pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
American Strategic Income Portfolio Inc.
American Strategic Income Portfolio Inc.II
American Strategic Income Portfolio Inc.III
American Select Portfolio Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
|
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
AMERICAN STRATEGIC INCOME PORTFOLIO INC.
AMERICAN STRATEGIC INCOME PORTFOLIO INC.II
AMERICAN STRATEGIC INCOME PORTFOLIO INC.III
AMERICAN SELECT PORTFOLIO INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
DECEMBER 17, 2010
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of American Strategic Income
Portfolio Inc., American Strategic Income Portfolio Inc.II, American Strategic Income Portfolio
Inc.III and American Select Portfolio Inc. (individually, a Fund and collectively, the Funds)
will be held at 10:00 a.m., Central Time, on Friday, December 17, 2010, at the offices of FAF
Advisors, Inc., 3rd Floor Training Room A, 800 Nicollet Mall, Minneapolis, Minnesota
55402. The purposes of the meeting are as follows:
|
1. |
|
To elect a Board of Directors. |
|
|
2. |
|
To approve an Amendment to the Investment Advisory and Management Agreement
with FAF Advisors, Inc. |
|
|
3. |
|
To approve Investment Sub-Advisory Agreements with Nuveen Asset Management,
Nuveen Fund Advisors, Inc. and Nuveen Asset Management, LLC. |
|
|
4. |
|
To ratify the selection of Ernst & Young LLP as the independent registered
public accounting firm of each Fund for the current fiscal year. |
|
|
5. |
|
To transact any other business properly brought before the meeting. |
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF EACH ITEM LISTED ON THIS NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS.
Shareholders of record as of the close of business on October 27, 2010 are entitled to notice
of, and to vote at, the meeting or any adjournment(s) thereof.
You can vote easily and quickly by toll-free telephone call, by internet or by mail. Just
follow the instructions that appear on your enclosed proxy card. Please help the Funds avoid the
cost of a follow-up mailing by voting today.
October __, 2010
Kathleen L. Prudhomme
Secretary
PROXY STATEMENT
AMERICAN STRATEGIC INCOME PORTFOLIO INC.
AMERICAN STRATEGIC INCOME PORTFOLIO INC.II
AMERICAN STRATEGIC INCOME PORTFOLIO INC.III
AMERICAN SELECT PORTFOLIO INC.
ANNUAL MEETING OF SHAREHOLDERS DECEMBER 17, 2010
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting of
Shareholders to be Held on December 17, 2010: This proxy statement is available at
www.firstamericanfunds.com.
The enclosed proxy is solicited by the Board of Directors (the Board) of American Strategic
Income Portfolio Inc., American Strategic Income Portfolio Inc.II, American Strategic Income
Portfolio Inc.III and American Select Portfolio Inc. (sometimes referred to individually as a
Fund and collectively as the Funds) in connection with each Funds annual meeting of
shareholders to be held Friday, December 17, 2010, and any adjournments thereof (the Meeting). Mailing of the
Notice of Annual Meeting of Shareholders and this Proxy Statement will take place on approximately
October __, 2010.
In order for the Meeting to go forward for a Fund, there must be a quorum. This means that at
least a majority of that Funds shares must be represented at the Meeting either in person or by
proxy. All returned proxies count toward a quorum, regardless of how they are voted. If a broker
or nominee holding shares in street name indicates on the proxy card that it does not have
discretionary authority to vote on a proposal and has not received instructions from the beneficial
owner (a broker non-vote), those shares will not be considered present and entitled to vote on
that proposal. Abstentions, however, will be counted as shares present and entitled to vote with
respect to a proposal. Abstentions and broker non-votes will have no effect on the proposal to
elect directors. With respect to the proposals to approve an amendment to the Investment Advisory
and Management Agreement and to approve sub-advisory agreements, an abstention will have the same
effect as a vote against the proposal; a broker non-vote will have no effect when the voting
requirement is based on achieving a percentage of the voting securities present or represented by
proxy at the Meeting; and a broker non-vote will have the same effect as a vote against when the
voting requirement for the proposal is based on achieving a percentage of the outstanding voting
securities. For the proposal to ratify the Funds independent accountants, a broker non-vote will
have no effect, and an abstention will have the same effect as a vote against the proposal.
For any Fund, the persons named as proxies may propose one or more adjournments of the Meeting
for that Fund to permit further solicitation of proxies, whether or not a quorum is present. In
determining whether to adjourn the meeting, the following factors, among others, may be considered:
the nature of the proposal; the percentage of votes actually cast; the percentage of negative
votes actually cast; the nature of any further solicitation; and the information to be provided to
shareholders with respect to the reasons for the solicitation. Any adjournment will require a vote
in favor of the adjournment by the
holders of a majority of the shares present in person or by proxy at the Meeting (or any
adjourned meeting).
Only shareholders of record of each Fund on October 27, 2010 may vote at the meeting or any
adjournment thereof. As of that date, the Funds had the following numbers of issued and
outstanding shares of common stock:
|
|
|
|
|
|
|
|
|
|
|
American Strategic |
|
|
American Strategic |
|
American Strategic |
|
Income |
|
American Select |
Income Portfolio |
|
Income Portfolio II |
|
Portfolio III |
|
Portfolio |
4,231,331
|
|
15,985,741
|
|
21,356,023
|
|
10,662,195 |
Each shareholder of a Fund is entitled to one vote for each share held. None of the
matters to be presented at the meeting will entitle any shareholder to cumulative voting or
appraisal rights.
You may revoke your proxy at any time up until voting results are announced at the Meeting.
You can do this by writing to the Funds Secretary, or by voting in person at the Meeting and
notifying the election judge that you are revoking your proxy. In addition, you can revoke a prior
proxy simply by voting again using your original proxy card or by internet or toll-free
telephone call. If you return an executed proxy card without instructions, your shares will be
voted for each proposal.
The Funds most recent annual report has been mailed to shareholders, and is also available by
request without charge by writing to the Funds at 800 Nicollet Mall, Minneapolis, Minnesota 55402,
or by calling the Funds at 800-677-FUND.
2
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, shareholders of each Fund will be asked to elect the nominees listed below as
members of that Funds Board. Each nominee is not considered an interested person, as that term
is defined in the Investment Company Act of 1940, as amended (the 1940 Act), of the Funds (the
Independent Directors). It is intended that the enclosed proxy will be voted for the election of
the persons named below as directors of each Fund unless such authority has been withheld in the
proxy. Biographical information regarding each nominee is set forth below. Each nominee also
serves as a director of the other closed-end and open-end investment companies managed by the
Funds investment advisor (the Fund Complex). The Fund Complex currently consists of eight
closed-end funds (each of which is a registered investment company) and 47 open-end funds (which
are portfolios of four registered investment companies). The business address of each of the
nominees is First American Funds, P.O. Box 1329, Minneapolis, Minnesota 55440-1329. Each nominee
has served as a director since the last annual meeting of shareholders. All of the nominees listed
below have consented to serve as directors, if elected. If the Transaction (as defined in Proposal
2) is consummated, it is expected that Ms. Stringer will resign from the Board (which is the board
of directors of all the funds in the Fund Complex) as of the closing date. It is expected that, as
of the closing date, Ms. Stringer would serve as a board member of various registered investment
companies sponsored by Nuveen Investments, Inc. (Nuveen).
Nominees for Election as Independent Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios |
|
|
|
|
|
|
|
|
|
|
in Fund |
|
|
|
|
|
|
|
|
|
|
Complex |
|
Other |
|
|
Position |
|
|
|
|
|
Overseen |
|
Director- |
Name and Year of |
|
Held with |
|
Term of Office* and Length |
|
Principal Occupation(s) |
|
by |
|
ships Held by |
Birth |
|
the Funds |
|
of Time Served |
|
During Last 5 Years |
|
Director** |
|
Director*** |
Roger A. Gibson
(1946)
|
|
Director
|
|
Mr. Gibson has
served as a
director of each of
the Funds since
August 1998. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Director, Charterhouse
Group, Inc., a private
equity firm, since
October 2005;
Advisor/Consultant,
Future Freight, a
logistics/supply chain
company; Director,
Towne Airfreight;
non-profit board
member; prior to
retirement in 2005,
served in several
executive positions for
United Airlines,
including Vice
President and Chief
Operating Officer
Cargo; Independent
Director, Fund Complex
since 1997.
|
|
|
55 |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Herget
(1951)
|
|
Director
|
|
Ms. Herget has
served as a
director of each of
the Funds since
September 2003.
Fund directors
serve for a
one-year term that
expires at the next
annual meeting of
shareholders.
|
|
Investment Consultant,
Chartered Financial
Analyst; Board Chair,
United Educators
Insurance Company;
non-profit board
member; prior to
retirement in 2001,
served in various
positions, including
managing director, for
Zurich Scudder
Investments;
Independent Director,
Fund Complex since
2003.
|
|
|
55 |
|
|
None |
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios |
|
|
|
|
|
|
|
|
|
|
in Fund |
|
|
|
|
|
|
|
|
|
|
Complex |
|
Other |
|
|
Position |
|
|
|
|
|
Overseen |
|
Director- |
Name and Year of |
|
Held with |
|
Term of Office* and Length |
|
Principal Occupation(s) |
|
by |
|
ships Held by |
Birth |
|
the Funds |
|
of Time Served |
|
During Last 5 Years |
|
Director** |
|
Director*** |
John P. Kayser
(1949)
|
|
Director
|
|
Mr. Kayser has
served as a
director of each of
the Funds since
October 2006. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Retired; non-profit
board member; prior to
retirement in 2004,
Principal, William
Blair & Company, LLC, a
Chicago-based
investment firm;
previously served on
board of governors,
Chicago Stock Exchange;
former Director,
William Blair Mutual
Funds, Inc., Midwest
Securities Trust
Company, and John O.
Butler Co.; Independent
Director, Fund Complex
since 2006.
|
|
|
55 |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard W. Kedrowski
(1941)
|
|
Director
|
|
Mr. Kedrowski has
served as a
director of each of
the Funds since
August 1998. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Owner and President,
Executive and
Management Consulting,
Inc., a management
consulting firm; board
member, GC McGuiggan
Corporation (dba Smyth
Companies), a label
printer; member,
investment advisory
committee, Sisters of
the Good Shepherd;
Certified Public
Accountant; former
Chief Executive
Officer, Creative
Promotions
International, LLC, a
promotional award
programs and product
company; former Vice
President, Chief
Financial Officer,
Treasurer, Secretary,
and Director, Anderson
Windows, a large
privately-held
manufacturer of wood
windows; former
Director, Protection
Mutual Insurance
Company, an
international property
and casualty insurer,
Independent Director,
Fund Complex since
1993.
|
|
|
55 |
|
|
None |
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios |
|
|
|
|
|
|
|
|
|
|
in Fund |
|
|
|
|
|
|
|
|
|
|
Complex |
|
Other |
|
|
Position |
|
|
|
|
|
Overseen |
|
Director- |
Name and Year of |
|
Held with |
|
Term of Office* and Length |
|
Principal Occupation(s) |
|
by |
|
ships Held by |
Birth |
|
the Funds |
|
of Time Served |
|
During Last 5 Years |
|
Director** |
|
Director*** |
Richard K. Riederer
(1944)
|
|
Director
|
|
Mr. Riederer has
served as a
director of each of
the Funds since
August 2001. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Owner and Chief
Executive Officer, RKR
Consultants, Inc., a
consulting company
providing advice on
business strategy,
mergers and
acquisitions; Director,
Cliffs Natural
Resources, Inc.;
Certified Financial
Analyst; non-profit
board member; former
Chief Executive Officer
and President, Weirton
Steel Corporation;
former Vice President
and Treasurer,
Harnischfeger
Industries, a capital
machinery manufacturer;
former Treasurer and
Director of Planning,
Allis Chalmers
Corporation, an
equipment manufacturing
company; Independent
Director, Fund Complex
since 2001 and Firstar
Funds 1988-2001.
|
|
|
55 |
|
|
Cliffs Natural
Resources, Inc. (a
producer of iron
ore pellets and
coal) |
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios |
|
|
|
|
|
|
|
|
|
|
in Fund |
|
|
|
|
|
|
|
|
|
|
Complex |
|
Other |
|
|
Position |
|
|
|
|
|
Overseen |
|
Director- |
Name and Year of |
|
Held with |
|
Term of Office* and Length |
|
Principal Occupation(s) |
|
by |
|
ships Held by |
Birth |
|
the Funds |
|
of Time Served |
|
During Last 5 Years |
|
Director** |
|
Director*** |
Joseph D. Strauss
(1940)
|
|
Director
|
|
Mr. Strauss has
served as a
director of each of
the Funds since
August 1998. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Attorney At Law, Owner
and President, Strauss
Management Company, a
Minnesota holding
company for various
organizational
management business
ventures; Owner,
Chairman and Chief
Executive Officer,
Community Resource
Partnerships, Inc., a
corporation engaged in
strategic planning,
operations management,
government relations,
transportation planning
and public relations;
Owner, Chairman and
Chief Executive
Officer, ExcensusTM,
LLC, a strategic
demographic planning
and application
development firm; Vice
President and General
Counsel, Unger Meat
Co., a premium beef
source verification
firm; General Counsel,
Lythic Solutions, Inc.,
a brand owner and
distributor of concrete
densifier, protector
and polishing products
worldwide; General
Counsel, ibody science,
llc, a manufacturer of
all-natural skin and
wound care treatment
products for human
beings; General
Counsel, Cowgirl
Science, LLC, a
manufacturer of
all-natural skin and
wound care treatment
products for animals;
Independent Director,
Fund Complex since
1984.
|
|
|
55 |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
Virginia L. Stringer
(1944)
|
|
Chair; Director
|
|
Ms. Stringer has
served as a
director of each of
the Funds since
August 1998. Fund
directors serve for
a one-year term
that expires at the
next annual meeting
of shareholders.
|
|
Board member, Mutual
Fund Directors Forum;
Member, Governing
Board, Investment
Company Institutes
Independent Directors
Council; governance
consultant and
non-profit board
member; former Owner
and President,
Strategic Management
Resources, Inc., a
management consulting
firm; previously held
several executive
positions in general
management, marketing
and human resources at
IBM and The Pillsbury
Company; Independent
Director, Fund Complex
since 1987.
|
|
|
55 |
|
|
None |
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Portfolios |
|
|
|
|
|
|
|
|
|
|
in Fund |
|
|
|
|
|
|
|
|
|
|
Complex |
|
Other |
|
|
Position |
|
|
|
|
|
Overseen |
|
Director- |
Name and Year of |
|
Held with |
|
Term of Office* and Length |
|
Principal Occupation(s) |
|
by |
|
ships Held by |
Birth |
|
the Funds |
|
of Time Served |
|
During Last 5 Years |
|
Director** |
|
Director*** |
James M. Wade
(1943)
|
|
Director
|
|
Mr. Wade has served
as a director of
each of the Funds
since August 2001.
Fund directors
serve for a
one-year term that
expires at the next
annual meeting of
shareholders.
|
|
Owner and President,
Jim Wade Homes, a
homebuilding company;
formerly, Vice
President and Chief
Financial Officer,
Johnson Controls, Inc.;
Independent Director,
Fund Complex since 2001
and Firstar Funds
1988-2001.
|
|
|
55 |
|
|
None |
|
|
|
* |
|
Each director serves for the term specified or, if earlier, until his or her death,
resignation, removal or disqualification. |
|
** |
|
Upon the closing of the Transaction (as defined in Proposal 2), the number of portfolios in
the Fund Complex will decrease to 14, each of which will be overseen by the director. |
|
*** |
|
Includes only directorships in a company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the 1934 Act) or subject to
the requirements of Section 15(d) of the 1934 Act, or any company registered as an investment
company under the 1940 Act. |
There were five meetings of the Board during the fiscal year ended August 31, 2010.
During the fiscal year, each of the directors standing for re-election attended at least 75% of all
meetings of the Board and of committees of which he or she was a regular member that were held
while he or she was serving on the Board or on such committee.
Board Leadership Structure
The Board is responsible for overseeing generally the operation of each Fund. The Board has
approved an investment advisory agreement with FAF Advisors, Inc. (FAF Advisors or the Advisor)
as well as other contracts with FAF Advisors, its affiliates, and other service providers.
As noted above, each Director is considered to be an Independent Director. The Directors also
serve as directors of the other funds in the Fund Complex. Taking into account the number,
diversity and complexity of the funds overseen by the Directors and the aggregate amount of assets
under management in the Fund Complex, the Board has determined that the efficient conduct of its
affairs makes it desirable to delegate responsibility for certain matters to committees of the
Board. These committees, which are described in more detail below, review and evaluate matters
specified in their charters and make recommendations to the Board as they deem appropriate. Each
committee may use the resources of the Funds counsel and auditors, counsel to the Independent
Directors, as well as other experts. The committees meet as often as necessary, either in
conjunction with regular meetings of the Board or otherwise.
The Funds are subject to a number of risks, including investment, compliance, operational, and
valuation risks. The Boards role in risk oversight of each Fund reflects its responsibility to
oversee generally, rather than to manage, the operations of the Fund. The actual day-to-day risk
management with respect to the Funds resides with FAF Advisors and the other service providers to
the Funds. In line with the Boards oversight responsibility, the Board receives reports and makes
inquiries regarding various risks at its regular meetings or otherwise. However, the Board relies
upon the Funds Chief Compliance Officer, who reports directly to the Board, and FAF Advisors
(including its Chief Risk Officer and other members of its management team) to assist the Board in
identifying and understanding the nature and extent of such risks and determining whether, and to
what extent, such risks may be eliminated or mitigated. Although the risk management policies of
FAF Advisors and the other service providers are designed to be effective, those policies and their
implementation vary among service
7
providers and over time, and there is no guarantee that they will be effective. Not all risks
that may affect the Funds can be identified or processes and controls developed to eliminate or
mitigate their occurrence or effects, and some risks are simply beyond any control of the Funds or
FAF Advisors, its affiliates or other service providers.
Standing Committees
The Board currently has three standing committees: an Audit Committee, a Pricing Committee
and a Governance Committee.
The purposes of the Audit Committee are (1) to oversee each Funds accounting and financial
reporting policies and practices, its internal controls and, as appropriate, the internal controls
of certain service providers; (2) to oversee the quality of each Funds financial statements and
the independent audit thereof; (3) to assist Board oversight of each Funds compliance with legal
and regulatory requirements; and (4) to act as a liaison between each Funds independent auditors
and the full Board. The Audit Committee, together with the Board, has the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the outside auditor (or to
nominate the outside auditor to be proposed for shareholder approval in any proxy statement). The
Audit Committee has adopted a written charter setting forth, among other things, requirements with
respect to the composition of the Committee, the purposes of the Committee, and the Committees
duties and powers. A copy of this charter is attached hereto as Exhibit G. The Audit Committee
currently consists of Mr. Kedrowski (chair), Benjamin R. Field III, (who is not standing for
re-election because he has reached the Boards mandatory retirement age), Mr. Kayser, Mr. Riederer
and Ms. Stringer (ex officio). The Board has determined that each member of the Audit Committee is
independent within the meaning of New York Stock Exchange and American Stock Exchange listing
standards and is not an interested person as defined in the 1940 Act. The Board has designated
Mr. Kedrowski, Mr. Field, Mr. Kayser and Mr. Riederer as Audit Committee financial experts. The
Audit Committee met five times during the fiscal year ended August 31, 2010.
The Pricing Committee of the Board is responsible for overseeing the valuation of portfolio
securities for which market quotations are not readily available, pursuant to procedures
established by the Board. Current members of the Pricing Committee are Mr. Gibson (Chair), Mr.
Wade, Mr. Field and Ms. Stringer (ex officio). The Pricing Committee met four times during the
fiscal year ended August 31, 2010.
The Governance Committee of the Board is responsible for nominating directors and making
recommendations to the Board concerning Board composition, committee structure and governance,
director education, and governance practices. The members of the Governance Committee are Mr.
Strauss (Chair), Mr. Wade, Ms. Herget, and Ms. Stringer (ex officio). The Board has determined
that each member of the Governance Committee is independent within the meaning of New York Stock
Exchange and American Stock Exchange listing standards and is not an interested person as defined
in the 1940 Act. The Governance Committee met three times during the fiscal year ended August 31,
2010. A copy of the Governance Committee Charter is attached hereto as Exhibit H.
In addition to the above committees, the Board also appoints a Fund Review Liaison. The
responsibility of the Fund Review Liaison is to lead the Board, together with the Board Chair, in
evaluating Fund performance, Fund service provider contracts and arrangements for execution of Fund
trades. Ms. Herget is the current Fund Review Liaison.
Selection of Director Nominees
The Governance Committee will consider shareholder recommendations for director nominees in
connection with each annual shareholders meeting of the Funds and any special shareholders meeting
8
which is called for the purpose of electing directors. There are no differences in the manner
in which the Governance Committee evaluates nominees for director based on whether the nominee is
recommended by a shareholder.
A shareholder who wishes to recommend a director nominee should submit his or her
recommendation in writing to the Chair of the Board (Ms. Stringer) or the Chair of the Governance
Committee (Mr. Strauss), in either case at First American Funds, P.O. Box 1329, Minneapolis,
Minnesota 55440-1329. At a minimum, the recommendation should include:
|
|
|
the name, address, and business, educational, and/or other pertinent background of
the person being recommended; |
|
|
|
|
a statement concerning whether the person is independent within the meaning of New
York Stock Exchange and American Stock Exchange listing standards and is not an
interested person as defined in the 1940 Act; |
|
|
|
|
any other information that the Funds would be required to include in a proxy
statement concerning the person if he or she was nominated; and |
|
|
|
|
the name and address of the person submitting the recommendation, together with the
number of Fund shares held by such person and the period for which the shares have been
held. |
The recommendation also can include any additional information which the person submitting it
believes would assist the Governance Committee in evaluating the recommendation. In order for the
Governance Committee to consider a shareholders recommended nominee for election at the annual
shareholders meeting in a given year, the recommendation should be submitted to the Governance
Committee no later than August 31 in that year.
The Board currently is composed entirely of Independent Directors. The Board currently
intends to remain composed only of such persons. Shareholders should note that a person who owns
securities issued by U.S. Bancorp (the ultimate parent company of the Funds investment advisor)
would be deemed an interested person under the 1940 Act. In addition, certain other
relationships with U.S. Bancorp or its subsidiaries, with registered broker-dealers, or with the
Funds outside legal counsel may cause a person to be deemed an interested person.
The Governance Committee has not established specific minimum qualifications that it believes
must be met by a director nominee. In evaluating director nominees, the Governance Committee
considers, among other things, an individuals background, skills, and experience; whether the
individual is independent within the meaning of applicable stock exchange listing standards and
is not an interested person as defined in the 1940 Act; and whether the individual is
financially literate or would be deemed an audit committee financial expert within the meaning
of such listing standards and applicable Securities and Exchange Commission (SEC) rules. The
Governance Committee also considers whether the individuals background, skills, and experience
will complement the background, skills, and experience of other nominees and will contribute to the
diversity of the Board. In addition to considering shareholder recommendations, the Governance
Committee may consider recommendations by business and personal contacts of current Board members,
by Fund management, and by executive search firms which the committee may engage from time to time.
Before the Governance Committee decides to nominate an individual as a director, committee
members and other directors customarily interview the individual in person. In addition, the
individual customarily is asked to complete a detailed questionnaire which is designed to elicit
information that must
9
be disclosed under SEC and stock exchange rules and to determine whether the individual is
subject to any statutory disqualification from serving as a director of a registered investment
company.
Shareholder Communications with Directors
Shareholders of the Funds can communicate directly with the Board by writing to the Chair of
the Board, First American Funds, P.O. Box 1329, Minneapolis, Minnesota 55440-1329. Shareholders
can communicate directly with an individual director by writing to that director at P.O. Box 1329,
Minneapolis, Minnesota 55440-1329. Such communications to the Board or individual directors are
not screened before being delivered to the addressee.
Director Attendance at Shareholders Meetings
The Board encourages directors to attend annual shareholders meetings of the Fund in person or
by telephone. All of the directors standing for re-election attended the Funds 2009 annual
shareholder meeting either in person or telephonically.
Director Qualifications
The Board has determined that each of its Directors (other than Mr. Field, who is retiring)
should continue to serve as such based on several factors (none of which alone is decisive). Each
Director has served in his or her role as Director of the Funds since the dates noted in the table
above. Because of this experience, each Director is knowledgeable regarding the Funds business
and service provider arrangements. In addition, each Director has served for a number of years as
a director of other funds in the Fund Complex, as indicated in the Independent Directors table
above. Among the factors the Board considered when concluding that an individual should serve on
the Board were the following: (i) the individuals business and professional experience and
accomplishments; (ii) the individuals ability to work effectively with other members of the Board;
(iii) the individuals prior experience, if any, serving on the boards of public companies and
other complex enterprises and organizations; and (iv) how the individuals skills, experiences and
attributes would contribute to an appropriate mix of relevant skills, diversity and experience on
the Board. The Board believes that, collectively, its Directors have balanced and diverse
qualifications, skills, experiences, and attributes, which allow the Board to operate effectively
in governing the Fund and protecting the interests of shareholders. Information about the specific
qualifications, skills, experiences, and attributes of each Director, which in each case
contributed to the Boards conclusion that the Director should continue to serve as director of the
Fund, is provided in the Independent Directors table above.
Director Compensation
The Fund Complex currently pays directors who are not paid employees or affiliates of any fund
in the Fund Complex an annual retainer of $150,000 ($265,000 in the case of the Chair). The Fund
Review Liaison and the Audit Committee Chair each receive an additional annual retainer of $20,000.
The other standing Committee Chairs receive an additional annual retainer of $15,000. In addition,
directors are paid the following fees for attending Board and committee meetings:
|
|
|
$1,000 for attending the first day of an in-person Board meeting ($1,500 in the case
of the Chair); |
|
|
|
|
$2,000 for attending the second day of an in-person Board meeting ($3,000 in the
case of the Chair); |
10
|
|
|
$1,000 for attending the third day of an in-person Board meeting ($1,500 in the
case of the Chair), assuming the third day ends no later than early afternoon; and |
|
|
|
|
$500 for in-person attendance at any committee meeting ($750 in the case of the
Chair of each committee). |
A director who participates telephonically in any in-person Board or committee meeting
receives half of the fee that director would have received for attending in person. For telephonic
Board and committee meetings, the Chair and each director and committee Chair, as applicable,
receive a fee equal to half the fee he or she would have received for attending an in-person
meeting.
Directors also receive $3,500 per day when traveling out of town on Fund Complex business that
does not involve a Board or committee meeting. In addition, directors are reimbursed for their
out-of-pocket expenses in traveling from their primary or secondary residence to Board and
committee meetings, on Fund Complex business and to attend mutual fund industry conferences or
seminars. The amounts specified above are allocated evenly among the funds in the Fund Complex.
The directors may elect to defer payment of up to 100% of the fees they receive in accordance
with a Deferred Compensation Plan (the Plan). Under the Plan, a director may elect to have his
or her deferred fees treated as if they had been invested in shares of one or more funds and the
amount paid to the director under the Plan will be determined based on the performance of such
investments. Distributions may be taken in a lump sum or over a period of years. The Plan will
remain unfunded for federal income tax purposes under the Internal Revenue Code of 1986, as
amended. Deferral of director fees in accordance with the Plan will have a negligible impact on
Fund assets and liabilities and will not obligate the Funds to retain any director or pay any
particular level of compensation. The Funds do not provide any other pension or retirement
benefits to directors.
The following table sets forth the compensation received by each director standing for
re-election from each Fund for its most recent fiscal year, as well as the total compensation
received by each such director from the Fund Complex for the fiscal year ended August 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
Aggregate |
|
|
Aggregate |
|
|
|
|
|
|
|
|
|
from |
|
|
Compensation |
|
|
Compensation |
|
|
Aggregate |
|
|
Total |
|
|
|
American |
|
|
from American |
|
|
from |
|
|
Compensation |
|
|
Compensation from |
|
|
|
Strategic |
|
|
Strategic |
|
|
American Strategic |
|
|
from |
|
|
Fund |
|
|
|
Income |
|
|
Income |
|
|
Income |
|
|
American Select |
|
|
Complex Paid to |
|
Name of Director |
|
Portfolio(1) |
|
|
Portfolio II(2) |
|
|
Portfolio III(3) |
|
|
Portfolio(4) |
|
|
Directors(5)(6) |
|
Roger A. Gibson |
|
$ 3,235 |
|
|
$ 3,235 |
|
|
$ 3,235 |
|
|
$ 3,235 |
|
|
$ 183,375 |
|
Victoria J. Herget |
|
3,295 |
|
|
3,295 |
|
|
3,295 |
|
|
3,295 |
|
|
186,750 |
|
John P. Kayser |
|
2,964 |
|
|
2,964 |
|
|
2,964 |
|
|
2,964 |
|
|
168,000 |
|
Leonard W. Kedrowski |
|
3,337 |
|
|
3,337 |
|
|
3,337 |
|
|
3,337 |
|
|
189,125 |
|
Richard K. Riederer |
|
2,960 |
|
|
2,960 |
|
|
2,960 |
|
|
2,960 |
|
|
167,750 |
|
Joseph D. Strauss |
|
3,216 |
|
|
3,216 |
|
|
3,216 |
|
|
3,216 |
|
|
182,250 |
|
Virginia L. Stringer |
|
5,183 |
|
|
5,183 |
|
|
5,183 |
|
|
5,183 |
|
|
293,750 |
|
James M. Wade |
|
2,973 |
|
|
2,973 |
|
|
2,973 |
|
|
2,973 |
|
|
168,500 |
|
|
|
|
(1) |
|
Includes amounts deferred pursuant to the Deferred Compensation Plan as follows: Roger A.
Gibson, $647; and Victoria J. Herget, $988. |
|
(2) |
|
Includes amounts deferred pursuant to the Deferred Compensation Plan as follows: Roger A.
Gibson, $647; and Victoria J. Herget, $988. |
|
(3) |
|
Includes amounts deferred pursuant to the Deferred Compensation Plan as follows: Roger A.
Gibson, $647; and Victoria J. Herget, $988. |
11
|
|
|
(4) |
|
Includes amounts deferred pursuant to the Deferred Compensation Plan as follows: Roger A.
Gibson, $647; and Victoria J. Herget, $988. |
|
(5) |
|
Includes amounts deferred pursuant to the Deferred Compensation Plan as follows: Roger A.
Gibson, $36,675; and Victoria J. Herget, $56,025. |
|
(6) |
|
As of August 31, 2010, the Fund Complex consisted of 47 open-end funds (which are portfolios
of four investment companies) and eight closed-end investment companies, totaling 55 funds. |
Director Shareholdings
The following table discloses the dollar range of equity securities beneficially owned by each
Director standing for re-election (i) in each Fund and (ii) on an aggregate basis in any of the
funds in the Fund Complex.
|
|
|
|
|
|
|
|
|
Aggregate Dollar Range |
|
|
Dollar Range of Equity |
|
of Equity Securities |
Name of Director |
|
Securities in the Funds |
|
in the Fund Complex* |
Roger A. Gibson
|
|
None
|
|
Over $100,000 |
Victoria J. Herget
|
|
None
|
|
Over $100,000 |
John P. Kayser
|
|
None
|
|
Over $100,000 |
Leonard W. Kedrowski
|
|
American Strategic Income |
|
Over $100,000 |
|
|
Portfolio: $10,001-$50,000;
|
|
|
|
|
American Strategic Income |
|
|
|
|
Portfolio II: $50,001-$100,000;
|
|
|
|
|
American Strategic
Income |
|
|
|
|
Portfolio III: $50,001-$100,000 |
|
|
Richard K. Riederer
|
|
None
|
|
Over $100,000 |
Joseph D. Strauss
|
|
None
|
|
Over $100,000 |
Virginia L. Stringer
|
|
None
|
|
Over $100,000 |
James M. Wade
|
|
None
|
|
Over $100,000 |
|
|
|
* |
|
The dollar range disclosed is based on the value of the securities as of June 30, 2010. |
[To the knowledge of the Funds, as of October 27, 2010, the officers and directors of
each Fund as a group beneficially owned less than 1% of the outstanding shares of the Fund.]
Board Recommendation; Required Vote
The Board recommends that shareholders vote in favor of all nominees to serve as directors.
For each Fund, if at least a quorum is represented in person or by proxy, the vote of a plurality
of the shares represented at the meeting is sufficient for the election of each nominee, which
means that the candidates receiving the highest number of votes will be elected. Unless otherwise
instructed, the proxies named in the proxy card enclosed herewith will vote for all nominees. In
the event any of the above nominees are not candidates for election at the meeting due to events
not now known or anticipated, the proxies will vote for such other persons as the Board may
designate.
PROPOSAL TWO
APPROVAL OF AN AMENDMENT TO THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Background
FAF Advisors, a wholly-owned subsidiary of U.S. Bank National Association (U.S. Bank),
serves as investment advisor and administrator to each Fund. On July 29, 2010, U.S. Bank and FAF
Advisors entered into a definitive agreement with Nuveen, Nuveen Asset Management (NAM) and
12
certain Nuveen affiliates, whereby NAM will acquire a portion of the asset management business
of FAF Advisors (the Transaction). The acquired business
includes the assets of FAF Advisors
used in providing investment advisory services, research, sales and distribution in connection with
equity, fixed income, real estate, global infrastructure and asset allocation investment products,
excluding FAF Advisors money market business and the closed-end funds advised by FAF Advisors.
Accordingly, FAF Advisors will remain as the investment advisor and administrator to eight
registered closed-end investment companies, including the Funds, upon the closing of the
Transaction. After the closing of the Transaction, it is currently anticipated that FAF Advisors
will change its name to U.S. Bancorp Asset Management.
After closing of the Transaction, the individuals who currently act as portfolio managers for
the Funds will become employees of NAM or a subsidiary of NAM. To allow these individuals to
continue to manage the Funds, the Board has approved, and you are being asked to approve under
Proposal Three, investment sub-advisory agreements (each a Sub-Advisory Agreement) for each Fund
with NAM and with certain affiliated entities, as described under Proposal Three.
In connection with its approval of the Sub-Advisory Agreements, the Board considered
amendments (the Amendments) to the Investment Advisory and Management Agreement for each Fund
(each an Advisory Agreement). Each Amendment clarifies that the Advisor has the right to retain
one or more sub-advisors to perform some or all of the investment advisory services described in
the Advisory Agreement, subject to approval requirements under Section 15 of the 1940 Act. The
Board has approved the Amendments and you are being asked to approve the Amendment for your Fund to
take effect upon closing of the Transaction. Further details regarding the Advisory Agreements and
the Amendments are discussed below.
The Transaction is expected to close during the fourth quarter of 2010 subject to the
satisfaction or waiver of customary closing conditions. If approved, each Amendment will take
effect as of the closing of the Transaction. If the Transaction closes and the shareholders of a
Fund have not approved an Amendment for that Fund, the Board will take such action as it deems to
be in the best interests of the Fund.
The Advisory Agreements and the Amendments
Set forth below is a general description of certain terms of the Advisory Agreements and the
Amendments. The following discussion of the Advisory Agreements and the Amendments is qualified in
its entirety by reference to the actual terms of the Advisory Agreements and the Amendments. The
form of the Advisory Agreements is included in Appendix A and the form of the Amendments is
included in Appendix B. You are encouraged to review Appendix A and Appendix B for the complete
terms of the Advisory Agreements and the Amendments, respectively. The date of each Funds
Advisory Agreement and the date on which it was last approved by shareholders and last approved for
continuance by the Board is provided in Exhibit A.
Each Amendment clarifies the Advisors ability to appoint one or more sub-advisors to perform
the investment advisory services under the Funds Advisory Agreement, subject to the initial and
periodic approvals required under Section 15 of the 1940 Act. Other than the ability to appoint
one or more sub-advisors to perform the investment advisory services, there are no additional
modifications to the Advisory Agreements. The Advisory Agreement for each Fund continues in effect
from year to year if such continuance is approved for the Fund at least annually in the manner
required under the 1940 Act.
Investment Advisory and Management Services. The Advisory Agreement for each Fund provides
that (1) the Advisor will act as investment advisor for, and will manage the affairs, business and
investment of the assets of the Fund; (2) the investment of the assets of the Fund shall at all
times be
13
subject to the applicable provisions of the Articles of Incorporation, Bylaws, Registration
Statement on Form N-2 and any representations contained in the Prospectus of the Fund and shall
conform to the policies and purposes of the Fund as set forth in such Registration Statement and
Prospectus and (a) as interpreted from time to time by the Board of the Fund and (b) as may be
amended from time to time by the Board and/or the shareholders of the Fund as permitted by the 1940
Act; (3) within the framework of the investment policies of the Fund, the Advisor shall have the
sole and exclusive responsibility for the management of the Funds assets and the making and
execution of all investment decisions for the Fund; (4) the Advisor shall report to the Board of
the Fund regularly at such times and in such detail as the Board may from time to time determine to
be appropriate, in order to permit the Board to determine the adherence of the Advisor to the
investment policies of the Fund; and (5) the Advisor shall, at its own expense, furnish the Fund
suitable office space, and all necessary administrative facilities, office facilities, equipment
and personnel for servicing the investments of the Fund and investment advisory facilities and
executive and supervisory personnel for managing the investments of the Fund and effecting
portfolio transactions of the Fund.
The Amendment for each Fund provides that, subject to obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Advisor may retain one or more
sub-advisors at the Advisors own cost and expense for the purpose of furnishing one or more of the
services described in the Advisory Agreement. The Amendment for each Fund further provides that
retention of a sub-advisor shall in no way reduce the responsibilities or obligations of the
Advisor under the Advisory Agreement, and the Advisor shall be responsible to the Fund for all acts
or omissions of any sub-advisor in connection with the performance of the Advisors duties under
the Advisory Agreement.
Compensation for Services. Under the Advisory Agreement for each Fund, the Fund pays the
Advisor a monthly advisory fee for all services, facilities, equipment and personnel, and for other
costs of the Advisor in provides services under the Advisory Agreement as follows:
|
|
|
|
|
Current Monthly |
Fund |
|
Management Fee |
American Strategic Income Portfolio;
American Strategic Income Portfolio II; and
American Strategic Income Portfolio III
|
|
The sum of .01667% of
the Funds average weekly
net assets during the month
(approximately .20 of 1% on
an annual basis) and 4.5%
of the Funds daily gross
income (i.e., investment
income including
amortization of discount
income, other than gains
from the sale of securities
or gains received from
options and futures
contracts less interest on
money borrowed by the Fund)
accrued by the Fund during
the month but such monthly
management fee shall not
exceed in the aggregate
1/12th of .725% of the
Funds average weekly net
assets during the month
(approximately .725% on an
annual basis) |
|
|
|
American Select Portfolio
|
|
1/12 of the per annum
rate of .50 of 1% of
average weekly net assets |
The Amendment does not change the terms of the Advisory Agreement regarding compensation
for services. If the sub-advisory agreements are approved by shareholders, FAF Advisors will pay
the sub-advisor(s) from the fees it receives from a Fund; therefore, the advisory fees paid by the
Funds will not increase as a result of shareholder approval of the Amendment. The fees paid by
each Fund to FAF Advisors during each Funds last fiscal year and each Funds net assets as of
September 30, 2010 are set forth in Exhibit B.
14
Amendments. The Advisory Agreement for each Fund provides that no material amendment to the
Advisory Agreement shall be effective until approved by vote of the holders of a majority of the
outstanding shares of the Fund, which is defined in the Advisory Agreement as the vote of the
lesser of (i) 67% or more of the shares represented at a meeting at which more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (ii) more than 50% of the
outstanding shares of the Fund. The Amendment does not change the terms of the Advisory Agreement
regarding amendments.
Continuance and Termination. The Advisory Agreement for each Fund provides that, it will
continue in effect only so long as such continuance is specifically approved at least annually (a)
by the Board of the Fund or by a vote of the holders of a majority of the Funds outstanding
shares, and (b) by the vote of a majority of the directors who are not parties to the Advisory
Agreement or Interested Persons (as defined in Section 2(a)(19) of the 1940 Act and the rules,
regulations and releases relating thereto) of the Advisor or of the Fund cast in person at a
meeting called for the purpose of voting on such approval.
The Advisory Agreement for each Fund also provides that the Advisory Agreement may be
terminated at any time without the payment of any penalty by the vote of the Board of the Fund or
by the vote of the holders of a majority of the outstanding shares of the Fund, or by the Advisor,
upon sixty (60) days written notice to the other party. In addition, the Advisory Agreement for
each Fund shall automatically terminate in the event of its assignment as defined in the 1940 Act
and the rules thereunder. The Amendment does not change the terms of the Advisory Agreement
regarding continuance and termination.
Board Considerations
The Board considered the Amendments to the Funds Advisory Agreements at meetings held
September 21-23 and October 7, 2010, as a part of its consideration of the proposed Sub-Advisory
Agreements for each Fund. The factors considered by the Board in connection with its approval of
the Sub-Advisory Agreements are discussed in more detail below. See Proposal Three Approval of
Investment Sub-Advisory Agreements Board Considerations.
In voting to approve the Amendment to each Funds Advisory Agreement, the Board considered,
among other things, the following information:
The Board considered that, in connection with the Transaction, the portfolio managers of the
Funds are expected to become employees of NAM or a subsidiary of NAM as of the close of the
Transaction, and that such individuals will continue to manage the Funds if the Sub-Advisory
Agreements are approved. Accordingly, approval of the Sub-Advisory Agreements for each Fund would
result in continuity of portfolio management following closing of the Transaction. The Board noted
that, because the Amendment provides FAF Advisors with the ability to appoint one or more
sub-advisors to perform investment advisory services under the Advisory Agreement, approval of the
Amendment is required in order to enter into the Sub-Advisory Agreements. Additionally, the Board
considered that the appointment of one or more sub-advisors would not increase the advisory fees
paid by each Fund because the sub-advisory fee(s) would be paid by FAF Advisors out of its advisory
fee. Further, FAF Advisors would continue to be responsible for the provision of services to each
Fund under the Advisory Agreement and would be responsible to each Fund for all acts or omissions
committed by a sub-advisor in connection with the performance of FAF Advisors duties under the
Advisory Agreement.
The Board also considered that no other terms of the Funds Advisory Agreements, including the
fees payable to FAF Advisors, would change as a result of the Amendment. The Board noted that it
had recently approved the annual renewal of each Funds Advisory Agreement with FAF Advisors and
15
concluded that, in light of the limited nature of the Amendment, it was not necessary to
reconsider all of the factors it typically reviews in connection with the approval of an advisory
agreement.
After deliberating in executive session during its October 7, 2010 meeting, the members of the
Board in attendance, all of whom are not considered to be interested persons of the Funds as
defined in the 1940 Act (the Independent Directors), approved the Amendment to each Funds
Advisory Agreement and authorized the submission of the Amendments for consideration by each Funds
shareholders.
Information about FAF Advisors
FAF Advisors, 800 Nicollet Mall, Minneapolis, Minnesota 55402, serves as the investment
advisor and manager of the Funds. The Advisor is a wholly owned subsidiary of U.S. Bank, 800
Nicollet Mall, Minneapolis, Minnesota 55402, a national banking association that has professionally
managed accounts for individuals, insurance companies, foundations, commingled accounts, trust
funds, and others for over 75 years. U.S. Bank is, in turn, a subsidiary of U.S. Bancorp, 800
Nicollet Mall, Minneapolis, Minnesota 55402, which is a regional multi-state bank holding company
that primarily serves the Midwestern, Rocky Mountain and Northwestern states. U.S. Bancorp
operates four banks and eleven trust companies with banking offices in twenty-four contiguous
states. U.S. Bancorp also has various other subsidiaries engaged in financial services. The table
set forth in Exhibit C lists other funds registered under the 1940 Act with similar investment
objectives and policies to the Funds which are advised by FAF Advisors, the net assets of those
funds and the advisory fee rates payable to FAF Advisors.
The principal business address of each director and/or principal executive officer of FAF
Advisors, is 800 Nicollet Mall, Minneapolis, Minnesota 55402. The names and principal occupations
of the directors and/or officers of FAF Advisors are set forth in Exhibit D.
Board Recommendation; Required Vote
The Board recommends that shareholders vote in favor of the Amendment. For each Fund, if at
least a quorum is represented in person or by proxy, the 1940 Act and the Advisory Agreement
require that the Amendment be approved by the vote of the lesser of (i) 67% of the or more of the
voting securities of the Fund that are present at a meeting if holders of shares representing more
than 50% of the outstanding voting securities of the Fund are present or represented by proxy at
the Meeting or (ii) more than 50% of the outstanding voting securities of the Fund. Unless
otherwise instructed, the proxies will vote for the approval of the Amendment for each Fund.
PROPOSAL THREE
APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENTS
Background
As described above, FAF Advisors will remain as the investment advisor and administrator to
the Funds upon the closing of the Transaction. However, the individuals who currently act as
portfolio managers for the Funds will become employees of NAM (or, as explained below, an affiliate
of NAM). In order to provide the Funds with continuity of portfolio management, FAF Advisors
initially recommended that the Board approve a Sub-Advisory Agreement for each Fund with NAM.
However, NAM is contemplating an internal restructuring pursuant to which NAM is expected to change
its name to Nuveen Fund Advisors, Inc. (NFA) and to form a new wholly-owned subsidiary, Nuveen
Asset Management, LLC (NAM LLC). In connection with the restructuring, investment personnel of
NAM,
16
including the Funds current portfolio managers, will become employees of NAM LLC. This
restructuring may occur before, concurrently with or after closing of the Transaction. FAF
Advisors therefore recommended that the Board also approve Sub-Advisory Agreements for each Fund
with NFA and NAM LLC under which NFA and NAM LLC would provide, in the aggregate, substantially the
same services as would be provided under the proposed Sub-Advisory Agreement with NAM.
If the internal restructuring of NAM is completed prior to or concurrently with the closing of
the Transaction, each Funds Sub-Advisory Agreements with NFA and NAM LLC will take effect at the
closing of the Transaction, assuming they have been approved by shareholders, and the Sub-Advisory
Agreements with NAM will not take effect. If the internal restructuring of NAM is not completed
prior to the closing of the Transaction, each Funds Sub-Advisory Agreement with NAM will take
effect at the closing of the Transaction, assuming it has been approved by shareholders. If the
internal restructuring of NAM is completed following closing of the Transaction, each Funds
Sub-Advisory Agreement with NAM will be terminated and the Sub-Advisory Agreements with NFA and NAM
LLC will take effect. If the internal restructuring of NAM does not occur, the Sub-Advisory
Agreements with NAM will remain in effect subject to the continuation and termination provisions of
the Sub-Advisory Agreements.
If approved, FAF Advisors will pay NAM, or NFA and NAM LLC, from the advisory fees it receives
from a Fund; therefore, the advisory fees paid by the Funds will not increase as a result of
shareholder approval of the Sub-Advisory Agreements.
The Board has approved, and you are being asked to approve, Sub-Advisory Agreements for each
Fund with NAM, NFA and NAM LLC, to take effect as described above. A vote in favor of the
Sub-Advisory Agreements for a Fund includes the approval of a Sub-Advisory Agreement between FAF
Advisors and NAM, a Sub-Advisory Agreement between FAF Advisors and NFA, and a Sub-Advisory
Agreement between FAF Advisors and NAM LLC.
The Transaction is expected to close during the fourth quarter of 2010 subject to the
satisfaction or waiver of customary closing conditions. If the Transaction closes and the
shareholders of a Fund have not approved the Amendment and the Sub-Advisory Agreements for the
Fund, the Board will take such action as it deems to be in the best interests of the Fund.
Information about NAM
NAM is a wholly-owned subsidiary of Nuveen and is located at 333 West Wacker Drive, Chicago,
IL 60606. Nuveen is a wholly-owned subsidiary of Windy City Investment Holding, L.L.C. (Windy
City), a limited liability company formed by investors led by Madison Dearborn Partners, LLC
(MDP), a private equity investment firm based in Chicago, Illinois. Windy City is controlled by
MDP on behalf of the Madison Dearborn Capital Partner V funds. As part of the Transaction, U.S.
Bank will acquire a 9.5% ownership interest in Windy City. Nuveen had approximately $150 billion
of assets under management as of June 30, 2010. The table set forth in Exhibit E lists other funds
registered under the 1940 Act with similar investment objectives and policies to the Funds which
are advised or sub-advised by NAM, the net assets of those funds and the management/sub-advisory
fee rates payable to NAM.
The principal business address of NAM, and each director and/or principal executive officer of
NAM, is 333 West Wacker Drive, Chicago, IL 60606. The names and principal occupations of the
directors and/or officers of NAM are set forth in Exhibit F.
The Sub-Advisory Agreements
Under each Funds Sub-Advisory Agreement with NAM, NAM provides investment advisory services
to the Fund for a fee payable by FAF Advisors. If the restructuring occurs and each Fund enters
17
into Sub-Advisory Agreements with NFA and NAM LLC instead, the aggregate services to be
provided to the Fund by NFA and NAM LLC will be substantially the same as those services to be
provided by NAM and the aggregate fees to be paid by FAF Advisors to NFA and NAM LLC will be equal
to the fees payable to NAM. Set forth below is a general description of certain terms of the
Sub-Advisory Agreements. The following discussion of the Sub-Advisory Agreements is qualified in
its entirety by reference to the actual terms of the Sub-Advisory Agreements, the forms of which
are included in Appendix C. You are encouraged to review Appendix C for the complete terms of the
Sub-Advisory Agreements.
Investment Advisory Services. Each Funds Sub-Advisory Agreement with NAM provides that NAM
will be employed and authorized to conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the assets in the Fund. In connection therewith, NAM will
(a) make investment decisions for the Fund; (b) place purchase and sale orders for portfolio
transactions in the Fund; (c) employ professional portfolio managers and securities analysts to
provide research services relating to the Fund; (d) employ qualified personnel to assist in the
supervision of the Funds investment program and to monitor the level of risk incurred by the Fund
in connection with its investment program; (e) manage the forms and levels of leverage employed by
the Fund, negotiate the terms and conditions of leverage facilities and monitor the Funds
compliance with leverage limits imposed under the 1940 Act; (f) provide assistance in connection
with determining dividend and distribution levels for the Fund; and (g) provide tax advice on
issues arising in connection with management of the Funds portfolio. Subject to the supervision
of the Funds Board and FAF Advisors, NAM will manage the assets in the Fund in accordance with (a)
the Funds investment objective(s), policies and restrictions, to the extent NAM has been notified
of such objectives, policies and restrictions, (b) the Funds charter documents, to the extent that
they have been provided to NAM, and (c) applicable laws and regulations.
The services to be provided by NFA and NAM LLC under their respective Sub-Advisory Agreements
with the Funds are substantially similar, in the aggregate, to the services to be provided by NAM
under its Sub-Advisory Agreements with the Funds. The difference among the Sub-Advisory Agreements
is that the services provided by NAM are divided between NFA and NAM LLC. Specifically, the
Sub-Advisory Agreement with NFA provides that NFA will be employed and authorized to perform the
following sub-investment advisory services on behalf of the Fund: (a) assist in the supervision of
the Funds investment program; (b) monitor the level of risk incurred by the Fund in connection
with its investment program; (c) manage the forms and levels of leverage employed by the Fund,
negotiate the terms and conditions of leverage facilities and monitor the Funds compliance with
leverage limits imposed under the 1940 Act; (d) provide assistance in connection with determining
dividend and distribution levels for the Fund; (e) provide tax advice on issues arising in
connection with management of the Funds portfolio; and (f) assist with pricing the Funds
portfolio securities, provided that NFA shall not be liable for any valuation determined or adopted
by the Fund, unless such determination is made based upon information provided by NFA that is
materially incorrect or incomplete as a result of NFAs gross negligence.
The Sub-Advisory Agreement with NAM LLC provides that NAM LLC will be employed and authorized
to conduct a continual program of investment, evaluation and, if appropriate, sale and reinvestment
of the assets in the Fund. In connection therewith, NAM LLC will (a) make investment decisions for
the Fund; (b) place purchase and sale orders for portfolio transactions in the Fund; and (c) employ
professional portfolio managers and securities analysts to provide research services relating to
the Fund. Subject to the supervision of the Funds Board and FAF, NAM LLC will manage the assets
in the Fund in accordance with (a) the Funds investment objective(s), policies and restrictions,
to the extent NAM LLC has been notified of such objectives, policies and restrictions, (b) the
Funds charter documents, to the extent that they have been provided to NAM LLC, and (c) applicable
laws and regulations.
18
Fees and Expenses. Under the Sub-Advisory Agreement with NAM, FAF Advisors would pay NAM a
monthly fee at the annual rate shown below, computed based on the average weekly net assets.
|
|
|
Fund |
|
Management fee rate |
American Strategic Income Portfolio,
American Strategic Income Portfolio II,
American Strategic Income Portfolio III
|
|
The sum of .008335% of the
Funds average weekly net assets
during the month (approximately
0.10% on an annual basis) and
4.5% of the Funds daily gross
income (i.e., investment income
including amortization of
discount income, other than gains
from the sale of securities or
gains received from options and
futures contracts less interest
on money borrowed by the Fund)
accrued by the Fund during the
month but such monthly management
fee shall not exceed in the
aggregate 1/12th of 0.625% of the
Funds average weekly net assets
during the month (approximately
0.625% on an annual basis) |
|
|
|
American Select Portfolio
|
|
1/12 of the per annum rate
of 0.40% of the Funds average
weekly net assets |
Under the Sub-Advisory Agreements with NFA and NAM LLC, aggregate fees paid by FAF
Advisors would be the same for each Fund as fees that would be paid by FAF Advisors under the
Sub-Advisory Agreement with NAM. Under the Sub-Advisory Agreement with NFA, FAF Advisors would pay
NFA a monthly fee at the annual rate shown below, computed based on the average weekly net assets.
|
|
|
Fund |
|
Management fee rate |
American Strategic Income Portfolio,
American Strategic Income Portfolio II,
American Strategic Income Portfolio III
|
|
1.5% of the Funds daily
gross income (i.e., investment
income including amortization of
discount income, other than gains
from the sale of securities or
gains received from options and
futures contracts less interest
on money borrowed by the Fund)
accrued by the Fund during the
month but such monthly management
fee shall not exceed in the
aggregate 1/12th of 0.175% of the
Funds average weekly net assets
during the month (approximately
0.175% on an annual basis) |
|
|
|
American Select Portfolio
|
|
1/12 of the per annum rate
of 0.10% of the Funds average
weekly net assets |
Under the Sub-Advisory Agreement with NAM LLC, FAF Advisors would pay NAM LLC a monthly
fee at the annual rate shown below, computed based on the average weekly net assets.
19
|
|
|
Fund |
|
Management fee rate |
American Strategic Income Portfolio,
American Strategic Income Portfolio II,
American Strategic Income Portfolio III
|
|
The sum of .008335% of the
Funds average weekly net assets
during the month (approximately
0.10% on an annual basis) and
3.0% of the Funds daily gross
income (i.e., investment income
including amortization of
discount income, other than gains
from the sale of securities or
gains received from options and
futures contracts less interest
on money borrowed by the Fund)
accrued by the Fund during the
month but such monthly management
fee shall not exceed in the
aggregate 1/12th of 0.45% of the
Funds average weekly net assets
during the month (approximately
0.45% on an annual basis) |
|
|
|
American Select Portfolio
|
|
1/12 of the per annum rate
of 0.30% of the Funds average
weekly net assets |
Limitation on Liability and Standard of Care. The Sub-Advisory Agreements provide the
same limitations on liability and the same standard of care. Each Sub-Advisory Agreement provides
that the sub-advisor will agree to indemnify and hold harmless FAF Advisors and the Fund and their
respective shareholders, members, partners, directors, officers, employees, agents, successors and
assigns (each an Advisor Indemnified Person) from and against any and all claims, losses,
liabilities or damages (including reasonable attorneys fees and other related expenses) to which
any Advisor Indemnified Person may become subject as a result of the sub-advisors material breach
of the Sub-Advisory Agreement or as a result of the sub-advisors willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties hereunder or violation of
applicable law; provided, however, that no Advisor Indemnified Person shall be indemnified for any
claim, loss, liability or damage that may be sustained as a result of FAF Advisors willful
misfeasance, bad faith or gross negligence on FAF Advisors part in the performance of its duties
or from reckless disregard by FAF Advisors of its obligations and duties.
Each Sub-Advisory Agreement provides that the sub-advisor shall exercise its best judgment in
rendering certain services of the Sub-Advisory Agreement. The sub-advisor shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund or FAF Advisors in
connection with the matters to which the Sub-Advisory Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the sub-advisors part in the
performance of its duties or from reckless disregard by the sub-advisor of its obligations and
duties under the Sub-Advisory Agreement. Neither the sub-advisor nor its members, partners,
officers, employees and agents shall be liable to FAF Advisors, the Fund, its shareholders or any
other person (a) for the acts, omissions, errors of judgment or mistakes of law of any other
fiduciary or other person with respect to the Fund or (b) for any failure or delay in performance
of the sub-advisors obligations under the Sub-Advisory Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of civil or military authority, national emergencies, labor difficulties, fire,
mechanical breakdowns, flood or catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.
Term, Continuance and Termination. Each Sub-Advisory Agreement has been approved by the Board
for an initial term of up to two years from the closing date of the Transaction. Thereafter, each
Sub-Advisory Agreement shall continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by the Funds Board in the manner required
by the 1940 Act. Each Sub-Advisory Agreement is terminable, without penalty, on 60 days written
notice (the date of termination may be less than 60 days after the written notice of termination so
long as the duration of the notice period is agreed upon by FAF Advisors and the sub-advisor) by
FAF Advisors, by the
20
Funds Board, by vote of a majority of the Funds outstanding voting securities, or by the
sub-advisor and will immediately terminate upon termination of the Funds Advisory Agreement. Each
Sub-Advisory Agreement also will terminate automatically in the event of its assignment (as defined
in the 1940 Act).
Board Considerations
The Board approved the Sub-Advisory Agreements for each Fund with NAM, NFA and NAM LLC after
consideration of all factors determined to be relevant to its deliberations, including those
discussed below.
At meetings held in May and June of this year, the Board was apprised of the general terms of
the Transaction and, as a result, began the process of considering the transition of services from
FAF Advisors to NAM. At in-person meetings held September 21-23 and October 7, 2010, the Board
considered a number of proposals related to the Transaction that were recommended by FAF Advisors,
including the Amendments and the Sub-Advisory Agreements. In preparation for these meetings, the
Board received, in response to written due diligence requests prepared by the Board and its
independent legal counsel and provided to NAM and FAF, a significant amount of information covering
a range of issues. In addition, the Board was provided with a memorandum from independent legal
counsel outlining the legal duties of the Board under the 1940 Act. To assist the Board in its
consideration of the various agreements related to the Transaction, including the Amendments and
the Sub-Advisory Agreements, NAM provided materials and information about, among other things (1)
NAM and its affiliates, including their history and organizational structure, product lines,
experience in providing investment advisory, administrative and other services, and financial
condition, (2) the nature, extent and quality of services to be provided under the various
agreements, (3) proposed fees and expenses and comparative information relating thereto, (4) and
NAMs compliance and risk management capabilities and processes.
In considering the Sub-Advisory Agreements for each Fund, the Board, advised by independent
legal counsel, reviewed and analyzed the factors it deemed relevant. In considering the
Sub-Advisory Agreements, the Board did not identify any particular information that was
all-important or controlling, and each director may have attributed different weights to the
various factors discussed below. The directors, all of whom are Independent Directors, concluded
that the terms of the Sub-Advisory Agreements are appropriate, that the fee rates to be paid are
reasonable in light of the services to be provided to each Fund, and that the Sub-Advisory
Agreements should be approved and recommended to stockholders for approval. In voting to approve
the Sub-Advisory Agreements for each Fund, the Board considered, among other things, the following
factors:
Nature, Extent and Quality of Services. In considering approval of the Sub-Advisory
Agreements, the Board considered the nature, extent and quality of services to be provided by NAM
(or, after completion of the internal restructuring, by NFA and NAM LLC). The Board reviewed
materials outlining, among other things, NAMs organizational structure and business; the types of
services that NAM or its affiliates are expected to provide to the Funds; the performance record of
the applicable Fund (as described in further detail below); and fund product lines offered by NAM.
With respect to personnel, the Board considered that the Funds current portfolio managers are
expected to be employed by NAM (or NAM LLC) following closing of the
Transaction, and that such individuals will continue to manage the
Funds if the Sub-Advisory Agreements are approved. The Board also
considered information regarding retention plans for current FAF employees who will be offered
employment by NAM, and reviewed information regarding portfolio manager compensation arrangements
to evaluate NAMs ability to attract and retain high quality investment personnel. In evaluating
the services of NAM, the Board also considered NAMs compliance program. Among other things, the
Board considered the report of NAMs chief compliance officer regarding NAMs compliance policies
and procedures.
21
In light of the continuity of investment personnel, the Board considered the historical
investment performance of each Fund previously provided during the annual contract renewal process.
Cost of Services Provided by NAM. In evaluating the costs of the services to be provided by
NAM under the Sub-Advisory Agreements, the Board noted that sub-advisory fees would be paid by FAF,
and that advisory fees paid by the Funds would not change. The Board noted that it had considered
the advisory fees paid by each Fund during its most recent contract renewal process, and had
compared each Funds fees and expenses to the median fees and expenses of comparable funds, using
information provided by an independent data service. In considering the compensation to be paid to
NAM, the Board also reviewed fee information regarding NAM-sponsored funds, to the extent such
funds had similar investment objectives and strategies to the Funds.
The Board also considered other amounts expected to be paid to NAM or its affiliates by the
Funds, including amounts payable under proposed sub-administration agreements between FAF Advisors
and NAM, as well as any indirect benefits NAM and its affiliates are expected to receive that are
directly attributable to their sub-advisory relationship with the Funds.
The Board also considered that the Funds would not bear any of the costs relating to the
Transaction, including the incremental costs of preparing, printing and mailing this Proxy
Statement over costs incurred in connection with last years annual shareholder meeting.
Conclusion. After deliberating in executive session during its October 7, 2010 meeting, the
members of the Board in attendance, all of whom are Independent Directors, approved the
Sub-Advisory Agreements for each Fund and authorized the submission of the Sub-Advisory Agreements
for consideration by each Funds shareholders.
Sub-Administrator
The Board also considered the appointment of NAM as sub-administrator to each Fund in
connection with its consideration of a package of proposals related to the Transaction. The Board
approved, and FAF Advisors, as administrator for each Fund, intends to enter into a
Sub-Administration Agreement with NAM for each Fund (each a Sub-Administration Agreement) to take
effect upon the closing of the Transaction, if shareholders of the Fund approve the Amendment and
Sub-Advisory Agreements. Under each Funds Sub-Administration Agreement, the administrator will
pay to NAM compensation at an annual rate, which is calculated weekly and paid monthly, equal to
0.10% of the average weekly net assets of the Fund.
Board Recommendation; Required Vote
The Board recommends that shareholders vote in favor of the Sub-Advisory Agreements. For each
Fund, if at least a quorum is represented in person or by proxy, the 1940 Act requires that the
Sub-Advisory Agreements be approved by the vote of the lesser of (i) 67% of the or more of the
voting securities of the Fund that are present at a meeting if holders of shares representing more
than 50% of the outstanding voting securities of the Fund are present or represented by proxy at
the Meeting or (ii) more than 50% of the outstanding voting securities of the Fund. Unless
otherwise instructed, the proxies will vote for the approval of the Sub-Advisory Agreements for
each Fund.
22
PROPOSAL FOUR
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The 1940 Act provides that the selection of the independent registered public accounting firm
of a registered investment company must be approved by a majority of the directors of the
investment company who are not interested persons of the investment company (this requirement is
subject to certain exceptions). This selection is being submitted for ratification or rejection by
the shareholders of each Fund.
Based on the Audit Committees recommendation, as discussed below under Audit Committee
Report, the directors, including a majority who are not interested persons of FAF Advisors, NAM or
the Funds, have selected Ernst & Young LLP (Ernst & Young) to be the Funds independent
registered public accounting firm for each Funds current fiscal year. Ernst & Young examines the
annual financial statements of the Funds and provides certain other audit-related and tax-related
services to the Funds. Representatives of Ernst & Young are expected to be present at the meeting.
These representatives will have the opportunity to make a statement to shareholders if they choose
to do so and are expected to be available to respond to appropriate questions.
While the bylaws of American Strategic Income Portfolio Inc. require that the selection of the
Funds independent public accountants be submitted to shareholders for their ratification, none of
the other Funds is required by law or its governing documents to do so. Nevertheless, the Funds
Board has elected to submit the selection of Ernst & Young to the Funds shareholders for
ratification. With respect to American Strategic Income Portfolio, if the selection is not
ratified, the independent public accountants will be selected by majority vote, either at the
Meeting or at a subsequent meeting of shareholders called for such purpose. With respect to the
other Funds, if this selection is not ratified, the Board will consider what action to take,
including possibly resubmitting the selection to shareholders, continuing the engagement of Ernst &
Young, or retaining a different independent registered public accounting firm.
Audit Committee Report
The Audit Committee and the Board have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the Funds independent registered public accounting firm
(or to nominate the independent registered public accounting firm to be proposed for shareholder
approval in any proxy statement). The function of the Audit Committee is oversight. It is
managements responsibility to maintain appropriate systems for accounting and internal control and
for preparing the Funds financial statements, and the independent public accountants
responsibility is to plan and carry out a proper audit of the financial statements.
In this context, the Audit Committee has met and held discussions with management and the
independent accountants. Management represented to the Audit Committee that each Funds financial
statements were prepared in accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the financial statements with management and the independent
accountants. The Audit Committee discussed with the independent registered public accounting firm
matters required to be discussed by Statement on Auditing Standards No. 114.
The Funds independent registered public accounting firm also provided to the Audit Committee
the written disclosures and letter required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountants communications with the audit
committee concerning independence, and the Audit Committee discussed with the independent
accountants the accounting firms independence. The Audit Committee also considered whether
non-audit services provided by the independent accountants during the last fiscal year were
compatible with maintaining the accountants independence.
23
Based upon the Audit Committees discussion with management and the independent accountants
and the Audit Committees review of the representation of management and the report of the
independent accountants to the Audit Committee, the Audit Committee recommended to the Board that,
with respect to each Fund, the audited financial statements for the Funds most recent fiscal year
be included in the Funds Annual Report for that fiscal year filed with the SEC.
|
|
|
|
|
Members of the Audit Committee |
|
|
|
|
|
Leonard W. Kedrowski, Chair |
|
|
Benjamin R. Field III |
|
|
John P. Kayser |
|
|
Richard K. Riederer |
|
|
Virginia L. Stringer (ex officio) |
Fees Paid to Ernst & Young
Audit Fees. Ernst & Youngs fees for professional services rendered for the audit of each
Funds annual financial statements for its two most recently completed fiscal years were as set
forth in the following table. These amounts included fees associated with the annual audit, SEC
Rule 17f-2 security count filings and filings of the Funds Annual Reports on Form N-CSR.
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
Fiscal year ended |
|
|
|
8/31/10 |
|
|
8/31/09 |
|
American Strategic Income Portfolio |
|
$ |
36,163 |
|
|
$ |
31,116 |
|
American Strategic Income Portfolio II |
|
$ |
36,163 |
|
|
$ |
31,116 |
|
American Strategic Income Portfolio III |
|
$ |
36,163 |
|
|
$ |
31,116 |
|
American Select Portfolio |
|
$ |
36,163 |
|
|
$ |
31,116 |
|
Audit-Related Fees. Ernst & Youngs fees for audit-related services for its two most
recently completed fiscal years were as set forth in the following table. These audit-related
services primarily related to the review of the semi-annual financial statements.
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
Fiscal year ended |
|
|
|
8/31/10 |
|
|
8/31/09 |
|
American Strategic Income Portfolio |
|
$ |
3,010 |
|
|
$ |
4,518 |
|
American Strategic Income Portfolio II |
|
$ |
3,010 |
|
|
$ |
11,218 |
|
American Strategic Income Portfolio III |
|
$ |
3,010 |
|
|
$ |
4,518 |
|
American Select Portfolio |
|
$ |
3,010 |
|
|
$ |
4,518 |
|
Tax Fees. Ernst & Youngs fees for tax services for its two most recently completed
fiscal years were as set forth in the following table. These tax services included tax compliance,
tax advice and tax planning services. Tax compliance, tax advice and tax planning services
primarily relate to the preparation of original and amended tax returns, timely regulated
investment company qualification reviews, and tax distribution analysis and planning.
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
Fiscal year ended |
|
|
|
8/31/10 |
|
|
8/31/09 |
|
American Strategic Income Portfolio |
|
$ |
7,989 |
|
|
$ |
5,498 |
|
American Strategic Income Portfolio II |
|
$ |
7,989 |
|
|
$ |
5,498 |
|
American Strategic Income Portfolio III |
|
$ |
7,989 |
|
|
$ |
5,498 |
|
American Select Portfolio |
|
$ |
7,989 |
|
|
$ |
5,498 |
|
24
All Other Fees. There were no fees billed by Ernst & Young for other services during
each Funds two most recently completed fiscal years.
Aggregate Non-Audit Fees. The aggregate non-audit fees billed by Ernst & Young to each of the
Funds and the Advisor and entities controlling, controlled by or under common control with the
Advisor that provide ongoing services to the Funds for the two most recently completed fiscal years
are set forth in the following table.
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
Fiscal year ended |
|
|
|
8/31/10 |
|
|
8/31/09 |
|
American Strategic Income Portfolio |
|
$ |
786,608 |
|
|
$ |
169,129 |
|
American Strategic Income Portfolio II |
|
$ |
786,608 |
|
|
$ |
175,829 |
|
American Strategic Income Portfolio III |
|
$ |
786,608 |
|
|
$ |
169,129 |
|
American Select Portfolio |
|
$ |
786,608 |
|
|
$ |
169,129 |
|
Audit Committee Pre-Approval Policies
The Audit Committee has established procedures requiring the pre-approval of all audit and
non-audit services performed for the Fund by Ernst & Young. Such procedures also require the
pre-approval of non-audit services provided to FAF Advisors, U.S. Bank, Quasar Distributors, U.S.
Bancorp Fund Services, LLC and any other entity under common control with FAF Advisors that
provides ongoing services to the Funds, but only if those services relate directly to the
operations and financial reporting of the Funds. All of the services described above were
pre-approved in accordance with the Audit Committees pre-approval procedures.
Board Recommendation; Required Vote
The Board recommends that shareholders vote in favor of the ratification of the selection of
Ernst & Young. For each Fund, the vote of a majority of the shares represented at the meeting is
sufficient for the ratification of the selection of the independent public accountants, provided at
least a quorum (a majority of the outstanding shares) is represented in person or by proxy. Unless
otherwise instructed, the proxies will vote for the ratification of the selection of Ernst & Young
as each Funds independent registered public accounting firm.
ADDITIONAL INFORMATION
Investment Advisor and Administrator
The investment advisor for the Funds is FAF Advisors. FAF Advisors also acts as the
administrator for the Funds. The address of the Funds and the Advisor is 800 Nicollet Mall,
Minneapolis, Minnesota 55402. During the fiscal year ended August 31, 2010, the Funds paid FAF
Advisors the following fees for provided administrative services to the Funds:
|
|
|
|
|
|
|
Administrative Fees Paid by |
|
|
|
the Fund |
|
American Strategic Income Portfolio |
|
$ |
135,509 |
|
American Strategic Income Portfolio II |
|
$ |
444,151 |
|
American Strategic Income Portfolio III |
|
$ |
528,170 |
|
American Select Portfolio |
|
$ |
326,932 |
|
25
Solicitation of Proxies
The costs of this proxy solicitation, including the cost of preparing and mailing the Notice
of Annual Meeting of Shareholders and this Proxy Statement, will be allocated among and borne by
the Funds, except that any costs in excess of those incurred in connection with last years
annual meeting of shareholders will be borne by U.S. Bank and NAM. In addition to the solicitation of proxies by mail, representatives of the Advisor
may, without cost to the Funds, solicit proxies on behalf of management of the Funds by means of
mail, telephone or personal calls. The Advisor may also arrange for an outside firm, The Altman
Group, to solicit shareholder votes by telephone on behalf of the Funds. The cost of this procedure, which will be borne entirely by U.S. Bank and NAM, is
expected to be approximately $1,339 for American Strategic Income Portfolio Inc., $4,093 for
American Strategic Income Portfolio Inc. II, $14,617 for American Strategic Income Portfolio Inc.
III, and $9,317 for American Select Portfolio Inc.
Persons holding shares as nominees will be reimbursed by the Funds, upon request, for the
reasonable expenses of mailing soliciting materials to the principals of the accounts.
Officers of the Funds
Information about each officers position and term of office with the Funds and business
experience during the past five years is set forth below. Unless otherwise indicated, all
positions have been held more than five years. No officer receives any compensation from the
Funds.* Unless otherwise indicated, the address of each of the officers is FAF Advisors, Inc., 800
Nicollet Mall, Minneapolis, Minnesota 55402.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term of Office** |
|
|
Name and Year of |
|
Position Held with |
|
and Length of Time |
|
Principal Occupation(s) |
Birth |
|
the Funds |
|
Served |
|
During Past Five Years |
Thomas S. Schreier, Jr.
(1962)***
|
|
President
|
|
Since February 2001
|
|
Chief Executive
Officer of the
Advisor; Chief
Investment Officer
of the Advisor
since September
2007. |
|
|
|
|
|
|
|
John G. Wenker
(1951)
|
|
Senior Vice President
|
|
Since November 1996
|
|
Managing Director
of the Advisor. |
|
|
|
|
|
|
|
Chris J. Neuharth
(1959)
|
|
Vice President
|
|
Since June 2007
|
|
Senior Fixed-Income
Portfolio Manager
of the Advisor. |
|
|
|
|
|
|
|
David A. Yale
(1956)
|
|
Vice President
|
|
Since June 2007
|
|
Senior Real Estate
Portfolio Manager
of the Advisor
since August 2006;
prior thereto,
Senior Vice
President, Twin
Cities Market
Manager, U.S. Bank
from July 2005 to
August 2006; prior
to July 2005, Vice
President, ING
Investment
Management/ReliaStar
Investment
Research. |
|
|
|
|
|
|
|
Jeffery M. Wilson
(1956)***
|
|
Vice President -
Administration
|
|
Since March 2000
|
|
Senior Vice
President of the
Advisor. |
|
|
|
|
|
|
|
David H. Lui
(1960)***
|
|
Chief Compliance
Officer
|
|
Since March 2005
|
|
Chief Compliance
Officer for the
Advisor since March
2005. |
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term of Office** |
|
|
Name and Year of |
|
Position Held with |
|
and Length of Time |
|
Principal Occupation(s) |
Birth |
|
the Funds |
|
Served |
|
During Past Five Years |
Cynthia C. DeRuyter
(1976)***
|
|
Anti-Money
Laundering Officer
|
|
Since June 2010
|
|
Compliance Director
of the Advisor
since March 2010;
prior thereto,
Compliance Manager,
RSM McGladrey, Inc.
from 2006 to 2010;
prior thereto,
Compliance Manager
of the Advisor. |
|
|
|
|
|
|
|
Charles D. Gariboldi,
Jr.
(1959)***
|
|
Treasurer
|
|
Since December 2004
|
|
Mutual Funds
Treasurer for the
Advisor since
October 2004. |
|
|
|
|
|
|
|
Jill M. Stevenson
(1965)
|
|
Assistant Treasurer
|
|
Since September 2005
|
|
Mutual Funds
Assistant Treasurer
for the Advisor
since September
2005. |
|
|
|
|
|
|
|
Kathleen L. Prudhomme
(1953)***
|
|
Secretary
|
|
Since December
2004; Assistant
Secretary of the
Funds from
September 1999 to
December 2004
|
|
Deputy General
Counsel of the
Advisor since
November 2004. |
|
|
|
|
|
|
|
Richard J. Ertel
(1967)
|
|
Assistant Secretary
|
|
Since June 2006 and
from June 2003 to
August 2004
|
|
Counsel for the
Advisor since May
2006; prior
thereto, Counsel,
Ameriprise
Financial Services,
Inc. |
|
|
|
|
|
|
|
Michael W. Kremenak
(1978)***
|
|
Assistant Secretary
|
|
Since February 2009
|
|
Counsel of the
Advisor since
January 2009; prior
thereto, Associate,
Skadden, Arps,
Slate, Meagher &
Flom LLP, a New
York City-based law
firm, from
September 2005 to
January 2009. |
|
|
|
|
|
|
|
James D. Alt*
(1951)
Dorsey & Whitney LLP
50 South Sixth Street,
Suite 1500
Minneapolis, MN 55402
|
|
Assistant Secretary
|
|
Since December
2004; Secretary of
the Funds from June
2002 to December
2004 and Assistant
Secretary of the
Funds from
September 1998 to
June 2002
|
|
Partner, Dorsey &
Whitney LLP, a
Minneapolis-based
law firm. |
|
|
|
* |
|
Legal fees and expenses are paid to Dorsey & Whitney LLP, the law firm of which Mr. Alt is a
partner. |
|
** |
|
Officers serve at the pleasure of the Board of Directors and are re-elected by the Board
annually. |
|
*** |
|
Upon the closing of the Transaction, designated persons are expected to resign as officers of
the Funds. |
Security Ownership of Certain Shareholders
No person, to the knowledge of Fund management, was the beneficial owner of more than 5% of
any class of voting shares of any Fund as of October 27, 2010, except as follows:
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
Name and Address of |
|
Number of Shares of |
|
Ownership of Common |
Fund |
|
Beneficial Owner |
|
Common Stock |
|
Stock |
American Strategic
Income Portfolio
|
|
Sit Investment
Associates, Inc. and
affiliated entities
(Sit Investment
Associates)
4600 Wells Fargo Center
Minneapolis, MN
|
|
|
*
|
|
__ . __ |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Strategic
Income Portfolio II
|
|
Sit Investment Associates
|
|
| *
|
|
__ . __ |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Strategic
Income Portfolio III
|
|
Sit Investment Associates
|
|
| *
|
|
__ . __ |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Select Portfolio
|
|
Sit Investment Associates
|
|
| *
|
|
__ . __ |
% |
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Based on amended Schedule 13D filings of Sit Investment Associates made on _________ __, 2010
with respect to American Strategic Income Portfolio, and ________ __, 2010 with respect to
American Strategic Income Portfolio II, American Strategic Income Portfolio III, and American
Select Portfolio, which indicate that Sit Investment Associates has sole voting power and sole
dispositive power with respect to such shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
Based on Fund records and other information, the Funds believe that all SEC filing
requirements with respect to the Funds applicable to their directors and officers, the Advisor and
companies affiliated with the Advisor, pursuant to Section 16(a) of the 1934 Act, with respect to
each Funds fiscal year end were satisfied, except that Kathleen L. Prudhomme, an officer of the
Funds, did not file a Form 4 (Statement of Changes of Beneficial Ownership of
Securities) for a transaction in American Strategic Income Portfolio II and American Strategic
Income Portfolio III on a timely basis.
Shareholder Proposals
Under the 1934 Act, Fund shareholders may submit proposals to be considered at the next annual
meeting. Rule 14a-8 under the Exchange Act sets forth the procedures and requirements for
requesting that a Fund include these proposals in its proxy statement. Any proposal submitted
under Rule 14a-8 must be received at the Funds offices, 800 Nicollet Mall, Minneapolis, Minnesota
55402, not later than [120 days from mailing], 2011. Shareholders also may submit proposals to be
voted on at the next annual meeting without having the proposals included in the Funds proxy
statement. These proposals are known as non-Rule 14a-8 proposals. The Funds proxies will be
able to exercise their discretionary authority to vote all proxies with respect to any non-Rule
14a-8 proposal, unless written notice of the proposal is presented to the Fund not later than [45
days from mailing], 2011. If a shareholder makes a timely notification on a non-Rule 14a-8
proposal, the proxies may still exercise discretionary voting authority under circumstances
consistent with applicable proxy rules.
Other Business
So far as the Board is aware, no matters other than those described in this Proxy Statement
will be acted upon at the Meeting. Should any other matters properly come before the Meeting
calling for a vote of shareholders, including any question as to the adjournment of the Meeting, it
is the intention of the persons named as proxies to vote upon such matters according to their best
judgment.
28
Dated: October __, 2010
|
|
|
|
|
Kathleen L. Prudhomme |
|
|
Secretary |
29
APPENDIX A
FORM OF INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This AGREEMENT, made this ____ day of 1998, by and between [Fund], a Minnesota
corporation (the Fund) and (the Adviser).
1. Investment Advisory and Management Services. The Fund hereby engages the Adviser,
and the Adviser hereby agrees to act as investment adviser for, and to manage the affairs, business
and the investment of the assets of the Fund.
The investment of the assets of the Fund shall at all times be subject to the applicable
provisions of the Articles of Incorporation, Bylaws, Registration Statement on Form N-2 and any
representations contained in the Prospectus of the Fund and shall conform to the policies and
purposes of the Fund as set forth in such Registration Statement and Prospectus and (i) as
interpreted from time to time by the Board of Directors of the Fund and (ii) as may be amended from
time to time by the Board of Directors and/or the shareholders of the Fund as permitted by the
Investment Company Act of 1940, as amended (the 1940 Act). Within the framework of the
investment policies of the Fund, the Adviser shall have the sole and exclusive responsibility for
the management of the Funds assets and the making and execution of all investment decisions for
the Fund. The Adviser shall report to the Board of Directors of the Fund regularly at such times
and in such detail as the Board may from time to time determine to be appropriate, in order to
permit the Board to determine the adherence of the Adviser to the investment policies of the Fund.
The Adviser shall, at its own expense, furnish the Fund suitable office space, and all
necessary [For American Strategic Income Portfolio: administrative facilities], office facilities, equipment and personnel for servicing the
investments of the Fund [For American Strategic Income Portfolio: and investment advisory facilities and executive and supervisory personnel
for managing the investments of the Fund and effecting portfolio transactions of the Fund]. The
Adviser shall arrange, if requested by the Fund, for officers, employees or other Affiliated
Persons (as defined in Section 2(a)(3) of the 1940 Act and the rules, regulations and releases
relating thereto) of the Adviser to serve without compensation from the Fund as directors, officers
or employees of the Fund if duly elected to such positions by the shareholders or directors of the
Fund.
The Adviser hereby acknowledges that all records necessary in the operation of the Fund,
including records pertaining to its shareholders and investments, are the property of the Fund, and
in the event that a transfer of management or investment advisory services to someone other than
the Adviser should ever occur, the Adviser will promptly, and at its own cost, take all steps
necessary to segregate such records and deliver them to the Fund.
2. Compensation for Services. In payment for all services, facilities, equipment and
personnel, and for other costs of the Adviser hereunder, the Fund shall pay to the Adviser a
monthly investment advisory fee in an amount equal to [for American Select Portfolio, 1/12 of the
per annum rate of .50 of 1% of average weekly net assets] [for American Strategic Income Portfolio,
American Strategic Income Portfolio II and American Strategic Income Portfolio III, the sum of
..01667% of the Funds average weekly net assets during the month (approximately .20 of 1% on an
annual basis) and 4.5% of the Funds daily gross income (i.e., investment income including
amortization of discount income, other than gains from the sale of securities or gains received
from options and futures contracts less interest on money borrowed by the Fund) accrued by the Fund
during the month but such monthly management fee shall not exceed in the aggregate 1/12th of .725%
of the Funds average weekly net assets during the month (approximately .725% on an annual basis)].
For purposes of the calculation of the fee payable to the Adviser, average weekly net assets shall
be determined on the basis of the Funds average net assets for each weekly period (ending on
Fridays) ending during the month. The net assets for each weekly
A-1
period are determined by averaging the net assets on the last day of such weekly period with
the net assets on the Friday of the immediately preceding weekly period. When the last day of a weekly period is not a Fund business day, then the calculation will be based on the net assets of the Fund on the
immediately preceding business day. Such fee shall be payable on the fifth day of
each calendar month for services performed hereunder during the preceding month. If the Funds
Registration Statement on Form N-2 is declared effective by the Securities and Exchange Commission
after the beginning of a month or this Agreement terminates prior to the end of a month, such fee
shall be prorated according to the proportion which such portion of the month bears to the full
month.
3. Allocation of Expenses. In addition to the fees described in Section 2 hereof, the
Fund shall pay all its expenses which are not assumed by the Adviser in its capacity as the Funds
administrator. These Fund expenses include, by way of example, but not by way of limitation, (a)
brokerage and commission expenses; (b) Federal, state, local and foreign taxes, including issue and
transfer taxes incurred by or levied on the Fund; (c) interest charges on borrowings; (d) the
Funds organizational and offering expenses; (e) (for (e), all
Funds except, American Strategic Income Portfolio) the cost of other personnel providing services to the Fund; (f) fees and expenses of registering the Funds shares
under the appropriate Federal securities laws and qualifying the Funds shares under applicable
state securities laws; (g) fees and expenses of listing and maintaining the listing of the Funds
shares on the principal securities exchanges where listed, or, if the Funds shares are not so
listed, fees and expenses of listing and maintaining the quotation of the Funds shares on the
principal securities market where traded; (h) expenses of printing and distributing reports to
shareholders; (i) costs of shareholders meetings and proxy solicitation; (j) charges and expenses
of the Funds Administrator, custodian and registrar, transfer agent and dividend disbursing agent;
(k) expenses incident to foreclosure on property underlying mortgage loans; (l) fee of outside
parties retained to assist in conducting due diligence respecting Whole Loans and Participation
Mortgages, as defined in the Funds Registration Statement on Form N-2; (m) compensation of the
Funds officers, directors and employees that are not affiliated persons or interested persons (as
defined in Section 2(a)(19) of the 1940 Act and the rules, regulations and releases relating
thereto) of the Adviser; (n) legal and auditing expenses; (o) cost of certificates representing
common shares of the Fund; (p) costs of stationery and supplies; (q) insurance expenses; and (r)
association membership dues.
4. Freedom to Deal with Third Parties. The Adviser shall be free to render services
to others similar to those rendered under this Agreement or of a different nature except as such
services may conflict with the services to be rendered or the duties to be assumed hereunder.
5. Effective Date, Duration and Termination of Agreement. The effective date of this
Agreement shall be the date first set forth above. Wherever referred to in this Agreement, the
vote or approval of the holders of a majority of the outstanding shares of the Fund shall mean the
vote of the lesser of (i) 67% or more of the shares represented at a meeting at which more than 50%
of the outstanding shares of the Fund are present in person or by proxy or (ii) more than 50% of
the outstanding shares of the Fund.
Unless sooner terminated as hereinafter provided, this Agreement shall continue in effect for
a period of two years from the date of its execution hereof, and thereafter shall continue in
effect only so long as such continuance is specifically approved at least annually by the Board of
Directors of the Fund, including the specific approval of a majority of the directors who are not
Interested Persons of the Adviser or of the Fund cast in person at a meeting called for the
purpose of voting on such approval, or by a vote of the holders of a majority of the Funds
outstanding shares.
This Agreement may be terminated at any time without the payment of any penalty by the vote of
the Board of Directors of the Fund or by the vote of the holders of a majority of the outstanding
shares of the Fund, or by the Adviser, upon sixty (60) days written notice to the other party. Any
such termination may be made effective with respect to both the investment advisory and management
services provided
A-2
for in this Agreement or with respect to either of such kinds of services. This Agreement
shall automatically terminate in the event of its assignment as defined in the 1940 Act and the
rules thereunder.
6. Amendments to Agreement. No material amendment to this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding shares of the
Fund.
7. Notices. Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other party may designate in
writing for receipt of such notice.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.
|
|
|
|
|
|
[FUND]
|
|
|
By: |
|
|
|
Its |
|
|
|
|
|
|
|
[ADVISER]
|
|
|
By: |
|
|
|
Its |
|
|
|
|
|
|
A-3
APPENDIX B
AMENDMENT TO INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
DATED AUGUST 10, 1998
WHEREAS, [Fund], a Minnesota corporation (the Fund), and U.S. Bank National Association, a
national banking association (U.S. Bank) entered into an Investment Advisory Agreement dated
August 10, 1998 (the Advisory Agreement) pursuant to which U.S. Bank acted as the Funds
investment adviser; and
WHEREAS, U.S. Bank assigned its rights, duties and responsibilities under the Advisory
Agreement to FAF Advisors, Inc., a Delaware corporation (the Adviser) and the Adviser assumed
such rights, duties and responsibilities pursuant to an Assignment and Assumption Agreement dated
as of May 2, 2001; and
WHEREAS, the Fund and the Adviser wish to amend the Advisory Agreement to allow the Adviser
the option to perform its investment advisory services under the Advisory Agreement by retaining
one or more sub-advisors at the Advisers own cost and expense.
NOW, THEREFORE, the Fund and the Adviser agree as follows:
Subject to obtaining the initial and periodic approvals required under Section 15 of the
Investment Company Act of 1940, as amended, the Adviser may retain one or more sub-advisers at the
Advisers own cost and expense for the purpose of furnishing one or more of the services described
in Section 1 of the Advisory Agreement. Retention of a sub-adviser shall in no way reduce the
responsibilities or obligations of the Adviser under the Advisory Agreement, and the Adviser shall
be responsible to the Fund for all acts or omissions of any sub-adviser in connection with the
performance of Advisers duties thereunder.
B-1
IN WITNESS WHEREOF, the Fund and the Adviser have caused this amendment to be executed by
their duly authorized officers as of the day and year first above written.
|
|
|
[Fund]
|
|
FAF Advisors, Inc. |
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
By: |
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Name: |
|
|
|
|
Its:
|
|
|
|
|
|
Its: |
|
|
|
|
|
|
|
|
|
|
|
|
|
B-2
APPENDIX C
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the ____ day of __________, 2010, between FAF Advisors, Inc., a
Delaware corporation (the Advisor), and Nuveen Asset Management, a Delaware corporation (the
Sub-Advisor).
WHEREAS, the Advisor acts as the investment advisor for __________ (the Fund), a closed-end
management investment company registered under the Investment Company Act of 1940, as amended (the
1940 Act), pursuant to an investment advisory agreement between the Advisor and the Fund (the
Advisory Agreement);
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish sub-investment advisory
services for the Fund, upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants contained
herein, the parties agree as follows:
1. Appointment of Sub-Advisor. The Advisor desires to engage and hereby appoints the
Sub-Advisor to provide certain sub-investment advisory services to the Fund for the period and on
the terms set forth in this Agreement. The Sub-Advisor accepts the appointment and agrees to
furnish the services described herein for the compensation set forth below.
2. Duties of Sub-Advisor.
The Sub-Advisor is hereby employed and authorized to conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the assets in the Fund. In
connection therewith, the Sub-Advisor will (a) make investment decisions for the Fund; (b) place
purchase and sale orders for portfolio transactions in the Fund; (c) employ professional portfolio
managers and securities analysts to provide research services relating to the Fund; (d) employ
qualified personnel to assist in the supervision of the Funds investment program and to monitor
the level of risk incurred by the Fund in connection with its investment program; (e) manage the
forms and levels of leverage employed by the Fund, negotiate the terms and conditions of leverage
facilities and monitor the Funds compliance with leverage limits imposed under the 1940 Act; (f)
provide assistance in connection with determining dividend and distribution levels for the Fund;
and (g) provide tax advice on issues arising in connection with management of the Funds portfolio.
Subject to the supervision of the Funds Board of Directors (the Board) and the Advisor, the
Sub-Advisor will manage the assets in the Fund in accordance with (a) the Funds investment
objective(s), policies and restrictions, to the extent the Sub-Advisor has been notified of such
objectives, policies and restrictions, (b) the Charter Documents (as such term is defined below),
to the extent that they have been provided to the Sub-Advisor, and (c) applicable laws and
regulations.
The Advisor has furnished to the Sub-Advisor the Funds compliance procedures pursuant to
Rules 10f-3, 17a-7, and 17e-1 under the 1940 Act (collectively, the Compliance Procedures), the
Articles of Incorporation and Bylaws of the Fund, each as amended to date (the Charter
Documents), and the Funds investment objective(s), policies and restrictions. The
C-1
Advisor agrees, on an ongoing basis, to provide to the Sub-Advisor, as promptly as
practicable, copies of all amendments and supplements to the Compliance Procedures, all amendments
to the Charter Documents and all revisions to the Funds investment objective(s), policies and
restrictions.
3. Brokerage. In selecting brokers or dealers to execute transactions on behalf of the
Fund, the Sub-Advisor will seek the best overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Advisor will consider factors it deems relevant,
including, without limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a continuing basis.
In selecting brokers or dealers to execute a particular transaction, and in evaluating the best
overall terms available, the Sub-Advisor is authorized to consider brokerage and research services
(within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended). The
Sub-Advisor will not execute any portfolio transactions with a broker or dealer which is an
affiliated person (as defined in the 1940 Act) of the Sub-Advisor or the Advisor, except pursuant
to the Boards approved 17e-1 Policies and Procedures for affiliated brokerage transactions. The
Advisor will provide the Sub-Advisor with a list of brokers and dealers that are affiliated
persons of the Advisor.
4. Proxy Voting. The Sub-Advisor shall vote all proxies with respect to securities
held in the Fund in accordance with the Sub-Advisors proxy voting guidelines and procedures in
effect from time to time. In the event material changes are made to such proxy voting guidelines,
the Sub-Advisor agrees to provide the Advisor with a copy of the revised proxy voting guidelines.
The Advisor agrees to instruct the Funds custodian to forward all proxy materials and related
shareholder communications to the Sub-Advisor promptly upon receipt. The Sub-Advisor agrees to
promptly inform the Advisor and the Fund of any conflict of interest of which the Sub-Advisor is
aware that the Sub-Advisor has in voting proxies with respect to securities held in the Fund. The
Sub-Advisor shall not be liable with regard to voting of proxies or other corporate actions if the
proxy materials and related communications are not received in a timely manner.
5. Information Provided to the Advisor.
(a) The Sub-Advisor will keep the Advisor informed of developments materially affecting the
Fund and will, on its own initiative, furnish the Advisor from time to time with whatever
information the Sub-Advisor believes is appropriate for this purpose.
(b) The Sub-Advisor will confer with the Advisor as the Advisor may reasonably request
regarding the investment and management of the Fund. The Sub-Advisor will not be required to advise
the Advisor or act for the Advisor or the Fund in any legal proceedings, including bankruptcies or
class actions, involving securities in the Fund or the issuers of the securities, except that the
Sub-Advisor, if requested by the Advisor or the Board, shall act on behalf of the Advisor and/or
the Fund in any legal proceedings relating specifically to Whole Loans and Participation Mortgages
held by the Fund.
C-2
(c) The Sub-Advisor agrees to comply with all reporting requirements that the Board or the
Advisor reasonably adopt and communicate to the Sub-Advisor in writing, including reporting
requirements related to performance of the Fund, brokerage practices, and proxy voting.
(d) The Sub-Advisor will monitor the pricing of portfolio securities, and events relating to
the issuers of those securities and the markets in which the securities trade in the ordinary
course of managing the portfolio securities of the Fund, and will notify the Advisor promptly of
any issuer-specific or market events or other situations that occur (particularly those that may
occur after the close of a foreign market in which the securities may primarily trade but before
the time at which the Funds securities are priced on a given day) that may materially impact the
pricing of one or more securities in the Fund. In addition, upon the request of Advisor, the
Sub-Advisor will assist the Advisor in evaluating the impact that such an event may have on the net
asset value of the Fund and in determining a recommended fair value of the affected security or
securities. Sub-Advisor shall not be liable for any valuation determined or adopted by the Fund,
unless such determination is made based upon information provided by the Sub-Advisor that is
materially incorrect or incomplete as a result of the Sub-Advisors gross negligence.
(e) The Sub-Advisor has provided the Advisor with a true and complete copy of its compliance
policies and procedures that are reasonably designed to prevent violations of the federal
securities laws (as such term is defined in Rule 38a-1 under the 1940 Act) and Rule 206(4)-7 under
the Investment Advisers Act of 1940, as amended (the Advisers Act) (the Sub-Advisor Compliance
Policies). The Sub-Advisors chief compliance officer (the Sub-Advisor CCO) shall provide to the
Funds chief compliance officer (the Fund CCO) or his or her delegate, promptly (and in no event
more than 10 business days) after the occurrence of the triggering event, the following:
(i) a report of any material changes to the Sub-Advisor Compliance Policies;
(ii) a report of any material compliance matters, as defined by Rule 38a-1 under the 1940
Act, that have occurred in connection with the Sub-Advisor Compliance Policies;
(iii) a copy of a summary of the Sub-Advisor CCOs report with respect to the annual review
of the Sub-Advisor Compliance Policies pursuant to Rule 206(4)-7 under the Advisers Act; and
(iv) an annual (or more frequently as the Fund CCO may request) certification regarding the
Sub-Advisors compliance with Rule 206(4)-7 under the Advisers Act and Section 38a-1 under
the 1940 Act as well as the foregoing sub-paragraphs (i) (iii).
(f) The Sub-Advisor will timely notify the Advisor of any material violations by the
Sub-Advisor of the Funds investment policies or restrictions or any applicable law or regulation.
6. Standard of Care. The Sub-Advisor shall exercise its best judgment in rendering
the services described in paragraphs 2, 3 and 4 above. The Sub-Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or the Advisor in
connection with the matters to which this Agreement relates, except a loss resulting from willful
C-3
misfeasance, bad faith or gross negligence on the Sub-Advisors part in the performance of its
duties or from reckless disregard by the Sub-Advisor of its obligations and duties under this
Agreement (each such act or omission shall be referred to as Disqualifying Conduct). Neither the
Sub-Advisor nor its members, partners, officers, employees and agents shall be liable to the
Advisor, the Fund, its shareholders or any other person (a) for the acts, omissions, errors of
judgment or mistakes of law of any other fiduciary or other person with respect to the Fund or (b)
for any failure or delay in performance of the Sub-Advisors obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdowns, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
The Sub-Advisor does not guarantee the future performance of the Fund or any specific level of
performance, the success of any investment decision or strategy that the Sub-Advisor may use, or
the success of the Sub-Advisors overall management of the Fund. The Advisor understands that
investment decisions made for the Fund by the Sub-Advisor are subject to various market, currency,
economic, political and business risks, and that those investment decisions will not always be
profitable.
7. Compensation.
[For American Strategic Income Portfolio, American Strategic Income Portfolio II and American
Strategic Income Portfolio III: In consideration of the services rendered pursuant to this
Agreement, the Advisor will pay the Sub-Advisor on the fifth business day of each month a fee for
the previous month according to the attached Schedule A.] [For American Select Portfolio:
In consideration of the services rendered pursuant to this Agreement, the Advisor will pay the
Sub-Advisor on the fifth business day of each month a fee for the previous month equal to 1/12 of
the per annum rate of 0.40% of the Funds average weekly net assets, calculated in the same manner
as the fee paid by the Fund to the Advisor under the Advisory Agreement.] The fee for the period
from the date of this Agreement to the end of the calendar month shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period and shall be payable
upon the date of termination of this Agreement.
8. Expenses. The Sub-Advisor will bear all of its expenses in connection with the
performance of its services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent specifically assumed by the
Sub-Advisor. The expenses to be borne by the Fund include, by way of example, but not by way of
limitation, (a) brokerage and commission expenses; (b) Federal, state, local and foreign taxes,
including issue and transfer taxes incurred by or levied on the Fund; (c) interest charges on
borrowings; (d) the Funds organizational and offering expenses; (e) fees and expenses of
registering the Funds shares under the appropriate Federal securities laws and qualifying the
Funds shares under applicable state securities laws; (f) fees and expenses of listing and
maintaining the listing of the Funds shares on the principal securities exchanges where listed,
or, if the Funds shares are not so listed, fees and expenses of listing and maintaining the
quotation of the Funds shares on the principal securities market where traded; (g) expenses of
printing and
C-4
distributing reports to shareholders; (h) expenses of shareholders meetings and proxy
solicitation; (i) charges and expenses of the Funds administrator, custodian and registrar,
transfer agent and dividend disbursing agent; (j) expenses incident to foreclosure on property
underlying mortgage loans; (k) fees of outside parties retained to assist in conducting due
diligence respecting Whole Loans and Participation Mortgages, as defined in the Funds Registration
Statement on Form N-2; (l) compensation of the Funds officers, directors and employees that are
not affiliated persons or interested persons (as defined in Section 2(a)(19) of the 1940 Act and
the rules, regulations and releases relating thereto) of the Advisor or Sub-Advisor; (m) legal and
auditing expenses, including any legal expenses incurred by the Sub-Advisor in performing its
obligations under Section 5(b) hereof; (n) cost of certificates representing shares of the fund;
(o) costs of stationery and supplies; (p) insurance expenses; and (q) association membership dues.
9. Services to Other Companies or Accounts. The Advisor understands that the
Sub-Advisor now acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other investment companies, and
the Advisor has no objection to the Sub-Advisor so acting, provided that whenever the Fund and one
or more other accounts or investment companies advised by the Sub-Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in accordance with a
methodology believed to be equitable to each entity. The Sub-Advisor agrees to similarly allocate
opportunities to sell securities. The Advisor recognizes that, in some cases, this procedure may
limit the size of the position that may be acquired or sold for the Fund. In addition, the Advisor
understands that the persons employed by the Sub-Advisor to assist in the performance of the
Sub-Advisors duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the Sub-Advisor or any affiliate
of the Sub-Advisor to engage in and devote time and attention to other business or to render
services of whatever kind or nature.
10. Books and Records. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Advisor hereby agrees that all records which it specifically maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to the Fund copies of
any of such records upon the Funds or the Advisors request. The Sub-Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records relating to its
activities hereunder required to be maintained by Rule 31a-1 under the 1940 Act and to preserve the
records relating to its activities hereunder required by Rule 204-2 under the Advisers Act for the
period specified in said Rule.
11. Term of Agreement. Unless sooner terminated, this Agreement shall continue in
effect until ________, 2012. Thereafter, this Agreement shall continue automatically for
successive annual periods, provided such continuance is specifically approved at least annually by
the Board in the manner required by the 1940 Act. This Agreement is terminable, without penalty, on
60 days written notice (the date of termination may be less than 60 days after the written notice
of termination so long as the duration of the notice period is agreed upon by the Advisor and
Sub-Advisor) by the Advisor, by the Funds Board, by vote of a majority of the Funds outstanding
voting securities, or by the Sub-Advisor, and will immediately terminate upon termination of the
Advisory Agreement. This Agreement also will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
C-5
12. Trade Settlement at Termination. Termination will be without prejudice to the
completion of any transaction already initiated. On, or after, the effective date of termination,
the Sub-Advisor shall be entitled, without prior notice to the Advisor or the Fund, to direct the
Funds custodian to retain and/or realize any assets of the Fund as may be required to settle
transactions already initiated. Following the date of effective termination, any new transactions
will only be executed by mutual agreement between the Advisor and the Sub-Advisor.
13. Indemnification. (a) The Advisor agrees to indemnify and hold harmless the
Sub-Advisor and its members, partners, officers, employees, agents, successors and assigns (each a
Sub-Advisor Indemnified Person) from and against any and all claims, losses, liabilities or
damages (including reasonable attorneys fees and other related expenses) to which any Sub-Advisor
Indemnified Person may become subject as a result of the Advisors material breach of this
Agreement or as a result of the Advisors willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties hereunder or violation of applicable law;
provided, however, that no Sub-Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Sub-Advisors
Disqualifying Conduct.
(b) The Sub-Advisor agrees to indemnify and hold harmless the Advisor and the Fund and their
respective shareholders, members, partners, directors, officers, employees, agents, successors and
assigns (each an Advisor Indemnified Person) from and against any and all claims, losses,
liabilities or damages (including reasonable attorneys fees and other related expenses) to which
any Advisor Indemnified Person may become subject as a result of the Sub-Advisors material breach
of this Agreement or as a result of the Sub-Advisors willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder or violation of applicable
law; provided, however, that no Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Advisors
Disqualifying Conduct.
14. Delegation to Third Parties. Except where prohibited by applicable law or
regulation, the Sub-Advisor may delegate or may employ a third party to perform any accounting,
administrative, reporting and ancillary services required to enable the Sub-Advisor to perform its
functions under this Agreement. Notwithstanding any other provision of the Agreement, the
Sub-Advisor may provide information about the Advisor and the Fund to any such third party for the
purposes of this paragraph, provided that the third party is subject to a confidentiality agreement
that specifically prevents the misuse of any such information, including portfolio holdings. The
Sub-Advisor will act in good faith and with due diligence in the selection, use and monitoring of
third parties and shall be solely responsible for any loss, mistake, gross negligence or misconduct
caused by such third party.
15. Disclosure. (a) Neither the Advisor, on its own behalf or on behalf of the Fund,
or the Sub-Advisor shall disclose information of a confidential nature acquired in consequence of
this Agreement, except for information that they may be entitled or bound to disclose by law,
regulation or that is disclosed to their advisors where reasonably necessary for the performance of
their professional services or, in the case of the Sub-Advisor, as permitted in accordance with
Section 14 of this Agreement.
C-6
(b) Notwithstanding the provisions of Subsection 15(a), to the extent that any market
counterparty with whom the Sub-Advisor deals requires information relating to the Fund (including,
but not limited to, the identity of the Advisor or the Fund and market value of the Fund), the
Sub-Advisor shall be permitted to disclose such information to the extent necessary to effect
transactions on behalf of the Fund in accordance with the terms of this Agreement.
(c) Notwithstanding the provisions of Subsections 15(a) and 15(b), the Sub-Advisor
acknowledges that the Advisor and the Fund intend to rely on Rule 17a-7, Rule 17a-10, Rule 10f-3,
Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the Sub-Advisor hereby agrees that it shall not
consult with any other sub-advisor to a fund under common control with the Fund with respect to
transactions for the Fund in securities or other assets.
16. Instructions to Custodian. The Sub-Advisor shall have authority to issue to
the Funds custodian such instructions as it may consider appropriate in connection with the
settlement of any transaction relating to the Fund that it has initiated. The Advisor shall ensure
that the Funds custodian is obliged to comply with any instructions of the Sub-Advisor given in
accordance with this Agreement. The Sub-Advisor will not be responsible for supervising the Funds
custodian.
17. Representations and Warranties. (a) The Advisor represents and warrants
to the Sub-Advisor that the Advisor:
(i) has full power and authority to appoint the Sub-Advisor to manage the Fund in
accordance with the terms of this Agreement; and
(ii) this Agreement is valid and has been duly authorized by appropriate action of the
Advisor, the Board and the Funds shareholders, does not violate any obligation by which the
Advisor is bound, and when so executed and delivered, will be binding upon the Advisor in
accordance with its terms subject to applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally and general principles of equity.
(b) The Sub-Advisor represents and warrants to the Advisor that the Sub-Advisor:
(i) is registered as an investment adviser under the Advisers Act and will continue to
be so registered for so long as this Agreement remains in effect;
(ii) is not currently the subject of, and has not been the subject of during the last
three (3) years, any enforcement action by a regulator, except as previously disclosed to
the Advisor; and
(iii) maintains insurance coverage in an appropriate amount and shall upon request
provide to the Advisor any information it may reasonably require concerning the amount of or
scope of such insurance.
C-7
18. Miscellaneous.
(a) Notices. All notices provided for by this Agreement shall be in writing and
shall be deemed given when received, against appropriate receipt, by the General Counsel of the
Advisor or Sub-Advisor, as the case may be, or such other person as a party shall designate by
notice to the other parties.
(b) Amendment. This Agreement may be amended at any time, but only by written
agreement between the Advisor and the Sub-Advisor, which amendment must be approved by the Board in
the manner required by the 1940 Act.
(c) Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersedes any prior agreement among the parties relating to the subject matter
hereof.
(d) Severability. If any provision of this Agreement will be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be
affected thereby.
(e) Headings. The paragraph headings of this Agreement are for convenience of
reference and do not constitute a part hereof.
(f) Governing Law. This Agreement shall be governed in accordance with the
internal laws of the State of Minnesota, without giving effect to principles of conflict of laws.
(g) Use of Sub-Advisors Name. The Advisor shall furnish to the Sub-Advisor all
prospectuses, proxy statements, reports to shareholders, sales literature or other material
prepared for distribution which refers to the Sub-Advisor by name prior to the use thereof. The
Advisor shall not use or cause the Fund to use any such materials if the Sub-Advisor reasonably
objects to such use. This paragraph shall survive the termination of this Agreement.
C-8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized representatives as of the date first written above.
|
|
|
|
|
|
FAF Advisors, Inc.
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
|
Nuveen Asset Management
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
C-9
Schedule A
Pursuant to Section 7, the Advisor shall pay the Sub-Advisor, for services rendered to the
Fund, a monthly sub-advisory fee in an amount equal to the sum of. 008335% of the Funds average
weekly net assets during the month (approximately 0.10% on an annual basis) and 4.5% of the Funds
daily gross income (i.e., investment income including amortization of discount income, other than
gains from the sale of securities or gains received from options and futures contracts less
interest on money borrowed by the Fund) accrued by the Fund during the month but such monthly
management fee shall not exceed in the aggregate 1/12th of 0.625% of the Funds average
weekly net assets during the month (approximately 0.625% on an annual basis). Average weekly net
assets shall be calculated in the same manner as is used to determine the fee paid by the Fund to
the Advisor under the Advisory Agreement.
C-10
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the ____ day of __________, 2010, between FAF Advisors,
Inc., a Delaware corporation (the Advisor) and Nuveen Fund Advisors, Inc., a Delaware corporation
(the Sub-Advisor).
WHEREAS, the Advisor acts as the investment advisor for __________ (the Fund), a
closed-end management investment company registered under the Investment Company Act of 1940, as
amended (the 1940 Act), pursuant to an investment advisory agreement between the Advisor and the
Fund (the Advisory Agreement);
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish sub-investment
advisory services for the Fund, upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
contained herein, the parties agree as follows:
1. Appointment of Sub-Advisor. The Advisor desires to engage and hereby
appoints the Sub-Advisor to provide certain sub-investment advisory services to the Fund for the
period and on the terms set forth in this Agreement. The Sub-Advisor accepts the appointment and
agrees to furnish the services described herein for the compensation set forth below.
2. Duties of Sub-Advisor.
The Sub-Advisor is hereby employed and authorized to perform the following sub-investment
advisory services on behalf of the Fund: (a) assist in the supervision of the Funds investment
program; (b) monitor the level of risk incurred by the Fund in connection with its investment
program; (c) manage the forms and levels of leverage employed by the Fund, negotiate the terms and
conditions of leverage facilities and monitor the Funds compliance with leverage limits imposed
under the 1940 Act; (d) provide assistance in connection with determining dividend and distribution
levels for the Fund; (e) provide tax advice on issues arising in connection with management of the
Funds portfolio; and (f) assist with pricing the Funds portfolio securities, provided that
Sub-Advisor shall not be liable for any valuation determined or adopted by the Fund, unless such
determination is made based upon information provided by the Sub-Advisor that is materially
incorrect or incomplete as a result of the Sub-Advisors gross negligence.
The Advisor has furnished to the Sub-Advisor the Funds compliance procedures pursuant to
Rules 10f-3, 17a-7, and 17e-1 under the 1940 Act (collectively, the Compliance Procedures), the
Articles of Incorporation and Bylaws of the Fund, each as amended to date (the Charter
Documents), and the Funds investment objective(s), policies and restrictions. The Advisor
agrees, on an ongoing basis, to provide to the Sub-Advisor, as promptly as practicable, copies of
all amendments and supplements to the Compliance Procedures, all amendments to the Charter
Documents and all revisions to the Funds investment objective(s), policies and restrictions.
C-11
3. Information Provided to the Advisor.
(a) The Sub-Advisor will keep the Advisor informed of developments materially affecting
the Fund and will, on its own initiative, furnish the Advisor from time to time with whatever
information the Sub-Advisor believes is appropriate for this purpose.
(b) The Sub-Advisor will confer with the Advisor as the Advisor may reasonably request
regarding the investment and management of the Fund. The Sub-Advisor will not be required to advise
the Advisor or act for the Advisor or the Fund in any legal proceedings, including bankruptcies or
class actions, involving securities in the Fund or the issuers of the securities.
(c) The Sub-Advisor agrees to comply with all reporting requirements that the Board of
Directors of the Fund (the Board) or the Advisor reasonably adopt and communicate to the
Sub-Advisor in writing.
(d) The Sub-Advisor has provided the Advisor with a true and complete copy of its
compliance policies and procedures that are reasonably designed to prevent violations of the
federal securities laws (as such term is defined in Rule 38a-1 under the 1940 Act) and Rule
206(4)-7 under the Investment Advisers Act of 1940, as amended (the Advisers Act) (the
Sub-Advisor Compliance Policies). The Sub-Advisors chief compliance officer (the Sub-Advisor
CCO) shall provide to the Funds chief compliance officer (the Fund CCO) or his or her delegate,
promptly (and in no event more than 10 business days) after the occurrence of the triggering event,
the following:
(i) a report of any material changes to the Sub-Advisor Compliance Policies;
(ii) a report of any material compliance matters, as defined by Rule 38a-1 under the
1940 Act, that have occurred in connection with the Sub-Advisor Compliance Policies;
(iii) a copy of a summary of the Sub-Advisor CCOs report with respect to the annual
review of the Sub-Advisor Compliance Policies pursuant to Rule 206(4)-7 under the Advisers
Act; and
(iv) an annual (or more frequently as the Fund CCO may request) certification regarding
the Sub-Advisors compliance with Rule 206(4)-7 under the Advisers Act and Section 38a-1
under the 1940 Act as well as the foregoing sub-paragraphs (i) (iii).
(e) The Sub-Advisor will timely notify the Advisor of any material violations by the
Sub-Advisor of the Funds investment policies or restrictions or any applicable law or regulation.
4. Standard of Care. The Sub-Advisor shall exercise its best judgment in
rendering the services described in paragraph 2 above. The Sub-Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or the Advisor in
connection with the matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Advisors part in the performance of its
duties or from reckless disregard by the Sub-Advisor of its obligations and duties under this
Agreement (each such act or omission shall be referred to as Disqualifying Conduct). Neither
C-12
the Sub-Advisor nor its members, partners, officers, employees and agents shall be liable to
the Advisor, the Fund, its shareholders or any other person (a) for the acts, omissions, errors of
judgment or mistakes of law of any other fiduciary or other person with respect to the Fund or (b)
for any failure or delay in performance of the Sub-Advisors obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdowns, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
5. Compensation. [For American Strategic Income Portfolio, American Strategic
Income Portfolio II and American Strategic Income Portfolio III: In consideration of the services
rendered pursuant to this Agreement, the Advisor will pay the Sub-Advisor on the fifth business day
of each month a fee for the previous month according to the attached Schedule A.] [For
American Select Portfolio: In consideration of the services rendered pursuant to this Agreement,
the Advisor will pay the Sub-Advisor on the fifth business day of each month a fee for the previous
month equal to 1/12 of the per annum rate of 0.10% of the Funds average weekly net assets,
calculated in the same manner as the fee paid by the Fund to the Advisor under the Advisory
Agreement.] The fee for the period from the date of this Agreement to the end of the calendar
month shall be prorated according to the proportion that such period bears to the full monthly
period. Upon any termination of this Agreement before the end of a month, the fee for such part of
that month shall be prorated according to the proportion that such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement.
6. Expenses. The Sub-Advisor will bear all of its expenses in connection with the
performance of its services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent specifically assumed by the
Sub-Advisor. The expenses to be borne by the Fund include, by way of example, but not by way of
limitation, (a) brokerage and commission expenses; (b) Federal, state, local and foreign taxes,
including issue and transfer taxes incurred by or levied on the Fund; (c) interest charges on
borrowings; (d) the Funds organizational and offering expenses; (e) fees and expenses of
registering the Funds shares under the appropriate Federal securities laws and qualifying the
Funds shares under applicable state securities laws; (f) fees and expenses of listing and
maintaining the listing of the Funds shares on the principal securities exchanges where listed,
or, if the Funds shares are not so listed, fees and expenses of listing and maintaining the
quotation of the Funds shares on the principal securities market where traded; (g) expenses of
printing and distributing reports to shareholders; (h) expenses of shareholders meetings and proxy
solicitation; (i) charges and expenses of the Funds administrator, custodian and registrar,
transfer agent and dividend disbursing agent; (j) expenses incident to foreclosure on property
underlying mortgage loans; (k) fees of outside parties retained to assist in conducting due
diligence respecting Whole Loans and Participation Mortgages, as defined in the Funds Registration
Statement on Form N-2; (l) compensation of the Funds officers, directors and employees that are
not affiliated persons or interested persons (as defined in Section 2(a)(19) of the 1940 Act and
the rules, regulations and releases relating thereto) of the Advisor or Sub-Advisor; (m) legal and
auditing expenses; (n) cost of certificates representing shares of the fund; (o) costs of
stationery and supplies; (p) insurance expenses; and (q) association membership dues.
C-13
7. Services to Other Companies or Accounts. The Advisor understands that the
Sub-Advisor now acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other investment companies, and
the Advisor has no objection to the Sub-Advisor so acting, provided that whenever the Fund and one
or more other accounts or investment companies advised by the Sub-Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in accordance with a
methodology believed to be equitable to each entity. The Sub-Advisor agrees to similarly allocate
opportunities to sell securities. The Advisor recognizes that, in some cases, this procedure may
limit the size of the position that may be acquired or sold for the Fund. In addition, the Advisor
understands that the persons employed by the Sub-Advisor to assist in the performance of the
Sub-Advisors duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the Sub-Advisor or any affiliate
of the Sub-Advisor to engage in and devote time and attention to other business or to render
services of whatever kind or nature.
8. Books and Records. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Advisor hereby agrees that all records which it specifically maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to the Fund copies of
any of such records upon the Funds or the Advisors request. The Sub-Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records relating to its
activities hereunder required to be maintained by Rule 31a-1 under the 1940 Act and to preserve the
records relating to its activities hereunder required by Rule 204-2 under the Advisers Act for the
period specified in said Rule.
9. Term of Agreement. Unless sooner terminated, this Agreement shall continue in
effect until ________, 2012. Thereafter, this Agreement shall continue automatically for
successive annual periods, provided such continuance is specifically approved at least annually by
the Board in the manner required by the 1940 Act. This Agreement is terminable, without penalty, on
60 days written notice (the date of termination may be less than 60 days after the written notice
of termination so long as the duration of the notice period is agreed upon by the Advisor and
Sub-Advisor) by the Advisor, by the Funds Board, by vote of a majority of the Funds outstanding
voting securities, or by the Sub-Advisor, and will immediately terminate upon termination of the
Advisory Agreement. This Agreement also will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
10. Indemnification. (a) The Advisor agrees to indemnify and hold harmless
the Sub-Advisor and its members, partners, officers, employees, agents, successors and assigns
(each a Sub-Advisor Indemnified Person) from and against any and all claims, losses, liabilities
or damages (including reasonable attorneys fees and other related expenses) to which any
Sub-Advisor Indemnified Person may become subject as a result of the Advisors material breach of
this Agreement or as a result of the Advisors willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties hereunder or violation of applicable law;
provided, however, that no Sub-Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Sub-Advisors
Disqualifying Conduct.
C-14
(b) The Sub-Advisor agrees to indemnify and hold harmless the Advisor and the Fund and
their respective shareholders, members, partners, directors, officers, employees, agents,
successors and assigns (each an Advisor Indemnified Person) from and against any and all claims,
losses, liabilities or damages (including reasonable attorneys fees and other related expenses) to
which any Advisor Indemnified Person may become subject as a result of the Sub-Advisors material
breach of this Agreement or as a result of the Sub-Advisors willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder or violation of applicable
law; provided, however, that no Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Advisors
Disqualifying Conduct.
11. Delegation to Third Parties. Except where prohibited by applicable law or
regulation, the Sub-Advisor may delegate or may employ a third party to perform any accounting,
administrative, reporting and ancillary services required to enable the Sub-Advisor to perform its
functions under this Agreement. Notwithstanding any other provision of the Agreement, the
Sub-Advisor may provide information about the Advisor and the Fund to any such third party for the
purposes of this paragraph, provided that the third party is subject to a confidentiality agreement
that specifically prevents the misuse of any such information, including portfolio holdings. The
Sub-Advisor will act in good faith and with due diligence in the selection, use and monitoring of
third parties and shall be solely responsible for any loss, mistake, gross negligence or misconduct
caused by such third party.
12. Disclosure. Neither the Advisor, on its own behalf or on behalf of the Fund,
or the Sub-Advisor shall disclose information of a confidential nature acquired in consequence of
this Agreement, except for information that they may be entitled or bound to disclose by law,
regulation or that is disclosed to their advisors where reasonably necessary for the performance of
their professional services or, in the case of the Sub-Advisor, as permitted in accordance with
Section 11 of this Agreement.
13. Instructions to Custodian. The Sub-Advisor shall have authority to issue to
the Funds custodian such instructions as it may consider appropriate in connection with the
settlement of any transaction relating to the Fund that it has initiated. The Advisor shall ensure
that the Funds custodian is obliged to comply with any instructions of the Sub-Advisor given in
accordance with this Agreement. The Sub-Advisor will not be responsible for supervising the Funds
custodian.
14. Representations and Warranties. (a) The Advisor represents and warrants
to the Sub-Advisor that the Advisor:
(i) has full power and authority to appoint the Sub-Advisor to manage the Fund in
accordance with the terms of this Agreement; and
(ii) this Agreement is valid and has been duly authorized by appropriate action of the
Advisor, the Board and the Funds shareholders, does not violate any obligation by which the
Advisor is bound, and when so executed and delivered, will be binding upon the Advisor in
accordance with its terms subject to applicable bankruptcy, insolvency,
C-15
reorganization or similar laws affecting creditors rights generally and general principles
of equity.
(b) The Sub-Advisor represents and warrants to the Advisor that the Sub-Advisor:
(i) is registered as an investment adviser under the Advisers Act and will continue to
be so registered for so long as this Agreement remains in effect;
(ii) is not currently the subject of, and has not been the subject of during the last
three (3) years, any enforcement action by a regulator, except as previously disclosed to
the Advisor; and
(iii) maintains insurance coverage in an appropriate amount and shall upon request
provide to the Advisor any information it may reasonably require concerning the amount of or
scope of such insurance.
15. Miscellaneous.
(a) Notices. All notices provided for by this Agreement shall be in writing and
shall be deemed given when received, against appropriate receipt, by the General Counsel of the
Advisor or Sub-Advisor, as the case may be, or such other person as a party shall designate by
notice to the other parties.
(b) Amendment. This Agreement may be amended at any time, but only by written
agreement between the Advisor and the Sub-Advisor, which amendment must be approved by the Board in
the manner required by the 1940 Act.
(c) Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersedes any prior agreement among the parties relating to the subject matter
hereof.
(d) Severability. If any provision of this Agreement will be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be
affected thereby.
(e) Headings. The paragraph headings of this Agreement are for convenience of
reference and do not constitute a part hereof.
(f) Governing Law. This Agreement shall be governed in accordance with the
internal laws of the State of Minnesota, without giving effect to principles of conflict of laws.
(g) Use of Sub-Advisors Name. The Advisor shall furnish to the Sub-Advisor all
prospectuses, proxy statements, reports to shareholders, sales literature or other material
prepared for distribution which refers to the Sub-Advisor by name prior to the use thereof. The
Advisor shall not use or cause the Fund to use any such materials if the Sub-Advisor reasonably
objects to such use. This paragraph shall survive the termination of this Agreement.
C-16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized representatives as of the date first written above.
|
|
|
|
|
|
FAF Advisors, Inc.
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
|
Nuveen Fund Advisors, Inc.
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
C-17
Schedule A
Pursuant to Section 5, the Advisor shall pay the Sub-Advisor, for services rendered to the
Fund, a monthly sub-advisory fee in an amount equal to 1.5% of the Funds daily gross income (i.e.,
investment income including amortization of discount income, other than gains from the sale of
securities or gains received from options and futures contracts less interest on money borrowed by
the Fund) accrued by the Fund during the month but such monthly management fee shall not exceed in
the aggregate 1/12th of 0.175% of the Funds average weekly net assets during the month
(approximately 0.175% on an annual basis). Average weekly net assets shall be calculated in the
same manner as is used to determine the fee paid by the Fund to the Advisor under the Advisory
Agreement.
C-18
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the ____ day of __________, 2010, between FAF Advisors, Inc., a
Delaware corporation (the Advisor), and Nuveen Asset Management, LLC, a Delaware limited
liability company (the Sub-Advisor).
WHEREAS, the Advisor acts as the investment advisor for __________ (the Fund), a closed-end
management investment company registered under the Investment Company Act of 1940, as amended (the
1940 Act), pursuant to an investment advisory agreement between the Advisor and the Fund (the
Advisory Agreement);
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish sub-investment advisory
services for the Fund, upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants contained
herein, the parties agree as follows:
1. Appointment of Sub-Advisor. The Advisor desires to engage and hereby appoints
the Sub-Advisor to provide certain sub-investment advisory services to the Fund for the period and
on the terms set forth in this Agreement. The Sub-Advisor accepts the appointment and agrees to
furnish the services described herein for the compensation set forth below.
2. Duties of Sub-Advisor.
The Sub-Advisor is hereby employed and authorized to conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the assets in the Fund. In
connection therewith, the Sub-Advisor will (a) make investment decisions for the Fund; (b) place
purchase and sale orders for portfolio transactions in the Fund; and (c) employ professional
portfolio managers and securities analysts to provide research services relating to the Fund.
Subject to the supervision of the Funds Board of Directors (the Board) and the Advisor, the
Sub-Advisor will manage the assets in the Fund in accordance with (a) the Funds investment
objective(s), policies and restrictions, to the extent the Sub-Advisor has been notified of such
objectives, policies and restrictions, (b) the Charter Documents (as such term is defined below),
to the extent that they have been provided to the Sub-Advisor, and (c) applicable laws and
regulations.
The Advisor has furnished to the Sub-Advisor the Funds compliance procedures pursuant to
Rules 10f-3, 17a-7, and 17e-1 under the 1940 Act (collectively, the Compliance Procedures), the
Articles of Incorporation and Bylaws of the Fund, each as amended to date (the Charter
Documents), and the Funds investment objective(s), policies and restrictions. The Advisor
agrees, on an ongoing basis, to provide to the Sub-Advisor, as promptly as practicable, copies of
all amendments and supplements to the Compliance Procedures, all amendments to the Charter
Documents and all revisions to the Funds investment objective(s), policies and restrictions.
3. Brokerage. In selecting brokers or dealers to execute transactions on
behalf of the Fund, the Sub-Advisor will seek the best overall terms available. In assessing the
best overall terms available for any transaction, the Sub-Advisor will consider factors it deems
C-19
relevant, including, without limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a continuing basis.
In selecting brokers or dealers to execute a particular transaction, and in evaluating the best
overall terms available, the Sub-Advisor is authorized to consider brokerage and research services
(within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended). The
Sub-Advisor will not execute any portfolio transactions with a broker or dealer which is an
affiliated person (as defined in the 1940 Act) of the Sub-Advisor or the Advisor, except pursuant
to the Boards approved 17e-1 Policies and Procedures for affiliated brokerage transactions. The
Advisor will provide the Sub-Advisor with a list of brokers and dealers that are affiliated
persons of the Advisor.
4. Proxy Voting. The Sub-Advisor shall vote all proxies with respect to
securities held in the Fund in accordance with the Sub-Advisors proxy voting guidelines and
procedures in effect from time to time. In the event material changes are made to such proxy
voting guidelines, the Sub-Advisor agrees to provide the Advisor with a copy of the revised proxy
voting guidelines. The Advisor agrees to instruct the Funds custodian to forward all proxy
materials and related shareholder communications to the Sub-Advisor promptly upon receipt. The
Sub-Advisor agrees to promptly inform the Advisor and the Fund of any conflict of interest of which
the Sub-Advisor is aware that the Sub-Advisor has in voting proxies with respect to securities held
in the Fund. The Sub-Advisor shall not be liable with regard to voting of proxies or other
corporate actions if the proxy materials and related communications are not received in a timely
manner.
5. Information Provided to the Advisor.
(a) The Sub-Advisor will keep the Advisor informed of developments materially affecting
the Fund and will, on its own initiative, furnish the Advisor from time to time with whatever
information the Sub-Advisor believes is appropriate for this purpose.
(b) The Sub-Advisor will confer with the Advisor as the Advisor may reasonably request
regarding the investment and management of the Fund. The Sub-Advisor will not be required to advise
the Advisor or act for the Advisor or the Fund in any legal proceedings, including bankruptcies or
class actions, involving securities in the Fund or the issuers of the securities, except that the
Sub-Advisor, if requested by the Advisor or the Board, shall act on behalf of the Advisor and/or
the Fund in any legal proceedings relating specifically to Whole Loans and Participation Mortgages
held by the Fund.
(c) The Sub-Advisor agrees to comply with all reporting requirements that the Board or the
Advisor reasonably adopt and communicate to the Sub-Advisor in writing, including reporting
requirements related to performance of the Fund, brokerage practices, and proxy voting.
(d) The Sub-Advisor will monitor the pricing of portfolio securities, and events relating
to the issuers of those securities and the markets in which the securities trade in the ordinary
course of managing the portfolio securities of the Fund, and will notify the Advisor promptly of
any issuer-specific or market events or other situations that occur (particularly those
C-20
that may occur after the close of a foreign market in which the securities may primarily trade
but before the time at which the Funds securities are priced on a given day) that may materially
impact the pricing of one or more securities in the Fund. In addition, upon the request of
Advisor, the Sub-Advisor will assist the Advisor in evaluating the impact that such an event may
have on the net asset value of the Fund and in determining a recommended fair value of the affected
security or securities. Sub-Advisor shall not be liable for any valuation determined or adopted by
the Fund, unless such determination is made based upon information provided by the Sub-Advisor that
is materially incorrect or incomplete as a result of the Sub-Advisors gross negligence.
(e) The Sub-Advisor has provided the Advisor with a true and complete copy of its
compliance policies and procedures that are reasonably designed to prevent violations of the
federal securities laws (as such term is defined in Rule 38a-1 under the 1940 Act) and Rule
206(4)-7 under the Investment Advisers Act of 1940, as amended (the Advisers Act) (the
Sub-Advisor Compliance Policies). The Sub-Advisors chief compliance officer (the Sub-Advisor
CCO) shall provide to the Funds chief compliance officer (the Fund CCO) or his or her delegate,
promptly (and in no event more than 10 business days) after the occurrence of the triggering event,
the following:
(i) a report of any material changes to the Sub-Advisor Compliance Policies;
(ii) a report of any material compliance matters, as defined by Rule 38a-1 under the
1940 Act, that have occurred in connection with the Sub-Advisor Compliance Policies;
(iii) a copy of a summary of the Sub-Advisor CCOs report with respect to the annual
review of the Sub-Advisor Compliance Policies pursuant to Rule 206(4)-7 under the Advisers
Act; and
(iv) an annual (or more frequently as the Fund CCO may request) certification regarding
the Sub-Advisors compliance with Rule 206(4)-7 under the Advisers Act and Section 38a-1
under the 1940 Act as well as the foregoing sub-paragraphs (i) (iii).
(f) The Sub-Advisor will timely notify the Advisor of any material violations by the
Sub-Advisor of the Funds investment policies or restrictions or any applicable law or regulation.
6. Standard of Care. The Sub-Advisor shall exercise its best judgment in
rendering the services described in paragraphs 2, 3 and 4 above. The Sub-Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by the Fund or the
Advisor in connection with the matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the Sub-Advisors part in the
performance of its duties or from reckless disregard by the Sub-Advisor of its obligations and
duties under this Agreement (each such act or omission shall be referred to as Disqualifying
Conduct). Neither the Sub-Advisor nor its members, partners, officers, employees and agents shall
be liable to the Advisor, the Fund, its shareholders or any other person (a) for the acts,
omissions, errors of judgment or mistakes of law of any other fiduciary or other person with
respect to the Fund or (b) for any failure or delay in performance of the Sub-Advisors obligations
under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its
C-21
reasonable control, including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdowns, flood or catastrophe, acts
of God, insurrection, war, riots or failure of the mails, transportation, communication or power
supply.
The Sub-Advisor does not guarantee the future performance of the Fund or any specific level of
performance, the success of any investment decision or strategy that the Sub-Advisor may use, or
the success of the Sub-Advisors overall management of the Fund. The Advisor understands that
investment decisions made for the Fund by the Sub-Advisor are subject to various market, currency,
economic, political and business risks, and that those investment decisions will not always be
profitable.
7. Compensation.
[For American Strategic Income Portfolio, American Strategic Income Portfolio II and American
Strategic Income Portfolio III: In consideration of the services rendered pursuant to this
Agreement, the Advisor will pay the Sub-Advisor on the fifth business day of each month a fee for
the previous month according to the attached Schedule A.] [For American Select Portfolio:
In consideration of the services rendered pursuant to this Agreement, the Advisor will pay the
Sub-Advisor on the fifth business day of each month a fee for the previous month equal to 1/12 of
the per annum rate of 0.30% of the Funds average weekly net assets, calculated in the same manner
as the fee paid by the Fund to the Advisor under the Advisory Agreement.] The fee for the period
from the date of this Agreement to the end of the calendar month shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period and shall be payable
upon the date of termination of this Agreement.
8. Expenses. The Sub-Advisor will bear all of its expenses in connection with the
performance of its services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent specifically assumed by the
Sub-Advisor. The expenses to be borne by the Fund include, by way of example, but not by way of
limitation, (a) brokerage and commission expenses; (b) Federal, state, local and foreign taxes,
including issue and transfer taxes incurred by or levied on the Fund; (c) interest charges on
borrowings; (d) the Funds organizational and offering expenses; (e) fees and expenses of
registering the Funds shares under the appropriate Federal securities laws and qualifying the
Funds shares under applicable state securities laws; (f) fees and expenses of listing and
maintaining the listing of the Funds shares on the principal securities exchanges where listed,
or, if the Funds shares are not so listed, fees and expenses of listing and maintaining the
quotation of the Funds shares on the principal securities market where traded; (g) expenses of
printing and distributing reports to shareholders; (h) expenses of shareholders meetings and proxy
solicitation; (i) charges and expenses of the Funds administrator, custodian and registrar,
transfer agent and dividend disbursing agent; (j) expenses incident to foreclosure on property
underlying mortgage loans; (k) fees of outside parties retained to assist in conducting due
diligence respecting Whole Loans and Participation Mortgages, as defined in the Funds Registration
Statement on Form N-2; (l) compensation of the Funds officers, directors and employees that are
not affiliated persons or interested persons (as defined in Section 2(a)(19) of the 1940 Act and
the rules, regulations and releases relating thereto) of the Advisor or Sub-
C-22
Advisor; (m) legal and auditing expenses, including any legal expenses incurred by the
Sub-Advisor in performing its obligations under Section 5(b) hereof; (n) cost of certificates
representing shares of the fund; (o) costs of stationery and supplies; (p) insurance expenses; and
(q) association membership dues.
9. Services to Other Companies or Accounts. The Advisor understands that the
Sub-Advisor now acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other investment companies, and
the Advisor has no objection to the Sub-Advisor so acting, provided that whenever the Fund and one
or more other accounts or investment companies advised by the Sub-Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in accordance with a
methodology believed to be equitable to each entity. The Sub-Advisor agrees to similarly allocate
opportunities to sell securities. The Advisor recognizes that, in some cases, this procedure may
limit the size of the position that may be acquired or sold for the Fund. In addition, the Advisor
understands that the persons employed by the Sub-Advisor to assist in the performance of the
Sub-Advisors duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the Sub-Advisor or any affiliate
of the Sub-Advisor to engage in and devote time and attention to other business or to render
services of whatever kind or nature.
10. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Advisor hereby agrees that all records which it specifically maintains for
the Fund are the property of the Fund and further agrees to surrender promptly to the Fund copies
of any of such records upon the Funds or the Advisors request. The Sub-Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records relating to its
activities hereunder required to be maintained by Rule 31a-1 under the 1940 Act and to preserve the
records relating to its activities hereunder required by Rule 204-2 under the Advisers Act for the
period specified in said Rule.
11. Term of Agreement. Unless sooner terminated, this Agreement shall continue in
effect until ________, 2012. Thereafter, this Agreement shall continue automatically for
successive annual periods, provided such continuance is specifically approved at least annually by
the Board in the manner required by the 1940 Act. This Agreement is terminable, without penalty, on
60 days written notice (the date of termination may be less than 60 days after the written notice
of termination so long as the duration of the notice period is agreed upon by the Advisor and
Sub-Advisor) by the Advisor, by the Funds Board, by vote of a majority of the Funds outstanding
voting securities, or by the Sub-Advisor, and will immediately terminate upon termination of the
Advisory Agreement. This Agreement also will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
12. Trade Settlement at Termination. Termination will be without prejudice to the
completion of any transaction already initiated. On, or after, the effective date of termination,
the Sub-Advisor shall be entitled, without prior notice to the Advisor or the Fund, to direct the
Funds custodian to retain and/or realize any assets of the Fund as may be required to settle
transactions already initiated. Following the date of effective termination, any new transactions
will only be executed by mutual agreement between the Advisor and the Sub-Advisor.
C-23
13. Indemnification. (a) The Advisor agrees to indemnify and hold harmless
the Sub-Advisor and its members, partners, officers, employees, agents, successors and assigns
(each a Sub-Advisor Indemnified Person) from and against any and all claims, losses, liabilities
or damages (including reasonable attorneys fees and other related expenses) to which any
Sub-Advisor Indemnified Person may become subject as a result of the Advisors material breach of
this Agreement or as a result of the Advisors willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties hereunder or violation of applicable law;
provided, however, that no Sub-Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Sub-Advisors
Disqualifying Conduct.
(b) The Sub-Advisor agrees to indemnify and hold harmless the Advisor and the Fund and
their respective shareholders, members, partners, directors, officers, employees, agents,
successors and assigns (each an Advisor Indemnified Person) from and against any and all claims,
losses, liabilities or damages (including reasonable attorneys fees and other related expenses) to
which any Advisor Indemnified Person may become subject as a result of the Sub-Advisors material
breach of this Agreement or as a result of the Sub-Advisors willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder or violation of applicable
law; provided, however, that no Advisor Indemnified Person shall be indemnified for
any claim, loss, liability or damage that may be sustained as a result of the Advisors
Disqualifying Conduct.
14. Delegation to Third Parties. Except where prohibited by applicable law or
regulation, the Sub-Advisor may delegate or may employ a third party to perform any accounting,
administrative, reporting and ancillary services required to enable the Sub-Advisor to perform its
functions under this Agreement. Notwithstanding any other provision of the Agreement, the
Sub-Advisor may provide information about the Advisor and the Fund to any such third party for the
purposes of this paragraph, provided that the third party is subject to a confidentiality agreement
that specifically prevents the misuse of any such information, including portfolio holdings. The
Sub-Advisor will act in good faith and with due diligence in the selection, use and monitoring of
third parties and shall be solely responsible for any loss, mistake, gross negligence or misconduct
caused by such third party.
15. Disclosure. (a) Neither the Advisor, on its own behalf or on behalf of
the Fund, or the Sub-Advisor shall disclose information of a confidential nature acquired in
consequence of this Agreement, except for information that they may be entitled or bound to
disclose by law, regulation or that is disclosed to their advisors where reasonably necessary for
the performance of their professional services or, in the case of the Sub-Advisor, as permitted in
accordance with Section 14 of this Agreement.
(b) Notwithstanding the provisions of Subsection 15(a), to the extent that any market
counterparty with whom the Sub-Advisor deals requires information relating to the Fund (including,
but not limited to, the identity of the Advisor or the Fund and market value of the Fund), the
Sub-Advisor shall be permitted to disclose such information to the extent necessary to effect
transactions on behalf of the Fund in accordance with the terms of this Agreement.
C-24
(c) Notwithstanding the provisions of Subsections 15(a) and 15(b), the Sub-Advisor
acknowledges that the Advisor and the Fund intend to rely on Rule 17a-7, Rule 17a-10, Rule 10f-3,
Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the Sub-Advisor hereby agrees that it shall not
consult with any other sub-advisor to a fund under common control with the Fund with respect to
transactions for the Fund in securities or other assets.
16. Instructions to Custodian. The Sub-Advisor shall have authority to issue to
the Funds custodian such instructions as it may consider appropriate in connection with the
settlement of any transaction relating to the Fund that it has initiated. The Advisor shall ensure
that the Funds custodian is obliged to comply with any instructions of the Sub-Advisor given in
accordance with this Agreement. The Sub-Advisor will not be responsible for supervising the Funds
custodian.
17. Representations and Warranties. (a) The Advisor represents and warrants
to the Sub-Advisor that the Advisor:
(i) has full power and authority to appoint the Sub-Advisor to manage the Fund in
accordance with the terms of this Agreement; and
(ii) this Agreement is valid and has been duly authorized by appropriate action of the
Advisor, the Board and the Funds shareholders, does not violate any obligation by which the
Advisor is bound, and when so executed and delivered, will be binding upon the Advisor in
accordance with its terms subject to applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally and general principles of equity.
(b) The Sub-Advisor represents and warrants to the Advisor that the Sub-Advisor:
(i) is registered as an investment adviser under the Advisers Act and will continue to
be so registered for so long as this Agreement remains in effect;
(ii) is not currently the subject of, and has not been the subject of during the last
three (3) years, any enforcement action by a regulator, except as previously disclosed to
the Advisor; and
(iii) maintains insurance coverage in an appropriate amount and shall upon request
provide to the Advisor any information it may reasonably require concerning the amount of or
scope of such insurance.
18. Miscellaneous.
(a) Notices. All notices provided for by this Agreement shall be in writing and
shall be deemed given when received, against appropriate receipt, by the General Counsel of the
Advisor or Sub-Advisor, as the case may be, or such other person as a party shall designate by
notice to the other parties.
C-25
(b) Amendment. This Agreement may be amended at any time, but only by written
agreement between the Advisor and the Sub-Advisor, which amendment must be approved by the Board in
the manner required by the 1940 Act.
(c) Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersedes any prior agreement among the parties relating to the subject matter
hereof.
(d) Severability. If any provision of this Agreement will be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be
affected thereby.
(e) Headings. The paragraph headings of this Agreement are for convenience of
reference and do not constitute a part hereof.
(f) Governing Law. This Agreement shall be governed in accordance with the
internal laws of the State of Minnesota, without giving effect to principles of conflict of laws.
(g) Use of Sub-Advisors Name. The Advisor shall furnish to the Sub-Advisor all
prospectuses, proxy statements, reports to shareholders, sales literature or other material
prepared for distribution which refers to the Sub-Advisor by name prior to the use thereof. The
Advisor shall not use or cause the Fund to use any such materials if the Sub-Advisor reasonably
objects to such use. This paragraph shall survive the termination of this Agreement.
C-26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized representatives as of the date first written above.
|
|
|
|
|
|
FAF Advisors, Inc.
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
|
Nuveen Asset Management, LLC
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
C-27
Schedule A
Pursuant to Section 7, the Advisor shall pay the Sub-Advisor, for services rendered to the
Fund, a monthly sub-advisory fee in an amount equal to the sum of .008335% of the Funds average
weekly net assets during the month (approximately 0.10% on an annual basis) and 3.0% of the Funds
daily gross income (i.e., investment income including amortization of discount income, other than
gains from the sale of securities or gains received from options and futures contracts less
interest on money borrowed by the Fund) accrued by the Fund during the month but such monthly
management fee shall not exceed in the aggregate 1/12th of 0.45% of the Funds average
weekly net assets during the month (approximately 0.45% on an annual basis). Average weekly net
assets shall be calculated in the same manner as is used to determine the fee paid by the Fund to
the Advisor under the Advisory Agreement.
C-28
EXHIBIT A
Dates Related to Advisory Agreements
The following table shows the date of (i) each Advisory Agreement; (ii) the last submission of
the Advisory Agreement to a vote of the shareholders of the Fund; and (iii) the last approval of
the Advisory Agreement by the Board.
|
|
|
|
|
|
|
|
|
Effective Date of |
|
Date Last Approved |
|
Date Last Approved |
Fund Name |
|
Agreement |
|
by Shareholders |
|
by Board |
American Strategic Income Portfolio
|
|
August 10, 1998
|
|
August 10, 1998
|
|
June 17, 2010 |
American Strategic Income Portfolio II
|
|
August 10, 1998
|
|
August 10, 1998
|
|
June 17, 2010 |
American Strategic Income Portfolio III
|
|
August 10, 1998
|
|
August 10, 1998
|
|
June 17, 2010 |
American Select Portfolio
|
|
August 10, 1998
|
|
August 10, 1998
|
|
June 17, 2010 |
EA-1
EXHIBIT B
Advisory Fee Rates and Aggregate Advisory Fees Paid During Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid to the |
|
|
|
|
|
|
Annual Gross |
|
|
Adviser During Last |
|
|
Net Assets as of |
|
Fund |
|
Advisory Fee Rate |
|
|
Fiscal Year |
|
|
9/30/10 |
|
American Strategic Income Portfolio |
|
|
* |
|
|
$ |
302,744 |
|
|
$ |
56,367,133 |
|
American Strategic Income Portfolio II |
|
|
* |
|
|
$ |
898,856 |
|
|
$ |
171,016,838 |
|
American Strategic Income Portfolio III |
|
|
* |
|
|
$ |
965,795 |
|
|
$ |
192,871,935 |
|
American Select Portfolio |
|
|
0.50 |
% |
|
$ |
653,865 |
|
|
$ |
128,233,840 |
|
|
|
|
* |
|
The Fund pays a monthly investment advisory fee in an amount equal to an annualized rate of
0.20% of the Funds average weekly net assets and 4.50% of the daily gross income accrued by
the Fund during the month (i.e., investment income, including accretion of bond discounts and
amortization of premiums, other than gains from the sale of securities or gains from options
and futures contracts less interest on money borrowed by the Fund). The monthly investment
advisory fee shall not exceed, in the aggregate, 1/12 of 0.725% of the Funds average weekly
net assets during the month (approximately 0.725% on an annual basis). |
EB-1
EXHIBIT C
Other Registered Funds Advised by FAF Advisors
FAF
Advisors does not advise other funds registered under the 1940 Act
with similar investment objectives and policies as the Funds.
EC-1
EXHIBIT D
Directors and Principal Officers of FAF Advisors
The names and principal occupations of the directors and/or officers of FAF Advisors are set
forth below.
|
|
|
Name |
|
Principal Occupation |
Thomas S. Schreier, Jr.
|
|
Director, Chief Executive Officer, and Chief
Investment Officer of FAF Advisors; President of
the First American Funds. |
|
|
|
Charles R. Manzoni, Jr.
|
|
Director, General Counsel, Chief Risk Officer, and
Secretary of FAF Advisors. |
|
|
|
Joseph M. Ulrey, III
|
|
Director, Chief Financial Officer, Treasurer, and
Head of Technology and Operations of FAF Advisors. |
|
|
|
David H. Lui
|
|
Chief Compliance Officer of FAF Advisors and the
First American Funds. |
|
|
|
Frank L. Wheeler
|
|
Head of Distribution of FAF Advisors. |
|
|
|
Cynthia C. DeRuyter
|
|
Anti-Money Laundering Officer of FAF Advisors and
the First American Funds; Director of Compliance
of FAF Advisors. |
|
|
|
John P. Kinsella
|
|
Senior Vice President and Tax Agent for FAF
Advisors; Corporate Tax Director of U.S. Bancorp. |
|
|
|
Jody A. Rose
|
|
Assistant Secretary and Paralegal for FAF Advisors. |
ED-1
EXHIBIT E
Other Registered Funds Advised by NAM
NAM does not advise other funds registered under the 1940 Act with similar investment objectives
and policies as the Funds.
EE-1
EXHIBIT F
Directors and Principal Officers of NAM
The following table provides the names of the Directors and Principal Officers of NAM and
their principal occupation and position(s). The address of each Director and Principal Officer of
NAM listed below is c/o Nuveen Investments, 333 West Wacker Drive, Chicago, IL 60606. Currently,
none of the persons listed below holds any position with the Funds.
|
|
|
|
|
Other Business, Profession, Vocation or Employment |
Name and Position with NAM |
|
During Past Two Years |
John P. Amboian,
Chief Executive Officer and Director
|
|
Chief Executive
Officer and Chairman
(since 2007) and
Director (since
1999) of Nuveen
Investments, Inc.;
Chief Executive
Officer (since 2007)
of Nuveen
Investments
Advisors, Inc. |
|
|
|
Michael T. Atkinson,
Vice President
|
|
Vice President
(since 2002) of
Nuveen Investments,
LLC; Vice President
and Assistant
Secretary of the
Nuveen Funds. |
|
|
|
Stuart J. Cohen,
Managing Director, Assistant Secretary and
Assistant General Counsel
|
|
Managing Director,
Assistant Secretary
and Assistant
General Counsel of
Nuveen Investments,
LLC; Managing
Director and
Assistant Secretary
of Nuveen
Investments
Holdings, Inc. and
Nuveen Investments
Advisers Inc.; Vice
President and
Assistant Secretary
of NWQ Investment
Management Company,
LLC, Nuveen HydePark
Group, LLC, Nuveen
Investment
Solutions, Inc.,
Tradewinds Global
Investors, LLC, NWQ
Holdings, LLC, Santa
Barbara Asset
Management, LLC,
Symphony Asset
Management LLC. And
Winslow Capital
Management, Inc. |
|
|
|
Lorna C. Ferguson,
Managing Director
|
|
Managing Director
(since 2004) of
Nuveen Investments,
LLC; Vice President
of the Nuveen Funds. |
|
|
|
Stephen D. Foy,
Senior Vice President
|
|
Senior Vice
President (since
2010) and Funds
Controller (since
1998), previously,
Vice President
(1993-2010) of
Nuveen Investments,
LLC; Vice President
and Controller of
the Nuveen Funds;
Certified Public
Accountant. |
|
|
|
Scott S. Grace,
Managing Director and Treasurer
|
|
Managing Director,
Corporate Finance &
Development,
Treasurer (since
September 2009) of
Nuveen Investments,
LLC; Vice President
and Treasurer of the
Nuveen Funds;
Managing Director
and Treasurer of
Nuveen
Investment
Solutions, Inc.,
Nuveen Investments
Advisers, Inc. and
Nuveen Investments
Holdings, Inc.; Vice
President and
Treasurer of NWQ
Investment
Management Company,
LLC, Tradewinds
Global Investors,
LLC, Symphony Asset
Management LLC and
Winslow Capital
Management, Inc.;
Vice President of
Santa Barbara Asset
Management,
LLC; formerly,
Treasurer
(2006-2009), Senior
Vice President
(2008-2009),
previously, Vice
President
(2006-2008) of Janus
Capital Group, Inc.;
formerly, Senior
Associate in |
EF-1
|
|
|
|
|
Other Business, Profession, Vocation or Employment |
Name and Position with NAM |
|
During Past Two Years |
|
|
Morgan
Stanleys Global
Financial Services
Group (2000-2003);
Chartered Accountant
Designation. |
|
|
|
Sherri A. Hlavacek,
Managing Director and Corporate Controller
|
|
Managing Director
and Corporate
Controller of Nuveen
Investments, Inc.,
Nuveen Investments,
LLC, Nuveen
Investments Advisers
Inc. and Nuveen
Investments
Holdings, Inc.; Vice
President and
Controller of Nuveen
Investment
Solutions, Inc.
NWQ Investment
Management Company,
LLC, NWQ Holdings,
LLC, Tradewinds
Global Investors,
LLC, Symphony Asset
Management LLC,
Santa Barbara Asset
Management, LLC
and Nuveen HydePark
Group, LLC;
Certified Public
Accountant. |
|
|
|
William T. Huffman,
Chief Operating Officer, Municipal Fixed Income
|
|
Vice President of
the Nuveen Municipal
Funds; previously,
Chairman, President
and Chief Executive
Officer (2002-2007)
of Northern Trust
Global Advisors,
Inc. and Chief
Executive Officer
(2007) of Northern
Trust Global
Investments Limited;
Certified Public
Accountant. |
|
|
|
Mary E. Keefe,
Managing Director and Chief Compliance Officer
|
|
Managing Director
(since 2004) and
Director of
Compliance of Nuveen
Investments, Inc.;
Managing Director
and Chief Compliance
Officer of Nuveen
Investments, LLC,
Nuveen Investments
Advisers Inc.,
Symphony Asset
Management LLC,
Santa Barbara Asset
Management, LLC,
Nuveen Investment
Solutions, Inc. and
Nuveen HydePark
Group, LLC; Vice
President and
Assistant Secretary
of NWQ Holdings, LLC
and Winslow
Capital Management,
Inc. |
|
|
|
Walter M. Kelly,
Senior Vice President and Assistant Secretary
|
|
Senior Vice
President (since
2008), formerly,
Vice President,
formerly, Assistant
Vice President and
Assistant General
Counsel (2003-2006)
of Nuveen
Investments, LLC;
Vice President and
Chief Compliance
Officer of the
Nuveen Funds;
previously,
Assistant Vice
President and
Assistant Secretary
of the Nuveen Funds
(2003-2006). |
|
|
|
David J. Lamb,
Senior Vice President
|
|
Senior Vice
President (since
2009), formerly,
Vice President
(2000-2009) of
Nuveen Investments,
LLC; Vice President
of the Nuveen Funds;
Certified Public
Accountant. |
|
|
|
Tina M. Lazar,
Senior Vice President
|
|
Senior Vice
President (since
2009), formerly,
Vice President
(1999-2009) of
Nuveen Investments,
LLC; Vice President
of the Nuveen Funds. |
|
|
|
John L. MacCarthy,
Executive Vice President and Secretary and Director
|
|
Executive Vice
President (since
2008), formerly,
Senior Vice
President
(2006-2008),
Secretary and
General Counsel
(since 2006) of
Nuveen Investments,
Inc., Nuveen
Investments, LLC,
and Nuveen
Investments
Holdings, Inc.;
Executive Vice
President (since
2008), formerly,
Senior Vice
President
(2006-2008) and
Secretary (since
2006) of Nuveen
Investments Advisers
Inc., NWQ Holdings,
LLC, NWQ Investment |
EF-2
|
|
|
|
|
Other Business, Profession, Vocation or Employment |
Name and Position with NAM |
|
During Past Two Years |
|
|
Management Company,
LLC, Tradewinds
Global Investors,
LLC, Symphony Asset
Management LLC,
Santa Barbara Asset
Management, LLC,
Nuveen HydePark
Group, LLC and
Nuveen Investment
Solutions, Inc.;
Director, Vice
President and
Secretary of Winslow
Capital
Management,
Inc. |
|
|
|
Larry W. Martin,
Senior Vice President and Assistant Secretary
|
|
Senior Vice
President, Assistant
Secretary and
Assistant General
Counsel of Nuveen
Investments, LLC;
Vice President
(since 2005) and
Assistant Secretary
of Nuveen
Investments, Inc.;
Vice President and
Assistant Secretary
of the Nuveen Funds;
Vice President and
Assistant Secretary
of Nuveen
Investments Advisers
Inc. (since 2002),
NWQ Investment
Management Company,
LLC (since 2002),
Symphony Asset
Management LLC
(since 2003),
Tradewinds Global
Investors, LLC and
Santa Barbara Asset
Management LLC
(since 2006) and
Nuveen HydePark
Group, LLC and
Nuveen Investment
Solutions, Inc.
(since 2007) and of
Winslow Capital
Management,
Inc. (since
2010); Vice
President and
Assistant Secretary
(since 2010) of
Nuveen Commodities
Asset Management,
LLC. |
|
|
|
Kevin J. McCarthy,
Managing Director and Assistant Secretary
|
|
Managing Director
(since 2008),
formerly, Vice
President
(2007-2008) of
Nuveen Investments,
LLC; Vice President
and Secretary of the
Nuveen Funds; Vice
President and
Assistant Secretary
of Nuveen Investment
Advisers Inc., NWQ
Investment
Management Company,
LLC, Tradewinds
Global Investors,
LLC, NWQ Holdings,
LLC, Symphony Asset
Management LLC,
Santa Barbara Asset
Management, LLC,
Nuveen HydePark
Group, LLC and
Nuveen Investment
Solutions, Inc. and
of Winslow
Capital
Management,
Inc. (since
2010); Vice
President and
Secretary (since
2010) of Nuveen
Commodities Asset
Management, LLC;
prior thereto,
Partner, Bell, Boyd
& Lloyd LLP
(1997-2007). |
|
|
|
John V. Miller,
Chief Investment Officer and Managing Director
|
|
Managing Director
(since 2007),
formerly, Vice
President
(2002-2007) of
Nuveen Investments,
LLC; Vice President
of the Nuveen
Municipal Funds;
Chartered Financial
Analyst. |
|
|
|
Glenn R. Richter,
Executive Vice President and Director
|
|
Executive Vice
President, Chief
Administrative
Officer of Nuveen
Investments, Inc.
(since 2006);
Executive Vice
President of Nuveen
Investments, LLC;
Executive Vice
President of Nuveen
Investments
Holdings, Inc.;
Chief Administrative
Officer of NWQ
Holdings, LLC. |
|
|
|
Christopher M. Rohrbacher,
Vice President and Assistant Secretary
|
|
Vice President and
Assistant Secretary
of Nuveen
Investments, LLC
(since 2008); Vice
President and
Assistant Secretary
of the Nuveen Funds;
Vice President and
Assistant Secretary
(since 2010) of
Nuveen Commodities
Asset Management,
LLC; prior thereto,
Associate, Skadden,
Arps, Slate Meagher
& Flom LLP
(2002-2008). |
EF-3
|
|
|
|
|
Other Business, Profession, Vocation or Employment |
Name and Position with NAM |
|
During Past Two Years |
Mark L. Winget,
Vice President and Assistant Secretary
|
|
Vice President and
Assistant Secretary
of Nuveen
Investments, LLC
(since 2008); Vice
President and
Assistant Secretary
of the Nuveen Funds;
Vice President and
Assistant Secretary
(since 2010) of
Nuveen Commodities
Asset Management,
LLC; prior thereto,
Counsel, Vedder
Price P.C.
(1997-2007). |
|
|
|
Gifford R. Zimmerman,
Managing Director, Assistant Secretary and
Associate General Counsel
|
|
Managing Director
(since 2002),
Assistant Secretary
and Associate
General Counsel of
Nuveen Investments,
LLC; Managing
Director (since
2004) and Assistant
Secretary (since
1994) of Nuveen
Investments, Inc.;
Chief Administrative
Officer of the
Nuveen Funds; Vice
President and
Assistant Secretary
of NWQ Investment
Management Company,
LLC (since 2002);
Vice President and
Assistant Secretary
of Nuveen
Investments Advisers
Inc. (since 2002);
Managing Director,
Associate General
Counsel and
Assistant Secretary
of Symphony Asset
Management LLC
(since 2003); Vice
President and
Assistant Secretary
of Tradewinds Global
Investors, LLC and
Santa Barbara Asset
Management, LLC
(since 2006), and
Nuveen HydePark
Group, LLC and
Nuveen Investment
Solutions, Inc.
(since 2007) and of
Winslow Capital
Management, Inc.
(since 2010); Chief
Administrative
Officer and Chief
Compliance Officer
(since 2010) of
Nuveen Commodities
Asset Management,
LLC; Chartered
Financial Analyst. |
EF-4
EXHIBIT G
First American Funds
Audit Committee
Charter
[As amended May 11, 2004]
1. |
|
The First American Funds Complex Audit Committee (Audit Committee) shall be composed entirely
of independent directors1 who are not interested persons of the Funds within the
meaning of the Investment Company Act of 1940. The Audit Committee shall be comprised of at
least three members with one member appointed as chairperson. All committee members shall be
financially literate,2 at least one member shall have accounting or related
financial management expertise3, and at least one member shall be an audit
committee financial expert as determined by the Board of Directors of the Funds pursuant to
SEC Form N-CSR, Items 3(b) and (c). |
2. |
|
The purposes of the Audit Committee are: |
|
(a) |
|
to oversee the Funds accounting and financial reporting policies and
practices, their internal controls and, as appropriate, the internal controls of
certain service providers; |
|
|
(b) |
|
to oversee the quality of the Funds financial statements and the independent
audit thereof; |
|
|
(c) |
|
to assist Board oversight of the Funds compliance with legal and regulatory
requirements; and |
|
|
(d) |
|
to act as a liaison between the Funds independent auditors and the full Board
of Directors. |
|
|
The function of the Audit Committee is oversight; it is managements responsibility to
maintain appropriate systems for accounting and internal control and for preparing the
Funds financial |
|
|
|
1 |
|
A director shall be deemed independent for
this purpose only if he or she is independent within the meaning of Rule
10A-3(b)(1)(iii) under the Securities Exchange Act of 1934. The full Board of
Directors has reviewed information provided by each Audit Committee member and
has found that each such member is independent within the meaning of this
rule. |
|
2 |
|
For purposes of the applicable New York Stock
Exchange Rule, the full Board of Directors, in its business judgment,
interprets the term financially literate in a manner consistent with the
counterpart American Stock Exchange Rule, as meaning that an Audit Committee
member is able to read and understand fundamental financial statements,
including a balance sheet, income statement, and cash flow statement. |
|
3 |
|
For purposes of the applicable New York Stock
Exchange Rule, the full Board of Directors, in its business judgment,
interprets this qualification in a manner consistent with the counterpart
American Stock Exchange Rule, as meaning that an Audit Committee member has
past employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individuals financial sophistication, including being or
having been a chief executive officer, chief financial officer, or other senior
officer with financial oversight responsibilities. |
EG-1
|
|
statements, and the independent auditors responsibility is to plan and carry out a proper
audit of the financial statements. |
|
|
|
The outside auditor for the Funds is ultimately accountable to the Board of Directors and
Audit Committee as representatives of shareholders. The Audit Committee and Board of
Directors have the ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor (or to nominate the outside auditor to be proposed
for shareholder approval in any proxy statement). |
3. |
|
To carry out its purposes, the Audit Committee shall have the following duties and powers: |
|
(a) |
|
to review with management and the independent auditors the audited annual
financial statements of the Funds, including their judgment about the quality, not just
the acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements; |
|
|
(b) |
|
to meet with the Funds independent auditors, including private meetings, as
necessary (i) to review the arrangements for and scope of the annual audit and any
special audits; (ii) to discuss any matters or concern relating to the Funds financial
statements, including any adjustments to such statements recommended by the auditors,
or other results of said audit(s); (iii) to consider the auditors comments with
respect to the Funds financial policies, procedures, and internal accounting controls
and managements responses thereto; (iv) to review the form of opinion the independent
auditors propose to render to the Board and shareholders with respect to the Funds
financial statements; and (v) to review the results of internal audits of areas that
impact the Funds; |
|
|
(c) |
|
to prepare and deliver the audit committee reports required to be included in
the closed-end funds proxy statements; |
|
|
(d) |
|
to receive and consider any communications which the Funds principal executive
officer and principal financial officer are required to make to the Audit Committee in
connection with their certifications of the Funds filings on SEC Form N-CSR; |
|
|
(e) |
|
to receive and consider the communications which the Funds independent
auditors are required to make to the Audit Committee pursuant to SEC Reg. S-X, Rule
2-07(a) (a copy of which is attached hereto as Exhibit A); |
|
|
(f) |
|
to consider the effect upon the Funds of any changes in accounting principles
or practices proposed by management or the auditors; |
|
|
(g) |
|
to ensure that the auditor submits on a periodic basis to the Audit Committee a
formal written statement delineating all relationships between the auditor and the
Funds, consistent with Independence Standards Board Statement No. 1, to engage in a
dialogue with the auditor with respect to any disclosed relationships or services that
may impact the objectivity and independence of the auditor, to evaluate the
independence of the auditor, and to recommend that the Board of Directors take
appropriate action in response to the auditors report to satisfy itself of the
auditors independence; |
|
|
(h) |
|
at least annually, to obtain and review a report by the auditor describing the
firms internal quality-control procedures, any material issues raised by the most
recent internal quality-control review, or peer review, of the firm, or by any inquiry
or investigation by |
EG-2
|
|
|
governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carries out by the firm, and any steps
taken to deal with any such issues; |
|
|
(i) |
|
to consider pre-approving any accounting firms engagement to render audit or
non-audit services to the Funds or, under the circumstances contemplated by SEC Reg.
S-X, Rule 2-01(c)(7)(ii) (a copy of which is attached hereto as Exhibit B), to the
Funds investment adviser or any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the Funds and the
accounting firms services have a direct impact on the Funds operations or financial
reporting; provided, that the Audit Committee may establish written pre-approval
policies and procedures which conform to the requirements of SEC Reg. S-X, Rule
2-01(c)(7)(i)(B) (a copy of which is attached hereto as Exhibit C); |
|
|
(j) |
|
to review the fees charged to the Funds by the auditors for audit and non-audit
services; |
|
|
(k) |
|
to investigate improprieties or suspected improprieties in Fund operations; |
|
|
(l) |
|
to review procedures to safeguard portfolio securities; |
|
|
(m) |
|
to review the Funds back-up procedures and disaster recovery plans (except
those pertaining to primary pricing services system); |
|
|
(n) |
|
to discuss policies with respect to risk assessment and risk management; |
|
|
(o) |
|
to meet separately, periodically, with management, with internal auditors (or
other personnel responsible for the internal audit function) and with independent
auditors; |
|
|
(p) |
|
to set clear hiring policies for employees or former employees of the auditors;
and |
|
|
(q) |
|
to report its activities to the full Board on a regular basis and to make such
recommendations with respect to the above and other matters as the Committee may deem
necessary or appropriate. |
4. |
|
The Committee shall meet at least quarterly and is empowered to hold special meetings, as
circumstances require. |
|
5. |
|
The Committee shall regularly meet with the Treasurer of the Funds. |
|
6. |
|
The Committee shall establish procedures for (a) the receipt, retention, and treatment of
complaints received by the Funds regarding accounting, internal accounting controls, or
auditing matters, and (b) the confidential, anonymous submission by employees of the Funds and
of their investment advisers, administrators, principal underwriters, and any other provider
of accounting related services for the Funds, of concerns regarding questionable accounting or
auditing matters. |
|
7. |
|
The Committee also shall act as the Funds qualified legal compliance committee, as defined
in 17 CFR Section 205.2(k). In this role, the Committee shall: |
|
(a) |
|
adopt written procedures for the confidential receipt, retention and
consideration of any report of evidence of a material violation of United States
federal or state securities law, material breach of fiduciary duty to the Funds arising
under United States federal or state |
EG-3
|
|
|
law, or similar material violation of United States federal or state law which is
required to be made with respect to the Funds by attorneys who are subject to the
reporting rules set forth in 17 CFR Part 205; |
|
|
(b) |
|
have the authority and responsibility: |
|
(i) |
|
to inform the Funds chief legal officer and chief executive
officer (or the equivalents thereof) of any report of evidence of a material
violation received by the Committee (except in the circumstances described in
17 CFR Section 205.3(b)(4)); |
|
|
(ii) |
|
to determine whether an investigation is necessary regarding
any report of evidence of a material violation received by the Committee and,
if the Committee determines an investigation is necessary or appropriate, to
(A) notify the Funds Board of Directors, (B) initiate an investigation, which
may be conducted either by the Funds chief legal officer (or the equivalent
thereof) or by outside attorneys, and (C) retain such additional expert
personnel as the Committee deems necessary; |
|
|
(iii) |
|
at the conclusion of the investigation, to (A) recommend to
the full Board of Directors, by majority vote, that the Funds implement an
appropriate response to evidence of a material violation, and (B) inform the
Funds chief legal officer and chief executive officer and their Board of
Directors of the results of any such investigation and the appropriate remedial
measures to be adopted; and |
|
|
(iv) |
|
have the authority and responsibility, acting by majority vote,
to take all other appropriate action, including the authority to notify the SEC
in the event that the Funds fail in any material respect to implement an
appropriate response that the Committee has recommended the Funds to take. |
8. |
|
The Committee shall have the resources and authority appropriate to discharge its
responsibilities, including the power to investigate any matter brought to its attention with
full access to all books, records, facilities, and personnel related to the Funds and the
authority to retain special counsel and other experts or consultants at the expense of the
appropriate Fund(s). |
|
9. |
|
The Committee shall review this Charter at least annually and recommend any changes to the
full Board of Directors. The full Board of Directors shall approve this charter at least
annually. |
|
10. |
|
The Committee shall evaluate its own performance at least annually. |
EG-4
EXHIBIT H
FIRST AMERICAN FUNDS
GOVERNANCE COMMITTEE CHARTER
(as of November 3, 2009)
I. |
|
Purpose |
|
|
|
The purpose of the Governance Committee is to oversee the Boards governance processes. |
The Governance Committee shall be composed entirely of Directors who are not interested
persons of the Funds within the meaning of the Investment Company Act of 1940. The Governance
Committee will have at least three members and the Board Chair will serve as an ex-officio member
of the Committee.
III. |
|
Responsibilities |
|
|
|
The Committee will have the following responsibilities: |
|
|
|
Board Composition |
|
|
|
Interview and recommend to the Board of Directors of the Funds nominees for
election as directors (whether they are interested or disinterested within the
meaning of the Investment Company Act of 1940) consistent with the needs of the Board
and the Funds. The Committee will evaluate candidates qualifications for Board
membership and, with respect to persons being considered to join the Board as
disinterested directors, their independence from management and principal service
providers. These persons must be independent in terms of both the letter and the
spirit of the 1940 Act and the Rules, Regulations and Forms under the 1940 Act. With
respect to disinterested director candidates, the Committee also will consider the
effect of any relationships beyond those delineated in the 1940 Act that might impair
independence, such as business, financial or family relationships with Fund managers or
service providers. In this regard, the Committee will not consider the following types
of candidates to serve as disinterested directors: (1) a close family member of an
employee, officer or interested director of a Fund or its affiliates, and (2) a former
officer or director of a Funds affiliate. |
|
|
|
|
Review, annually, the independence of all Independent Directors and report its
findings to the Board. |
|
|
|
|
Review the composition of the Board of Directors to determine whether it may be
appropriate to add individuals with different backgrounds or skills from those already
on the Board. |
|
|
|
|
Report annually to the Board on which current and potential members of the
Audit Committee qualify as Audit Committee Financial Experts. |
|
|
|
|
Recommend to the Board a successor to the Board Chair when a vacancy occurs in
that position. |
EH-1
|
|
|
Consult with the Board Chair regarding the Board Chairs recommended Committee
assignments. |
|
|
|
Assist the Board Chair in his or her annual review of the Boards Committee
structure and membership. |
|
|
|
Develop an annual education calendar that details the topics to be addressed in
the Boards quarterly education sessions. The educational calendar will be presented
to the full Board at its first quarterly meeting. |
|
|
|
|
Encourage and monitor the attendance by each Independent Director at
educational seminars, conferences or similar meetings. |
|
|
|
|
Develop and conduct orientation sessions for new Independent Directors before
or shortly after the new Directors join the Board. |
|
|
|
|
Manage the Boards education program in a cost-effective manner. |
|
|
|
Review and make recommendations to the Board of Directors concerning Director
compensation at least once every year. |
|
|
|
|
As appropriate or necessary, review, on a regular basis, and make
recommendations to the Board of Directors concerning Director expenses, including those
related to Board education, Director education, Director travel, legal counsel and
consultant support. |
|
|
|
|
Monitor compliance with the Boards requirement that each Director maintain
investments in the Funds that are at least equal to the aggregate fees for one year
that he or she receives for Board-related service to the Funds. |
|
|
|
|
Review Director compliance with the requirement that a Director must retire
from Board service by December 31 of the year in which he or she reaches the age of 72. |
|
|
|
|
Review Director compliance with the prohibition from serving on the board of
directors of mutual funds that are not part of the First American Fund Complex. |
|
|
|
|
If requested, assist the Board Chair in overseeing the Boards self-evaluation
process undertaken each year by the Independent Directors. |
|
|
|
|
In collaboration with outside counsel and as required by law or deemed
advisable by the Committee, develop policies and procedures addressing matters which
should come before the Committee in the proper exercise of its duties. |
|
|
|
|
Review new industry reports and best practices applicable to the FAF complex
as they are published. |
|
|
|
|
In consultation with the Board Chair, review and, as appropriate, recommend
changes in, Board governance policies, procedures and practices. |
EH-2
|
|
|
Report the Committees activities on a regular basis to the Board of Directors
and make such recommendations as the Committee and the Board Chair deem appropriate. |
|
|
|
|
Review at least annually and, as appropriate, recommend that the Board
implement changes to this Charter. |
The Committee will have the resources and authority to discharge its responsibilities,
including the authority to retain special counsel and other experts or consultants at the expense
of any one or more of the Funds, as appropriate.
EH-3
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
TIME:
Friday, December 17, 2010
at 10:00 a.m.
PLACE:
800 Nicollet Mall
Minneapolis, Minnesota 55402
IMPORTANT:
Please date and sign your
proxy card and return it promptly
using the enclosed reply envelope.
|
|
|
|
|
Cusip Numbers:
030098-10-7
030099-10-5
03009T-10-1
029570-10-8
|
|
|
|
|
|
[INSERT BROADRIDGE CODE] |
|
|
|
|
|
|
|
Fund Name Here |
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned appoints Charles D. Gariboldi, Jr., Kathleen L. Prudhomme, Jeffery M. Wilson,
and Richard J. Ertel, or any one of them, as proxies of the undersigned, with full power of
substitution, to cast all eligible votes held by the undersigned at the Annual Meeting of
Shareholders, to be held at the offices of FAF Advisors, Inc., 800 Nicollet Mall, 3rd
Floor-Training Room A, Minneapolis, Minnesota 55402, on December 17, 2010, at 10:00 a.m., Central
time, and at any adjournment thereof, with all powers the undersigned would possess if present in
person. All previous proxies given with respect to the Annual Meeting are revoked. Receipt of the
Notice of Annual Meeting of Shareholders and the accompanying Proxy Statement is hereby
acknowledged.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTERS SET FORTH ON THE REVERSE SIDE. IT IS
UNDERSTOOD THAT IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. UPON ALL
OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF THE FUND. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS.
|
|
|
|
|
|
|
NOTE: Please sign exactly as your name appears on this proxy card. Joint owners should each
sign. When signing as executor, administrator, attorney, trustee, guardian or custodian for a
minor, please give full title as such. If a corporation, this signature should be that of an
authorized officer, please sign in full corporate name and indicate
the signers title.
|
|
|
|
Signature
Date
|
|
|
|
|
|
|
Additional Signatures (if held jointly)
Date |
Please fold here - Do not tear or seperate
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. THE MATTERS WE ARE SUBMITTING FOR
YOUR CONSIDERATION ARE SIGNIFICANT TO THE FUND AND TO YOU AS A FUND SHAREHOLDER. PLEASE TAKE THE
TIME TO READ THE PROXY STATEMENT AND CAST YOUR VOTE.
For your convenience we have setup several convenient methods to vote your proxy. Please vote by
using one of the following methods detailed below:
|
|
|
|
|
|
|
1. Internet:
|
|
Log on to www.proxyonline.com. Make
sure to have this proxy card available
when you plan to vote your shares. |
|
|
|
|
|
|
|
2. Phone: |
|
Simply dial toll-free XXX-XXX-XXXX.
Please have this proxy card available at
the time of the call. |
|
|
|
|
|
|
|
3. Mail:
|
|
Simply sign, date, and complete the
reverse side of this proxy card and
return it in the postage paid envelope
provided. |
Control Number:
123456789123
If you would like another copy of the proxy material, they are available at
www.proxyonline.com. You will need your control number above to log in. For any questions
regarding the proposals or how to cast your vote, call toll-free XXX-XXX-XXXX.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS.
Fund Name Here
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTERS SET FORTH BELOW. IT IS UNDERSTOOD THAT
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL ITEMS. UPON ALL OTHER MATTERS THE
PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF THE FUND.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS.
PROPOSALS:
|
|
|
|
|
|
|
1. |
|
To elect eight directors to the Board of Directors. |
|
|
|
|
|
|
|
|
|
NOMINEES: |
|
|
|
|
|
|
|
(01) Roger A. Gibson
|
|
(04) Leonard W. Kedrowski
|
|
(07) Virginia L. Stringer |
|
|
(02) Victoria J. Herget
|
|
(05) Richard K. Riederer
|
|
(08) James M. Wade |
|
|
(03) John P. Kayser
|
|
(06) Joseph D. Strauss |
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR ALL NOMINEES
|
|
WITHHOLD FROM ALL
NOMINEES
|
|
FOR ALL EXCEPT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
o |
|
o |
|
o |
|
|
|
|
|
INSTRUCTION: To withhold authority to vote for any individual nominee, check the
box For All Except and write that nominees name on the line provided above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
2.
|
|
To approve an Amendment to the Investment Advisory
and Management Agreement with FAF Advisors, Inc.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
3.
|
|
To approve Investment Sub-Advisory Agreements with
Nuveen Asset Management, Nuveen Fund Advisors, Inc.
and Nuveen Asset Management, LLC.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
4.
|
|
To ratify the selection of Ernst & Young LLP as the
independent
registered public accounting firm of the Fund
for the current fiscal year.
|
|
o
|
|
o
|
|
o |
THANK YOU FOR YOUR CONSIDERATION AND VOTING.
|
|
|
|
|
|
|
|
|
|
TAG ID
|
|
SCANNER BAR CODE
|
|
CUSIP |