EXHIBIT 4(b)
USAA Investment Management Company
10750 Xxxxxx X. XxXxxxxxx Freeway
San Xxxxxxx, XX 00000
Gentlemen:
Pursuant to Section 1(b) of the Advisory Agreement dated as of August 1,
2001, between USAA Mutual Fund, Inc. (the "Company") and USAA Investment
Management Company (the "Manager"), please be advised that the Company has
established a new series of its shares, namely, the Value Fund (the "Fund"),
and please be further advised that the Company desires to retain the Manager to
render investment advisory services under the Advisory Agreement to the Fund at
the fee stated below:
ADVISORY FEE SCHEDULE
Three-fourths of one percent (.75) of the aggregate net assets of the
Value Fund
From time to time, the Manager may voluntarily waive all or a portion of
the advisory fee payable with respect to a Fund or pay expenses of the Fund. In
addition to any amounts otherwise payable to the Manager as an advisory fee for
current services under the Advisory Agreement, the Company shall be obligated
to pay the Manager all amounts previously waived or expenses paid by the
Manager with respect to the Value Fund, provided that such additional payments
are made not later than three years from the date first set forth below and
provided further that the amount of such additional payment in any year,
together with all other expenses of the Fund, in the aggregate, would not cause
the Fund's expense ratio in such year to exceed 1.15% of the average net assets
of the Fund.
In addition, revised Schedules A, B-1, B-2, and D to the Advisory
Agreement reflecting the addition of the Fund to the Advisory Agreement are
attached hereto as Exhibits A, B, C, and D, respectively, and are hereby
approved.
Please state below whether you are willing to render such services at the
fee stated above.
USAA MUTUAL FUND, INC.
Attest: /S/ XXXXXXX X. XXXXXX By: /S/ XXXXXXXXXXX X. XXXXX
---------------------- --------------------------
Xxxxxxx X. Xxxxxx Xxxxxxxxxxx X. Xxxxx
Secretary President
Dated: August 3, 2001
We, as the sole shareholder of the above named Fund, do hereby approve the
Advisory Agreement and are willing to render investment advisory services to
the Value Fund at the fee stated above. In addition, we approve Exhibits A, B,
C, and D hereto as revised Schedules A, B-1, B-2, and D, respectively, to the
Advisory Agreement.
USAA INVESTMENT MANAGEMENT
COMPANY
Attest: /S/ XXXX X. XXXXXX By: /S/ XXXXX X. XXXXXXX
------------------- --------------------------
Xxxx X. Xxxxxx Xxxxx X. Xxxxxxx
Assistant Secretary Senior Vice President
Dated: August 3, 2001
EXHIBIT A
SCHEDULE A TO ADVISORY AGREEMENT
LISTING OF FUNDS
NAME OF FUND
------------
AGGRESSIVE GROWTH FUND
CAPITAL GROWTH FUND
FIRST START GROWTH FUND
GROWTH FUND
GROWTH & INCOME FUND
HIGH-YIELD OPPORTUNITIES FUND
INCOME FUND
INCOME STOCK FUND
INTERMEDIATE-TERM BOND FUND
MONEY MARKET FUND
SCIENCE & TECHNOLOGY FUND
SHORT-TERM BOND FUND
SMALL CAP STOCK FUND
VALUE FUND
EXHIBIT B
SCHEDULE B-1 TO ADVISORY AGREEMENT - LISTING OF FUNDS
WITH PERFORMANCE ADJUSTMENT
ANNUAL BASIC
NAME OF FUND PERFORMANCE INDEX FEE RATE
------------ ----------------- -----------
AGGRESSIVE GROWTH FUND MID-CAP GROWTH *
CAPITAL GROWTH FUND MID-CAP GROWTH .85%
FIRST START GROWTH FUND LARGE-CAP GROWTH .75%
GROWTH FUND LARGE-CAP GROWTH .75%
GROWTH & INCOME FUND LARGE-CAP CORE .60%
HIGH-YIELD OPPORTUNITIES FUND HIGH CURRENT YIELD .50%
INCOME FUND CORPORATE DEBT FUNDS A RATED .24%
INCOME STOCK FUND EQUITY INCOME .50%
INTERMEDIATE-TERM BOND FUND INTERMEDIATE INVESTMENT GRADE DEBT **
SCIENCE & TECHNOLOGY FUND SCIENCE & TECHNOLOGY .75%
SHORT-TERM BOND FUND SHORT INVESTMENT GRADE DEBT .24%
SMALL CAP STOCK FUND SMALL-CAP CORE .75%
VALUE FUND MULTI-CAP VALUE .75%
* THE FEE IS COMPUTED AT ONE-HALF OF ONE PERCENT (.50%) OF THE FIRST $200
MILLION OF AVERAGE NET ASSETS, TWO-FIFTHS OF ONE PERCENT (.40%) FOR THAT
PORTION OF AVERAGE NET ASSETS IN EXCESS OF $200 MILLION BUT NOT OVER
$300 MILLION, AND ONE-THIRD OF ONE PERCENT (.33%) FOR THAT PORTION OF
AVERAGE NET ASSETS IN EXCESS OF $300 MILLION.
** THE FEE IS COMPUTED AT ONE-HALF OF ONE PERCENT (.50%) OF THE FIRST $50
MILLION OF AVERAGE NET ASSETS, TWO-FIFTHS OF ONE PERCENT (.40%) OF THAT
PORTION OF AVERAGE NET ASSETS OVER $50 MILLION BUT NOT OVER $100
MILLION, AND THREE-TENTHS OF ONE PERCENT (.30%) OF THAT PORTION OF
AVERAGE NET ASSETS IN EXCESS OF $100 MILLION.
EXHIBIT C
SCHEDULE B-2 TO ADVISORY AGREEMENT - PERFORMANCE ADJUSTMENT RATE
HIGH-YIELD OPPORTUNITIES FUND INCOME FUND
INTERMEDIATE-TERM BOND FUND SHORT-TERM BOND FUND
Over/Under Performance Relative Performance Adjustment Rate
to Index (in basis points) (in basis points as a percentage
of average net assets)
+/- 20 to 50 +/- 4
+/- 51 to 100 +/- 5
+/- 101 and greater +/- 6
AGGRESSIVE GROWTH CAPITAL GROWTH FUND
FIRST START GROWTH FUND GROWTH FUND
GROWTH & INCOME FUND INCOME STOCK FUND
SCIENCE & TECHNOLOGY FUND SMALL CAP STOCK FUND
VALUE FUND
Over/Under Performance Relative Performance Adjustment Rate
to Index (in basis points) (in basis points as a percentage
of average net assets)
+/- 100 to 400 +/- 4
+/- 401 to 700 +/- 5
+/- 701 and greater +/- 6
EXHIBIT D
SCHEDULE D TO ADVISORY AGREEMENT- FOR FUNDS WITH XXX
XXXXXX AND EXPENSE REIMBURSEMENT RECOVERY PLANS
NAME OF FUND ENDING DATE PERCENTAGE OF ANA
------------ ------------ -----------------
HIGH-YIELD OPPORTUNITIES FUND AUGUST 2, 2002 *
INTERMEDIATE-TERM BOND FUND AUGUST 2, 2002 .65%
VALUE FUND AUGUST 3, 2004 1.15%
* FOR EXPENSES WAIVED AND AMOUNTS REIMBURSED PRIOR TO AUGUST 1, 2001, THE
FUND'S EXPENSE RATIO SHALL NOT EXCEED .75% OF ANA; HOWEVER, FOR EXPENSES
WAIVED AND AMOUNTS REIMBURSED FROM AUGUST 1, 2001 UNTIL AUGUST 2, 2002, THE
FUND'S EXPENSE RATIO SHALL NOT EXCEED 1.00% OF ANA.
