Advisory Contract
Valgro Funds, Inc.
Advisory Contract
By this contract, Valgro Investments, Inc. ("Adviser"), an Illinois
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 at the time the SEC notifies Advisee that its
registration is declared effective. The contract is for a term of one year,
but advisee may terminate the contract at any time without penalty. The
contract is automatically renewable, unless Adviser notifies Advisee at least
60 days before expiration, or unless Advisee notifies Adviser at any time.
Adviser shall be given discretionary authority over Xxxxxxx's brokerage
account, but not custody over Xxxxxxx's assets. Subject to Adviser's attached
xxxxxxx xxxxxxx policy, Adviser shall be permitted to execute any trades that
are legally permitted for Advisee, consistent with the Advisee's investment
objectives as stated in Xxxxxxx'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 September 21, 1999, in Chicago, Illinois:
Xxxxxx Xxxxxx
President & Chairman, Valgro Funds, Inc.
Xxxxxx Xxxxxx
President & Chairman, Valgro Investments, Inc.
Attachment: Xxxxxxx Xxxxxxx Policy 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, an insider is
explicitly permitted to buy or sell securities it knows 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 accounts, to ensure compliance with the rules.
For each of the 4 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 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 4 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.
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.
