EXHIBIT 5
MAGNA GROWTH & INCOME FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 31, 1994 between MAGNA FUNDS, a Massachusetts
business trust (herein called the "Trust"), and MAGNA BANK OF MISSOURI, a
Missouri Trust Company with its principal offices in St. Louis, Missouri (herein
called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Magna Growth & Income Fund (the "Fund"), an
investment portfolio of the Trust, and the Investment Adviser represents that it
is willing and possesses legal authority to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
-----------
as investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Management. Subject to the supervision of the Trust's Board of
----------
Trustees, the Investment Adviser will provide a continuous investment program
for the Trust, including investment research and management with respect to all
securities and investments and cash equivalents of the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Trust's investment objective, policies and restrictions as stated in
the Prospectus and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to any fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) will place orders pursuant to its investment determinations for the
Trust either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Investment
Adviser will attempt to obtain prompt execution of orders in an effective manner
at the most favorable price. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers are comparable,
the Investment Adviser may, in its discretion, purchase and sell portfolio
securities to and from brokers and dealers who provide the Investment Adviser
with research advice and other services. Unless and until appropriate
procedures are adopted by the Trustees of the Trust under Rule 17e-1 of the 1940
Act and unless the provisions of such Rule are complied with, portfolio
securities will not be purchased from or sold to Ernst & Company, the Investment
Adviser, or any affiliated person of the Trust, Ernst & Company, or the
Investment Adviser;
(d) will maintain all books and records with respect to the Trust's
securities transactions and will furnish the Trust's Board of Trustees such
periodic and special reports as the Board may request; and
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present or potential interestholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where the Investment Adviser 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 the Trust.
3. Services Not Exclusive. The investment management services furnished
----------------------
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule 3la-3
-----------------
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 3la-3 under the 1940 Act the records required to be maintained by Rule 3la-
1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Investment Adviser
--------
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee computed
daily and paid monthly at the applicable annual rate of 0.75% of average daily
net assets. The Trust's obligation to pay the above-described fee to the
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Investment Adviser will begin as of the date of the initial public sale of
shares in the Fund.
If in any fiscal year the aggregate expenses of the Funds (as defined under
the securities regulations of any state having jurisdiction over the Fund)
exceed the expense limitations of any such state, the Investment Adviser will
reimburse the Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees otherwise payable by the Fund to the Investment
Adviser hereunder to the aggregate fees otherwise payable by the Fund to the
Investment Adviser hereunder and to Ernst Asset Management Corporation under the
Administration Agreement between Ernst Asset Management Corporation and the
Fund. The obligation of the Investment Adviser to reimburse the Fund hereunder
is limited in any fiscal year to the amount of its fee hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Investment
-------- -------
Adviser shall reimburse the Fund for such proportion of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over the
Fund so require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
7. Limitation of Liability. The Investment Adviser shall not be liable
-----------------------
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by the Investment Adviser of its obligations
and duties under this Agreement.
8. Duration and Termination. This Agreement will become effective as to
------------------------
the Trust as of the date first written above, provided that it shall have been
approved by vote of a majority of the outstanding voting securities of the
Trust, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until June 30,
1995.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on June 30th of each year,
provided such continuance is specifically approved at least annually (a) by the
--------
vote of a majority of those members of the Trust's Board of Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the vote of a majority of the Trust's Board of Trustees or by the
vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time on
sixty days' written notice, without the payment of any penalty, by the Trust (by
vote of the Fund's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund) or by the Investment Adviser. This Agreement will
immediately terminate in the event of its assignment. If the Investment Adviser
requires the Trust or the Fund to change its name so as
-3-
to eliminate all references to the word "Magna," then this Agreement shall
automatically terminate at the time of such change unless the continuance of
this Agreement after such change shall have been specifically approved by vote
of a majority of the outstanding voting securities of the Fund and by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or the Investment Adviser, cast in person at a meeting called for the
purpose of voting on such approval. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
9. Amendment of this Agreement. No provision of this Agreement may be
---------------------------
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
10. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
on behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the Trustees, officers or shareholders individually but are binding
only upon the assets and property belonging to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
MAGNA FUNDS
Seal By:
-----------------------------
Title:
--------------------------
MAGNA BANK OF MISSOURI
Seal By:
-----------------------------
Title:
--------------------------
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MAGNA INTERMEDIATE GOVERNMENT BOND FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 31, 1994 between MAGNA FUNDS, a Massachusetts
business trust (herein called the "Trust"), and MAGNA BANK OF MISSOURI, a
Missouri Trust Company with its principal offices in St. Louis, Missouri (herein
called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Magna Intermediate Government Bond Fund (the
"Fund"), an investment portfolio of the Trust, and the Investment Adviser
represents that it is willing and possesses legal authority to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
-----------
as investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Management. Subject to the supervision of the Trust's Board of
----------
Trustees, the Investment Adviser will provide a continuous investment program
for the Trust, including investment research and management with respect to all
securities and investments and cash equivalents of the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Trust's investment objective, policies and restrictions as stated in
the Prospectus and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to any fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) will place orders pursuant to its investment determinations for the
Trust either directly with the issuer or with any broker or
dealer. In placing orders with brokers and dealers, the Investment Adviser
will attempt to obtain prompt execution of orders in an effective manner at
the most favorable price. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers are
comparable, the Investment Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who provide the
Investment Adviser with research advice and other services. Unless and
until appropriate procedures are adopted by the Trustees of the Trust under
Rule 17e-1 of the 1940 Act and unless the provisions of such Rule are
complied with, portfolio securities will not be purchased from or sold to
Ernst & Company, the Investment Adviser, or any affiliated person of the
Trust, Ernst & Company, or the Investment Adviser;
(d) will maintain all books and records with respect to the Trust's
securities transactions and will furnish the Trust's Board of Trustees such
periodic and special reports as the Board may request; and
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present or potential interestholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where the Investment Adviser 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 the Trust.
3. Services Not Exclusive. The investment management services furnished
----------------------
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule 3la-3
-----------------
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 3la-3 under the 1940 Act the records required to be maintained by Rule
3la-1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Investment Adviser
--------
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee computed
daily and paid monthly at the applicable annual rate of 0.50% of average daily
-2-
net assets. The Trust's obligation to pay the above-described fee to the
Investment Adviser will begin as of the date of the initial public sale of
shares in the Fund.
If in any fiscal year the aggregate expenses of the Funds (as defined under
the securities regulations of any state having jurisdiction over the Fund)
exceed the expense limitations of any such state, the Investment Adviser will
reimburse the Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees otherwise payable by the Fund to the Investment
Adviser hereunder to the aggregate fees otherwise payable by the Fund to the
Investment Adviser hereunder and to Ernst Asset Management Corporation under the
Administration Agreement between Ernst Asset Management Corporation and the
Fund. The obligation of the Investment Adviser to reimburse the Fund hereunder
is limited in any fiscal year to the amount of its fee hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Investment
-------- -------
Adviser shall reimburse the Fund for such proportion of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over the
Fund so require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
7. Limitation of Liability. The Investment Adviser shall not be liable
-----------------------
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by the Investment Adviser of its obligations
and duties under this Agreement.
8. Duration and Termination. This Agreement will become effective as to
------------------------
the Trust as of the date first written above, provided that it shall have been
approved by vote of a majority of the outstanding voting securities of the
Trust, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until June 30,
1995.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on June 30th of each year,
provided such continuance is specifically approved at least annually (a) by the
--------
vote of a majority of those members of the Trust's Board of Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the vote of a majority of the Trust's Board of Trustees or by the
vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time on
sixty days' written notice, without the payment of any penalty, by the Trust (by
vote of the Fund's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund) or by the Investment Adviser. This Agreement will
immediately terminate in the event of its assignment. If
-3-
the Investment Adviser requires the Trust or the Fund to change its name so as
to eliminate all references to the word "Magna," then this Agreement shall
automatically terminate at the time of such change unless the continuance of
this Agreement after such change shall have been specifically approved by vote
of a majority of the outstanding voting securities of the Fund and by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or the Investment Adviser, cast in person at a meeting called for the
purpose of voting on such approval. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
9. Amendment of this Agreement. No provision of this Agreement may be
---------------------------
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
10. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
on behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the Trustees, officers or shareholders individually but are binding
only upon the assets and property belonging to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
MAGNA FUNDS
Seal By: __________________________
Title: __________________________
MAGNA BANK OF MISSOURI
Seal By: __________________________
Title: __________________________
-4-
