Ex. (5)(a)
CO-ADVISORY AGREEMENT
This Agreement, dated as of the 12th day of April, 1996, is entered
into by and among NBD Bank ("NBD"), First Chicago Investment Management
Company ("FCIMCO") and The Xxxxxxxx Funds (the "Trust"), a Massachusetts
business trust registered as an investment company under the Investment
Company Act of 1940 (the
"1940 Act");
WHEREAS, the Trust desires to appoint NBD and FCIMCO to act as
co-advisers to the Trust's investment portfolios listed on Schedule 1 attached
hereto (each a "Fund" and collectively the "Funds").
WHEREAS, NBD and FCIMCO (each an "Adviser" and collectively the
"Advisers") desire to perform investment advisory services on behalf of the
Trust's Funds;
NOW, THEREFORE, the parties hereto intending to be legally bound,
hereby agree as follows:
1. Appointment. (a) The Trust hereby appoints the Advisers to act as
investment co-advisers for each of the Funds of the Trust for the period and
on the terms set forth in this Agreement. The Advisers accept such appointment
and agree to render the services herein set forth, for the compensation herein
provided. The Advisers may, in their discretion, provide such services through
their own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Trust under applicable law
and are under the common control of First Chicago NBD Corporation provided (i)
that all persons, when providing services hereunder, are functioning as part
of an organized group of persons, and (ii) that such organized group of
persons is managed at all times by persons who are authorized officers of one
or both of the Advisers.
(b) In the event that the Trust establishes one or more
investment portfolios other than the Funds with respect to which it desires to
retain the Advisers to act as investment co- advisers hereunder, the Trust
shall notify the Advisers in writing. If the Advisers are willing to render
such services they shall notify the Trust in writing whereupon, subject to
such shareholder approval as may be required pursuant to Paragraph 8 hereof,
such portfolio shall become a Fund hereunder and the compensation payable by
such new Fund to the Advisers will be as agreed in writing at the time.
2. Management. Subject to the supervision of the Board
of Trustees of the Trust (the "Board"), the Advisers will provide
a continuous investment program for each of the Funds, including
investment research and management with respect to all
securities, investments, cash and cash equivalents in each Fund.
The Advisers will determine from time to time what securities and other
investments will be purchased, retained or sold by the Trust for each of its
Funds. The Advisers will provide the services rendered by them hereunder in
accordance with the investment objective and policies of each of the Funds as
stated in their respective prospectuses ("Prospectuses" or a "Prospectus"),
statements of additional information ("SAIs") and all amendments and
supplements thereto, Bylaws, Amended and Restated Declaration of Trust and
resolutions adopted from time to time by the Trust's Board. The Advisers
further agree that they:
(a) will conform with all applicable Rules and Regulations
(hereinafter called the "Rules") of the Securities and
Exchange Commission ("SEC"), and will in addition
conduct their activities under this Agreement in
accordance with other applicable laws;
(b) will place all orders for the purchase and sale of
portfolio securities for the account of each Fund
with brokers or dealers selected by the Advisers.
In executing portfolio transactions and selecting
brokers or dealers, the Advisers will use their
best efforts to seek on behalf of the Trust and
each Fund thereof the best overall terms
available. In assessing the best overall terms
available for any transaction, the Advisers shall
consider all factors they deem relevant, including
the breadth of the market in the security, the
price of the security, the financial condition and
execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both
for the specific transaction and on a continuing
basis. In evaluating the best overall terms
available, and in selecting the broker or dealer
to execute a particular transaction, the Advisers
may also consider the brokerage and research
services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934)
provided to any Fund and/or other accounts over
which the Advisers or an affiliate of the Advisers
exercises investment discretion. The Advisers are
authorized, subject to the prior approval of such
policy by the Trust's Board, to pay to a broker or
dealer who provides such brokerage and research
services a commission for executing a portfolio
transaction for any Fund which is in excess of the
amount of commission another broker or dealer
would have charged for effecting that transaction
if, but only if, such is consistent with
applicable law and the Advisers determine in good
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faith that such commission was reasonable in relation to
the value of the brokerage and research services
provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of the overall
responsibilities of the Advisers to the particular Fund
and to the Trust.
In no instance will portfolio securities be purchased
from or sold to the Advisers or the Trust's principal
underwriter for the Funds or an affiliated person of
either, acting as principal or as broker, except as
permitted by law. In executing portfolio transactions
for any Fund, the Advisers, to the extent permitted by
applicable laws and regulations, may but shall not be
obligated to, aggregate the securities to be sold or
purchased with those of other Funds and their other
clients where such aggregation is not inconsistent with
applicable law and the policies set forth in the Funds'
registration statement. In such event, the Advisers will
allocate the securities so purchased or sold, and the
expenses incurred in the transaction, in the manner they
consider to be the most equitable and consistent with
their fiduciary obligations to the Funds and such other
clients;
(c) will maintain a policy and practice of conducting
their investment advisory operations independently
of their commercial banking operations. When the
Advisers make investment recommendations for a
Fund, their investment advisory personnel will not
inquire or take into consideration whether the
issuer of securities proposed for purchase or sale
for the Fund's account are customers of their
commercial departments. In dealing with
commercial customers, the Advisers' commercial
departments will not inquire or take into
consideration whether securities or those
customers are held by the Funds;
(d) will maintain all books and records with respect to the
securities transactions of the Funds; and furnish the
Trust's Board such periodic and special reports as the
Board may request;
(e) will treat confidentially and as proprietary information
of the Trust all records and other information relative
to the Trust and prior or present shareholders of the
Funds or those persons or entities who respond to
inquiries of the
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Trust's principal underwriter concerning investment in
the Funds and will not use such records and information
for any purpose other than performance of their
responsibilities and duties hereunder, except after
prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld
and may not be withheld where the Advisers may be
exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such
information by duly constituted authorities, or when so
requested by the Trust. Nothing contained herein or in
any other agreement executed with the Trust, however,
shall prohibit NBD, FCIMCO and any of their affiliates
from advertising to or soliciting the public generally
with respect to other products or services, including,
but not limited to, any advertising or marketing via
radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement
or solicitation may coincidentally include prior or
present Fund shareholders or those persons or entities
who have responded to inquiries of the Trust's principal
underwriter.
3. Services Not Exclusive. The services rendered by the
Advisers hereunder are not to be deemed exclusive, and the
Advisers shall be free to render similar services to others so
long as their services under this Agreement are not impaired
thereby.
4. Expenses. During the term of this Agreement, the
Advisers will pay all expenses incurred by them in connection
with their activities under this Agreement other than the cost of
securities purchased for the Funds (including brokerage
commissions, if any).
In addition, if the expenses borne by any Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities
regulations of any state in which the shares are registered or qualified for
sale to the public, the Advisers jointly and severally agree to reimburse such
Fund for a portion of any excess expense in an amount equal to the portion
that the advisory fees otherwise payable by the Fund to the Advisers bear to
the total amount of investment advisory and administration fees otherwise
payable by the Fund. The expense reimbursement obligation of the Advisers is
limited to the amount of their fees hereunder for such fiscal year; provided,
however, that notwithstanding the foregoing, the Advisers shall reimburse such
Fund for a portion of any such excess expenses in an amount equal to the
proportion that the fees otherwise payable to the Advisers bear to the total
investment advisory and administration fees
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otherwise payable by the Fund regardless of the amount of such fees payable to
the Advisers during such fiscal year to the extent that the securities
regulations of any state in which the Trust's shares are registered or
qualified for sale so require. Such expense reimbursement, if any, will be
estimated, reconciled and paid on a monthly basis.
5. Compensation. For the services provided and the
expense assumed pursuant to this Agreement, the Trust will pay
the Advisers and the Advisers will accept as full compensation
therefor the fees set forth on Schedule 2 hereof.
6. Sub-Adviser. It is understood that, subject to the prior approval
of the Board of the Trust, the Advisers may employ a sub-adviser(s) to assist
them in the performance of this Agreement, and it is agreed that the Advisers
shall be as fully responsible to the Trust for the acts and omissions of the
sub- adviser(s) as they are for their own acts and omissions. Any compensation
to be paid to such sub-adviser will be paid by the Advisers and the activities
of such subadviser will be subject to the provisions of this Agreement. The
Advisers will use their best effort to cause the sub-adviser(s) to comply with
all of the Advisers' policies, including without limitation, their codes of
ethics and their policies relating to personal trading, brokerage and
securities allocation, soft and hard dollars and compliance.
7. Limitation of Liability of the Advisers. The Advisers 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 a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Advisers in the
performance of their duties or from reckless disregard by their obligations
and duties under this Agreement. The Advisers agree that their liability,
including the liability of any sub-adviser, under this Agreement as set forth
herein, shall be joint and several. Any person, even though also an officer,
Board member, partner, director, employee or agent of an Adviser, who may be
or become an officer, Board member, partner, employee or agent of the Trust,
shall be deemed, when rendering services to the Trust or acting on any
business of the Trust (other than services or business in connection with the
Advisers' duties as co-advisers hereunder) to be rendering such services to or
acting solely for the Trust and not as an officer, Board member, partner,
director, employee or agent or one under the control or direction of the
Advisers even though paid by either of them.
8. Duration and Termination. This Agreement shall become
effective (x) upon the date first above written with respect to
the Cash Management Fund, the Treasury Prime Cash Management Fund
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and the U.S. Government Securities Cash Management Fund, (y) as to each other
Fund which has not commenced operations on the date of this Agreement, upon
the first effective date of a registration statement registering shares issued
by such Fund, and (z) as to each Fund not covered by clause (x) or clause (y),
upon the consummation of the first reorganization in which such Fund is a
participant. Unless sooner terminated as provided herein, this Agreement shall
continue with respect to each Fund until June 30, 1997. Thereafter, if not
terminated, this Agreement shall continue with respect to a Fund for
successive annual periods, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Board
of the Trust who are not parties to this Agreement or "interested persons" of
any such party, cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Board of the Trust or by vote of a majority
of the outstanding voting securities of such Fund; provided, however, that
this Agreement may be terminated with respect to a Fund, without the payment
of any penalty, by the Board of the Trust or by vote of a majority of the
outstanding voting securities of such Fund on sixty (60) days' written notice,
or by the Advisers, on ninety (90) days' written notice to the Trust. This
Agreement will immediately terminate in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
9. Amendment of this Agreement. No provisions in this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party or parties against which enforcement of the change,
discharge or termination is sought, and no amendment to this Agreement
affecting a Fund shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of such Fund.
10. Names. The names "The Xxxxxxxx Funds" and "Trustees of The
Xxxxxxxx Funds" refer, respectively, to the Trust created and the trustees
("Trustees"), as trustees but not individually or personally, acting from time
to time under a Declaration of Trust dated April 21, 1987, as amended on May
1, 1992, which is hereby referred to and a copy of which is on file at the
office of the Secretary of State of the Commonwealth of Massachusetts and at
the principal office of the Trust. The obligations of the Fund entered into in
the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the Trust property, and all persons dealing with any
series of shares in the Trust must look solely to the Trust property belonging
to such series for the enforcement of any claims against the Trust.
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11. Miscellaneous. 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. 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 Michigan law.
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.
THE XXXXXXXX FUNDS
Attest:
_______________________ By: /s/Illegible
-------------
NBD BANK
Attest:
_______________________ By: /s/Illegible
-------------
(Corporate Seal)
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
Attest:
_______________________ By: /s/Illegible
------------
(Corporate Seal)
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SCHEDULE 1
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
MICHIGAN MUNICIPAL MONEY MARKET FUND
CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
EQUITY INDEX FUND
GROWTH AND VALUE FUND
INTRINSIC VALUE FUND
MID CAP OPPORTUNITY FUND
EQUITY INCOME FUND
SMALL CAP OPPORTUNITY FUND
BOND FUND
SHORT BOND FUND
MICHIGAN MUNICIPAL BOND FUND
INTERMEDIATE MUNICIPAL BOND FUND
MUNICIPAL BOND FUND
INCOME FUND
INTERMEDIATE BOND FUND
INTERNATIONAL BOND FUND
MANAGED ASSETS BALANCED FUND
MANAGED ASSETS CONSERVATIVE FUND
MANAGED ASSETS GROWTH FUND
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SCHEDULE 2
As compensation for their services hereunder, the Trust will pay an
advisory fee, computed daily and payable monthly, at the following annual
rates for the respective Funds:
Fund Fee Rate
---- --------
Money Market Fund .30% of the first $1.0
Treasury Money Market Fund billion, .275% of the next $1
Michigan Municipal Money billion and .25% of each such
Market Fund Fund's average daily net
Municipal Money Market Fund assets in excess of $2 billion
International Equity Fund .80% of the average net assets
of the Fund
Managed Assets Balanced Fund .65% of the average net assets
Managed Assets Conservative of the Fund
Fund
Managed Assets Growth Fund
Bond Fund .40% of the average net assets
Municipal Bond Fund of the Fund
Income Fund
Intermediate Municipal Bond
Fund
Intermediate Bond Fund
Michigan Municipal Bond
Short Bond Fund .35% of the average net assets
of the Fund
Cash Management Fund .20% of the average net assets
U.S. Government of the Fund
Cash Management Fund
Treasury Prime Cash
Management Fund
Equity Index Fund .10% of the average net assets
of the Fund
International Bond Fund .70% of the average net assets
Small Cap Opportunity Fund of the Fund
Equity Income Fund .50% of the average net assets
of the Fund
Growth Fund .60% of the average net assets
Mid-Cap Opportunity Fund of the Fund
Growth and Value Fund
Intrinsic Value Fund
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Net asset value shall be computed in accordance with the Funds'
Prospectuses and resolutions of the Trust's Board of Trustees. The fee for the
period from the day of the month this Agreement is entered into until the end
of that month shall be pro-rated according to the proportion which such period
bears to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. Such fee as is attributable to each Fund shall be a separate charge
to such Fund and shall be the several (and not joint or joint and several)
obligation of each such Fund.
In addition, the Advisers will receive as compensation under
this Agreement 4/10ths of the gross income earned by each Fund on each loan of
its securities (including capital gains and loss, if any).
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