereunder are not to be deemed exclusive and the Adviser shall be free to
provide similar investment advisory or management services to its other
clients, so long as its services under this Agreement are not impaired
thereby.
10. EFFECTIVE DATE, AMENDMENT, AND TERMINATION
a) This Agreement shall become effective as of the date on which the
Registration Statement becomes effective. The initial term of this
Agreement shall be for two (2) years. Thereafter, this Agreement
shall continue in effect for successive twelve (12) month periods,
provided such continuance is specifically approved at least
annually (i) by a vote of the majority of the Board who are not
parties to this Agreement or interested persons of the Fund or the
Adviser, cast in person at a meeting called for the purpose of
voting on such approval and (ii) by a vote of the Board or a
majority of the outstanding voting securities of the Fund.
b) This Agreement may be amended at any time by mutual consent of the
parties; the consent of the Trust must, except as otherwise
permitted by or under the 1940 Act, be approved (i) by vote of a
majority of the Board who are not parties to this Agreement or
interested persons of the Fund or the Adviser, cast in person at a
meeting called for the purpose of voting on such amendment and
(ii) by vote of a majority of the outstanding voting securities of
the Fund.
c) This Agreement may be terminated by either party as further set
forth in this Paragraph (c) at any time without payment of any
penalty. Upon termination, all advisory fees (as defined in
Section 5 of this Agreement) shall cease to accrue and become due
and payable. This Agreement may be terminated by the Fund upon the
vote of the Board or a majority of the outstanding voting
securities of the Fund on sixty (60) days' prior written notice to
the Adviser. This Agreement may be terminated by the Adviser upon
sixty (60) days' prior written notice to the Fund. This Agreement
shall terminate automatically in the event of its assignment or
termination of this Agreement.
11. CERTAIN DEFINITIONS
The terms "majority of the outstanding voting securities," "assignment,"
and "interested persons," shall have the meanings set forth in the 1940
Act.
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12. EXPENSES
During the term of this Agreement, the Adviser will bear its expenses
incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund. The Fund will bear certain other expenses,
including: payment of the advisory fee; custody, transfer and dividend
disbursing, and administration expenses; fees of Trustees who are not
affiliated persons of the Adviser; legal and auditing expenses, clerical,
accounting and other office costs; costs of preparing, printing and
distributing Prospectuses and Fund shareholder reports; cost of
maintaining the Fund's existence; interest charges, taxes, brokerage fees
and commissions; costs of stationary and supplies; expenses and fees
related to registration and filing with the SEC and state regulatory
authorities; costs of independent pricing service retained to assist in
valuing the Fund Assets; the Fund's proportionate share of the insurance
premiums; costs attributable to shareholder services, including but not
limited to, telephone and personnel expenses; costs of Fund shareholder
and Board meetings; and any extraordinary expenses.
13. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of New York.
14. SEVERABILITY
If any provision of this Agreement shall become or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. NOTICES
All notices under this Agreement shall be given in writing and shall be
duly given if mailed or delivered to the Adviser at 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000 to the attention of Xxxxxxxxx X. Xxxx, Executive Vice
President and to the Fund at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 to the
attention of Xxx X. Xxxxx, President. Notices shall be effective upon
delivery.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter herein and supersedes any prior agreement
or understanding between the parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the date written
above.
XXXX XXXXX MANAGEMENT, INC. THE CHINA-U.S. GROWTH FUND
By: /s/ Xxxxxxxxx X. Xxxx By: /s/ Xxxxxxxxx X. Xxxx
---------------------------- ----------------------------
Name: Xxxxxxxxx X. Xxxx Name: Xxxxxxxxx X. Xxxx
Title: Executive Vice President Title: Treasurer
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