Exhibit (d) 2 (27)
Investment Subadvisory Agreement between Phoenix Variable Advisors and
Alliance Capital Management L.P.
SUBADVISORY AGREEMENT
THE PHOENIX EDGE SERIES FUND
Alliance Capital Management L.P. Dated: January 6, 2003
1345 Avenue of the Americas ------------------
Xxx Xxxx, Xxx Xxxx 00000
WHEREAS, The Phoenix Edge Series Fund (the "Fund") is an open-end
investment company of the series type registered under the Investment Company
Act of 1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder;
WHEREAS, the shares of the Fund are offered or may be offered in
several series;
WHEREAS, Phoenix Variable Advisors, Inc. (the "Advisor") evaluates and
recommends series advisors for certain series and is responsible for the day-to-
day management of such series;
WHEREAS, under a certain exemptive order issued by the Securities and
Exchange Commission on August 6, 2002, Release No. 25693 (the "Order"), the
Advisor has been granted the authority, subject to the approval of the Fund's
Board of Trustees, to enter into subadvisory agreements with subadvisors,
materially amend existing subadvisory agreements, and approve new subadvisory
agreements with existing subadvisors in cases where the subadvisory agreement
has been terminated as a result of an "assignment", in each case without such
subadvisory agreement being approved by the shareholders of the applicable
series;
WHEREAS, the management of the Phoenix-X.X. Xxxxxx Research Enhanced
Index Series (the "Series") by X.X. Xxxxxx Investment Management Inc. will be
terminated effective as of January 31, 2003;
WHEREAS, in accordance with the Order, the Fund's Board of Trustees
approved the replacement of subadvisors to the Series of X.X. Xxxxxx Investment
Management Inc. with Alliance Capital Management L.P. (the "Subadvisor") at its
meeting on November 12, 2002;
WHEREAS, the Series shall be renamed the "Phoenix-Alliance/Xxxxxxxxx
Enhanced Index Series", effective January 31, 2003; and
WHEREAS, the Advisor desires to retain the Subadvisor, a limited
partnership organized under the laws of the State of Delaware, to furnish
portfolio management services for the Series and its Xxxxxxxxx Investment
Research and Management Unit to manage the portion of the assets invested in
value stocks, and the Subadvisor is willing to furnish such services.
NOW, THEREFORE, the Advisor and the Subadvisor agree as follows:
1. Employment as a Subadvisor. The Advisor, being duly authorized, hereby
employs the Subadvisor to invest and reinvest the assets of the Series
on the terms and conditions set forth herein. The services of the
Subadvisor hereunder are not to be deemed exclusive; the Subadvisor may
render services to others and engage in other activities that do not
conflict in any material manner with the Subadvisor's performance
hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadvisor
accepts its employment as a subadvisor to the Advisor and agrees to use
its best professional judgment to make investment decisions for the
Series in accordance with the provisions of this Agreement.
3. Services of Subadvisor.
(a) The Subadvisor shall provide the services set forth
herein and in Schedule A attached hereto and made a
part hereof. In providing management services to the
Series, the Subadvisor shall be subject to the
investment objectives, policies and restrictions of the
Fund as they apply to the Series and as set forth in
the Fund's then current Prospectus and Statement of
Additional Information (as the same may be modified
from time to time), and to the Fund's Agreement and
Declaration of Trust, to the investment and other
restrictions set forth in the Act, the Securities Act
of 1933, as amended, and the diversification
requirements of Section 817(h) of the Internal Revenue
Code ("IRC"), the provisions of Subchapter M of the IRC
applicable to regulated investment companies, including
those which underlie variable annuities, the
distribution requirements necessary to avoid payment of
any excise tax pursuant to Section 4982 of the IRC and
the rules and regulations adopted under each such
provision; and to the supervision and direction of the
Advisor, who in turn is subject to the supervision and
direction of the Board of Trustees of the Fund. The
Subadvisor shall not, without the Advisor's prior
approval, effect any transactions that would cause the
Series at the time of the transaction to be out of
compliance with any of such restrictions or policies.
The Subadvisor will keep the Fund and the Advisor
informed of developments materially affecting the Fund,
and will, on its own initiative, furnish the Fund and
the Advisor from time to time with whatever information
the Sub-Advisor believes is appropriate for this
purpose.
(b) Subject at all times to the limitations set forth in
subparagraph 3(a) above, the Subadvisor shall have full
authority at all times with respect to the management
of the Series, including, but not limited to, authority
to give written or oral instructions to various
broker/dealers, banks or other agents; to bind and
obligate the Fund to and for the carrying out of
contracts, arrangements, or transactions which shall be
entered into by the Subadvisor on the Fund's behalf
with or through such broker/dealers, banks or other
agents; to direct the purchase and sale of any
securities; and generally to do and take all action
necessary in connection with the Series, or considered
desirable by the Subadvisor with respect thereto. The
Subadvisor may maintain uninvested cash balances in the
Series as it shall deem reasonable without incurring
any liability for the payment of interest thereon.
4. Expenses. The Subadvisor shall furnish the following at its own expense:
(a) Office facilities, including office space, furniture and
equipment utilized by its employees, in the fulfillment of
Subadvisor's responsibilities hereunder;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series'
assets (including those required for research, statistical
and investment work), and to fulfill the other functions
of the Subadvisor hereunder; and
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(c) The Subadvisor need not provide personnel to perform, or
pay the expenses of the Advisor for, services customarily
performed for an open-end management investment company by
its national distributor, custodian, financial agent,
transfer agent, auditors and legal counsel.
5. Transaction Procedures. All transactions for the Series will be
consummated by payment to, or delivery by, the Custodian(s) from time
to time designated by the Fund (the "Custodian"), or such depositories
or agents as may be designated by the Custodian pursuant to its
agreement with the Fund (the "Custodian Agreement"), of all cash and/or
securities due to or from the Series. The Subadvisor shall not have
possession or custody of such cash and/or securities or any
responsibility or liability with respect to such custody. The
Subadvisor shall advise the Custodian and confirm in writing or by
confirmed electronic transmission to the Fund all investment orders for
the Series placed by it with brokers and dealers at the time and in the
manner set forth in the Custodian Agreement and in Schedule B hereto
(as amended from time to time). The Fund shall issue to the Custodian
such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Subadvisor. The Fund
shall be responsible for all custodial arrangements and the payment of
all custodial charges and fees, and, upon giving proper instructions to
the Custodian, the Subadvisor shall have no responsibility or liability
with respect to custodial arrangements or the acts, omissions or other
conduct of the Custodian.
6. Allocation of Brokerage. The Subadvisor shall have authority and
discretion to select brokers and dealers to execute Series transactions
initiated by the Subadvisor, and to select the markets on or in which
the transactions will be executed.
A. In placing orders for the sale and purchase of Series securities
for the Fund, the Subadvisor's primary responsibility shall be to seek
the best execution of orders at the most favorable prices. However,
this responsibility shall not obligate the Subadvisor to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Subadvisor reasonably
believes that the broker or dealer selected by it can be expected to
obtain "best execution" on the particular transaction and determines in
good faith that the commission cost is reasonable in relation to the
value of the brokerage and research services (as defined in Section
28(e)(3) of the Securities Exchange Act of 1934) provided by such
broker or dealer to the Subadvisor, viewed in terms of either that
particular transaction or of the Subadvisor's overall responsibilities
with respect to its clients, including the Fund, as to which the
Subadvisor exercises investment discretion, notwithstanding that the
Fund may not be the direct or exclusive beneficiary of any such
services or that another broker may be willing to charge the Fund a
lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Advisor
shall have the right to require that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Advisor
and the Subadvisor, shall be executed by brokers and dealers that
provide brokerage or research services to the Fund or that will be of
value to the Fund in the management of its assets, which services and
relationship may, but need not, be of direct or exclusive benefit to
the Series. In addition, subject to paragraph A above, the applicable
Conduct Rules of the National Association of Securities Dealers, Inc.
and other applicable law, the Fund shall have the right to request that
transactions be executed by brokers and dealers by or through whom
sales of shares of the Fund are made.
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C. Subject to its duty to seek best execution and compliance with the
requirements of Section 11(a) of the Securities Exchange Act of 1934,
as amended, the Subadvisor may utilize its affiliate Xxxxxxx X.
Xxxxxxxxx & Co., LLC ("SCB LLC"), to execute trades for the Series from
time to time at rates not exceeding the usual and customary broker's
commission. Under Federal law, the Subadvisor must obtain the Advisor's
consent to permit SCB LLC to effect agency cross transactions for the
Series, which consent is hereby granted. The Subadvisor represents,
warrants and covenants that all agency cross transactions for the
Series will be effected by Subadvisor and SCB LLC strictly in
accordance with Rule 206(3)-2 under the Investment Advisers Act of
1940, as amended (the "Advisers Act"). An agency cross transaction is
where SCB LLC purchases or sells securities from or to a non-managed
account on behalf of a client's managed account. By "non-managed" it is
meant that the account is not managed by Subadvisor, or any of its
respective affiliated investment advisers. Pursuant to this consent,
the Subadvisor will only permit SCB LLC to effect an agency cross
transaction for the Series with a non-managed account. In an agency
cross transaction where SCB LLC acts as broker for the Series, SCB LLC
receives commissions from both sides of the trade and there is a
potentially conflicting division of loyalties and responsibilities.
However, as both sides to the trade want to execute the transaction at
the best price without moving the market price in either direction, the
Subadvisor believes that an agency cross transaction will aid both
sides to the trade in obtaining the best price for the trade. THE
TRUSTEES OR THE ADVISOR MAY REVOKE THIS CONSENT BY WRITTEN NOTICE TO
THE SUBADVISOR AT ANY TIME.
7. Fees for Services. The compensation of the Subadvisor for its services
under this Agreement shall be calculated and paid by the Advisor in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Fund and the Advisor, the Advisor is
solely responsible for the payment of fees to the Subadvisor. Brokerage
services provided by an affiliate of Subadvisor are not within the
scope of the duties of the Subadvisor under this Agreement. Subject to
the requirements of applicable law and any procedures adopted by the
Trustees, SCB LLC may receive brokerage commissions from the Series for
such services.
8. Limitation of Liability. The Subadvisor shall not be liable for any
action taken, omitted or suffered to be taken by it in its best
professional judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement, or in accordance with specific directions or
instructions from the Fund, provided, however, that such acts or
omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Series and that
such acts or omissions shall not have resulted from the Subadvisor's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Subadvisor in its
actions under this Agreement or a breach of its duty or of its
obligations hereunder (provided, however, that the foregoing shall not
be construed to protect the Subadvisor from liability under the Act,
other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadvisor to comply with
applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Series and the actions
of the Subadvisor and the Fund in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the
Act. The Subadvisor shall notify the Advisor in writing sufficiently in
advance of any proposed change of control, as defined in Section
2(a)(9) of the
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Act, as will enable the Advisor to consider whether an assignment as
defined in Section 2(a)(4) of the Act will occur and to take the steps
it deems necessary.
11. Representations, Warranties and Agreements of the Subadvisor. The
Subadvisor represents, warrants and agrees that:
A. It is registered as an "investment adviser" under the Investment
Advisers Act of 1940 ("Advisers Act").
B. It will maintain, in the form and for the period required by
Rule 31a-2 under the Act, the records and information required by [the
relevant portion of subparagraph (b) (1) and] subparagraphs (b)(5),
(b)(6), (b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the Act
respecting its activities with respect to the Series, and such other
records with respect thereto relating to the services the Subadvisor
provides under this Agreement as may be required in the future by
applicable SEC rules. The records maintained by the Subadvisor
hereunder shall be the property of the Fund and surrendered promptly
upon request.
C. It has a written code of ethics complying with the requirements
of Rule 17j-l under the Act and will provide the Advisor with a copy of
the code of ethics and evidence of its adoption. Subadvisor
acknowledges receipt of the written code of ethics adopted by and on
behalf of the Fund (the "Code of Ethics"). The Subadvisor will not be
subject to the Code of Ethics of the Fund as long as its code of ethics
complies with the applicable regulatory requirements and its code of
ethics is approved by the Board of Trustees of the Trust. Within 10
days of the end of each calendar quarter while this Agreement is in
effect, a duly authorized compliance officer of the Subadvisor shall
certify to the Fund and to the Advisor that the Subadvisor has complied
with the requirements of Rule 17j-l during the previous calendar
quarter and that there has been no violation of its code of ethics, or
if such a violation has occurred, that appropriate action was taken in
response to such violation. The Subadvisor shall permit the Fund and
Advisor to examine the reports required to be made by the Subadvisor
under Rule 17j-l(c)(1) and this subparagraph.
D. It will use all necessary efforts to manage the Series so that the
Fund will qualify as a regulated investment company under Subchapter M
of the IRC and will satisfy the diversification requirements of Section
817(h) of the IRC and the distribution requirements necessary to avoid
payment of any excise tax pursuant to Section 4982 of the IRC and the
rules and regulations adopted under each such provision.
E. It will furnish the Advisor a copy of its Form ADV as filed with
the Securities and Exchange Commission.
F. It will be responsible for the preparation and filing of
Schedule 13G and Form 13F on behalf of the Series in accordance with
the requirements thereunder.
G. It will notify the Advisor of any changes in the membership of its
general partners within a reasonable time after such change.
H. Reference is hereby made to the Declaration of Trust dated
February 18, 1986, establishing the Fund, a copy of which has been
filed with the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter so filed with the Secretary of the Commonwealth of
Massachusetts and elsewhere as
5
required by law. The name Phoenix Edge Series Fund refers to the
Trustees under said Declaration of Fund, as Trustees and not
personally, and no Trustee, shareholder, officer, agent or employee of
the Fund shall be held to any personal liability in connection with the
affairs of the Fund; only the Fund estate under said Declaration of
Trust is liable. Without limiting the generality of the foregoing,
neither the Subadvisor nor any of its officers, directors, partners,
shareholders or employees shall, under any circumstances, have recourse
or cause or willingly permit recourse to be had directly or indirectly
to any personal, statutory, or other liability of any shareholder,
Trustee, officer, agent or employee of the Fund or of any successor of
the Fund, whether such liability now exists or is hereafter incurred
for claims against the trust estate.
12. Representations, Warranties and Agreements of the Advisor. The Advisor
represents, warrants and agrees that:
A. It has the power and has taken all necessary action, and has
obtained all necessary licenses, authorizations and approvals, to
execute this Agreement, which constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.
B. It is registered as an "investment adviser" under the Advisers
Act.
C. It will deliver to the Subadvisor true and complete copies of the
Prospectus, Statement of Additional Information, and such other
documents or instruments governing the investments and investment
policies and practices of the Series, and during the term of this
Agreement will promptly deliver to the Subadvisor true and complete
copies of all documents and instruments supplementing, amending, or
otherwise becoming such Fund Documents before or at the time they
become effective.
D. It will deliver to the Subadvisor any limitations imposed upon the
Fund as a result of relevant diversification requirements under the
provisions of Section 817(h) of the Internal Revenue Code of 1986, as
amended.
E. It will furnish or otherwise make available to the Subadvisor such
other information relating to the business affairs of the Fund as the
Subadvisor at any time, or from time to time, reasonably requests in
order to discharge its obligations hereunder.
13. Reports. The Subadvisor shall provide the Advisor such periodic and
special reports as the Advisor may reasonably request. The Subadvisor
agrees that such records are the property of the Fund, and shall be
made reasonably available for inspections, and by the Fund or to the
Advisor as agent of the Fund, and promptly upon request surrendered to
either. The Subadvisor is authorized to supply the Fund's independent
accountants, PricewaterhouseCoopers LLP, or any successor accountant
for the Fund, any information that they may request in connection with
the Fund.
14. Proxies. Unless the Advisor or the Fund gives the Subadvisor written
instructions to the contrary, Subadvisor will vote, and shall comply
with the Fund's proxy voting procedures then in effect, to vote or
abstain from voting, all proxies solicited by or with respect to the
issuers of securities in which assets of the Series may be invested.
The Advisor shall cause the Custodian to forward promptly to Subadvisor
all proxies upon receipt, so as to afford Subadvisor a reasonable
amount of time in which to determine how to vote such proxies.
Subadvisor agrees to provide the Advisor with quarterly proxy voting
reports in such form as the Advisor may request from time to time.
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15. Recordkeeping. The Subadvisor will assist the recordkeeping agent for
the Fund in determining or confirming the value of any securities or
other assets in the Series for which the recordkeeping agent seeks
assistance from or identifies for review by the Advisor. The parties
agree that, consistent with applicable law, the Advisor will not bear
responsibility for the determination of value of any such securities or
other assets.
16. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Subadvisor and the Advisor, which
amendment, other than amendments to Schedules A and B, is subject to
the approval of the Trustees and the Shareholders of the Fund as and to
the extent required by the Act.
17. Effective Date; Term. This Agreement shall become effective on the date
set forth on the first page of this Agreement. Unless terminated as
hereinafter provided, this Agreement shall remain in full force and
effect until November 30, 2003, and thereafter only so long as its
continuance has been specifically approved at least annually by the
Trustees in accordance with Section 15(a) of the Act, and by the
majority vote of the disinterested Trustees in accordance with the
requirements of Section 15(c) thereof.
18. Notices. Except as otherwise provided in this Agreement, all notices or
other communications required or permitted to be given hereunder shall
be in writing and shall be delivered or sent by confirmed facsimile or
by pre-paid first class letter post or overnight courier to the
following addresses or to such other address as the relevant addressee
shall hereafter notify for such purpose to the others by notice in
writing and shall be deemed to have been given at the time of delivery.
If to the Advisor: PHOENIX VARIABLE ADVISORS, INC.
One American Row
Hartford, Connecticut
Attention: Xxxxxx Xxxxxx
If to the Subadvisor: Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Senior Vice President
With a copy to: Xxxx Xxxxx, Business Relationship
Manager
19. Termination. This Agreement may be terminated by either party, without
penalty, immediately upon written notice to the other party in the
event of a breach of any provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the other party, but
any such termination shall not affect the status, obligations or
liabilities of either party hereto to the other party.
20. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of
the Commonwealth of Massachusetts.
21. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement shall not be affected thereby,
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and each and every term and condition of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
PHOENIX VARIABLE ADVISORS, INC.
By: /s/ Xxxxx X. Xxx
-----------------------------------
Title: Xxxxx X. Xxx, President
ACCEPTED:
ALLIANCE CAPITAL MANAGEMENT L.P.
BY: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, ITS GENERAL PARTNER
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Title: Assistant Secretary
SCHEDULES: A. Subadvisor Functions
B. Operational Procedures
C. Fee Schedule
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SCHEDULE A
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SUBADVISOR FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadvisor shall provide, at its own expense:
(a) An investment program for the Series consistent with its
investment objectives based upon the development, review and
adjustment of buy/sell strategies approved from time to time
by the Board of Trustees and Advisor;
(b) Implementation of the investment program for the Series based
upon the foregoing criteria;
(c) Annual reports, in form and substance acceptable to the
Advisor and Subadvisor, with respect to foreign custody as
governed by Rule 17f-7 under the Act.
(d) Quarterly reports, in form and substance acceptable to the
Advisor, with respect to: i) compliance with the Subadvisor's
code of ethics; ii) compliance with procedures adopted from
time to time by the Trustees of the Fund relative to
securities eligible for resale under Rule 144A under the
Securities Act of 1933, as amended; iii) diversification of
Series assets in accordance with the then prevailing
prospectus and statement of additional information pertaining
to the Series and governing laws; iv) compliance with
governing restrictions relating to the fair valuation of
securities for which market quotations are not readily
available or considered "illiquid" for the purposes of
complying with the Series limitation on acquisition of
illiquid securities; v) cross transactions conducted pursuant
to Rule 17a-7 under the Act; vi) proxy voting reports; vii)
any and all other reports reasonably requested in accordance
with or described in this Agreement; and, viii) the
implementation of the Series investment program, including,
without limitation, analysis of Series performance;
(e) Attendance by appropriate representatives of the Subadvisor at
meetings requested by the Advisor or Trustees at such time(s)
and location(s) as reasonably requested by the Advisor or
Trustees; and
(f) Participation, overall assistance and support in marketing the
Series, including, without limitation, meetings with pension
fund representatives, broker/dealers who have a sales
agreement with Phoenix Equity Planning Corporation, and other
parties requested by the Advisor.
(g) This Schedule A is subject to amendment from time to time to
require additional reports as contemplated by Paragraph 13 of
this Agreement.
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SCHEDULE B
----------
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank and Trust Company (the
"Custodian"), the custodian for the Fund.
The Subadvisor must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 8:30 p.m. (Eastern Standard time) on the day of the trade. The deadline for
semi-annual and annual financial reporting days is 5 p.m. The necessary
information can be sent via facsimile machine to the Custodian. Information
provided to the Custodian shall include the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Fund, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Fund. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadvisor daily with a cash availability report. This
will normally be done by confirmed facsimile or confirmed electronic
transmission so that the Subadvisor will know the amount available for
investment purposes.
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SCHEDULE C
----------
SUBADVISORY FEE
For services provided to the Fund pursuant to paragraph 3 hereof, the
Advisor will pay to the Subadvisor, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of:
0.225% on the first $50 million of average net
assets;
0.180% on average net assets between $50 million and
$200 million;
0.135% on average net assets in excess of $200 million.
The fees shall be prorated for any month during which this agreement is in
effect for only a portion of the month. In computing the fee to be paid to the
Subadvisor, the net asset value of the Fund and each Series shall be valued as
set forth in the then current registration statement of the Fund.
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