EXPENSE LIMITATION AGREEMENT
GARTMORE MUTUAL FUNDS
EXPENSE LIMITATION AGREEMENT, effective as of February 28, 2005, by and
between GARTMORE MUTUAL FUND CAPITAL TRUST (the "Investment Adviser") and
GARTMORE MUTUAL FUNDS, a Delaware statutory trust (the "Trust"), on behalf of
the funds listed on Exhibit A (each, a "Fund").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open end management company of the
series type, and the Fund is a separate series of the Trust; and
WHEREAS, the Trust and the Investment Adviser have entered into an
Investment Advisory Agreement (the "Advisory Agreement"), pursuant to which the
Investment Adviser renders investment advisory services to each Fund for
compensation based on the value of the average daily net assets of that Fund;
and
WHEREAS, the Trust and the Investment Adviser have determined that it
is appropriate and in the best interests of each Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which that Fund
would otherwise be subject.
NOW, THEREFORE, the parties hereto agree as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. To the extent that the aggregate
expenses incurred by a Fund or a class of a Fund in any fiscal year, including
but not limited to investment advisory fees of the Investment Adviser (but
excluding interest, taxes, brokerage commissions and other costs incurred in
connection with the purchase and sale of portfolio securities, Rule 12b-1 fees,
fees paid pursuant to an Administrative Services Plan, short sale dividend
expenses, other expenditures which are capitalized in accordance with generally
accepted accounting principles, expenses incurred by a Fund in connection with
any merger or reorganization, and other extraordinary expenses not incurred in
the ordinary course of the Fund's business) ("Fund Operating Expenses"), exceed
the Operating Expense Limit, as defined in Section 1.2 below, such excess amount
(the "Excess Amount") shall be the liability of the Investment Adviser.
1.2. Operating Expense Limit. The Operating Expense Limit in any year
shall be a percentage of the average daily net assets of each class of the Fund
as described in Exhibit A, or such other rate as may be agreed to in writing by
the parties. The parties hereby agree that Operating Expense Limit described in
Exhibit A will not be increased before the date listed on Exhibit A.
1.3. Method of Computation--Non-Daily Dividend Funds. To determine the
Investment Adviser's liability with respect to the Excess Amount for Funds that
do not accrue daily dividends, each month the Fund Operating Expenses shall be
annualized as of the last day of the month for each class of a Fund. If the
annualized Fund Operating Expenses for any month exceed the Operating Expense
Limit of a Fund class, the Investment Adviser shall (i) waive or reduce its
advisory fee by an amount sufficient to reduce the annualized Fund Operating
Expenses to an amount which does not exceed the Operating Expense Limit, and/or
(ii) remit to a Fund an amount that, together with the waived or reduced
advisory fee, is sufficient to satisfy such Excess Amount.
1.4 Method of Computation - Daily Dividend Funds. To determine the
Investment Adviser's liability with respect to the Excess Amount for Funds that
accrue daily dividends (a "Daily Dividend Fund"), each day the Fund Operating
Expenses shall be annualized as of that day for each class of a Daily Dividend
Fund. If the annualized Fund Operating Expenses for any day exceed the Operating
Expense Limit of a Daily Dividend Fund class, the Investment Adviser shall (i)
on a daily basis waive or reduce its advisory fee for such month by an amount
sufficient to reduce the annualized Fund Operating Expenses to an amount which
does not exceed the Operating Expense Limit and/or (ii) on a monthly basis remit
to a Fund an amount that, together with the waived or reduced advisory fee, is
sufficient to satisfy such Excess Amount.
1.5 Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Investment Adviser to a Fund with
respect to the previous fiscal year shall equal the Excess Amount.
2. Reimbursement of Fee Waivers and Expense Reimbursements.
2.1. Reimbursement. If in any fiscal year during which total Fund
assets are greater than $100 million and in which the Investment Advisory
Agreement is still in effect, the estimated aggregate Fund Operating Expenses
for the fiscal year are less than the Operating Expense Limit for that year,
subject to quarterly approval by the Trust's Board of Trustees as provided in
Section 2.2 below, the Investment Adviser shall be entitled to reimbursement by
a Fund, in whole or in part as provided below, of the advisory fees waived or
reduced and other payments remitted by the Investment Adviser to the Fund
pursuant to Section 1 hereof. The total amount of reimbursement to which the
Investment Adviser may be entitled (the "Reimbursement Amount") shall equal, at
any time, the sum of all advisory fees previously waived or reduced by the
Investment Adviser and all other payments remitted by the Investment Adviser to
a Fund or a class of a Fund (as appropriate), pursuant to Section 1 hereof, less
any reimbursement previously paid by such Fund to the Investment Adviser,
pursuant to Sections 2.2 or 2.3 hereof, with respect to such waivers,
reductions, and payments; provided, however, that no Reimbursement Amount shall
be paid at a date more than three (3) years after the fiscal year when the
Investment Adviser waived investment advisory fees or reimbursed other expenses
to a Fund or a class of a Fund for the corresponding Excess Amount pursuant to
Section 1. The Reimbursement Amount shall not include any additional charges or
fees whatsoever, including, e.g., interest accruable on the Reimbursement
Amount.
2.2. Board Approval. No reimbursement shall be paid to the Investment
Adviser pursuant to this provision in any fiscal year, unless the Trust's Board
of Trustees has determined that the payment of such reimbursement is appropriate
in light of the terms of this Agreement. The Trust's Board of Trustees shall
determine quarterly in advance whether any portion of the Reimbursement Amount
may be paid to the Investment Adviser in such quarter.
2.3. Method of Computation. To determine a Fund's payments, if any, to
reimburse the Investment Adviser for all or any portion of the Reimbursement
Amount, each month the Fund Operating Expenses for each Fund class shall be
annualized as of the last day of the month. If the annualized Fund Operating
Expenses for any month are less than the Operating Expense Limit for that class
for that year, a Fund, only with the prior approval of the Board, shall pay to
the Investment Adviser an amount sufficient to increase the annualized Fund
Operating Expenses to an amount no greater than the Operating Expense Limit for
that year, provided that such amount paid to the Investment Adviser will not
exceed the total Reimbursement Amount. If the annualized Fund Operating Expenses
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for a Fund are greater than the Operating Expense Limit for one or more months
in a quarter and less than the remaining month(s), the calculation described in
this section will be made on a monthly basis and the net amount of the monthly
calculations will be presented to the Board for approval.
2.4. Year-End Adjustment. If necessary, on or before the last day of
the first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. Term and Termination of Agreement.
This Agreement shall continue in effect for the period listed on
Exhibit A for any Fund covered by the Agreement and then unless this Agreement
is terminated earlier as provided below, from year to year thereafter provided
such continuance is specifically approved by a majority of the Trustees of the
Trust who (i) are not "interested persons" of the Trust or any other party to
this Agreement, as defined in the 1940 Act, and (ii) have no direct or indirect
financial interest in the operation of this Agreement ("Non-Interested
Trustees"), provided however, that the reimbursements described in Section 2
will not continue to accrue for more than three years after the fiscal year when
the Investment Adviser waived investment advisory fees or reimbursed other
expenses to a Fund for the corresponding Excess Amount pursuant to Section 1. In
order to terminate the Agreement, the Investment Adviser must give at least 30
days' prior written notice to the Trust prior to the end of the period listed on
Exhibit A or the end of the annual renewal. Regardless of any other termination
provisions, the provisions contained in Section 2 of this Agreement relating to
the reimbursement of the Investment Adviser for fee waivers and expense
reimbursements previously made by the Investment Adviser on behalf of the Fund
shall survive the termination of the Agreement.
4. Miscellaneous.
4.1. Captions. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
4.2. Interpretation. Nothing herein contained shall be deemed to
require the Trust or a Fund to take any action contrary to the Trust's Agreement
and Declaration of Trust or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Trust's Board of Trustees of its responsibility for and control of
the conduct of the affairs of the Trust or the Fund.
4.3. Definitions. Any question of interpretation of any term or
provision of this Agreement, including but not limited to the investment
advisory fee, the computations of net asset values, and the allocation of
expenses, having a counterpart in or otherwise derived from the terms and
provisions of the Advisory Agreement or the 1940 Act, shall have the same
meaning as and be resolved by reference to such Advisory Agreement or the 1940
Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
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GARTMORE MUTUAL FUNDS
By:________________________________
Name:
Title:
GARTMORE MUTUAL FUND CAPITAL TRUST
By:________________________________
Name:
Title:
4
EXHIBIT A
to the Amended and Restated Expense Limitation Agreement between
GARTMORE MUTUAL FUNDS
and
GARTMORE MUTUAL FUND CAPITAL TRUST
February 28, 2005
Name of Fund/Class Expense Limitation for Fund/Class
------------------ ---------------------------------
Gartmore Mid Cap Growth Fund
Class A 1.15%
Class B 1.15%
Class C 1.15%
Class R 1.15%
Institutional Service Class 1.15%
Institutional Class 1.15%
Gartmore Mid Cap Growth Leaders Fund (formerly, Gartmore Millennium Growth Fund)
Class A 1.20%
Class B 1.20%
Class C 1.20%
Class D 1.20%
Class R 1.20%
Institutional Service Class 1.20%
Institutional Class 1.20%
Gartmore Nationwide Principal Protected Fund** Offering Guarantee Zero Coupon
Period Period Investment Period
-------- --------- ------------------
Class A 1.00% 1.95% 1.40%
Class B 1.50% 2.45% 1.90%
Class C 1.50% 2.45% 1.90%
Gartmore Convertible Fund
Class A 0.95%
Class B 0.95%
Class C 0.95%
Class R 0.95%
Institutional Service Class 0.95%
Institutional Class 0.95%
Gartmore Money Market Fund***
Class C 0.59%
Prime 0.59%
Service 0.59%
Institutional 0.59%
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Name of Fund/Class Expense Limitation for Fund/Class
------------------ ---------------------------------
Gartmore Small Cap Growth Fund
Class A 1.35%
Class B 1.35%
Class C 1.35%
Class R 1.35%
Institutional Service Class 1.35%
Institutional Class 1.35%
Gartmore Small Cap Leaders Fund
Class A 1.35%
Class B 1.35%
Class C 1.35%
Class R 1.35%
Institutional Service Class 1.35%
Institutional Class 1.35%
Gartmore China Opportunities Fund
Class A 1.75%
Class B 1.75%
Class C 1.75%
Class R 1.75%
Institutional Service Class 1.75%
Institutional Class 1.75%
Gartmore Global Natural Resources Fund
Class A 1.20%
Class B 1.20%
Class C 1.20%
Class R 1.20%
Institutional Service Class 1.20%
Institutional Class 1.20%
Gartmore Optimal Allocations Fund: Aggressive (formerly Gartmore Actively
Managed Aggressive Asset Allocation Fund)
Class A 0.25%
Class B 0.25%
Class C 0.25%
Class R 0.25%
Institutional Service Class 0.25%
Institutional Class 0.25%
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Gartmore Optimal Allocations Fund: Moderately Aggressive (formerly Gartmore
Actively Managed Moderately Aggressive Asset Allocation Fund)
Class A 0.25%
Class B 0.25%
Class C 0.25%
Class R 0.25%
Institutional Service Class 0.25%
Institutional Class 0.25%
Gartmore Optimal Allocations Fund: Moderate (formerly Gartmore Actively Managed
Moderate Asset Allocation Fund)
Class A 0.25%
Class B 0.25%
Class C 0.25%
Class R 0.25%
Institutional Service Class 0.25%
Institutional Class 0.25%
Gartmore Optimal Allocations Fund: Specialty (formerly Gartmore Actively Managed
Specialty Asset Allocation Fund)
Class A 0.25%
Class B 0.25%
Class C 0.25%
Class R 0.25%
Institutional Service Class 0.25%
Institutional Class 0.25%
Effective until at least February 28, 2006. These expense limitations may be
revised, after the expiration of the agreed upon term, if mutually agreed upon
by the parties. They may also be revised to increase the limitations at anytime
if mutually agreed upon by the parties.
**Until at least the end of the Guarantee Period which will be seven years, it
is hereby agreed that Fund Operating Expenses shall include Rule 12b-1 fees and
fees paid pursuant to an Administrative Services Plan.
***In addition with respect to the Service Class of the Gartmore Money Market
Fund, effective until at least February 28, 2006, the Fund Operating Expenses
shall be limited to 0.75% and shall include the Rule 12b-1 fees and fees paid
pursuant to an Administrative Services Plan.
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GARTMORE MUTUAL FUNDS
By:________________________________
Name:
Title:
GARTMORE MUTUAL FUND CAPITAL TRUST
By:________________________________
Name:
Title:
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