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Exhibit d.(9)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this ___ day of __________, 2000, by and between THE
VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC,"
and Xxxxxx Investment Management, Inc., hereinafter referred to as the
"SUB-ADVISER."
VALIC and the SUB-ADVISER recognize the following:
(a) VALIC is a life insurance company organized under Chapter
3 of the Texas Insurance Code and an investment adviser(1) registered
under the Investment Advisers Act of 1940, as amended ("Advisers
Act").
(b) VALIC is engaged as the investment adviser of North
American Funds Variable Product Series I ("NAF Variable") (formerly
known as American General Series Portfolio Company), pursuant to an
Investment Advisory Agreement dated May 1, 1992 between VALIC and NAF
Variable, an investment company organized under the general corporate
laws of Maryland as a series type of investment company issuing
separate classes (or series) of shares of common stock. NAF Variable
is registered as a diversified, open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940
Act"). The 1940 Act prohibits any person from acting as an investment
adviser of a registered investment company except pursuant to a
written contract.
(c) NAF Variable currently consists of nineteen portfolios
("Funds"):
North American - AG Asset Allocation Fund
North American - AG Capital Conservation Fund
North American Core Equity Fund
North American - AG Government Securities Fund
North American - AG Growth & Income Fund
North American - American Century Income & Growth Fund
North American - American Century International Growth Fund
North American - AG International Equities Fund
North American - AG International Government Bond Fund
North American - Founders Large Cap Growth Fund
North American - XX XxxXxx Index Fund
North American - AG 1 Money Market Fund
North American - AG Nasdaq-100(R) Index Fund
North American - Xxxxxx Opportunities Fund
North American - X. Xxxx Price Science & Technology Fund
North American - Founders/X. Xxxx Price Small Cap Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
In accordance with NAF Variable's Articles of Incorporation
(the "Articles"), new Funds may be added to NAF Variable upon approval
of NAF Variable's Board of Directors without the approval of Fund
shareholders. This Agreement will apply only to Funds set forth on the
attached Schedule A, and any other Funds as may be added or deleted by
amendment to the attached Schedule A ("Covered Funds").
(d) The SUB-ADVISER is engaged principally in the business of
rendering investment advisory services and is registered as an
investment adviser under the Advisers Act.
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(1) The registration statement for NAF Variable may show the investment adviser
as "American General Advisers, a division of VALIC."
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(e) VALIC desires to enter into an Investment Sub-Advisory
Agreement with the SUB-ADVISER for all or a portion of the assets of
the Covered Funds which VALIC determines from time to time to assign
to the SUB-ADVISER.
VALIC and the SUB-ADVISER agree as follows:
1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER
The SUB-ADVISER, subject to the control, direction, and supervision of
VALIC and NAF Variable's Board of Directors and in material conformity with the
1940 Act, all applicable laws and regulations thereunder, all other applicable
federal and state securities and tax laws and regulations, including section
817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), NAF Variable's Articles, Bylaws, registration statements, prospectuses
and stated investment objectives, policies and restrictions and any applicable
procedures adopted by NAF Variable's Board of Directors and provided to the
SUB-ADVISER shall:
(a) manage the investment and reinvestment of the assets,
other than cash, of the Covered Funds including, for example, the
evaluation of pertinent economic, statistical, financial, and other
data, the determination of the industries and companies to be
represented in each Covered Fund's portfolio, and the formulation and
implementation of investment programs.
(b) maintain a trading desk and place orders for the purchase
and sale of portfolio investments (including futures contracts and
options thereon) for each Covered Fund's account with brokers or
dealers (including futures commission merchants) selected by the
SUB-ADVISER, or arrange for any other entity to provide a trading desk
and to place orders with brokers and dealers (including futures
commission merchants) selected by the SUB-ADVISER, subject to the
SUB-ADVISER's control, direction, and supervision, which brokers or
dealers may include brokers or dealers (including futures commission
merchants) affiliated with the SUB-ADVISER, subject to applicable law.
The SUB-ADVISER shall not be responsible for the administrative
affairs of the Covered Fund, including pricing the Covered Fund. The
SUB-ADVISER will provide reasonable assistance to VALIC to assist in pricing
securities where market or broker quotations are not readily available.
In performing the services described in paragraph (b) above, the
SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the best
execution of portfolio transactions. If NAF Variable's Board of Directors
approves appropriate policies and procedures, the SUB-ADVISER may cause the
Covered Funds to pay to a broker a commission for effecting a portfolio
transaction, in excess of the commission another broker would have charged for
effecting the same transaction, if the first broker provided brokerage and/or
research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to
have acted unlawfully, or to have breached any duty created by this Agreement,
or otherwise, solely by reason of acting in accordance with such authorization.
The SUB-ADVISER may aggregate sales and purchase orders of securities
held by the Covered Fund with similar orders being made simultaneously for
other accounts managed by the SUB-ADVISER or with accounts of the affiliates of
the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation
shall result in an overall economic benefit to the Covered Fund considering the
advantageous selling or purchase price, brokerage commission and other
expenses. In accounting for such aggregated order price, commission and other
expenses shall be averaged on a per bond or share basis daily. VALIC
acknowledges that the determination of such economic benefit to the Covered
Fund by the SUB-ADVISER is subjective and represents the SUB-ADVISER's
evaluation that the Covered Fund is benefited by relatively better purchase or
sales prices, lower commission expenses and beneficial timing of transactions
or a combination of these and other factors.
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VALIC may direct the SUB-ADVISER to use a particular broker or dealer
for one or more trades if, in the sole opinion of VALIC, it is in the best
interest of the Covered Fund to do so. Any such direction shall be in writing
and in a form satisfactory to SUB-ADVISER.
VALIC authorizes and empowers the SUB-ADVISER to direct the Covered
Fund's Custodian to open and maintain brokerage accounts for securities and
other property, including financial and commodity futures and commodities and
options thereon (all such accounts hereinafter called "brokerage accounts") for
and in the name of the Covered Fund and to execute for the Covered Fund as its
agent and attorney-in-fact standard customer agreements with such broker or
brokers as the SUB-ADVISER shall select as provided above. With respect to
brokerage accounts for financial and commodity futures and commodities and
options thereon, the SUB-ADVISER shall select such brokers, as approved by
VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER
may, using such of the securities and other property in the Covered Fund as the
SUB-ADVISER deems necessary or desirable, direct the Covered Fund's Custodian
to deposit for the Covered Fund original and maintenance brokerage and margin
deposits and otherwise direct payments of cash, cash equivalents and securities
and other property into such brokerage accounts and to such brokers as the
SUB-ADVISER deems desirable or appropriate.
The SUB-ADVISER shall maintain records adequately demonstrating
compliance with its obligations under this Agreement and report periodically to
VALIC and NAF Variable's Board of Directors regarding the performance of its
services under this Agreement. The SUB-ADVISER will make available to VALIC and
NAF Variable promptly upon their reasonable written request all of the Covered
Funds' investment records and ledgers to assist VALIC and NAF Variable in
compliance with respect to each Covered Fund's securities transactions as
required by the 1940 Act and the Advisers Act, as well as other applicable
laws. The SUB-ADVISER will furnish NAF Variable's Board of Directors such
periodic and special reports as VALIC and NAF Variable's Board of Directors may
reasonably request. The SUB-ADVISER will furnish to regulatory authorities any
information or reports in connection with such services which may be requested
in order to ascertain whether the operations of the Covered Funds are being
conducted in a manner consistent with applicable laws and regulations. The
SUB-ADVISER will not disclose or use any records or information obtained
pursuant to this Agreement in any manner whatsoever except as expressly
authorized in this Agreement, and will keep confidential any non-public
information obtained directly as a result of this service relationship, and the
SUB-ADVISER shall disclose such non-public information only if VALIC or the
Board of Directors of NAF Variable has authorized such disclosure, or if such
information is or hereafter otherwise is known by the SUB-ADVISER or has been
disclosed, directly or indirectly, by VALIC or NAF Variable to others becomes
ascertainable from public or published information or trade sources, or if such
disclosure is expressly required or requested by applicable federal or state
regulatory authorities, or to the extent such disclosure is reasonably required
by auditors or attorneys of the SUB-ADVISER in connection with the performance
of their professional services. Notwithstanding the foregoing, the SUB-ADVISER
may disclose the total return earned by the Covered Funds and may include such
total return in the calculation of composite performance information without
prior approval by VALIC or the Board of Trustees of NAF Variable.
Should VALIC at any time make any definite determination as to any
investment policy and notify the SUB-ADVISER in writing of such determination,
the SUB-ADVISER shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such determination
has been revoked, provided such determination will permit SUB-ADVISER to comply
with the first paragraph of this Section.
The SUB-ADVISER will not hold money or investments on behalf of NAF
Variable. The money and investments will be held by the Custodian of NAF
Variable. The SUB-ADVISER will arrange for the transmission to the Custodian
for NAF Variable, on a daily basis, such confirmation, trade tickets and other
documents as may be necessary to enable it to perform its administrative
responsibilities with respect to the Covered Funds. The SUB-ADVISER further
shall have the authority to instruct the Custodian of NAF Variable (i) to pay
cash for securities and other property delivered, or to be delivered, to the
Custodian for NAF Variable (ii) to deliver securities and other property
against payment for NAF Variable, and (iii) to transfer assets and funds to
such brokerage accounts as the SUB-ADVISER may designate, all consistent with
the powers, authorities and limitations set forth herein. The SUB-
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ADVISER shall not have the authority to cause the Custodian to deliver
securities and other property except as expressly provided for in this
Agreement.
The SUB-ADVISER will not perform cash management services for the
Covered Funds. The cash management function will be performed by VALIC.
The SUB-ADVISER shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act or represent VALIC or NAF Variable other than in
furtherance of the SUB-ADVISER=s duties and responsibilities as set forth in
this Agreement.
Except as otherwise agreed, or as otherwise provided herein, the
SUB-ADVISER shall bear the expense of discharging its responsibilities
hereunder and VALIC shall pay, or arrange for others to pay, all VALIC's
expenses, except that VALIC shall in all events pay the compensation described
in Section 2 of the Agreement.
2. COMPENSATION OF THE SUB-ADVISER
VALIC shall pay to the SUB-ADVISER, as compensation for the services
rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on
each Covered Fund's average daily net assets computed for each Covered Fund as
provided for herein and in the fee schedule attached hereto as Schedule A.
Schedule A may be amended from time to time by mutual agreement of the parties,
provided that amendments are made in conformity with applicable laws and
regulations and the Articles and Bylaws of NAF Variable. Any change in Schedule
A pertaining to any new or existing Fund shall not be deemed to affect the
interest of any other Fund and shall not require the approval of shareholders
of any other Fund.
The average daily net assets shall be determined by taking the average
of all of the determinations of net assets, made in the manner provided in NAF
Variable's Declaration, for each business day during a given calendar month.
VALIC shall pay this fee for each calendar month as soon as practicable after
the end of that month, but in any event no later than ten (10) business days
following the end of the month.
If the SUB-ADVISER serves for less than a whole month, the foregoing
compensation shall be prorated.
The payment of advisory fees related to the services of the
SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and
shall not be the responsibility of NAF Variable.
3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES
VALIC understands that the SUB-ADVISER and its affiliates now act,
will continue to act and may act in the future as investment adviser to
fiduciary and other managed accounts and as investment adviser to other
investment companies, and VALIC has no objection to the SUB-ADVISER so acting,
provided that whenever a Covered Fund and one or more other accounts or
investment companies advised by the SUB-ADVISER have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a methodology believed to be equitable to each entity. The
SUB-ADVISER similarly agrees to allocate opportunities to sell securities.
VALIC recognizes that, in some cases, this procedure may limit the size of the
position that may be acquired or sold for a Covered Fund. In addition, VALIC
understands that the persons employed by the SUB-ADVISER to assist in the
performance of the SUB-ADVISER=s duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the SUB-ADVISER or any affiliate of the SUB-ADVISER to
engage in and devote time and attention to other business or to render services
of whatever kind or nature.
Except as otherwise required by the 1940 Act, any of the shareholders,
directors, officers and employees of VALIC may be a shareholder, director,
officer or employee of, or be otherwise interested in, the SUB-ADVISER, and in
any person controlling, controlled by or under common control with the
SUB-ADVISER; and the SUB-
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ADVISER, and any person controlling, controlled by or under common control with
the SUB-ADVISER, may have an interest in VALIC.
The SUB-ADVISER shall not be liable to VALIC, NAF Variable, or to any
shareholder in the Covered Fund, and VALIC shall indemnify the SUB-ADVISER, for
any act or omission in rendering services under this Agreement, or for any
losses sustained in connection with the matters to which this agreement
relates, so long as there has been no willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties on the part of the
SUB-ADVISER in performing its duties under this Agreement.
VALIC shall perform quarterly and annual tax compliance tests and
promptly furnish reports of such tests to the SUB-ADVISER after each quarter
end to ensure that the Covered Fund is in compliance with Subchapter M of the
Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER
promptly after each quarter end of any potential non-compliance with the
diversification requirements in such Code provisions. If so advised, the
SUB-ADVISER shall take prompt action so that the Covered Fund complies with
such Code diversification provisions, as directed by VALIC. VALIC acknowledges
that the SUB-ADVISER will base its compliance with such provisions of the Code
on accurate and timely portfolio information, including lot allocation, from
VALIC.
4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC
The SUB-ADVISER represents, warrants, and agrees as follows:
(a) The SUB-ADVISER (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect: (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement, (iv)
has the authority to enter into and perform the services contemplated by this
Agreement, and (v) will immediately notify VALIC of the occurrence of any event
that would disqualify the SUB-ADVISER from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) The SUB-ADVISER has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and if it has not
already done so, will provide VALIC and NAF Variable with a copy of such code
of ethics together with evidence of its adoption.
(c) The SUB-ADVISER has provided VALIC and NAF Variable with a copy of
its Form ADV as most recently filed with the SEC and will promptly after filing
its annual update to its Form ADV with the SEC, furnish a copy of such
amendment to VALIC.
VALIC represents, warrants, and agrees as follows:
VALIC: (i) is registered as an investment adviser under the Advisers
Act and will continue to be so registered for so long as this Agreement remains
in effect: (ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) has met, and will
continue to meet for so long as this Agreement remains in effect, any
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to
perform the services contemplated by this Agreement, (iv) has the authority to
enter into and perform the services contemplated by this Agreement, and (v)
will immediately notify the SUB-ADVISER of the occurrence of any event that
would disqualify VALIC from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise.
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5. TERM OF AGREEMENT
This Agreement shall become effective as to the Covered Fund(s) set
forth on Schedule A on the date hereof and as to any other Fund on the date of
the Amendment to Schedule A adding such Fund in accordance with this Agreement.
Unless sooner terminated as provided herein, this Agreement shall continue in
effect for two years from its effective date. Thereafter, this Agreement shall
continue in effect, but with respect to any Covered Fund, subject to the
termination provisions and all other terms and conditions hereof, only so long
as such continuance is approved at least annually by the vote of a majority of
NAF Variable's directors who are not parties to this Agreement or interested
persons of any such parties, cast in person at a meeting called for the purpose
of voting on such approval, and by a vote of a majority of NAF Variable's Board
of Directors or a majority of that Covered Fund's outstanding voting
securities.
This Agreement shall automatically terminate in the event of its
assignment as that term is defined in the 1940 Act, or in the event of the
termination of the Investment Advisory Agreement between VALIC and NAF Variable
as it relates to any Covered Fund. The Agreement may be terminated as to any
Covered Fund at any time, without the payment of any penalty, by vote of NAF
Variable's Board of Directors or by vote of a majority of that Covered Fund's
outstanding voting securities on not more than 60 days' nor less than 30 days'
written notice to the SUB-ADVISER, or upon such shorter notice as may be
mutually agreed upon by the parties. This Agreement may also be terminated by
VALIC: (i) on not more than 60 days' nor less than 30 days' written notice to
the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by
the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER
becomes unable to discharge its duties and obligations under this Agreement.
The SUB-ADVISER may terminate this Agreement at any time, or preclude its
renewal without the payment of any penalty, on not more than 60 days' nor less
than 30 days' written notice to VALIC, or upon such shorter notice as may be
mutually agreed upon by the parties.
6. OTHER MATTERS
The SUB-ADVISER may from time to time employ or associate with itself
any person or persons believed to be particularly fit to assist in its
performance of services under this Agreement, provided no such person serves or
acts as an investment adviser separate from the SUB-ADVISER so as to require a
new written contract pursuant to the 1940 Act. The compensation of any such
persons will be paid by the SUB-ADVISER, and no obligation will be incurred by,
or on behalf of, VALIC or NAF Variable with respect to them.
The SUB-ADVISER agrees that any books and records, such as transaction
records, which it may generate for the Covered Fund are the Covered Fund's
property. The SUB-ADVISER also agrees upon request of VALIC or NAF Variable, to
promptly surrender such books and records in accordance with the 1940 Act and
rules thereunder.
VALIC has herewith furnished the SUB-ADVISER copies of NAF Variable's
Prospectus, Statement of Additional Information, Articles and Bylaws as
currently in effect and agrees during the continuance of this Agreement to
furnish the SUB-ADVISER copies of any amendments or supplements thereto before
or at the time the amendments or supplements become effective. Until VALIC
delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER
shall be fully protected in relying on the documents previously furnished to
it.
The SUB-ADVISER is authorized to honor and act on any notice,
instruction or confirmation given by VALIC on behalf of the Covered Fund in
writing signed or sent by any of the persons whose names, addresses and
specimen signatures will be provided by VALIC from time to time. The
SUB-ADVISER shall not be liable for so acting in good faith upon such
instructions, confirmation or authority, notwithstanding that it shall
subsequently be shown that the same was not given or signed or sent by an
authorized person.
VALIC agrees to furnish the SUB-ADVISER at its principal office prior
to use thereof, copies of all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for distribution to
shareholders of the Covered Fund or the public that refer in any way to the
SUB-ADVISER, and not to use such material if the SUB-ADVISER reasonably objects
in writing within ten (10) business days (or such other time as
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may be mutually agreed) after receipt thereof. In the event of termination of
this agreement, VALIC will continue to furnish to the SUB-ADVISER copies of any
of the above-mentioned materials that refer in any way to the SUB-ADVISER.
VALIC shall furnish or otherwise make available to the SUB-ADVISER such other
information relating to the business affairs of VALIC and the Covered Fund as
the SUB-ADVISER at any time, or from time to time, may reasonably request in
order to discharge obligations hereunder.
VALIC agrees to indemnify the SUB-ADVISER for losses, costs, fees,
expenses and claims which arise directly or indirectly (i) as a result of a
failure by VALIC to provide the services or furnish materials required under
the terms of this Investment Sub-Advisory Agreement, or (ii) as the result of
any untrue statement of a material fact or any omission to state a material
fact required to be stated or necessary to make the statements, in light of the
circumstances under which they were made, not misleading in any registration
statements, proxy materials, reports, advertisements, sales literature, or
other materials pertaining to the Covered Fund, except insofar as any such
statement or omission was specifically made in reliance on written information
provided to VALIC by the SUB-ADVISER for use in such material and which was
specifically reviewed and approved by SUB-ADVISER.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims which
arise (i) as a result of the willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties by the SUB-ADVISER; or (ii) as
the result of any untrue statement of a material fact or any omission to state
a material fact required to be stated or necessary to make the statements, in
light of the circumstances under which they were made, not misleading in any
registration statements, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Covered Fund to the extent any
such statement or omission was made in reliance on information provided to
VALIC by the SUB-ADVISER for use in such material and which was specifically
reviewed and approved by SUB-ADVISER.
7. APPLICABILITY OF FEDERAL SECURITIES LAWS
This Agreement shall be interpreted in accordance with the laws of the
State of Texas and applicable federal securities laws and regulations,
including definitions therein and such exemptions as may be granted to VALIC or
the SUB-ADVISER by the Securities and Exchange Commission or such interpretive
positions as may be taken by the Commission or its staff. To the extent that
the applicable law of the State of Texas, or any of the provisions herein,
conflict with applicable provisions of the federal securities laws, the latter
shall control.
8. AMENDMENT AND WAIVER
Provisions of this Agreement may be amended, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. The
Agreement may be amended by mutual written consent of the parties, subject to
the requirements of the 1940 Act and the rules and regulations promulgated and
orders granted thereunder.
9. NOTICES
All notices hereunder shall be given in writing (and shall be deemed
to have been duly given upon receipt) by delivery in person, by facsimile, by
registered or certified mail or by overnight delivery (postage prepaid, return
receipt requested) to VALIC and to SUB-ADVISER at the address of each set forth
below:
If to VALIC:
VALIC
Attn: Xxxx X. Xxxxxx, Xxx., X00-00
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
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If to SUB-ADVISER:
Xxxxxx Investment Management, Inc.
Attn:
The parties hereto have each caused this Agreement to be signed in
duplicate on its behalf by its duly authorized officer on the above date.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By:
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Name:
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Title:
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ATTEST:
Attest:
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Name:
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Title:
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XXXXXX INVESTMENT MANAGEMENT, INC.
By:
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Name:
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Title:
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ATTEST:
Attest:
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Name:
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Title:
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SCHEDULE A
(Effective _____, 2000)
Annual Fee computed at the following annual rate, based on average daily net
asset value for each month and payable monthly:
Covered Fund Fee
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North American-Xxxxxx 0.55 % on the first $150 million
Opportunities Fund 0.50 % on the next $150 million
0.40 % on excess over $300 million
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