METROPOLITAN WEST FUNDS
Investment Management Agreement
THIS INVESTMENT MANAGEMENT AGREEMENT (this
"Agreement") is made as of the 31st day of March, 2010, by and
between Metropolitan West Funds, a Delaware statutory trust
(hereinafter called the "Trust"), on behalf of each series of
the Trust listed in Appendix A hereto, as may be amended from
time to time (hereinafter referred to individually as a "Fund"
and collectively as the "Funds") and Metropolitan West Asset
Management, LLC, a California limited liability company
(hereinafter called the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management
investment company, registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended,
and is engaged in the business of supplying investment advice,
investment management and administrative services, as an
independent contractor; and
WHEREAS, the Trust desires to retain the Manager to
render advice and services to the Funds pursuant to the terms
and provisions of this Agreement, and the Manager is interested
in furnishing said advice and services; and
WHEREAS, this Agreement replaces a prior investment
management agreement that terminated because of a change of
control of the Manager;
NOW, THEREFORE, in consideration of the covenants and
the mutual promises hereinafter set forth, the parties hereto,
intending to be legally bound hereby, mutually agree as follows:
1. Appointment of Manager. The Trust hereby employs
the Manager and the Manager hereby accepts such employment, to
render investment advice and management services with respect to
the assets of the Funds for the period and on the terms set
forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees.
2. Duties of Manager.
(a) General Duties. The Manager shall act as
investment manager to the Funds and shall supervise investments
of the Funds on behalf of the Funds in accordance with the
investment objectives, programs and restrictions of the Funds as
provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and
By-Laws, or otherwise and such other limitations as the Trustees
may impose from time to time in writing to the Manager. Without
limiting the generality of the foregoing, the Manager shall:
(i) furnish the Funds with advice and recommendations with
respect to the investment of each Fund's assets and the purchase
and sale of portfolio securities for the Funds, including the
taking of such other steps as may be necessary to implement such
advice and recommendations; (ii) furnish the Funds with reports,
statements and other data on securities, economic conditions and
other pertinent subjects which the Trust's Board of Trustees may
reasonably request; (iii) manage the investments of the Funds,
subject to the ultimate supervision and direction of the Trust's
Board of Trustees; (iv) provide persons satisfactory to the
Trust's Board of Trustees to act as officers and employees of
the Trust and the Funds (such officers and employees, as well as
certain trustees, may be trustees, directors, officers,
partners, or employees of the Manager or its affiliates) but not
including personnel to provide limited administrative services
to the Fund not typically provided by the Fund's administrator
under separate agreement; and (v) render to the Trust's Board of
Trustees such periodic and special reports with respect to each
Fund's investment activities as the Board may reasonably
request.
(b) Brokerage. The Manager shall place orders
for the purchase and sale of securities either directly with the
issuer or with a broker or dealer selected by the Manager. In
placing each Fund's securities trades, it is recognized that the
Manager will give primary consideration to securing the most
favorable price and efficient execution, so that each Fund's
total cost or proceeds in each transaction will be the most
favorable under all the circumstances. Within the framework of
this policy, the Manager may consider the financial
responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a
party to any such transaction or other transactions to which
other clients of the Manager may be a party.
It is also understood that it is desirable for the
Funds that the Manager have access to investment and market
research and securities and economic analyses provided by
brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a
higher cost to the Funds than might result from the allocation
of brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the
purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to
review by the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice to
determine whether each Fund benefits, directly or indirectly,
from such practice. It is understood by both parties that the
Manager may select broker-dealers for the execution of the
Funds' portfolio transactions who provide research and analysis
as the Manager may lawfully and appropriately use in its
investment management and advisory capacities, whether or not
such research and analysis may also be useful to the Manager in
connection with its services to other clients.
On occasions when the Manager deems the purchase or
sale of a security to be in the best interest of one or more of
the Funds as well as of other clients, the Manager, to the
extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions
and the most efficient execution. In such event, allocation of
the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the
manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other
clients.
(c) Administrative Services. The Manager shall
oversee the administration of the Funds' business and affairs
although the provision of administrative services, to the extent
not covered by subparagraphs (a) or (b) above, is not the
obligation of the Manager under this Agreement. Notwithstanding
any other provisions of this Agreement, the Manager shall be
entitled to reimbursement from the Funds for all or a portion of
the reasonable costs and expenses, including salary, associated
with the provision by Manager of personnel to render
administrative services to the Funds.
3. Best Efforts and Judgment. The Manager shall use
its best judgment and efforts in rendering the advice and
services to the Funds as contemplated by this Agreement.
4. Independent Contractor. The Manager shall, for
all purposes herein, be deemed to be an independent contractor,
and shall, unless otherwise expressly provided and authorized to
do so, have no authority to act for or represent the Trust or
the Funds in any way, or in any way be deemed an agent for the
Trust or for the Funds. It is expressly understood and agreed
that the services to be rendered by the Manager to the Funds
under the provisions of this Agreement are not to be deemed
exclusive, and the Manager shall be free to render similar or
different services to others so long as its ability to render
the services provided for in this Agreement shall not be
impaired thereby.
5. Manager's Personnel. The Manager shall, at its
own expense, maintain such staff and employ or retain such
personnel and consult with such other persons as it shall from
time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the
Manager shall be deemed to include persons employed or retained
by the Manager to furnish statistical information, research, and
other factual information, advice regarding economic factors and
trends, information with respect to technical and scientific
developments, and such other information, advice and assistance
as the Manager or the Trust's Board of Trustees may desire and
reasonably request.
6. Reports by Funds to Manager. Each Fund will from
time to time furnish to the Manager detailed statements of its
investments and assets, and information as to its investment
objective and needs, and will make available to the Manager such
financial reports, proxy statements, legal and other information
relating to each Fund's investments as may be in its possession
or available to it, together with such other information as the
Manager may reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund,
and to the extent not paid or reimbursed through a plan adopted
by the Fund under Rule 12b-1 under the 1940 Act, the Manager is
responsible for (i) the compensation of any of the Trust's
trustees, officers, and employees who are affiliates of the
Manager (but not the compensation of employees performing
services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below), (ii) the expenses
of printing and distributing the Funds' prospectuses, statements
of additional information, and sales and advertising materials
(but not the legal, auditing or accounting fees attendant
thereto) to prospective investors (but not to existing
shareholders), and (iii) providing office space and equipment
reasonably necessary for the operation of the Funds.
(b) Each Fund is responsible for and has assumed
the obligation for payment of all of its expenses, other than as
stated in Subparagraph 7(a) above, including but not limited to:
fees and expenses incurred in connection with the issuance,
registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities
and other property of the Trust for the benefit of the Funds
including all fees and expenses of its custodian, shareholder
services agent and accounting services agent; interest charges
on any borrowings; costs and expenses of pricing and calculating
its daily net asset value and of maintaining its books of
account required under the 1940 Act; taxes, if any; expenditures
in connection with meetings of each Fund's shareholders and
Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any
advisory board or committee who are not members of, affiliated
with or interested persons of the Manager; insurance premiums on
property or personnel of each Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses
and statements of additional information of the Fund or other
communications for distribution to existing shareholders; legal,
auditing and accounting fees; trade association dues; fees and
expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable
state and foreign securities laws; all expenses of maintaining
and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Funds, if
any; and all other charges and costs of its operation plus any
extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) To the extent the Manager incurs any costs
by assuming expenses which are an obligation of a Fund as set
forth herein, such Fund shall promptly reimburse the Manager for
such costs and expenses, except to the extent the Manager has
otherwise agreed to bear such expenses. To the extent the
services for which a Fund is obligated to pay are performed by
the Manager, the Manager shall be entitled to recover from such
Fund to the extent of the Manager's actual costs for providing
such services.
8. Investment Advisory and Management Fee.
(a) Each Fund shall pay to the Manager, and the
Manager agrees to accept, as full compensation for all
administrative and investment management and advisory services
furnished or provided to such Fund pursuant to this Agreement, a
management fee at the annual rate set forth in the Fee Schedule
attached hereto as Appendix A, as may be amended in writing from
time to time by the Trust and the Manager.
(b) The management fee shall be accrued daily by
each Fund and paid to the Manager on the first business day of
the succeeding month.
(c) The initial fee under this Agreement shall
be payable on the first business day of the first month
following the effective date of this Agreement and shall be
prorated as set forth below. If this Agreement is terminated
before the end of any month, the fee to the Manager shall be
prorated for the portion of any month in which this Agreement is
in effect which is not a complete month according to the
proportion which the number of calendar days in the month during
which the Agreement is in effect bears to the number of calendar
days in the month, and shall be payable within ten (10) days
after the date of termination.
(d) The Manager may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to
this Agreement and may agree to make payments to limit the
expenses which are the responsibility of a Fund under this
Agreement. Any such reduction or payment shall be applicable
only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or
reimbursement due to the Manager hereunder or to continue future
payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and
reconciled and paid on a monthly basis. Any fee withheld
pursuant to this paragraph from the Manager shall be reimbursed
by the appropriate Fund to the Manager in the first, second or
third (or any combination thereof) fiscal year next succeeding
the fiscal year of the reduction to the extent approved by the
Trust's disinterested Trustees. The Manager may not request or
receive reimbursement for prior reductions or reimbursements
before payment of a Fund's operating expenses for the current
year and cannot cause a Fund to exceed any more restrictive
limitation to which the Manager has agreed in making such
reimbursement.
(e) The Manager may agree not to require payment
of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement prior to the time
such compensation or reimbursement has accrued as a liability of
the Fund. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future
compensation or reimbursement due to the Manager hereunder.
9. Fund Share Activities of Manager's Officers and
Employees. The Manager agrees that neither it nor any of its
officers or employees shall take any short position in the
shares of the Funds. This prohibition shall not prevent the
purchase of such shares by any of the officers or bona fide
employees of the Manager or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the
1940 Act.
10. Conflicts with Trust's Governing Documents and
Applicable Laws. Nothing herein contained shall be deemed to
require the Trust or the Funds to take any action contrary to
the Trust's Agreement and Declaration of Trust, By-Laws, or any
applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and
control of the conduct of the affairs of the Trust and Funds.
11. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the
obligations or duties hereunder on the part of the Manager, the
Manager shall not be subject to liability to the Trust or the
Funds or to any shareholder of the Funds for any act or omission
in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security by the Funds.
(b) The Funds shall indemnify and hold harmless
the Manager and the partners, members, officers and employees of
the Manager and its general partner (any such person, an
"Indemnified Party") against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses
and reasonable counsel fees incurred in connection therewith)
arising out of the Indemnified Party's performance or non-
performance of any duties under this Agreement provided,
however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or
officer of the Manager (or its managers), from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
12. Non-Exclusivity. The Trust's employment of the
Manager is not an exclusive arrangement, and the Trust may from
time to time employ other individuals or entities to furnish it
with the services provided for herein. The Manager also may be
retained by other advisory clients for the same or similar
strategies employed by the Trust. If this Agreement is
terminated with respect to any Fund, this Agreement shall remain
in full force and effect with respect to all other Funds listed
on Appendix A hereto, as the same may be amended.
13. Term. This Agreement shall become effective with
respect to a particular Fund on the later of when the
Registration Statement under the Securities Act of 1933 with
respect to the shares of that Fund becomes effective by the
Securities and Exchange Commission and when this Agreement has
received requisite approval by the shareholders of that Fund,
and shall remain in effect for a period of two (2) years, unless
sooner terminated as hereinafter provided. This Agreement shall
continue in effect thereafter with respect to each Fund for
additional periods not exceeding one (l) year so long as such
continuation is approved for that Fund at least annually by (i)
the Board of Trustees of the Trust or by the vote of a majority
of the outstanding voting securities of that Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not
parties to this Agreement nor interested persons thereof, cast
in person at a meeting called for the purpose of voting on such
approval.
14. Termination. This Agreement may be terminated by
the Trust on behalf of any one or more of the Funds at any time
without payment of any penalty, by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting
securities of a Fund, upon sixty (60) days' written notice to
the Manager, and by the Manager upon sixty (60) days' written
notice to a Fund.
15. Termination by Assignment. This Agreement shall
terminate automatically in the event of any transfer or
assignment thereof, as defined in the 1940 Act.
16. Severability. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or
rule, or shall be otherwise rendered invalid, the remainder of
this Agreement shall not be affected thereby.
17. Definitions. The terms "majority of the
outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the 1940 Act.
18. Notice of Declaration of Trust. The Manager
agrees that the Trust's obligations under this Agreement shall
be limited to the Funds and to their assets, and that the
Manager shall not seek satisfaction of any such obligation from
the shareholders of the Funds nor from any trustee, officer,
employee or agent of the Trust or the Funds.
19. Captions. 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.
20. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
California without giving effect to the conflict of laws
principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal
law, regulation or rule, including the 1940 Act and the
Investment Advisers Act of 1940 and any rules and regulations
promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested by their duly
authorized officers, all on the day and year first above
written.
METROPOLITAN WEST FUNDS
METROPOLITAN WEST ASSET MANAGEMENT, LLC
By:/s/ Xxxxxx X. Xxxxxxxxx
By:/s/ Xxxxx Xxxxxxx
Title: Treasurer
Title: Chief Executive Officer
[PAGE BREAK]
Appendix A to Investment Management Agreement
Name Applicable Effective
of Fund Fee Date
Metropolitan West 0.35% March 31, 2010
Total Return
Bond Fund
Metropolitan West Low 0.30% March 31, 2010
Duration Bond Fund 0.25% Xxxxx 00, 0000
Xxxxxxxxxxxx West 0.50% March 31, 2010
Ultra Short Bond Fund
Metropolitan West
High Yield
Bond Fund
Metropolitan West 0.35% April 9, 2010
Intermediate Bond Fund
Metropolitan West 0.35% + up to March 31, 2010
0.35%(1)
AlphaTrakSM 500 Fund 1.20% + up to 0.70%(2) April 9, 2010
Metropolitan West
Strategic Income Fund
METROPOLITAN WEST FUNDS
METROPOLITAN WEST ASSET
MANAGEMENT, LLC
By:/s/ Xxxxxx X. Xxxxxxxxx
By:/s/ Xxxxx Xxxxxxx
Title: Treasurer
Title: Chief Executive Officer
[See notes on continuation pages.]
[PAGE BREAK]
(1) METROPOLITAN WEST ALPHATRAKSM 500 FUND (THE "FUND")
a. The management fee payable to the Manager shall
consist of two parts, a basic fee equal to an annual
rate of 0.35% (the "Basic Fee") and a performance
adjustment of up to an annual rate of positive or
negative 0.35% (the "Performance Adjustment"). The
Basic Fee and the Performance Adjustment shall be
accrued daily by the Fund. Accruals of (but not
payments of) the Performance Adjustment may be made on
an estimated basis.
b. The daily portion of Basic Fee shall be accrued daily
based on the net assets of the Fund that day.
c. The daily portion of Performance Adjustment shall be
accrued daily based on the average daily net assets
over the Performance Period (as defined below). The
Performance Adjustment (expressed as dollars) with
respect to any accrual or payment of the management
fee under Section 8 of this Agreement shall not exceed
the positive or negative Performance Adjustment
otherwise applicable to that payment (expressed as a
percentage) applied instead to the net assets used to
calculate the Basic Fee.
d. The Performance Adjustment shall be equal to 35% of
the amount by which the investment performance of the
Fund during the Performance Period exceeds, or is
exceeded by, the investment record of the Standard &
Poors 500 Stock Index ("S&P 500TM") plus an annual rate
of 0.30% over the same Performance Period, up to a
maximum Performance Adjustment of a positive or
negative annual rate of 0.35%.
e. The "Performance Period" shall consist of a rolling
period of three (3) months. (The Performance Period
shall include periods before the effective date of
this Agreement to the extent applicable.)
f. The investment performance for the Fund with respect
to a particular Performance Period shall be calculated
using the highest expense (lowest performing) share
class (if the Fund designates another share class) and
shall be based on the sum of: (i) the change in the
Fund's net asset value per share during that
Performance Period plus any Basic Fee and Performance
Adjustment accrued per share during that Performance
Period but less the maximum possible Basic Fee and
Performance Adjustment that could be accrued per share
in any Performance Period (that is, the change in net
asset value per share assuming the accrual of a
maximum management fee at an annual rate of 0.70%),
(ii) the value of any cash distributions per share
accumulated during that Performance Period, and
(iii) the value of any capital gains taxes per share
paid or payable on undistributable realized long-term
capital gains accumulated during that Performance
Period, which collectively shall be expressed as a
percentage of the Fund's net asset value per share at
the beginning of that Performance Period.
g. The investment record for the S&P 500 with respect to
a particular Performance Period shall be based on the
sum of: (i) the change in the level of the S&P 500
during that Performance Period and (ii) the value of
cash distributions made by companies whose securities
comprise the S&P 500 accumulated during that
Performance Period and reinvested in the S&P 500 at
least as frequently as the end of the quarter
following the payment of the dividend, which together
shall be expressed as a percentage of the level of the
S&P 500 at the beginning of that Performance Period.
h. By way of example only:
Fund performance of the Fund for the three 2.750%
months ended September 30th
Annualized Fund Performance = ((1+ 0.02750) ^ 11.364%
(365 / 92) - 1) * 100
Average daily net assets for the three $100,000,000
months ended September 30th
Accrued (and paid) management fee for that $ 125,000
period
Actual Management Fee percentage (125,000 / 0.125%
100,000,000) * 100
Annualized actual management fee [(1 + 0.00125) 0.497%
^ (365 / 92) - 1] *100
Annualized maximum possible management fee for 0.700%
period
Investment performance of the Fund = 11.161%
Fund performance + Actual Management Fee -
Maximum Management Fee
(11.364% + 0.497% - 0.70%)
Investment record of S&P 500 for the
three months ended September 30 = 2.50% 2.50%
Annualized S&P 500 Performance = ((1 + 0.025) ^ 10.292%
(365 / 92) - 1) * 100
Performance Adjustment = 35% * (11.161% - 0.199%
(10.292% + 0.30%)) =
September Performance Fee =
Performance Adjustment * Average daily net
Assets for the three months ended
September 30th * 30/365 =
0.199% * $100,000,000 * 30 / 365 = 16,356.16
(2) METROPOLITAN WEST STRATEGIC INCOME FUND (THE "FUND")
a. The management fee payable to the Manager shall
consist of two parts, a basic fee equal to an annual
rate of 1.20% (the "Basic Fee") and a performance
adjustment of up to an annual rate of positive or
negative 0.70% (the "Performance Adjustment"). The
Basic Fee and the Performance Adjustment shall be
accrued daily by the Fund. Accruals of (but not
payments of) the Performance Adjustment may be made on
an estimated basis.
b. The daily portion of Basic Fee shall be accrued daily
based on the net assets of the Fund that day.
c. The daily portion of Performance Adjustment shall be
accrued daily based on the average daily net assets
over the Performance Period (as defined below). The
Performance Adjustment (expressed as dollars) with
respect to any accrual or payment of the management
fee under Section 8 of this Agreement shall not exceed
the positive or negative Performance Adjustment
otherwise applicable to that payment (expressed as a
percentage) applied instead to the net assets used to
calculate the Basic Fee.
d. The Performance Adjustment shall be equal to 35% of
the amount by which the investment performance of the
Fund during the Performance Period exceeds, or is
exceeded by, the investment record of the Xxxxxxx
Xxxxx 3-Month U.S. Treasury Xxxx Index (the "Index")
plus an annual rate of 0.10% over the same Performance
Period, up to a maximum Performance Adjustment of a
positive or negative annual rate of 0.70%.
e. The "Performance Period" shall consist of a rolling
period of twelve (12) months. (The Performance Period
shall include periods before the effective date of
this Agreement to the extent applicable.)
f. The investment performance for the Fund with respect
to a particular Performance Period shall be calculated
using the highest expense (lowest performing) share
class and shall be based on the sum of: (i) the
change in the Fund's net asset value per share during
that Performance Period plus any Basic Fee and
Performance Adjustment accrued per share during that
Performance Period but less the maximum possible Basic
Fee and Performance Adjustment that could be accrued
per share in any Performance Period (that is, the
change in net asset value per share assuming the
accrual of a maximum management fee at an annual rate
of 1.90%), (ii) the value of any cash distributions
per share accumulated during that Performance Period,
and (iii) the value of any capital gains taxes per
share paid or payable on undistributable realized
long-term capital gains accumulated during that
Performance Period, which collectively shall be
expressed as a percentage of the Fund's net asset
value per share at the beginning of that Performance
Period.
g. The investment record for the Index with respect to a
particular Performance Period shall be based on the
sum of: (i) the change in the level of the Index
during that Performance Period and (ii) the value of
cash distributions (interest payments) made by
securities that comprise the Index accumulated during
that Performance Period and reinvested in the Index at
least as frequently as the end of the quarter
following the payment of the distribution (interest),
which together shall be expressed as a percentage of
the level of the Index at the beginning of that
Performance Period.
h. By way of example only:
Fund Strategic
Income
Fund performance for the twelve months ended
June 30th 6.000%
Average daily net assets for the twelve months
ended June 30th $ 100,000,000
Accrued (and paid) management fee for that
Period $ 1,200,000
Actual Management Fee percentage
((1,200,000 / 100,000,000) * 100) 1.200%
Maximum possible management fee for period 1.900%
Investment performance of the Fund =
Fund performance + Actual Management Fee - Maximum
Management Fee (7.500% + 1.200% - 1.900%) 5.300%
Investment record of Index for the twelve months
ended June 30th = 4.00% 4.000%
Performance Adjustment = 35% * (5.300% -
(4.000% + 0.100%)) = 0.420%
June Performance Fee =
Performance Adjustment * Average daily net assets
for the twelve months ended June 30th * 30 / 365 =
0.420% * $100,000,000 * 30 / 365 = 34,520.55
