Exhibit 10.5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 28th day of June, 1996,
between TEMPLETON GLOBAL INVESTMENT TRUST (hereinafter
referred to as the "Trust"), on behalf of Templeton Latin
America Fund (the "Fund"), and TEMPLETON INVESTMENT COUNSEL,
INC., (hereinafter referred to as the "Investment Manager").
In consideration of the mutual agreements herein
made, the Trust on behalf of the Fund and the Investment
Manager
understand and agree as follows:
(1) The Investment Manager agrees, during the
life of this Agreement, to manage the investment and
reinvestment of the Fund's assets consistent with the
provisions of the Trust Instrument of the Trust and the
investment policies adopted and declared by the Trust's
Board of Trustees. In pursuance of the foregoing, the
Investment Manager shall make all determinations with
respect to the investment of the Fund's assets and the
purchase and sale of its investment securities, and shall
take such steps as may be necessary to implement those
determinations. Such determinations and services shall
include determining the manner in which any voting rights,
rights to consent to corporate action and any other rights
pertaining to the Fund's investment securities shall be
exercised, subject to guidelines adopted by the Board of
Trustees.
(2) The Investment Manager is not required to
furnish any personnel, overhead items or facilities for the
Fund, including trading desk facilities or daily pricing of
the Fund's portfolio.
(3) The Investment Manager shall be responsible
for selecting members of securities exchanges, brokers and
dealers (such members, brokers and dealers being hereinafter
referred to as "brokers") for the execution of the Fund's
portfolio transactions consistent with the Trust's brokerage
policies and, when applicable, the negotiation of
commissions in connection therewith.
All decisions and placements shall be made in
accordance with the following principles:
A. Purchase and sale orders will
usually be placed with brokers which are
selected by the Investment Manager as able to
achieve "best execution" of such orders.
"Best execution" shall mean prompt and
reliable execution at the most favorable
security price, taking into account the other
provisions hereinafter set forth. The
determination of what may constitute best
execution and price in the execution of a
securities transaction by a broker involves a
number of considerations, including, without
limitation, the overall direct net economic
result to the Fund (involving both price paid
or received and any commissions and other
costs paid), the efficiency with which the
transaction is effected, the ability to
effect the transaction at all where a large
block is involved, availability of the broker
to stand ready to execute possibly difficult
transactions in the future, and the financial
strength and stability of the broker. Such
considerations are judgmental and are weighed
by the Investment Manager in determining the
overall reasonableness of brokerage
commissions.
B. In selecting brokers for portfolio
transactions, the Investment Manager shall
take into account its past experience as to
brokers qualified to achieve "best
execution," including brokers who specialize
in any foreign securities held by the Fund.
C. The Investment Manager is
authorized to allocate brokerage business to
brokers who have provided brokerage and
research services, as such services are
defined in Section 28(e) of the Securities
Exchange Act of 1934 (the "1934 Act"), for
the Fund and/or other accounts, if any, for
which the Investment Manager exercises
investment discretion (as defined in
Section 3(a)(35) of the 1934 Act) and, as to
transactions for which fixed minimum
commission rates are not applicable, to cause
the Fund to pay a commission for effecting a
securities transaction in excess of the
amount another broker would have charged for
effecting that transaction, if the Investment
Manager determines in good faith that such
amount of commission is reasonable in
relation to the value of the brokerage and
research services provided by such broker,
viewed in terms of either that particular
transaction or the Investment Manager's
overall responsibilities with respect to the
Fund and the other accounts, if any, as to
which it exercises investment discretion. In
reaching such determination, the Investment
Manager will not be required to place or
attempt to place a specific dollar value on
the research or execution services of a
broker or on the portion of any commission
reflecting either of said services. In
demonstrating that such determinations were
made in good faith, the Investment Manager
shall be prepared to show that all
commissions were allocated and paid for
purposes contemplated by the Trust's
brokerage policy; that the research services
provide lawful and appropriate assistance to
the Investment Manager in the performance of
its investment decision-making
responsibilities; and that the commissions
paid were within a reasonable range. Whether
commissions were within a reasonable range
shall be based on any available information
as to the level of commission known to be
charged by other brokers on comparable
transactions, but there shall be taken into
account the Trust's policies that
(i) obtaining a low commission is deemed
secondary to obtaining a favorable securities
price, since it is recognized that usually it
is more beneficial to the Fund to obtain a
favorable price than to pay the lowest
commission; and (ii) the quality,
comprehensiveness and frequency of research
studies that are provided for the Investment
Manager are useful to the Investment Manager
in performing its advisory services under
this Agreement. Research services provided
by brokers to the Investment Manager are
considered to be in addition to, and not in
lieu of, services required to be performed by
the Investment Manager under this Agreement.
Research furnished by brokers through which
the Fund effects securities transactions may
be used by the Investment Manager for any of
its accounts, and not all research may be
used by the Investment Manager for the Fund.
When execution of portfolio transactions is
allocated to brokers trading on exchanges
with fixed brokerage commission rates,
account may be taken of various services
provided by the broker.
D. Purchases and sales of portfolio
securities within the United States other
than on a securities exchange shall be
executed with primary market makers acting as
principal, except where, in the judgment of
the Investment Manager, better prices and
execution may be obtained on a commission
basis or from other sources.
E. Sales of the Fund's shares (which
shall be deemed to include also shares of
other registered investment companies which
have either the same adviser or an investment
adviser affiliated with the Investment
Manager) by a broker are one factor among
others to be taken into account in deciding
to allocate portfolio transactions (including
agency transactions, principal transactions,
purchases in underwritings or tenders in
response to tender offers) for the account of
the Fund to that broker; provided that the
broker shall furnish "best execution," as
defined in subparagraph A above, and that
such allocation shall be within the scope of
the Trust's policies as stated above;
provided further, that in every allocation
made to a broker in which the sale of Fund
shares is taken into account, there shall be
no increase in the amount of the commissions
or other compensation paid to such broker
beyond a reasonable commission or other
compensation determined, as set forth in
subparagraph C above, on the basis of best
execution alone or best execution plus
research services, without taking account of
or placing any value upon such sale of the
Trust's shares.
(4) The Fund agrees to pay to the Investment
Manager a monthly fee in dollars at an annual rate of 1.25%
of the Fund's average daily net assets, payable at the end
of each calendar month. The Investment Manager may waive
all or a portion of its fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of
its services. The Investment Manager shall be contractually
bound hereunder by the terms of any publicly announced
waiver of its fee, or any limitation of the Fund's expenses,
as if such waiver or limitation were fully set forth herein.
Notwithstanding the foregoing, if the total
expenses of the Fund (including the fee to the Investment
Manager) in any fiscal year of the Trust exceed any expense
limitation imposed by applicable State law, the Investment
Manager shall reimburse the Fund for such excess in the
manner and to the extent required by applicable State law.
The term "total expenses," as used in this paragraph, does
not include interest, taxes, litigation expenses,
distribution expenses, brokerage commissions or other costs
of acquiring or disposing of any of the Fund's portfolio
securities or any costs or expenses incurred or arising
other than in the ordinary and necessary course of the
Fund's business. When the accrued amount of such expenses
exceeds this limit, the monthly payment of the Investment
Manager's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of
the Trust's fiscal year if accrued expenses thereafter fall
below the limit.
(5) This Agreement is dated as of the 28th day of
June, 1996 and shall continue in effect until April 30,
1998. If not sooner terminated, this Agreement shall
continue in effect for successive periods of 12 months each
thereafter, provided that each such continuance shall be
specifically approved annually by the vote of a majority of
the Trust's Board of Trustees who are not parties to this
Agreement or "interested persons" (as defined in Investment
Company Act of 1940 (the "1940 Act")) of any such party,
cast in person at a meeting called for the purpose of voting
on such approval and either the vote of (a) a majority of
the outstanding voting securities of the Fund, as defined in
the 1940 Act, or (b) a majority of the Trust's Board of
Trustees as a whole.
(6) Notwithstanding the foregoing, this Agreement
may be terminated by either party at any time, without the
payment of any penalty, on sixty (60) days' written notice
to the other party, provided that termination by the Trust
is approved by vote of a majority of the Trust's Board of
Trustees in office at the time or by vote of a majority of
the outstanding voting securities of the Fund (as defined by
the 1940 Act).
(7) This Agreement will terminate automatically
and immediately in the event of its assignment (as defined
in the 1940 Act).
(8) In the event this Agreement is terminated and
the Investment Manager no longer acts as Investment Manager
to the Fund, the Investment Manager reserves the right to
withdraw from the Fund the use of the name "Templeton" or
any name misleadingly implying a continuing relationship
between the Fund and the Investment Manager or any of its
affiliates.
(9) Except as may otherwise be provided by the
1940 Act, neither the Investment Manager nor its officers,
directors, employees or agents shall be subject to any
liability for any error of judgment, mistake of law, or any
loss arising out of any investment or other act or omission
in the performance by the Investment Manager of its duties
under the Agreement or for any loss or damage resulting from
the imposition by any government of exchange control
restrictions which might affect the liquidity of the Fund's
assets, or from acts or omissions of custodians, or
securities depositories, or from any war or political act of
any foreign government to which such assets might be
exposed, or for failure, on the part of the custodian or
otherwise, timely to collect payments, except for any
liability, loss or damage resulting from willful
misfeasance, bad faith or gross negligence on the Investment
Manager's part or by reason of reckless disregard of the
Investment Manager's duties under this Agreement. It is
hereby understood and acknowledged by the Trust that the
value of the investments made for the Fund may increase as
well as decrease and are not guaranteed by the Investment
Manager. It is further understood and acknowledged by the
Trust that investment decisions made on behalf of the Fund
by the Investment Manager are subject to a variety of
factors which may affect the values and income generated by
the Fund's portfolio securities, including general economic
conditions, market factors and currency exchange rates, and
that investment decisions made by the Investment Manager
will not always be profitable or prove to have been correct.
(10) It is understood that the services of the
Investment Manager are not deemed to be exclusive, and
nothing in this Agreement shall prevent the Investment
Manager, or any affiliate thereof, from providing similar
services to other investment companies and other clients,
including clients which may invest in the same types of
securities as the Fund, or, in providing such services, from
using information furnished by others. When the Investment
Manager determines to buy or sell the same security for the
Fund that the Investment Manager or one or more of its
affiliates has selected for clients of the Investment
Manager or its affiliates, the orders for all such security
transactions shall be placed for execution by methods
determined by the Investment Manager, with approval by the
Trust's Board of Trustees, to be impartial and fair.
(11) This Agreement shall be construed in
accordance with the laws of the State of Delaware, provided
that nothing herein shall be construed as being inconsistent
with applicable Federal and state securities laws and any
rules, regulations and orders thereunder.
(12) 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(13) Nothing herein shall be construed as
constituting the Investment Manager an agent of the Trust.
(14) It is understood and expressly stipulated
that neither the holders of shares of the Fund nor any
Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or
obligation hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their duly authorized
officers and their respective corporate seals to be hereunto
duly affixed and attested.
TEMPLETON GLOBAL INVESTMENT TRUST
By:_______________________________
John R. Kay
Vice President
TEMPLETON INVESTMENT COUNSEL, INC.
By:_________________________________
Charles E. Johnson
Chairman