SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
PAYDEN & RYGEL INVESTMENT GROUP
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PAYDEN & RYGEL GLOBAL FIXED INCOME FUND
PAYDEN & RYGEL INTERNATIONAL BOND FUND
333 South Grand Avenue
Los Angeles, California 90071
Notice of Special Meeting of Shareholders
Meeting Date: June 28, 1996
To the Shareholders:
A Special Meeting of Shareholders of Payden & Rygel Global Fixed
Income Fund and Payden & Rygel International Bond Fund (each a "Fund") will
be held on June 28, 1996 at 9:00 A.M. at the offices of Payden & Rygel
Investment Group located at 333 South Grand Avenue, 32nd Floor, Los
Angeles, California 90071 for the following purposes:
1. To approve amendments to the Investment Management Agreement
between Payden & Rygel Investment Group and Payden & Rygel, revising the
fee schedule with respect to each Fund, as more fully described in the
proxy statement;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The proposed amendment will result in decreases in the advisory fees
paid by the Funds at current asset levels. The details of the decrease are
noted on page 3 of the proxy statement. When a Fund exceeds $900 million
in assets, the fee will increase over the levels currently contemplated by
the Fund's investment management agreement. However, the total fee will
increase by .02% or less of total assets until a Fund's assets exceed $1.6
billion. THE TRUSTEES UNANIMOUSLY RECOMMEND APPROVAL OF THE PROPOSED
AMENDMENTS TO THE INVESTMENT MANAGEMENT AGREEMENT.
Shareholders of record of the Funds at the close of business on
May 3, 1996 are entitled to vote at the meeting or any adjournment thereof.
IT IS IMPORTANT THAT YOU RETURN YOUR SIGNED PROXY PROMPTLY, REGARDLESS OF
THE SIZE OF YOUR HOLDINGS, SO THAT A QUORUM MAY BE ASSURED.
By Order of the Board of Trustees
Carole Trist
Secretary
May 28, 1996
Your vote is important! Please indicate your voting instructions on
the enclosed proxy, date and sign it, and return it in the accompanying
postage prepaid envelope. If you sign, date and return the proxy but give
no voting instructions, your shares will be voted to approve the proposed
amendments to the Investment Management Agreement and as the proxies
determine with respect to any other business that properly comes before the
Meeting.
PAYDEN & RYGEL GLOBAL FIXED INCOME FUND
PAYDEN & RYGEL INTERNATIONAL BOND FUND
333 South Grand Avenue
Los Angeles, California 90071
PROXY STATEMENT
Special Meeting of Shareholders
June 28, 1996
This proxy statement is furnished in connection with the
solicitation by the Board of Trustees of Payden & Rygel Investment Group
(the "Trust") of proxies to be voted at a Special Meeting of Shareholders
(the "Meeting") of Payden & Rygel Global Fixed Income Fund (the "Global
Fund") and Payden & Rygel International Bond Fund (the "International
Fund"), each of which is a series of the Trust, to be held on June 28,
1996, and any adjournment thereof. The International Fund and the Global
Fund are each referred to below from time to time as a "Fund" and
collectively as the "Funds".
The time, location and purposes of the Meeting are set forth in the
accompanying Notice of Special Meeting of Shareholders dated May 28, 1996.
Proxies will be solicited primarily by mailing this proxy statement and the
accompanying proxy card to shareholders commencing on or about May 28,
1996. Supplementary solicitations may be made by telephone or telegram or
by personal interview. Officers of the Trust and of the Trust's investment
adviser, Payden & Rygel, who participate in such solicitations will receive
no compensation for their services other than their regular salaries. The
expenses of preparing and mailing this proxy statement and its enclosures
and all other solicitation expenses will be paid by the Funds.
The Trust will furnish without charge a copy of its most recent
annual report to any shareholder upon request. Such request may be made by
calling the Trust during business hours at (213) 625-1900 or (800) 5-PAYDEN
(800-572-9336), or by writing the Trust at the address set forth above.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees has fixed the close of business on May 3, 1996
as the record date for the Meeting and any adjournments thereof. Only
shareholders of record of the Funds at the close of business on that date
are entitled to notice of and to vote at the Meeting. Each such
shareholder of a Fund is entitled to one vote for each full share, and a
proportionate vote for each fractional share, of the Fund held on the
record date.
As of May 3, 1996, 1,988,984 shares of the International Fund and
66,010,343 shares of the Global Fund were issued and outstanding. As of
such date, the following persons were known to hold of record more than 5%
of the outstanding shares of the Funds:
<TABLE>
Percentage of
Name and Address Number of Shares Outstanding Shares
<S> <C> <C>
Global Fixed Income Fund
Public Service Electric & 7,354,679 11.1%
Gas Company
Jersey City, NJ 07302
UniHealth America 4,859,631 7.4%
Pittsburgh, PA 15230
All Officers and Trustees as 412,132 0.6%
a group
International Bond Fund
Consuelo Zobel Alger 1,459,634 73.4%
Foundation
Honolulu, HI 96813
Fleetwood Retirement Plan 363,446 18.3%
Riverside, CA 92523
All Officers and Trustees as 104,888 5.2%
a group
</TABLE>
The holders of 30% of the outstanding shares of a Fund must be
present in person or represented by proxy at the Meeting in order to
constitute a quorum for the transaction of any business with respect to
such Fund. If a quorum of a Fund is present at the Meeting but sufficient
votes to approve the proposed amendment to the Investment Management
Agreement with respect to such Fund are not received, the persons named as
proxies may propose one or more adjournments of the Meeting with respect to
such Fund to permit further solicitation of proxies. In so doing, the
persons named as proxies will attempt to determine if an adjournment and
additional shareholder solicitation are reasonable and in the best interest
of shareholders, and will vote for or against adjournment accordingly. Any
such adjournment will require the affirmative vote of a majority of the
shares of the Fund present at the Meeting or represented by proxy.
If the enclosed proxy card is executed properly and returned in
time to be voted at the Meeting, and is not revoked, the shares represented
thereby will be voted according to the instructions marked on the card.
The persons appointed as proxies will use their best judgment in voting in
connection with the transaction of any other business that may properly
come before the Meeting or any adjournment thereof. A shareholder giving a
proxy may revoke it at any time before it is exercised by giving written
notice of its revocation to the Secretary of the Trust at the address
indicated on the Notice of Special Meeting, by executing and delivering to
the Trust another proxy dated subsequent to the proxy to be revoked, or by
attending the Meeting and voting in person.
Abstentions and broker "non-votes" (proxies from brokers or
nominees indicating that such persons have not received instructions from
the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the broker or nominee does not have
discretionary power) will not be counted for or against any proposal to
which they relate, but will be counted for purposes of determining the
shares present at the Meeting. Abstentions and broker non-votes will
therefore have the effect of a "no" vote for purposes of obtaining the
requisite approval of any proposal before the Meeting.
PROPOSAL 1
APPROVAL OF AMENDMENT TO
INVESTMENT MANAGEMENT AGREEMENT
At the Meeting, the shareholders of each Fund will be asked to
approve an amendment (the "Amendment") to the Investment Management
Agreement between the Trust and Payden & Rygel with respect to the Fund. A
copy of the Investment Management Agreement, as amended by the Amendment,
is set forth as Exhibit 1 to this Proxy Statement, with changes from the
current Investment Management Agreement indicated in bold face type. The
provisions of the Investment Management Agreement will remain the same,
with the exception of the new fee schedule set forth in Exhibit 1 of the
Investment Management Agreement (discussed further below).
Pursuant to the Investment Management Agreement, Payden & Rygel
renders investment advice and provides supervisory management services to
each Fund, subject to the control and overall supervisory authority of the
Trust's Board of Trustees. For these services, Payden & Rygel currently
receive fees at the following annual rates, as a percentage of each Fund's
average daily net assets: 0.37% of the first $200,000,000, 0.29% of the
next $500,000,000, 0.25% of the next $800,000,000, and 0.18% of the excess
over $1,500,000,000. If the Amendment is approved by the shareholders of a
Fund, the annual advisory fee to be paid to Payden & Rygel with respect to
such Fund will be amended to 0.30% of the first $2,000,000,000 and 0.25% of
the excess over $2,000,000,000 of the Fund's average daily net assets.
For the fiscal year ended October 31, 1995, the aggregate amounts
of Payden & Rygel's fees under the Investment Management Agreement with
respect to the Global Fund and the International Fund were $1,533,836 and
$25,777, respectively. If the proposed fee structure under the Amendment
had been in effect with respect to each Fund for such fiscal year, the
aggregate amount of Payden & Rygel's fees would have been $1,420,375 with
respect to the Global Fund, which represents a 7.3% DECREASE over the
amount of fees actually paid, and $20,900 with respect to the International
Fund, which represents a 18.9% DECREASE over the amount of fees actually
paid.
Management believes that the current advisory fee schedule is too
complex. Shareholders may have difficulty calculating a Fund's average
management fee. The new structure is much easier to understand.
Furthermore, the proposed new fee structure is similar to (and only
slightly higher than) that of the Trust's seven domestic fixed income
funds. The proposed fee structure will continue to be one of the lowest
fee structures currently available to investors in non-index global and
international mutual funds.
General Information Regarding the Investment Management Agreement
The Investment Management Agreement is dated as of June 24, 1992
with respect to the Global Fund. The International Fund was added to the
Agreement by amendment on December 31, 1994. The Agreement was approved by
the shareholders of the Global Fund on January 29, 1993 and by the initial
shareholder of the International Fund on March 31, 1995, and was last
approved by the Board of Trustees of the Trust on June 13, 1995.
Except as described below, each Fund will continue to pay all of
its expenses, including commissions, interest, taxes, legal and accounting
fees, fees of custodians, transfer agents, registrars and dividend
disbursing agents, registration and filing fees, and costs in connection
with meetings of shareholders, including the preparation and distribution
of proxy soliciting materials, and a pro rata portion of other Trust
expenses, including fees and expenses of Trustees who are not "interested
persons" of Payden & Rygel or of the principal underwriter of the Fund,
insurance premiums, printing costs (which do not include the costs of
printed material sent to persons who are not shareholders), salaries and
related compensation of all non-officer employees, postage, association
dues and extraordinary and non-recurring expenses.
Payden & Rygel will continue to limit each Fund's operating
expenses (other than interest, taxes, brokerage commissions and other
portfolio transaction expenses, capital expenditures and extraordinary
expenses) to 0.70% of the average daily net assets of the Fund's Class A
shares and 0.95% of the average daily assets of the Fund's Class B shares.
For the year ended October 31, 1995, total expenses for the Global Fixed
Income Fund and International Bond Fund were 0.50% and 0.70% of average
daily net assets, respectively. In addition, Payden & Rygel will continue
to be obligated to reimburse each Fund if Fund expenses exceed those
expenses set forth in any statutory or regulatory formula prescribed by any
state in which Fund shares are registered at such time.
The Investment Management Agreement provides that neither Payden
& Rygel nor any of its officers, directors or employees will be liable for
any error of judgment or mistake of law, or for any loss suffered by a Fund
in connection with the matters to which the Investment Management Agreement
relates, except for losses resulting from Payden & Rygel's willful
misfeasance, bad faith or gross negligence in the performance of its duties
on behalf of the Fund or from its reckless disregard of its duties under
the Investment Management Agreement.
Treasury Plus, Inc., a wholly-owned subsidiary of Payden & Rygel,
provides administration services to the Trust pursuant to a Management and
Administration Agreement with the Trust which became effective on January
1, 1996.
Consideration of Amendment by the Board
The Board of Trustees of the Trust, including all of the Trustees
who are not "interested persons" of the Trust within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), has concluded
that approval of the Amendment is in the best interests of each Fund and
its shareholders. The Board, therefore, recommends approval of the
Amendment by the shareholders of each Fund.
In making this recommendation, the Trustees carefully evaluated
the following factors with respect to each Fund, among others: (1) the
excellent performance of the Fund under the management of Payden & Rygel;
(2) that the level of the annual advisory fees paid to Payden & Rygel will
decrease at the Fund's current level of assets and until its assets exceed
approximately $900 million, and will be low compared to the fees charged to
many other non-index global and international and mutual funds; (3) the
continuing agreement of Payden & Rygel to limit annual Fund operating
expenses to 0.70% and 0.95% of the average daily net assets of the Fund's
Class A and Class B shares, respectively; (4) that the other terms of the
Investment Management Agreement will remain unchanged; (5) the history,
reputation, qualification, and background of Payden & Rygel; and (6) the
capabilities of Payden & Rygel Distributors, the affiliate of Payden &
Rygel which acts as distributor of the Fund's shares, to increase the
assets of the Fund, thereby potentially resulting in greater economies of
scale and portfolio diversity.
Required Vote
The affirmative vote of the holders of "a majority of the
outstanding securities" of a Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), is required to approve the Amendment
with respect to such Fund. "Majority of the outstanding voting securities"
of a Fund for this purpose under the 1940 Act means the lower of (i) 67% of
the shares of the Fund represented at the Meeting, if more than 50% of the
outstanding shares of the Fund are represented at the Meeting, or (ii) more
than 50% of the outstanding shares of the Fund.
THE INVESTMENT ADVISER
Payden & Rygel serves as investment adviser to the Trust pursuant
to the Investment Management Agreement. Payden & Rygel is an investment
counseling firm founded in 1983, and currently has over $20 billion of
assets under management. It is registered as an investment adviser with
the Securities and Exchange Commission and as a commodity trading adviser
with the Commodities Futures Trading Commission.
The following table provides a summary of certain information
with respect to the principal executive officers and directors of Payden &
Rygel. The principal business address of such persons is 333 South Grand
Avenue, Los Angeles, California 90071.
<TABLE>
Position with
Name Trust Office Payden & Rygel
<S> <C> <C>
Joan A. Payden Chairman of the Board President and
and President Director
Lynda L. Faber Trustee Senior Vice
President and
Director
John P. Isaacson Trustee Executive Vice
President and
Director
James P. Sarni - Vice President
Brian W. Matthews - Vice President
Christopher N. Orndorff Trustee Vice President
Lynn M. Bowker Vice President and Vice President and
Treasurer Treasurer
Scott A. King Executive Vice Executive Vice
President President and
Director
</TABLE>
Payden & Rygel is controlled by Joan A. Payden, who owns a
majority of its outstanding shares.
OTHER BUSINESS
As of the date of this Proxy Statement, the Trust's management
knows of no business to come before the Meeting other than as set forth in
the Notice of Meeting. If any other business is properly brought before
the meeting or any adjustment thereof, the persons named as proxies will
vote on such business in their sole discretion.
NEXT MEETING OF SHAREHOLDERS
The Meeting is a special meeting of shareholders of the Funds.
The Trust is not required, and does not intend, to hold annual or other
periodic meetings of shareholders of the Funds except as required by the
1940 Act. The next meeting of shareholders of one or more Funds will be
held at such time as the Board of Trustees may determine or at such time as
may be legally required. A proposal which a shareholder wishes to have
included in the Trust's proxy materials for any such meeting must be
received by the Trust at its principal office within a reasonable time
before the release of the Trust's proxy soliciting materials with respect
to such meeting, as determined by the Board of Trustees. Any such proposal
must comply with the requirements of applicable law and regulations
governing both the eligibility of the proponent and the form and substance
of the proposal.
Please execute and return the enclosed proxy promptly to ensure
that a quorum is present at the meeting. A self-addressed, postage-paid
envelope is enclosed for your convenience.
s/JOAN A. PAYDEN
Joan A. Payden
President
May 28, 1996
Los Angeles, California
PAYDEN & RYGEL GLOBAL FIXED INCOME FUND
PROXY SOLICITED BY MANAGEMENT
The undersigned hereby appoint(s) Joan A. Payden and Christopher N.
Orndorff, and each of them, as proxies of the undersigned, each with full
power of substitution, to vote at the Special Meeting of Shareholders of
Payden & Rygel Global Fixed Income Fund (the "Fund") to be held on June 28,
1996 at 9:00 a.m., and any adjournment thereof, all the shares of the Fund
standing in the name of the undersigned.
When properly executed, this Proxy will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is
given, this Proxy will be voted FOR approval of the proposed amendment to
the Investment Management Agreement. In their discretion, the proxies are
each authorized to vote upon such other business as may properly come
before the Special Meeting and any adjournments thereof.
(1) For [ ] Against [ ] Abstain [ ]
With respect to approval of the amendment to the Investment Management
Agreement between Payden & Rygel Investment Group and Payden & Rygel
with respect to the Fund, as more fully described in the proxy
statement (the Board of Directors recommends a vote FOR)
The undersigned hereby acknowledge(s) receipt of a copy of the Notice
of Special Meeting of Shareholders and the Proxy Statement with respect
thereto, and hereby revoke(s) any proxy or proxies heretofore given. This
Proxy may be revoked at any time before it is exercised.
Dated: , 1996
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Signature(s) should be exactly as name or names
appear on the records of the Fund. If shares
are held jointly, each holder should sign. If
signing as attorney, executor, administrator,
trustee or guardian, please give us full name
and capacity in which signing.
PAYDEN & RYGEL INTERNATIONAL BOND FUND
PROXY SOLICITED BY MANAGEMENT
The undersigned hereby appoint(s) Joan A. Payden and Christopher N.
Orndorff, and each of them, as proxies of the undersigned, each with full
power of substitution, to vote at the Special Meeting of Shareholders of
Payden & Rygel International Bond Fund (the "Fund") to be held on June 28,
1996 at 9:00 a.m., and any adjournment thereof, all the shares of the Fund
standing in the name of the undersigned.
When properly executed, this Proxy will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is
given, this Proxy will be voted FOR approval of the proposed amendment to
the Investment Management Agreement. In their discretion, the proxies are
each authorized to vote upon such other business as may properly come
before the Special Meeting and any adjournments thereof.
(1) For [ ] Against [ ] Abstain [ ]
With respect to approval of the amendment to the Investment Management
Agreement between Payden & Rygel Investment Group and Payden & Rygel
with respect to the Fund, as more fully described in the proxy
statement (the Board of Directors recommends a vote FOR)
The undersigned hereby acknowledge(s) receipt of a copy of the Notice
of Special Meeting of Shareholders and the Proxy Statement with respect
thereto, and hereby revoke(s) any proxy or proxies heretofore given. This
Proxy may be revoked at any time before it is exercised.
Dated: , 1996
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Signature(s) should be exactly as name or names
appear on the records of the Fund. If shares
are held jointly, each holder should sign. If
signing as attorney, executor, administrator,
trustee or guardian, please give us full name
and capacity in which signing.
EXHIBIT 1
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT is made as of June 24, 1992,
between P&R INVESTMENT TRUST*/, a Massachusetts business trust (herein
called the "Trust"), and PAYDEN & RYGEL, a California corporation ("P&R").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Trust desires to retain P&R to furnish investment
advisory services to the Trust and P&R is willing to so furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT. The Trust hereby appoints P&R to act as
investment adviser to each series of shares of beneficial interest of the
Trust identified on Exhibit A hereto, as such Exhibit may from time to time
be amended by the parties (each a "Fund"), for the period and on the terms
set forth in this Agreement. P&R accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, P&R shall provide a continuous investment program for each
Fund, including, investment research and management with respect to all
securities and investments and cash equivalents in such Fund.
(a) P&R shall determine from time to time what securities and
other investments will be purchased, retained or sold by the Trust with
respect to each Fund. P&R shall comply with the investment objectives,
policies and restrictions as stated in the Trust's Registration Statement
with respect to each Fund, as from time to time amended, and resolutions of
the Trust's Board of Trustees. P&R shall
comply with the 1940 Act, the Securities Act of 1933 and all applicable
Rules and Regulations of the Securities and Exchange Commission, and shall
conduct its activities pursuant to this Agreement in accordance with all
other applicable laws and regulations.
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*/ Name subsequently changed to Payden & Rygel Investment Group.
(b) On occasions when P&R deems the purchase or sale of a
security to be in the best interest of a Fund as well as other clients of
P&R, then P&R, to the extent permitted by applicable laws and regulations,
may (but shall be under no obligation to) aggregate the securities to be
sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation
of the securities so purchased or sold, as well as the expenses incurred in
the transaction, shall be made by P&R in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund
and to such other clients.
(c) P&R shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Trust to
serve in the capacities in which they are elected.
3. SERVICES NOT EXCLUSIVE. P&R shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees from time
to time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent. The investment management services
furnished by P&R hereunder are not deemed exclusive, and P&R shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby.
4. REPORTS, BOOKS AND RECORDS. P&R shall render to the Board of
Trustees of the Trust such periodic and other reports as the Board may from
time to time reasonably request. In compliance with the requirements of
Rule 3la-3 under the 1940 Act, P&R hereby agrees that all records which it
maintains for the Trust are the property of the Trust. P&R shall surrender
promptly to the Trust any of such records upon the Trust's request, and
shall preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
5. EXPENSES.
(a) During the term of this Agreement, P&R shall pay the
following expenses: (i) the salaries and expenses of all personnel of the
Trust and all personnel of P&R who perform services for the Trust, except
the fees and expenses of trustees who are not affiliated persons of P&R;
and (ii) all expenses incurred by P&R or by the Funds in connection with
managing the ordinary course of the Funds' business other than those to be
paid by the Funds as set forth herein.
(b) During the term of this Agreement, the Trust shall pay the
following expenses: (i) the fees and expenses incurred by each Fund in
connection with the management of the investment and reinvestment of the
Fund's assets; (ii) the fees and expenses of trustees who are not
affiliated persons of P&R; (iii) the fees and expenses of the Trust's
Custodian, Transfer Agent, Fund Accounting Agent and Administrator; (iv)
the charges and expenses of legal counsel and independent accountants for
the Trust; (v) brokers' commissions and any issue or transfer taxes
chargeable to the Fund in connection with its securities and futures
transactions; (vi) all taxes and corporate fees payable by a Fund to
federal, state or other governmental agencies; (vii) the fees of any trade
associations of which the Trust may be a member; (viii) the cost of
fidelity, trustees and officers and errors and omission insurance; (ix) the
fees and expenses involved in registering and maintaining registration of
each Fund and of its shares with the SEC, registering the Trust as a broker
or dealer and qualifying shares of each Fund under state securities laws,
including the preparation and printing of the Trust's registration
statements, prospectuses and statements of additional information for
filing under federal and state securities laws for such purposes; (x)
allocable communications expenses with respect to investor services and all
expenses of shareholders' and trustees' meetings and of preparing, printing
and mailing reports to shareholders in the amount necessary for
distribution to the shareholders; (xi) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary
course of the Trust's business, and (xii) any expenses assumed by the Trust
pursuant to a plan of distribution adopted in conformity with Rule 12b-1
under the 1940 Act.
6. COMPENSATION. For the services provided by P&R pursuant to
this Agreement, the Trust shall pay P&R a fee, computed daily and paid
monthly (in arrears), at the annual rate set forth in Exhibit A.
(a) If in any fiscal year the aggregate operating expenses of any
Fund (as hereafter defined) exceed the applicable percentage of the average
daily net assets of the Fund set forth in Exhibit A for such fiscal year,
P&R shall reimburse such Fund for such excess operating expenses. Such
operating expense reimbursement, if any, shall be estimated, reconciled and
paid on a monthly basis. Any such reimbursement of a Fund shall be repaid
to P&R by such Fund, without interest, at such later time or times as it
may be repaid without causing the aggregate operating expenses of such Fund
to exceed the applicable percentage of the average daily net assets of the
Fund for the period in which it is repaid; provided, however, that upon
termination of this Agreement with respect to any Fund, such Fund shall
have no further obligation to repay any such reimbursements. As used in
this paragraph, the term "operating expenses" of a Fund for a fiscal year
shall mean all expenses of the Fund for such year other than interest,
taxes, brokerage commissions (including related SEC fees), blue-sky fees,
12b-l plan fees and extraordinary expenses.
(b) In addition, if in any fiscal year the aggregate expenses of
any Fund (as defined under the securities regulations of any state having
jurisdiction over such Fund) exceed the expense limitations of any such
state, P&R shall reimburse the Fund for such excess expenses to the extent
not previously reimbursed pursuant to paragraph (a) of this Section 6. The
obligation of P&R to reimburse any Fund hereunder is limited in any fiscal
year to the amount of its fee hereunder for such fiscal year with respect
to such Fund. Such expense reimbursement, if any, shall be estimated,
reconciled and paid on a monthly basis.
7. LIMITATION OF LIABILITY. P&R shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust
in connection with the performance of this Agreement, except a loss
resulting from a breach of P&R's fiduciary duty with respect to the receipt
of compensation for services (in which event any award of damages shall be
limited to the period and amount set forth in Section 36(b)(3) of the 1940
Act) or loss resulting from P&R's willful misfeasance, bad faith or gross
negligence in the performance of its duties or from reckless disregard by
P&R of its obligations and duties under this Agreement.
The Trust shall indemnify P&R and hold it harmless from and
against all damages, liabilities, costs and expenses (including reasonable
attorneys' fees and amounts reasonably paid in settlement) incurred by P&R
in or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding (including an action or suit by or in the
right of a Fund or its security holders) arising out of or otherwise based
upon any action actually or allegedly taken or omitted to be taken by P&R
in connection with the performance of any of its duties or obligations
under this Agreement or otherwise as an investment adviser of the Trust.
Determination of whether and the extent to which the P&R is entitled to
indemnification hereunder shall be made by (a) a final decision on the
merits by a court or to her body before whom the action, suit or other
proceeding was brought that P&R was or was not liable by reason of willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
or breach of its fiduciary duty or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that P&R was or
was not liable by reason of such misconduct by (i) the vote of a majority
of a quorum of the Trustees of the Trust who are neither "interested
persons" of the Trust (as defined in Section 2(a)(19) of the 1940 Act) nor
parties to the action, suit or other proceeding or (ii) an independent
legal counsel in a written opinion.
8. DURATION AND TERMINATION. This Agreement shall become
effective with respect to the initial Fund on the date hereof, and with
respect to any additional Funds on the date of the amendment to Exhibit A
adding such Fund hereto, provided that this Agreement (as supplemented by
the terms specified in Exhibit A hereto with respect to such Fund) shall
have been approved by the shareholders of such Fund in accordance with the
requirements of the 1940 Act, and unless sooner terminated as provided
herein, shall continue in effect with respect to each Fund for an initial
term of two years. Thereafter, if not terminated, this Agreement shall
continue in effect as to a particular Fund for successive periods of twelve
months each, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be terminated
as to any Fund at any time, without the payment of any penalty, by the
Trust (by vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund), or by P&R, on sixty days'
written notice. This Agreement shall immediately terminate in the event of
its assignment.
9. REPRESENTATIONS AND WARRANTIES. P&R represents and warrants
to the Trust that P&R is registered as an investment adviser under the
Investment Advisers Act of 1940. The Trust represents and warrants to P&R
that it is registered as an open-end management investment company under
the 1940 Act. Each party further represents and warrants to the other that
this Agreement has been duly authorized by such party and constitutes the
legal, valid and binding obligation of such party in accordance with its
terms.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective as to a particular Fund until approved by vote
of a majority of the outstanding securities of such Fund; provided,
however, that this Agreement may be amended without the vote of the
shareholders of any Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provisions hereof, or
it the parties deem such amendment necessary to conform this Agreement to
the requirements of applicable federal laws or regulations (but neither the
Trust nor P&R shall be liable for failing to do so).
11. OBLIGATIONS OF THE TRUST. P&R acknowledges that the Master
Trust Agreement of the Trust dated January 22, 1992 is on file with the
Secretary of the Commonwealth of Massachusetts, and that the obligations of
the Trust under this Agreement are not binding on any officers, trustees or
shareholders of the Trust individually but are binding only upon the assets
and properties of the various Funds.
12. NOTICES. Notices of any kind to be given to P&R hereunder
by the Trust shall be in writing and shall be duly given if mailed or
delivered to P&R at 333 South Grand Avenue, Los Angeles, California 90071,
Attention: President, or at such other address or to such individual as
shall be so specified by P&R to the Trust. Notices of any kind to be given
to the Trust hereunder by P&R shall be in writing and shall be duly given
if mailed or delivered to the Trust at 333 South Grand Avenue, Los Angeles,
California 90071, Attention: President; or at such other address or to such
individual as shall be so specified by the Trust to P&R.
13. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way limit any of the provisions
hereof or otherwise affect their construction or effect. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and shall
be governed by Massachusetts law (without regard to principles of conflicts
of law); provided, however, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940
or any rule or regulation of the Securities and Exchange Commission
thereunder. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall
have the same meaning as the meaning of such terms in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
P&R INVESTMENT TRUST
By s/Joan A. Payden
President
PAYDEN & RYGEL
By s/Scott King
Executive Vice President
EXHIBIT A
Payden & Rygel Global Fixed Income Fund Series
Annual Advisory Fees (as a percentage of average daily net assets) -- .30%
of the first $2,000,000,000; .25% over $2,000,000,000.
Operating Expense Limitation (as a percentage of average daily net assets)
- -- .70% of Class A shares; .95% of Class B shares.
Payden & Rygel International Bond Fund Series
Annual Advisory Fees (as a percentage of average daily net assets) -- .30%
of the first $2,000,000,000; .25% over $2,000,000,000.
Operating Expense Limitation (as a percentage of average daily net assets)
- -- .70% of Class A shares; .95% of Class B shares.
A-8
