1
INVESTMENT ADVISORY AGREEMENT
INTERSTATE FUND
(A SERIES OF FINANCIAL INVESTORS TRUST)
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this _____
day of March, 2000, between Interstate Advisors, Inc., a [state] corporation
("Interstate Advisors") and Financial Investors Trust, a Delaware business trust
(the "Trust"), with respect to the Interstate Fund, a series of the Trust (the
"Fund").
RECITALS
A. The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares for public offering under the Securities Act of 1933, as
amended (the "1933 Act").
B. The Trust is authorized to create separate series of shares, each
with its own separate investment portfolio, one of such series created by the
Trust being the Fund.
C. The Trust and Interstate Advisors deem it mutually advantageous that
Interstate Advisors should assist the Trustees and officers of the Trust in the
management of the securities portfolio of the Fund.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Appointment. The Trust hereby appoints Interstate Advisors as
investment adviser and manager with respect to the Fund for the period and on
the terms set forth in this Agreement. Interstate Advisors hereby accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Investment Advisory Functions. In its capacity as investment
adviser to the Fund, Interstate Advisors shall have the following duties and
responsibilities:
(a) To manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine
without prior consultation with the Trust, what securities
and other assets of the Fund will be acquired, held,
disposed of or loaned, in conformity with the investment
objective, policies and restrictions and the other
statements concerning the Fund in the Trust's trust
instrument, as amended from time to time (the "Trust
Instrument"), bylaws, and registration statements under the
1940 Act and the 1933 Act, the Investment Advisers Act of
1940, as amended (the "Advisers Act"), the rules thereunder,
and all other applicable federal and state laws and
regulations, and the provisions of the Internal Revenue Code
of 1986, as amended, applicable to the Fund as a regulated
investment company;
(b) To cause its officers to attend meetings and furnish oral or
written reports, as the Trustees may reasonably require, in
order to keep the Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment
portfolio of the Fund, the investment decisions of
Interstate Advisors, and the investment considerations which
have given rise to those decisions;
2
(c) To place orders for the purchase and sale of securities for
investments of the Fund and for other related transactions;
to give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and receipt and payments of cash for
the account of the Fund, and advise the Trust on the same
day such instructions are given; to submit such reports
relating to the valuation of the Fund's assets and to
otherwise assist in the calculation of the net asset value
of shares of the Fund as may reasonably be requested; on
behalf of the Fund, to exercise such voting rights,
subscription rights, rights to consent to corporate action
and any other rights pertaining to the Fund's assets that
may be exercised, in accordance with any policy pertaining
to the same that may be adopted or agreed to by the Trustees
of the Trust, or, in the event that the Trust retains the
right to exercise such voting and other rights, to furnish
the Trust with advice as to the manner in which such rights
should be exercised;
(d) To maintain all books and records required to be maintained
by Interstate Advisors pursuant to the 1940 Act and the
rules and regulations promulgated thereunder, as the same
may be amended from time to time, with respect to
transactions on behalf of the Fund, and shall furnish the
Trustees with such periodic and special reports as the
Trustees reasonably may request. Interstate Advisors agrees
that all records which it maintains for the Fund are the
property of the Trust, agrees to permit the reasonable
inspection thereof by the Trust or its designees and agrees
to preserve for the periods prescribed under the 1940 Act
any records which it maintains for the Fund and which are
required to be maintained under the 1940 Act, and further
agrees to surrender promptly to the Trust or its designees
any records which it maintains for the Trust upon request by
the Trust; and
(e) At such times as shall be reasonably requested by the
Trustees, to provide the Trustees with economic, operational
and investment data and reports, including without
limitation all information and materials reasonably
requested by or requested to be delivered to the Trustees of
the Trust pursuant to Section 15(c) of the 1940 Act, and
make available to the Trustees any economic, statistical and
investment services normally available to similar investment
company clients of Interstate Advisors.
3. Further Obligations. In all matters relating to the performance of
this Agreement, Interstate Advisors shall act in conformity with the Trust's
Trust Instrument, bylaws and currently effective registration statements under
the 1940 Act and the 1933 Act and any amendments or supplements thereto (the
"Registration Statements") and with the written policies, procedures and
guidelines of the Fund, and written instructions and directions of the Trustees
of the Trust and shall comply with the requirements of the 1940 Act, the
Advisers Act, the rules thereunder, and all other applicable federal and state
laws and regulations. The Trust agrees to provide Interstate Advisors with
copies of the Trust's Trust Instrument, bylaws, Registration Statements, written
policies, procedures and guidelines, and written instructions and directions of
the Trustees, and any amendments or supplements to any of them at, or, if
practicable, before the time such materials become effective.
2
3
4. Obligations of Trust. The Trust shall fulfill or cause its agents to
fulfill the following obligations under this Agreement:
(a) To keep Interstate Advisors continuously and fully informed as to
the composition of the investment portfolio of the Fund and the
nature of all of the Fund's assets and liabilities from time to
time;
(b) To furnish Interstate Advisors with a certified copy of any
financial statements or reports prepared for the Fund by
certified or independent public accountants and with copies of
any financial statements or reports made to the Fund's
shareholders or to any governmental body or securities exchange;
(c) To furnish Interstate Advisors with any further materials or
information which Interstate Advisors may reasonably request to
enable it to perform its function under this Agreement; and
(d) To compensate Interstate Advisors for its services in accordance
with the provisions of Section 5 hereof.
5. Compensation. The Trust shall pay to Interstate Advisors for its
services under this Agreement a fee, payable in United States dollars, at an
annual rate of 1.00% of the average daily net asset value of the Fund up to $500
million, .75% of the average daily net asset value of the Fund on the next $500
million, and .50% of the average daily net asset value of the Fund in excess of
$1 billion. This fee shall be computed and accrued daily and payable monthly on
the last day of each month during which or part of which this Agreement is in
effect. For the month during which this Agreement becomes effective and the
month during which it terminates, however, there shall be an appropriate
proration of the fee payable for such month based on the number of calendar days
of such month during which this Agreement is effective.
6. Expenses.
(a) Expenses Paid by the Trust. The Trust assumes and shall pay all
expenses incidental to its operations and business not
specifically assumed or agreed to be paid by Interstate Advisors
hereunder or otherwise, including, but not limited to, any
compensation, fees or reimbursements which the Trust pays to its
Trustees who are not interested persons of Interstate Advisors;
compensation of the Fund's custodian, transfer agent, registrar
and dividend disbursing agent and other service providers; legal,
accounting, audit and printing expenses; administrative,
clerical, record keeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution
of portfolio transactions; interest; all federal, state and local
taxes (including stamp, excise, income and franchise taxes);
costs of stock certificates and expenses of delivering such
certificates to the purchasers thereof; expenses of local
representation in Delaware; expenses of shareholders' meetings
and of preparing, printing and distributing proxy statements,
notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory
authorities; all expenses incurred in complying with all federal
and state laws and the laws of any foreign country applicable to
the issue, offer or sale of shares of the Fund, including, but
not limited to, all costs involved in preparing, printing and
mailing prospectuses and statements of additional information to
shareholders of the Fund; and all fees, dues and other expenses
incurred by the Trust in connection with the membership of the
Trust in any trade association or other investment company
organization.
3
4
(b) Expenses Paid by Interstate Advisors. Interstate Advisors
shall pay all its own costs and expenses incurred in rendering
the services required under this Agreement. In addition to
such costs and expenses, Interstate Advisors shall incur and
pay reasonable compensation, fees and related expenses of any
of the Trust's officers or Trustees who are interested persons
of Interstate Advisors.
7. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust to the contrary, Interstate
Advisors is authorized and directed to place Fund portfolio transactions only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates,
provided, however, that Interstate Advisors may pay a broker an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker would have charged for effecting that transaction if
Interstate Advisors 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 broker viewed in terms of either that particular transaction or
the overall responsibilities of Interstate Advisors. Interstate Advisors is also
authorized to consider sales of Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions. In placing portfolio
business with such broker-dealers, Interstate Advisors shall seek the best
execution of each transaction. Notwithstanding the foregoing, the Trustees of
the Trust may establish policies or guidelines to be followed by Interstate
Advisors in placing portfolio transactions for the Trust pursuant to the
foregoing provisions. Interstate Advisors shall report on the placement of
portfolio transactions in the prior fiscal quarter at each quarterly meeting of
such Trustees. To the extent consistent with applicable law, purchase or sell
orders for the Fund may be aggregated with simultaneous purchase or sell orders
for other clients of Interstate Advisors. Whenever Interstate Advisors
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other clients of Interstate Advisors, such orders will
be allocated as to price and amount among all such clients in a manner
reasonably believed by Interstate Advisors to be fair and equitable to each
client. The Trust recognizes that in some cases, this procedure may adversely
affect the results obtained for the Fund.
8. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities, provided in
either case that sixty (60) days' advance written notice of termination be given
to Interstate Advisors at its principal place of business. This Agreement may be
terminated by Interstate Advisors at any time, without penalty, by giving sixty
(60) days' advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that the name "Interstate" is the
property of Interstate Advisors, and that the Trust is using such name in the
name of the Fund with the permission of Interstate Advisors, and that the Trust
shall cease to use the name Interstate in connection with the Fund as soon as
reasonably practicable following any termination of this Agreement if Interstate
Advisors does not continue to provide investment advice to the Fund after such
termination.
9. Assignment. This Agreement shall terminate automatically in the
event of any assignment of this Agreement.
10. Term. This Agreement shall continue in effect until ,2000, unless
sooner terminated in accordance with its terms, and shall continue in effect
from year to year thereafter only so long as such continuance is specifically
approved at least annually by the vote of a majority of the Trustees of the
Trust who are not parties hereto or interested persons of any such party, cast
in person at a
4
5
meeting called for the purpose of voting on the approval of the terms of such
renewal, and by either the Trustees of the Trust or the affirmative vote of a
majority of the outstanding voting securities of the Fund.
11. Amendments. This Agreement may be amended by the parties only if
such amendment is specifically approved (i) by a majority of the Trustees,
including a majority of the Trustees who are not interested persons of the Fund
or Interstate Advisors and, (ii) if required by applicable law, by the
affirmative vote of a majority of the outstanding voting securities of the Fund.
12. Allocation of Expenses. The Trustees shall determine the basis for
making an appropriate allocation of the Trust's expenses (other than those
directly attributable to the Fund) between the Fund and any other series of the
Trust.
13. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
14. Limitation of Liability of Interstate Advisors. Interstate Advisors
shall not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder and except to the extent otherwise provided by law.
15. Activities of Interstate Advisors. The services of Interstate
Advisors to the Trust hereunder are not intended to be exclusive, and Interstate
Advisors and its affiliates are free to render services to other parties, so
long as its services under this Agreement are not materially or adversely
affected or otherwise impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of Interstate Advisors
to engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any other business, whether of a
similar nature or a dissimilar nature. It is understood that trustees, officers
and shareholders of the Trust are or may become interested in Interstate
Advisors as directors, officers and shareholders of Interstate Advisors, that
directors, officers, employees and shareholders of Interstate Advisors are or
may become similarly interested in the Trust, and that Interstate Advisors may
become interested in the Trust as a shareholder or otherwise.
16. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities", "assignment", "approved at least annually" and
"interested persons" when used herein, shall have the respective meanings
specified in the 1940 Act, as now in effect or hereafter amended, and the rules
and regulations thereunder, subject to such orders, exemptions and
interpretations as may be issued by the Securities and Exchange Commission under
said Act and as may be then in effect. Where the effect of a requirement of the
federal securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation, order, interpretation or other authority
of the Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation, order, interpretation or other authority.
17. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To
5
6
the extent that the applicable laws of the State of Colorado conflict with the
applicable provisions of the 1940 Act, the latter shall control.
18. Miscellaneous. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof 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.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Investment Advisory Agreement as of the date and year
first above written.
INTERSTATE ADVISORS, INC.
By:
-----------------------------------
Xxxxxx Xxxxx
President
FINANCIAL INVESTORS TRUST, with
respect to the Interstate Fund
By:
-----------------------------------
President
6
