Exhibit (d)(64)
SUBADVISORY AGREEMENT
AGREEMENT made as of November 17, 2004, by and between Deutsche
Investment Management Americas Inc. (hereinafter called the "Manager"), and
Deutsche Asset Management Investment Services Limited (hereinafter called the
"Subadviser").
WITNESSETH:
WHEREAS, Xxxxxxx Variable Series II (the "Trust") is a Massachusetts
business trust organized with one or more portfolios of shares and is registered
as an investment company under the Investment Company Act of 1940 (the "1940
Act");
WHEREAS, the Trust and the manager have entered into an Investment
Management Agreement on behalf of Xxxxxxx Total Return Portfolio, a portfolio of
the Trust (the "Series"), dated April 5, 2002, pursuant to which the Manager
acts as investment manager of the Series;
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment counsel with respect to certain portfolio assets of the Series;
and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to all or a portion of the Series, as may be
determined from time to time by the Manager.
The Subadviser is hereby authorized and directed and hereby agrees,
subject to the stated investment policies and restrictions of the Series as set
forth in the current Prospectus and Statement of Additional Information of the
Trust, including amendments (the "Registration Statement"), and in accordance
with the Declaration of Trust and By-laws of the Trust, as both may be amended
from time to time, governing the offering of its shares, and subject to such
resolutions, policies and procedures as from time to time may be adopted by the
Trustees of the Trust and furnished to the Subadviser, and to the extent
requested by the Manager, to develop, recommend and implement such investment
program and strategy for the Series as may from time to time be most appropriate
to the achievement of the investment objectives of the Series as stated in the
Registration Statement, to provide research and analysis relative to the
investment program and investments of the Trust, to determine what securities
should be purchased and sold and to monitor on a continuing basis the
performance of the portfolio securities of the Series. In addition, if requested
by the Manager, the Subadviser will place orders for the purchase and sale of
portfolio securities and, subject to the provisions of the following paragraph,
will take reasonable steps to assure that portfolio transactions are effected at
the best price and execution available. The Subadviser will advise the Trust's
custodian and the Manager on a prompt basis of each purchase and sale of a
portfolio security specifying the name of the issuer, the description and amount
or number of shares of the security purchased, the market price, commission and
gross or net price, trade date, settlement date and identity of the effecting
broker or dealer. From time to time as the Trustees of the Trust or the Manager
may reasonably request,
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the Subadviser will furnish to the Manager, the Trust's officers and to each of
its Trustees reports on portfolio transactions and reports on assets held in the
Series, all in such detail as the Trust or the Manager may reasonably request.
The Subadviser will also inform the Manager, the Trust's officers and Trustees
on a current basis of changes in investment strategy or tactics or any other
developments materially affecting the Series. The Subadviser will make its
officers and employees available to meet with the Manager, the Trust's officers
and Trustees at least quarterly on due notice and at such other times as may be
mutually agreeable, to review the investments and investment performance of the
Trust in the light of the Trust's investment objectives and policies and market
conditions.
In using its best efforts to obtain for the Trust the most favorable
price and execution available, the Subadviser, bearing in mind the Trust's best
interests at all times, shall consider all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions. In
evaluating best execution, and in selecting the broker-dealer to execute a
particular transaction, subject to any instructions and directions of the
Manager or the Board of Trustees, the Subadviser may also consider the brokerage
and research services provided (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934). Provided the Subadviser is acting in
accordance with any such instructions and directions of the Manager or the Board
of Trustees, the Subadviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Series which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Subadviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer--viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Subadviser to the
Series.
It shall be the duty of the Subadviser to furnish to the Trustees of
the Trust such information as may reasonably be requested in order for such
Trustees to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to Section 9 hereof.
In the performance of its duties hereunder, the Subadviser is and shall
be an independent contractor and except as otherwise expressly provided herein
or otherwise authorized in writing, shall have no authority to act for or
represent the Trust or the Manager in any way or otherwise be deemed to be an
agent of the Trust or the Manager.
In furnishing the services under this Agreement, the Subadviser will
comply with the requirements of the 1940 Act applicable to it, and the
regulations promulgated thereunder, and all other applicable laws and
regulations. The Subadviser will immediately notify the Manager and the Trust in
the event that the Subadviser: (i) becomes subject to a statutory
disqualification that prevents the Subadviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission or other regulatory authority. The Subadviser will
immediately forward, upon receipt, to the Manager any correspondence from the
Securities and Exchange Commission or other regulatory authority that relates to
the Trust.
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Subadviser agrees that it will not consult with any other subadviser
engaged by Manager with respect to transactions in securities or other assets
concerning the Fund or another Subadvised Fund, except to the extent permitted
by certain exemptive rules under the Investment Company Act of 1940, as amended,
that permit certain transactions with a subadviser or its affiliates.
2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of
the Subadviser as subadviser to the Series and approving the
form of this agreement;
(d) The resolutions of the Trustees selecting the Manager as
investment manager to the Trust and approving the form of the
Investment Management Agreement with the Trust;
(e) The Investment Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Manager as
currently in effect;
(g) Current copies of the Series' Prospectus; and
(h) Resolutions, policies and procedures adopted by the Trustees
of the Trust in respect of the management or operation of the
Series.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until so provided the Subadviser may
continue to rely on those documents previously provided.
During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Trust documents, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Trust or the public that refer in any way to
the Subadviser, and will not use such material if the Subadviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt thereof. However, the Manager and the
Subadviser may agree amongst themselves that certain of the above-mentioned
documents do not need to be furnished to the Subadviser prior to the document's
use.
In the event of termination of this Agreement, the Manager will
continue to furnish to the Subadviser copies of any of the above-mentioned
materials that refer in any way to the Subadviser. The Manager shall furnish or
otherwise make available to the Subadviser such other information relating to
the business affairs of the Trust as the Subadviser at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
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3. Delivery of Documents to the Manager. The Subadviser has furnished
the Manager with copies of each of the following documents:
(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have
authorized to give written and/or oral instructions to
Custodians and the fund accounting agent of Trust assets for
the Series;
(c) The Code of Ethics of the Subadviser as currently in effect;
and
(d) Any compliance manuals, trading, commission and other reports,
insurance policies, and such other
management or operational documents as the Manager may
reasonably request in writing (on behalf of itself or the
Trustees of the Trust) in assessing the Subadviser.
The Subadviser will maintain a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Trust
with a copy of the code of ethics, including any amendments thereto, and
evidence of its adoption. Within 45 days of the end of each year while this
Agreement is in effect (or more frequently if required by Rule 17j-1 or as the
Trust may reasonably request), an officer of the Subadviser shall certify in
writing to the Trust that the Subadviser has complied with the requirements of
Rule 17j-1 during the previous year and that there has been no violation of its
code of ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation. Subadviser shall also certify to the Trust
with respect to such other matters as may be required by Rule 17j-1. Upon the
written request of the Trust, the Subadviser shall permit the Trust to examine
the reports to be made by the Subadviser under Rule 17j-1(d) and the records the
Subadviser maintains pursuant to Rule 17j-1(f).
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c) above will be provided
within 30 days of the time such materials became available to the Subadviser.
The Subadviser will promptly notify the Manager of any proposed
transaction or other event that could reasonably be expected to result in an
"assignment" of this Agreement within the meaning of the 1940 Act. In addition,
the Subadviser will promptly complete and return to the Manager any compliance
questionnaires or other inquiries submitted to the Subadviser in writing.
4. Other Agreements, etc. It is understood that any of the
shareholders, Trustees, officers and employees of the Trust may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person of the Subadviser, any organization in
which the Subadviser may have an interest or any organization which may have an
interest in the Subadviser, and that any such interested person or any such
organization may have an interest in the Trust. It is also understood that the
Subadviser, the Manager and the Trust may have advisory, management, service or
other contracts with other individuals or entities, and may have other interests
and businesses. When a security proposed to be purchased or sold for the
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Trust is also to be purchased or sold for other accounts managed by the
Subadviser at the same time, the Subadviser shall make such purchases or sales
on a pro-rata, rotating or other equitable basis so as to avoid any one
account's being preferred over any other account.
The Subadviser may give advice and take action with respect to other
funds or clients, or for its own account which may differ from the advice or the
timing or nature of action taken with respect to the Trust.
Nothing in this Agreement shall be implied to prevent (i) the Manager
from engaging other subadvisers to provide investment advice and other services
in relation to any of the portfolios of the Trust, or to prevent the Manager
from providing such services itself in relation to such portfolios; or (ii) the
Subadviser from providing investment advice and other services to other funds or
clients.
5. Fees, Expenses and Other Charges.
(a) The Manager will pay the Subadviser in United States
dollars, as compensation for the services to be
rendered by the Subadviser hereunder, a monthly fee
which, on an annual basis, is equal to 50% of the net
effective advisory fee paid to the Manager by the
Trust for services rendered under the Investment
Management Agreement only for the portion of
portfolio that the Subadviser shall manage.
(b) During the term of this Agreement, the Subadviser
will pay all expenses incurred by it in connection
with its activities under this Agreement other than
the cost of purchasing securities (including
brokerage commissions, if any) for the Trust.
6. Representations and Warranties. The Subadviser hereby represents and
warrants as follows:
(a) The Subadviser is registered as an investment adviser
under the Investment Advisers Act of 1940 (the
"Advisers Act");
(b) The Subadviser has all requisite authority to enter
into, execute, deliver and perform its obligations
under this Agreement;
(c) This Agreement is legal, valid and binding, and
enforceable in accordance with its terms; and
(d) The performance by the Subadviser of its obligations
under this Agreement does not conflict with any law
to which it is subject.
7. Covenants. The Subadviser hereby covenants and agrees that, so long
as this Agreement shall remain in effect:
(a) The Subadviser shall remain either registered under,
or exempt from, the registration provisions of the
Advisers Act;
(b) The performance by the Subadviser of its obligations
under this Agreement shall not conflict with any law
to which it is then subject;
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(c) The Subadviser will carry out appropriate compliance
procedures necessary to the operation of the Series
as the Subadviser and the Manager may agree; and
(d) The Subadviser will manage the Trust in conformity
with all applicable rules and regulations of the
Securities and Exchange Commission in all material
respects and so that the Series will qualify as a
regulated investment company under Subchapter M of
the Internal Revenue Code.
8. Reports by the Subadviser and Records of the Trust. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Trust, including information required to be
disclosed in the Trust's Registration Statement, in such form as may be mutually
agreed, to review the Trust and discuss the management of it. The Subadviser
shall permit the financial statements, books and records with respect to the
Trust to be inspected and audited by the Trust, the Manager or their agents at
all reasonable times during normal business hours. The Subadviser shall
immediately notify and forward to both the Manager and legal counsel for the
Trust any legal process served upon it on behalf of the Manager or the Trust.
The Subadviser shall promptly notify the Manager of any changes in any
information concerning the Subadviser of which the Subadviser becomes aware that
would be required to be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust or
the Manager any such records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
9. Continuance and Termination. This Agreement shall remain in full
force and effect through September 30, 2005, and is renewable annually
thereafter by specific approval of the Board of Trustees of the Trust or by the
affirmative vote of a majority of the outstanding voting securities of the
Series. Any such renewal shall be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons under the 1940 Act, cast in
person at a meeting called for the purpose of voting on such renewal. This
Agreement may be terminated without penalty at any time by the Trustees, by vote
of a majority of the outstanding voting securities of the Series, or by the
Manager or by the Subadviser upon 60 days written notice, and will automatically
terminate in the event of its assignment by either party to this Agreement, as
defined in the 1940 Act, or upon termination of the Manager's Investment
Management Agreement with the Trust. In addition, the Manager or the Trust may
terminate this Agreement upon immediate notice if the Subadviser becomes
statutorily disqualified from performing its duties under this Agreement or
otherwise is legally prohibited from operating as an investment adviser.
10. Voting Rights. The Manager shall be responsible for exercising any
voting rights of any securities of the Series.
11. Indemnification. The Subadviser agrees to indemnify and hold
harmless the Manager, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Manager and each person, if
any, who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") the Manager, against
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any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Manager or such affiliated
person or controlling person may become subject under the 1933 Act, the 1940
Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of Subadviser's responsibilities as portfolio manager of the Series
(1) to the extent of and as a result of the willful misconduct, bad faith, or
gross negligence by the Subadviser, any of the Subadviser's employees or
representatives or any affiliate of or any person acting on behalf of the
Subadviser, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in a Prospectus and Statement of
Additional Information covering the Series or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made in reliance
upon written information furnished by the Subadviser to the Manager, the Trust
or any affiliated person of the Manager or the Trust expressly for use in the
Trust's registration statement, or upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement or
upon verbal information confirmed by the Subadviser in writing expressly for use
in the Trust's registration statement, or (3) to the extent of, and as a result
of, the failure of the Subadviser to execute, or cause to be executed, portfolio
transactions according to the standards and requirements of the 1940 Act, the
Advisors Act and the Securities Exchange Act of 1934; provided, however, that in
no case is the Subadviser's indemnity in favor of the Manager or any affiliated
person or controlling person of the Manager, or any other provision of this
Agreement, deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of willful misconduct, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a Prospectus and Statement of
Additional Information covering the Series or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
registration statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser or any affiliated person or controlling person of the Subadviser, or
any other provision of this Agreement, deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
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12. Certain Definitions. For the purposes of this Agreement, the "vote
of a majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets," "net assets,"
"securities," "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities, portfolio securities or
investments which are from time to time under the management of the Subadviser
pursuant to this Agreement.
13. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
If to the Manager: DEUTSCHE INVESTMENT MANAGEMENT
AMERICAS INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Trust: XXXXXXX VARIABLE SERIES II
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
If to the Subadviser: DEUTSCHE ASSET MANAGEMENT
INVESTMENT SERVICES LIMITED
Xxx Xxxxxx Xxxxxx Xxxxxx, Xxxxxxx XX0X
0XX Attention:
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Trust or Manager in writing
signed or sent by one of the persons whose names, addresses and specimen
signatures will be provided by the Trust or Manager from time to time.
15. Law. This Agreement is governed by and shall be construed in
accordance with the laws of The Commonwealth of Massachusetts in a manner not in
conflict with the provisions of the 1940 Act.
16. Limitation of Liability of the Trust, Trustees and Shareholders. It
is understood and expressly stipulated that none of the Trustees, officers,
agents, or shareholders of the Trust shall
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be personally liable hereunder. It is understood and acknowledged that all
persons dealing with the Series must look solely to the property of such Series
for the enforcement of any claims against such Series as neither the Trustees,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Trust or the Series. No series of the Trust shall
be liable for the obligations of any other Series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this instrument
to be signed in duplicate on its behalf by the officer designated below
thereunto duly authorized.
Deutsche Investment Management Americas Inc.
By: /s/A. Xxxxxx Xxxxx
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Name: A. Xxxxxx Xxxxx
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Title: Secretary
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Deutsche Asset Management Investment
Services Limited
By: /s/Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
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Title: CAO
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