Exhibit 23(d)(v)
THE XXXXXX SQUARE STRATEGIC EQUITY FUND
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the 7th day of September,
1998, among The Xxxxxx Square Strategic Equity Fund, a Massachusetts business
trust (the "Fund"), Wilmington Trust Company (the "Adviser"), a corporation
organized under the laws of the State of Delaware and Xxxxxxx Xxxxxx
Investments, Inc., a corporation organized under the laws of the State of
Delaware (the "Sub-Adviser" ) .
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and offers for public sale distinct series of shares of beneficial interest; and
WHEREAS, The International Equity Portfolio (the "Portfolio") is a
series of the Fund; and
WHEREAS, the Adviser acts as the investment adviser for the Portfolio
pursuant to the terms of an Investment Advisory Agreement between the Fund and
the Adviser under which the Adviser is responsible for the coordination of
investment of the Portfolio's assets in portfolio securities; and
WHEREAS, the Adviser is authorized under the Investment Advisory
Agreement to delegate its investment responsibilities to one or more persons or
companies;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Fund, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Fund hereby appoints and employs the
Sub-Adviser as a discretionary portfolio manager, on the terms and
conditions set forth herein, of those assets of the Portfolio which the
Adviser determines to assign to the Sub-Adviser (those assets being
referred to as the "Portfolio Account"). The Adviser may, from time to
time, make additions to and withdrawals, including cash and cash
equivalents, from the Portfolio Account.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts its appointment as a
discretionary portfolio manager and agrees to use its professional
judgment to make investment decisions for the Portfolio with respect to
the investments of the Portfolio Account and to implement such
decisions on a timely basis in accordance with the provisions of this
Agreement.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following and
will promptly provide the Sub-Adviser with copies properly certified or
authenticated of any amendment or supplement thereto:
(a) The Portfolio's Investment Advisory Agreement;
(b) The Fund's most recent effective registration statement and
financial statements as filed with the Securities and Exchange
Commission;
(c) The Fund's Declaration of Trust and By-Laws; and
(d) Any policies, procedures or instructions adopted or approved
by the Fund's Board of Trustees relating to obligations and
services provided by the Sub-Adviser.
4. PORTFOLIO MANAGEMENT SERVICES OF THE SUB-ADVISER. The Sub-Adviser is
hereby employed and authorized to select portfolio securities for
investment by the Portfolio, to purchase and to sell securities for the
Portfolio Account, and upon making any purchase or sale decision, to
place orders for the execution of such portfolio transactions in
accordance with Sections 6 and 7 hereof and Schedule A hereto (as
amended from time to time). In providing portfolio management services
to the Portfolio Account, the Sub-Adviser shall be subject to and shall
conform to such investment restrictions as are set forth in the 1940
Act and the rules thereunder, the Internal Revenue Code, applicable
state securities laws, applicable statutes and regulations of foreign
jurisdictions, the supervision and control of the Board of Trustees of
the Fund, such specific instructions as the Board of Trustees may adopt
and communicate to the Sub-Adviser, the investment objective, policies
and restrictions of the Fund applicable to the Portfolio furnished
pursuant to Section 5 of this Agreement, the provisions of Schedule A
and Schedule B hereto and other instructions communicated to the
Sub-Adviser by the Adviser. The Sub-Adviser is not authorized by the
Fund to take any action, including the purchase or sale of securities
for the Portfolio Account, in contravention of any restriction,
limitation, objective, policy or instruction described in the previous
sentence. The Sub-Adviser shall maintain on behalf of the Fund the
records listed in Schedule B hereto (as amended from time to time). At
the Fund's reasonable request, the Sub-Adviser will consult with the
Fund or with the Adviser with respect to any decision made by it with
respect to the investments of the Portfolio Account.
5. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Fund will provide
the Sub-Adviser with the statement of investment objective, policies
and restrictions applicable to the Portfolio as contained in the
Portfolio's Prospectus and Statement of Additional Information, all
amendments or supplements to the Prospectus and Statement of Additional
Information, and any instructions adopted by the Board of Trustees
supplemental thereto. The Fund agrees, on an ongoing basis, to notify
the Sub-Adviser in writing of each change in the fundamental and
non-fundamental investment policies of the Portfolio and will provide
the Sub-Adviser with such further information concerning
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the investment objective, policies, restrictions and such other
information applicable thereto as the Sub-Adviser may from time to time
reasonably request for performance of its obligations under this
Agreement. The Fund retains the right, on written notice to the
Sub-Adviser from the Fund or the Adviser, to modify any such objective,
policies or restrictions in any manner at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment
to or delivery by the custodian designated by the Fund (the
"Custodian"), or such depositories or agents as may be designated by
the Custodian in writing, of all cash and/or securities due to or from
the Portfolio Account, and the Sub-Adviser shall not have possession or
custody thereof. The Sub-Adviser shall advise the Custodian and confirm
in writing to the Fund and to the administrator designated by the Fund
or any other designated agent of the Fund, all investment orders for
the Portfolio Account placed by it with brokers and dealers at the time
and in the manner set forth 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 Sub-Adviser. 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
Sub-Adviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian, except that it shall be the responsibility of the
Sub-Adviser to take appropriate action if the Custodian fails to
confirm in writing proper execution of the instructions.
7. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have authority and
discretion to select brokers and dealers (including brokers that may be
affiliates of the Sub-Adviser to the extent permitted by Section 7(c)
hereof) to execute portfolio transactions initiated by the Sub-Adviser,
and for the selection of the markets on or in which the transactions
will be executed, subject to the following and subject to conformance
with the policies and procedures disclosed in the Fund's Prospectus and
Statement of Additional Information and the policies and procedures
adopted by the Fund's Board of Trustees.
(a) In executing portfolio transactions, the Sub-Adviser will give
primary consideration to securing the best price and
execution. Consistent with this policy, the Sub-Adviser may
consider the financial responsibility, research and investment
information and other services provided by brokers or dealers
who may effect or be a party to any such transaction or other
transactions to which other clients of the Sub-Adviser may be
a party. It is understood that neither the Fund, the Adviser
nor the Sub-Adviser has adopted a formula for allocation of
the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the
Sub-Adviser have access to supplemental investment and market
research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the lowest
commission. Therefore, the Sub-Adviser is authorized to place
orders for the purchase and sale of securities for the
Portfolio with such certain brokers,
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subject to review by the Fund's Board of Trustees from time to
time with respect to the extent and continuation of this
practice. It is understood that the services provided by such
brokers may be useful to the Sub-Adviser in connection with
its services to other clients. The Sub-Adviser is also
authorized to place orders with certain brokers for services
deemed by the Adviser to be beneficial for the Fund; and the
Sub-Adviser shall follow the directions of the Adviser or the
Fund in this regard.
(b) On occasions when the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of the Portfolio as
well as other clients, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, may, but shall
be under no obligation to, aggregate the securities to be sold
or purchased in order to obtain the best price and execution.
In such event, allocation of the securities so purchased or
sold, as well as expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations
to the Fund in respect of the Portfolio and to such other
clients.
(c) The Sub-Adviser agrees that it will not execute without the
prior written approval of the Adviser any portfolio
transactions for the Portfolio Account with a broker or dealer
which is (i) an affiliated person of the Fund, including the
Adviser or any Sub-Adviser for any Portfolio of the Fund; (ii)
a principal underwriter of the Fund's shares; or (iii) an
affiliated person of such an affiliated person or principal
underwriter. The Adviser agrees that it will provide the
Sub-Adviser with a list of such brokers and dealers.
(d) The Adviser shall render regular reports to the Fund of the
total brokerage business placed and the manner in which the
allocation has been accomplished.
8. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Portfolio
Account may be invested from time to time. At the request of the
Sub-Adviser, the Adviser shall provide the Sub-Adviser with its
recommendations as to the voting of such proxies.
9. REPORTS TO THE SUB-ADVISER. The Fund will provide the Sub-Adviser with
such periodic reports concerning the status of the Portfolio Account as
the Sub-Adviser may reasonably request.
10. FEES FOR SERVICES. The compensation of the Sub-Adviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the provisions of
the Investment Advisory Agreement between the Fund and the Adviser, the
Adviser is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of the
Sub-Adviser's fees solely from the Adviser.
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11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Fund acknowledges
that the Sub-Adviser or one or more of its affiliated persons may have
investment responsibilities or render investment advice to or perform
other investment advisory services for other individuals or entities
and that the Sub-Adviser, its affiliated persons or any of its or their
directors, officers, agents or employees may buy, sell or trade in any
securities for its or their respective accounts ("Affiliated
Accounts"). Subject to the provisions of Section 7(b) hereof, the Fund
agrees that the Sub-Adviser or its affiliated persons may give advice
or exercise investment responsibility and take such other action with
respect to other Affiliated Accounts which may differ from the advice
given or the timing or nature of action taken with respect to the
Portfolio Account, provided that the Sub-Adviser acts in good faith,
and provided further, that it is the Sub-Adviser's policy to allocate,
within its reasonable discretion, investment opportunities to the
Portfolio Account over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objective and policies of the Portfolio and any specific investment
restrictions applicable thereto. The Fund acknowledges that one or more
of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in
which the Portfolio Account may have an interest from time to time,
whether in transactions which involve the Portfolio Account or
otherwise. The Sub-Adviser shall have no obligation to acquire for the
Portfolio Account a position in any investment which any Affiliated
Account may acquire, and the Fund shall have no first refusal,
co-investment or other rights in respect of any such investment, either
for the Portfolio Account or otherwise.
12. CERTIFICATE OF AUTHORITY. The Fund, the Adviser and the Sub-Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Boards of Trustees/Directors or executive
committees, as the case may be, evidencing the authority of officers
and employees who are authorized to act on behalf of the Fund, a
Portfolio Account, the Adviser and/or the Sub-Adviser.
13. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable
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 (or in the absence of) specific directions or
instructions from the Fund or the Adviser, provided, however, that such
acts or omissions shall not have resulted from the Sub-Adviser's
willful misfeasance, bad faith, gross negligence or a reckless
disregard of duty. Nothing in this Section 13 shall be construed in a
manner inconsistent with Section 17(i) of the 1940 Act.
14. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser
and the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto
shall treat as confidential all material non public information
pertaining to the Portfolio Account and the actions of the Sub-Adviser,
the Adviser and the Fund in respect thereof.
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15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the
event of such assignment. The Sub-Adviser shall notify the Fund and the
Adviser in writing sufficiently in advance of any proposed change of
control within the meaning of the 1940 Act to enable the Fund and the
Adviser to take the steps necessary to enter into a new contract with
the Sub-Adviser.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND. The Fund
represents, warrants and agrees that:
(a) The Sub-Adviser has been duly appointed by the Board of
Trustees of the Fund to provide investment services to the
Portfolio Account as contemplated hereby.
(b) The Fund will deliver to the Sub-Adviser a true and complete
copy of its then current Prospectus and Statement of
Additional Information as effective from time to time and such
other documents or instruments governing the investment of the
Portfolio Account and such other information as is necessary
for the Sub-Adviser to carry out its obligations under this
Agreement.
(c) The Fund is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the Fund
by applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees
of the Fund to delegate to the Sub-Adviser the provision of
investment services to the Portfolio Account as contemplated
hereby.
(b) The Adviser is currently in compliance and shall at all times
continue to comply with the requirements imposed upon the
Adviser by applicable law and regulations.
18. REPRESENTATIONS. WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act") or is a
"bank" as defined in Section 202(a)(2) of the Advisers Act.
(b) The Sub-Adviser will maintain, keep current and preserve on
behalf of the Fund, in the manner required or permitted by the
1940 Act, the records identified in Schedule B. The
Sub-Adviser agrees that such records (unless otherwise
indicated on Schedule B) are the property of the Fund, and
will be surrendered to the Fund promptly upon request. The
Sub-Adviser agrees to keep confidential all records of the
Fund and information relating to the Fund, unless the release
of such
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records or information is otherwise consented to in writing by
the Fund or the Adviser. The Fund and the Adviser agree that
such consent shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or
criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
(c) The Sub-Adviser will complete such reports concerning
purchases or sales of securities on behalf of the Portfolio
Account as the Adviser or the Fund may from time to time
require to ensure compliance with the 1940 Act, the Internal
Revenue Code, applicable state securities laws and applicable
statutes and regulations of foreign jurisdictions.
(d) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Advisers Act and has provided the Fund
with a copy of the code of ethics and evidence of its
adoption. Within forty-five (45) days of the end of the last
calendar quarter of each year while this Agreement is in
effect, the president or a vice president or general partner
of the Sub-Adviser shall certify to the Fund that the
Sub-Adviser has complied with the requirements of Rule 17j-1
and Section 204A during the previous year and that there has
been no violation of the Sub-Adviser's code of ethics or, if
such a violation has occurred, that appropriate action was
taken in response to such violation. Upon the written request
of the Fund, the Sub-Adviser shall permit the Fund, its
employees or its agents to examine the reports required to be
made to the Sub-Adviser by Rule 17j-1(c)(1).
(e) The Sub-Adviser will promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV furnish a
copy of such amendment to the Fund and the Adviser.
(f) The Sub-Adviser will immediately notify the Fund and the
Adviser of the occurrence of any event which would disqualify
the Sub-Adviser from serving as an investment adviser of an
investment company pursuant to Section 9 of the 1940 Act or
otherwise. The Sub-Adviser will also immediately notify the
Fund and the Adviser if it 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 Portfolio.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Sub-Adviser, the Adviser and the Fund,
which amendment, other than amendments to Schedules A and B, is subject
to the approval of the Board of Trustees and, to the extent required by
the 1940 Act, the shareholders of the Portfolio in the manner required
by the 1940 Act and the rules thereunder, subject to any applicable
orders of exemption issued by the Securities and Exchange Commission.
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20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of time of
two years from such date, and from year to year thereafter but only so
long as such continuance is specifically approved at least annually by
the vote of a majority of the Directors who are not interested persons
of the Fund, the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and by a
vote of the Board of Directors or of a majority of the outstanding
voting securities of the Portfolio. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
21. TERMINATION.
(a) This Agreement may be terminated by the Fund (by a vote of the
Board of Directors of the Fund or by a vote of a majority of
the outstanding voting securities of the Portfolio), without
the payment of any penalty, immediately upon written notice to
the other parties hereto, in the event of a material breach of
any provision thereof by the party so notified or otherwise by
the Fund, upon sixty (60) days' written notice to the other
parties hereto, but any such termination shall not affect the
status, obligations or liabilities of any party hereto to the
others.
(b) This Agreement may also be terminated by the Adviser or the
Sub-Adviser, without the payment of any penalty immediately
upon written notice to the other parties hereto, in the event
of a material breach of any provision thereof by the party so
notified if such breach shall not have been cured within a
20-day period after notice of such breach or otherwise by the
Adviser or the Sub-Adviser upon sixty (60) days' written
notice to the other parties hereto, but any such termination
shall not affect the status, obligations or liabilities of any
party hereto to the others.
22. SHAREHOLDER LIABILITY. The Adviser and Sub-Adviser are hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust of the Fund and agree that obligations
assumed by the Fund pursuant to this Agreement shall be limited in all
cases to the Fund and its assets, and if the liability relates to one
or more Portfolios, the obligations hereunder shall be limited to the
respective assets of such Portfolio or Portfolios. The Adviser and
Sub-Adviser further agree that they shall not seek satisfaction of any
such obligation from the shareholders or any individual shareholder of
the Portfolios of the Fund, nor from the Trustees or any individual
Trustee of the Fund.
23. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person," "principal underwriter"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to any applicable orders of exemption
issued by the Securities and Exchange Commission.
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24. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other
parties to this Agreement at their principal place of business.
25. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
26. GOVERNING 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 State of Delaware.
27. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto
embodies the entire agreement and understanding between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
THE XXXXXX SQUARE STRATEGIC EQUITY FUND
on behalf of
THE INTERNATIONAL EQUITY PORTFOLIO
By: ______________________________________________
Xxxxxx X. Xxxxxxxxx, President
XXXXXXX XXXXXX INVESTMENTS, INC.
By: _______________________________________________
Title: ____________________________________________
WILMINGTON TRUST COMPANY
By: ______________________________________________
Xxxxxx X. Xxxxxxxxx, Senior Vice President
SCHEDULES: A. Operating Procedures
B. Record Keeping Requirements
C Fee Schedule
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SCHEDULE A
OPERATING PROCEDURES
From time to time the Adviser shall issue written Operating Procedures which
shall govern reporting of transactions and other matters so as to facilitate (i)
the monitoring of the Fund's compliance with the restrictions and limitations
applicable to the operations of a registered investment company and (ii) the
preparation of reports to the Board of Trustees, regulatory authorities and
shareholders.
SUBSTANTIVE LIMITATIONS
A. The Sub-Adviser will manage the Portfolio Account as if the Portfolio
Account were a registered investment company subject to the investment
objective, policies and limitations applicable to the Portfolio stated
in the Fund's Prospectus and Statement of Additional Information, as
from time to time in effect, included in the Fund's registration
statement or a supplement thereto under the Securities Act of 1933 and
the Investment Company Act of 1940 (the "1940 Act"), as each may be
amended from time to time; provided, however, that if a more stringent
restriction or limitation than any of the foregoing is stated in
Section B of this Schedule, the more stringent restriction or
limitation shall apply to the Portfolio Account.
B. The Sub-Adviser shall not, without the written approval of the Adviser,
on behalf of the Portfolio Account:
1. purchase securities of any issuer if such purchase would cause
more than 3.33 % of the voting securities of such issuer to be
held in the Portfolio Account (1940 Act ss.5(b)(1); IRC*
ss.851(b)(4)(a)(ii));
2. purchase securities if such purchase would cause:
a. more than 1 % of the outstanding voting stock of any
other investment company to be held in the Portfolio
Account (1940 Act ss.12(d)(1)(A)(i)),
b. securities issued by any other investment company
having an aggregate value in excess of 5 % of the
value of the total assets in the Portfolio Account to
be held in the Portfolio Account (1940 Act
ss.12(d)(1)(A)(i)),
c. securities issued by all other investment companies
having an aggregate value in excess of 10% of the
value of the total assets of the Portfolio Account to
be held in the Portfolio Account (1940 Act
ss.12(d)(1)(A)(iii)),
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* Internal Revenue Code
A-1
d. more than 3.33% of the outstanding voting stock of
any registered closed-end investment company to be
held in the Portfolio Account, and by any other
investment company having as its investment adviser
any of the Sub-Advisers, the Adviser, or any other
investment adviser to the Fund (1940 Act
ss.12(d)(1)(C));
3. purchase securities of any insurance company if such purchase
would cause more than 3.33% of the outstanding voting
securities of any insurance company to be held in the
Portfolio Account (1940 Act ss.12(d)(2)); or
4. purchase securities of or any interest in any person who is a
broker, a dealer, is engaged in the business of underwriting,
is an investment adviser to an investment company or is a
registered investment adviser under the Investment Advisers
Act of 1940. unless
a. such purchase is of a security of any issuer that,
in its most recent fiscal year, derived 15% or less
of its gross revenues from securities-related
activities (1940 Act Rule 12d3-l(a)), or
b. despite the fact that such purchase is of any
security of any issuer that derived more than 15% of
its gross revenues from securities-related
activities:
(1) immediately after the purchase of any
equity security, the Portfolio Account
would not own more than 5% of outstanding
securities of that class of the issuer's
equity securities (1940 Act Rule
12d3-1(b)(1));
(2) immediately after the purchase of any debt
security, the Portfolio Account would not
own more than 10% of the outstanding
principal amount of the issuer's debt
securities (1940 Act Rule 12d3-1(b)(2));
and
(3) immediately after the purchase, not more
than 5% of the value of the Portfolio
Account's total assets would be invested
in the issuer's securities (1940 Act Rule
12d3-1(b)(3)).
C. In the event that the number of Sub-Advisers shall vary from three (3),
the percentage limitations of Subsections B1, B2a, B2d, B3, B4b(1) and
B4b(4) of this Schedule shall be adjusted (i) in the case of an
increase in the number of Sub-Advisers, proportionately downward and
(ii) in the case of a decrease of the number of Sub-Advisers,
proportionately upward.
The Adviser shall notify the Sub-Adviser of an increase or decrease in
the number of Sub-Advisers and the proportionate decrease or increase
in the percentages specified in the subsections enumerated in the
preceding sentence, but the Adviser's failure to do so shall not affect
the operation of this Section C of this Schedule.
A-2
D. The Sub-Adviser will manage the Portfolio Account so that no more than
10% of the gross income of the Portfolio Account is derived from any
source other than dividends, interest, payments with respect to
securities loans (as defined in IRC ss.512(a)(5)), and gains from the
sale or other disposition of stock or securities (as defined in the
1940 Act ss.2(a)(36)) or foreign currencies, or other income
(including, but not limited to, gains from options, futures, or forward
contracts) derived with respect to the Portfolio's business of
investing in such stock, securities, or currencies (IRC ss.851(b)(2)).
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SCHEDULE B
RECORD KEEPING REQUIREMENTS
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER:
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A. (Rule 31a-l(b)(5) and (6)). A record of each brokerage order, and all
other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Portfolio Account for, or in connection with, the purchase or
sale of securities, whether executed or unexecuted. Such records shall
include:
1. the name of the broker;
2. the terms and conditions of the order and of any modification
or cancellation thereof;
3. the time of entry or cancellation;
4. the price at which executed;
5. the time of receipt of a report of execution; and
6. the name of the person who placed the order on behalf of the
Portfolio Account.
B. (Rule 31a-l(b)(9)). A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases (e.g. execution ability, execution and research) upon
which the allocation of orders for the purchase and sale of portfolio
securities to named brokers or dealers was effected, and the division
of brokerage commissions or other compensation on such purchase and
sale orders. Such record:
1. shall include the consideration given to:
a. the sale of shares of the Fund by brokers or dealers;
b. the supplying of services or benefits by brokers or
dealers to:
(1) the Fund,
(2) the Adviser,
(3) the Sub-Adviser, and
(4) any person other than the foregoing; and
B-1
c. any other consideration other than the technical
qualifications of the brokers and dealers as such;
2. shall show the nature of the services or benefits made
available;
3. shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation; and
4. shall show the name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
C. (Rule 31a-l(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
D. (Rule 31a-1(f)). Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Sub-Adviser's transactions with respect to the Portfolio Account.
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* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports of
portfolio adviser reviews.
B-2
SCHEDULE C
FEE SCHEDULE
For the services to be provided to the Portfolio pursuant to the
attached Sub-Advisory Agreement, the Adviser shall pay the Sub-Adviser a monthly
fee in accordance with the following formula:
Monthly Fee = (.50% x net asset value of the Sub-Adviser's Portfolio Account on
the last business day of the month) / 12
Such fee shall be payable in arrears within 15 business days following the end
of each month.
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* Internal Revenue Code
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
