EX 10.5
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 20th day of January, 1995 among UNITED SERVICES
ADVISORS, INC., a corporation organized under the laws of the State of Texas
(the "Adviser"), UNITED SERVICES FUNDS, a Massachusetts business trust having
its principal place of business in San Antonio, Texas (the "Trust"), on behalf
of the China Region Opportunity Fund (the "Fund"), a series of shares of the
Trust, and Batterymarch Financial Management, Inc. ("BFM, Inc."), whose
principal place of business is Boston, Massachusetts (the "Sub-Adviser").
WHEREAS, the Adviser is engaged in the business of rendering investment
management services to the Trust; and
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust is operated as a "series company" within the meaning of
Rule 18f-2 under the 1940 Act and has fifteen separate series of shares of
beneficial interest, one of which series is the Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-ADVISER.
The Sub-Adviser is hereby appointed to provide investment advisory
services to the Fund for the period and on the terms herein set forth.
The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DUTIES OF SUB-ADVISER.
(a) The Sub-Adviser is hereby authorized and directed and hereby
agrees, subject to the stated investment objective and policies
of the Fund as set forth in the Fund's Prospectus (as defined
below) and subject to the supervision of the Adviser and the
Board of Trustees of the Trust, (i) to develop, recommend and
implement such investment program and strategy for the Fund as
may from time to time in the circumstances appear most
appropriate to the achievement of the investment objective of the
Fund as stated in the aforesaid Prospectus, (ii) to provide
research and analysis relative to the investment program and
investments of the Fund, (iii) to determine what securities
should be purchased and sold and what portion of the assets of
the Fund should be held in cash or cash equivalents and (iv) to
monitor on a continuing basis the performance of the portfolio
securities of the Fund. The Sub-Adviser will advise the Trust's
custodian and the Adviser on a prompt basis of each purchase and
sale of a portfolio security specifying the name of the issuer,
the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price,
trade date, settlement date and identity of the effecting broker
or dealer. From time to time, as the Trustees of the Trust or the
Adviser may reasonably request, the Sub-Adviser will furnish to
the Trust's officers and to each of its Trustees reports on
portfolio transactions and reports on issues of securities held
in the portfolio, all in such detail as the Trust or the Adviser
may reasonably request. The Sub-Adviser will also inform the
Trust's officers and Trustees on a current basis of changes in
investment strategy or tactics. The Sub-Adviser will make its
officers and employees available to meet with the Trust's
officers and Trustees on due notice to review the investments and
investment program of the Fund.
The Sub-Adviser shall place all orders for the purchase and sale
of portfolio securities for the account of the Fund with brokers
or dealers selected by the Sub-Adviser, although the Trust will
pay the actual brokerage commissions and any transfer taxes with
respect to transactions in the portfolio securities of the Trust.
The Sub-Adviser is authorized to submit any such order
collectively with orders on behalf of other accounts under its
management, provided that the Sub-Adviser shall have determined
that such action is in the best interest of the Fund and is in
accordance with applicable law, including, without limitation,
Rule 17d-1 under the 1940 Act. In executing portfolio
transactions and selecting brokers or dealers, the Sub- Adviser
will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall consider all
factors it deems relevant, including 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 the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services (as those terms
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund and/or other accounts over which the
Sub-Adviser or an affiliate of the Sub-Adviser exercises
investment discretion. The Sub-Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for
the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such
broker or dealer, viewed in terms of that particular transaction
or in terms of all of the accounts over which investment
discretion is so exercised. An affiliated person of the
Sub-Adviser may provide brokerage services to the Fund provided
that the Sub-Adviser shall have determined that such action is
consistent with its obligation to seek the best overall terms
available and is in accordance with applicable law, including,
without limitation, Section 17(e) of the 0000 Xxx. The foregoing
shall not be deemed to authorize an affiliated person of the
Sub-Adviser to enter into transactions with the Fund as
principal.
In the performance of its duties hereunder, the Sub-Adviser is
and shall be an independent contractor and unless otherwise
expressly provided or authorized shall have no authority to act
for or represent the Trust in any way or otherwise be deemed to
be an agent of the Trust or of the Adviser.
(b) Delivery of Documents. The Adviser will furnish upon request or
has furnished the Sub- Adviser with true copies of each of the
following:
(i) The Trust's Master Trust Agreement dated July 31, 1984, as
filed with the Secretary of State of the Commonwealth of
Massachusetts and all amendments thereto (such Master Trust
Agreement, as presently in effect and as it shall from time
to time be amended, is herein called the "Master Trust
Agreement");
(ii) The Trust's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as it shall from time to time be
amended, is herein called the "By-Laws");
(iii)Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Adviser and Sub-Adviser and approving
the Advisory Agreement and this Agreement;
(iv) The most recent Post-Effective Amendment to the Trust's
Registration Statement on Form N-1A under the Securities Act
of 1933 as amended ("1933 Act") and the 1940 Act as filed
with the Securities and Exchange Commission;
(v) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements
thereto being referred to herein as the "Prospectus"); and
(vi) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Fund.
During the term of this Agreement the Adviser shall not use or
implement any amendment or supplement that relates to or affects the
obligations of the Sub-Adviser hereunder if the Sub-Adviser reasonably
objects in writing within five business days after delivery thereof
(or such shorter period of time as the Adviser shall specify upon
delivery, if such shorter period of time is reasonable under the
circumstances).
3. ADVISORY FEE.
(a) For the services to be provided to the Fund by the Sub-Adviser as
provided in Paragraph 2 hereof, the Adviser will pay the
Sub-Adviser a monthly fee as soon as practical after the last day
of each calendar month, which fee shall be paid at a rate set
forth below upon the Monthly Average Net Assets (as defined in
subparagraph (C) below) of the Fund for such calendar month. The
Sub-Advisers fee will be 1.00% (100 basis points) on an
annualized basis, with no minimum fee.
(b) In the case of termination of the Agreement during any calendar
month, the fee with respect to that month shall be reduced
proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the
average net assets of the Fund for the business days during which
it is so in effect.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the
sum of the net assets of the Fund, determined in accordance with
procedures established from time to time by or under the
direction of the Board of Trustees of the Trust in accordance
with the Master Trust Agreement, as of the close of business on
each day during such month that the Fund was open for business,
by (ii) the number of such days.
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all
expenses incurred by it in the performance of its duties hereunder.
5. FUND TRANSACTIONS.
The Sub-Adviser agrees that neither it nor any of its trustees,
employees, officers or directors will take any long or short term
position in the shares of the Fund; provided, however, that such
prohibition shall not prevent the purchase of shares of the Fund by
any of the persons above described for their account and for
investment at the price at which such shares are available to the
public at the time of purchase.
6. REPRESENTATION AND WARRANTY.
The Sub-Adviser hereby represents and warrants to the Adviser that it
is duly registered as an investment adviser, or is exempt from
registration, under the Investment Advisor's Act of 1940, as amended,
and that it shall maintain such registration or exemption at all times
during which this Agreement is in effect.
7. LIABILITY OF SUB-ADVISER.
In the performance of its duties under this Agreement, the Sub-Adviser
shall act in conformity with and in compliance with the requirements
of the 1940 Act and all other applicable U.S. Federal and state laws
and regulations and shall not cause the Fund to take any action that
would require the Fund or any affiliated person thereof to register as
a commodity pool operator under the terms of the U.S. Commodity
Exchange Act, as amended (it being understood by the Sub-Adviser that
a notice of eligibility has been filed on behalf of the Trust pursuant
to Rule 4.5 promulgated under said Act). The Sub-Adviser shall be
responsible for maintaining such procedures as may be reasonably
necessary to ensure that the investment and reinvestment of the Fund's
assets are made in compliance with its investment objectives and
policies and with all applicable statues and regulations. No provision
of this Agreement shall be deemed to protect the Sub-Adviser against
any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement.
8. REPORTS.
The Sub-Adviser shall render to the Board of Trustees of the Trust
such periodic and special reports as the Board of Trustees may
reasonably request with respect to matters relating to duties of the
Sub- Adviser set forth herein.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective upon the date
hereof and shall continue in full force and effect from year to
year thereafter so long as such continuance is approved at least
annually (i) by either the Trustees of the Trust or by vote of a
majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, and (ii) in either event by the vote of a
majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 0000 Xxx) of
any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty (i) by vote of the Trustees of the
Trust or by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 0000 Xxx) on sixty (60)
days' written notice to the other parties, (ii) by the Adviser on
sixty (60) days' written notice to the other parties or (iii) by
the Sub-Adviser on ninety (90) days' written notice to the other
parties.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or upon
expiration of the Advisory Agreement now or hereafter in effect
between the Adviser and the Trust with respect to the Fund.
10. SERVICES NOT EXCLUSIVE.
The services of the Sub-Adviser of the Fund hereunder are not to be
deemed exclusive, and the Sub- Adviser shall be free to render similar
services to others.
11. LIMITATION OF LIABILITY.
(a) The term "United Services Funds" means and refers to the Trustees
from time to time serving under the Master Trust Agreement. It is
expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally,
but bind only the assets and property of the Trust, as provided
in the Master Trust Agreement. The execution and delivery of the
Agreement have been authorized by the Trustees and shareholders
of the Trust and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees
and shareholders nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind
only the assets and property of the Trust as provided in its
Master Trust Agreement.
12. PROXY VOTING.
Decisions on voting of proxies will be made by or under the direction
of the Sub-Adviser.
13. MISCELLANEOUS.
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
parties at such address as such other parties may designate in
writing for the receipt of such notices.
(b) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the Adviser, the Trust and the Sub-Adviser have caused
this Agreement to be executed on the day and year first above written.
UNITED SERVICES ADVISORS, INC.
By: XXXXX X. XXXXXX
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UNITED SERVICES FUNDS
By: XXXXX X. XXXXXX
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BATTERYMARCH FINANCIAL MANAGEMENT, INC.
By: XXXXX XXXXXXX
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