EXHIBIT 4(d)
ADMINISTRATION AND SERVICING AGREEMENT
AGREEMENT made as of the 1st day of May, 2001, between USAA INVESTMENT
MANAGEMENT COMPANY, a corporation organized under the laws of the state of
Delaware and having a place of business in San Antonio, Texas (IMCO), and USAA
MUTUAL FUND, INC., a corporation organized under the laws of the state of
Maryland and having a place of business in San Antonio, Texas (the Company).
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the 1940 Act); and
WHEREAS, the Company is authorized to issue shares of capital stock (the
Shares) in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company offers Shares in each of the classes identified in
Exhibit A hereto (the Existing Funds) (such classes, together with all other
classes subsequently established by the Company with respect to which the
Company desires to retain IMCO to provide administrative and shareholder
services hereunder and with respect to which IMCO is willing so to do, being
herein collectively referred to as the Funds); and
WHEREAS, the Company desires to retain IMCO to render certain
administrative and shareholder services to the Company with respect to the
Funds; and
WHEREAS, IMCO is willing to perform such services:
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF IMCO.
(a) EXISTING FUNDS. The Company hereby appoints IMCO to act as
administrator and shareholder servicing agent for the Existing Funds for the
period and on the terms herein set forth. IMCO accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) ADDITIONAL FUNDS. In the event that the Company desires to retain
IMCO to render administrative and shareholder services hereunder with respect
to any Fund other than an Existing Fund, it shall so notify IMCO in writing. If
IMCO is willing to render such services it shall notify the Company in writing,
whereupon the Company shall appoint IMCO to act as administrator and
shareholder servicing agent for such Fund for the period and on the terms
herein set forth, IMCO shall accept such appointment and agree to render the
services herein set forth for the compensation herein provided.
2. DUTIES OF IMCO.
IMCO shall administer the affairs of the Company and provide
shareholder-related services with respect to the Funds; provided, that IMCO
shall not have any obligation to provide under this Agreement any services
related to the distribution of Fund shares or any other services which are the
subject of a separate
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agreement or arrangement between the Company and IMCO with respect to the
Funds. Subject to the foregoing, IMCO shall provide the following services and
facilities to the Company:
(a) OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to the
Company, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Company's needs with respect to the Funds.
(b) PERSONNEL. Provide, without remuneration from or other cost to the
Company, the services of individuals competent to perform all of the Company's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Company or by IMCO acting in some
other capacity pursuant to a separate agreement or arrangement with the Company
with respect to the Funds.
(c) AGENTS. Assist the Company in selecting and coordinating the
activities of the other agents engaged by the Company with respect to the
Funds, including the Company's transfer agent, custodian, independent auditors
and legal counsel.
(d) DIRECTORS AND OFFICERS. Authorize and permit IMCO's directors,
officers and employees who may be elected or appointed as directors or officers
of the Company to serve in such capacities, without remuneration from or other
cost to the Company.
(e) BOOKS AND RECORDS. Assure that all financial, accounting and other
records required to be maintained and preserved by the Company with respect to
the Funds are maintained and preserved by it or on its behalf in accordance
with applicable laws and regulations.
(f) REGULATORY REPORTS AND FILINGS. Assist in the preparation of (but
not pay for) all periodic reports by the Company with respect to the Funds and
all reports and filings required to maintain the registration and qualification
of the Company and the Shares, or to meet other regulatory or tax requirements
applicable to the Funds under federal and state securities and tax laws.
(g) BOARD REPORTS. Prepare and coordinate materials relating to the
Funds to be presented to the Company's Board of Directors in preparation for
its meetings.
(h) FIDELITY BOND. Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the place where the bond is
issued, against larceny and embezzlement covering each officer and employee of
the Company who may singly or jointly with others have access to funds or
securities of the Company, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be
in such reasonable amount as a majority of the Board of Directors of the
Company who are not officers or employees of the Company shall determine, with
due consideration to the aggregate assets of the Company to which any such
officer or employee may have access.
(i) PURCHASES/REDEMPTIONS. Process and coordinate requests by
shareholders of the Funds for the purchase and redemption of Shares of the
Funds.
(j) WIRE TRANSFERS. Coordinate and implement wire transfers in
connection with the purchase and redemption of Fund Shares.
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(k) EXCHANGE OFFERS. Execute orders under any offer of exchange offered
by the Company involving concurrent purchases and redemptions of Shares of one
or more Funds or Shares of other mutual funds within the USAA Family of Funds.
(l) SHAREHOLDER INQUIRIES. Respond to shareholder inquiries requesting
information regarding matters such as shareholder account or transaction
status, net asset value of Fund shares, Fund performance, Fund services, plans
and options, Fund investment policies, Fund portfolio holdings and Fund
distributions and taxation thereof.
(m) SHAREHOLDER COMMUNICATIONS. Provide services in connection with
processing shareholder proxy statements, annual and semi-annual reports,
prospectuses and other Fund and/or Company communications with shareholders.
(n) ACCOUNT INFORMATION. Furnish (either separately or on an integrated
basis with other reports) monthly, quarterly and/or annual statements and
confirmations of all account activity with respect to each Fund to Fund
shareholders.
(n) SHAREHOLDER COMPLAINTS. Respond to shareholder complaints and other
correspondence directed to or brought to the attention of IMCO.
(o) DELEGATION. Delegate, at its expense, some or all of its duties
hereunder to other persons or entities approved by IMCO upon notice to the
Company.
(p) OTHER SERVICES. Provide such other services as the parties may from
time to time agree in writing.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by IMCO set forth
in paragraph 2 above and the services provided by IMCO set forth in any other
Agreement between the Company and IMCO, the Company assumes and shall pay all
expenses for all other Fund operations and activities and shall reimburse IMCO
for any such expenses incurred by IMCO. The expenses to be borne by the Company
shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Company
for the safekeeping of a Fund's cash, portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees payable
by a Fund to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of a Fund;
(f) fees involved in registering and maintaining registrations of the
Company and of its Shares with the Securities and Exchange Commission and
various states and other jurisdictions;
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(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports, semiannual
reports, annual reports and other communications (including prospectuses) to
existing shareholders;
(h) computation of each Fund's net asset value per Share, including the
use of equipment or services to price or value the Fund's investment portfolio;
(i) compensation and travel expenses of Directors who are not
"interested persons" of the Company within the meaning of the 1940 Act;
(j) the expense of furnishing or causing to be furnished to each
shareholder of a Fund a statement of the shareholder's account, including the
expense of mailing;
(k) charges and expenses of legal counsel in connection with matters
relating to the Funds, including, without limitation, legal services rendered
in connection with the Funds' legal and financial structure and relations with
its shareholders, issuance of Fund Shares, and registration and qualification
of securities under federal, state and other laws;
(l) membership or association dues for the Investment Company Institute
or similar organizations;
(m) interest payable on Fund borrowings; and
(n) postage.
4. ADMINISTRATION AND SHAREHOLDER SERVICING FEE.
(a) For the services and facilities to be provided by IMCO as provided
in paragraph 2 hereof, the Company shall pay to IMCO a monthly fee with respect
to each Fund computed as set forth in Exhibit A hereto.
(b) IMCO may from time to time and for such periods as it deems
appropriate voluntarily waive fees or otherwise reduce its compensation
hereunder.
5. LIABILITY AND INDEMNIFICATION.
IMCO shall exercise reasonable care in performing its services under this
Agreement and shall not be liable to the Company for any action or inaction,
except for any action or inaction constituting willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or the reckless
disregard of such duties.
The Company shall indemnify and hold IMCO and its officers, directors and
employees harmless from and against any and all loss, cost, damage and expense
(a Loss), including reasonable expenses for counsel, incurred by it resulting
from any claim, demand, action or suit relating to the performance of its
duties under this Agreement, or any action or omission by it in the performance
of its duties hereunder; PROVIDED, HOWEVER, that this indemnification shall not
apply to any Loss resulting from any action or inaction of IMCO constituting
willful misconduct, bad faith or negligence in the performance of its duties or
the reckless disregard of its duties under this Agreement. Prior to confessing
any claim against it which may be the
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subject of this indemnification, IMCO shall give the Company reasonable
opportunity to defend against said claim in its own name or in the name of
IMCO.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective as of the date
first set forth above and unless terminated shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved annually (a) by the Company's Board of Directors or by a vote of a
majority of the Fund's outstanding voting securities (as that term is defined
in the 0000 Xxx) and (b) by a majority of the Directors who are not parties to
this Agreement or "interested persons" of any such party (as defined in the
1940 Act.)
(b) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board of Directors of the Company or by
vote of a majority of the outstanding shares (as defined in the 1940 Act), or
by IMCO on sixty (60) days' written notice to the other party. This Agreement
shall automatically terminate upon its assignment by IMCO; provided, however,
that IMCO may delegate its duties as provided in subparagraph (o) of paragraph
2 hereof.
7. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
8. SERVICES NOT EXCLUSIVE.
The services of IMCO to the Company hereunder are not to be deemed
exclusive, and IMCO shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: /S/ XXXXXXXXXXX X. XXXXX By: /S/ XXXXX X. XXXXXXX
------------------------- ----------------------
Name: Xxxxxxxxxxxx x. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Senior Vice President
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EXHIBIT A
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LISTING OF FUNDS AND FEES
--------------------------
Name of Fund Fee Rate
------------ --------
S&P 500 Index Fund 0.06%*
Extended Markets Index Fund 0.38%**
Global Titans Index Fund 0.35%
Nasdaq-100 Index Fund 0.35%
(a) The Company shall pay IMCO a fee for each Fund, payable monthly in
arrears, computed as a percentage of the average net assets of the Fund for
such month at the rate set forth in this Exhibit.
(b) The "average net assets" of the Fund for any month shall be equal to
the quotient produced by dividing (i) the sum of the net assets of such Fund,
determined in accordance with procedures established from time to time by or
under the direction of the Board of Directors of the Company, for each calendar
day of such month, by (ii) the number of such days.
*The fee is computed daily and paid monthly, at an annual rate equal to the
lesser of .06% of the average daily net assets of the Fund or the amount that
brings the total Fund and Equity 500 Index Portfolio annual operating expenses
as a percentage of the Fund's average net assets up to .18%.
**The fee is computed daily and paid monthly, at an annual rate equal to .38%,
up to .10% of this fee shall be paid to Xxxxxxx Xxxxx Quantitative Advisers for
subadministrative services.
371682
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EXHIBIT 4(m)
FORM OF ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ____________, 2001 between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
"Manager"), and USAA MUTUAL FUND, INC., a corporation organized under the laws
of the state of Maryland and having a place of business in San Antonio, Texas
(the "Company").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisers
Act of 1940, as amended; and
WHEREAS, the Company is authorized to issue shares of capital stock (the
"Shares") in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company presently offers Shares in each of the classes
identified in Schedule A hereto (the "Existing Funds") (such classes, together
with all other classes subsequently established by the Company with respect to
which the Company desires to retain the Manager to render investment advisory
services hereunder and with respect to which the Manager is willing so to do,
being herein collectively referred to as the "Funds");
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF MANAGER.
(a) EXISTING FUNDS. The Company hereby appoints the Manager to act as
manager and investment adviser for each of the Existing Funds for the period
and on the terms herein set forth. The Manager accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) ADDITIONAL FUNDS. In the event that the Company establishes one or
more classes of Shares other than the Existing Funds with respect to which it
desires to retain the Manager to render management and investment advisory
services hereunder, it shall so notify the Manager in writing. If the Manager
is willing to render such services it shall notify the Company in writing,
whereupon the Company shall appoint the Manager to act as manager and
investment adviser for each of such classes of Shares for the period and on the
terms herein set forth, the Manager shall accept such appointment and agree to
render the services herein set forth for the compensation herein provided, and
each of such classes of Shares shall become a Fund hereunder.
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services and
facilities to the Company:
(a) INVESTMENT PROGRAM. The Manager will (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Directors of the Company) what
investments shall be purchased, held, sold or exchanged for each Fund and what
portion, if any, of the assets of each Fund shall be held uninvested, and (iii)
make changes on behalf of the Company in the investments of each Fund.
(b) MONITORING. Should the Company's Board of Directors determine it is
in the best interests of a Fund's shareholders to invest all of its investable
assets in another mutual fund with substantially the same investment objective
(the "Portfolio"), the Manager will monitor the services provided to the
Portfolio, subject always to the control of the Company's Board of Directors.
Such monitoring may include among other things, review of Portfolio reports
showing the composition of securities in the Portfolio on a periodic basis and
periodic review of investment practices of the Portfolio. The Manager will
report to the Company's Board of Directors, at least annually, on the results
of such monitoring such that the Board may determine whether continued
investment exclusively in the Portfolio is in the best interests of the Fund's
shareholders.
3. SUB-ADVISERS.
The Manager may employ one or more sub-advisers from time to time to
perform such of the acts and services of the Manager, including the selection
of brokers or dealers to execute the Fund's portfolio security transactions,
and upon such terms and conditions as may be agreed upon between the Manager
and such investment adviser and approved by the Company's Board of Directors.
4. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Manager set
forth in Paragraph 2 above, the Company assumes and shall pay all expenses for
all other Company operations and activities and shall reimburse the Manager for
any such expenses incurred by the Manager. The expenses to be borne by the
Company shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Company
for the safekeeping of its cash, portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions for transactions in the portfolio securities
of the Company;
(d) all taxes, including issuance and transfer taxes, and fees payable
by the Company to Federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Company;
(f) fees involved in registering and maintaining registrations of the
Company and of its Shares with the Securities and Exchange Commission and
various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports, semiannual
reports, annual reports and other communications (including Prospectuses) to
existing shareholders;
(h) compensation and travel expenses of Directors who are not
"interested persons" within the meaning of the 1940 Act;
(i) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of mailing;
(j) charges and expenses of legal counsel in connection with matters
relating to the Company, including, without limitation, legal services rendered
in connection with the Company's legal and financial structure and relations
with its shareholders, issuance of Company Shares, and registration and
qualification of securities under Federal, state and other laws;
(k) membership or association dues for the Investment Company Institute
or similar organizations;
(l) interest payable on Company borrowings; and
(m) postage.
5. ADVISORY FEE.
(a) For the services and facilities to be provided by the Manager as
provided in Paragraph 2(a) hereof, the Company shall pay to the Manager a
monthly fee with respect to each Fund computed as set forth in Schedule B or
Schedule C hereto. For the services and facilities to be provided by the
Manager as provided in Paragraph 2(b) hereof, the Company shall pay no fee.
(b) The Manager may from time to time and for such periods as it deems
appropriate voluntarily waive fees or otherwise reduce its compensation
hereunder. With respect to each Fund identified in Schedule D hereto, in
addition to any amounts otherwise payable to the Manager as an advisory fee for
current services under this Agreement, the Company shall be obligated to pay
the Manager amounts previously waived or expenses paid by the Manager with
respect to such Fund, provided that such additional payments are made not later
than the date identified in Schedule D hereto as the "Ending Date" and provided
further that the amount of such additional payment in any year, together with
all other expenses of the Fund, in the aggregate, would not cause the Fund's
expense ratio in such year to exceed the percentage of the Fund's average net
assets identified in Schedule D.
(c) In the event this Agreement is terminated with respect to any one
or more Funds as of a date other than the last day of any month, the Manager
shall pay the Company a pro rata portion of the amount that the Manager would
have been required to pay, if any, had this Agreement remained in effect for
the full month, subject to such other adjustments as may be provided in
Schedule B hereto.
6. COMPANY TRANSACTIONS.
In connection with the management of the investment and reinvestment of
the assets of the Company, the Manager, acting by its own officers, directors
or employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Company and is directed to use its best efforts to seek on behalf of a Fund the
best overall terms available. In assessing the best overall terms available for
any transaction, the Manager shall consider all factors it deems relevant,
including the breadth of the market in and the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, with respect to the specific
transaction and on a continuing basis. Subject to this primary requirement, and
maintaining as its first consideration the benefits to the Company and its
shareholders, the Manager shall have the right, subject to the control of the
Board of Directors, to follow a policy of selecting brokers and dealers who
furnish statistical, research and other services to the Company or to the
Manager.
7. RELATIONS WITH COMPANY.
Subject to and in accordance with the Articles of Incorporation and Bylaws
of the Company and of the Manager, respectively, it is understood that
Directors, officers, agents and shareholders of the Company are or may be
interested in the Manager (or any successor thereof) as directors, officers, or
otherwise, that directors, officers, agents and shareholders of the Manager are
or may be interested in the Company as Directors, officers, shareholders or
otherwise, that the Manager (or any such successor) is or may be interested in
the Company as a shareholder or otherwise and that the effect of any such
interests shall be governed by said Articles of Incorporation and Bylaws.
8. LIABILITY OF MANAGER.
Neither the Manager nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Company or its shareholders in
connection with the matters to which this Agreement relates; provided that no
provision of this Agreement shall be deemed to protect the Manager against any
liability to the Company or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of its duties or the reckless disregard of its obligations and
duties under this Agreement. Nor shall any provision hereof be deemed to
protect any Director or officer of the Company against any such liability to
which he might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of his duties or the reckless
disregard of his obligations and duties. 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.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall be executed on the first date upon
which the Agreement shall have been approved by a majority of the outstanding
voting securities (as that term is defined in the 0000 Xxx) of any Existing
Fund. This Agreement shall become effective with respect to any Existing Fund
on the first day of the first month following the date upon which the Agreement
shall have been approved by a majority of the outstanding voting securities (as
that term is defined in the 0000 Xxx) of such Existing Fund, and with respect
to any additional Fund on the date set forth in the notice from the Manager in
accordance with Paragraph 1(b) hereof that the Manager is willing to serve as
Manager with respect to such Fund. Unless terminated as herein provided, this
Agreement shall remain in full force and effect with respect to each Existing
Fund through July 31, 2003, and, with respect to each additional Fund, through
the first July 31 occurring more than twelve months after the date on which
such Fund becomes a Fund hereunder, and shall continue in full force and effect
for periods of one year thereafter with respect to each Fund so long as such
continuance with respect to any such Fund is approved at least annually (a) by
either the Directors of the Company or by vote of a majority of the outstanding
voting shares (as defined in the 0000 Xxx) of such Fund, and (b) in either
event by the vote of a majority of the Directors of the Company who are not
parties to this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of any Fund shall be effective
to continue this Agreement with respect to any such Fund notwithstanding (A)
that this Agreement has not been approved by the holders of a majority of the
outstanding shares of any other Fund affected thereby, and (B) that this
Agreement has not been approved by the vote of a majority of the outstanding
shares of the Company, unless such approval shall be required by any other
applicable law or otherwise.
(b) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Directors of the Company or by vote of a
majority of the outstanding shares (as defined in the 1940 Act), or by the
Manager on sixty (60) days' written notice to the other party.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically terminate
in the event of its assignment.
10. NAME OF COMPANY.
It is understood that the name "USAA," and any logo associated with that
name, is the valuable property of the United Services Automobile Association,
and that the Company has the right to include "USAA" as a part of its name only
so long as this Agreement shall continue and the Manager is a wholly owned
subsidiary of the United Services Automobile Association. Upon termination of
this Agreement
the Company shall forthwith cease to use the "USAA" name and logo and shall
submit to its shareholders an amendment to its Articles of Incorporation to
change the Company's name.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
12. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Company hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
so long as its services hereunder are not impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
BY: ___________________________ BY: _______________________
President President
SCHEDULE A TO ADVISORY AGREEMENT
--------------------------------
LISTING OF FUNDS
----------------
NAME OF FUND
------------
AGGRESSIVE GROWTH FUND
CAPITAL GROWTH FUND
FIRST START GROWTH FUND
GROWTH FUND
GROWTH & INCOME FUND
HIGH-YIELD OPPORTUNITIES FUND
INCOME FUND
INCOME STOCK FUND
INTERMEDIATE-TERM BOND FUND
MONEY MARKET FUND
SCIENCE & TECHNOLOGY FUND
SHORT-TERM BOND FUND
SMALL CAP STOCK FUND
VALUE FUND
SCHEDULE B TO ADVISORY AGREEMENT - FOR
FUNDS WITH PERFORMANCE ADJUSTMENTS
This Schedule B shall apply to each of the Funds identified on Schedule B-1
hereto (each, a "Fund").
(a) GENERAL. The Company shall pay to the Manager, as compensation for the
Manager's services and expenses assumed hereunder, a fee determined with
respect to each Fund, which shall be composed of the Basic Fee (defined below)
and a Performance Adjustment (defined below) to the Basic Fee based upon the
investment performance of a class of shares of the Fund in relation to the
investment record of a securities index determined by the Directors of the
Company to be appropriate over the same period.
(b) INDEX, CLASS AND CHANGES THERETO. The Directors have initially
designated for each Fund the index and class of shares of the Fund identified
on Schedule B-1 as the index and class to be used for purposes of determining
the Performance Adjustment (referred to herein as the "Index" and the "Class,"
respectively). From time to time, the Directors may, by a vote of the Directors
of the Company voting in person, including a majority of the Directors who are
not parties to this Agreement or "interested persons" (as defined in the 0000
Xxx) of any such parties, determine (i) that another securities index is a more
appropriate benchmark than the Index for purposes of evaluating the performance
of the Company; and/or (ii) that a different class of shares of the Company
representing interests in a Fund other than the Class is most appropriate for
use in calculating the Performance Adjustment. After ten days' written notice
to the Manager, a different index (the "Successor Index") may be substituted
for the Index in prospectively calculating the Performance Adjustment, and/or a
different class of shares (the "Successor Class") may be substituted in
calculating the Performance Adjustment. However, the calculation of that
portion of the Performance Adjustment attributable to any portion of the
performance period prior to the adoption of the Successor Index will still be
based upon the Fund's performance compared to the Index. The use of a Successor
Class of shares for purposes of calculating the Performance Adjustment shall
apply to the entire performance period so long as such Successor Class was
outstanding at the beginning of such period. In the event that such Successor
Class of shares was not outstanding for all or a portion of the Performance
Period, it may only be used in calculating that portion of the Performance
Adjustment attributable to the period during which such Successor Class was
outstanding and any prior portion of the Performance Period shall be calculated
using the Successor Class of shares previously designated.
(c) BASIC FEE. The basic fee for a Fund (the "Basic Fee") for any period
shall equal: (i) the Fund's average net assets during such period, multiplied
by (ii) the annual rate identified for such Fund on Schedule B-1 hereto,
multiplied by (iii) a fraction, the numerator of which is the number of
calendar days in the payment period and the denominator of which is 365 (366 in
leap years).
(d) PERFORMANCE ADJUSTMENT. The amount of the performance adjustment (the
"Performance Adjustment") shall equal: (i) the average net assets of the Fund
over the Performance Period (as defined below), multiplied by (ii) the
Adjustment Rate (as defined below), multiplied by (iii) a fraction, the
numerator of which shall be the number of days in the last month of the
Performance Period and the denominator of which shall be 365. The resulting
dollar figure will be added to or subtracted from the Basic Fee depending on
whether the Fund experienced better or worse performance than the Index.
(e) ADJUSTMENT RATE. The adjustment rate (the "Adjustment Rate") shall be
as set forth in Schedule B-2 for each Fund, PROVIDED, HOWEVER, that the
Performance Adjustment may be further adjusted to the extent necessary to
insure that the total adjustment to the Basic Fee on an annualized basis does
not exceed the maximum Performance Adjustment identified for such Fund in
Schedule B-2.
(f) PERFORMANCE PERIOD. The performance period (the "Performance Period")
shall commence on the first day of the month next occurring after this
Agreement becomes effective with respect to the Fund (the "Commencement Date"),
PROVIDED, HOWEVER, that if this Agreement should become effective on the first
day of a month with respect to a Fund, then the Commencement Date shall be the
first day of
such month. The Performance Period shall consist of the current month plus the
preceding months through the Commencement Date until a period of 36 months is
included in the Performance Period, PROVIDED, HOWEVER, that no Performance
Adjustment shall be made with respect to any period that is less than 12
months. In months subsequent to a 36-month Performance Period having been
reached, the Performance Period will be a rolling 36-month period consisting of
the most recently completed month and the previous 35 months.
(g) MEASUREMENT CALCULATION. The Fund's investment performance will be
measured by comparing the (i) opening net asset value of one share of the Class
of the Fund on the first business day of the Performance Period with (ii) the
closing net asset value of one share of the Class of the Fund as of the last
business day of such period. In computing the investment performance of the
Fund and the investment record of the Index, distributions of realized capital
gains, the value of capital gains taxes per share paid or payable undistributed
realized long-term capital gains accumulated to the end of such period and
dividends paid out of investment income on the part of the Fund, and all cash
distributions of the companies whose securities comprise the Index, will be
treated as reinvested in accordance with Rule 205-1 or any other applicable
rule under the Investment Advisers Act of 1940, as the same from time to time
may be amended.
(h) PAYMENT OF FEES. The Management Fee payable hereunder shall be
computed daily and paid monthly in arrears.
(i) AVERAGE NET ASSETS. The term "average net assets" of a Fund as used
herein for any period shall mean the quotient produced by dividing (i) the sum
of the net assets of the Fund, as determined in accordance with procedures
established from time to time under the direction of the Board of Directors of
the Company, for each calendar day of such period, by (ii) the number of such
days.
(j) TERMINATION. In the event this Agreement with respect to any Fund is
terminated as of a date other than the last day of any month, the Basic Fee
shall be computed on the basis of the period ending on the last day on which
this Agreement is in effect for such Fund, subject to a pro rata adjustment
based on the number of days elapsed in the current month as a percentage of the
total number of days in such month. The amount of any Performance Adjustment to
the Basic Fee will be computed on the basis of and applied to the average net
assets over the Performance Period ending on the last day on which this
Agreement is in effect for such Fund.
SCHEDULE B-1 TO ADVISORY AGREEMENT - LISTING OF FUNDS
WITH PERFORMANCE ADJUSTMENT
ANNUAL BASIC
NAME OF FUND PERFORMANCE INDEX FEE RATE
------------ ----------------- --------
AGGRESSIVE GROWTH FUND MID-CAP GROWTH *
CAPITAL GROWTH FUND MID-CAP GROWTH .85%
FIRST START GROWTH FUND LARGE-CAP GROWTH .75%
GROWTH FUND LARGE-CAP GROWTH .75%
GROWTH & INCOME FUND LARGE-CAP CORE .60%
HIGH-YIELD OPPORTUNITIES FUND HIGH CURRENT YIELD .50%
INCOME FUND CORPORATE DEBT FUNDS A RATED .24%
INCOME STOCK FUND EQUITY INCOME .50%
INTERMEDIATE-TERM BOND FUND INTERMEDIATE INVESTMENT GRADE **
SCIENCE & TECHNOLOGY FUND SCIENCE & TECHNOLOGY .75%
SHORT-TERM BOND FUND SHORT INVESTMENT GRADE .24%
SMALL CAP STOCK FUND SMALL CAP CORE .75%
VALUE FUND .75%
* THE FEE IS COMPUTED AT ONE-HALF OF ONE PERCENT (.50%) OF THE FIRST $200
MILLION OF AVERAGE NET ASSETS, TWO-FIFTHS OF ONE PERCENT (.40%) FOR THAT
PORTION OF AVERAGE NET ASSETS IN EXCESS OF $200 MILLION BUT NOT OVER
$300 MILLION, AND ONE-THIRD OF ONE PERCENT (.33%) FOR THAT PORTION OF
AVERAGE NET ASSETS IN EXCESS OF $300 MILLION.
** THE FEE IS COMPUTED AT ONE-HALF OF ONE PERCENT (.50%) OF THE FIRST $50
MILLION OF AVERAGE NET ASSETS, TWO-FIFTHS OF ONE PERCENT (.40%) OF THAT
PORTION OF AVERAGE NET ASSETS OVER $50 MILLION BUT NOT OVER $100
MILLION, AND THREE-TENTHS OF ONE PERCENT (.30%) OF THAT PORTION OF
AVERAGE NET ASSETS IN EXCESS OF $100 MILLION.
SCHEDULE B-2 TO ADVISORY AGREEMENT - PERFORMANCE ADJUSTMENT RATE
----------------------------------------------------------------
AGGRESSIVE GROWTH CAPITAL GROWTH FUND
FIRST START GROWTH FUND GROWTH FUND
GROWTH & INCOME FUND INCOME STOCK FUND
SCIENCE & TECHNOLOGY FUND SMALL CAP STOCK FUND
VALUE FUND
OVER/UNDER PERFORMANCE RELATIVE PERFORMANCE ADJUSTMENT RATE
TO INDEX (IN BASIS POINTS) (IN BASIS POINTS AS A PERCENTAGE
OF AVERAGE NET ASSETS)
+/- 20 to 50 +/- 4
+/- 51 to 100 x/- 0
x/- 000 xxx xxxxxxx x/- 0
HIGH-YIELD OPPORTUNITIES FUND INCOME FUND
INTERMEDIATE-TERM BOND FUND SHORT-TERM BOND FUND
OVER/UNDER PERFORMANCE RELATIVE PERFORMANCE ADJUSTMENT RATE
TO INDEX (IN BASIS POINTS) (IN BASIS POINTS AS A PERCENTAGE
OF AVERAGE NET ASSETS)
+/- 100 to 400 x/- 0
x/- 000 xx 000 x/- 0
+/- 701 and greater +/- 6
SCHEDULE C TO ADVISORY AGREEMENT - FOR FUNDS
WITH NO PERFORMANCE ADJUSTMENT)
This Schedule C shall apply to each of the Funds identified on Schedule C-1
hereto (each, a "Fund").
(a) The Company shall pay to the Manager a fee for each Fund calculated
daily and payable monthly in arrears, computed as a percentage of the average
net assets of the Fund for such month at the rate set forth in Schedule C-1
thereto.
(b) The "average net assets" of the Fund for any month shall be equal to
the quotient produced by dividing (i) the sum of the net assets of such Fund,
determined in accordance with procedures established from time to time by or
under the direction of the Board of Directors of the Company, for each calendar
day of such month, by (ii) the number of such days.
SCHEDULE C-1 TO ADVISORY AGREEMENT - LISTING OF FUNDS
AND FEE RATES
NAME OF FUND FEE RATE
------------ --------
MONEY MARKET FUND .24%
SCHEDULE D TO ADVISORY AGREEMENT- FOR FUNDS WITH FEE
WAIVER AND EXPENSE REIMBURSEMENT RECOVERY PLANS
NAME OF FUND ENDING DATE PERCENTAGE OF XXX
---------------------------------------------------------------------------
HIGH-YIELD OPPORTUNITIES FUND AUGUST 2, 2002 .75%
INTERMEDIATE-TERM BOND FUND AUGUST 2, 2002 .65%
VALUE FUND AUGUST 3, 2004 1.15%
EXHIBIT 4(n)
DRAFT
ADMINISTRATION AND SERVICING AGREEMENT
AGREEMENT made as of the day of , 2001, between USAA INVESTMENT MANAGEMENT
COMPANY, a corporation organized under the laws of the state of Delaware and
having a place of business in San Antonio, Texas (IMCO), and USAA MUTUAL FUND,
INC., a corporation organized under the laws of the state of Maryland and
having a place of business in San Antonio, Texas (the Company).
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the 1940 Act); and
WHEREAS, the Company is authorized to issue shares of capital stock (the
Shares) in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company offers Shares in each of the classes identified in
Exhibit A hereto (the Existing Funds) (such classes, together with all other
classes subsequently established by the Company with respect to which the
Company desires to retain IMCO to provide administrative and shareholder
services hereunder and with respect to which IMCO is willing so to do, being
herein collectively referred to as the Funds); and
WHEREAS, the Company desires to retain IMCO to render certain
administrative and shareholder services to the Company with respect to the
Funds; and
WHEREAS, IMCO is willing to perform such services:
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF IMCO.
(a) EXISTING FUNDS. The Company hereby appoints IMCO to act as
administrator and shareholder servicing agent for the Existing Funds for the
period and on the terms herein set forth. IMCO accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) ADDITIONAL FUNDS. In the event that the Company desires to retain
IMCO to render administrative and shareholder services hereunder with respect
to any Fund other than an Existing Fund, it shall so notify IMCO in writing. If
IMCO is willing to render such services it shall notify the Company in writing,
whereupon the Company shall appoint IMCO to act as administrator and
shareholder servicing agent for such Fund for the period and on the terms
herein set forth, IMCO shall accept such appointment and agree to render the
services herein set forth for the compensation herein provided.
2. DUTIES OF IMCO.
IMCO shall administer the affairs of the Company and provide
shareholder-related services with respect to the Funds; provided, that IMCO
shall not have any obligation to provide under this Agreement any services
related to the distribution of Fund shares or any other services which are the
subject of a separate agreement or arrangement between the Company and IMCO
with respect to the Funds. Subject to the foregoing, IMCO shall provide the
following services and facilities to the Company:
1
DRAFT
(a) OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to the
Company, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Company's needs with respect to the Funds.
(b) PERSONNEL. Provide, without remuneration from or other cost to the
Company, the services of individuals competent to perform all of the Company's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Company or by IMCO acting in some
other capacity pursuant to a separate agreement or arrangement with the Company
with respect to the Funds.
(c) AGENTS. Assist the Company in selecting and coordinating the
activities of the other agents engaged by the Company with respect to the
Funds, including the Company's transfer agent, custodian, independent auditors
and legal counsel.
(d) DIRECTORS AND OFFICERS. Authorize and permit IMCO's directors,
officers and employees who may be elected or appointed as directors or officers
of the Company to serve in such capacities, without remuneration from or other
cost to the Company.
(e) BOOKS AND RECORDS. Assure that all financial, accounting and other
records required to be maintained and preserved by the Company with respect to
the Funds are maintained and preserved by it or on its behalf in accordance
with applicable laws and regulations.
(f) REGULATORY REPORTS AND FILINGS. Assist in the preparation of (but
not pay for) all periodic reports by the Company with respect to the Funds and
all reports and filings required to maintain the registration and qualification
of the Company and the Shares, or to meet other regulatory or tax requirements
applicable to the Funds under federal and state securities and tax laws.
(g) BOARD REPORTS. Prepare and coordinate materials relating to the
Funds to be presented to the Company's Board of Directors in preparation for
its meetings.
(h) FIDELITY BOND. Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the place where the bond is
issued, against larceny and embezzlement covering each officer and employee of
the Company who may singly or jointly with others have access to funds or
securities of the Company, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be
in such reasonable amount as a majority of the Board of Directors of the
Company who are not officers or employees of the Company shall determine, with
due consideration to the aggregate assets of the Company to which any such
officer or employee may have access.
(i) PURCHASES/REDEMPTIONS. Process and coordinate requests by
shareholders of the Funds for the purchase and redemption of Shares of the
Funds.
(j) WIRE TRANSFERS. Coordinate and implement wire transfers in
connection with the purchase and redemption of Fund Shares.
(k) EXCHANGE OFFERS. Execute orders under any offer of exchange offered
by the Company involving concurrent purchases and redemptions of Shares of one
or more Funds or Shares of other mutual funds within the USAA Family of Funds.
(l) SHAREHOLDER INQUIRIES. Respond to shareholder inquiries requesting
information regarding matters such as shareholder account or transaction
status, net asset value of Fund shares, Fund performance,
2
DRAFT
Fund services, plans and options, Fund investment policies, Fund portfolio
holdings and Fund distributions and taxation thereof.
(m) SHAREHOLDER COMMUNICATIONS. Provide services in connection with
processing shareholder proxy statements, annual and semi-annual reports,
prospectuses and other Fund and/or Company communications with shareholders.
(n) ACCOUNT INFORMATION. Furnish (either separately or on an integrated
basis with other reports) monthly, quarterly and/or annual statements and
confirmations of all account activity with respect to each Fund to Fund
shareholders.
(n) SHAREHOLDER COMPLAINTS. Respond to shareholder complaints and other
correspondence directed to or brought to the attention of IMCO.
(o) DELEGATION. Delegate, at its expense, some or all of its duties
hereunder to other persons or entities approved by IMCO upon notice to the
Company.
(p) OTHER SERVICES. Provide such other services as the parties may from
time to time agree in writing.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by IMCO set forth in
paragraph 2 above and the services provided by IMCO set forth in any other
Agreement between the Company and IMCO, the Company assumes and shall pay all
expenses for all other Fund operations and activities and shall reimburse IMCO
for any such expenses incurred by IMCO. The expenses to be borne by the Company
shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Company
for the safekeeping of a Fund's cash, portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees payable
by a Fund to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of a Fund;
(f) fees involved in registering and maintaining registrations of the
Company and of its Shares with the Securities and Exchange Commission and
various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports, semiannual
reports, annual reports and other communications (including prospectuses) to
existing shareholders;
(h) computation of each Fund's net asset value per Share, including the
use of equipment or services to price or value the Fund's investment portfolio;
3
DRAFT
(i) compensation and travel expenses of Directors who are not
"interested persons" of the Company within the meaning of the 1940 Act;
(j) the expense of furnishing or causing to be furnished to each
shareholder of a Fund a statement of the shareholder's account, including the
expense of mailing;
(k) charges and expenses of legal counsel in connection with matters
relating to the Funds, including, without limitation, legal services rendered
in connection with the Funds' legal and financial structure and relations with
its shareholders, issuance of Fund Shares, and registration and qualification
of securities under federal, state and other laws;
(l) membership or association dues for the Investment Company Institute
or similar organizations;
(m) interest payable on Fund borrowings; and
(n) postage.
4. ADMINISTRATION AND SHAREHOLDER SERVICING FEE.
(a) For the services and facilities to be provided by IMCO as provided
in paragraph 2 hereof, the Company shall pay to IMCO a monthly fee with respect
to each Fund computed as set forth in Exhibit A hereto.
(b) IMCO may from time to time and for such periods as it deems
appropriate voluntarily waive fees or otherwise reduce its compensation
hereunder.
5. LIABILITY AND INDEMNIFICATION.
IMCO shall exercise reasonable care in performing its services under this
Agreement and shall not be liable to the Company for any action or inaction,
except for any action or inaction constituting willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or the reckless
disregard of such duties.
The Company shall indemnify and hold IMCO and its officers, directors and
employees harmless from and against any and all loss, cost, damage and expense
(a Loss), including reasonable expenses for counsel, incurred by it resulting
from any claim, demand, action or suit relating to the performance of its
duties under this Agreement, or any action or omission by it in the performance
of its duties hereunder; PROVIDED, HOWEVER, that this indemnification shall not
apply to any Loss resulting from any action or inaction of IMCO constituting
willful misconduct, bad faith or negligence in the performance of its duties or
the reckless disregard of its duties under this Agreement. Prior to confessing
any claim against it which may be the subject of this indemnification, IMCO
shall give the Company reasonable opportunity to defend against said claim in
its own name or in the name of IMCO.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective as of the date
first set forth above and unless terminated shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved annually (a) by the Company's Board of Directors or by a vote of a
majority of the Fund's outstanding voting securities (as that term is defined
in the 0000 Xxx) and (b) by a majority of the
4
DRAFT
Directors who are not parties to this Agreement or "interested persons" of any
such party (as defined in the 1940 Act.)
(b) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board of Directors of the Company or by
vote of a majority of the outstanding shares (as defined in the 1940 Act), or
by IMCO on sixty (60) days' written notice to the other party. This Agreement
shall automatically terminate upon its assignment by IMCO; provided, however,
that IMCO may delegate its duties as provided in subparagraph (o) of paragraph
2 hereof.
7. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
8. SERVICES NOT EXCLUSIVE.
The services of IMCO to the Company hereunder are not to be deemed
exclusive, and IMCO shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By: _________________________
---------------------------
Name: Name:
Title: President Title: Senior Vice President
5
DRAFT
EXHIBIT A
---------
LISTING OF FUNDS AND FEES
-------------------------
Name of Fund Fee Rate
------------ --------
S&P 500 Index Fund 0.06%*
Extended Markets Index Fund 0.38%**
Global Titans Index Fund 0.35%
Nasdaq-100 Index Fund 0.35%
Value Fund 0.15%
(a) The Company shall pay IMCO a fee for each Fund, payable monthly in
arrears, computed as a percentage of the average net assets of the Fund for
such month at the rate set forth in this Exhibit.
(b) The "average net assets" of the Fund for any month shall be equal
to the quotient produced by dividing (i) the sum of the net assets of such
Fund, determined in accordance with procedures established from time to time by
or under the direction of the Board of Directors of the Company, for each
calendar day of such month, by (ii) the number of such days.
*The fee is computed daily and paid monthly, at an annual rate equal to the
lesser of .06% of the average daily net assets of the Fund or the amount that
brings the total Fund and Equity 500 Index Portfolio annual operating expenses
as a percentage of the Fund's average net assets up to .18%.
**The fee is computed daily and paid monthly, at an annual rate equal to .38%,
up to .10% of this fee shall be paid to Xxxxxxx Xxxxx Quantitative Advisers for
subadministrative services.
395970
6
