SUBADVISORY AGREEMENT
AGREEMENT made as of the ___ day of _________, 1996, between Xxxxxxx,
Xxxxxxx & Xxxxx, Inc., a Delaware corporation (hereinafter called the
"Manager"), and Bankers Trust Company, a New York corporation (hereinafter
called the "Subadviser").
W I T N E S S E T H:
WHEREAS AARP Growth Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser as
investment counsel with respect to certain portfolio assets of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to the investment portfolio of AARP Blue Chip
Index Fund (the "Series"), being one of the portfolio series of the Trust, which
is under the management of the Manager pursuant to an Investment Management
Agreement between the Manager and the Trust dated February 1, 1994, as
supplemented February 1, 1997.
The Subadviser is hereby authorized and directed and hereby agrees, subject
to the stated investment policies and restrictions of the Series as set forth in
the current Prospectus and Statement of Additional Information of the Trust
(including amendments) and in accordance with the Fund's Declaration of Trust,
as amended, and By-laws governing the offering of its shares and subject to such
resolutions as from time to time may be adopted by the Fund's Trustees and
furnished to the Subadviser, to develop, recommend and implement such investment
program and strategy for the Series as may from time to time be most appropriate
to the achievement of the investment objectives of the Series as stated in the
aforesaid Prospectus, to provide research and analysis relative to the
investment program and investments of the Series, to determine what securities
should be purchased and sold and to monitor on a continuing basis the
performance of the portfolio securities of the Series. In addition, the
Subadviser will place orders for the purchase and sale of portfolio securities
and, subject to the provisions of the following
paragraph, will take reasonable steps to assure that portfolio transactions are
effected to the best price and execution available. The Subadviser will advise
the Fund's custodian and the Manager on a prompt basis of each purchase and sale
of a portfolio security specifying the name of the issuer, the description and
amount or number of shares of the security purchased, the market price,
commission and gross or net price, trade date, settlement date and identity of
the effecting broker or dealer. From time to time as the Trustees of the Trust
or the Manager may reasonably request, the Subadviser will furnish to the
Manager, Trust's officers and to each of its Trustees reports on portfolio
transactions and reports on assets held in the Series, all in such detail as the
Trust or the Manager may reasonably request. The Subadviser will also inform the
Manager, Trust's officers and Trustees on a current basis of changes in
investment strategy or tactics. The Subadviser will make its officers and
employees available to meet with the Manager, Trust's officers and Trustees at
least quarterly on due notice to review the investments and investment
performance of the Series in the light of the Trust's investment objectives and
policies and market conditions.
In using its best efforts to obtain for the Series the most favorable price
and execution available, the Subadviser, bearing in mind the Series' best
interest at all times, shall consider all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Trust may determine, the
Subadviser 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 Series to pay an unaffiliated broker or dealer that provides
brokerage and research services to the Subadviser 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 Subadviser 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 Subadviser's overall responsibilities with respect
to the Series.
It shall be the duty of the Subadviser to furnish to the Trustees of the
Trust such information as may be reasonably be requested in order for such
Trustees to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to Section 10 hereof.
In the performance of its duties hereunder, the Subadviser is and shall be
an independent contractor and except as otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust, the Series or the Manager in any way or otherwise be deemed to be an
agent of the Trust, the Series or the Manager.
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In furnishing the services under this Agreement, the Subadviser will comply
with the requirements of the 1940 Act applicable to it, and the regulations
promulgated thereunder.
2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-Laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Subadviser as subadviser to the Series and approving the form of this
agreement;
(d) The resolutions of the Trustees selecting the Manager as
investment manager to the Trust and approving the form of the Investment
Management Agreement with the Trust, on behalf of the Series;
(e) The Investment Management Agreement with the Trust, on behalf of
the Series;
(f) The Code of Ethics of the Trust and of the Manager as currently in
effect; and
(g) Current copies of the Series' Prospectus and Statement of
Additional Information.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until provided the Subadviser may continue
to rely on those documents previously provided.
During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Trust documents, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Series or the public that refer in any way
to the Subadviser, and will not use such material if the Subadviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt thereof. However, the Manager and the
Subadviser may agree amongst themselves that certain of the above-mentioned
documents do not need to be furnished to the Subadviser prior to the document's
use.
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In the event of termination of this Agreement, the Trust will continue to
furnish to the Subadviser copies of any of the above-mentioned materials that
refer in any way to the Subadviser. The Trust shall furnish or otherwise make
available to the Subadviser such other information relating to the business
affairs of the Trust as the Subadviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
3. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have
authorized to give written and/or oral instructions to Custodians and the
Transfer Agent of Trust assets for the Series; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c) above will be provided
within 30 days of the time such materials became available to the Subadviser.
4. Other Agreements, etc. It is understood that any of the shareholders,
Trustees, officers and employees of the Trust or the Series may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person of the Subadviser, any organization in
which the Subadviser may have an interest or any organization which may have an
interest in the Subadviser, any such interested person or any such organization
may have an interest in the Trust or the Series. It is also understood that the
Subadviser, the Manager and the Trust may have advisory, management, service or
other contracts with other individuals or entities, and may have other interests
and businesses. When a security proposed to be purchased or sold for the Series
is also to be purchased or sold for other accounts managed by the Subadviser at
the same time, the Subadviser shall make such purchases or sales on a pro-rata,
rotating or other equitable basis so as to avoid any one account's being
preferred over any other account.
The Subadviser may give advice and take action with respect to other funds
or clients, or for its own account (collectively, "Other Accounts") which may
differ from the advice or the timing or nature of action taken with respect to
the Series.
Nothing in this Agreement shall be implied to prevent the (i) Manager from
engaging other subadvisers to provide investment advice and other services in
relation to
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portfolios of the Trust for which the Subadviser does not provide such services,
or to prevent the Manager from providing such services itself in relation to
such portfolios; or (ii) the Subadviser from providing investment advice and
other services to other funds or clients.
5. Fees, Expenses and other Charges.
(a) For its services hereunder, the Subadviser shall be paid a
management fee by the Trust according to the fee schedule attached hereto
as Schedule A.
(b) All sums payable to the Subadviser hereunder will be paid in full
without set off, deduction or withholding for any taxes, duties or other
charges. If in respect of any payments made to the Subadviser hereunder any
person is required by law to make any such deduction or withholding, the
Manager will immediately pay to the Subadviser such additional amount as
will result in the Subadviser receiving a net amount equal to the full
amount which the Subadviser would have received had no such deduction or
withholding been required.
(c) The Subadviser, at its expense, will furnish all necessary
investment facilities, including salaries of personnel required for it to
execute its duties faithfully.
6. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Manager, the Trust or such persons as the Manager may designate in
connection with the Series. It is also understood that any information supplied
to the Subadviser in connection with the performance of its obligations
hereunder, particularly, but not limited to, any list of securities which, on a
temporary basis, may not be bought or sold for the Series, is to be regarded as
confidential and for use only by the Subadviser in connection with its
obligation to provide investment advice and other services to the Series.
7. Representations and Covenants of the Parties. The Subadviser hereby
acknowledges that it is a "bank" as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 and neither it not any "affiliated person" of
it, as defined in the 1940 Act, is subject to any disqualification that would
make the Subadviser unable to serve as an investment adviser to a registered
investment company under Section 9 of the 1940 Act. The Subadviser covenants
that it will not carry out appropriate compliance procedures necessary to the
operation of the Series as the Subadviser and the Manager may agree. The
Subadviser also covenants that it will manage the Series so that the Trust will
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code.
8. Reports by the Subadviser and Records of the Series. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and
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performance of the Series, including information required to be disclosed in the
Trust's registration statement, in such form as may be mutually agreed, to
review the Series and discuss the management of it. The Subadviser shall permit
the financial statements, books and records with respect to the Series to be
inspected and audited by the Trust, the Manager or their agents at all
reasonable times during normal business hours. The Subadviser shall immediately
notify and forward to both the Manager and legal counsel for the Trust any legal
process served upon it on behalf of the Manager or the Trust. The Subadviser
shall promptly notify the Manager of any changes in any information concerning
the Subadviser of which the Subadviser becomes aware that would be required to
be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Subadviser agrees that all records it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust or the
Manager any such records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
9. Continuance and Termination. This Agreement shall remain in full force
and effect for one year from the date hereof, and is renewable annually
thereafter by specific approval of the Board of Trustees of the Trust or by the
affirmative vote of a majority of the outstanding voting securities of the
Series. Any such renewal shall be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons under the 1940 Act, cast in
person at a meeting called for the purpose of voting on such renewal. This
agreement may be terminated without penalty at any time by the Trustees, by vote
of a majority of the outstanding voting securities of the Series, or by the
Manager or by the Subadviser upon 60 days written notice, and will automatically
terminate in the event of its assignment by either party to this Agreement, as
defined in the 1940 Act, or (provided Subadviser has received prior written
notice thereof) upon termination of the Manager's Investment Agreement with the
Trust.
10. Voting Rights. The Subadviser shall be responsible for exercising any
voting rights of any securities of the Series.
11. Indemnification. The Subadviser agrees to indemnify and hold harmless
the Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") the Manager, against any and all losses, claim
damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Manager or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any
other statute, at common law or otherwise, arising out of Subadviser's
responsibilities as portfolio manager of the Series (1) to the extent and as a
result of the
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willful misconduct, bad faith, or gross negligence by the Subadviser, any of the
Subadviser's employees or representatives or any affiliate of or any person
acting on behalf of the Subadviser, or (2) as a result of any untrue statement
or alleged untrue statement of a material fact contained in a prospectus or
statement of additional information covering the Series or the Trust or any
amendment thereof or any supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement therein not misleading, if such a statement or omission was
made in reliance upon written information furnished by the Subadviser to the
Manager, the Trust or any affiliated person of the Manager or the Trust
expressly for use in the Trust's registration statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use in the
Trust's registration statement or (3) to the extent of, and as a result of, the
failure of the Subadviser to execute, or cause to be executed, portfolio
transactions according to the standards and requirements of the 1940 Act;
provided, however, that in no case is the Subadviser9s indemnity in favor of the
Manager or any affiliated person or controlling person of the Manager deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Trust or any amendment thereof
or any supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
registration statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser or any affiliated person or controlling person of the Subadviser
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
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12. Certain Definitions. For the purposes of this Agreement, the "vote of a
majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets", "net assets",
"securities", "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities, portfolio securities or
investments which are from time to time under the management of the Subadviser
pursuant to this Agreement.
13. Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
If to the Manager: XXXXXXX, XXXXXXX & XXXXX, INC.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: _____________________
If to the Trust: AARP GROWTH TRUST
AARP BLUE CHIP INDEX FUND
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: _____________________
If to the Subadviser: BANKERS TRUST COMPANY
Global Investment Management
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _____________________
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Trust or Manager in writing
signed or sent by
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one of the persons whose names, addresses and specimen signatures will be
provided by the Trust or Manager from time to time.
15. Law. This Agreement is governed by and shall be construed in accordance
with the laws of the State of New York in a manner not in conflict with the
provisions of the 1940 Act.
16. Limitation of Liability of the AARP Mutual Funds, Trustees, and
Shareholders. It is understood and expressly stipulated that none of the
trustees, officers, agents, or shareholders of any AARP Mutual Fund shall be
personally liable hereunder. It is understood and acknowledged that all persons
dealing with any AARP Mutual Fund must look solely to the property of such AARP
Mutual Fund for the enforcement of any claims against such AARP Mutual Fund as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of any AARP Mutual Fund. No
AARP Mutual Fund shall be liable for the obligations or liabilities of any other
AARP Mutual Fund. No series of any AARP Mutual Fund, if any, shall be liable for
the obligations of any other series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this instrument to
be signed in duplicate on its behalf by the officer designated below thereunto
duly authorized.
XXXXXXX, XXXXXXX & XXXXX, INC.
Attest:_____________________________ By _______________________________
Name:
Title:
BANKERS TRUST COMPANY
Attest:_____________________________ By _______________________________
Name:
Title:
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Schedule A to the Subadvisory Agreement
for the AARP Blue Chip Index Fund (the "Series")
dated as of__________, 1996 between Xxxxxxx, Xxxxxxx &
Xxxxx, Inc. and Bankers Trust Company
FEE SCHEDULE
As compensation for its services described herein, Bankers Trust Company shall
receive a fee based on a percentage of average net assets calculated according
to the following annualized fee schedule:
Series Assets Annualized Rate
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On the first $100 million 0.07 of l%
On the next $100 million 0.03 of l%
On the balance over $200 million 0.01 of l%
Minimum annual fee: $75,000
The above fees exclude all custody charges. Valuations are made based on the
market value of assets held in the Account at the end of each calendar quarter,
and fees are charged quarterly in arrears based on one-fourth of the annual fee.
Fees will be prorated appropriately if Bankers Trust Company does not perform
services for a full quarter.
To assist Xxxxxxx and the AARP Investment Program in maintaining an appropriate
and competitive level of fluid expenses during the Series' start-up phase,
Bankers Trust Company will apply a 15% discount to the above stated fee schedule
for the first 12 months of management. After this 12 month period expires, the
stated (standard) fees will be charged.
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