EXHIBIT (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
(INTERNATIONAL BOND PORTFOLIO)
THIS AGREEMENT, made as of the 27th day of January, 2005, by and
between Advantus Capital Management, Inc., a Minnesota corporation, registered
as an Investment Adviser under the Investment Advisers Act of 1940 (the
"Adviser") and Xxxxxx Xxxx Investments Limited, a UK company, authorized and
regulated by the financial Services Authority ("FSA") and registered as an
Investment Adviser under the Investment Advisers Act of 1940 (the
"Sub-Adviser").
WHEREAS, the Adviser is the Investment Adviser to Advantus Series Fund,
Inc. (the "Fund"), an open-end diversified management investment company
organized as a series fund, registered under the Investment Company Act of 1940,
as amended (the "1940 Act");
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it
with portfolio selection and related research and statistical services in
connection with the Adviser's investment advisory activities on behalf of the
Fund's International Bond Portfolio (hereinafter "Portfolio"), and the
Sub-Adviser desires to furnish such services to the Adviser; and
WHEREAS, the Sub-Adviser has classified the Adviser as an Intermediate
Customer in accordance with the rules of the FSA and by execution of this
Agreement the Adviser hereby acknowledges such classification
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF SUB-ADVISER
In accordance with and subject to the Investment Advisory Agreement between the
Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for the investment and
reinvestment of the Portfolio, subject to the control and direction of the
Fund's Board of Directors, for the period and on the terms hereinafter set
forth. The Sub-Adviser accepts such appointment and agrees to furnish the
services hereinafter set forth for the compensation described herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized herein, have no
authority to act for or represent the Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and
assume the following obligations with respect to the Portfolio
of the Fund:
(1) INVESTMENT PLAN
In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall:
(i) obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Portfolio or are under consideration for inclusion therein;
(ii) formulate and implement a continuous investment program for the
Portfolio consistent with the investment objective and related
investment policies for such Portfolio; and
(iii) take such steps as are necessary to implement the aforementioned
investment program by purchase and sale of securities, including
financial futures contracts and currency exchange transactions,
including the placing of orders for such purchases and sales.
(2) INVESTMENT OBJECTIVES, POLICIES, PRACTICES AND RESTRICTIONS
(i) The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, the current Prospectus and the
Statement of Additional Information of the Fund and shall conform to
the investment objectives, policies and restrictions of the Portfolio
as set forth in such documents and as interpreted from time to time by
the Board of Directors of the Fund and by the Adviser, including
diversification of the holdings of the Portfolio as a segregated asset
account in accordance with Section 817 of the Internal Revenue Code, as
amended (the "Code"), and Regulation Section 1.817-5 thereunder,
provided that Adviser shall be responsible for ensuring that the Fund
as a whole is "adequately diversified" if and to the extent required by
Section 817(h) of the Code and Regulation 1.817-5 thereunder.
(ii) Within the framework of the investment objectives, policies and
restrictions of the Portfolio, and subject to the supervision of the
Adviser, the Sub-Adviser shall formulate and implement an overall
continuing program for managing the investment of the assets of the
Portfolio, and shall amend and update such program from time to time as
financial and other economic conditions warrant.
(iii) Adviser agrees to promptly inform the Sub-Adviser, in writing, of any
changes in such documents or interpretations which may affect the
Sub-Adviser's services hereunder, it being understood that such changes
will be effective with respect to the Sub-Adviser upon the
Sub-Adviser's receipt of such notice, provided, however, that
Sub-Advisor shall have a reasonable period to effect any necessary
portfolio changes to bring the assets into compliance with such changes
or interpretations.
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(3) CASH MANAGEMENT AND SHORT-TERM INVESTMENT FUNDS
(i) The Adviser shall arrange with the custodian of the Portfolio
("Custodian") to have two Short-Term Investment Funds ("STIF's")
available to be used as sweep vehicles for the short-term investment of
cash for the Portfolio. The Sub-Adviser agrees to use these STIF's for
the short-term investment of cash, subject to the limitations on
investments in shares of other investment companies set forth in the
1940 Act..
(ii) In addition, the Sub-Adviser agrees that the management of cash is the
Sub-Adviser's responsibility, and agrees that cash will be managed in
full compliance with any applicable restrictions, including the
limitations on investments in shares of other investment companies set
forth in the 1940 Act.
(4) ELECTRONIC DELIVERY OF DAILY TRADE FILE AND DAILY HOLDINGS
(i) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall deliver to the Adviser by no later
than noon Central Time on trading day, a trade file with respect to
securities, including financial futures contracts and currency exchange
transactions, purchased or sold on such trading day, if any, using a
secure electronic system established by Adviser, and confirmations, if
customarily provided by counterparties, relating to each transaction
executed for the Portfolio.
(ii) Intentionally deleted.
(iii) Using a secure electronic system established by Adviser, Sub-Adviser
will deliver to Adviser by no later than noon Central Time on trade
date plus one, a complete list of investments held by the Portfolio on
a daily basis. Sub-Adviser agrees to reconcile these holdings with the
Custodian on a monthly basis.
(iv) Revisions to or cancellations of trades must be provided by Sub-Adviser
to Adviser using a secure electronic system established by Adviser by
no later than 2:00 p.m. Central Time on trade date plus one. If a
revision or cancellation is made after this deadline, Sub-Adviser will
promptly notify Adviser using a secure electronic system established by
Adviser.
(5) INVESTMENT IN NEW SECURITIES
(i) Intentionally Deleted.
(ii) Sub-Adviser further agrees to provide ongoing security related
information as is necessary (including, but not limited to payment
discrepancies).
(6) TRADE AFFIRMATION AND SETTLEMENT
(i) The Sub-Adviser shall affirm and direct the Custodian to settle each
trade made by the Sub-Adviser on behalf of the Account and shall advise
brokers to list Adviser as an Interested
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Party on all Depository Trust Company "(DTC") confirms, supplying
Adviser's DTC number as 71567. Sub-Adviser agrees that all trades will
be affirmed by the Sub-Adviser by no later than 11:00 a.m. Central Time
on trade date plus one.
(ii) With respect to portfolio securities to be purchased or sold through
DTC, the Sub-Adviser shall arrange for the automatic transmission of
the I.D. confirmation of the trade to the Custodian of the Portfolio.
For non-DTC eligible trades, Sub-Adviser will provide hard copy
confirmation, if customarily provided, via facsimile or e-mail to
Adviser by no later than 11:00 a.m. Central Time on trade date plus
one.
(iii) Sub-Adviser will work directly with Custodian and/or any applicable
broker to resolve any trade-related issues (including, but not limited
to re-registration of physical certificates, denominational breakdowns,
exchanges, etc.).
(iv) Sub-Adviser agrees to monitor any failing trades and to use its best
efforts to work proactively to resolve these issues, and seek
reimbursement from third parties as appropriate. JBIL agrees to
reimburse the Portfolio for any compensating interest due because of
failing trades if due to the fault of JBIL or if JBIL fails to use its
best efforts to seek reimbursement from third parties.
(7) CORPORATE ACTIONS
(i) Sub-Adviser will work with appropriate parties to facilitate voluntary
corporate action processing;
(ii) Sub-Adviser will notify Adviser of any voluntary corporate actions and
the specific actions that will be taken; and
(iii) Sub-Adviser will provide appropriate details related to all corporate
actions, including any accounting data needed.
(8) PROXY VOTING
Sub-Adviser agrees to be solely responsible for voting all proxies on
behalf of the securities held by the Portfolio in accordance with proxy
voting policies and procedures adopted by the Fund and shall provide
information regarding such proxy voting to Adviser. Adviser will not
vote any such proxies.
(9) SECURITIES LENDING
The Adviser may have entered into, prior to the existence of this
agreement, or may, at some point during the existence of this Agreement
enter into a securities lending agreement with the Custodian or another
party to have the securities of the Portfolio placed on loan for a fee.
If the Adviser does enter into such agreement, the Adviser will notify
the Sub-Adviser of such agreement. The Adviser agrees not to enter into
such agreement without the
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counterparty agreeing to contractual settlement, thereby guaranteeing
the return of any securities on loan when requested by the Custodian in
connection with settlements of transactions initiated by Sub-Adviser.
If requested by Sub-Adviser, and as permitted by the relevant
securities lending agreements, Adviser will instruct a buy-in against a
borrower which has failed to redeliver securities to the Portfolio.
(10) DIRECTED BROKERAGE
Sub-Adviser understands that Adviser may, on occasion, enter into
agreements for directed brokerage with certain brokers. Sub-Adviser
agrees to follow Adviser's direction regarding directed brokerage.
(11) BROKER SELECTION
Except as provided in paragraph 10, above, in placing orders or
directing the placement of orders for the execution of portfolio
transactions, the Sub-Adviser shall select brokers and dealers for the
execution of the Portfolio's transactions. In selecting brokers or
dealers to execute such orders, the Sub-Adviser is expressly authorized
to consider the fact that a broker or dealer has furnished statistical,
research or other information or services which enhance the
Sub-Adviser's investment research and portfolio management capability
generally. It is further understood in accordance with Section 28(e) of
the Securities Exchange Act of 1934, as amended, that the Sub-Adviser
may negotiate with and assign to a broker a commission which may exceed
the commission which another broker would have charged for effecting
the transaction if the Sub-Adviser determines in good faith that the
amount of commission charged was reasonable in relation to the value of
brokerage and/or research services (as defined in Section 28(e))
provided by such broker, viewed in terms either of the Portfolio or the
Sub-Adviser's overall responsibilities to the Sub-Adviser's
discretionary accounts.
(12) AVAILABILITY AND RETENTION OF RECORDS
The Sub-Adviser shall, in the name of the Portfolio, place or direct
the placement of orders for the execution of portfolio transactions in
accordance with its investment policies, as set forth in the
Portfolio's investment objectives, policies and restrictions. In
connection with the placement of orders for the execution of the
Portfolio's portfolio transactions, the Sub-Adviser shall create and
maintain all necessary records required to be created and maintained by
an investment adviser under all applicable law, rules and regulations,
including, but not limited to, records required by Section 31(a) of the
1940 Act . All records pertaining to the Sub-Adviser's management of
the Portfolio shall be the property of the Fund and shall be available
for inspection and use, upon reasonable notice and during normal
business hours, by the Securities and Exchange Commission, state
regulators, Adviser, or any person retained by the Fund. Where
applicable, such records shall be maintained by the Sub-Adviser for the
period and in the place required by Rule 31a-2 under the 1940 Act.
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(13) INVESTMENT ACTIVITY AND PORTFOLIO COMPOSITION REPORTING
The Sub-Adviser shall render such reports to the Adviser and/or to the
Fund's Board of Directors concerning the investment activity and
portfolio composition of the Portfolio in such form and at such
intervals as the Adviser or the Board may from time to time reasonably
request.
(b) The Sub-Adviser shall use the same skill and care in providing
services to the Portfolio as it uses in providing services to
other fiduciary accounts for which it has investment
responsibility.
3. EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all of its own
expenses incurred in connection with its activities under this Agreement. All
brokerage and custodial expenses relating to the operation of the Portfolio
shall be borne by the Portfolio.
4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the
Sub-Adviser a fee, determined as described on Exhibit A, attached hereto and
made a part hereof.
5. RENEWAL, AMENDMENT AND TERMINATION
This Agreement shall not become effective unless and until it is approved by the
Board of Directors of the Fund, including a majority of the members who are not
"interested persons" to parties to this Agreement, by a vote cast in person at a
meeting called for the purpose of voting such approval.
This Agreement shall continue in effect for a period more than two years from
the date of this Agreement, only so long as such continuance is specifically
approved at least annually by a vote of the holders of the majority of the
outstanding voting securities of the Portfolio, or by a vote of the majority of
the Fund's Board of Directors. And further provided that such continuance is
also approved annually by a vote of the majority of the Fund's Board of
Directors who are not parties to this Agreement or interested persons of parties
hereto, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time without payment of
penalty: (i) by the Fund's Board of Directors or by a vote of a majority of the
outstanding voting securities of the class of capital stock of the Portfolio on
sixty (60) days' prior written notice, or (ii) by either party hereto upon sixty
(60) days' prior written notice to the other. This Agreement will terminate
automatically upon any termination of the Investment Advisory Agreement between
the Fund and the Adviser or in the event of its assignment. The terms
"interested person," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act. This
Agreement may only be amended by mutual written agreement, signed by both
parties.
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6. LIABILITY
The Sub-Adviser may rely on information reasonably believed by it to be accurate
and reliable. Except as provided by the 1940 Act, neither the Sub-Adviser nor
its officers, directors, employees or agents shall be subject to any liability
for any error of judgment or mistake of law or for any loss arising out of any
investment or other act or omission in the performance by the Sub-Adviser of its
duties under this Agreement or for any loss or damage resulting from the
imposition by any government of exchange control restrictions which might affect
the liquidity of the Portfolio's assets, or from acts or omissions of the
Adviser, custodians, securities depositories or other third parties, or from any
war or political act of any foreign government to which such assets might be
exposed, provided that nothing herein shall be deemed to protect, or purport to
protect, the Sub-Adviser against any liability to the Portfolio to which the
Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder, or by
reason of the Sub-Adviser's reckless disregard of its obligations and duties
hereunder.
7. NO GUARANTEE AS TO INVESTMENT PERFORMANCE
The Adviser and the Fund's Board of Directors understand that the value of
investments made for the Account may go up as well as down and is not
guaranteed, and that investment decisions will not always be profitable. Neither
the Adviser nor the Sub-Adviser has made or is making any guarantees, including
any guarantee as to any specific level of performance of the Portfolio. The
Adviser and the Fund's Board of Directors acknowledge that this Portfolio is
designed for the described investment objective and is not intended as a
complete investment program. They also understand that investment decisions made
on behalf of the Portfolio by Sub-Adviser are subject to various market and
business risks.
8. OTHER CLIENTS OF SUB-ADVISER
The Adviser understands that the Sub-Adviser now acts, or may act in the future,
as investment adviser to other managed accounts, including other investment
companies, and the Adviser has no objection to the Sub-Adviser so acting,
provided that the Sub-Adviser duly performs all obligations under this
Agreement. The Adviser also understands that the Sub-Adviser may give advice and
take action with respect to any of its other clients or for its own account
which may differ from the timing or nature of action taken by the Sub-Adviser
with respect to the Portfolio. Nothing in this Agreement shall impose upon the
Sub-Adviser any obligation to purchase or sell, with respect to the Portfolio,
any security which the Sub-Adviser may purchase or sell for its own account or
for the account of any other client.
9. OTHER BUSINESS ACTIVITIES OF SUB-ADVISER
Except to the extent necessary to perform its obligations hereunder, nothing
herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the
right of any of its officers, directors or employees who may also be an officer,
director or employee of the Fund, or persons otherwise affiliated with Fund
(within the meaning of the 0000 Xxx) to engage in any other
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business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other trust, corporation, firm, individual or
association.
10. REPRESENTATIONS
Sub-Adviser represents that it is registered as an investment advisor under the
Investment Advisers Act of 1940 and that such registration is currently
effective and will remain effective throughout the term of this Agreement.
The Sub-Adviser will perform its duties hereunder with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims The Sub-Adviser
acknowledges that it will be acting as a fiduciary for Adviser in the
performance of its duties hereunder. The Sub-Adviser shall at no time have
custody or physical control of any assets of the Portfolio.
11. DISCLOSURE STATEMENT
Adviser acknowledges receipt of Sub-Adviser's Disclosure Statement, as required
by Rule 204-3 under the Investment Advisors Act of 1940, not less than 48 hours
prior to the date of execution of this Agreement shown below.
12. ENTIRE AGREEMENT, GOVERNING LAW AND WAIVER OF JURY TRIAL
This Agreement constitutes the entire agreement of the parties with respect to
management of the Portfolio and it supercedes and replaces any pre-existing
agreement between the parties. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Minnesota. To the
extent permitted by the Federal securities laws, the parties hereby waive their
right to a jury trial.
13. ATTORNEYS' FEES
In the event of any litigation between the parties with respect to the subject
matter of this Agreement, the prevailing party shall be entitled to recover, in
addition to any other relief awarded by the court, its reasonable attorneys'
fees and other costs of preparing for and participating in the litigation.
14. CAPTIONS
The captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
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15. SEVERABILITY
Each provision of this Agreement is intended to be severable from the others so
that if any provision or term is found to be invalid or illegal for any reason
whatsoever, such invalidity or illegality shall not affect the validity or
legality of the remaining provisions and terms hereof.
16. CONTACT INFORMATION
Sub-Adviser agrees to provide to Adviser, and update as necessary, all specific
contact information regarding individual's names, phone numbers, facsimile
numbers, e-mail addresses, and similar information for all back-up personnel,
for all personnel who have any individual responsibility for the operation of
the Portfolio.
17. NOTICES
Any notice under this Agreement shall be in writing, addressed and delivered or
mailed postage pre-paid to the appropriate party at the following address:
The Adviser at:
Advantus Capital Management
000 Xxxxxx Xxxxxx Xxxxx
Mail Station 15-3175
St. Xxxx, Minnesota 55101-2098
Attn: Xxxxx Xxxxxx
Xxxx Xxxxx
and the Sub-Adviser at:
Xxxxxx Xxxx Investments Limited
Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx XX0X 0XX Xxxxxxx
Attn: Xx. Xxxxxx Xxxx
18. POTENTIAL CONFLICTS OF INTEREST AND DISCLOSURES
(a) The Sub-Adviser (which will act as agent of the Adviser) may, subject
to the overriding principles of suitability and Best Execution and
without reference to the Adviser, effect transactions in which the
Sub-Adviser or any Associate of the Sub-Adviser has, directly or
indirectly, a material interest or a relationship of any description
with another party, which may involve a potential conflict with the
Sub-Adviser's duty to the Adviser. Neither the Sub-Adviser nor any
Associate shall be liable to account to the Adviser for any profit,
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commission or remuneration made or received from or by reason of such
transactions or any connected transactions and the Sub-Adviser's fees
shall not, unless otherwise provided, be abated thereby. Such potential
conflicting interests or duties may arise because:
(1) the Sub-Adviser or an Associate undertakes Investment Business
for other Advisers;
(2) any of the Sub-Adviser's directors or employees, or those of
an Associate, is a director of, holds or deals in securities
of, or is otherwise interested in any company whose securities
are held or dealt in on behalf of the Adviser;
(3) the transaction is in securities issued by an Associate or the
Adviser of an Associate;
(4) the transaction is in relation to any investment in respect of
which the Sub-Adviser or an Associate may benefit from a
commission, fee, xxxx-up or xxxx-down payable otherwise than
by the Adviser, or the receipt of other remuneration payable
by the counterparty to any such transaction;
(5) the Sub-Adviser deals on behalf of the Adviser with an
Associate;
(6) the Sub-Adviser may act as agent for the Adviser in relation
to transactions in which it is also acting as agent for the
account of other Advisers and Associates;
(7) the transaction is in units of or shares in collective
investment schemes or a company, of which the Sub-Adviser or
any Associate is the Sub-Adviser, operator, banker, adviser or
trustee;
(8) the Sub-Adviser may have regard, in exercising its management
discretion, to the relative performance of other funds under
its management;
(9) the Sub-Adviser may effect transactions involving placings
and/or new issues with an Associate who may be acting as
principal or receiving agent's commission. Associates may
retain any agent's commission or discount or other benefit
(including directors' fees) that accrues to them;
(10) the transaction is in the securities of a company for which
the Sub-Adviser or an Associate has underwritten, managed or
arranged an issue within the period of 12 months before the
date of the transaction;
(11) the Sub-Adviser or an Associate may receive remuneration or
other benefits by reason of acting in corporate finance or
similar transactions involving companies whose securities are
held by the Adviser; and
(12) the transaction is in securities in respect of which the
Sub-Adviser or an Associate, or a director or employee of the
Sub-Adviser or an Associate, is contemporaneously trading or
has traded on its own account or has either a long or short
position.
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(b) Capitalised terms used in this section 18 will, unless defined in this
Agreement, have the meanings ascribed to them in the Handbook of Rules
of the FSA.
(c) Notwithstanding anything contained in this agreement, none of the above
mentioned activities or practices shall violate the laws of the United
States, the United Kingdom or other regulatory authorities (such as the
National Association of Securities Dealers, Inc.)
19. COMPLAINTS AND COMPENSATION
(a) All formal complaints should in the first instance be made in writing
to the Compliance Officer at the office of the Sub-Adviser. As an
Intermediate Customer, the Adviser falls outside the scope of the UK
Financial Ombudsman Service.
(b) The Financial Services Compensation Scheme has been established
pursuant to section 213 of the UK Financial Services and Markets Xxx
0000. Eligible Claimants may be compensated by this Scheme if the
Sub-Adviser is unable to meet its liabilities to them. A statement is
available from the Sub-Adviser's Compliance Officer explaining the
Adviser's right to compensation in the event that the Sub-Adviser is
unable to meet its liabilities to the Adviser.
20. The effective date of this agreement shall be January 27, 2005.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL XXXXXX XXXX INVESTMENTS LIMITED
MANAGEMENT, INC. (SUB-ADVISER)
(ADVISER)
By: By:
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
(printed or typed name and title) (printed or typed name and title)
By: By:
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
(printed or typed name and title) (printed or typed name and title)
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EXHIBIT A
SCHEDULE OF FEES
In payment for the investment sub-advisory services to be rendered by
the Sub-Adviser in respect of the Portfolio, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Portfolio. The fee shall be accrued daily and shall be based on
the net asset value of the Portfolio assets as determined as of the close of
each business day. The fee shall be payable quarterly by Adviser to Sub-Adviser
within 30 days after quarter end and shall be accompanied by a worksheet created
by Adviser which sets forth the supporting documentation upon which Adviser
relied to calculate such fee.
The amount of such annual fee, as applied to the average daily value of
the net assets of the Portfolio shall be as described in the schedule below:
Assets Annual Fee
------ ----------
All Assets of the Portfolio 30 basis points (0.30 %)
Exhibit A
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