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Exhibit 23(d)17
Fundamental Growth
(Fundamental Growth Fund)
INTERIM
SUB-MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
INDEPENDENCE INVESTMENT LLC
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
INTERIM
SUB-MANAGEMENT AGREEMENT
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AGREEMENT made as of the 15th day of December, 2003, by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Independence Investment LLC, a Massachusetts limited liability company
("INDEPENDENCE"), and Xxxx Xxxxxxx Life Insurance Company, a Massachusetts
corporation ("JHLICO").
WHEREAS, the Trust is organized and is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940 (the "1940 Act"); and
WHEREAS, JHLICO and INDEPENDENCE are engaged in the business of rendering
investment advice under the Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of capital stock in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several series, one of which is
designated as the Fundamental Growth Fund, (together with all other series
established by the Trust, the "Funds"), each of which pursues its investment
objectives through separate investment policies; and
WHEREAS, the Trust has retained JHLICO to render investment management
services to the Trust pursuant to an Investment Management Agreement dated as of
April 12, 1988 (the "Investment Management Agreement"), pursuant to which it may
contract with INDEPENDENCE as a sub-manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
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(a) Subject Fund. INDEPENDENCE is hereby appointed and INDEPENDENCE hereby
accepts the appointment to act as an investment adviser and manager to the
Fundamental Growth Fund (the "Subject Fund"), effective December 15, 2003, for
the period and on the terms herein set forth, for the compensation herein
provided.
(b) Independent Contractor. INDEPENDENCE shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or be deemed an agent of
the Trust.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
INDEPENDENCE will provide for the Subject Fund a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Fund, as furnished to INDEPENDENCE by JHLICO in writing
from time to time. INDEPENDENCE will manage the investment and reinvestment of
the Subject Fund, and perform the functions set forth below, subject to the
overall supervision, direction, control and review of the Board of Trustees of
the Trust, JHLICO and, as in effect from time to time, the provisions of the
Trust's Declaration of Trust, Bylaws, prospectus, statement of additional
information (all as furnished to INDEPENDENCE by JHLICO in writing from time to
time), the 1940 Act and all other applicable laws and regulations (including any
applicable investment restrictions imposed by state insurance laws and
regulations or any directions or instructions, all as delivered to INDEPENDENCE
in writing by JHLICO or the Trust from time to time).
INDEPENDENCE will have investment discretion with respect to the Subject
Fund and will, at its own expense:
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(a) upon request, advise the Trust in connection with investment decisions
to be made by its Board of Trustees or any committee thereof regarding the
Subject Fund and furnish the Trust with research, economic and statistical data
in connection with investments and investment policies for the Subject Fund;
(b) submit such reports relating to the valuation of the Subject Fund as
the Trust's Board of Trustees may reasonably request;
(c) place orders for purchases and sales of portfolio investments for the
Subject Fund;
(d) maintain and preserve the records relating to its activities hereunder,
including those records required by the 1940 Act to be maintained by it and
preserved by the Trust, to the extent not maintained by the Trust's custodian,
transfer agent or JHLICO; and
(e) subject to its receipt of all necessary voting materials, in its
discretion, as it deems advisable in the best interests of the Subject Fund,
vote any or all proxies with respect to the Subject Fund in accordance with
INDEPENDENCE's proxy voting policy as most recently provided to JHLICO.
The Trust and JHLICO will provide timely information to INDEPENDENCE
regarding such matters as purchases and redemptions of shares in the Subject
Fund and the cash requirements of, and cash available for investment in, the
Subject Fund, and all information (including, without limitation, reports
concerning the classification of Fund securities for purposes of Subchapter M of
the Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for INDEPENDENCE to perform its
responsibilities hereunder. On its own initiative, INDEPENDENCE will apprise
JHLICO and
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the Trust of important developments materially affecting the Subject Fund and
will furnish JHLICO and the Trust's Board of Trustees from time to time such
information as is appropriate for this purpose.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Trust specifically
agrees, without limitation, to assume the expense of:
(i) brokerage commissions for transactions in the portfolio investments of
the Subject Fund and similar fees, charges and expenses incurred in connection
with the acquisition, disposition, lending or borrowing of such portfolio
investments;
(ii) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental agencies; and
(iii) interest payable on the Trust's borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Trust and JHLICO in the Investment Management Agreement
or any other agreement to which they are parties.
4. SUB-ADVISORY FEES.
For all of the services rendered as herein provided, JHLICO shall pay to
INDEPENDENCE a fee (for payment of which the Trust shall have no obligation or
liability) based on the Current Net Assets of the Subject Fund, as set forth in
Schedule I attached hereto and made a part hereof.
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The fee shall be accrued daily and payable monthly, as soon as practicable after
the last day of each calendar month. In the case of termination of this
Agreement with respect to the Subject Fund during any calendar month, the fee
with respect to such Fund accrued to termination shall be paid promptly
following such termination.
"Current Net Assets" of the Subject Fund for purposes of computing the
amount of advisory fee accrued for any day shall mean the net assets of the
Subject Fund as of the most recent preceding day for which the Subject Fund's
net assets were computed.
5. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, INDEPENDENCE is authorized to select the brokers or dealers that
will execute purchase and sale transactions for the Subject Fund and to use its
best efforts to obtain best execution with respect to all such purchases and
sales of portfolio securities for the Subject Fund. INDEPENDENCE shall maintain
records reasonably adequate to demonstrate compliance with this requirement.
Subject to this primary requirement, and maintaining as its first consideration
the benefits to the Subject Fund and its shareholders, INDEPENDENCE shall have
the right subject to the control of the Board of Trustees, and to the extent
authorized by the Securities Exchange Act of 1934, to follow a policy of
selecting brokers who furnish brokerage and research services to the Subject
Fund or to INDEPENDENCE, and who charge a higher commission rate to the Subject
Fund than may result when allocating brokerage solely on the basis of seeking
the most favorable price and execution. INDEPENDENCE shall determine in
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good faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.
The fees payable to INDEPENDENCE by JHLICO hereunder shall be reduced by
any tender offer solicitation fees or similar payments received by INDEPENDENCE,
in connection with the tender of investments of any Subject Fund (less direct
expenses incurred by INDEPENDENCE in connection with obtaining such fees or
payments), to the extent not otherwise paid or credited to the Subject Fund.
6. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by
INDEPENDENCE on the Trust's behalf and, in the event of termination of this
Agreement with respect to the Subject Fund for any reason, all records (or true
and complete copies thereof) relating to that Fund shall be promptly returned to
the Trust, free from any claim or retention of rights by INDEPENDENCE.
INDEPENDENCE also agrees, upon request of the Trust, promptly to surrender such
books and records or, at its expense, copies thereof, to the Trust or make such
books and records available for inspection by representatives of regulatory
authorities or other persons reasonably designated by the Trust. INDEPENDENCE
further agrees to maintain, prepare and preserve such books and records in
accordance with the 1940 Act and rules thereunder, including but not limited to,
Rules 31a-1 and 31a-2 and to supply all information in its possession or
reasonably available to it, requested by any insurance regulatory authorities to
determine whether all insurance laws and regulations are being complied with.
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INDEPENDENCE shall not disclose or use any records or information obtained
pursuant hereto in any manner whatsoever except as expressly authorized herein,
and will keep confidential any information obtained pursuant hereto, and
disclose such information only (i) to JHLICO, or to any other person or entity
that directly or indirectly owns all or substantially all of INDEPENDENCE's
capital stock; (ii) if the Trust or JHLICO has authorized such disclosure, or
(iii) if such disclosure is expressly required by applicable federal or state
regulatory authorities or court proceedings.
INDEPENDENCE shall supply the Board of Trustees and officers of the Trust
and JHLICO with all statistical information regarding investments which is
reasonably required by them and reasonably available to it.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect INDEPENDENCE or
JHLICO against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement or the Investment Management
Agreement, as applicable. Nor shall any provision hereof be deemed to protect
any trustee or officer of the Trust against any such liability to which he might
otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance his duties or the reckless disregard of his
obligations and duties. INDEPENDENCE shall employ only qualified personnel to
manage the Subject Fund; shall comply with all applicable laws and regulations
in the discharge of its duties under this Agreement (provided that copies of any
applicable
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investment restrictions imposed by state insurance laws and regulations shall be
furnished to INDEPENDENCE by JHLICO); shall (as provided in Section 2 above)
comply with the investment policies, guidelines and restrictions of the Subject
Fund and with the provisions of the Trust's Declaration of Trust, Bylaws,
prospectus and statement of additional information, all as furnished to
INDEPENDENCE by JHLICO in writing from time to time; shall manage the Subject
Fund (subject to the receipt of, and based upon the information contained in,
periodic reports from JHLICO or the custodian concerning the classification of
Fund securities for such purposes) as a regulated investment company in
accordance with subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and Treasury Regulations Section 1.817-5(b); shall act in its
management of the Subject Fund in the best interests of the Trust, subject
however to its duties to other clients as described in Section 9 below; and
shall discharge its duties with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of a similar
enterprise. However, INDEPENDENCE shall not be obligated to perform any service
not described in this Agreement, and shall not be deemed by virtue of this
Agreement to have made any representation or warranty that any level of
investment performance or level of investment results will be achieved.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Subject Fund on the date set forth in Section 1(a) hereof. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for the
earlier of (i) 150 days from the date hereof and (ii) the date a superseding
agreement is approved by vote of a majority of the outstanding voting shares
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of such Fund becomes effective. The term "vote of a majority of the outstanding
shares" when used in this Agreement, shall have the meaning specified in the
1940 Act and rules thereunder.
(b) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by the Trust pursuant to a vote of the trustees of the
Trust or a vote of a majority of the outstanding shares of the Subject Fund,
which termination shall be effective immediately upon delivery of notice thereof
to INDEPENDENCE and JHLICO. This Agreement may be terminated by INDEPENDENCE on
at least sixty days' prior written notice to the Trust and JHLICO, or by JHLICO
on at least sixty days' prior written notice to the Trust and INDEPENDENCE.
Transactions already entered into by INDEPENDENCE but not yet settled at the
time of any such termination shall settle for the account of the Trust.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE.
The services of INDEPENDENCE to the Trust are not to be deemed exclusive
and it shall be free to render similar services to others so long as its
services hereunder are not impaired thereby. It is specifically understood that
directors, officers and employees of INDEPENDENCE and of its subsidiaries and
affiliates may continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, and other
investment advisory clients.
Nothing in this Agreement shall limit or restrict INDEPENDENCE or any of
its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own
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accounts; provided, however, that no such person shall purchase securities from
or sell securities to the Subject Fund except as permitted under applicable laws
and regulations, including without limitation the 1940 Act and the Investment
Advisers Act of 1940, and the rules and regulations thereunder. The Trust
acknowledges that INDEPENDENCE and its officers, affiliates and employees, and
its and their other clients, may at any time have, acquire, increase, decrease
or dispose of positions in investments which are at the same time being acquired
or disposed of under this Agreement. INDEPENDENCE shall have no obligation to
acquire for the Subject Fund a position in any investment which INDEPENDENCE,
its officers, affiliates or employees may acquire for their own accounts or for
the accounts of another client, if in the sole discretion of INDEPENDENCE it is
not feasible or desirable to do so.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, INDEPENDENCE and its directors, officers and employees will not
act as principal or agent or receive any commission, except as may be permitted
under applicable laws and regulations and the policies and procedures of the
Trust in effect from time to time. Nothing in this Agreement, however, shall
preclude the combination of orders for the sale or purchase of portfolio
securities of the Subject Fund with those for other accounts managed by
INDEPENDENCE or its affiliates, if orders are allocated in a manner deemed
equitable by INDEPENDENCE among the accounts and at a price approximately
averaged.
INDEPENDENCE will not consult with any other non-affiliated sub-manager to
any other Fund of the Trust concerning transactions of the Subject Fund in
securities or
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other assets, except as such consultation may be reasonably necessary in order
to ensure compliance with paragraphs (a) and (b) of Rule 12d3-1 under the 1940
Act.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by a duly
authorized officer of the party or parties intending to be bound thereby. No
amendment of this Agreement shall be effective until approved specifically by
(a) the Board of Trustees of the Trust, or by vote of a majority of the
outstanding shares of the Subject Fund, and (b) by vote of a majority of those
Trustees of the Trust who are not interested persons of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust.
13. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act and
rules thereunder.
14. NOTICES.
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Notices and other communications required or permitted under this Agreement
shall be in writing, shall be deemed to be effectively delivered when actually
received, and may be delivered by US mail (first class, postage prepaid), by
facsimile transmission (provided that any notice delivered by facsimile shall be
followed promptly by a duplicate notice delivered by another permitted method of
delivery), by hand or by commercial overnight delivery service, addressed as
follows:
SUB-MANAGER: Independence Investment LLC
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
Fax #: 000-000-0000
JHMLICO: Xxxx Xxxxxxx Life Insurance Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
5. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
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By: /s/ Xxxxxxx X. Xxx Xxxx
------------------------------------
Title: Chairman and CEO
XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxx Xxxx
------------------------------------
Title: Vice President
INDEPENDENCE INVESTMENT LLC
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Title: COO
SCHEDULE I
FEES
For the Fundamental Growth Fund:
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
On the first $500 million 30 basis points (0.3000%)
per annum
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On the next $500 million 26.25 basis points
(0.2625%) per annum
On amounts over $1 billion 22.5 basis points
(0.2250%) per annum
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