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007 C010300 3
007 C020300 US GOVERNMENT STRATEGIC INCOME FUND
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007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
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011 C01AA01 NEW YORK
011 C02AA01 NY
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012 A00AA01 FIRSTAR TRUST COMPANY
012 B00AA01 85-00410
012 C01AA01 MILWAUKEE
012 C02AA01 WI
012 C03AA01 53202
013 A00AA01 MCGLADREY & PULLEN
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<PAGE> PAGE 2
013 B03AA01 10017
013 B04AA01 2416
014 A00AA01 TOCQUEVILLE SECURITIES L.P.
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015 A00AA01 FIRSTAR TRUST COMPANY
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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070 I020100 N
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070 L020100 N
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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008 B000201 A
008 C000201 801-36209
008 D010201 NEW YORK
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<PAGE> PAGE 10
028 G030200 0
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<PAGE> PAGE 11
062 D000200 0.0
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<PAGE> PAGE 12
070 N010200 Y
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<PAGE> PAGE 13
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008 B000301 A
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008 D010301 NEW YORK
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
SIGNATURE KIERAN LYONS
TITLE VICE PRESIDENT
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<CIK> 0000811668
<NAME> FUNDAMENTAL FIXED INCOME FUND
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<TABLE> <S> <C>
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<NAME> HIGH YIELD MUNI BOND SERIES
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<S> <C>
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<ACCUMULATED-NET-GAINS> (147)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55
<NET-ASSETS> 2314
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 86
<OTHER-INCOME> 0
<EXPENSES-NET> (45)
<NET-INVESTMENT-INCOME> 41
<REALIZED-GAINS-CURRENT> 11
<APPREC-INCREASE-CURRENT> (37)
<NET-CHANGE-FROM-OPS> 15
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1121
<NUMBER-OF-SHARES-REDEEMED> (1109)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 59
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (159)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 44
<AVERAGE-NET-ASSETS> 2201
<PER-SHARE-NAV-BEGIN> 7.53
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> (0.19)
<PER-SHARE-DIVIDEND> (0.15)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.34
<EXPENSE-RATIO> 4.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000811668
<NAME> FUNDAMENTAL FIXED INCOME FUND
<SERIES>
<NUMBER> 3
<NAME> US GOVERNMENT STRATEGIC INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 7576
<INVESTMENTS-AT-VALUE> 7851
<RECEIVABLES> 412
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8263
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74
<TOTAL-LIABILITIES> 74
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24862
<SHARES-COMMON-STOCK> 6312
<SHARES-COMMON-PRIOR> 7117
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16948)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 275
<NET-ASSETS> 8189
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 495
<OTHER-INCOME> 0
<EXPENSES-NET> (173)
<NET-INVESTMENT-INCOME> 322
<REALIZED-GAINS-CURRENT> 886
<APPREC-INCREASE-CURRENT> (1629)
<NET-CHANGE-FROM-OPS> (421)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (322)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 217
<NUMBER-OF-SHARES-REDEEMED> (1187)
<SHARES-REINVESTED> 165
<NET-CHANGE-IN-ASSETS> (1841)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (17834)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 1
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 9466
<PER-SHARE-NAV-BEGIN> 1.41
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> (0.11)
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
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</TABLE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of June, 1998 by
and between FUNDAMENTAL FIXED-INCOME FUND, a Massachusetts
business trust, on behalf of one of its series, the TAX-FREE
MONEY MARKET SERIES (the "Fund") and TOCQUEVILLE ASSET
MANAGEMENT L.P., a limited partnership (the "Interim Investment
Adviser");
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the
rules and regulations promulgated thereunder; and
WHEREAS, the Interim Investment Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"), and engages in the
business of acting as an investment adviser; and
WHEREAS, the Fund and the Interim Investment Adviser desire to
enter into an agreement to provide for the management of the
assets of the Fund on an interim basis on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto agree as
follows:
1. Management. The Interim Investment Adviser shall act as
interim investment adviser for the Fund for a period of up to,
but not exceeding, 120 days from June 1, 1998, and shall, in
such capacity, supervise the investment and reinvestment of the
cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the
Fund's Board of Trustees. The Interim Investment Adviser shall
give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment adviser.
2. Duties of Interim Investment Adviser. In carrying out its
obligation under paragraph 1 hereof, the Interim Investment
Adviser shall, subject at all times to the policies and control
of the Fund's Board of Trustees:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter
supervise, such executive, administrative, clerical and
shareholder servicing services as are deemed advisable by the
Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax
returns, reports to the Fund's shareholders and reports to and
filings with the Securities and Exchange Commission and state
Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and
similar items for the Fund's principal office;
(e) provide the Board of Trustees of the Fund on a regular
basis with Financial reports and analyses on the Fund's
operations and the operations of comparable investment companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Fund, and whether concerning the
individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to
securities which the Investment Adviser considers desirable for
inclusion in the Fund;
(g) determine what issuers and securities shall be
represented in the Fund's portfolio and regularly report them to
the Board of Trustees of the Fund;
(h) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Board of Trustees of the Fund;
and
(i) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the
placing of orders for the purchase and sale of portfolio
securities.
3. Broker-Dealer Relationships. The Interim Investment
Adviser is responsible for decisions to buy and sell securities
for the Fund, broker-dealer selection, and negotiation of
brokerage commission rates. The Interim Investment Adviser's
primary consideration in effecting a security transaction will
be execution at a price that is reasonable and fair compared to
the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable
transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular
transaction, the Interim Investment Adviser will take the
following into consideration: the best net price available; the
reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the
order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies and procedures as the Board of Trustees
may determine, the Interim Investment Adviser shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Interim Investment
Adviser for the Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Interim Investment Adviser
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 or dealer, viewed in
terms of either that particular transaction or the Interim
Investment Adviser's overall responsibilities with respect to
the Fund. The Interim Investment Adviser is further authorized
to allocate the orders placed by it on behalf of the Fund to
such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the
Interim Investment Adviser for the Fund's use. Such allocation
shall be in such amounts and proportions as the Interim
Investment Adviser shall determine and the Interim Investment
Adviser will report on said allocations regularly to the Board
of Trustees of the Fund indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program
undertaken by the Interim Investment Adviser pursuant to this
Agreement, as well as any other activities undertaken by the
Interim Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the
Board of Trustees of the Fund.
5. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Interim Investment
Adviser shall at all times conform to:
(a) all applicable provisions of the Investment Company Act
and the Investment Advisers Act and any rules and regulations
adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment
Company Act; and
(c) the provisions of the Declaration of Trust of the Fund,
as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Interim Investment Adviser as
follows:
(a) The Interim Investment Adviser shall furnish, at its
expense and without cost to the Fund, the services of a
President, Chief Financial Officer, and to the extent necessary,
such additional officers as may be required by the Fund for the
proper conduct of its affairs.
(b) The Interim Investment Adviser shall further maintain, at
its expense and without cost to the Fund, a trading function in
order to carry out its obligations under subparagraph (i) of
paragraph 2 hereof to place orders for the purchase and sale of
portfolio securities for the Fund.
(c) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be
borne by the Fund unless specifically provided otherwise in this
paragraph 6. These expenses include but are not limited to
brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian,
depository, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers
and trustees if available) of the Fund which inure to its
benefit, expenses relating to trustee and shareholder meetings,
the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund
in connection with membership in investment company
organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to
shareholders.
7. Compensation. The Fund shall pay the Interim Investment
Adviser a portfolio management fee with respect to the Fund,
which fee shall be computed on the basis of the average net
asset value of the Fund as ascertained at the close of each
business day and which fee shall be paid monthly within three
(3) business days following the end of the month in accordance
with the following schedule:
Net Asset Value Annual Fee Payable
Net asset value to $100,000,000 Net asset value of $100,000,000
or more but less than $200,000,000 Net asset value of
$200,000,000 or more but less than $300,000,000 Net asset value
of $300,000,000 or more but less than $400,000,000 Net asset
value of $400,000,000 or more but less than $500,000,000 Net
asset value of $500,000,000 or more .50% .48% .46% .44% .42%
.40%
The computation for the period from the effective date of this
Agreement to the last day of the month including such effective
date shall be prorated according to the proportion which such
period bears to the full month. Upon any termination of this
Agreement before the end of any month, such compensation for the
period from the end of the last month ending prior to such
termination to the date of termination shall be prorated
according to the proportion which such period bears to a full
month and shall be payable upon the date of termination.
8. Non-Exclusivity. The services of the Interim Investment
Adviser to the Fund are not to be deemed to be exclusive, and
the Interim Investment Adviser shall be free to render
investment advisory and corporate administrative or other
services to others (including other investment companies) and to
engage in other activities. It is understood and agreed that
officers or Partners of the Interim Investment Adviser may serve
as officers or trustees of the Fund, and that officers or
trustees of the Fund may serve as officers or partners of the
Interim Investment Adviser to the extent permitted by law; and
that the officers and partners of the Interim Investment Adviser
are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving
as partners, officers or partners of any other firm or
corporation, including other investment companies.
9. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in
force and effect for up to 120 days pending (i) consummation of
the Agreement and Plan of Reorganization providing for the
transfer of the Fund's assets to a separate newly-created series
of The Tocqueville Trust, (ii) approval of a permanent
investment adviser, or (iii) approval of another interim
investment adviser.
10. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Fund's
Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities. This Agreement may be terminated
by the Interim Investment Adviser on twenty (20) days' written
notice to the Fund. The notice provided for herein may be
waived by the Fund. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
11. Liability of Interim Investment Adviser and
Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Interim Investment Adviser
or any of its officers, trustees or employees, it shall not be
subject to liability to the Fund or to any shareholder of the
Fund for any omission in the course of, or connected with,
rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. Liability of Trustees and Shareholders. A copy of the
Agreement and Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of
the Trustees of the Fund as trustees and not individually and
that the obligations of this instrument are not binding upon any
of the Trustees or shareholders individually but are binding
only upon the assets and property of the Fund.
13. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the
other party at such address as such other party may designate
for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Fund and that
of the Interim Investment Adviser shall be 1675 Broadway, New
York, New York 10019. If to the Fund, an additional copy of any
notice under this Agreement shall be provided to Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022,
attention to Carl Frischling, Esq. If to the Interim Investment
Adviser, an additional copy of any notice under this Agreement
shall be provided to Seward & Kissell, One Battery Park Plaza,
New York, New York 10006, attention to Robert Van Grover, Esq.
14. Questions of Interpretation. 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 Investment Company Act shall be resolved by reference to
such term or provision of the 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
issued pursuant to said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any
provision of this Agreement is released by rules, regulation or
order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
15. Miscellaneous. The Interim Investment Adviser will notify
the Fund of any changes in the general partner of its limited
partnership within a reasonable time after such change.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective
officers on the day and year first above written.
FUNDAMENTAL FIXED-INCOME FUND,
on behalf of the Tax-Free Money Market Series
Attest: By:
TOCQUEVILLE ASSET MANAGEMENT L.P.
Attest:
By:
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of June, 1998
by and between FUNDAMENTAL FIXED-INCOME FUND, a Massachusetts
business trust, on behalf of one of its series, the HIGH-YIELD
MUNICIPAL BOND SERIES (the "Fund") and TOCQUEVILLE ASSET
MANAGEMENT L.P., a limited partnership (the "Interim Investment
Adviser");
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the
rules and regulations promulgated thereunder; and
WHEREAS, the Interim Investment Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"), and engages in the
business of acting as an investment adviser; and
WHEREAS, the Fund and the Interim Investment Adviser desire to
enter into an agreement to provide for the management of the
assets of the Fund on an interim basis on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto agree as
follows:
1. Management. The Interim Investment Adviser shall act as
interim investment adviser for the Fund for a period of up to,
but not exceeding, 120 days from June 1, 1998, and shall, in
such capacity, supervise the investment and reinvestment of the
cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the
Fund's Board of Trustees. The Interim Investment Adviser shall
give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment adviser.
2. Duties of Interim Investment Adviser. In carrying out its
obligation under paragraph 1 hereof, the Interim Investment
Adviser shall, subject at all times to the policies and control
of the Fund's Board of Trustees:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter
supervise, such executive, administrative, clerical and
shareholder servicing services as are deemed advisable by the
Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax
returns, reports to the Fund's shareholders and reports to and
filings with the Securities and Exchange Commission and state
Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and
similar items for the Fund's principal office;
(e) provide the Board of Trustees of the Fund on a regular
basis with financial reports and analyses on the Fund's
operations and the operations of comparable investment companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Fund, and whether concerning the
individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to
securities which the Investment Adviser considers desirable for
inclusion in the Fund;
(g) determine what issuers and securities shall be
represented in the Fund's portfolio and regularly report them to
the Board of Trustees of the Fund;
(h) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Board of Trustees of the Fund;
and
(i) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the
placing of orders for the purchase and sale of portfolio
securities.
3. Broker-Dealer Relationships. The Interim Investment
Adviser is responsible for decisions to buy and sell securities
for the Fund, broker-dealer selection, and negotiation of
brokerage commission rates. The Interim Investment Adviser's
primary consideration in effecting a security transaction will
be execution at a price that is reasonable and fair compared to
the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable
transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular
transaction, the Interim Investment Adviser will take the
following into consideration: the best net price available; the
reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the
order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies and procedures as the Board of Trustees
may determine, the Interim Investment Adviser shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Interim Investment
Adviser for the Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Interim Investment Adviser
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 or dealer, viewed in
terms of either that particular transaction or the Interim
Investment Adviser's overall responsibilities with respect to
the Fund. The Interim Investment Adviser is further authorized
to allocate the orders placed by it on behalf of the Fund to
such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the
Interim Investment Adviser for the Fund's use. Such allocation
shall be in such amounts and proportions as the Interim
Investment Adviser shall determine and the Interim Investment
Adviser will report on said allocations regularly to the Board
of Trustees of the Fund indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program
undertaken by the Interim Investment Adviser pursuant to this
Agreement, as well as any other activities undertaken by the
Interim Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the
Board of Trustees of the Fund.
5. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Interim Investment
Adviser shall at all times conform to:
(a) all applicable provisions of the Investment Company Act
and the Investment Advisers Act and any rules and regulations
adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment
Company Act; and
(c) the provisions of the Declaration of Trust of the Fund,
as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Interim Investment Adviser as
follows:
(a) The Interim Investment Adviser shall furnish, at its
expense and without cost to the Fund, the services of a
President, Chief Financial Officer, and to the extent necessary,
such additional officers as may be required by the Fund for the
proper conduct of its affairs.
(b) The Interim Investment Adviser shall further maintain, at
its expense and without cost to the Fund, a trading function in
order to carry out its obligations under subparagraph (i) of
paragraph 2 hereof to place orders for the purchase and sale of
portfolio securities for the Fund.
(c) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be
borne by the Fund unless specifically provided otherwise in this
paragraph 6. These expenses include but are not limited to
brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian,
depository, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers
and trustees if available) of the Fund which inure to its
benefit, expenses relating to trustee and shareholder meetings,
the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund
in connection with membership in investment company
organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to
shareholders.
7. Compensation. The Fund shall pay the Interim Investment
Adviser a portfolio management fee with respect to the Fund,
which fee shall be computed on the basis of the average net
asset value of the Fund as ascertained at the close of each
business day and which fee shall be paid monthly within three
(3) business days following the end of the month in accordance
with the following schedule:
Net Asset Value Annual Fee Payable
Net asset value to $100,000,000 Net asset value of $100,000,000
or more but less than $200,000,000 Net asset value of
$200,000,000 or more but less than $300,000,000 Net asset value
of $300,000,000 or more but less than $400,000,000 Net asset
value of $400,000,000 or more but less than $500,000,000 Net
asset value of $500,000,000 or more .80% .78% .76% .74% .72%
.70%
The computation for the period from the effective date of this
Agreement to the last day of the month including such effective
date shall be prorated according to the proportion which such
period bears to the full month. Upon any termination of this
Agreement before the end of any month, such compensation for the
period from the end of the last month ending prior to such
termination to the date of termination shall be prorated
according to the proportion which such period bears to a full
month and shall be payable upon the date of termination.
8. Non-Exclusivity. The services of the Interim Investment
Adviser to the Fund are not to be deemed to be exclusive, and
the Interim Investment Adviser shall be free to render
investment advisory and corporate administrative or other
services to others (including other investment companies) and to
engage in other activities. It is understood and agreed that
officers or Partners of the Interim Investment Adviser may serve
as officers or trustees of the Fund, and that officers or
trustees of the Fund may serve as officers or partners of the
Interim Investment Adviser to the extent permitted by law; and
that the officers and partners of the Interim Investment Adviser
are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving
as partners, officers or partners of any other firm or
corporation, including other investment companies.
9. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in
force and effect for up to 120 days pending (i) consummation of
the Agreement and Plan of Reorganization providing for the
transfer of the Fund's assets to a separate newly-created series
of The Tocqueville Trust, (ii) approval of a permanent
investment adviser, or (iii) approval of another interim
investment adviser.
10. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Fund's
Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities. This Agreement may be terminated
by the Interim Investment Adviser on twenty (20) days' written
notice to the Fund. The notice provided for herein may be
waived by the Fund. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
11. Liability of Interim Investment Adviser and
Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Interim Investment Adviser
or any of its officers, trustees or employees, it shall not be
subject to liability to the Fund or to any shareholder of the
Fund for any omission in the course of, or connected with,
rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. Liability of Trustees and Shareholders. A copy of the
Agreement and Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of
the Trustees of the Fund as trustees and not individually and
that the obligations of this instrument are not binding upon any
of the Trustees or shareholders individually but are binding
only upon the assets and property of the Fund.
13. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the
other party at such address as such other party may designate
for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Fund and that
of the Interim Investment Adviser shall be 1675 Broadway, New
York, New York 10019. If to the Fund, an additional copy of any
notice under this Agreement shall be provided to Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022,
attention to Carl Frischling, Esq. If to the Interim Investment
Adviser, an additional copy of any notice under this Agreement
shall be provided to Seward & Kissell, One Battery Park Plaza,
New York, New York 10006, attention to Robert Van Grover, Esq.
14. Questions of Interpretation. 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 Investment Company Act shall be resolved by reference to
such term or provision of the 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
issued pursuant to said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any
provision of this Agreement is released by rules, regulation or
order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
15. Miscellaneous. The Interim Investment Adviser will notify
the Fund of any changes in the general partner of its limited
partnership within a reasonable time after such change.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective
officers on the day and year first above written.
FUNDAMENTAL FIXED-INCOME FUND,
on behalf of the High-Yield Municipal Bond Series
Attest: By:
TOCQUEVILLE ASSET MANAGEMENT L.P.
Attest:
By:
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of June, 1998
by and between FUNDAMENTAL FIXED-INCOME FUND, a Massachusetts
business trust, on behalf of one of its series, the FUNDAMENTAL
U.S. GOVERNMENT STRATEGIC INCOME FUND (the "Fund") and
TOCQUEVILLE ASSET MANAGEMENT L.P., a limited partnership (the
"Interim Investment Adviser");
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the
rules and regulations promulgated thereunder; and
WHEREAS, the Interim Investment Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"), and engages in the
business of acting as an investment adviser; and
WHEREAS, the Fund and the Interim Investment Adviser desire to
enter into an agreement to provide for the management of the
assets of the Fund on an interim basis on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto agree as
follows:
1. Management. The Interim Investment Adviser shall act as
interim investment adviser for the Fund for a period of up to,
but not exceeding, 120 days from June 1, 1998, and shall, in
such capacity, supervise the investment and reinvestment of the
cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the
Fund's Board of Trustees. The Interim Investment Adviser shall
give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment adviser.
2. Duties of Interim Investment Adviser. In carrying out its
obligation under paragraph 1 hereof, the Interim Investment
Adviser shall, subject at all times to the policies and control
of the Fund's Board of Trustees:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter
supervise, such executive, administrative, clerical and
shareholder servicing services as are deemed advisable by the
Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax
returns, reports to the Fund's shareholders and reports to and
filings with the Securities and Exchange Commission and state
Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and
similar items for the Fund's principal office;
(e) provide the Board of Trustees of the Fund on a regular
basis with financial reports and analyses on the Fund's
operations and the operations of comparable investment companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Fund, and whether concerning the
individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to
securities which the Investment Adviser considers desirable for
inclusion in the Fund;
(g) determine what issuers and securities shall be
represented in the Fund's portfolio and regularly report them to
the Board of Trustees of the Fund;
(h) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Board of Trustees of the Fund;
and
(i) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the
placing of orders for the purchase and sale of portfolio
securities.
3. Broker-Dealer Relationships. The Interim Investment
Adviser is responsible for decisions to buy and sell securities
for the Fund, broker-dealer selection, and negotiation of
brokerage commission rates. The Interim Investment Adviser's
primary consideration in effecting a security transaction will
be execution at a price that is reasonable and fair compared to
the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable
transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular
transaction, the Interim Investment Adviser will take the
following into consideration: the best net price available; the
reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the
order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies and procedures as the Board of Trustees
may determine, the Interim Investment Adviser shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Interim Investment
Adviser for the Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Interim Investment Adviser
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 or dealer, viewed in
terms of either that particular transaction or the Interim
Investment Adviser's overall responsibilities with respect to
the Fund. The Interim Investment Adviser is further authorized
to allocate the orders placed by it on behalf of the Fund to
such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the
Interim Investment Adviser for the Fund's use. Such allocation
shall be in such amounts and proportions as the Interim
Investment Adviser shall determine and the Interim Investment
Adviser will report on said allocations regularly to the Board
of Trustees of the Fund indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program
undertaken by the Interim Investment Adviser pursuant to this
Agreement, as well as any other activities undertaken by the
Interim Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the
Board of Trustees of the Fund.
5. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Interim Investment
Adviser shall at all times conform to:
(a) all applicable provisions of the Investment Company Act
and the Investment Advisers Act and any rules and regulations
adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment
Company Act; and
(c) the provisions of the Declaration of Trust of the Fund,
as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Interim Investment Adviser as
follows:
(a) The Interim Investment Adviser shall furnish, at its
expense and without cost to the Fund, the services of a
President, Chief Financial Officer, and to the extent necessary,
such additional officers as may be required by the Fund for the
proper conduct of its affairs.
(b) The Interim Investment Adviser shall further maintain, at
its expense and without cost to the Fund, a trading function in
order to carry out its obligations under subparagraph (i) of
paragraph 2 hereof to place orders for the purchase and sale of
portfolio securities for the Fund.
(c) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be
borne by the Fund unless specifically provided otherwise in this
paragraph 6. These expenses include but are not limited to
brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian,
depository, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers
and trustees if available) of the Fund which inure to its
benefit, expenses relating to trustee and shareholder meetings,
the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund
in connection with membership in investment company
organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to
shareholders.
7. Compensation. The Fund shall pay the Interim Investment
Adviser a portfolio management fee with respect to the Fund,
which fee shall be computed on the basis of the average net
asset value of the Fund as ascertained at the close of each
business day and which fee shall be paid monthly within three
(3) business days following the end of the month in accordance
with the following schedule: .75% per annum of the Fund's
average daily net assets up to $500 million, .725% per annum on
the next $500 million, and .70% per annum on assets over $1
billion.
The computation for the period from the effective date of this
Agreement to the last day of the month including such effective
date shall be prorated according to the proportion which such
period bears to the full month. Upon any termination of this
Agreement before the end of any month, such compensation for the
period from the end of the last month ending prior to such
termination to the date of termination shall be prorated
according to the proportion which such period bears to a full
month and shall be payable upon the date of termination.
8. Non-Exclusivity. The services of the Interim Investment
Adviser to the Fund are not to be deemed to be exclusive, and
the Interim Investment Adviser shall be free to render
investment advisory and corporate administrative or other
services to others (including other investment companies) and to
engage in other activities. It is understood and agreed that
officers or Partners of the Interim Investment Adviser may serve
as officers or trustees of the Fund, and that officers or
trustees of the Fund may serve as officers or partners of the
Interim Investment Adviser to the extent permitted by law; and
that the officers and partners of the Interim Investment Adviser
are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving
as partners, officers or partners of any other firm or
corporation, including other investment companies.
9. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in
force and effect for up to 120 days pending (i) consummation of
the Agreement and Plan of Reorganization providing for the
transfer of the Fund's assets to a separate newly-created series
of The Tocqueville Trust, (ii) approval of a permanent
investment adviser, or (iii) approval of another interim
investment adviser.
10. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Fund's
Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities. This Agreement may be terminated
by the Interim Investment Adviser on twenty (20) days' written
notice to the Fund. The notice provided for herein may be
waived by the Fund. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
11. Liability of Interim Investment Adviser and
Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Interim Investment Adviser
or any of its officers, trustees or employees, it shall not be
subject to liability to the Fund or to any shareholder of the
Fund for any omission in the course of, or connected with,
rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. Liability of Trustees and Shareholders. A copy of the
Agreement and Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of
the Trustees of the Fund as trustees and not individually and
that the obligations of this instrument are not binding upon any
of the Trustees or shareholders individually but are binding
only upon the assets and property of the Fund.
13. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the
other party at such address as such other party may designate
for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Fund and that
of the Interim Investment Adviser shall be 1675 Broadway, New
York, New York 10019. If to the Fund, an additional copy of any
notice under this Agreement shall be provided to Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022,
attention to Carl Frischling, Esq. If to the Interim Investment
Adviser, an additional copy of any notice under this Agreement
shall be provided to Seward & Kissell, One Battery Park Plaza,
New York, New York 10006, attention to Robert Van Grover, Esq.
14. Questions of Interpretation. 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 Investment Company Act shall be resolved by reference to
such term or provision of the 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
issued pursuant to said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any
provision of this Agreement is released by rules, regulation or
order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
15. Miscellaneous. The Interim Investment Adviser will notify
the Fund of any changes in the general partner of its limited
partnership within a reasonable time after such change.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective
officers on the day and year first above written.
FUNDAMENTAL FIXED-INCOME FUND,
on behalf of the Fundamental U.S. Government Strategic
Income Fund
Attest: By:
TOCQUEVILLE ASSET MANAGEMENT L.P.
Attest:
By:
REFERENCE ITEM #77-Q1) EXHIBITS
AMENDMENT OF BYLAWS
(AMENDED)
The FIRST sentence of ARTICLE I, Section 2 of the By-laws of
The Fundamental Fixed Income Fund has been amended as follows:
Election of Officers: The President, Treasurer and Secretary shall be chosen
annually by the Trustees. The Chairman shall be chosen annually by and from
the Trustees.
