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RIC's. The individual RIC fee is a fixed percentage of a monthly
average of net assets. The performance fee is based upon a given
RIC's performance measured against an industry index, such as the
Standard & Poors 500, and the fee may increase or decrease
depending upon whether the performance of the given RIC is higher
or lower than the applicable index. The percentage used to
calculate the management fee earned by petitioner from the 82
RIC's in issue was not the same for all 82 RIC's. However, all
petitioner's management fees under the various contracts are
dependent upon the amount of assets in each individual RIC.
Terms of Contracts With Petitioner's Other Affiliates
Pursuant to a distribution agreement between the RIC and
FDC, FDC must use all reasonable efforts to secure purchasers for
the RIC's shares. FDC initially incurs the promotional and
administrative expenses associated with the offer and sale of the
RIC's shares. Pursuant to a transfer agent agreement, FSC acts
as transfer, dividend disbursing, and shareholder servicing agent
for the RIC. FSC receives annual account fees and asset-based
fees for each retail account and certain institutional accounts
based on account size. FSC also calculates the RIC's net asset
value per share and dividends and maintains the RIC's accounting
records, and in return, FSC receives pricing and bookkeeping fees
for these services based upon the RIC's average net assets.
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