Second Amended and Restated
Investment Sub-Advisory Agreement
Xxxx Investment Advisors, Inc.
THIS SECOND AMENDED AND RESTATED INVESTMENT SUB-ADVISORY AGREEMENT
(the "Agreement") effective as of January 1, 2009 (the "Effective Date"),
by and among AMERICAN FIDELITY DUAL STRATEGY FUND, INC., a Maryland
corporation (the "Fund"), AMERICAN FIDELITY ASSURANCE COMPANY, an insurance
company organized under the laws of Oklahoma (the "Advisor"), and XXXX
INVESTMENT ADVISORS, INC. (the "Sub-Advisor"), amends and restates in its
entirety the Amended and Restated Investment Sub-Advisory Agreement by
and among the parties hereto dated December 1, 2004 (the "Previous
Agreement").
RECITALS
A. The Fund is engaged in business as an open-end, diversified
management company and is registered as such under the Investment
Company Act of 1940, as amended (the "Investment Company Act").
B. The Advisor has entered into an Amended and Restated Management
and Investment Advisory Agreement dated as of May 1, 2003 with the Fund
(the "Advisory Agreement"), pursuant to which the Advisor acts as
investment advisor to the Fund.
C. The Sub-Advisor is engaged principally in the business of
rendering investment advisory services and is registered as an
investment advisor under the Investment Advisors Act of 1940
(the "Investment Advisors Act").
D. The Advisor and the Sub-Advisor previously obtained approval
by a Majority Vote of Shareholders (as defined in Section 2(a)(42) of
the Investment Company Act) to retain the Sub-Advisor to furnish
investment advisory services to the Advisor with respect to certain
assets of the Fund, and the Sub-Advisor has rendered such investment
advisory services prior to the date hereof pursuant to the Previous
Agreement.
E. The parties desire to amend and restate the Previous
Agreement, as set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. APPOINTMENT OF INVESTMENT SUB-ADVISOR. Effective on the Effective
Date, the Advisor hereby appoints Sub-Advisor to serve as investment
advisor to the Advisor in respect of those assets of the Fund specified
in writing on or before the Effective Date by the Advisor to be subject
to this Agreement (which assets, together with any assets which are added
at a subsequent date or which are received as a result of the sale,
exchange, or transfer of any of such assets are herein collectively referred
to as the "Investment Assets").
The Sub-Advisor hereby accepts such appointment and agrees to render
the services and to assume the obligations herein set forth, for the
compensation herein provided.
2. THE INVESTMENT ASSETS. The Investment Assets shall consist of such
cash, stocks, bonds and other securities which, from time to time, the Advisor
places under the investment supervision of the Sub-Advisor and/or which shall
become part of the Investment Assets as a result of transactions therein or
otherwise. The Advisor may make additions to or withdrawals from the
Investment Assets in such amounts as the Advisor shall determine.
3. CUSTODIANSHIP OF THE INVESTMENT ASSETS. The Investment Assets have
been deposited with InvesTrust, N.A. (the "Custodian") and are maintained
by the Custodian in safekeeping on its premises, in a recognized clearing
corporation, or in the Federal Reserve book-entry system, in the name of
the Fund, the Custodian or the clearing corporation, or in the nominee name
of any of the foregoing. The Sub-Advisor is hereby authorized to give
instructions to the Custodian with respect to the consummation of transactions
on behalf of the Advisor in the Investment Assets, and the Custodian is hereby
authorized to act in response to instructions given by the Sub-Advisor. The
Advisor agrees to take any other action and deliver any certificates reasonably
necessary to confirm the foregoing authorization to the Custodian. The Advisor
shall advise the Sub-Advisor if any other entity is appointed to serve as
Custodian for the Investment Assets prior to the date such entity succeeds the
Custodian. The term "Custodian" includes all successors to the presently
serving Custodian.
4. MANAGEMENT OF INVESTMENT ASSETS.
4.1 General Powers and Duties. So long as the Sub-Advisor's
appointment under Section 1 hereof remains in effect, the Sub-Advisor shall,
subject to the provisions of Section 4.2 hereof, have complete discretion
and authority in the investment and reinvestment of the Investment Assets
and shall determine what securities or other property shall be acquired,
held, or disposed of and, subject to the provisions of Section 4.4 hereof,
what portion of the Investment Assets shall be held uninvested. The
Sub-Advisor's investment and reinvestment authority shall include, without
limitation, authority to purchase, sell, exchange, convert, trade, and
generally to deal in the Investment Assets. The Sub-Advisor shall have
authority to direct the Custodian with respect to the investment and
management of the Investment Assets.
The Sub-Advisor's authority shall include the exercise of all
voting rights pertaining to the Investment Assets. However, the Sub-Advisor
shall have no obligation to exercise any particular voting rights unless the
Custodian or the Advisor shall have furnished the pertinent proxies to the
Sub-Advisor a reasonable time prior to the deadline before which such
proxies are required to be submitted. The Sub-Advisor has the duty to
maintain accurate records as to any vote or action taken with respect to
any stock or other securities which are part of the Investment Assets
and to take such further action as may be necessary for the Fund to
participate fully in any transaction undertaken by issuers of Investment
Assets.
4.2 Investment Policy. Investment objectives, policies and
other restrictions for the management of Investment Assets, including
requirements as to diversification are set forth in Exhibit A to this
Agreement. The Sub-Advisor shall discharge its duties hereunder in
accordance with Exhibit A as the same may be revised or supplemented from
time to time by the Advisor.
4.3 Prudence and Diversification. The Sub-Advisor shall
discharge its duties hereunder at all times with the care, skill, prudence,
and diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
4.4 Minimum Liquidity Requirements. The Advisor shall give
the Sub-Advisor reasonable advance notice of any cash requirements from
the Investment Assets, and the Sub-Advisor shall maintain in cash or cash
equivalents sufficient assets to meet such cash requirements.
4.5 Instructions to Securities Brokers and Dealers. The
Sub-Advisor is hereby empowered to issue orders for the purchase,
sale or exchange of securities with respect to the Investment Assets
directly to a broker or dealer. The Sub-Advisor shall give the Custodian
and the Advisor prompt written notification of each such execution in
accordance with the provisions of Section 5.1 hereof, and the Sub-Advisor
shall instruct the broker or dealer concerned to forward a copy of the
confirmation of the execution of such order to the Custodian and the
Advisor.
4.6 Selection of Securities Brokers and Dealers. The
Sub-Advisor may select and employ securities brokers and dealers
to effect any securities transactions concerning the investment management
of the Investment Assets. In the selection of such brokers and dealers by
the Sub-Advisor and the placing of orders with them, the Sub-Advisor shall
use its best efforts to obtain for the Investment Assets the most favorable
net price and execution available except to the extent otherwise provided
by Section 28(e) of the Securities Exchange Act of 1934, as amended, or by
other applicable law. Notwithstanding anything in this Section 4.6 to the
contrary, the Advisor may instruct the Sub-Advisor in writing to engage
securities brokers and dealers specified by the Advisor to effect, with
respect to the Investment Assets, securities transactions, or particular
securities transactions, and the Sub-Advisor shall act in accordance with
such instructions. The Sub-Advisor shall not be responsible or liable for
any acts or omissions by any broker or dealer selected pursuant to this
Section 4.6 provided the Sub-Advisor has acted reasonably in the exercise
of due care in the selection of such broker or dealer and has not otherwise
participated in, directly or indirectly, such acts or omissions by such
broker or dealer.
4.7 Other Accounts of the Sub-Advisor. It is understood that
the Sub-Advisor performs investment advisory services for various clients
and accounts other than the Advisor. The Sub-Advisor may give advice and
take action in the performance of its duties with respect to any of such
other clients or accounts which may be the same as or differ from the timing
or nature of action taken with respect to the Investment Assets, provided
that the Sub-Advisor allocates to the Investment Assets, to the extent
practicable, opportunities to acquire or dispose of investments over a
period of time on a basis no less favorable than its allocation of such
opportunities to such other clients and accounts and seeks over a period
of time to obtain comparable execution of similar transactions among its
clients. It is understood that the Sub-Advisor shall not have any
obligation to purchase or sell, or to recommend for purchase or sale,
for the Fund any security which the Sub-Advisor, its principals, affiliates
or employees may purchase or sell for its or their own accounts or for the
account of any other client, if in the opinion of the Sub-Advisor such
transaction or investment appears unsuitable, impractical or undesirable
for the Fund.
4.8 Limit of Liability. The Sub-Advisor shall act in good
faith and shall not be liable for any error of judgment or loss incurred
by the Fund in connection with recommendations or investments made by the
Investment Sub-Advisor in its management of the Investment Assets.
5. INFORMATION AND REPORTS.
5.1 Reports to Advisor. The Sub-Advisor shall submit a
daily written report to the Advisor promptly following the close of
regular trading on the New York Stock Exchange detailing the actions
taken by the Sub-Advisor under this Agreement during such day. The
report shall contain such information in such form as the Advisor
has specified, or from time to time shall specify, to the Sub-Advisor.
In addition, the Sub-Advisor shall provide such other reports on
the performance of the Investment Assets at such times, for such
periods and in such form as the Advisor shall reasonably request,
taking into account the Sub-Advisor's ability to produce such reports
without undue burden to the Sub-Advisor.
5.2 Records and Accounts. The Sub-Advisor shall keep
accurate and detailed records and accounts of the Investment Assets
and of all receipts, disbursements, and other transactions hereunder
affecting the Investment Assets. All such records and accounts, and
all documents relating thereto shall be open at all reasonable times
and under reasonable conditions to inspection and audit by any person
or persons designated by the Advisor.
5.3 Code of Ethics. The Sub-Advisor has adopted a written
code of ethics complying with the requirements of Rule 17j-1 of the
Investment Company Act and Rule 204A-1 of the Investment Advisors Act
(the "Code of Ethics") and has provided a copy of such Code of Ethics
to the Fund. The Sub-Advisor agrees to deliver a copy of the Code of
Ethics to the Fund promptly after any material changes are made,
highlighting or summarizing such material changes. Upon request, the
Chief Compliance Officer of the Sub-Advisor shall certify that, with
regard to the period identified by the Fund in its request:
(a) The Sub-Advisor has provided to the Fund the
Sub-Advisor's Code of Ethics that is in effect at that time;
(b) The Sub-Advisor has complied with the requirements
of Rule 17j-1 and Rule 204A-1;
(c) The Sub-Advisor has adopted procedures reasonably
necessary to prevent its Access Persons from violating the Code of
Ethics; and
(d) There have been no material violations of the
Code of Ethics or, if any violation has occurred, the nature of
such violation and of the action taken in response to such violation.
5.4 Compliance Program. The Sub-Advisor has adopted
written policies and procedures in compliance with the requirements
of Rule 38a-1 of the Investment Company Act and Rule 206(4)-7
of the Investment Advisors Act (the "Compliance Procedures") and
has provided a copy of such Compliance Procedures to the Fund.
The Sub-Advisor agrees to provide a copy of the Compliance
Procedures to the Fund promptly after any material changes
are made, highlighting or summarizing such material changes.
Upon request, the Chief Compliance Officer of the Sub-Advisor shall
certify that:
(a) The Sub-Advisor has provided to the Fund the
Sub-Advisor's Compliance Procedures that are in effect at that time;
(b) The Sub-Advisor has reviewed, during the preceding
12-month period, the adequacy of its Compliance Procedures and the
effectiveness of the implementation of the Compliance Procedures;
(c) The Compliance Procedures are reasonably designed
to prevent violation, by the Sub-Advisor and its Supervised Persons,
of the Federal Securities Laws, including the Investment Advisors
Act and related rules issued by the SEC; and
(d) With regard to the period identified by the Fund
in its request, there have been no material violations of the
Compliance Procedures or, if any violation has occurred, the
nature of such violation and of the action taken in response
to such violation.
5.5 Proxy Voting Records and Policies.
(a) The Sub-Advisor has adopted and implemented written
policies and procedures pursuant to Rule 206(4)-6 of the Investment
Advisors Act that are reasonably designed to ensure that the
Sub-Advisor votes client securities in the best interest of its
clients (the "Proxy Voting Policies"), and the Sub-Advisor has
provided a copy of such Proxy Voting Policies to the Fund. The
Sub-Advisor agrees to provide a copy of the Proxy Voting Policies
to the Fund promptly after any material changes are made, highlighting
or summarizing such material changes.
(b) The Sub-Advisor agrees to maintain an accurate summary
of any vote cast or proxy granted by the Sub-Advisor on behalf of the
Fund (the "Voting Records"), and, upon request, the Sub-Advisor shall
provide the Voting Records in the form specified in writing to the
Sub-Advisor by the Fund, and the Sub-Advisor's Chief Compliance Officer
shall certify that, with regard to the period identified by the Fund
in its request, the Voting Records accurately reflect the votes cast
and proxies granted by the Sub-Advisor during the identified period,
each of which vote or proxy was cast or granted in compliance with
the Sub-Advisor's Proxy Voting Policies.
5.6 Exchange of Information. The Advisor and the Sub-Advisor
agree to provide to each other such information as the Advisor or the
Sub-Advisor, as the case may be, may reasonably request to enable it to
carry out its duties, obligations, and responsibilities under this
Agreement or applicable law.
5.7 Information to be Confidential. All information and
advice furnished to or obtained by the Advisor or the Sub-Advisor under
or in connection with this Agreement shall be treated as confidential
and shall not be disclosed to third parties except as required by law,
including the disclosure obligations of an investment company to its
securities holders under the federal securities laws.
6. FEE PAYABLE TO SUB-ADVISOR. For services under this Agreement,
the Sub-Advisor shall be entitled to receive from the Advisor a fee in
an amount equal to the greater of (a) 0.095% of the current value of the
Investment Assets as of the close of the last trading day of March, June,
September and December (0.38% on an annual basis) up to and including
$100,000,000, and 0.75% of the current value of the Investment Assets on
those days (0.30% on an annual basis) above $100,000,000, or (b) $12,500
per quarter ($50,000 on an annual basis). Such fee shall be payable in
arrears as soon as practicable, but not more than 10 business days, after
the last day of each calendar quarter.
7. MEETINGS WITH CLIENT AND FUND. A representative of the Sub-Advisor
shall personally meet with the Investment Committee of the Advisor or its
designated representative as reasonably requested by the Advisor to explain
the investment and management activities of the Sub-Advisor, and any reports
related thereto, at such times as may be mutually agreed by the Sub-Advisor
and the Advisor. In addition, upon request, each year, a representative of
the Sub-Advisor shall attend one or more of the Fund's Board of Directors
meetings and shall be prepared to discuss the Sub-Advisor's economic outlook,
investment strategy, individual holdings included in the Investment Assets
and such other related matters as the Board of Directors shall request.
8. INDEMNIFICATION. In addition to any other rights which the Advisor
or the Fund may have against the Sub-Advisor, the Sub-Advisor shall indemnify
the Advisor and the Fund and hold them harmless with respect to any loss or
damage, or costs or expenses suffered by them as a result of (i) the
Sub-Advisor's failure to provide notice within one day of its receipt of
notification of any transfer, exchange, redemption or other corporate action
that occurs with regard to a portfolio security held by the Fund or any trade
placed by the Sub-Advisor on behalf of the Advisor or the Fund, or (ii) a
breach by the Sub-Advisor of this Agreement, or (iii) the willful
misfeasance, bad faith or gross negligence of the Sub-Advisor or any of its
employees or agents acting under its supervision or control to perform any of
its obligations and duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement, the Investment Advisors Act or
any other applicable law or regulation; provided, the Sub-Advisor shall have
no responsibility or liability for any loss incurred by reason of any act or
omission of the Advisor, a custodian or any broker-dealer.
9. MISCELLANEOUS.
9.1 Amendment. This Agreement may be amended at any time by
written agreement of the parties, provided that any material amendment
will not be effective unless approved in accordance with the Investment
Company Act.
9.2 Term. This Agreement shall have an initial term of one year
from the Effective Date and thereafter shall continue from year to year if
continuance is approved at least annually by (a) the Fund's Board of
Directors or a Majority Vote of Shareholders and (b) the vote of a majority
of the members of the Fund's Board of Directors who are not Interested
Persons of the Sub-Advisor or of the Fund cast in person at a meeting called
for the purpose of voting on such approval.
9.3 Termination. This Agreement shall automatically terminate in
the event of its assignment, within the meaning of Section 15(a) of the
Investment Company Act, unless an order of the Commission is issued exempting
such assignment. This Agreement may be terminated at any time, on 30 days'
written notice to the Sub-Advisor, without payment of any penalty, by the
Advisor, the Board of Directors of the Fund or by a Majority Vote of
Shareholders. If at any time the Sub-Advisor ceases to be an "investment
advisor" in accordance with the Investment Advisors Act, this Agreement shall
terminate forthwith without penalty or payment of any kind by the Advisor.
The Sub-Advisor may terminate this Agreement at any time upon 30 days' prior
written notice to the Advisor. If this Agreement shall terminate at any time
other than at the end of a calendar quarter, the Sub-Advisor shall be entitled
to receive the fee set forth in Section 6 hereof for the portion of the quarter
elapsed prior to the date of termination, prorated on a daily basis.
9.4 Errors and Omissions Policy. The Sub-Advisor agrees that, at
its sole expense, it will maintain an errors and omissions insurance policy
that covers the acts, errors and omissions by the Sub-Advisor, its employees
or agents during the term of this Agreement. Upon request of the Advisor,
the Sub-Advisor shall provide evidence of such insurance.
9.5 Governing Law; Severability. This Agreement and its
performance shall be governed by and construed in accordance with the
applicable laws of theUnited States and, to the extent permitted by such
laws, with the laws of the State of Oklahoma. In case any provision of
this Agreement shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining provisions of
the Agreement but shall be fully severable, and the Agreement shall be
construed and enforced as if such illegal or invalid provision had not
been included herein.
9.6 Notices. Unless the parties otherwise agree, all notices,
instructions and advice with respect to matters contemplated by this Agreement
shall be in writing and effective when received, and delivery shall be made
personally, by registered or certified mail, return receipt requested,
overnight courier or confirmed facsimile and addressed as follows:
Advisor: American Fidelity Assurance Company
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Investment Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Fund: American Fidelity Dual Strategy Fund, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Compliance Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxx
McAfee & Xxxx A Professional Corporation
Two Leadership Square
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx.xxxxxxx@xxxxxxxxxx.xxx
Sub-Advisor: Xxxx Investment Advisors, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxxx Xxxxxxx, CCO
C/O Fort Washington Investment Advisors
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Either party may change any of the above information by providing notice to
the other party in the manner set forth above. All reports required to be
delivered by the Sub-Advisor to the Advisor pursuant to Section 5.1 of this
Agreement shall be delivered in the manner specified from time to time by
the Advisor. Any communications from the Sub-Advisor of a routine nature
may be delivered by U.S. mail to the person(s) specified by the Advisor.
9.7 Compliance With Laws. Nothing in this Agreement shall be deemed
to authorize the Sub-Advisor to effect any transactions in contravention of its
fiduciary obligations, duties or responsibilities under the Investment Advisors
Act, this Agreement or any other applicable federal or state laws or
regulations (including all applicable securities laws and regulations) or the
rules of any national securities exchange. The Sub-Advisor shall at all times
in the performance of its duties hereunder comply with the Investment Advisors
Act and such other laws, regulations and rules.
9.8 Counterparts. This Agreement may be executed in one or more
separate counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to constitute one and the same
instrument.
[Signature Page Follows]
Dated as of the date set forth above.
ADVISOR: AMERICAN FIDELITY ASSURANCE COMPANY
By
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
FUND: AMERICAN FIDELITY DUAL STRATEGY
FUND, INC.
By ____________________________________
Name: Xxxxx X. Xxxxxxxxx
Title: President
SUB-ADVISOR: XXXX INVESTMENT ADVISORS, INC.
By ___________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Partner, Chairman
By ___________________________________
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive Officer
EXHIBIT A
American Fidelity Assurance Company
American Fidelity Dual Strategy Fund
Investment Objectives, Policies and Other Restrictions
I. INVESTMENT OBJECTIVES:
The Fund's investment objectives are, primarily, long-term growth of capital
and, secondarily, the production of income. Such objectives do not preclude
infrequent investments for short-term capital appreciation.
The Fund normally invests in a diversified portfolio consisting primarily of
common stocks based upon an assessment of particular industries or companies.
The Fund attempts to maintain sufficient cash balances to meet variable annuity
contract payments. The Fund's assets may be held in cash or cash equivalents or
in United States Government securities for this purpose. The Fund does not
engage in the purchase or sale of puts, calls or other options or in writing
such options.
The Sub-Advisor, after consulting with the Advisor and obtaining Advisor
approval, may determine that prevailing market and economic conditions indicate
that investments other than common stocks may be advantageous, in which event
investments may be made on a short-term basis in United States Government
securities, bonds, notes or other evidences of indebtedness, issued publicly,
of a type customarily purchased for investment by institutional investors.
II. FUNDAMENTAL INVESTMENT POLICIES:
The Sub-Advisor must comply with the following:
A. Not more than five percent (5%) of the value of the Investment
Assets placed with the Sub-Advisor will be invested in securities
of any one issuer, except obligations of the United States
Government and instrumentalities thereof.
B. Not more than ten percent (10%) of the voting securities of any
one issuer will be acquired.
C. Not more than twenty-five (25%) of the value of the Investment
Assets placed with the Sub-Advisor will be invested in any one
industry.
D. No borrowings will be made.
E. The Sub-Advisor will ensure that the Fund does not act as an
underwriter of securities of other issuers.
F. Investment in real estate will be limited to shares of real
estate investment trusts investing in equity real estate, up to
ten percent (10.0%) of Investment Assets placed with the Sub-Advisor.
Investment in private placements and other illiquid assets will not
be made.
G. No purchase of commodities or commodity contracts will be effected.
H. Puts, calls or other options will not be purchased.
I. Loans will not be made except through the acquisition of publicly
traded bonds, debentures or other evidences of indebtedness of a
type customarily purchased by institutional investors.
J. Investment will not be made in the securities of a company for the
purpose of exercising management or control.
K. Investment in securities of other investment companies will not be
made except for money market funds. Up to ten percent (10%) of
Investment Assets placed with the Sub-Advisor may be invested in
money market funds, provided that not more than three percent (3%)
of the total outstanding voting stock of any one investment company
may be held.
L. Investments in repurchase agreements will be limited to the top
thirty-five (35) U.S. banks, by deposits, that are rated at least
"B/C" by Xxxxx, Bruyette, Woods, a national bank rating agency or
a comparable rating from a similar bank rating service. Additionally,
there must be an appropriate amount of excess collateralization
depending upon the length of the agreement, to protect against
downward market fluctuation and the Fund must take delivery of the
collateral. The market value of the securities held as collateral
will be valued daily. In the event the market value of the collateral
falls below the repurchase price, the bank issuing the repurchase
agreement will be required to provide additional collateral sufficient
to cover the repurchase price.
M. Short sales of securities will not be made.
N. Purchases will not be made on margin, except for such short-term
credits necessary for the clearance of transactions.
O. Investments in high-yield or non-investment grade bonds will not be made.
P. Investments in the equity securities of foreign corporations will be
limited to American Depositary Receipts ("ADRs"), other depositary
receipts and ordinary shares which are denominated in U.S. dollars and
publicly traded in the United States. Not more than thirty-five percent
(35%) of the Investment Assets placed with the Sub-Advisor will be
invested in foreign issuers. In addition, not more than twenty percent
(20%) of the Investment Assets placed with the Sub-Advisor will be
invested in issuers from any one foreign country.
III. ADDITIONAL INVESTMENT RESTRICTIONS:
The Sub-Advisor must comply with the following Additional Investment
Restrictions unless it requests an exception and receives written consent from
the Advisor or the Board of Directors of the Fund. To the extent that these
Additional Investment Restrictions conflict with the Fundamental Investment
Policies, the Additional Investment Restrictions shall govern.
A. The Sub-Advisor should generally conform to these issuer guidelines
with exceptions noted at the time of purchase and variances reviewed
annually with the Board of Directors of the Fund.
1. A minimum market capitalization of one billion dollars
($1,000,000,000) at the time of purchase.
2. Audited financial statements for at least three (3) years.
3. Fifty million dollars ($50,000,000) or more in stockholders equity.
B. Lending of securities will not be permitted.
C. The Fund will not invest in the securities of tobacco-producing companies.
D. InvesTrust, N.A., or another custodian chosen by the Advisor, shall be the
Custodian of all Investment Assets placed with the Sub-Advisor. The
Sub-Advisor must ensure that duplicate brokerage confirmations of all
transactions are sent to the Custodian and the Advisor.
E. All money market funds used by the Sub-Advisor for a portion of Investment
Assets placed with the Sub-Advisor must be approved in advance by the Advisor.
F. The money market funds (cash) used by the Sub-Advisor for a portion of
Investment Assets must have a balance at all times equal to at least one
percent (1.0%), but not more than three percent (3.0%), of the market value
of Investment Assets placed with the Sub-Advisor.
G. All brokers used by the Sub-Advisor to execute transactions for the Fund
must have a commercial paper rating of A1/P1 by Moody's and Standard &
Poor's unless approved in advance by the Advisor.
Execution Copy
