Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
INVESTMENT MANAGEMENT AGREEMENT
(TAX-EXEMPT PORTFOLIO)
AGREEMENT made this 4th day of January, 1996, by and between
CASH EQUIVALENT FUND, a Massachusetts business trust (the
"Fund"), and XXXXXX FINANCIAL SERVICES, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified management
investment company registered under the Investment Company Act of
1940, the shares of beneficial interest ("Shares") of which are
registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate
series with each such series representing the interests in a
separate portfolio of securities and other assets;
WHEREAS, the Fund currently offers or intends to offer
Shares in three portfolios, the Money Market Portfolio, the
Government Securities Portfolio and the Tax-Exempt Portfolio; and
WHEREAS, the Fund desires at this time to retain the Adviser
under this Agreement to render investment advisory and management
services to the Tax-Exempt Portfolio, and the Adviser is willing
to render such services.
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment
adviser for the Tax-Exempt Portfolio or other Portfolios
hereunder and to manage the investment and reinvestment of the
assets of the Fund in accordance with applicable investment
objective and policies and limitations and to administer its
affairs to the extent requested by and subject to the supervision
of the Board of Trustees of the Fund for the period and upon the
terms herein set forth. The investment of funds shall be subject
to all applicable restrictions of the Agreement and Declaration
of Trust and By-Laws of the Fund as may from time to time be in
force.
The Adviser accepts such employment and agrees during such
period to render such services, to furnish office facilities and
equipment and clerical, bookkeeping and administrative services
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 2
for the Fund, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if
elected to such positions and to assume the obligations herein
set forthfor the compensation herein provided. The Adviser shall
for all purposes herein provided be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements
with the Fund, may also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Tax-Exempt Portfolio with respect to
which it desires to retain the Adviser to render investment
advisory and management services hereunder, it shall notify the
Adviser in writing. If the Adviser is willing to render such
services it shall notify the Fund in writing whereupon such
portfolio or portfolios shall become subject to this Agreement.
The Tax-Exempt Portfolio, together with any other Fund portfolios
which may be established later and served by the Adviser under
this Agreement shall be herein referred to collectively as the
"Portfolios" and individually referred to as a "Portfolio." The
Money Market Portfolio and the Government Securities Portfolio
are not subject to this Agreement and are not considered to be
"Portfolios" hereunder.
3. For the services and facilities described in Section 1, the
Fund will pay to the Adviser at the end of each calendar month,
an investment management fee computed at an annual rate of 0.22%
of the first $500 million of the combined average daily net
assets of the Portfolios, 0.20% of the next $500 million, 0.175%
of the next $1 billion, 0.16% of the next $1 billion and 0.15% of
combined average daily net assets over $3 billion. The fee as
computed above shall be allocated to each Portfolio based upon
the relative average daily net assets of each Portfolio managed
by the Adviser. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement
is in effect during the month and year, respectively.
4. The services of the Adviser to the Fund under this Agreement
are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as
its services hereunder are not impaired thereby.
5. In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for the
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 3
safekeeping of the Fund's securities or other property, for
keeping its books of account, for any other charges of the
custodian, and for calculating the net asset value of the Fund as
provided in the Agreement and Declaration of Trust of the Fund.
The Adviser shall not be required to pay and the Fund shall
assume and pay the charges and expenses of its operations,
including compensation of the trustees (other than those
affiliated with the Adviser), charges and expenses of independent
auditors, of legal counsel, of any transfer or dividend
disbursing agent, any registrar of the Fund, costs of acquiring
and disposing of portfolio securities, interest, if any, on
obligations incurred by the Fund, cost of Share certificates and
of reports, membership dues in the Investment Company Institute
or any similar organization, reports and notices to shareholders,
other like miscellaneous expenses and all taxes and fees payable
to federal, state or other governmental agencies on account of
the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or
incur any obligation for any expenses for which the Fund intends
to seek reimbursement from the Adviser as herein provided without
first obtaining the written approval of the Adviser. The Adviser
shall arrange, if desired by the Fund, for officers or employees
of the Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
If expenses borne by the Portfolios in any fiscal year
(including the Adviser's fee, but excluding interest, taxes, fees
incurred in acquiring and disposing of portfolio securities and,
to the extent permitted, extraordinary expenses) exceed 1 1/2% of
average daily net assets up to $30,000,000 and 1% of average
daily net assets over $30,000,000 of the Portfolios, the Adviser
will reduce its fee or reimburse the Fund for any excess. The
expense limitation guarantee shall be allocated to each Portfolio
upon a fee reduction or reimbursement based upon the relative
average daily net assets of each Portfolio. If for any month the
expenses of the Fund properly chargeable to the income account
shall exceed 1/12 of the percentage of average net assets
allowable as expenses, the payment to the Adviser for that month
shall be reduced and, if necessary, the Adviser shall make a
refund payment to the Fund so that the total net expense will not
exceed such percentage. As of the end of the Fund's fiscal year,
however, the foregoing computations and payments shall be
readjusted so that the aggregate compensation payable to the
Adviser for the year is equal to the percentage set forth in
Section 3 hereof of the average net asset values as determined as
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 4
described herein throughout the fiscal year, diminished to the
extent necessary so that the total of the aforementioned expense
items shall not exceed the expense limitation. The aggregate of
repayments, if any, by the Adviser to the Fund for the year shall
be the amount necessary to limit the said net expense to said
percentage.
The net asset value of each Portfolio shall be calculated as
of the close of the New York Stock Exchange on each day the
Exchange is open for trading or as of such other time or times as
the trustees may determine in accordance with the provisions of
the Investment Company Act of 1940. On each day when net asset
value is not calculated, the net asset value of a Share of a
Portfolio shall be deemed to be the net asset value of such a
Share as of the close of business on the last day on which such
calculation was made for the purpose of the foregoing
computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or
may be interested in the Adviser as officers, trustees, agents,
shareholders or otherwise, and that the officers, directors,
shareholders and agents of the Adviser may be interested in the
Fund otherwise than as a director, officer or agent.
7. The Adviser shall not be liable for any error of judgment or
of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser in the performance of its obligations
and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
8. This Agreement shall become effective on the date hereof and
shall remain in full force until December 1, 1996, unless sooner
terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter, but only as long
as such continuance is specifically approved at least annually
for each Portfolio in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is
not approved for a Portfolio, the Adviser may continue to serve
in such capacity for such Portfolio in the manner and to the
extent permitted by the Investment Company Act of 1940 and the
rules and regulations thereunder.
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 5
This Agreement shall automatically terminate in the event of
its assignment and may be terminated at any time without the
payment of any penalty with respect to any Portfolio by the Fund
or by the Adviser on sixty (60) days written notice to the other
party. The Fund may effect termination with respect to any
Portfolio by action of the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio.
This Agreement may be terminated at any time with respect to
any Portfolio without the payment of any penalty by the Board of
Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio in the event that it shall have been
established by a court of competent jurisdiction that the Adviser
or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set
forth herein.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth
in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of
the Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
9. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
11. All parties hereto are expressly put on notice of the Cash
Equivalent Fund Agreement and Declaration of Trust and all
amendments thereto, all of which are on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its
representatives as such representatives and not individually, and
the obligations of the Fund hereunder are not binding upon any of
the Trustees, officers or shareholders of the Fund individually
but are binding upon only the assets and property of the Fund.
With respect to any claim by Adviser for recovery of that portion
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 6
of the investment management fee (or any other liability of the
Fund arising hereunder) allocated to a particular Portfolio,
whether in accordance with the express terms hereof or otherwise,
the Adviser shall have recourse solely against the assets of that
Portfolio to satisfy such claim and shall have no recourse
against the assets of any other portfolio of Fund (whether or not
a Portfolio hereunder) for such purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of Illinois.
13. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed on the day and year first above written.
CASH EQUIVALENT FUND
By: /s/ Xxxx X. Xxxxxx
---------------------------
Title: Vice President
------------------------
ATTEST:
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Title: Secretary
------------------------
XXXXXX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
------------------------
ATTEST:
/s/ Xxxxx X. Xxxxxxxxxxx
------------------------------
Title: Assistant Secretary
------------------------
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 7
INVESTMENT MANAGEMENT AGREEMENT
(MONEY MARKET PORTFOLIO)
(GOVERNMENT SECURITIES PORTFOLIO)
AGREEMENT made this 4th day of January, 1996, by and between
CASH EQUIVALENT FUND, a Massachusetts business trust (the
"Fund"), and XXXXXX FINANCIAL SERVICES, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified management
investment company, registered under the Investment Company Act
of 1940, the shares of beneficial interest ("Shares") of which
are registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate
series with each such series representing the interests in a
separate portfolio of securities and other assets;
WHEREAS, the Fund currently offers or intends to offer
Shares in three portfolios, the Money Market Portfolio, the
Government Securities Portfolio and the Tax-Exempt Portfolio; and
WHEREAS, the Fund desires to retain the Adviser under this
Agreement to render investment advisory and management services
to the Money Market Portfolio and the Government Securities
Portfolio (the "Portfolios"), and the Adviser is willing to
render such services.
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the
investment adviser for the Portfolios and to manage the
investment and reinvestment of the assets of the Fund in
accordance with the investment objective and policies and
limitations for each of the Fund's Portfolios, and to administer
its affairs to the extent requested by and subject to the
supervision of the Board of Trustees of the Fund for the period
and upon the terms herein set forth. The investment of funds
shall be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from time
to time be in force.
The Adviser accepts such employment and agrees during such
period to render such services, to furnish office facilities and
equipment and clerical, bookkeeping and administrative services
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 8
for the Fund, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if
elected to such positions and to assume the obligations herein
set forth for the compensation herein provided. The Adviser
shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
It is understood and agreed that the Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
2. For the services and facilities described in Section 1,
the Fund will pay to the Adviser at the end of each calendar
month, an investment management fee computed at an annual rate of
0.22% of the first $500 million of the combined average daily net
assets of all Portfolios the Adviser manages, 0.20% of the next
$500 million, 0.175% of the next $1 billion, 0.16% of the next $1
billion and 0.15% of the average daily net assets of such
Portfolios over $3 billion. The fee as computed above shall be
allocated to each Portfolio based upon the relative net assets of
each Portfolio and shall be based only upon the net assets of the
Fund allocated to Portfolios for which this Agreement is then in
effect. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration
on the basis of the number of days that the Agreement is in
effect during the month and year, respectively.
4. The services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Adviser shall
be free to render similar services or other services to others so
long as its services hereunder are not impaired thereby.
5. In addition to the fee of the Adviser, the Fund shall
assume and pay any expenses for services rendered by a custodian
for the safekeeping of the Fund's securities or other property,
for keeping its books of account, for any other charges of the
custodian, and for calculating the net asset value of the Fund as
provided in the Prospectus of the Fund. The Adviser shall not be
required to pay and the Fund shall assume and pay the charges and
expenses of its operations, including compensation of the
trustees (other than those affiliated with the Adviser), charges
and expense of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, any registrar of the Fund,
costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, cost of
share certificates and of reports, membership dues in the
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 9
Investment Company Institute or any similar organization, reports
and notices to shareholders, other like miscellaneous expenses
and all taxes and fees payable to federal, state or other
governmental agencies on account of the registration of
securities issued by the Fund, filing of corporate documents or
otherwise. The Fund shall not pay or incur any obligation for
any expenses for which the Fund intends to seek reimbursement
from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if
desired by the Fund, for officers or employees of the Adviser to
serve, without compensation from the Fund, as trustees, officers
or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Fund for those Portfolios which the
Adviser manages in any fiscal year (including the Adviser's fee,
but excluding interest, taxes, fees payable to the Adviser under
the administration, shareholder services and distribution
agreement with the Fund, fees incurred in acquiring and disposing
of portfolio securities, and, to the extent permitted,
extraordinary expenses) exceed 0.90% of the first $500 million of
the combined average daily net assets of such Portfolios, 0.80%
of the next $500 million, 0.75% of the next $1 billion and 0.70%
of average daily net assets of such Portfolios over $2 billion,
the Adviser will reduce its fee or reimburse the Fund for any
excess. The expense limitation guarantee shall be allocated to
each such Portfolio upon a fee reduction or reimbursement based
upon the relative average daily net assets of each such
Portfolio. If for any month the expenses of the Fund properly
chargeable to the income account shall exceed 1/12 of the
percentage of average net assets allowable as expenses, the
payment to the Adviser for that month shall be reduced and, if
necessary, the Adviser shall make a refund payment to the Fund so
that the total net expense will not exceed such percentage. As
of the end of the Fund's fiscal year, however, the foregoing
computations and payments shall be readjusted so that the
aggregate compensation payable to the Adviser for the year is
equal to the percentage set forth in Section 2 hereof of the
average net asset values as determined as described herein
throughout the fiscal year, diminished to the extent necessary so
that the total of the aforementioned expense items shall not
exceed the expense limitation. The aggregate of repayments, if
any, by the Adviser to the Fund for the year shall be the amount
necessary to limit the said net expense to said percentage.
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 10
The net asset value for each Portfolio shall be calculated
in accordance with the provisions of the Fund's prospectus or at
such other time or times as the trustees may determine in
accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the
net asset value of a share of a Portfolio shall be deemed to be
the net asset value of such a share as of the close of business
on the last day on which such calculation was made for the
purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or
may be interested in the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors,
shareholders and agents of the Adviser may be interested in the
Fund otherwise than as a trustee, officer or agent.
7. The Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of
its obligations and duties or by reason of its reckless disregard
of its obligations and duties under this Agreement.
8. This Agreement shall become effective with respect to
each Portfolio on the date hereof and shall remain in full force
until December 1, 1996, unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year to
year thereafter with respect to each Portfolio, but only as long
as such continuance is specifically approved for each Portfolio
at least annually in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is
not approved for a Portfolio, the Adviser may continue to serve
in such capacity for such Portfolio in the manner and to the
extent permitted by the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement shall automatically terminate in the event of
its assignment and may be terminated at any time without the
payment of any penalty by the Fund or by the Adviser on sixty
(60) days written notice to the other party. The Fund may effect
termination with respect to any Portfolio by action of the Board
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 11
of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any
Portfolio at any time without the payment of any penalty by the
Board of Trustees or by vote of a majority of the outstanding
voting securities of such Portfolio in the event that it shall
have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken
any action which results in a breach of the covenants of the
Adviser set forth herein.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth
in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of
the Adviser to receive payments on any unpaid balance of the
compensation described in Section 2 earned prior to such
termination.
9. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
11. All parties hereto are expressly put on notice of the
Cash Equivalent Fund Agreement and Declaration of Trust dated
August 9, 1985 and all amendments thereto, all of which are on
file with the Secretary of The Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained
therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not
individually, and the obligations of the Fund hereunder are not
binding upon any of the trustees, officers, or shareholders of
the Fund individually but are binding upon only the assets and
property of the Fund. With respect to any claim by Adviser for
recovery of that portion of the investment management fee (or any
other liability of the Fund arising hereunder) allocated to a
particular Portfolio, whether in accordance with the express
Exhibit 77Q1(e)
Cash Equivalent Fund
Form N-SAR for the period ended 01/31/96
File No. 811-2899
Page 12
terms hereof or otherwise, the Adviser shall have recourse solely
against the assets of that Portfolio to satisfy such claim and
shall have no recourse against the assets of any other Portfolio
for such purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 9 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of Illinois.
13. This Agreement is the entire contract between the
parties relating to the subject matter hereof and supersedes all
prior agreements between the parties relating to the subject
matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused
this Agreement to be executed as of the day and year first above
written.
CASH EQUIVALENT FUND
By: /s/ Xxxx X. Xxxxxx
--------------------------
Title: Vice President
-----------------------
ATTEST: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Title: Secretary
--------------------------
XXXXXX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President
------------------------
ATTEST: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------
Title: Assistant Secretary
---------------------------
MRB|W:\FUNDS\NSAR.EXH\CEF196.77Q|031896
