EXHIBIT 5(d)
INVESTMENT ADVISORY AGREEMENT
Security Capital Real Estate Mutual Funds Incorporated
Security Capital Real Estate Arbitrage Shares
June __, 1998
Security Capital Global Capital Management Group Incorporated
00 Xxxxx XxXxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
We, the undersigned Security Capital Real Estate Mutual Funds Incorporated
("Fund"), herewith confirm our agreement with you as follows:
1. We are an open-end management investment company. Our Directors are
authorized to reclassify and issue any unissued shares to any number of
additional classes or series (portfolios), each having its own investment
objective, policies and restrictions, without shareholder approval, all as more
fully described in our prospectus and statement of additional information.
We engage in the business of investing and reinvesting our assets in
securities in accordance with the limitations specified in our Articles of
Incorporation, By-Laws and any representations made in our prospectus and
statement of additional information, all in such manner and to such extent as
may from time to time be authorized by our Board of Directors. We enclose copies
of the documents listed above and will from time to time furnish you with any
amendments thereof.
2. (a) We hereby employ you to manage the investment and reinvestment of
Security Capital Real Estate Arbitrage Shares, a portfolio of the Fund
("Portfolio") as above specified and, without limiting the generality of the
foregoing, to provide management, investment, advisory and other services
specified below.
(b) You will make decisions with respect to all purchases and sales
of the portfolio securities of the Portfolio. To carry out such decisions, you
are hereby authorized, as our agent and attorney-in-fact, for our account and at
our risk and in our name, to place orders for the investment and reinvestment of
the Portfolio's assets. In all purchases, sales and other transactions in our
portfolio securities you are authorized to exercise full discretion and act for
us in the same manner and with the same force and effect as we might or could do
with respect to such purchases, sales or other transactions, as well as with
respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in the Portfolio since the prior report, and will also keep us in
touch with important developments affecting the Portfolio and on your own
initiative will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual issuers
whose securities are included in the Portfolio, the industries in which they
engage, or the conditions prevailing in the economy generally. You will also
furnish us with such statistical and analytical information with respect to the
Portfolio's securities as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of portfolio securities, you will
bear in mind the policies set from time to time by our Board of Directors as
well as the limitations imposed by our Articles of Incorporation, the Investment
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Company Act of 1940 (the "Act") and the Securities Act of 1933, and the Internal
Revenue Code of 1986, as amended, in respect of regulated investment companies.
(d) It is understood that you will from time to time employ or
associate with yourselves such persons as you believe to be particularly fitted
to assist you in the execution of your duties hereunder, the cost of performance
of such duties to be borne and paid by you. No obligation may be incurred on
our behalf in any such respect. During the continuance of this Agreement at our
request you will provide us persons satisfactory to our Board of Directors to
serve as our officers.
(e) Subject to our ability to obtain the required initial and
periodic approvals under Section 15(c) the 1940 Act, you may retain an
investment sub-adviser, at your own cost and expense, for the purpose of
executing your duties hereunder. Your retention of an investment sub-adviser
shall in no way reduce your responsibilities under this Agreement and you shall
be responsible to us for all acts or omissions of such investment sub-adviser in
connection with the performance of your duties hereunder.
3. We propose to retain the services of an administrator, which shall be
a firm acceptable to you, to administer all aspects of our operations except
those which are your responsibility pursuant to this Agreement. We will bear
the cost of and pay the fee of the administrator. Our initial Administrator
will be Security Capital Global Capital Management Group Incorporated.
4. It is further agreed that you shall pay the fees and expenses
associated with the printing and mailing of the Fund's prospectus and statement
of additional information, and any other sales literature, to parties other than
existing shareholders. We hereby confirm that, subject
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to the foregoing, we shall be responsible and hereby assume the obligation for
payment of all our other expenses, including: (a) payment of the fee payable to
you under paragraph 6 hereof; (b) charges and expenses of our administrator,
custodian, transfer, and dividend disbursing agent; (c) fees of directors who
are not your affiliated persons; (d) legal and auditing expenses; (e)
compensation of our officers, Directors and employees who do not devote any part
of their time to your affairs or the affairs of your affiliates other than us;
(f) costs of printing our prospectuses and stockholder reports; (g) costs of
proxy solicitation; (h) costs of maintenance of corporate existence; (i)
interest charges, taxes, brokerage fees and commissions; (j) costs of stationery
and supplies; (k) expenses and fees related to registration and filing with the
Securities and Exchange Commission and with state regulatory authorities; and
(l) upon the approval of the Board of Directors, costs of your personnel or your
affiliates rendering clerical, accounting and other office services.
5. We shall expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect, or
purport to protect, you against any liability to us or to our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties hereunder.
6. In consideration of the foregoing we will pay you a monthly fee as set
forth on Schedule A hereto. Such fee shall be payable in arrears on the last
day of each calendar month
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for services performed hereunder during such month. If this Agreement terminates
prior to the end of a month, such fee shall be prorated according to the
proportion which such portion of the month bears to the full month.
7. This Agreement shall become effective on the date hereof, shall
continue in effect until the second anniversary of the date hereof, and may be
continued for successive twelve-month periods with respect to the Portfolio
provided that such continuance is specifically approved at least annually by the
Board of Directors or by majority vote of the holders of the outstanding voting
securities of the Portfolio (as defined in the Act), and, in either case, by a
majority of the Board of Directors who are not interested persons, as defined in
the Act, of any party to this Agreement (other than as Directors of our
corporation); provided further, however, that if the continuation of this
Agreement is not approved, you may continue to render the services described
herein in the manner and to the extent permitted by the Act and the rules and
regulations thereunder. Upon the effectiveness of this Agreement, it shall
supersede all previous agreements between us covering the subject matter hereof.
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of a majority of the outstanding voting securities (as so
defined) or by a vote of a majority of the Board of Directors on 60 days'
written notice to you, or by you on 60 days' written notice to us.
8. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by
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governing law and any interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission thereunder.
9. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees, who may also be a Director,
officer or employee of ours, or persons otherwise affiliated with us (within the
meaning of the Act) to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
trust, corporation, firm, individual or association.
10. This Agreement shall be construed in accordance with the laws of the
State of Illinois, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
Security Capital Real Estate Mutual Funds Incorporated
By: __________________________________________________
Xxxxxxx X. Xxxxx Xx., President
Agreed to and accepted as of the date first set forth above
Security Capital Global Capital Management Group Incorporated
By: ______________________________________
Name:
Title:
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SCHEDULE A
The advisory fee payable pursuant to paragraph 6 hereunder shall be:
a. During the first three months of the Portfolio's operations, an amount
equal to 2.00% of the average daily net asset value of each class of the
Portfolio's shares; and
b. Thereafter, an amount equal to 2.00% of the average daily net asset value
of each class of the Portfolio's shares, adjusted to reflect the investment
performance of the Portfolio for the prior twelve month period relative to
the investment record of the Wilshire Real Estate Index ("Index") for the
same period ("Index Return"). Until the Portfolio has completed twelve
full months of operations, the performance adjustment is measured from the
date of inception.
The advisory fee shall increase or decrease from 2.00% by 10% of the difference
between the investment performance of the Portfolio and the Index Return during
the preceding twelve month period, up to the maximum fee of 3.50% or down to the
minimum fee of 0.50%. The following table reflects the advisory fees that apply
at the stated levels of the Portfolio's performance relative to the Index
Return.
FUND PERFORMANCE ADVISORY FEE
(NET OF FEES AND EXPENSES) (AS % OF AVERAGE DAILY NET ASSETS)
-------------------------- ----------------------------------
Index Return + 15% 3.50%
Index Return + 10 3.00
Index Return + 5 2.50
Index Return + 3 2.30
Index Return + 1 2.10
Index Return 2.00
Index Return - 1 1.90
Index Return - 3 1.70
Index Return - 5 1.50
Index Return - 10 1.00
Index Return - 15 0.50
The "investment performance of the Portfolio" for a specified period shall mean
the sum of: (1) the change in the Portfolio's net asset value during such
period; (2) the value of its cash distributions per share accumulated to the end
of such period; and (3) the value of capital gains taxes per share paid or
payable on the undistributed realized long-term capital gains accumulated to the
end of such period.
The "investment record of the Index" for a specified period shall mean the sum
of: (1) the change in the level of the Index during such period; and (2) the
value, computed consistently with the Index, of cash distributions made by
companies whose securities comprise the Index
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accumulated to the end of such period, expressed as a percentage of the Index
level at the beginning of such period. Cash distributions on the securities
which comprise the Index shall be treated as reinvested in the Index at least as
frequently as the end of each calendar quarter following the payment of the
dividend.
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