SUBADVISORY AGREEMENT
THE PHOENIX EDGE SERIES FUND
September 29, 2000
Alliance Capital Management L.P.
through its Xxxxxxxxx Investment Research and Management unit
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
WHEREAS, The Phoenix Edge Series Fund (the "Fund") is a diversified
open-end investment company of the series type registered under the Investment
Company Act of 1940 (the "Act"), and is subject to the rules and regulations
promulgated thereunder;
WHEREAS, the shares of the Fund are offered or may be offered in several
series, including the Phoenix-Xxxxxxx Xxxxxxxxx Global Value Series (hereafter
referred to as the "Series");
WHEREAS, Phoenix Variable Advisors (the "Advisor") evaluates and recommends
series advisors for the Series and is responsible for the day-to-day management
of the Series; and
WHEREAS, the Advisor desires to retain Alliance Capital Management L.P., a
limited partnership organized under the laws of the State of Delaware acting
hereunder through its Xxxxxxxxx Investment Research and Management unit (the
"Subadvisor") to furnish portfolio management services for the Series, and the
Subadvisor is willing to furnish such services.
NOW, THEREFORE, the Advisor and the Subadvisor agree as follows:
1. Employment as a Subadvisor. The Advisor, being duly authorized, hereby
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employs the Subadvisor to invest and reinvest the assets of the Series on
the terms and conditions set forth herein. The services of the Subadvisor
hereunder are not to be deemed exclusive; the Subadvisor may render
services to others and engage in other activities which do not conflict in
any material manner in the Subadvisor's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadvisor accepts
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its employment as a subadvisor to the Advisor and agrees to use its best
professional judgment to make investment decisions for the Series in
accordance with the provisions of this Agreement.
3. Services of Subadvisor.
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(a) The Subadvisor shall provide the services set forth herein and in
Schedule A attached hereto and made a part hereof. In providing
management services to the Series, the Subadvisor shall be
subject to the investment objectives, policies and restrictions
of the Fund as they apply to the Series and as set forth in the
Fund's then current Prospectus and Statement of Additional
Information (as the same may be modified from time to time), and
to the Fund's Agreement and Declaration of Trust, to the
investment and other restrictions set forth in the Act, the
Securities Act of 1933 and the Internal Revenue Code and the
rules and regulations thereunder, and to the supervision and
control of the Trustees of the Fund (the "Trustees"). The
Subadvisor shall not, without the Advisor's prior approval,
effect any transactions which would cause the Series at the time
of the transaction to be out of compliance with any of such
restrictions or policies. The Subadvisor will keep the Fund and
the Advisor informed of developments materially affecting the
Fund, and will, on its own initiative, furnish the Fund and the
Advisor from time to
time with whatever information the Sub-Advisor believes is
appropriate for this purpose.
(b) Subject at all times to the limitations set forth in subparagraph
3(a) above, the Subadvisor shall have full authority at all times
with respect to the management of the Series, including, but not
limited to, authority to give written or oral instructions to
various broker/dealers, banks or other agents; to bind and
obligate the Fund to and for the carrying out of contracts,
arrangements, or transactions which shall be entered into by the
Subadvisor on the Fund's behalf with or through such
broker/dealers, banks or other agents; to direct the purchase and
sale of any securities; and generally to do and take all action
necessary in connection with the Series, or considered desirable
by the Subadvisor with respect thereto. The Subadvisor may
maintain uninvested cash balances in the Series as it shall deem
reasonable without incurring any liability for the payment of
interest thereon.
4. Expenses. The Subadvisor shall furnish the following at its own expense:
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(a) Office facilities, including office space, furniture and
equipment utilized by its employees, in the fulfillment of
Subadvisor's responsibilities hereunder; and
(b) Personnel necessary to perform the functions required to manage
the investment and reinvestment of the Series' assets (including
those required for research, statistical and investment work),
and to fulfill the other functions of the Subadvisor hereunder.
The Subadvisor need not provide personnel to perform, or pay the
expenses of the Advisor for, services customarily performed for
an open-end management investment company by its national
distributor, custodian, financial agent, transfer agent, auditors
and legal counsel.
5. Transaction Procedures. All transactions for the Series will be consummated
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by payment to, or delivery by, the Custodian(s) from time to time
designated by the Fund (the "Custodian"), or such depositories or agents as
may be designated by the Custodian pursuant to its agreement with the Fund
(the "Custodian Agreement"), of all cash and/or securities due to or from
the Series. The Subadvisor shall not have possession or custody of such
cash and/or securities or any responsibility or liability with respect to
such custody. The Subadvisor shall advise the Custodian and confirm in
writing to the Fund all investment orders for the Series placed by it with
brokers and dealers at the time and in the manner set forth in the
Custodian Agreement and in Schedule B hereto (as amended from time to
time). The Fund shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated
by the Subadvisor. The Fund shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and, upon
giving proper instructions to the Custodian, the Subadvisor shall have no
responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Subadvisor shall have authority and discretion
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to select brokers and dealers to execute Series transactions initiated by
the Subadvisor, and to select the markets on or in which the transactions
will be executed.
A. In placing orders for the sale and purchase of Series securities for
the Fund, the Subadvisor's primary responsibility shall be to seek the best
execution of orders at the most favorable prices. However, this
responsibility shall not obligate the Subadvisor to solicit competitive
bids for each transaction or to seek the lowest available commission cost
to the Fund, so long as the Subadvisor reasonably believes that the broker
or dealer selected by it can be
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expected to obtain "best execution" on the particular transaction and
determines in good faith that the commission cost is reasonable in relation
to the value of the brokerage and research services (as defined in Section
28(e)(3) of the Securities Exchange Act of 1934) provided by such broker or
dealer to the Subadvisor, viewed in terms of either that particular
transaction or of the Subadvisor's overall responsibilities with respect to
its clients, including the Fund, as to which the Subadvisor exercises
investment discretion, notwithstanding that the Fund may not be the direct
or exclusive beneficiary of any such services or that another broker may be
willing to charge the Fund a lower commission on the particular
transaction.
B. Subject to the requirements of paragraph A above, the Advisor shall
have the right to require that transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the Advisor and the
Subadvisor, shall be executed by brokers and dealers that provide brokerage
or research services to the Fund or that will be of value to the Fund in
the management of its assets, which services and relationship may, but need
not, be of direct or exclusive benefit to the Series. In addition, subject
to paragraph A above, the applicable Conduct Rules of the National
Association of Securities Dealers, Inc. and other applicable law, the Fund
shall have the right to request that transactions be executed by brokers
and dealers by or through whom sales of shares of the Fund are made.
C. Subject to its duty to seek best execution and compliance with the
requirements of Section 11(a) of the Securities Exchange Act of 1934, as
amended, the Sub-Advisor may utilize its affiliate Xxxxxxx X. Xxxxxxxxx &
Co., LLC ("SCB LLC"), to execute trades in U.S. markets for the Series from
time to time at rates not exceeding the usual and customary broker's
commission. Under Federal law, the Subadvisor must obtain the Advisor's
consent to permit SCB LLC to effect agency cross transactions for the
Series, which consent is hereby granted. The Subadvisor represents,
warrants and covenants that all agency cross transactions for the Series
will be effected by Subadvisor and SCB LLC strictly in accordance with Rule
206(3)-2 under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"). An agency cross transaction is where SCB LLC purchases or
sells securities from or to a non-managed account on behalf of a client's
managed account. By "non-managed" it is meant that the account is not
managed by Sub-Advisor, or any of its respective affiliated investment
advisers. Pursuant to this consent, the Subadvisor will only permit SCB LLC
to effect an agency cross transaction for the Series with a non-managed
account. In an agency cross transaction where SCB LLC acts as broker for
the Series, SCB LLC receives commissions from both sides of the trade and
there is a potentially conflicting division of loyalties and
responsibilities. However, as both sides to the trade want to execute the
transaction at the best price without moving the market price in either
direction, the Subadvisor believes that an agency cross transaction will
aid both sides to the trade in obtaining the best price for the trade. THE
TRUSTEES OR THE ADVISOR MAY REVOKE THIS CONSENT BY XXXXXX NOTICE TO THE
SUBADVISOR AT ANY TIME.
7. Fees for Services. The compensation of the Subadvisor for its services
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under this Agreement shall be calculated and paid by the Advisor in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Fund and the Advisor, the Advisor is solely
responsible for the payment of fees to the Subadvisor. Brokerage services
provided by an affiliate of Subadvisor are not within the scope of the
duties of the Subadvisor under this Agreement. Subject to the requirements
of applicable law and any procedures adopted by the Trustees, SCB LLC may
receive brokerage commissions from the Series for such services.
8. Limitation of Liability. The Subadvisor shall not be liable for any action
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taken, omitted or suffered to be taken by it in its best professional
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with specific directions or instructions from the Fund,
provided, however, that such
3
acts or omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Series and that
such acts or omissions shall not have resulted from the Subadvisor's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Subadvisor in its
actions under this Agreement or a breach of its duty or of its obligations
hereunder (provided, however, that the foregoing shall not be construed to
protect the Subadvisor from liability under the Act, other federal or state
securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadvisor to comply with
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applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the parties hereto shall treat as confidential all
information pertaining to the Series and the actions of the Subadvisor and
the Fund in respect thereof.
Subadvisor may disclose the investment performance of the Series provided
that such disclosure does not reveal the identity of the Advisor, the Fund
or the Series. Subadvisor may, however, disclose that the Advisor and the
Series are its clients, provided that such disclosure does not reveal the
investment performance or composition of the Series.
10. Assignment. This Agreement shall terminate automatically in the event of
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its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Subadvisor shall notify the Advisor in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act,
as will enable the Advisor to consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur and to take the steps it deems
necessary.
11. Representations, Warranties and Agreements of the Subadvisor. The
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Subadvisor represents, warrants and agrees that:
A. It is registered as an "investment adviser" under the Advisers Act.
B. It will maintain, in the form and for the period required by Rule
31a-2 under the Act, the records and information required by paragraphs
(b)(5), (b)(6), (b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the Act
respecting its activities with respect to the Series, and such other
records with respect thereto relating to the services the Subadvisor
provides under this Agreement as may be required in the future by
applicable SEC rules. The records maintained by the Subadvisor hereunder
shall be the property of the Fund and surrendered promptly upon request.
C. It has a written code of ethics complying with the requirements of
Rule 17j-l under the Act and will provide the Advisor with a copy of its
code of ethics and evidence of its adoption for approval by the Fund's
Trustees. All material changes to the code of ethics shall likewise be
promptly furnished to the Advisor for approval by the Fund's Trustees.
Subadvisor acknowledges receipt of the written code of ethics adopted by
and on behalf of the Fund. The Subadvisor shall be subject to its code of
ethics and shall not be subject to any other code of ethics, including the
code of ethics of the Fund or the Advisor. Within 10 days of the end of
each calendar quarter while this Agreement is in effect, a duly authorized
compliance officer of the Subadvisor shall certify to the Fund and to the
Advisor that the Subadvisor has complied with the requirements of Rule
17j-l during the previous calendar quarter and that there has been no
violation of its code of ethics or if such a violation has occurred, that
appropriate action was taken in response to such violation. The Subadvisor
shall permit the Fund and Advisor to examine the reports required to be
made by the Subadvisor under Rule 17j-l(c)(1) and this subparagraph.
D. It will use all necessary efforts to manage the Series so that the
Fund will qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code.
4
E. It will furnish the Advisor a copy of its Form ADV as filed with the
Securities and Exchange Commission.
F. It will be responsible for the preparation and filing of Schedule 13G
and Form 13F reflecting the Fund's securities holdings as part of the
Subadvisor's overall holdings.
G. It will notify the Advisor of any change in the membership of its
general partners within a reasonable time after such change.
H. Reference is hereby made to the Declaration of Trust dated February
18, 1986, establishing the Fund, a copy of which has been filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter so filed
with the Secretary of the Commonwealth of Massachusetts and elsewhere as
required by law. The name The Phoenix Edge Series Fund refers to the
Trustees under said Declaration of Fund, as Trustees and not personally,
and no Trustee, shareholder, officer, agent or employee of the Fund shall
be held to any personal liability in connection with the affairs of the
Fund; only the Fund estate under said Declaration of Trust is liable.
Without limiting the generality of the foregoing, neither the Subadvisor
nor any of its officers, directors, partners, shareholders or employees
shall, under any circumstances, have recourse or cause or willingly permit
recourse to be had directly or indirectly to any personal, statutory, or
other liability of any shareholder, Trustee, officer, agent or employee of
the Fund or of any successor of the Fund, whether such liability now exists
or is hereafter incurred for claims against the trust estate.
12. Representations, Warranties and Agreements of the Advisor. The Advisor
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represents, warrants and agrees that:
A. It has the power and has taken all necessary action, and has obtained
all necessary licenses, authorizations and approvals, to execute this
Agreement, which constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
B. It is registered as an "investment adviser" under the Advisers Act.
C. It will deliver to the Subadvisor true and complete copies of the
Prospectus, Statement of Additional Information, and such other documents
or instruments governing the investments and investment policies and
practices of the Series, and during the term of this Agreement will
promptly deliver to the Subadvisor true and complete copies of all
documents and instruments supplementing, amending, or otherwise becoming
such Fund Documents before or at the time they become effective.
D. It will deliver to the Subadviser any limitations imposed upon the
Fund as a result of relevant diversification requirements under the
provisions of Section 817(h) of the Internal Revenue Code of 1986, as
amended.
E. It will furnish or otherwise make available to the Subadvisor such
other information relating to the business affairs of the Fund as the
Subadvisor at any time, or from time to time, reasonably requests in order
to discharge its obligations hereunder.
13. Reports. The Subadvisor shall provide the Advisor such periodic and special
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reports as the Advisor may reasonably request. The Subadvisor agrees that
such records are the property of the Fund, and shall be made reasonably
available for inspections, and by the Fund or to the Advisor as agent of
the Fund, and promptly upon request surrendered to either. The Subadvisor
is
5
authorized to supply the Fund's independent accountants,
PricewaterhouseCoopers LLP, or any successor accountant for the Fund, any
information that they may request in connection with the Fund.
14. Proxies. Subadviser will be responsible for exercising voting rights on all
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securities held by the Series, and the Advisor shall cause the Custodian to
forward promptly to Subadvisor all proxies upon receipt, so as to afford
Subadvisor a reasonable amount of time in which to determine how to vote
such proxies.
15. Recordkeeping. The Subadviser will assist the recordkeeping agent for the
-------------
Fund in determining or confirming the value of any securities or other
assets in the Series for which the recordkeeping agent seeks assistance
from or identifies for review by the Advisor. The parties agree that,
consistent with applicable law, the Advisor will not bear responsibility
for the determination of value of any such securities or other assets.
16. Amendment. This Agreement may be amended at any time, but only by written
---------
agreement between the Subadvisor and the Advisor, which amendment, other
than amendments to Schedules B and D, is subject to the approval of the
Trustees and the Shareholders of the Fund as and to the extent required by
the Act.
17. Effective Date; Term. Unless otherwise agreed in writing, this Agreement
--------------------
shall become effective on September 30, 2000. Unless terminated as
hereinafter provided, this Agreement shall remain in full force and effect
until September 30, 2002 and thereafter only so long as its continuance has
been specifically approved at least annually by the Trustees in accordance
with Section 15(a) of the Act, and by the majority vote of the
disinterested Trustees in accordance with the requirements of Section 15(c)
thereof.
18. Notices. All notices or other communications required of permitted to be
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given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such
other address as the relevant addressee shall hereafter notify for such
purpose to the others by notice in writing and shall be deemed to have been
given at the time of delivery.
If to the Advisor: PHOENIX VARIABLE ADVISORS
One American Row
Hartford, Connecticut
Attention: Xxxxxx Xxxxxx
If to the Subadviser: Alliance Capital Management X.X.
Xxxxxxxxx Investment Research and Management Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxx Xxxxx
With a copy to: Senior Vice President -
Institutional Asset Advisors (at the above address)
19. Termination. This Agreement may be terminated by either party, without
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penalty, immediately upon written notice to the other party in the event of
a breach of any provision thereof by the party so notified, or otherwise,
upon sixty (60) days' written notice to the other party, but any such
termination shall not affect the status, obligations or liabilities of
either party hereto to the other party.
6
20. Applicable Law. To the extent that state law is not preempted by the
--------------
provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the
Commonwealth of Massachusetts.
21. Severability. If any term or condition of this Agreement shall be invalid
------------
or unenforceable to any extent or in any application, then the remainder of
this Agreement shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
PHOENIX VARIABLE ADVISORS
By: /s/ Xxxxx X. Xxx
---------------------------------
Title:Xxxxx X. Xxx, President
ACCEPTED:
ALLIANCE CAPITAL MANAGEMENT L.P.
BY: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, ITS GENERAL PARTNER
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Title: Xxxx X. Xxxxxx
Assistant Secretary
SCHEDULES: A. Subadvisor Functions
B. Operational Procedures
C. Fee Schedule
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SCHEDULE A
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SUBADVISOR FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadvisor shall provide, at its own expense:
(a) An investment program for the Series consistent with its investment
objectives based upon the development, review and adjustment of
buy/sell strategies approved from time to time by the Board of
Trustees and Advisor;
(b) Implementation of the investment program for the Series based upon the
foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to the Advisor,
with respect to: i) compliance with the Subadvisor's code of ethics;
ii) compliance with procedures adopted from time to time by the
Trustees of the Fund relative to securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended; iii)
diversification of Series assets in accordance with the then
prevailing prospectus and statement of additional information
pertaining to the Series and governing laws; iv) compliance with
governing restrictions relating to the fair valuation of securities
for which market quotations are not readily available or considered
"illiquid" for the purposes of complying with the Series limitation on
acquisition of illiquid securities; v) any and all other reports
reasonably requested in accordance with or described in this
Agreement; and, vi) the implementation of the Series investment
program, including, without limitation, analysis of Series
performance;
(d) Attendance by appropriate representatives of the Subadvisor at
meetings requested by the Advisor or Trustees at such time(s) and
location(s) as reasonably requested by the Advisor or Trustees; and
(e) Participation, overall assistance and support in marketing the Series,
including, without limitation, meetings with pension fund
representatives, broker/dealers who have a sales agreement with
Phoenix Equity Planning Corporation, and other parties as may be
reasonably requested by the Advisor.
8
SCHEDULE B
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OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank (the "Custodian"), the custodian
for the Fund.
The Subadvisor must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 8:30 p.m. (Eastern Standard time) on the day of the trade (confirmation
received from broker). The necessary information can be sent via facsimile
machine to the Custodian. Information provided to the Custodian shall include
the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Fund, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Fund. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadvisor daily with a cash availability report. This
will normally be done by telex so that the Subadvisor will know the amount
available for investment purposes.
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SCHEDULE C
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SUBADVISORY FEE
For services provided to the Fund pursuant to paragraph 3 hereof, the
Advisor will pay to the Subadvisor, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of
0.65% on the first $25 million of net assets;
0.50% on the next $25 million of net assets;
0.45% on the next $25 million of net assets;
0.40% on the next $100 million of net assets;
0.30% on net assets in excess of $175 million.
The fees shall be prorated for any month during which this agreement is in
effect for only a portion of the month. In computing the fee to be paid to the
Subadvisor, the net asset value of the Fund and each Series shall be valued as
set forth in the then current registration statement of the Fund.
In accordance with the Subadvisor's fee and discount policies for portfolios
managed in accordance with its value investment strategies by its Xxxxxxxxx
Investment Research and Management unit, clients with managed assets of $10
million or more who have two or more accounts invested in different investment
management services in the same asset category will receive a 10% reduction in
fees on the smaller account(s) in that asset category. Clients with an account
of $25 million or more receive a 10% discount on smaller individually managed
related accounts in other asset categories. For this purpose, equity services
are considered a separate asset category and fixed-income services are
considered a separate asset category. The economic value of such reductions may
be applied by a client to any of the accounts in the asset category eligible for
such reductions, as provided above.
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