Exhibit 5(a)
AARP GROWTH TRUST
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December 16, 1985
AARP/▇▇▇▇▇▇▇ Financial Management
Company
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Investment Management and Advisory Agreement
Dear Sirs:
AARP Growth Trust (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
initially two Series. The Trust has selected you to act as investment adviser,
commencing on the effective date of your registration as an investment adviser
under the
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Management Company -2- December 16, 1985
Investment Advisers Act of 1940, as amended (the "Registration"), for each of
the initial two 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. The Trust
has selected ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Ltd. to act as such investment manager and
adviser and to perform such services under the terms and conditions hereinafter
set forth until the effective date of the Registration. Accordingly, the Trust
agrees with you and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Ltd. as follows (the terms "you"
and "your" as hereinafter used shall be deemed to refer to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇ Ltd. until the effective date of the Registration):
1. Delivery of Trust Documents. The Trust has furnished you with
copies properly certified or authenticated of each of the following:
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Management Company -3- December 16, 1985
(a) Declaration of Trust, dated June 8, 1984, 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.
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. Advisory 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
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Management Company -4- December 16, 1985
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 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
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Management Company -5- December 16, 1985
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 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
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Management Company -6- December 16, 1985
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 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 primarily 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 ▇▇▇▇▇▇▇ pursuant to Section 4 of the Investment
Company Services Agreement, dated as of October 9, 1984, among ▇▇▇▇▇▇▇, American
Association of Retired Persons and the Manager. You shall be required to pay
such expenses as are excluded by the preceding sentence.
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Management Company -7- December 16, 1985
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% of the
value of average daily net assets (as defined below) of the Series of the Trust
known as "AARP, Growth and Income Fund" and 62/1200 of 1% of the value of the
average daily net assets of the Series of the Trust known as "AARP Capital
Growth 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 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 Declaration of Trust and By-Laws of the Trust. If, pursuant to
such provisions, the determination of net asset
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Management Company -8- December 16, 1985
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 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 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 reduc-
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Management Company -9- December 16, 1985
tion 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 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 jurisdic-
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Management Company -10- December 16, 1985
tion 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 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.
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Management Company -11- December 16, 1985
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, 1986, and with respect to each Series, from year to year thereafter, 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
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Management Company -12- December 16, 1985
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 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
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Management Company -13- December 16, 1985
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.
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 ad-
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Management Company -14- December 16, 1985
viser 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 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
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counterpart of this letter and return such counterpart to the Trust, whereupon
this letter shall become a binding contract.
Yours very truly,
AARP GROWTH TRUST
By /s/ [Illegible]
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President
The foregoing Agreement is hereby accepted as of the date hereof.
AARP/▇▇▇▇▇▇▇ FINANCIAL
MANAGEMENT COMPANY
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LTD.
A General Partner
By /s/ [Illegible]
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Title [Illegible]
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LTD.
By /s/ [Illegible]
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Title [Illegible]