Amended and Restated Sub-Advisory Agreement
Renaissance Investment Management
This Amended and Restated Sub-Advisory Agreement (the "Agreement"),
effective as of January 1, 2009 (the "Effective Date"), by and among American
Fidelity Dual Strategy Fund, Inc., a Maryland corporation (the "Fund"), American
Fidelity Assurance Company, an insurance company organized under the laws of
the State of Oklahoma (the "Advisor"), and The Renaissance Group LLC (d/b/a
Renaissance Investment Management) (the "Sub-Advisor"), amends and restates in
its entirety the Sub-Advisory Agreement by and among the parties hereto dated
as of October 3, 2005, as amended February 22, 2006 (the "Previous Agreement").
RECITALS
A. The Fund is engaged in business as an open-end, diversified management
company and is registered as such under the Investment Company Act.
B. The Advisor has entered into Management and Investment Advisory
Agreement dated as of May 1, 2003 with the Fund (the "Advisory Agreement"),
pursuant to which the Advisor acts as investment advisor to the Fund.
C. The Sub-Advisor is engaged principally in the business of rendering
investment advisory services and is registered as an investment advisor under
the Investment Advisers Act.
D. The Advisor and the Sub-Advisor previously obtained approval by a
Majority Vote of Shareholders (defined below) to retain the Sub-Advisor to
furnish investment advisory services to the Advisor with respect to certain
assets of the Fund, and the Sub-Advisor has rendered such investment advisory
services prior to the date hereof pursuant to the Previous Agreement.
E. The parties desire to amend and restate the Previous Agreement, as set
forth herein.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS: Unless otherwise defined in this Agreement,
capitalized terms shall have the meanings commonly ascribed to them in the
federal securities laws and related rules and regulations. In addition,
the following terms shall mean:
(a) Advisor: As defined in the introductory paragraph
of this Agreement.
(b) Custodian: InvesTrust, N.A. a special purpose bank
chartered by the Office of the Comptroller of the Currency.
(c) Fund: As defined in the introductory paragraph of
this Agreement.
(d) Investment Advisers Act: The Investment Advisers
Act of 1940, as amended.
(e) Investment Assets: Those assets of the Fund as the
Advisor and the Fund shall specify in writing, from time to time, including
cash, stocks, bonds and other securities that the Advisor deposits with the
Custodian and places under the investment supervision of the Sub-Advisor,
together with any assets that are added at a subsequent date or which are
received as a result of the sale, exchange or transfer of such Investment
Assets.
(f) Investment Company Act: The Investment Company Act of
1940, as amended.
(g) Majority Vote of Shareholders: The vote, in
accordance with Section 2(a)(42) of the Investment Company Act, at an annual or
a special meeting of the Shareholders of: (i) sixty-seven percent (67%) or more
of the voting securities present at the meeting, if the holders of more than
fifty percent (50%) of the outstanding voting securities of the Fund are
present or represented by proxy, or (ii) more than fifty percent (50%) of the
outstanding voting securities of the Fund, whichever is less.
(h) SEC: The Securities and Exchange Commission.
(i) Securities Act: The Securities Act of 1933, as
amended.
(j) Securities Exchange Act: The Securities Exchange Act
of 1934, as amended.
(k) Shareholders: The beneficial owners of the Fund's
securities.
(l) Sub-Advisor: As defined in the introductory paragraph
of this Agreement.
2. APPOINTMENT OF THE SUB-ADVISOR. Effective as of the date
hereof, the Advisor hereby appoints the Sub-Advisor to serve as investment
advisor to the Advisor with respect to the Investment Assets of the Fund, and
the Sub-Advisor accepts such appointment and agrees to render the services and
to assume the obligations set forth in this Agreement.
3. THE INVESTMENT ASSETS. Subject to supervision by the Advisor
and the Fund's Board of Directors, the Sub-Advisor shall manage the investment
operations of the Investment Assets. The Advisor may make additions to or
withdrawals from the Investment Assets in any amounts the Advisor determines
appropriate or necessary, and the Advisor will provide notice of such additions
and withdrawals to the Sub-Advisor.
4. CUSTODIANSHIP OF THE INVESTMENT ASSETS. The Investment Assets
have been deposited with the Custodian and are maintained by the Custodian in
safekeeping on its premises, in a recognized clearing corporation, or in the
Federal Reserve book-entry system, in the name of the Fund, the Custodian or
the clearing corporation, or in the nominee name of any of these. The Advisor
will give the Sub-Advisor prior notice if any other entity is appointed to
serve as Custodian for the Investment Assets. The term "Custodian" includes
all successors to the presently serving Custodian. The Sub-Advisor shall
have no responsibility or liability for custody arrangements or for the
actions or omissions of the Custodian.
5. MANAGEMENT OF INVESTMENT ASSETS.
5.1 GENERAL POWERS AND DUTIES.
(a) General. For the term of this Agreement,
the Sub-Advisor, subject to the provisions of Sections 3 and 5.2 of this
Sub-Advisory Agreement, has complete discretion and authority in the
investment and reinvestment of the Investment Assets. Subject to specific
written instructions of the Advisor, the Sub-Advisor must determine what
securities or other property will be acquired, held, or disposed of and,
subject to the provisions of Section 5.4 of this Agreement, what portion
of the Investment Assets will be held uninvested. The Sub-Advisor's
investment and reinvestment authority includes, without limitation,
authority to purchase, sell, exchange, convert, trade, and generally
to deal in the Investment Assets.
(b) Instructions to Custodian. The Sub-Advisor
is hereby authorized to give instructions to the Custodian with respect to the
consummation of transactions on behalf of the Advisor in the Investment Assets,
and the Sub-Advisor has authority to direct the Custodian with respect to the
investment and management of the Investment Assets. The Custodian is hereby
authorized to act in response to instructions given by the Sub-Advisor. The
Advisor agrees to take any action and deliver any certificates reasonably
necessary to confirm this authorization to the Custodian.
(c) Voting Rights. The Sub-Advisor's authority
includes the exercise of all voting rights pertaining to the Investment
Assets. The Sub-Advisor has the duty to maintain accurate records as to
any vote or action taken with respect to any stock or other securities
which are part ofthe Investment Assets and to take such further action
as may be necessary forthe Fund to participate fully in any transaction
undertaken by issuers of Investment Assets.
5.2 INVESTMENT POLICY. Investment objectives, policies
and other restrictions for the management of the Investment Assets, including
requirements as to diversification, are set forth in Exhibit A to this
Agreement. The Sub-Advisor must discharge its duties hereunder in accordance
with Exhibit A as revised or supplemented in separate written instructions
provided from time to time by the Advisor or the Fund's Board of Directors.
5.3 PRUDENCE AND DIVERSIFICATION. The Sub-Advisor must
discharge its duties under this Agreement at all times with the care, skill,
prudence and diligence that a prudent person acting in a like capacity and
familiar with such matters would use in conducting an enterprise of a like
character and with like aims.
5.4 MINIMUM LIQUIDITY REQUIREMENTS. The Advisor will give
the Sub-Advisor reasonable advance notice of any cash requirements from
the Investment Assets, and the Sub-Advisor will maintain in cash or cash
equivalents sufficient assets to meet such cash requirements.
5.5 BROKERS AND DEALERS.
(a) Instructions. The Sub-Advisor is hereby
empowered to issue orders directly to a broker or dealer for the
purchase, sale or exchange of securities with respect to the
Investment Assets. The Sub-Advisor must give the Custodian and
the Advisor prompt written notification of each such execution in
accordance with the provisions of Section 6.1 of this Agreement,
and the Sub-Advisor must instruct the broker or dealer to forward
copies of the confirmation of the execution of the order to the
Custodian and the Advisor.
(b) Selection of Securities Brokers and Dealers.
The Sub-Advisor may select and employ securities brokers and dealers
to effect any securities transactions concerning the investment
management of the Investment Assets. In selecting brokers and dealers
and placing orders with them, the Sub-Advisor must use its commercially
reasonable best efforts to obtain for the Investment Assets the most
favorable net price and "best execution" available, except to the
extent otherwise provided by Section 28(e) of the Securities Exchange
Act or by other applicable law; provided, however, in seeking the best
execution available with respect to securities transactions involving
the Investment Assets, the Sub-Advisor shall give consideration to the
overall quality of brokerage and research services provided, it being
understood and agreed that "best execution" is not limited to obtaining
the lowest commission for each transaction. Notwithstanding anything
in this subsection to the contrary, the Advisor may instruct the
Sub-Advisor in writing to engage securities brokers and dealers
specified by the Advisor to effect, with respect to the Investment
Assets, securities transactions or particular securities transactions,
and the Sub-Advisor must act in accordance with those instructions,
so long as they are reasonable. The Sub-Advisor will not be responsible
or liable for any acts or omissions by any broker or dealer selected
pursuant to this subsection; provided that, the Sub-Advisor has acted
reasonablyin the exercise of due care in the selection of the broker
or dealer and has not otherwise directly or indirectly participated
in those acts or omissions by the broker or dealer.
(c) Affiliated Brokers. Unless authorized in
writing by the Advisor, neither the Sub-Advisor nor any parent,
subsidiary or related firm, individual or other entity related to
the Sub-Advisor will act as a securities broker with respect to
any purchase or sale of securities made on behalf of the Fund.
5.6 OTHER ACCOUNTS OF THE SUB-ADVISOR. It is
understood that the Sub-Advisor performs investment advisory services
for various clients and accounts other than the Advisor. The
Sub-Advisor may give advice and take action in the performance of
its duties with respect to other clients or accounts that may be
the same as or may differ from the timing or nature of action taken
with respect to the Investment Assets, provided that the Sub-Advisor
allocates to the Investment Assets, to the extent practicable,
opportunities to acquire or dispose of investments over a period of
time on a basis no less favorable than its allocation of such
opportunities to other clients and accounts and seeks over a period
of time to obtain comparable execution of similar transactions among
its clients. It is understood that the Sub-Advisor will not have
any obligation to purchase or sell, or to recommend for purchase or
sale, for the Fund any security which the Sub-Advisor, its principals,
affiliates or employees may purchase or sell for its or their own
accounts or for the account of any other client, if in the opinion
of the Sub-Advisor such transaction or investment appears unsuitable,
impractical or undesirable for the Fund.
5.7 LIABILITY OF SUB-ADVISOR. The Sub-Advisor shall
act in good faith in rendering services in connection with this
Agreement. Nothing contained herein shall make the Sub-Advisor be
liable for any loss incurred by the Fund in connection with services
provided by the Sub-Advisor in accordance with this Agreement so
long as the Sub-Advisor acts in good faith and fulfills its duties
under this Agreement; provided, however, that nothing herein shall
protect the Sub-Advisor against liability to the Fund to which the
Sub-Advisorwould otherwise be subject, by reason of its willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of its reckless disregard of its obligations
and duties under this Agreement. Nothing in this Agreement shall
protect the Sub-Advisor from any liabilities which it may have
under the Securities Act, the Investment Company Act or the Investment
Advisers Act.
6. INFORMATION AND REPORTS.
6.1 REPORTS TO ADVISOR. The Sub-Advisor must submit
a daily written report to the Advisor promptly following the close
of regular trading on the New York Stock Exchange detailing the actions
taken by the Sub-Advisor under this Agreement during that day. The
report must contain the information in the form that the Advisor has
or will from time to time specify. In addition, the Sub-Advisor must
provide other reports on the performance of the Investment Assets at
such times, for such periods and in such form as the Advisor or the
Fund's Board of Directors reasonably request.
6.2 RECORDS AND ACCOUNTS. The Sub-Advisor must keep
accurate and detailed records and accounts of the Investment Assets
and of all receipts, disbursements and other transaction affecting
the Investment Assets. The Sub-Advisor will make all its records,
accounts and documents relating to the Investment Assets available
at all reasonable times and under reasonable conditions for inspection
and audit by any person or persons designated by the Advisor or the
Fund's Board of Directors.
6.3 CODE OF ETHICS. The Sub-Advisor has adopted a
written code of ethics complying with the requirements of Rule 17j-1
of the Investment Company Act and Rule 204A-1 of the Investment
Advisers Act (the "Code of Ethics") and has provided a copy of such
Code of Ethics to the Fund. The Sub-Advisor agrees to deliver a
copy of the Code of Ethics to the Fund promptly after any material
changes are made, highlighting or summarizing such material changes.
Upon request, the Chief Compliance Officer of the Sub-Advisor shall
certify to the Fund that, with regard to the period identified by
the Fund in its request:
(a) The Sub-Advisor has provided to the Fund
the Sub-Advisor's Code of Ethics that is in effect;
(b) The Sub-Advisor has complied with the
requirements of Rule 17j-1 and Rule 204A-1;
(c) The Sub-Advisor has adopted procedures
reasonably necessary to prevent its "Access Persons" (as defined in
Rule 17j-1 of the Investment Company Act) from violating the Code of
Ethics; and
(d) There have been no material violations of
the Code of Ethics or, if any violation has occurred, the nature of
such violation and of the action taken in response to such violation.
6.4 COMPLIANCE PROGRAM. The Sub-Advisor has adopted
written policies and procedures in compliance with the applicable
requirements of Rule 38a-1 of the Investment Company Act and Rule
206(4)-7 of the Investment Advisers Act (the "Compliance Procedures")
and has provided a copy of such Compliance Procedures to the Fund.
The Sub-Advisor agrees to provide a copy of the Compliance Procedures
to the Fund promptly after any material changes are made, highlighting
or summarizing such material changes. Upon request, the Chief
Compliance Officer of the Sub-Advisor shall certify that:
(a) The Sub-Advisor has provided to the Fund the
Sub-Advisor's Compliance Procedures that are in effect at that time;
(b) The Sub-Advisor has reviewed, during the
preceding 12-month period (or as otherwise required by applicable law),
the adequacy of its Compliance Procedures and the effectiveness of the
implementation of the Compliance Procedures;
(c) The Compliance Procedures are reasonably
designed to prevent violation, by the Sub-Advisor and its Supervised
Persons, of the Federal Securities Laws, including the Investment
Advisers Act and related rules issued by the SEC; and
(d) With regard to the period identified by
the Fund in its request, there have been no violations of the
Compliance Procedures or, if any violation has occurred, the nature
of such violation and of the action taken in response to such violation.
6.5 PROXY VOTING RECORDS AND POLICY.
(a) The Sub-Advisor has adopted and implemented
written policies and procedures pursuant to Rule 206(4)-6 of the
Investment Advisers Act that are reasonably designed to ensure that the
Sub-Advisor votes client securities in the best interest of its clients
(the "Proxy Voting Policy"), and the Sub-Advisor has provided a copy of
such Proxy Voting Policy to the Fund. The Sub-Advisor agrees to provide
a copy of the Proxy Voting Policy to the Fund promptly after any material
changes are made, highlighting or summarizing such material changes.
(b) The Sub-Advisor agrees to maintain an accurate
summary of any vote cast or proxy granted by the Sub-Advisor on behalf of
the Fund (the "Voting Records"), and, upon request, the Sub-Advisor shall
provide the Voting Records in the form specified in writing to the
Sub-Advisor by the Fund, and the Sub-Advisor's Chief Compliance Officer
shall certify that, with regard to the period identified by the Fund in
its request, the Voting Records accurately reflect the votes cast and
proxies granted by the Sub-Advisor on behalf of the Fund during the
identified period, each of which vote or proxy was cast or granted in
compliance with the Sub-Advisor's Proxy Voting Policy.
6.6 FORM ADV. The Sub-Advisor agrees to provide a
copy of its current Form ADV (Parts I and II) to the Fund within 90 days
of the end of the calendar year.
6.7 EXCHANGE OF INFORMATION. The Advisor and the Sub-
Advisor agree to provide the information that the Sub-Advisor or the
Advisor, as the case may be, reasonably requests to enable it to carry
out its duties, obligations and responsibilities under this Agreement
or applicable law.
6.8 INFORMATION TO BE CONFIDENTIAL. All information
and advice furnished to or obtained by any party under or in connection
with this Agreement will be treated as confidential and will not be used
or disclosed to third parties except as required by law. This provision
must not be construed to limit the Advisor's or the Fund's ability to
comply with the disclosure obligations of an investment company to its
securities holders under the federal securities laws.
7. FEE PAYABLE TO SUB-ADVISOR. For services under the Sub-
Advisory Agreement, the Sub-Advisor shall be entitled to receive from
the Advisor a quarterly fee in an amount equal to 0.12% of the current
value of the Investment Assets as of the close of the last trading day
of March, June, September and December (0.48% on an annual basis).
This fee is payable in arrears as soon as practicable, but not more
than ten business days, after the last day of each calendar quarter.
8. MEETINGS WITH ADVISOR AND FUND. A representative of
the Sub-Advisor will personally meet with the Investment Committee
of the Advisor or its designated representative as reasonably
requested by the Advisor to explain the investment and management
activities of the Sub-Advisor and any reports related thereto, at
such times as may be mutually agreed upon by the Sub-Advisor and
the Advisor. In addition, upon reasonable request, each year, a
representative of the Sub-Advisor will attend one or more of the
meetings of the Fund's Board of Directors and will be prepared to
discuss the Sub-Advisor's economic outlook, investment strategy,
individual holdings included in the Investment Assets and such
other related matters as the Board of Directors requests.
9. INDEMNIFICATION. In addition to any other rights
the Advisor or the Fund may have against the Sub-Advisor, the
Sub-Advisor will indemnify the Advisor and the Fund and hold
them harmless with respect to any loss or damage, or costs
or expenses suffered by them as a result of (i) a breach by
the Sub-Advisor of this Agreement, or (ii) the willful
misfeasance, bad faith or gross negligence of the Sub-Advisor,
or (iii) the willful misfeasance, bad faith or gross
negligence of any of the Sub-Advisor's employees, or agents
acting under its supervision or control performing any of
its obligations and duties or (iv) by reason of the
Sub-Advisor's reckless disregard of its obligations
and duties under this Agreement, the Investment Advisers
Act or any other applicable law or regulation; provided,
the Sub-Advisor shall have no responsibility or liability
for any loss incurred by reason of any act or omission of
the Advisor or the Custodian.
10. The Advisor will indemnify the Sub-Advisor and
hold it harmless with respect to any loss or damage, or costs
or expenses suffered by it as a result of (i) a breach by the
Advisor for this Agreement, or (ii) the willful misfeasance,
bad faith or gross negligence of the Advisor, or (iii) the willful
misfeasance, bad faith or gross negligence of any of the Advisor's
employees, or agents acting under its supervision or control
performing any of its obligations and duties or (iv) by reason
of the Advisor's reckless disregard of its obligations and
duties under this Agreement, the Investment Advisers Act, the
Investment Company Act or any other applicable law or regulation;
provided, the Advisor shall have no responsibility or liability
for any loss incurred by reason of any act or omission of the
Sub-Advisor or the Custodian.
11. AMENDMENT. This Agreement may be amended at
any time by written agreement of the parties, provided that
any material amendment will not be effective unless approved
in accordance with the Investment Company Act.
12. TERM AND TERMINATION.
12.1 TERM.
(a) Term. This Agreement shall have an
initial term of one year from the Effective Date and thereafter
shall continue from year to year if continuance is approved at
least annually by (a) the Fund's Board of Directors or a Majority
Vote of Shareholders and (b) the vote of a majority of the members
of the Fund's Board of Directors who are not Interested Persons of
the Sub-Advisor or of the Fund cast in person at a meeting called
for the purpose of voting on such approval.
(b) Duration. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for an
initial period of one year from the Effective Date, and it shall
continue in effect from year to year, but only so long as such
continuance is specifically approved at least annually in
accordance with the Investment Company Act.
12.2 TERMINATION.
(a) Automatic Termination. This Agreement
shall automatically terminate in the event of its assignment,
within the meaning of Section 15(a) of the Investment Company Act,
unless an order of the SEC is issued exempting such assignment.
If at any time the Sub-Advisor ceases to be an "investment advisor"
in accordance with the Investment Advisers Act, this Agreement will
automatically terminate. No penalty or payment of any kind by the
Advisor will be due upon an automatic termination
(b) Termination by Advisor, Board of
Directors of the Fund or Shareholders of the Fund. This Agreement
may be terminated at any time, upon written notice to the Sub-Advisor,
without payment of any penalty, by the Advisor, the Board of Directors
of the Fund or by a Majority Vote of Shareholders. Notwithstanding
that the effective date of any such termination may be fewer than 30
days after the date of notice of termination, the Sub-Advisor shall
be compensated for 30 days after the date of notice of termination,
and such compensation shall not constitute payment of a penalty in
connection with such termination. Any compensation paid pursuant
to this subsection 11.2(b) shall be calculated based on the Investment
Assets as of the effective date of the termination.
(c) Termination By Sub-Advisor. The
Sub-Advisor may terminate this Agreement at any time upon 30
days' prior written notice to the Advisor and the Fund.
(d) Prorated Fee. If this Sub-Advisory
Agreement shall terminate at any time other than at the end of
a calendar quarter, the Sub-Advisor shall be entitled to receive
the fee set forth in Section 7 hereof for the portion of the
quarter elapsed prior to the date of termination, prorated on
a daily basis.
13. MISCELLANEOUS.
13.1 ERRORS AND OMISSIONS POLICY. The Sub-Advisor
agrees that, at its sole expense, it will maintain an errors and
omissions insurance policy that covers the acts, errors and omissions
by the Sub-Advisor and its employees and agents during the term of
this Agreement. Upon request of the Advisor, the Sub-Advisor will
promptly provide evidence of such insurance.
13.2 GOVERNING LAW; SEVERABILITY. This Agreement
and its performance shall be governed by and construed in accordance
with the applicable laws of the United States and, to the extent
permitted by such laws, with the laws of the State of Oklahoma. In
case any provision of this Agreement is held illegal or invalid for
any reason, that illegality or invalidity will not affect the
remaining provisions of this Agreement but will be fully severable,
and this Agreement will be construed and enforced as if the illegal
or invalid provision had not been included herein.
13.3 NOTICES. Unless the parties otherwise agree,
all notices, instructions and advice with respect to matters
contemplated by this Agreement must be in writing and are effective
when received. Delivery must be made personally, by registered or
certified mail, return receipt requested, overnight courier or
confirmed facsimile and addressed as follows:
Advisor: American Fidelity Assurance Company
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Investment Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Fund: American Fidelity Dual Strategy Fund, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Compliance Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxx
McAfee & Xxxx A Professional Corporation
Two Leadership Square
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx.xxxxxxx@xxxxxxxxxx.xxx
Sub-Advisor: The Renaissance Group LLC (d/b/a Renaissance
Investment Management)
The Xxxxxxx Center, Suite 1200
000 Xxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Managing Partner
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change any of the above information by providing notice
to the other parties in the manner set forth above. All reports
required to be delivered by the Sub-Advisor to the Advisor pursuant
to Section 6.1 of this Agreement must be delivered in the manner
specified from time to time by the Advisor.
13.4 COMPLIANCE WITH LAWS. Nothing in this Agreement
shall be deemed to authorize the Sub-Advisor to effect any transactions
in contravention of its fiduciary obligations, duties or responsibilities
under the Investment Advisers Act, this Agreement or any other applicable
federal or state laws or regulations (including all applicable securities
laws and regulations) or the rules of any national securities exchange.
Each party will at all times comply with the Investment Advisers Act and
other applicable laws, regulations and rules in performing its duties
under this Agreement.
13.5 COUNTERPARTS. This Agreement may be executed in
one or more separate counterparts, each of which shall be deemed to be
an original, and all of which taken together shall be deemed to constitute
one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FUND: AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By: ____________________________
Name: Xxxxx X. Xxxxxxxxx
Title: President
ADVISOR: AMERICAN FIDELITY ASSURANCE COMPANY
By: ____________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
SUB-ADVISOR: THE RENAISSANCE GROUP LLC
(d/b/a Renaissance Investment Management)
By: ____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Partner
EXHIBIT A
American Fidelity Assurance Company
American Fidelity Dual Strategy Fund
Investment Objectives, Policies and Other Restrictions
I. INVESTMENT OBJECTIVES:
The Fund's investment objectives are, primarily, long-term growth
of capital and, secondarily, the production of income. Such objectives
do not preclude infrequent investments for short-term capital
appreciation. The Fund normally invests in a diversified portfolio
consisting primarily of common stocks based upon an assessment of
particular industries or companies. The Fund attempts to maintain
sufficient cash balances to meet variable annuity contract payments.
The Fund's assets may be held in cash or cash equivalents or in
United States Government securities for this purpose. The Fund does
not engage in the purchase or sale of puts, calls or other options
or in writing such options. The Sub-Advisor, after consulting with
the Advisor and obtaining Advisor approval, may determine that
prevailing market and economic conditions indicate that investments
other than common stocks may be advantageous, in which event
investments may be made on a short-term basis in United States
Government securities, bonds, notes or other evidences of
indebtedness, issued publicly, of a type customarily purchased
for investment by institutional investors.
II. FUNDAMENTAL INVESTMENT POLICIES:
The Sub-Advisor must comply with the following:
A. Not more than five percent (5%) of the value of the
Investment Assets placed with the Sub-Advisor will be
invested in securities of any one issuer, except
obligations of the United States Government and
instrumentalities thereof.
B. Not more than ten percent (10%) of the voting
securities of any one issuer will be acquired.
C. Not more than twenty-five (25%) of the value of
the Investment Assets placed with the Sub-Advisor
will be invested in any one industry.
D. No borrowings will be made.
E. The Sub-Advisor will ensure that the Fund does
not act as an underwriter of securities of other
issuers.
F. Investment in real estate will be limited to shares
of real estate investment trusts investing in equity
real estate, up to ten percent (10.0%) of Investment
Assets placed with the Sub-Advisor. Investment in
private placements and other illiquid assets will not
be made.
G. No purchase of commodities or commodity contracts
will be effected.
H. Puts, calls or other options will not be purchased.
I. Loans will not be made except through the acquisition
of publicly traded bonds, debentures or other evidences
of indebtedness of a type customarily purchased by
institutional investors.
J. Investment will not be made in the securities of a
company for the purpose of exercising management or
control.
K. Investment in securities of other investment companies
will not be made except for money market funds. Up to
ten percent (10%) of Investment Assets placed with the
Sub-Advisor may be invested in money market funds,
provided that not more than three percent (3%) of the
total outstanding voting stock of any one investment
company may be held.
L. Investments in repurchase agreements will be limited
to the top thirty-five (35) U.S. banks, by deposits,
that are rated at least "B/C" by Xxxxx, Bruyette, Woods,
a national bank rating agency or a comparable rating
from a similar bank rating service. Additionally, there
must be an appropriate amount of excess collateralization
depending upon the length of the agreement, to protect
against downward market fluctuation and the Fund must
take delivery of the collateral. The market value of
the securities held as collateral will be valued daily.
In the event the market value of the collateral falls
below the repurchase price, the bank issuing the
repurchase agreement will be required to provide
additional collateral sufficient to cover the repurchase
price.
M. Short sales of securities will not be made.
N. Purchases will not be made on margin, except for such
short-term credits necessary for the clearance of
transactions.
O. Investments in high-yield or non-investment grade bonds
will not be made.
P. Investments in the equity securities of foreign corporations
will be limited to American Depositary Receipts ("ADRs"),
other depositary receipts and ordinary shares which are
denominated in U.S. dollars and publicly traded in the
United States. Not more than thirty-five percent (35%)
of the Investment Assets placed with the Sub-Advisor will
be invested in foreign issuers. In addition, not more
than twenty percent (20%) of the Investment Assets placed
with the Sub-Advisor will be invested in issuers from any
one foreign country.
III. ADDITIONAL INVESTMENT RESTRICTIONS:
The Sub-Advisor must comply with the following Additional Investment
Restrictions unless it requests an exception and receives written consent from
the Advisor or the Board of Directors of the Fund. To the extent that these
Additional Investment Restrictions conflict with the Fundamental Investment
Policies, the Additional Investment Restrictions shall govern.
A. The Sub-Advisor should generally conform to these issuer
guidelines with exceptions noted at the time of purchase
and variances reviewed annually with the Board of Directors
of the Fund.
1. A minimum market capitalization of one billion
dollars ($1,000,000,000) at the time of purchase.
2. Audited financial statements for at least three
(3) years of operation.
3. Fifty million dollars ($50,000,000) or more in
stockholders equity.
B. Lending of securities will not be permitted.
C. The Fund will not invest in the securities of tobacco-producing
companies.
D. InvesTrust, N.A., or another custodian chosen by the Advisor,
shall be the Custodian of all Investment Assets placed with
the Sub-Advisor. The Sub-Advisor must ensure that duplicate
brokerage confirmations of all transactions are sent to the
Custodian and the Advisor.
E. All money market funds used by the Sub-Advisor for a portion of
Investment Assets placed with the Sub-Advisor must be approved
in advance by the Advisor.
F. The money market funds (cash) used by the Sub-Advisor for a
portion of Investment Assets must have a balance at all times
equal to at least one percent (1.0%), but not more than three
percent (3.0%), of the market value of Investment Assets placed
with the Sub-Advisor.
G. All brokers used by the Sub-Advisor to execute transactions for
the Fund must have a commercial paper rating of A1/P1 by Moody's
and Standard & Poor's unless approved in advance by the Advisor.
Appendix 1 to Exhibit A
This Appendix 1 to Exhibit A is provided in order to clarify certain
matters with regard to the Fund's Fundamental Investment Policies and Other
Restrictions. The numbers below refer to the corresponding numbers in
Exhibit A.
III.C - Companies in which investment is prohibited are identified on
Attachment (a) to this Appendix.
III.G - Sub-Advisor requests, and Advisor grants, approval of, the brokers
identified on Attachment (b) to this Appendix.
Attachment (a) to Appendix 1
Company Ticker
(including any successors assignees that are tobacco-
producing companies)
DIMON CORP AOI
B.A.T. INDUSTRIES PLC BTI
LOEWS CORP CAROLINA GRP XX
XXXXX CORP DMN
ALTRIA GROUP, INC. MO
XXXXXXXX AMERICAN INC RAI
XXXXXXXXXX XXXX SWM
UST, INC. UST
UNIVERSAL CORPORATION UVV
VECTOR GROUP VGR
XXXXXXXXX FILTER WLSF
XXXX XXXXXXX CIGAR CORP ABDC.XX
XXXXXXXX BLH
IMPERIAL TOBACCO ITY
STAR SCIENTIFIC STSI
Attachment (b) to Appendix 1
CP
Broker Rating
BNY CovergEx A-1/P-1
Xxxxxx Xxxxxxx XX
Xxxxxxx Xxxxx A-1+/P-1
Jefferies XX
Xxxxxx Xxxxxxxxxx XX
Xxxxxxxxx NA
Instinet NA
UBS A-1+/P-1
Xxxxxxxx Xxx NA
Lighthouse Financial NA
Execution Copy
