Exhibit (d)(3)
AARP Managed Investment Portfolios Trust
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 7, 1998
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Management Agreement
AARP Diversified Income with Growth Portfolio
AARP Diversified Growth Portfolio
Ladies and Gentlemen:
AARP Managed Investment Portfolios Trust (the "Trust") has been established
as a Massachusetts business trust to engage in the business of an investment
company. Pursuant to the Trust's Declaration of Trust, as amended from
time-to-time (the "Declaration"), the Board of Trustees has divided the Trust's
shares of beneficial interest, par value $0.01 per share, (the "Shares") into
separate series, or funds, including AARP Diversified Income with Growth
Portfolio and AARP Diversified Growth Portfolio (the "Funds"). Series may be
abolished and dissolved, and additional series established, from time to time by
action of the Trustees.
The Trust, on behalf of the Funds, has selected you to act as the sole
investment manager of the Funds 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 be mutually agreed
upon), and to provide certain other services, as more fully set forth below, and
you have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust on behalf of the Funds agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Funds in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Funds included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly certified or authenticated
of each of the following additional documents related to the Trust and the
Funds:
(a) The Declaration dated October 21, 1996, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of each Fund
selecting you as investment manager and approving the form of this
Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial Interest
(included in the Declaration) dated October 21, 1996 relating to the Funds.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the Funds,
you shall provide continuing investment management of the assets of the Funds in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
each Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Funds shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Funds in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Funds' investment records and ledgers as are necessary to assist the Trust in
complying with the requirements of the 1940 Act and other applicable laws. To
the extent required by law, you shall furnish to regulatory authorities having
the requisite authority any information or reports in connection with the
services provided pursuant to this Agreement which may be requested in order to
ascertain whether the operations of the Trust are being conducted in a manner
consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Funds and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with the Funds'
policies as expressed in the Registration Statement. You shall determine what
portion of each Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Funds and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense for the
use of the Funds such office space and facilities in the United States as the
Funds may require for their reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
on behalf of
2
the Funds necessary for operating as open-end investment companies and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Funds' transfer agent; assisting in the preparation
and filing of each Fund's federal, state and local tax returns; preparing and
filing each Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of each Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
each Fund all books, records and reports and any other information required
under the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Funds' custodian or other agents of the
Funds; assisting in establishing the accounting policies of each Fund; assisting
in the resolution of accounting issues that may arise with respect to each Fund'
operations and consulting with the Funds' independent accountants, legal counsel
and other agents as necessary in connection therewith; establishing and
monitoring each Fund's operating expense budgets; reviewing each Fund's bills;
processing the payment of bills that have been approved by an authorized person;
assisting each Fund in determining the amount of dividends and distributions
available to be paid by each Fund to its shareholders, preparing and arranging
for the printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with such
information as is required for such parties to effect the payment of dividends
and distributions; and otherwise assisting the Trust as it may reasonably
request in the conduct of each Fund's business, subject to the direction and
control of the Trust's Board of Trustees. Nothing in this Agreement shall be
deemed to shift to you or to diminish the obligations of any agent of a Fund or
any other person not a party to this Agreement which is obligated to provide
services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 4, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including each Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Funds, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 2 hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Funds other than
those specifically allocated to you in this section 4 and under the terms of the
Special Servicing Agreement dated February 1, 1997 ("Special Servicing
Agreement") among you, the Trust, AARP Financial Services Company, Xxxxxxx Fund
Accounting Corporation, Xxxxxxx Service Corporation, Xxxxxxx Trust Company,
Xxxxxxx Investor Services, Inc. and the various funds in which the Portfolios
may invest (the "Underlying Funds"). In particular, but without limiting the
generality of the foregoing, you shall not be responsible, except to the extent
of the reasonable compensation of such of the Funds' Trustees and officers as
are directors, officers or employees of you whose services may be involved, for
the following expenses of the Fund: organization expenses of each Fund
(including out-of-pocket expenses, but not including your overhead or employee
costs); fees payable to you and to any other Fund advisors or consultants; legal
expenses;
3
auditing and accounting expenses; maintenance of books and records which are
required to be maintained by the Funds' custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications expenses; taxes
and governmental fees; fees, dues and expenses incurred by the Funds in
connection with membership in investment company trade organizations; fees and
expenses of the Funds' accounting agent, custodians, subcustodians, transfer
agents, dividend disbursing agents and registrars; payment for portfolio pricing
or valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or repurchase of securities
issued by the Fund; expenses relating to investor and public relations; expenses
and fees of registering or qualifying Shares of the Funds for sale; interest
charges, bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of the Funds' portfolio securities; the
compensation and all expenses (specifically including travel expenses relating
to Trust business) of Trustees, officers and employees of the Trust who are not
affiliated persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Funds and supplements thereto;
costs of stationery; any litigation expenses; indemnification of Trustees and
officers of the Trust; costs of shareholders' and other meetings; and travel
expenses (or an appropriate portion thereof) of Trustees and officers of the
Trust who are directors, officers or employees of you to the extent that such
expenses relate to attendance at meetings of the Board of Trustees of the Trust
or any committees thereof or advisors thereto held outside of Boston,
Massachusetts or New York, New York.
Except as provided in the Special Servicing Agreement, you shall not be
required to pay expenses of any activity which is primarily intended to result
in sales of Shares of the Funds 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 Funds' Shares pursuant to an underwriting agreement which provides that the
underwriter shall assume some or all of such expenses, or (ii) the Trust on
behalf of the Funds shall have adopted a plan in conformity with Rule 12b-1
under the 1940 Act providing that the Funds (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 8, 1984, among American Association of Retired Persons,
AARP/Xxxxxxx Financial Management Company, and us. You shall be required to pay
such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Funds (or some other party) pursuant to such a plan.
5. Management Fee. As you expect to receive additional compensation under
the investment management agreements currently between you and the Underlying
Funds due to growth in the assets of the Underlying Funds resulting from
investments in the Underlying Funds by the Portfolios, you shall not be paid a
fee for services described in sections 2 and 3 hereof.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Funds, neither you nor any of your directors, officers or
employees shall 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 and other investments for each Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Funds, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
4
Your services to the Trust and the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Trust or the Funds.
Whenever the Funds and one or more other accounts or investment companies
advised by the Manager have available funds for investment, investments suitable
and appropriate for each shall be allocated in accordance with procedures
believed by the Manager to be equitable to each entity. Similarly, opportunities
to sell securities shall be allocated in a manner believed by the Manager to be
equitable. The Funds recognize that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Funds.
7. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Trust agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Funds in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Trust, the
Funds or their shareholders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Funds shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Funds and not as your employee or agent.
8. Duration and Termination of This Agreement. This Agreement shall remain
in force until August 31, 1999, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust, or, with respect to each Fund, by the vote of a
majority of the outstanding voting securities of such Fund 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
1940 Act and the rules and regulations thereunder and any applicable SEC
exemptive order therefrom.
This Agreement may be terminated with respect to each Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of the
Secretary of The Commonwealth of Massachusetts, provides that the name "AARP
Managed Investment Portfolios Trust" refers to the Trustees under the
Declaration collectively as Trustees and not as individuals or personally, and
that no shareholder of any Fund of the Trust, or Trustee, officer, employee or
agent of the Trust, shall be subject to claims against or
5
obligations of the Trust or of any Fund of the Trust to any extent whatsoever,
but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and you agree that the obligations assumed by the
Trust on behalf of each Fund pursuant to this Agreement shall be limited in all
cases to the applicable Fund and its assets, and you shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the Funds or
any other series of the Trust, or from any Trustee, officer, employee or agent
of the Trust. You understand that the rights and obligations of each Fund, or
series, under the Declaration are separate and distinct from those of any and
all other series.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit 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 together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
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 SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause a
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Funds.
6
If you are in agreement with the foregoing, please execute 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
effective as of the date of this Agreement.
Yours very truly,
AARP MANAGED INVESTMENT
PORTFOLIOS TRUST, on behalf of
AARP Diversified Income with Growth
Portfolio
AARP Diversified Growth Portfolio
By: /s/Xxxxxx X. XxXxxxxxx
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
XXXXXXX XXXXXX INVESTMENTS, INC.
By: /s/Xxxxxx Xxxxxx
-------------------------------
Managing Director
