Exhibit 5(a)
AARP CASH INVESTMENTS FUNDS
000 Xxxx Xxxxxx
Xxx Xxxx. Xxx Xxxx 00000
December 16, 1985
AARP/Xxxxxxx Financial Management
Company
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Management and Advisor's Agreement
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Dear Sirs:
AARP CASH INVESTMENTS FUNDS (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
The Trust's Declaration of Trust provides that the Trust's Trustees may, from
time to time, determine that the shares of beneficial interests of the Trust
("Shares") shall be issued in separate series of the Trust ("Series"). There are
currently four Series to be offered to the public. The Trust has selected you to
act as investment adviser, commencing on the effective date
AARP/Xxxxxxx Financial
Management Company -2- December 16, 1985
of your registration as an investment adviser under the Investment Advisers
Act of 1940, as amended (the "Registration"), for each of the four Series of
the Trust and for each Series that may subsequently be authorized by the
Trustees (unless otherwise provided at the time and subject to such conditions
and amendments to this agreement as shall mutually be agreed upon), and to
provide certain other services, as more fully set forth below, and you are
willing to act as such investment manager and adviser and to perform such
services under the terms and conditions hereinafter set forth. Accordingly,
the Trust agrees with you as follows:
1. Delivery of Trust Documents. The Trust has furnished you with
copies properly certified or authenticated of each of the following:
(a) Restated Declaration of Trust, dated February 6, 1985, as amended to
date.
(b) By-Laws of the Trust as in effect on the date hereof.
(c) Resolutions of the Trustees selecting you as investment adviser and
approving the form of this Agreement.
AARP/Xxxxxxx Financial
Management Company -3- December 16, 1985
The Trust will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if
any.
2. Advisors Services. You will regularly provide, or cause to be
provided pursuant to the Subadvisory Agreement and other agreements referred
to in paragraph 10 hereof, each Series of the Trust with investment research,
advice and supervision and will furnish continuously an investment program for
each Series consistent with the investment objectives and policies of that
Series. You will determine what securities shall be purchased for each Series,
what securities shall be held or sold by each Series, and what portion of the
assets of each Series shall be held uninvested, subject always to the
provisions of the Trust's Declaration of Trust and By-Laws and of the
Investment Company Act of 1940, as amended, and to the investment objectives,
policies and restrictions of the Trust and the Series, as each of the same
shall be from time to time in effect, and subject, further, to such policies
and instructions as the Trustees may from time to time establish. You shall
advise and assist the officers of the Trust in taking such steps
AARP/Xxxxxxx Financial
Management Company -4- December 16, 1985
as are necessary or appropriate to carry out the decisions of the Trustees and
the appropriate committees of the Trustees regarding the conduct of the
business of the Trust and each Series.
3. Allocation of Charges and Expenses. You will pay the compensation
and expenses of all officers and executive employees of the Trust and will
make available or cause to be made available, without expense to the Trust,
the services of such of your partners, directors, officers and employees, or
of the partners, directors, officers and employees of your partners, as may
duly be elected officers, directors or trustees of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You will
pay the Trust's office rent and will provide, or cause to be provided,
investment advisory, research and statistical facilities and all clerical
services relating to research, statistical and investment work. You will not
be required to pay any expenses of the Trust other than those specifically
allocated to you in this paragraph 3. In particular, but without limiting the
generality of the foregoing, you will not be required to pay: organization
AARP/Xxxxxxx Financial
Management Company -5- December 16, 1985
expenses of the Trust; clerical salaries; fees and expenses incurred by the
Trust in connection with membership in investment company organizations;
brokers' commissions; payment for portfolio pricing services to a pricing
agent, if any; legal, auditing or accounting expenses; taxes or governmental
fees; the fees and expenses of the transfer agent of the Trust; the cost of
preparing share certificates or any other expenses, including clerical and
administrative expenses of issue, sale, underwriting, distribution, redemption
or repurchase of Shares issued by the Trust; the expenses of and fees for
registering or qualifying Shares of the Trust for sale under federal or state
securities law; the fees and expenses of directors or Trustees of the Trust
who are not affiliated with you; the cost of preparing and distributing
reports and notices to shareholders; or the fees or disbursements of
custodians of the Trust's assets, including expenses incurred in the
performance of any obligations enumerated by the Restated Declaration of Trust
or By-Laws of the Trust insofar as they govern agreements with any such
custodian. You shall not be required to pay expenses of activities which are
primar-
AARP/Xxxxxxx Financial
Management Company -6- December 16, 1985
ily intended to result in sales of Shares of the Trust if and to the extent
that (i) such expenses are required to be borne by a principal underwriter
which acts as the distributor of the Trust's Shares pursuant to an
underwriting agreement which provides that the underwriter shall assume some
or all of such expenses, (ii) the Trust shall have adopted a plan in
conformity with Rule 12b-1 under the Investment Company Act of 1940, as
amended, providing that the Trust (or some other party) shall assume some or
all of such expenses or (iii) such expenses are required to be borne by
Xxxxxxx pursuant to Section 4 of the Investment Company Services Agreement,
dated as of October 9, 1984, among Xxxxxxx, American Association of Retired
Persons and the Manager, as amended. You shall be required to pay such
expenses as are excluded by the preceding sentence.
4. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 2 and 3 hereof, the Trust will pay you
on the last day of each month a fee equal to the sum of 49/1200 of 1% on the
first $250 million, 47/1200 of 1% on the next $250 million, 45/1200 of 1% on
the next $500 mil-
AARP/Xxxxxxx Financial
Management Company -7- December 16, 1985
lion, 43/1200 of 1% on the next $500 million, 41/1200 of 1% on the next $500
million and 39/1200 of 1% on the balance of average daily net assets (as
defined below) of the Series of the Trust known as "AARP Prime Money Fund",
48/1200 of 1%, 46/1200 of 1% on the next $250 million, 42/1200 of 1% on the
next $1,500 million and 38/1200 of 1% on the balance of average daily net
assets of the Series of the Trust known as "AARP U.S. Treasury Money Fund",
49/1200 of 1% of the value of the average daily net assets of the Series of
the Trust known as "AARP Tax Free Money Fund" and 48/1200 of 1%, 46/1200 of 1%
on the next $250 million, 42/1200 of 1% on the next $1,500 million and 38/1200
of 1% on the balance of the average daily net assets of the Series of the
Trust known as "AARP Money Fund." The "average daily net assets" of the Trust
or any Series are defined as the average of the values placed on the net
assets as of the close of the New York Stock Exchange, on each day on which
the net asset value of the portfolio of the Trust or a series thereof is
determined consistent with the provisions of Rule 22c-1 under the Investment
Company Act of 1940 or, if the Trust lawfully determines the value of the net
AARP/Xxxxxxx Financial
Management Company -8- December 16, 1985
assets of its portfolio as of some other time on each business day, as of such
time. The value of net assets of the Trust or any Series shall be determined
pursuant to the applicable provisions of the Restated Declaration of Trust and
By-Laws of the Trust. If, pursuant to such provisions, the determination of
net asset value for any Series is suspended for any particular business day,
then for the purposes of this paragraph 4, the value of the net assets of that
Series of the Trust as last determined shall be deemed to be the value of the
net assets as of the close of the New York Stock Exchange, or as of such other
time as the value of the net assets of the portfolio of that Series may
lawfully be determined, on that day. If the determination of the net asset
value of the Shares of any Series of the Trust has been suspended pursuant to
the Restated Declaration of Trust or By-Laws of the Trust for a period
including such month, your compensation payable at the end of such month shall
be computed on the basis of the value of the net assets of the Trust as last
determined (whether during or prior to such month). You agree that your
compensation for any fiscal year shall be reduced by the amount, if any, by
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Management Company -9- December 16, 1985
which the expenses of the Trust for such fiscal year exceed the lowest
applicable expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the Shares of the Trust may be
qualified for offer and sale. You shall refund to the Trust or Series, as
applicable, the amount of any reduction of your compensation pursuant to this
paragraph 4 as promptly as practicable after the end of such fiscal year,
provided that you will not be required to pay the Trust or Series an amount
greater than the fee paid to you in respect of such year pursuant to this
Agreement. As used in this paragraph 4, "expenses" shall mean those expenses
included in the applicable expense limitation having the broadest
specifications thereof, and "expense limitation" means a limit on the maximum
annual expenses which may be incurred by an investment company determined (i)
by multiplying a fixed percentage by the average, or by multiplying more than
one such percentage by different specified amounts of the average, of the
values of an investment company's net assets for a fiscal year or (ii) by
multiplying a fixed percentage by an investment company's net investment
income for a fiscal year. The
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Management Company -10- December 16, 1985
words "lowest applicable expense limitation" shall be construed to result in
the largest reduction of your compensation for any fiscal year of the Trust.
Nothing in this paragraph 4 shall be construed to require you to reduce your
compensation unless such reduction would be required by the statutes and
regulations of any jurisdiction in which Shares of the Trust are qualified for
sale without the application of this paragraph 4.
5. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Trust, neither you nor
any of your partners, directors, officers or employees will act as a principal
or agent or receive any commission. You or your agent shall arrange for the
placing of all orders for the purchase and sale of portfolio securities for
the Trust's account with brokers or dealers selected by you. In the selection
of such brokers or dealers and the placing of such orders, you are directed at
all times to seek for the Trust the most favorable execution and net price
available. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Trust, you will act solely as
investment counsel
AARP/Xxxxxxx Financial
Management Company -11- December 16, 1985
for such clients and not in any way on behalf of the Trust. Your services to
the Trust pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
6. Limitation of Liability of Adviser. You 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 matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Trust
shall be deemed, when acting within the scope of his employment by the Trust,
to be acting in such employment solely for the Trust and not as your employee
or agent.
7. Duration and Termination of this Agreement. This Agreement shall become
effective as of the date hereof and shall remain in force until August 31, 1987
and with respect to each Series, from year to year there-
AARP/Xxxxxxx Financial
Management Company -12- December 16, 1985
after, but only so long as such continuance is specifically approved at least
annually by the vote of a majority of the trustees who are not interested
persons of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Trustees, or, with
respect to each Series, by vote of a majority of the outstanding voting
securities of such Series of the Trust. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the Investment Company Act of
1940 and the rules and regulations thereunder. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty,
by the Trustees, by vote of a majority of the outstanding voting securities of
the Trust (or Series, with respect only to that Series), or by you. This
Agreement shall automatically terminate in the event of its assignment,
provided that an assignment to a corporate successor to all or substantially
all of your business or to a wholly-owned subsidiary of such corporate
successor which does not result in a change of actual control or management of
your business shall not
AARP/Xxxxxxx Financial
Management Company -13- December 16, 1985
be deemed to be an assignment for the purposes of this Agreement. In
interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the Investment Company Act of 1940 (particularly the
definitions of "interested person," "assignment" and "majority of the
outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
9. Amendment of this Agreement. No provisions 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, and no amendment of this Agreement shall
be effective with respect to any Series until approved by the Trustees,
including a majority of the directors or Trustees who are not interested
persons of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval and by vote of the holders of a majority of
the outstanding voting securities of such Series of the Trust.
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Management Company -14- December 16, 1985
10. Subadvisory Agreement, etc. In rendering the services required
under this Agreement, you may, subject to the legally required approval of the
Trust, its shareholders and Trustees or directors, cause such services to be
provided by a registered investment adviser and receive other assistance from
such investment adviser pursuant to an agreement or agreements, and may
contract with such other parties as you may deem appropriate to obtain
information, advice and management services and other assistance, but any
fees, compensation or expenses to be paid to any such party shall be paid by
you, and no obligation shall be incurred on the Trust's behalf in any such
respect.
11. Miscellaneous. It is understood and expressly stipulated that
neither the shareholders of the Trust nor the Trustees shall be personally
liable hereunder. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original but all of which
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Management Company -15- December 16, 1985
together shall constitute one and the same instrument. This Agreement shall be
construed in accordance with and governed by the laws of New York.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract.
Yours very truly,
AARP CASH INVESTMENTS FUNDS
By /s/Xxxxxx X. Xxxxxxx
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President
The foregoing Agreement is hereby accepted as of the date hereof.
AARP/XXXXXXX FINANCIAL
MANAGEMENT COMPANY
By: XXXXXXX, XXXXXXX & XXXXX LTD.
A General Partner
By /s/Xxx X. Xxxxxxxx
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Title: Managing Director
