EXHIBIT (d)(1)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
HEARTLAND GROUP, INC.
AND
HEARTLAND ADVISORS, INC.
INVESTMENT ADVISORY AGREEMENT, made as of the 23rd day of October, 1984, by
and between the Heartland Value Fund Series (the "Fund") of Heartland Group,
Inc., a Maryland corporation (as successor in interest by merger of Heartland
Value Fund, Inc.), and Heartland Advisors, Inc. (the "Advisor"), a Wisconsin
corporation (formerly known as Milwaukee Asset Management, Inc. and, prior to
that, known as The Milwaukee Company Advisers, Inc.).
W I T N E S S E T H :
WHEREAS, the Fund will be engaged in business as an open-end investment
management company and registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Advisor is engaged in the business of rendering investment
supervisory services and is registered as an investment advisor under the
Investment Advisors Act of 1940, as amended; and
WHEREAS, the Fund desires the Advisor to render investment supervisory
services to the Fund in the manner and on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. DUTIES AND RESPONSIBILITIES OF ADVISOR.
A. INVESTMENT ADVISORY SERVICES. The Advisor shall act as
investment adviser and shall supervise and direct the investments of the Fund in
accordance with the Fund's investment objectives, programs and restrictions as
provided in its Prospectus and Statement of Additional Information, as amended
from time to time, and such other limitations as the Fund may impose by notice
in writing to the Advisor. The Advisor shall obtain and evaluate such
information relating to the economy, industries, businesses, securities markets
and securities as it may deem necessary or useful in the discharge of its
obligations hereunder and shall formulate and implement a continuing program for
the management of the assets and resources of the Fund in a manner consistent
with its investment objective. In furtherance of this duty, the Advisor as
agent and attorney-in-fact with respect to the Fund, is authorized, in its
discretion and without prior consultation with the Fund, to:
(i) buy, sell, exchange, convert, lend, and otherwise trade in any stocks,
bonds, and other securities or assets;
(ii) borrow on behalf of and in the name of the Fund, but only for the
purposes and to the extent described in the Fund's then current Prospectus; and
(iii) place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such brokers, dealers,
underwriters or issuers as the Advisor may select.
B. FINANCIAL, ACCOUNTING, AND ADMINISTRATIVE SERVICES. The Advisor
shall maintain the corporate existence and corporate records of the Fund;
maintain the registrations and qualifications of Fund shares under federal and
state law; monitor the financial, accounting, and administrative functions of
the Fund; maintain liaison with the various agents employed by the Fund
(including the Fund's transfer agent, custodian, independent accountants and
legal counsel) and assist in the coordination of their activities on behalf of
the Fund.
C. REPORTS TO FUND. The Advisor shall furnish to or place at the
disposal of the Fund such information, reports, evaluations, analyses and
opinions as the Fund may, at any time or from time to time, reasonably request
or as the Advisor may deem helpful to the Fund.
D. REPORTS AND OTHER COMMUNICATIONS TO FUND SHAREHOLDERS. The
Advisor shall assist the Fund in developing all general shareholder
communications, including regular shareholder reports.
E. FUND PERSONNEL. The Advisor agrees to permit individuals who are
either officers or employees of the Advisor to serve (if duly elected or
appointed) as officers, directors, members of any committee of directors,
members of any advisory board, or members of any other committee of the Fund,
without remuneration from or other cost to the Fund.
F. PERSONNEL, OFFICE SPACE, AND FACILITIES OF ADVISOR. The Advisor
at its own expense shall furnish or provide and pay the cost of such office
space, office equipment, office personnel, and office services as it requires in
the performance of its investment advisory and other obligations under this
Agreement.
2. ALLOCATION OF EXPENSES.
A. EXPENSES PAID BY ADVISOR.
(1) SALARIES AND FEES OF OFFICERS. The Advisor shall pay all
salaries, expenses, and fees of the officers and directors of the Fund who are
affiliated with the Advisor.
(2) ASSUMPTION OF FUND EXPENSES BY ADVISOR. The payment or assumption
by the Advisor of any expense of the Fund that the Advisor is not required by
this Agreement to pay or assume shall not obligate the Advisor to pay or assume
the same or any similar expense of the Fund on any subsequent occasion.
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B. EXPENSES PAID BY FUND. The Fund shall bear all expenses of its
organization, operations, and business not specifically assumed or agreed to be
paid by the Advisor as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Fund shall pay:
(1) CUSTODY AND ACCOUNTING SERVICES. All expenses of the transfer,
receipt, safekeeping, servicing and accounting for the Fund's cash, securities,
and other property, including all charges of depositories, custodians, and other
agents, if any;
(2) SHAREHOLDER SERVICING. All expenses of maintaining and servicing
shareholder accounts, including all charges of the Fund's transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents, if any;
(3) SHAREHOLDER COMMUNICATIONS. All expenses of preparing, setting in
type, printing, and distributing reports and other communications to
shareholders;
(4) SHAREHOLDER MEETINGS. All expenses incidental to holding
meetings of Fund shareholders, including the printing of notices and proxy
material, and proxy solicitation therefor;
(5) PROSPECTUSES. All expenses of preparing, setting in type, and
printing of annual or more frequent revisions of the Fund's Prospectus and of
mailing them to shareholders;
(6) PRICING. All expenses of computing the Fund's net asset value
per share, including the cost of any equipment or services used for obtaining
price quotations;
(7) COMMUNICATION EQUIPMENT. All charges for equipment or services
used for communication between the Advisor or the Fund and the custodian,
transfer agent or any other agent selected by the Fund;
(8) LEGAL AND ACCOUNTING FEES AND EXPENSES. All charges for services
and expenses of the Fund's legal counsel and independent auditors;
(9) DIRECTORS' FEES AND EXPENSES. All compensation of directors,
other than those affiliated with the Advisor and all expenses incurred in
connection with their service;
(10) FEDERAL REGISTRATION FEES. All fees and expenses of
registering and maintaining the registration of the Fund under the 1940 Act and
the registration of the Fund's shares under the Securities Act of 1933, as
amended (the "1933 Act"), including all fees and expenses incurred in connection
with the preparation, setting in type, printing, and filing of any registration
statement and Prospectus under the 1933 Act or the 1940 Act, and any amendments
or supplements that may be made from time to time;
(11) STATE REGISTRATION FEES. All fees and expenses of qualifying and
maintaining qualification of the Fund and of the Fund's shares for sale under
securities laws of
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various states or jurisdictions, and of registration and qualification of the
Fund under all other laws applicable to the Fund or its business activities;
(12) ISSUE AND REDEMPTION OF FUND SHARES. All expenses incurred in
connection with the issue, redemption, and transfer of Fund shares, including
the expense of confirming all share transactions, and of preparing and
transmitting the Fund's stock certificates;
(13) BONDING AND INSURANCE. All expenses of bond, liability, and
other insurance coverage required by law or deemed advisable by the Fund's Board
of Directors;
(14) BROKERAGE COMMISSIONS. All brokers' commissions and other
charges incident to the purchase, sale, or lending of the Fund's portfolio
securities;
(15) TAXES. All taxes or governmental fees payable by or with respect
of the Fund to Federal, state, or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes;
(16) TRADE ASSOCIATION FEES. All fees, dues, and other expenses
incurred in connection with the Fund's membership in any trade association or
other investment organization; and
(17) NONRECURRING AND EXTRAORDINARY EXPENSES. Such nonrecurring
expenses as may arise, including the costs of actions, suits, or proceedings to
which the Fund is a party and the expenses the Fund may incur as a result of its
legal obligation to provide indemnification to its officers, directors, and
agents.
3. ADVISORY FEES.
The Fund shall pay the Advisor a fee computed as described below, based on
the value of the net assets of the Fund.
A. FEE RATE. The fee shall be payable in monthly installments, at
the rate of 0.75% of the Fund's average daily net assets.
B. METHOD OF COMPUTATION. The fee shall be accrued for each
calendar day and the sum of the daily fee accruals shall be paid monthly to the
Advisor on the first business day of the next succeeding calendar month. The
daily fee accruals will be computed by multiplying the fraction of one over the
number of calendar days in the year by the applicable annual rate described in
subparagraph (A) of this Paragraph 3, and multiplying this product by the net
assets of the Fund as determined in accordance with the Fund's Prospectus as of
the close of business on the previous business day on which the Fund was open
for business.
C. EXPENSE LIMITATION. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to fees of the Advisor computed as hereinabove set forth, but excluding
interest, taxes, brokerage, and other expenditures
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which are capitalized in accordance with generally accepted accounting
principles and extraordinary expenses, shall exceed the limit ("State Expense
Limit") prescribed by any state in which the Fund's shares are qualified for
sale, such excess amount shall be the liability of the Advisor to pay in the
manner specified below. To determine the Advisor's liability for the Fund's
expenses, the expenses of the Fund shall be annualized monthly as of the last
day of the month. If the annualized expenses for any month exceed the State
Expense Limit, the payment of the advisory fee for such month (if there be any)
shall be reduced by such excess ("Excess Amount") and in the event the Excess
Amount exceeds the amount due as the advisory fee, the Advisor shall remit to
the Fund the difference between the Excess Amount and the amount due as the
advisory fee; provided, however, that an adjustment shall be made on or before
the last day of the first month of the next succeeding fiscal year if the
aggregate expenses for the fiscal year do not exceed the State Expense Limit.
D. PRORATION OF FEE. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
4. BROKERAGE.
Subject to the approval of the board of directors of the Fund or the
Advisor, in carrying out its duties under Paragraph l.A, may cause the Fund to
pay a broker-dealer which furnishes brokerage or research services (as such
services are defined under Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) a higher commission than that which might be
charged by another broker-dealer which does not furnish brokerage or research
services or which furnishes brokerage or research services deemed to be of
lesser value, if such commission is deemed reasonable in relation to the
brokerage and research services provided by the broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Advisor with respect to the accounts as to which it exercises investment
discretion (as such term is defined under Section 3(a)(35) of the 1934 Act). The
Fund may execute transactions through the Advisor or its affiliates on the terms
and subject to the conditions described in the Fund's most recent Prospectus.
5. ADVISOR'S USE OF THE SERVICES OF OTHERS.
The Advisor may (at its cost except as contemplated by Paragraph 4 of this
Agreement) employ, retain or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of providing either
it or the Fund with such statistical and other factual information, such advice
regarding economic factors and trends, such advice as to occasional transactions
in specific securities or such other information, advice or assistance as they
may deem necessary, appropriate or convenient for the discharge of their
obligations hereunder or otherwise helpful to the Fund, or in the discharge of
their overall responsibilities with respect to the other accounts which they
serve as investment adviser or commodity trading adviser.
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6. OWNERSHIP OF RECORDS.
All records required to be maintained and preserved by the Fund pursuant to
the provisions of rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the 1940 Act and maintained and preserved by the Advisor
on behalf of the Fund are the property of the Fund and will be surrendered by
the Advisor promptly on request by the Fund.
7. REPORTS TO ADVISOR.
The Fund shall furnish or otherwise make available to the Advisor such
Prospectuses, financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Fund as the Advisor may,
at any time or from time to time, reasonably require in order to discharge its
obligations under this Agreement.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Advisor or any
affiliated person to render investment supervisory and corporate administrative
services to other investment companies, to act as investment adviser or
investment counselor to other persons, firms or corporations, or to engage in
other business activities; but so long as this Agreement or any extension,
renewal or amendment hereof shall remain in effect or until the Advisor shall
otherwise consent, the Advisor shall be the only investment adviser to the Fund.
9. LIMITATION OF LIABILITY OF ADVISOR.
Neither the Advisor nor any of its officers, directors, or employees, nor
any person performing executive, administrative, trading, or other functions for
the Fund (at the direction or request of the Advisor) or the Advisor in
connection with the Advisor's discharge of its obligations undertaken or
reasonably assumed with respect to this Agreement, shall be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance of its
duties on behalf of the Fund or from reckless disregard by the Advisor or any
such person of the duties of the Advisor under this Agreement.
10. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first above written, and
unless sooner terminated as hereinafter provided, this Agreement shall be
submitted for shareholder approval at the first meeting of shareholders
occurring after the effective date of the Fund's registration statement. The
Agreement, if approved at that meeting, will continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
hereof, so long as: (a) such continuation shall be specifically approved at
least annually by the board of directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund and, concurrently with such
approval by the board of directors or prior to such approval by the holders of
the outstanding voting
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securities of the Fund, as the case may be, by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
directors of the Fund who are not parties to this Agreement or interested
persons of any such party; and (b) the Advisor shall not have notified the Fund,
in writing, at least 60 days prior to December 31,1984 or prior to December 31
of any year thereafter, that it does not desire such continuation. The Advisor
shall furnish to the Fund, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
11. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
This Agreement may not be amended or assigned without the affirmative vote
of a majority of the outstanding voting securities of the Fund, and this
Agreement shall automatically and immediately terminate in the event of its
assignment.
12. TERMINATION OF AGREEMENT.
This Agreement may be terminated by either party, without the payment of
any penalty, upon 60 days' prior notice in writing to the other party; provided,
that in the case of termination by the Fund such action shall have been
authorized by resolution of a majority of the directors of the Fund who are not
parties to this Agreement or interested persons of any such party, or by vote of
a majority of the outstanding voting securities of the Fund.
13. MISCELLANEOUS.
A. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
B. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles of Incorporation or
By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the board of directors
of the Fund of its responsibility for and control of the conduct of the affairs
of the Fund.
C. DEFINITIONS. 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 interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
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 Paragraphs 2, 8, 10, 11, and
12 hereof, shall have the meanings assigned to them by Section 2(a) of the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission,
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whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
Attest: HEARTLAND GROUP, INC.
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Attest: HEARTLAND ADVISORS, INC.
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
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