Exhibit (5)(e)
INVESTMENT ADVISORY AGREEMENT
Between
PENN SERIES FUNDS, INC.
and
VONTOBEL USA, INC.
INVESTMENT ADVISORY AGREEMENT, made as of the first day of November, 1992,
by and between PENN SERIES FUNDS, INC. ("Penn Series"), a corporation organized
and existing under the laws of the State of Maryland, and VONTOBEL USA, INC.
("Adviser"), a corporation organized and existing under the laws of the State of
New York.
WITNESSETH:
WHEREAS, Penn Series is an open-end management investment company
registered as such under the federal Investment Company Act of 1940, as amended
(the "Act"); and
WHEREAS, Penn Series is authorized to issue shares in separate series with
each series representing interests in a separate fund of securities and other
assets; and
WHEREAS, Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the federal Investment Advisers Act of 1940, as amended; and
WHEREAS, Penn Series desires Adviser to render investment advisory
services, and certain accounting and related services as provided Sections 2 and
9, to Penn Series in the manner and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Investment Advisory Services. Adviser shall serve as investment
adviser and shall supervise and direct the investments of the Penn Series
International Equity Fund ("▇▇▇ ▇▇▇▇") in accordance with the investment
objectives, program and restrictions applicable to the Fund as provided in Penn
Series' prospectus and statement of additional information, as amended from time
to time, and such other limitations as may be imposed by law or as Penn Series
may impose with notice in writing to Adviser. No investment will be made by
Adviser for the Fund if that investment is in violation of the objectives,
program, restrictions or limitations of the Fund. Adviser shall not take custody
of any assets of Penn Series, but shall issue settlement instructions to the
custodian designated by Penn Series (the "Custodian"). Adviser shall obtain and
evaluate such information relating to the economy, industries, businesses,
securities markets and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and
shall formulate and implement a continuing program for the management of the
assets and resources of the Fund in a manner consistent with the investment
objectives of the Fund. In furtherance of this duty, Adviser, as agent and
attorney-in-fact with respect to Penn Series, is authorized, in its discretion
and without prior consultation with Penn Series, to:
(i) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, derivative securities, commodities, foreign
exchange contracts, and other securities or assets; and
(ii) place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such
brokers, dealers, underwriters or issuers as Adviser may select,
in conformance with the provisions of Paragraph 4 herein;
provided, however, that Adviser shall make no investment for the Fund that is in
violation of the objectives, program, restrictions or limitations of the Fund.
2. Accounting and Related Services. Adviser agrees to cooperate with the
Accounting Services Agent appointed by Penn Series pursuant to the Accounting
Services Agreement. As requested from time to time, Adviser shall provide Penn
Series and its Accounting Services Agent with such information as may be
reasonably necessary to properly account for financial transactions with respect
to the Fund.
3. Fees.
A. Fee Rate. For all of the services rendered to Penn Series
hereunder, Adviser shall be paid a fee by Penn Series, at the
annual rate of 0.75% of the Fund's average daily net assets.
B. Method of computation. The fee for the Fund shall be accrued for
each calendar day and the sum of the daily fee accruals shall be
paid monthly to Adviser by check within five business days of
the end of the calendar month. The daily fee accruals will be
computed by multiplying the fraction of one over the number of
calendar days in the year by the annual rate applicable to the
Fund as set forth above, and multiplying this product by the net
assets of the Fund. The Fund's net assets, for purposes of the
calculations described above, will be determined in accordance
with Penn Series' prospectus and statement of additional
information as of the close of business on the most recent
previous business day on which Penn Series was open for
business.
C. Expense Limitation. The expense limitation of the Fund, as a
percentage of the Fund's average net assets, is 1.50%. To the
extent that the Fund's total expenses for a fiscal year
(excluding interest, taxes, brokerage, other
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expenses which are capitalized in accordance with generally
accepted accounting principles, and extraordinary expenses, but
including investment advisory and administrative and corporate
services fees before any adjustment pursuant to this provision)
exceed the expense limitation for the Fund in an amount up to
and including .10% of the average daily net assets of the Fund,
such excess amount shall be a liability of Adviser to Penn
Series. The liability (if any) of Adviser to pay Penn Series
such excess amount shall be determined on a daily basis. If, at
the end of each month, there is any liability of Adviser to pay
Penn Series such excess amount, the advisory fee shall be
reduced by such liability. If, at the end of each month, there
is no liability of Adviser to pay Penn Series such excess amount
and if payments of the advisory fee at the end of prior months
during the fiscal year have been reduced in excess of that
required to maintain expenses within the expense limitation,
such excess reduction shall be recaptured by Adviser and shall
be payable by Penn Series to Adviser along with the advisory fee
payable to Adviser for that month. In no circumstance shall the
liability of Adviser under this Section 3C exceed the total
amount of the investment advisory fees payable to it hereunder
in any given fiscal year.
4. Brokerage. In executing portfolio transactions and selecting brokers
or dealers for the Fund, Adviser will use its best efforts to seek the best
price and the most favorable execution of its orders. In assessing the best
price and the most favorable execution for any transaction, Adviser shall
consider the breadth of the market in the security, the price of the security,
the skill, financial condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any. Where best price and most
favorable execution will not be compromised, Adviser may take into account the
research and related services that the broker has provided to Penn Series or the
Adviser. In addition, Adviser is authorized to take into account the sale of
variable contracts which are invested in Penn Series shares in allocating to
brokers or dealers purchase and sale orders for portfolio securities, provided
that Adviser believes that the quality of the transaction and commission are
comparable to what they would be with other qualified firms. Adviser shall
regularly advise Penn Series' board of directors as to all payments of
commissions and as to its brokerage and practices and shall follow such
instructions with respect thereto as may be given by Penn Series' board.
5. Use of the Services of Others. Adviser may (at its cost except as
contemplated by Section 4 of this Agreement) employ, retain or otherwise avail
itself of the services or facilities of other persons or organizations for the
purpose of providing itself or Penn Series, as appropriate, with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as Adviser may deem
necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to Penn Series, or in the discharge of, Adviser's
overall responsibilities with respect to the other accounts which it serves as
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investment adviser.
6. Personnel, Office Space, and Facilities. Adviser at its own expense
shall furnish or provide and pay the cost of such office space, office
equipment, office personnel, and office services as it, or any affiliated
corporation of Adviser, requires in the performance of services under this
Agreement.
7. Ownership of Software and Related Material. All computer programs,
magnetic tapes, written procedures and similar items developed and used by
Adviser or any affiliate in performance of this Agreement are the property of
Adviser and will not become the property of Penn Series.
8. Certain Personnel. Adviser agrees to permit individuals who are officers
or employees of Adviser to serve (if duly elected or appointed) as officers,
directors, members of any committee of directors, members of any advisory board,
or members of any other committee of Penn Series, without remuneration or other
cost to Penn Series. Adviser shall pay all salaries, expenses, and fees of
officers and/or directors of Penn Series who are affiliated with Adviser.
9. Reports to Penn Series and Cooperation with Accountants. Adviser, and
any affiliated corporation of Adviser performing services for Penn Series
described in this Agreement, shall furnish to or place at the disposal of Penn
Series, such information, reports, evaluations, analyses and opinion as Penn
Series may, at any time or from time to time, reasonably request or as Adviser
may deem helpful, to reasonably ensure compliance with applicable laws
regulations or for any other purpose. Adviser and its affiliates shall
cooperate with Penn Series' independent public accountants and take all
reasonable action in the performance of services and obligations under this
Agreement to assure that the information needed by such accountants is made
available to them for the expression of their opinion without any qualification
as to the scope of their examination, including, but not limited to, their
opinion included in Penn Series' annual report under the Act and annual
amendment to Penn Series' registration statement under the Act.
10. Reports to Adviser. Penn Series shall furnish or otherwise make
available to Adviser such prospectuses, financial statements, proxy statements,
reports, and other information relating to the business and affairs of Penn
Series, as Adviser may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
11. Ownership of Records. All records required to be maintained and kept
current by Penn Series pursuant to the provisions of rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the Act and that are
maintained and kept current by Adviser or any affiliated corporation of Adviser
on behalf of Penn Series are the property of Penn Series. Such records will be
preserved by Adviser itself or through an affiliated corporation for the periods
prescribed in Rule 3la-2 under the Act, where applicable, or in such other
applicable rules that may be adopted from time to time under the Act. Such
records may be inspected by
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representatives of Penn Series at reasonable times, and, in the event of
termination of this Agreement, will be promptly delivered to Penn Series.
12. Services to Other Clients. Nothing herein contained shall limit the
freedom of Adviser or any affiliated person of Adviser to render investment
supervisory and other services to other investment companies, to act as
investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities, but so long as this
Agreement or any extension, renewal or amendment hereof shall remain in effect
as to the Fund, or until Adviser shall otherwise consent, Adviser shall be the
only investment adviser to the Fund. It is understood that Adviser may give
advice and take action for its other clients which may differ from advice given,
or the timing or nature of action taken, for the Fund. Adviser is not obligated
to initiate transactions for the Fund in any security which Adviser, its
principals, affiliates or employees may purchase or sell for its or their own
accounts or for other clients.
13. Confidential Relationship. Information furnished by one party to
another, including a party's respective agents and employees, is confidential
and shall not be disclosed to third parties unless required by law. Adviser, on
behalf of itself and its affiliates and representatives, agrees to keep
confidential all records and other information relating to Penn Series, except
after prior notification to and approval in writing by Penn Series, which
approval shall not be unreasonably withheld and may not be withheld where
Adviser or any affiliate may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Penn Series.
14. Proxies. Subject to such direction and oversight by Penn Series as the
Board of Directors of Penn Series shall deem appropriate, Adviser shall vote
proxies solicited by or with respect to the issuers of securities held in the
Fund.
15. Instructions, Opinion of Counsel and Signatures. At any time Adviser may
apply to an officer of Penn Series for instructions, and may consult legal
counsel for Penn Series, in respect of any matter arising in connection with
this Agreement, and Adviser shall not be liable for any action taken or omitted
by it or by any affiliate in good faith in accordance with such instructions or
with the advice or opinion of Penn Series' legal counsel. Adviser and its
affiliates shall be protected in acting upon any instruction, advice, or opinion
provided by Penn Series or its legal counsel and upon any other paper or
document delivered by Penn Series or its legal counsel believed by Adviser to be
genuine and to have been signed by the proper person or persons and shall not be
held to have notice of any change of authority of any officer or agent of Penn
Series, until receipt of written notice thereof from Penn Series.
16. Compliance with Governmental Rules and Regulations. Except as such
responsibility may be placed upon Adviser or any affiliate expressly by, or by
fair implication of, the terms of this Agreement, and except for the accuracy of
information furnished to Penn Series by Adviser or any affiliate, Penn Series
assumes full responsibility for the preparation, contents and distribution of
the prospectuses for Penn Series, for complying with all applicable
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requirements of the Act, the Securities Exchange Act of 1934, the Securities Act
of 1933, and any other laws, rules and regulations of governmental authorities
having jurisdiction over Penn Series.
17. Limitation of Liability. Neither Adviser nor any of its affiliates,
their officers, directors, employees or agents, or any person performing
executive, administrative, trading, or other functions for Penn Series (at the
direction or request of Adviser), or Adviser or its affiliates in connection
with the discharge of obligations undertaken or reasonably assumed with respect
to this Agreement, shall be liable for any error of judgment or mistake of law
or for any loss suffered by Penn Series in connection with the matters to which
this Agreement relates, except for such error, mistake or loss resulting from
willful misfeasance, bad faith, negligence or misconduct in the performance of
its, his or her duties on behalf of Penn Series or constituting or resulting
from a failure to comply with any term of this Agreement. Adviser shall not be
responsible for any loss incurred by reason of any act or omission of the
Custodian, Transfer Agent, Accounting Services Agent, or other third party with
which the Fund has a contractual arrangement, or of any broker, dealer,
underwriter or issuer selected by Adviser with reasonable care.
18. Obligations of Penn Series and Adviser. It is expressly agreed that
the obligations of Penn Series and Adviser hereunder shall not be binding upon
any of their directors, shareholders, nominees, officers, agents or employees,
personally. The execution and delivery of this Agreement have been authorized
by the board of directors and shareholders of Penn Series and signed by an
authorized officer of Penn Series, acting as such, and shall bind Penn Series.
19. Indemnification by Penn Series. Penn Series will indemnify and hold
Adviser harmless from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Adviser resulting from: (i) any action
or omitting to act by Adviser or any affiliated corporation, with respect to any
service described in this Agreement, upon instructions reasonably believed by
Adviser or any affiliated corporation to have been executed by an individual who
has been identified in writing by Penn Series as a duly authorized officer of
Penn Series; or (ii) any action by Adviser or any affiliated corporation, with
respect to any service described in this Agreement, upon information provided by
Penn Series in form and under policies agreed to by Adviser and Penn Series.
Adviser shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or willful misconduct of Adviser or its
affiliates, agents or contractors, or constituting a failure by Adviser or any
affiliate to comply with any-term of this Agreement. Prior to the confession of
any claim against Adviser which Adviser shall give Penn Series may be subject to
this indemnification, name or in the reasonable opportunity to defend against
said claim in its Own name of Adviser.
20. Indemnification by Adviser. Adviser will indemnify and hold harmless
Penn Series from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Penn Series resulting from any claim,
demand, action or suit arising out of Adviser's or any affiliate's failure to
comply with any term of this Agreement or which arise out of the
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willful misfeasance, bad faith, negligence or misconduct of Adviser, its
affiliates, their agents or contractors. Penn Series shall not be entitled to
such indemnification in respect of actions or omissions constituting negligence
or willful misconduct of Penn Series or its agents or contractors or
constituting a failure by Penn Series to comply with any term of this Agreement;
provided, that such negligence or misconduct is not attributable to Adviser or
any person that is an affiliate of Adviser or an affiliate of an affiliate of
Adviser. Prior to confessing any claim against it which may be subject to this
indemnification, Penn Series shall give Adviser reasonable opportunity to defend
against said claim in its own name or in the name of Penn Series. For purposes
of this Section 20 and of Section 19 hereof, no broker or dealer, or any third
party with which the Fund has a contractual arrangement and with which Adviser
is obligated to cooperate under the terms of this Agreement, shall be deemed to
be acting as agent or contractor of Penn Series, Adviser or any affiliate of
Adviser, in effecting or executing any portfolio transaction for the Fund.
21. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate purposes
hereof.
22. Dual Interests. It is understood that some person or persons may be,
or from time to time may become, directors, officers, or shareholders of both
Penn Series and Adviser (including its affiliates), and that the existence of
any such dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided by a specific provision of
applicable law.
23. Term of Agreement. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through October 31, 1993. Thereafter, this
Agreement shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions hereof, so long as such
continuation shall be specifically approved at least annually (a) by either the
board of directors of Penn Series, or by a vote of a majority of the outstanding
voting securities of the series of shares of Penn Series representing interests
in the Fund; (b) in either event by the vote, cast in person at a meeting called
for the purpose of voting on such approval, of a majority of the directors of
Penn Series who are not parties to this Agreement or interested persons of any
such party; and (c) Adviser shall not have notified Penn Series, in writing, at
least 90 days prior to October 31, 1993 or prior to October 31 of any year
thereafter, that it does not desire such continuation. Adviser shall furnish to
Penn Series, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
24. Amendment and Assignment of Agreement. This Agreement may not be
amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the series of shares of Penn Series
representing interests in the Fund, and, without affecting any claim for damages
or other right that Penn Series may have as a result thereof, this Agreement
shall automatically and immediately terminate in the event of its assignment.
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25. Termination of Agreement. This Agreement may be terminated by Penn
Series or by Adviser, without the payment of any penalty, upon 60 days' prior
notice in writing from Penn Series to Adviser, or upon 90 days' prior notice in
writing from Adviser to Penn Series; provided, that in the case of termination
by Penn Series, such action shall have been authorized by resolution of a
majority of its directors who are not interested persons of any party to this
Agreement, or by vote of a majority of the outstanding voting securities of the
series of shares of Penn Series representing interests in the Fund.
26. Miscellaneous.
A. Captions. The captions in this Agreement are convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
B. Interpretation. Nothing herein contained shall be deemed to
require Penn Series to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to
relieve or deprive the board of directors of Series of its
responsibility for and control of the conduct of the affairs of Penn
Series.
C. Definitions. Any question of interpretation of provision of this
Agreement having a counterpart in or derived from a term or provision
of the Act shall be resolved by reference to such term or provision of
the Act and to interpretations thereof, if any, by the United States
courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the terms
"vote of a majority of the outstanding voting securities," "interested
person," "assignment," and "affiliated person," as used herein, shall
have the meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or
order of the Securities and Exchange Commission, whether of special or
of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
D. Notice. Notice under the Agreement shall be in writing, addressed
and delivered or sent by registered or certified mail, postage
prepaid, to the addressed party at such address as such party may
designate for the receipt of such notices. Until further notice, it is
agreed that for this purpose the address of Penn Series is ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President, and
that of Adviser is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ F, ▇'▇▇▇▇▇, Vice President and Compliance
Officer.
E. State Law. The Agreement shall be construed and enforced in
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accordance with and governed by the laws of the State of Maryland
except where such state laws have been preempted by Federal law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
Attest: PENN SERIES FUNDS, INC.
/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- ------------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Attest: VONTOBEL USA, INC.
/s/ By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- ------------------------------------
Secretary ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
By:/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Vice President & Compliance Officer
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