Exhibit 99(d)(24)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement (the "Agreement") is entered into as of
December 15, 2014 (the "Effective Date"), by and between AllianceBernstein L.P.
("Advisor"), and Morningstar Associates, LLC ("Sub-Advisor").
WHEREAS, Advisor is an investment advisor registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and has been retained by
AllianceBernstein Cap Fund, Inc. (the "Company") to provide investment advisory
services with respect to certain assets of the following eleven (11) series of
the Company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"):
AllianceBernstein Multi-Manager Select Retirement Allocation Fund
AllianceBernstein Multi-Manager Select 2010 Fund
AllianceBernstein Multi-Manager Select 2015 Fund
AllianceBernstein Multi-Manager Select 2020 Fund
AllianceBernstein Multi-Manager Select 2025 Fund
AllianceBernstein Multi-Manager Select 2030 Fund
AllianceBernstein Multi-Manager Select 2035 Fund
AllianceBernstein Multi-Manager Select 2040 Fund
AllianceBernstein Multi-Manager Select 2045 Fund
AllianceBernstein Multi-Manager Select 2050 Fund
AllianceBernstein Multi-Manager Select 2055 Fund
(individually a "Fund," and collectively the "Funds"); and
WHEREAS, Sub-Advisor also is an investment advisor registered under the
Advisers Act; and
WHEREAS, Advisor desires to retain Sub-Advisor to furnish it with
portfolio management services in connection with Advisor's investment advisory
activities on behalf of the Funds, and Sub-Advisor is willing to furnish such
services to Advisor and the Funds.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of Sub-Advisor. In accordance with and subject to the
Investment Advisory Contract between the Company and Advisor, attached hereto as
Exhibit A (the "Advisory Agreement"), Advisor hereby appoints Sub-Advisor to
manage the investment and reinvestment of that portion of the assets of the
Funds allocated to it by Advisor (the "Fund Assets"), in conformity with the
Funds' currently effective Registration Statement, prospectus and Statement of
Additional Information and subject to the control and direction of Advisor and
the Company, for the period and on the terms hereinafter set forth. Sub-Advisor
hereby accepts such employment and agrees during such period to render the
services and to perform the duties called for by this Agreement for the
compensation herein provided. Sub-Advisor shall for all purposes herein be
deemed an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company
or the Funds.
2. Duties of Advisor. Advisor will provide the following services and
undertake the following duties:
a. Asset-Allocation Policy. Among other responsibilities to the
Funds, Advisor will determine the asset allocation policy that is to be
used by the Funds and will communicate this asset allocation policy to
Sub-Advisor. Advisor will also provide Sub-Advisor with the universe of
available investments from which Sub-Advisor is to select investments in
performing its portfolio management activities.
b. Trade Execution. Upon receipt of Sub-Advisor's allocations for
the underlying positions for the Funds, Advisor will place orders for the
execution of all portfolio transactions in accordance with the policies
with respect thereto set forth in the Fund's registration statements under
the 1940 Act and the Securities Act of 1933 (the "1933 Act"); as such
registration statements may be in effect from time to time.
3. Advisor Representations
Advisor represents and warrants that:
a. it is registered, and agrees to maintain its registration for the
term of this Agreement, as an investment advisor with the Securities and
Exchange Commission ("SEC") or applicable state(s) securities authority
and is not prohibited by the Advisers Act, the rules thereunder, or
otherwise from acting as contemplated by this Agreement;
b. it understands that the performance of its obligations under this
Agreement is subject to the securities and other applicable laws of the
various jurisdictions in which Advisor has an office or conducts its
business. Advisor will comply with all applicable laws and regulations,
including SEC and state registration or notice filing obligations, SEC and
state-imposed anti-fraud provisions, and all applicable registration
requirements for investment adviser representatives;
c. there is no action, suit, proceeding, or matter before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to Advisor's knowledge, threatened against Advisor (including any
investigation, request for a "Xxxxx" submission, or settlement of an
administrative action before the SEC) that might result in any material
adverse change in Advisor's financial condition, business, or prospects or
might materially and adversely affect Advisor's properties or assets;
d. it will perform its services under this Agreement in accordance
with this Agreement, the Advisers Act, and other applicable laws and
rules;
e. it will notify Sub-Advisor within five (5) business days of any
material change in investment personnel, litigation status of firm/key
personnel, enforcement or formal inquiry, or a financial situation which
will adversely impact its ability to perform its obligations under this
Agreement;
f. it will be responsible for notifying Sub-Advisor promptly upon
any additions and/or deletions in the Advisor's platform's investment
universe.
g. it, and its officers, directors, employees, associated persons
and agents, possess all necessary licenses and registrations to enter into
and perform this Agreement;
h. with respect to its performance of the obligations arising under
this Agreement, it complies in all material respects with all applicable
laws, rules and regulations, including but not limited to the 1940 Act,
the Advisers Act, applicable state laws, and the Internal Revenue Code of
1986, as amended (the "Code");
i. except as provided herein, Sub-Advisor has no responsibility for
the organization and operation of each Fund or for ensuring compliance
with all applicable laws and/or regulations relating to Advisor and the
Funds;
j. it is solely responsible for the monitoring and ongoing due
diligence of the parties that Advisor or the Funds contract with,
including, but not limited to the custodian, it being understood, however,
that Sub-Advisor is responsible for selecting the investments from the
universe of available investments provided to Sub-Advisor by Advisor;
k. it has met and will seek to continue to meet in all material
respects for so long as this Agreement remains in effect, any federal or
state requirements, as necessary to be met in order to maintain the
organization and operation of each Fund;
l. it will promptly notify Sub-Advisor of the occurrence of any
event that would materially adversely impact the operation of any Fund;
and
m. it has received a copy of Sub-Advisor's Form ADV Part 2.
n. it agrees to indemnify Sub-Advisor, its officers, directors,
employees, associated persons, agents and control persons, against any
damages, losses, penalties, fines, fees or expenses (including reasonable
attorneys' fees) resulting from any material breach by Advisor of such
representations and warranties.
4. Duties of Sub-Advisor. Sub-Advisor will provide the following services
and undertake the following duties:
a. Underlying Fund Selection. Sub-Advisor will select the underlying
investment options for the Funds; provided, however, that investments
managed by the Advisor shall constitute approximately 33% (and in no event
greater than 40%) of the aggregate net asset value of the Funds. Advisor
will determine the universe of investments from which Sub-Advisor will
choose to construct the investment portfolios of each of the Funds.
Sub-Advisor will work with Advisor to understand constraints that may
influence the portfolio construction of the Funds. Sub-Advisor employs
both quantitative and qualitative analysis to select investment options.
Sub-Advisor will make all determinations with respect to the selection of
the investments, based upon the universe of available investments as
determined by Advisor.
b. Portfolio Construction. Subject to Advisor's asset allocation
determinations, Sub-Advisor will have responsibility over the portfolio
construction of the Funds. As part of the portfolio construction process,
Sub-Advisor will analyze the underlying holdings of the selected
investments to ensure adherence to the selected asset allocation (provided
by Advisor) while minimizing unnecessary overlap. The Sub-Advisor's
selections will be communicated to Advisor for execution and trading.
Sub-Advisor will manage the investment of the Fund Assets as outlined
herein, subject to and in accordance with the investment objectives,
policies and restrictions of the Funds and in conformity with the Funds'
currently effective Registration Statement, prospectus and Statement of
Additional Information and any directions which Advisor or the Company may
give from time to time with respect to the Funds. Upon receipt of the
asset allocation policy from Advisor, Sub-Advisor will determine the
allocation in the investments of the Fund Assets.
c. Reporting. Sub-Advisor will render regular reports to the Company
and to Advisor (or such other advisor or advisors as Advisor shall engage
to assist it in the evaluation of the performance and activities of
Sub-Advisor). Such reports shall be made in such form and manner and with
respect to such matters regarding the Funds and Sub-Advisor as the Company
or Advisor shall from time to time request; provided, however, that unless
otherwise requested by the Board of Directors of the Company, the
individual primarily responsible for management of the Funds' Assets for
Sub-Advisor will not be required to attend in person more than four
quarterly meetings per year with the Company's board of directors or
Advisor.
d. Sub-Advisor shall provide support to Advisor with respect to the
marketing of the Funds, including but not limited to: (i) permission to
use Sub-Advisor's name as provided in Section 8, (ii) access to the
individual(s) responsible for day-to-day management of the Funds for
marketing conferences, teleconferences and other activities involving the
promotion of the Funds, subject to the reasonable request of Advisor, and
(iii) permission to use biographical and historical data of Sub-Advisor
and individual manager(s).
e. Sub-Advisor will work with Advisor, in the name of the Funds, to
place orders for the execution of all portfolio transactions in accordance
with the policies with respect thereto set forth in the Fund's
registration statements under the 1940 Act and the 1933 Act, as such
registration statements may be in effect from time to time.
f. In the event of any reorganization or other change in
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, Sub-Advisor shall give Advisor and
the Company written notice of such reorganization or change within a
reasonable time (but not later than 30 days) after such reorganization or
change.
g. Sub-Advisor will bear its expenses of providing services to the
Funds pursuant to this Agreement except such expenses as are expressly
undertaken by Advisor or the Company.
h. Sub-Advisor will comply with the timing and procedural standards
set forth in the service level agreement attached hereto as Exhibit D.
5. Sub-Advisor Representations
Sub-Advisor represents, warrants, and covenants that:
a. it is registered, and agrees to maintain its registration for the
term of this Agreement, as an investment advisor with the Securities and
Exchange Commission ("SEC") or applicable state(s) securities authority
and is not prohibited by the Advisers Act, the rules thereunder, or
otherwise from acting as contemplated by this Agreement;
b. there is no action, suit, proceeding, or matter before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to Sub-Advisor's knowledge, threatened against Sub-Advisor (including
any investigation, request for a "Xxxxx" submission, or settlement of an
administrative action before the SEC) that might result in any material
adverse change in Sub-Advisor's financial condition, business, or
prospects or might materially and adversely affect Sub-Advisor's
properties or assets;
c. it will perform its services under this Agreement in accordance
with this Agreement, the Advisers Act, and other applicable laws and
rules; and
d. it will notify Advisor within five (5) business days of any
material change in investment personnel, litigation status of firm/key
personnel, enforcement or formal inquiry, or a financial situation which
will adversely impact its ability to perform its obligations under this
Agreement.
e. Sub-Advisor agrees to comply with the requirements of the 1940
Act, the Advisers Act, the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), the Internal Revenue Code of 1986, and the
respective rules and regulations thereunder, as applicable, as well as
with all other applicable federal and state laws, rules, regulations and
case law that relate to the services and relationships described hereunder
and to the conduct of its business as a registered investment adviser. In
addition, in selecting the Funds' portfolio securities and performing
Sub-Advisor's obligations hereunder, Sub-Advisor shall cause the Funds to
comply with the requirements communicated by Advisor. Sub-Advisor shall
maintain compliance procedures that it reasonably believes are adequate to
ensure compliance with the foregoing. No supervisory activity undertaken
by Advisor shall limit Sub-Advisor's full responsibility for any of the
foregoing.
f. Sub-Advisor has adopted a written code of ethics (the "Code of
Ethics") that it reasonably believes complies with the requirements under
the Advisers Act. Sub-Advisor has policies and procedures in place to
monitor compliance by its Access Persons (as defined in Sub-Advisor's Code
of Ethics) with Sub-Advisor's Code of Ethics, as in effect from time to
time. Upon request, Sub-Advisor shall provide Advisor with (i) a copy of
Sub-Advisor's current Code of Ethics, as in effect from time to time, and
(ii) a certification that it has adopted procedures reasonably necessary
to prevent Access Persons from engaging in any conduct prohibited by
Sub-Advisor's Code of Ethics. No less frequently than annually,
Sub-Advisor shall furnish a written report, which complies with the
requirements of Rule 17j-1, concerning Sub-Advisor's Code of Ethics to the
Funds and Advisor. Sub-Advisor shall respond to requests for information
from Advisor as to violations of the Code of Ethics by Access Persons (as
defined in Rule 17j-1) and the sanctions imposed by Sub-Advisor.
Sub-Advisor shall immediately notify Advisor of any material violation of
the Code of Ethics, whether or not such violation relates to a security
held by any Fund.
g. Sub-Advisor shall notify the Advisor's Chief Compliance Officer
and Advisor immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of any of the Funds' or
Advisor's policies, guidelines or procedures. In addition, as requested
Sub-Advisor shall provide information regarding each Fund's compliance
with its investment objectives and policies and applicable law, including,
but not limited to the 1940 Act, the Code, and the Funds' and Advisor's
policies, guidelines or procedures as applicable to Sub-Advisor's
obligations under this Agreement. Sub-Advisor acknowledges and agrees that
Advisor may, in its discretion, provide such quarterly compliance
certifications to the Company. Sub-Advisor agrees to correct any such
failure promptly and to take any action that the Company and/or Advisor
may reasonably request in connection with any such breach. Upon request,
Sub-Advisor shall also provide Advisor with supporting certifications in
connection with such certifications of Fund financial statements and
disclosure controls pursuant to the Xxxxxxxx-Xxxxx Act. Sub-Advisor will
promptly notify Advisor in the event (i) Sub-Advisor is served or
otherwise receives notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board,
or body, involving the affairs of the Company or the compliance by
Sub-Advisor with the federal or state securities laws or (ii) the
controlling stockholder of Sub-Advisor changes or an actual change in
control resulting in an "assignment" (as defined in the Advisers Act) has
occurred or is otherwise proposed to occur.
h. Sub-Advisor shall maintain books and records as required by
applicable regulations.
6. Compensation of Sub-Advisor. As compensation for the services to be
rendered and duties undertaken hereunder by the Sub-Advisor, the Advisor will
pay to the Sub-Advisor a monthly fee as set forth in Exhibit B (the "Fee
Schedule") without regard to any total expense limitation of the Company or the
Advisor.
7. Activities of Sub-Advisor. Sub-Advisor will report to the Company (at
regular quarterly meetings of the Company's directors and at such other times as
the Company shall reasonably request, subject to the limitation on personal
attendance at such meetings in Section 4(c) above) such information as the
Company shall reasonably request regarding the Funds, the Funds' performance,
the services provided by Sub-Advisor and affiliates of Sub-Advisor to the Funds
as compared to its other accounts and the plans of, and the capability of,
Sub-Advisor with respect to providing future services to the Funds and its other
accounts.
Sub-Advisor has supplied to Advisor and the Company copies of its Form ADV
Part 2 and will hereafter supply to Advisor, promptly upon the preparation
thereof, copies of all amendments or restatements of such document.
8. Use of Names. Neither Advisor nor the Company shall use the name of
Sub-Advisor in any prospectus, sales literature or other material relating to
Advisor or the Company in any manner not approved in advance by Sub-Advisor;
provided, however, that Sub-Advisor hereby approves all uses of its name which
merely refer in accurate terms to its appointment hereunder or which are
required by the SEC or a state securities commission or otherwise required by
applicable law. Sub-Advisor shall not use the name of Advisor or the Company in
any material relating to Sub-Advisor in any manner not approved in advance by
Advisor or the Company, as the case may be; provided, however, that Advisor and
the Company shall each approve all uses of their respective names which merely
refer in accurate terms to the appointment of Sub-Advisor hereunder or which are
required by the SEC or a state securities commission or otherwise by applicable
law; and, provided further, that in no event shall such approval be unreasonably
withheld.
9. Liability of Sub-Advisor and Indemnification.
a. The Sub-Advisor will not be liable for any loss sustained by
reason of the adoption of any investment policy or the purchase, sale, or
retention of any security on the recommendation of the Sub-Advisor, if
such recommendation shall have been made and such other individual, firm,
or corporation shall have been selected, with due care and in good faith.
b. Sub-Advisor shall indemnify and hold harmless the Company and all
affiliated persons thereof (within the meaning of Section 2(a)(3) of the
0000 Xxx) and all controlling persons (as described in Section 15 of the
1933 Act) (collectively, the "Sub-Advisor Indemnitees") against any and
all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) by reason of or arising out of: (a)
Sub-Advisor being in material violation of any applicable federal or state
law, rule or regulation or any investment policy or restriction set forth
in the Funds' Registration Statement or any written guidelines or
instruction provided in writing by the Company, (b) Sub-Advisor's willful
misfeasance, bad faith or gross negligence generally in the performance of
its duties hereunder or its reckless disregard of its obligations and
duties under this Agreement, or (c) any breach of any duty or warranty
hereunder of the Sub-Advisor or any inaccuracy of any representation of
the Sub-Advisor made hereunder.
c. Advisor shall indemnify and hold harmless Sub-Advisor and its
affiliates against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) by reason of or
arising out of (a) Advisor's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or its reckless
disregard of its obligations and duties under this Agreement and (b) any
breach of any duty or warranty hereunder of the Advisor or any inaccuracy
of any representation of the Advisor made hereunder, provided, however,
that nothing herein contained will provide indemnity to the Sub-Advisor
for liability resulting from its own willful misfeasance, bad faith, or
gross negligence in the performance of its duties or reckless disregard of
such duties.
10. Force Majeure. Sub-Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of circumstances beyond
its control, Sub-Advisor shall take all reasonable steps to minimize service
interruptions.
11. Approval, Renewal, Termination and Amendment.
a. Approval. This Agreement has been approved by the Company's board
of directors, including a majority of the members who are not "interested
parties" (as that term is defined in the 0000 Xxx) of the Funds or any
investment advisor to a Fund ("Independent Board Member"), by a vote cast
in person at a meeting called for the purposes of voting on such approval,
and shall become effective as of the date of this Agreement.
b. Renewal and Termination. Unless terminated sooner as provided
herein, this Agreement shall continue in respect of each Fund for an
initial term of two (2) years from the Effective Date. Thereafter, if not
terminated, this Agreement shall continue in respect of each Fund for
successive 12-month periods, provided, that such continuance is
specifically approved at least annually by (i) the vote of the holders of
a majority of the Independent Board Members, cast in person at a person at
a meeting called for the purpose of voting on such continuance, and (ii)
by the Company or by vote of a majority of the "outstanding voting
securities" (as that term is defined in the 1940 Act ) of the Fund;
provided, however, that notwithstanding the foregoing, this Agreement may
be terminated with respect to the Fund at any time without payment of any
penalty, on sixty (60) days written notice to Advisor and/or Sub-Advisor,
as appropriate.
c. Survival. In the event of termination of this Agreement, Sections
8, 9, 11, 16, 17 and 18 shall survive such termination of this Agreement.
d. Amendment. This Agreement may be amended at any time by the
parties hereto, subject to approval by the Company and, if required by
applicable SEC rules and regulations, a vote of the majority of the
outstanding voting securities of the Funds affected by such change.
12. Marketing Materials, Trademarks and Related Matters.
a. Marketing Materials. Sub-Advisor will assist Advisor in Advisor's
development and construction of marketing materials for the Funds
("Marketing Materials"). Advisor will be responsible for any and all
content, production, shipping and other like charges relating to such
Marketing Materials. All Marketing Materials that refer to the Sub-Advisor
will appropriately reflect the nature and role of Sub-Advisor's
performance of Sub-Advisor's obligations under this Agreement. Advisor
agrees to provide Sub-Advisor with any new Marketing Materials that either
contain Sub-Advisor's logo or reference Sub-Advisor. Advisor will allow
Sub-Advisor to review and approve such Marketing Materials. Sub-Advisor
agrees to complete its review of such Marketing Materials within five (5)
business days. Marketing Materials that have previously been reviewed and
approved by Sub-Advisor are not required to be submitted unless content
impacting or relating to Sub-Advisor has changed.
b. Trademarks. Subject to (i) and (ii) below. Advisor may utilize
the following trademarks of Sub-Advisor in association with the Funds:
Morningstar(R)
i. Use of Trademarks. To the extent not permitted by Section 8
hereof, each party must obtain the other party's permission prior
any use of its name, logo, trademarks, or data. Sub-Advisor and
Advisor will submit such materials to the other for their review
prior to any printing or dissemination.
ii. Notices and Disclaimers. The following or a substantially
similar statement shall be included with Marketing Materials that
reference Sub-Advisor or the Funds:
Morningstar Associates, LLC is a registered investment
advisor and wholly owned subsidiary of Morningstar, Inc.
Morningstar Associates is acting as a sub-advisor to
AllianceBernstein L.P. with regard to the
AllianceBernstein Multi-Manager Select Retirement
Portfolios. Morningstar Associates is not affiliated
with AllianceBernstein or its affiliates. The
Morningstar name and logo are the property of
Morningstar, Inc.
Sub-Advisor reserves the right to modify the above disclaimer text
or add additional text to the required disclaimer text as it deems
appropriate based on its review of Marketing Materials.
13. Limited Exclusivity. Commencing with the Effective Date of this
Agreement and for a period of two (2) years; Sub-Advisor will not engage with
the asset managers listed in Exhibit C (the "Exclusivity List") as a sub-advisor
for a series of actively managed, multi-manager target date mutual funds. This
does not prohibit the asset managers from being included as underlying funds in
third party U.S. registered multi-manager offerings where Sub-Advisor acts as a
sub-advisor or consultant or for Sub-Advisor to act as consultant or advisor to
multi-manager custom target date solutions.
14. Disclosure Materials of Underlying Holdings. Advisor shall be solely
and exclusively responsible, where applicable, for the delivery in a timely
fashion to any shareholder, prospective shareholder or other person any
prospectus, semi-annual report, and any other shareholder communication or
materials.
15. Proxies and Legal Proceedings. Sub-Advisor will not be responsible
for voting of proxies solicited by, or with respect to, the issuers of any
securities held in any Fund. Advisor understands and acknowledges that
Sub-Advisor will not render any advice or take any action on behalf of any Fund
with respect to securities presently or formerly held in any Fund, or the
issuers thereof, which become the subject of any legal proceedings including
bankruptcies and class actions suits.
16. Severability. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
17. Notice. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Company and that of Advisor for this
purpose shall be 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 and that the
address of Sub-Advisor shall be 00 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000.
18. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Illinois and Sub-Advisor consents to the
jurisdiction of courts, both state or federal, in Illinois, with respect to any
dispute under this Agreement. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. The parties acknowledge that the
Company and the Funds are third party beneficiaries of this Agreement. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ALLIANCEBERNSTEIN L.P.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: XXXXXX X. XXXXX
---------------------------------
Title: Senior Vice President & Assistant Secretary
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Date: 12-15-14
---------------------------------
MORNINGSTAR ASSOCIATES, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: XXXXXXX X. XXXXXXXXX
---------------------------------
Title: Managing Director
---------------------------------
Date: 12/16/14
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EXHIBIT A
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ADVISORY AGREEMENT
EXHIBIT B
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FEE SCHEDULE
Basis Point Fee
As compensation for the services to be rendered and duties undertaken hereunder
by Sub-Advisor, Advisor will pay to Sub-Advisor a monthly fee (the "Basis Point
Fee") for the assets under management ("AUM") based upon the following fee
schedule.
AUM Annual Fee Rate
$0-$1 billion in AUM: 9 basis points
$1 billion - $3 billion in AUM: 7 basis points
$3 billion - $5 billion in AUM: 6 basis points
Over $5 billion in AUM: 4 basis points
Each month, Sub-Advisor's Basis Point Fee calculation will be based on 1/12 of
the annual Basis Point Fee multiplied by the total AUM. The Basis Point Fee
shall be assessed and payable monthly.
If Sub-Advisor serves in such capacity for less than the whole of any period,
the Fee shall be prorated.
Annual Minimum Fee
Advisor shall pay to Sub-Advisor an annual minimum fee (the "Annual Minimum
Fee") of $150,000, commencing on the Effective Date.
If, at the end of each one (1) year anniversary of the Effective Date, the Asset
Based Fees for the previous 12 month period are less than the Annual Minimum
Fee, the difference between the amount of Asset Based Fees paid and the Annual
Minimum Fee shall be due and payable by Advisor no later than forty-five (45)
days after that anniversary date.
If Sub-Advisor serves in such capacity for less than the whole of any period,
the Annual Minimum Fee shall be prorated.
EXHIBIT C
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EXCLUSIVITY LIST
Sub-Advisor will not engage with the following asset managers as a sub-advisor
for a series of actively managed, multi-manager target date mutual funds.
o MFS
o Xxxxxxxx Xxxxxxxxx
x Xxxxxxx Xxxxx
o Columbia
o PIMCO
o X.X. Xxxxxx
o Invesco
x Xxxxxxxxxxx
o AQR
EXHIBIT D
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Morningstar/AB standard operating procedures for implementing changes to the
model portfolio
Defining "change months". To allow for the most efficient change management
process, the month ends of February, May, August and November will be considered
the regular time frames for implementing a new model portfolio.
Provision of asset class glide path from AB to Morningstar. The AB portfolio
management team will provide any changes to the asset class glide path via
e-mail to Morningstar portfolio management by the 15th of the month prior to a
change month. Tactical changes provided will not include the normal "roll down"
of the glide path as this information will be provided in an excel file from AB
to Morningstar prior to the launch of the funds.
Provision of changes to the model portfolio from Morningstar to AB. To ensure
implementation can be completed by month end, AB would request that Morningstar
provides AB with a listing of any new funds to be added or any funds to be
completely removed no later than the 1st of the change month (Example in
Appendix A). The finalized model portfolio in the Excel evergreen format
(Example in Appendix A) can be provided as late as the 15th of the change month.
Exceptions. AB also understand that there may be events that would warrant a
more immediate change to a portfolio holding, and AB plans to work as necessary
to implement them should they occur. AB has the ability to sell almost
completely out of a fund on a tactical basis while XX xxxxx to fully liquidate
the position. AB can also purchase an ETF immediately to gain exposure to a new
holding while XX xxxxx to set up the new mutual fund.
Typical Quarterly Cycle. Using November month end as a change month ...
o October 15 - AB to provide Morningstar with a new asset class glide
path if necessary
o November 1 - Morningstar to provide new fund information to AB
o November 15 - Morningstar to provide final model portfolio to AB
o November 30 - AB to implement new model portfolio (potentially
earlier using tactical methods)
Implementation of new model portfolio. Once the model portfolio has been
received by AB's portfolio management team and approved, the AB implementation
team will determine the type of change and proceed with AB's process to load the
target weights.
Scenario A - only weightings of existing funds change (2 days to 1 week)
o Need to load new model portfolio into AB's product management tool
which must be done at least 2 days prior to implementation
o Additionally, AB's implementation team needs to analyze the new
target percentages to see if any will result in large flows to the
underlying funds. If there are large flows, AB will need to contact
the fund managers, who may require up to 3 days notice for
pretrading. If AB does not do this, AB runs the risk of the trades
being rejected.
Scenario B - funds from existing families are added/removed (1 to 4 weeks)
o Requires all bullets from Scenario A plus
o New funds must be setup in AB's trade operations, portfolio
management and custodial systems
o Implementation team needs to confirm whether AB has an existing
ability to trade the funds, and if not, needs to add them to
accounts if they weren't set up previously.
o Implementation team needs to vet the funds for any operational
complexities
o AB assumes the fund can trade on an "as of" basis, settles
both purchases and redemptions on T+1 basis, does not have
short term redemption fees or revenue share, and does not have
a minimum investment amount that would be needed to get
waived. If any of these scenarios do occur, they could add to
the implementation time.
o Complete liquidations of all shares for a fund require minor
development work and cannot be implemented immediately.
o NOTE: These implementations will be closer to the 1-2 week range if
AB is able to set the funds up ahead of time, either through a
backup fund list, or notification of the new fund additions on the
1st of a change month as mentioned earlier.
Scenario C - new fund families are added (4 to 6 weeks)
o Requires all of the bullets from Scenario A and Scenario B plus
o AB has to negotiate an investment management agreement with fund
family
o If fund family is not on the Fidelity brokerage platform, AB needs
them to paper a contract with the fund family to have it added (can
take several weeks) or AB can trade directly with the fund company
(several weeks for AB's IT team to build a trade feed assuming no
other priorities).
Additional Communications/Deliverables:
AB and Morningstar portfolio management teams will discuss the management of the
portfolios on a standing monthly call.
AB and Morningstar portfolio management teams will meet in person at a minimum
semi-annually to discuss the management of the portfolios.
On a quarterly basis, Morningstar will provide a brief write-up on the rationale
for including a fund in the lineup. Morningstar and AB will mutually agree on
the time frame within which these quarterly write-ups will be delivered to AB.
Morningstar will provide analytics on the underlying funds on a quarterly basis.
Morningstar and AB will mutually agree on the time frame within which these
quarterly analytics will be delivered to AB.
Morningstar will also provide analytics on the underlying funds whenever
off-cycle changes are implemented within 10 calendar days following an off-cycle
change.
Morningstar will provide a brief write-up on the rationale for adding and/or
removing a fund in to/from lineup or for making a change to a weight in excess
of 50 bps in any vintage.
Commentary for external use: TBD
Morningstar will present to the AB mutual fund board on an annual basis.
Morningstar may also be asked to participate via phone in other board meetings
no more frequently than quarterly.
15C: TBD
Appendix A
Fund Information Required for New Setup
Official Fund Name
CUSIP
Ticker
SEDOL
Share Class
Fund Family
Benchmark Name {as specific as possible}
Benchmark Identifier
Total Expense Ratio {in basis points or percentage}
Dividend Schedule {annual, semi-annual, quarterly, monthly, daily}
Model Portfolio Template
Contacts
AB Portfolio Management Team
Xxxxxx Xxxxx
Co-Head & Chief Investment Officer
Multi-Asset Solutions
t: x0 000-000-0000
m: x0 000-000-0000
Xxxxxx.Xxxxx@xxxxxxxxxxxxxxxxx.xxx
----------------------------------
Xxxxxxxxxxx Xxxxxxxx
Head, Research and Investment Design
AllianceBernstein Defined Contribution Investments
000-000-0000 office
000-000-0000 mobile
xxxxx.xxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
------------------------------------
AB Implementation Team
Xxxxxx Xxxxxxxxx
Xxxxxx.xxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
--------------------------------------
XXXXXxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
-----------------------------------
000-000-0000
Morningstar Portfolio Management Team
Xxxxx Xxxxxxxx
Portfolio Manager
T: x0 000-000-0000
M: x0 000-000-0000
Xxxxxxxxx@xxxxxxxx.xxx
----------------------
Xxxxxx Xxxxxxxx
Director, Investments
T: x0 000-000-0000
Xxxxxx.xxxxxxxx@xxxxxxxxxxx.xxx
-------------------------------
