Exhibit (d)(7)
INVESTMENT MANAGEMENT AGREEMENT
XXXXX XXXXXX INVESTMENT FUNDS INC.
Xxxxx Xxxxxx Multiple Discipline Funds--
Balanced All Cap Growth and Value Fund
XXXXX XXXXXX FUND MANAGEMENT LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxx Xxxxxx Investment Funds Inc. (the "Company"), a corporation organized
under the laws of the State of Maryland, on behalf of its new series, Xxxxx
Xxxxxx Multiple Discipline Funds--Balanced All Cap Growth and Value Fund (the
"Fund"), herewith confirms its agreement with Xxxxx Xxxxxx Fund Management LLC
(the "Manager"), as follows:
1. Investment Description; Appointment
The Company desires to employ the Fund's capital investing and reinvesting
in investments of the kind and in accordance with the investment objectives,
policies and limitations specified in (i) the Company's Charter as amended from
time to time (the "Charter"); (ii) the Fund's prospectus (the "Prospectus") and
(iii) the Fund's Statement of Additional Information (the "SAI") filed with the
Securities and Exchange Commission (the "SEC") as part of the Company's
Registration Statement on Form N-1A on June 30, 2004, as amended from time to
time, and in the manner and to the extent as may from time to time be approved
by the Board of Directors of the Company (the "Board"). Copies of the Prospectus
and the SAI have been or will be submitted to the Manager. The Company agrees
promptly to provide copies of all amendments to the Prospectus and the SAI to
the Manager on an on-going basis. The Company desires to employ and hereby
appoints the Manager to act as manager of the Fund. The Manager accepts the
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board, the Manager shall
(a) act in strict conformity with the Company's Charter, the Investment Company
Act of 1940 (the "1940 Act") and the Investment Advisers Act of 1940, (the
"Advisers Act") as the same may from time to time be amended, (b) manage the
Fund's assets in accordance with the Fund's investment objectives 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 (collectively, the "Advisory Services"). In
providing the Advisory Services, the Manager 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 Manager will furnish the Fund with whatever statistical
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 the Company and, where required,
the Fund's shareholders, the Manager 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 Manager 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 Company's
Board and subject to the requirements of the 1940 Act.
In addition to the Advisory Services outlined above, the Manager will (a)
assist in supervising all aspects of the Fund's operations; (b) supply the Fund
with office facilities (which may be in the Manager's own offices), statistical
and research data, data processing services, clerical, accounting and
bookkeeping services, including, but not limited to, the calculation of (i) the
net asset value of shares of the Fund, (ii) applicable contingent deferred sales
charges and similar fees and charges and (iii) distribution fees, internal
auditing and legal services, internal executive and administrative services, and
stationery and office supplies; and (c) prepare reports to shareholders of the
Fund, tax returns and reports to and filings with the SEC and state Blue Sky
authorities.
3. Brokerage
In executing transactions for the Fund, selecting brokers or dealers
(including, if permitted by applicable law, Citigroup Global Markets Inc.) and
negotiating any brokerage commission rates, the Manager will use its best
efforts to seek the best overall terms available. In assessing the best overall
terms available for any portfolio transaction, the Manager will consider factors
it deems relevant, including, but not limited to, the 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 Manager is
authorized to 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 Manager or its affiliates exercise investment discretion. Nothing in
this paragraph shall be deemed to prohibit the Manager from paying an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker, or dealer would have charged
for effecting that transaction, if the Manager determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker, or dealer,
viewed in terms of either that particular transaction or its overall
responsibilities with respect to the Fund and/or other accounts over which the
Manager or its affiliates exercise investment discretion.
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4. Information Provided to the Company
The Manager shall keep the Company informed of developments materially
affecting the Fund, and shall, on its own initiative, furnish the Company from
time to time with whatever information the Manager believes is appropriate for
this purpose.
5. Standard of Care
The Manager shall exercise its best judgment and shall act in good faith in
rendering the services listed in paragraphs 2 and 3 above. The Manager shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which this Agreement relates,
provided that nothing in this Agreement shall be deemed to protect or purport to
protect the Manager against any liability to the Company or the shareholders of
the Fund to which the Manager 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 Manager's reckless disregard of its obligations and
duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay the Manager an annual fee calculated at the rate of 0.75% of the
Fund's average daily net assets; the fee is calculated daily and paid monthly.
The fee for the period from the Effective Date (defined below) of the Agreement
to the end of the month during which the Effective Date occurs shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for
such part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Manager, the value of the Fund's net assets shall be computed at the times
and in the manner specified in the Prospectus and/or the SAI, as from time to
time in effect.
7. Expenses
The Manager shall bear all expenses (excluding brokerage costs, custodian
fees, auditors fees or other expenses to be borne by the Fund or the Company) 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 shall bear certain other expenses to be incurred in
its operation, including, but not limited to, investment advisory, any
sub-advisory and administration fees; charges of custodians and transfer and
dividend disbursing agents; fees for necessary professional services, such as
the Fund's and Directors' proportionate share of insurance premiums,
professional associations, dues and/or assessments; and brokerage services,
including taxes, interest and commissions; costs attributable to investor
services, including, without limitation, telephone and personnel expenses; costs
of preparing and printing prospectuses and SAIs for regulatory purposes and for
distribution to existing shareholders; fees for any pricing service; the costs
of regulatory compliance, such as SEC fees and state Blue Sky qualification
fees; outside auditing and legal expenses and costs associated with maintaining
the Company's legal existence; costs of shareholders' reports and meetings of
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officers or the Board; fees of Directors who are not officers, directors or
employees of Citigroup Global Markets Inc. or its affiliates or any person who
is an affiliate of any person to whom duties may be delegated hereunder; and any
extraordinary expenses. In addition, the Fund will pay all service and
distribution fees pursuant to a Services and Distribution Plan adopted by the
Company under Rule 12b-1 under the 1940 Act.
The Company 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 Company with respect to such litigation and other
expenses as determined by the Board.
8. Services to Other Companies or Accounts
The Company understands that the Manager now acts, will continue to act and
may act in the future as investment manager or adviser to fiduciary and other
managed accounts, and as investment manager or adviser to other investment
companies, and the Company has no objection to the Manager's so acting, provided
that whenever the Fund and one or more other investment companies or accounts
managed or advised by the Manager 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 Company recognizes
that in some cases this procedure may adversely affect the size of the position
obtainable for the Fund. In addition, the Company understands that the persons
employed by the Manager to assist in the performance of the Manager's duties
under this Agreement will not devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit or restrict the right of
the Manager or any affiliate of the Manager 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 Manager to
perform its services under this Agreement.
10. Term of Agreement
This Agreement shall become effective July 16, 2004 (the "Effective Date"),
shall continue for an initial two-year term and shall continue thereafter so
long as such continuance is specifically approved at least annually as required
by (i) the Board or (ii) the vote of a majority of the Fund's outstanding voting
securities, provided that in either event the continuance is also approved by a
majority of the Directors who are not interested persons of any party to this
Agreement, by vote cast in person or by proxy 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 or by vote of holders of a
majority of the Fund's outstanding voting securities, or upon 60 days' written
notice by the Manager. This Agreement will also terminate automatically in the
event of its assignment.
11. Interpretation and Definition of Terms
Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretation thereof, if any, by the United States courts or, in
the absence of any controlling decision of any such court, by rules,
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regulations or orders of the SEC validly issued pursuant to the 1940 Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment" and "affiliated person," as used
in this Agreement, shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is modified, interpreted or relaxed
by a rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
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If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning the enclosed copy of
this Agreement.
Very truly yours,
XXXXX XXXXXX INVESTMENT FUNDS INC.,
on behalf of its Xxxxx Xxxxxx Multiple Discipline
Funds--Balanced All Cap Growth and Value Fund
By: s/R. Xxx Xxxxxx
---------------
Name: R. Xxx Xxxxxx
Title: Chairman, President and Chief Executive
Officer
Accepted:
XXXXX XXXXXX FUND MANAGEMENT LLC
By: s/R. Xxx Xxxxxx
---------------
Name: R. Xxx Xxxxxx
Title: Chairman, President and Chief Executive Officer
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