EX-99.B5(a)
INVESTMENT ADVISORY AGREEMENT
NATIONS FUND TRUST
THIS AGREEMENT is made as of this 1st day of January, 1996, by and between
NATIONS FUND TRUST, a Massachusetts business trust (the "Trust"), and
NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"), on
behalf of those portfolios of the Trust now or hereafter identified on Schedule
I hereto (each a "Fund" and collectively, the "Funds").
WHEREAS, the Trust is registered with the Securities and Exchange Commission
( the "Commission") as an open-end, management investment company under the
Investment Company Act of 1940, as amended ( the "1940 Act"); and
WHEREAS, the Adviser is registered with the Commission under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") as an investment adviser;
and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide for investment advisory services to the Trust upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Trust and the Adviser contemplate that certain duties of the
Adviser under this Agreement will be delegated to one or more sub-investment
adviser(s) (the "Sub-Adviser(s)") pursuant to separate sub-advisory agreement(s)
(the "Sub-Advisory Agreement(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Adviser to act as investment
adviser to each Fund for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided. In the event
that the Trust establishes one or more portfolios other than the Funds with
respect to which it desires to retain the Adviser to act as investment adviser
hereunder, it shall notify the Adviser in writing. If the Adviser is willing to
render such services under this Agreement it shall notify the Trust in writing
whereupon such portfolio shall become a Fund hereunder and shall be subject to
the provisions of this Agreement except to the extent that said provisions
(including those relating to the compensation payable by the Fund to the
Adviser) are modified with respect to such Fund in writing by the Trust and the
Adviser at the time.
2. Delegation of Responsibilities. Subject to the approval of the Trust's
Board of Trustees and, if required, the shareholders of the Funds, the Adviser
may, pursuant to the Sub-Advisory Agreement(s), delegate to the Sub-Adviser(s)
those of its duties hereunder identified in the Sub-Advisory Agreement(s),
provided that the Adviser shall continue to supervise and monitor the
performance of the duties delegated to the Sub-Adviser(s) and any such
delegation shall not relieve the Adviser of its duties and obligations under
this Agreement. The Adviser shall be solely responsible for compensating the
Sub-Adviser(s) for services rendered under the Sub-Advisory Agreement(s).
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3. Delivery of Documents. The Trust has furnished the Adviser with copies,
properly certified or authenticated, of each of the following:
(a) The Trust's Declaration of Trust as filed with the Secretary of The
Commonwealth of Massachusetts on May 14, 1985, and all amendments thereto (such
Declaration of Trust, as presently in effect and as it shall from time to time
be amended, is herein called the "Declaration of Trust");
(b) The Trust's Code of Regulations and amendments thereto (such Code
of Regulations, as presently in effect and as it shall from time to time be
amended, is herein called the "Code");
(c) Votes of the Trust's Board of Trustees authorizing the appointment
of the Adviser and approving this Agreement;
(d) The Trust's Registration Statement, as amended, on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") (File No. 2-97817) and
under the 1940 Act; and
(e) The most recent prospectus(es) of the Trust relating to each Fund
(such prospectus(es) together with the related statement(s) of additional
information, as presently in effect and all amendments and supplements thereto,
are herein called the "Prospectus").
The Trust will furnish the Adviser from time to time with copies of all
amendments of or supplements to the foregoing, if any.
4. Management. Subject to the supervision of the Trust's Board of Trustees,
the Adviser will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in each Fund. The Adviser will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Funds and will place the daily orders for the purchase
or sale of securities. The Adviser will provide the services rendered by it
under this Agreement in accordance with each Fund's investment objective,
policies and restrictions as stated in the Prospectus and votes of the Trust's
Board of Trustees. The Adviser further agrees that it will:
(a) Update each Fund's cash availability throughout the day as
required;
(b) Maintain historical tax lots for each portfolio security held by
each Fund;
(c) Transmit trades to the Trust's custodian for proper settlement;
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(d) Maintain all books and records with respect to each Fund's
securities and transactions;
(e) Supply the Trust and its Board of Trustees with reports and
statistical data as requested; and
(f) Prepare a quarterly broker security transaction summary and monthly
security transaction listing for each Fund.
5. Other Covenants. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Commission and will in addition conduct its activities under this Agreement in
accordance with other applicable law, including but not limited to the 1940 Act
and the Advisers Act;
(b) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has investment
responsibilities;
(c) will not make loans to any person to purchase or carry Fund shares;
(d) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer. Subject to
the other provisions of this paragraph, in executing portfolio transactions and
selecting brokers or dealers, the Adviser will use its best efforts to seek on
behalf of each Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Adviser shall consider all
factors that it deems 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/dealer to execute
a particular transaction, the Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Fund and/or other accounts
over which the Adviser or an affiliate of the Adviser exercises investment
discretion. The Adviser is authorized, subject to the prior approval of the
Trust's Board of Trustees, 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, the Adviser determines in good 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 Adviser to the particular Fund and to the
Trust. In addition, the Adviser is authorized to take into account the sale of
shares of the Trust in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser or the Trust's principal underwriter), provided that
the Adviser believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will portfolio securities be purchased from or sold to the Adviser or
the Trust's principal underwriter for the Funds or an affiliated person of
either acting as principal or broker, except as permitted by the Commission or
applicable law;
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(e) will maintain a policy and practice of conducting its investment
advisory services hereunder independently of the commercial banking operations
of its affiliates. In making investment recommendations for a Fund, its
investment advisory personnel will not inquire or take into consideration
whether the issuer (or related supporting institution) of securities proposed
for purchase or sale for the Fund's account are customers of the commercial
departments of its affiliates. In dealing with commercial customers, such
commercial departments will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(f) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior, present
or potential shareholders, and will not use such records and information for any
purpose other than performance of its 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 and will be
deemed granted where the Adviser 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).
6. Services Not Exclusive. The services furnished by the Adviser hereunder
are deemed not to be exclusive, and the Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Adviser to be suitable for
two or more accounts managed by the Adviser, the available securities or
investments may be allocated in a manner believed by the Adviser to be equitable
to each account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by a Fund or the size of the
position obtainable for or disposed of by a Fund.
7. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for each Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
8. Expenses. During the term of this Agreement, the Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased or sold
for the Funds. In addition, if the aggregate expenses borne by any Fund in any
fiscal year exceed the applicable expense limitations imposed by the securities
regulations of any state in which its shares are registered or qualified for
sale to the public, the Adviser together with the Fund's administrator(s) shall
reimburse such Fund for such excess in proportion to the fees otherwise payable
to them for such year. The obligation of the Adviser to reimburse the Trust
hereunder is limited in any fiscal year to the amount of its fee hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing, the
Adviser shall reimburse the Trust for the full amount of its share of any such
excess expenses regardless of the fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over the
Trust so require. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis.
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9. Compensation. For the services provided to each Fund and the expenses
assumed pursuant to this Agreement, the Trust will pay the Adviser and the
Adviser will accept as full compensation therefor a fee for that Fund determined
in accordance with Schedule I attached hereto. The fee 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. The Trust and the Adviser
may, from time to time, agree to reduce, limit or waive the amounts payable
hereunder with respect to one or more Funds for such period or periods they deem
advisable.
10. Limitation of Liability. The Adviser 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 performance of this Agreement, 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 Adviser or any of its officers, directors,
employees or agents, in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
11. Duration and Termination. This Agreement shall become effective with
respect to a Fund when approved in accordance with the requirements of the 1940
Act, and shall thereafter continue from year to year, provided that the
continuation of the Agreement is specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined
in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's Trustees
who are not parties to this Agreement or "interested persons" (as
defined in the ▇▇▇▇ ▇▇▇) of a party to this Agreement (other than as
Trustees of the Trust), by votes cast in person at a meeting
specifically called for such purpose.
Notwithstanding the foregoing, this Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by the Trust (by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the particular Fund), or by the Adviser on sixty (60) days'
written notice. The notice provided for herein may be waived by the party
entitled to receipt thereof. 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 persons" and "assignment" shall have
the same meanings as such terms have in the 1940 Act.
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12. 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 which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement affecting a
Fund shall be effective until approved by vote of a majority of the outstanding
voting securities of such Fund. However, this shall not prevent the Adviser from
reducing, limiting or waiving its fee.
13. Release. The names "Nations Fund Trust" and "Trustees of Nations Fund
Trust" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under a Declaration of
Trust dated May 6, 1985, which is hereby referred to and a copy of which is on
file at the office of the Secretary of The Commonwealth of Massachusetts and the
principal office of the Trust. The obligations of "Nations Fund Trust" 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
class of shares of the Trust must look solely to the Trust Property belonging to
such class for the enforcement of any claims against the Trust.
14. 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 Delaware 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.
NATIONS FUND TRUST
on behalf of the Funds
By: /s/ A. ▇▇▇ ▇▇▇▇▇▇
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A. ▇▇▇ ▇▇▇▇▇▇
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President and Director
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SCHEDULE I
The Trust shall pay the Adviser as full compensation for services provided
and expenses assumed hereunder an advisory fee for each Fund, computed daily and
payable monthly at the annual rates listed below as a percentage of the average
daily net assets of the Fund:
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Rate of
Fund Compensation
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Nations Government Money Market Fund 0.40%
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Nations Tax Exempt Fund 0.40%
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Nations Value Fund 0.75%
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Nations Strategic Equity Fund 0.75%
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Nations Capital Growth Fund 0.75%
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Nations Emerging Growth Fund 0.75%
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Nations Equity Index Fund 0.50%
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Nations Managed Index Fund 0.50%
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Nations Managed SmallCap Index Fund 0.50%
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Nations Managed Value Index Fund 0.50%
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Nations Managed SmallCap Value Index Fund 0.50%
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Nations Disciplined Equity Fund 0.75%
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Nations ▇▇▇▇▇▇▇ Focused Equities Fund 0.85%
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Nations ▇▇▇▇▇▇▇ Growth & Income Fund 0.85%
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Nations Balanced Assets Fund 0.75%
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Nations Short-Intermediate Government Fund 0.60%
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Nations Short-Term Income Fund 0.60%
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Nations Diversified Income Fund 0.60%
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Nations Strategic Fixed Income Fund 0.60%
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Nations Municipal Income Fund 0.60%
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Nations Short-Term Municipal Income Fund 0.50%
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Nations Intermediate Municipal Bond Fund 0.50%
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Nations Florida Municipal Bond Fund 0.60%
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Nations Georgia Municipal Bond Fund 0.60%
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Nations Maryland Municipal Bond Fund 0.60%
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Nations North Carolina Municipal Bond Fund 0.60%
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Nations South Carolina Municipal Bond Fund 0.60%
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Nations Tennessee Municipal Bond Fund 0.60%
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Nations Texas Municipal Bond Fund 0.60%
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Nations Virginia Municipal Bond Fund 0.60%
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Nations Florida Intermediate Municipal Bond Fund 0.50%
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Nations Kansas Intermediate Municipal Bond Fund 0.50%
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Nations Georgia Intermediate Municipal Bond Fund 0.50%
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Nations Maryland Intermediate Municipal Bond Fund 0.50%
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Nations North Carolina Intermediate Municipal
Bond Fund 0.50%
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Nations South Carolina Intermediate Municipal
Bond Fund 0.50%
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Nations Tennessee Intermediate Municipal Bond Fund 0.50%
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Nations Texas Intermediate Municipal Bond Fund 0.50%
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Nations Virginia Intermediate Municipal Bond Fund 0.50%
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Amended: October 15, 1996
July 31, 1997
December 9, 1997
June 4, 1998
IN WITNESS WHEREOF, the parties hereto have caused this amended Schedule I
to be executed by their officers designated below as of the 4th day of June,
1998.
NATIONS FUND TRUST
on behalf of the Funds
By: /s/ A. ▇▇▇ ▇▇▇▇▇▇
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A. ▇▇▇ ▇▇▇▇▇▇
President and Chairman of the
Board of Trustees
NATIONSBANC ADVISORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Director
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