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Exhibit 23 (d)(1)
Interim Investment Management Agreement
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INTERIM
INVESTMENT MANAGEMENT AGREEMENT
FOR CERTAIN SERIES OF THE XXXXXXXXXX FUNDS III
XXXXXXXXXX VARIABLE SERIES: EMERGING MARKETS FUND
THIS INTERIM INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") made as
of the 18th day of January, 2003, by and between THE XXXXXXXXXX FUNDS III, a
Delaware business trust (the "Trust"), on behalf of the series of the Trust
listed in Appendix A hereto (the "Fund") and Gartmore Global Asset Management
Trust, a business trust organized and existing under the laws of the State of
Delaware (the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services; and
WHEREAS, Xxxxxxxxxx Asset Management, LLC ("MAM") renders advice and
services to the Fund under an Amended and Restated Investment Management
Agreement dated August 30, 2002 ("Old Agreement"); and
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WHEREAS, the Board of Trustees of the Trust, on January 14, 2003,
terminated the Old Agreement , effective as of January 17, 2003; and
WHEREAS, the Board of Trustees of the Trust, on January 14, 2003, duly
approved this "Interim Investment Management Agreement," effective as of January
18, 2003, pursuant to Rule 15a-4 under the 1940 Act, and, pursuant to this
interim agreement, the Adviser is to be retained to act as investment adviser
for the Fund; and
WHEREAS, in connection with a transaction whereby the Advisor will
assume investment management of the Fund ("the Transaction"), it is expected
that a proposal shall be submitted to shareholders of the Fund under which such
Fund would be reorganized into the relevant series of Gartmore Variable
Insurance Trust (the "Reorganization") pursuant to an Agreement and Plan of
Reorganization between the Trust and Gartmore Variable Insurance Trust (the
"Plan"); and
WHEREAS, the Trust and the Manager enter into this Agreement pursuant to
Rule 15a-4 under the 1940 Act and intend for this Agreement's term to commence
on January 18, 2003 and to extend only for so long as necessary to obtain the
requisite vote of the shareholders of the Fund, as required by law and the
Trust's By-Laws, to approve a new Investment Management Agreement between the
Trust and the Manager ("New Agreement") or one hundred and fifty (150) days from
the date of the termination of the Old Agreement, whichever occurs first;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
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1. Appointment of Manager. The Trust hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Fund for the period and on
the terms set forth in this Agreement, subject to the supervision and direction
of the Trust's Board of Trustees.
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment manager
to the Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, programs and restrictions of the Fund
as provided in the Trust's governing documents, including, without limitation,
the Trust's Agreement and Declaration of Trust and By-Laws, or otherwise and
such other limitations as the Trustees may impose from time to time in writing
to the Manager. Without limiting the generality of the foregoing, the Manager
shall: (i) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such other steps as may be
necessary to implement such advice and recommendations; (ii) furnish the Fund
with reports, statements and other data on securities, economic conditions and
other pertinent subjects which the Trust's Board of Trustees may reasonably
request; (iii) manage the investments of the Fund, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iv) provide persons
satisfactory to the Trust's Board of Trustees to act as officers and employees
of the Trust and the Fund (such officers and employees, as well as certain
trustees, may be trustees, directors, officers, partners, or employees of the
Manager or its affiliates) but not including personnel to provide administrative
services or distribution services
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to the Fund; and (v) render to the Trust's Board of Trustees such periodic and
special reports with respect to the Fund's investment activities as the Board
may reasonably request.
(b) Brokerage. The Manager shall place orders for the purchase
and sale of securities either directly with the issuer or with a broker or
dealer selected by the Manager. In placing the Fund's securities trades, it is
recognized that the Manager will give primary consideration to securing the most
favorable price and efficient execution, so that the Fund's total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Manager may consider the
financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party.
It is also understood that it is desirable for the Fund that the Manager
have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Fund than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Fund may be made with
brokers who provide such research and analysis, subject to review by the Trust's
Board of Trustees from time to time with respect to the extent and continuation
of this practice to determine whether the Fund benefits, directly or indirectly,
from such practice. It is understood by both parties that the Manager may select
broker-dealers for the execution of the Fund's portfolio transactions who
provide research and analysis as the Manager may lawfully and appropriately use
in its investment management
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and advisory capacities, whether or not such research and analysis may also be
useful to the Manager in connection with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Fund as well as of other clients, the Manager,
to the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Manager in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) Administrative Services. The Manager shall oversee the
administration of the Fund's business and affairs although the provision of
administrative services, to the extent not covered by subparagraphs (a) or (b)
above, is not the obligation of the Manager under this Agreement.
Notwithstanding any other provisions of this Agreement, the Manager shall be
entitled to reimbursement from the Fund for all or a portion of the reasonable
costs and expenses, including salary, associated with the provision by Manager
of personnel to render administrative services to the Fund.
3. Best Efforts and Judgment. The Manager shall use its best judgment
and efforts in rendering the advice and services to the Fund as contemplated by
this Agreement.
4. Independent Contractor. The Manager shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be
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deemed an agent for the Trust or for the Fund. It is expressly understood and
agreed that the services to be rendered by the Manager to the Fund under the
provisions of this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar or different services to others so long as its
ability to render the services provided for in this Agreement shall not be
impaired thereby.
5. Manager's Personnel. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. Reports by Fund to Manager. The Fund will from time to time furnish
to the Manager detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Manager such financial reports, proxy statements, legal and other
information relating to the Fund's investments as may be in its possession or
available to it, together with such other information as the Manager may
reasonably request.
7. Expenses.
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(a) With respect to the operation of the Fund, the Manager is
responsible for (i) the compensation of any of the Trust's trustees, officers,
and employees who are affiliates of the Manager (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below), (ii) the expenses of printing and
distributing the Fund's prospectuses, statements of additional information, and
sales and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing shareholders),
and (iii) providing office space and equipment reasonably necessary for the
operation of the Fund.
(b) The Fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of the Fund's
shareholders and Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Manager; insurance
premiums on property or personnel of the Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements,
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prospectuses and statements of additional information of the Fund or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of obtaining and maintaining any required registration or notification for
its shares for sale under federal and applicable state and foreign securities
laws; all expenses of maintaining and servicing shareholder accounts, including
all charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming
expenses which are an obligation of the Fund as set forth herein, the Fund shall
promptly reimburse the Manager for such costs and expenses, except to the extent
the Manager has otherwise agreed to bear such expenses. To the extent the
services for which the Fund is obligated to pay are performed by the Manager,
the Manager shall be entitled to recover from the Fund to the extent of the
Manager's actual costs for providing such services.
8. Investment Advisory and Management Fee.
(a) The Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
and advisory services furnished or provided to the Fund pursuant to this
Agreement, a management fee as set forth in the Fund and Fee Schedule attached
hereto as Appendix A, as may be amended in writing from time to time by the
Trust and the Manager.
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(b) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Manager shall be prorated
for the portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(c) All fees payable to the Manager under this Section 8 shall be
accrued daily and paid by the Fund to an interest-bearing escrow account with an
institution mutually agreed upon by both parties; provided that if a new
agreement is approved by a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund before the termination of this Agreement,
all amounts paid by the Fund in the escrow account will be immediately payable
to the Manager along with the interest attributable to such amounts upon such
approval; provided further, that if a majority of the outstanding voting
securities of the Fund do not approve a new agreement with respect to the Fund
before the termination of this Agreement, the Manager shall, upon termination of
this Agreement, be entitled only to the lesser of: (i) the costs incurred in
performing this Agreement with respect to the Fund plus interest earned on that
amount while in escrow; or (ii) the total amount paid by the Fund to the escrow
account plus interest earned on that amount.
(d) Fee Reduction. The Manager may, but is not required to,
reduce all or a portion of its fees and/or reimburse the Fund for other expenses
in order to decrease the operating expenses of the Fund. Any such reduction,
reimbursement, or payment (collectively "subsidies")
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shall be applicable only to such specific subsidy and shall not constitute an
agreement to continue such subsidy in the future. Any such subsidy will be
agreed to prior to accrual of the related expense or fee and will be estimated
daily and reconciled and paid on a monthly basis. The Manager has agreed to
limit the Fund's operating expenses as set forth in Appendix B for the term of
this Agreement. To the extent such an expense limitation has been agreed to by
the Manager and such limit has been disclosed to shareholders of the Fund in the
Prospectus, the Manager may not change the limitation without first disclosing
the change in an updated Prospectus.
The Manager may seek reimbursement of any subsidies made by the
Manager either voluntarily or pursuant to contract. The reimbursement of any
subsidy must be approved by the Trust's Board of Trustees and must be sought no
later than the end of the third fiscal year following the year to which the
subsidy relates if the aggregate expenses for that period do not exceed any more
restrictive limitation to which the Manager has agreed (subsidies available for
reimbursement to the Manager are collectively referred to as the "Recoupment
Balance") and the Board of Trustees approves the reimbursement. For example,
subsidized Operating Expenses relating to the period July 1, 2002 through June
30, 2003 would no longer be eligible for reimbursement after July 1, 2006. The
Manager agrees not to request or seek reimbursement of subsidized Operating
Expenses that are no longer eligible for reimbursement. The Manager may not
request or receive reimbursement of the Recoupment Balance before payment of the
Fund's operating expenses for the current year and cannot cause the Fund to
exceed any agreed upon expense limitation for that year in making such
reimbursement.
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(e) The Manager may agree not to require payment of any portion
of the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the Fund. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Manager hereunder.
9. Fund Share Activities of Manager's Directors, Partners, Officers and
Employees. The Manager agrees that neither it nor any of its directors,
partners, officers or employees shall take any short position in the shares of
the Fund. This prohibition shall not prevent the purchase of such shares by any
of the officers and partners or bona fide employees of the Manager or any trust,
pension, profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the 1940 Act.
10. Conflicts with Trust's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Trust or the Fund to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and the Fund.
11. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, negligence,
or reckless disregard of the obligations or duties hereunder on the part of the
Manager, the Manager shall not
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be subject to liability to the Trust or the Fund or to any shareholder of the
Fund for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security by the Fund; provided, however, that this
provision shall not be construed as a waiver or limitation of any rights which
the Trust or the Fund may have under applicable federal securities laws.
(b) The Fund shall indemnify and hold harmless the Manager, its
managing member and the shareholders, directors, officers and employees of each
of them (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement; and provided, further, that this
provision shall not be construed as a waiver or limitation of any rights which
the Trust or the Fund may have under applicable federal securities laws.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or managing member, director or officer of
the Manager, from liability in violation of Sections 17(h) and (i) of the 1940
Act.
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12. Non-Exclusivity. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein.
13. Term. This Agreement shall become effective on January 18, 2003 and
shall remain in effect for a period not to exceed one hundred and fifty (150)
days from January 18, 2003, unless sooner terminated as provided herein;
provided, however, that if the Agreement is approved by the vote of a majority
of a Fund's outstanding voting securities, this Agreement shall remain in effect
with respect to that Fund until the closing date of the Reorganization as
identified in the Plan, unless sooner terminated as provided herein.
14. Termination. This Agreement may be terminated by the Trust on behalf
of any one or more of the Funds at any time without payment of any penalty, by
the Board of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of a Fund, upon ten (10) days' written notice to
the Manager, and by the Manager upon sixty (60) days' written notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. Transfer, Assignment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of the Fund.
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17. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. Definitions. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. Notice of Declaration of Trust. The Manager agrees that the Trust's
obligations under this Agreement shall be limited to the Fund and to its assets,
and that the Manager shall not seek satisfaction of any such obligation from the
shareholders of the Fund nor from any trustee, officer, employee or agent of the
Trust or the Fund.
20. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
21. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940 and any
rules and regulations promulgated thereunder.
22. Nonpublic Personal Information. Notwithstanding any provision herein
to the contrary, the Manager agrees on behalf of itself and its directors,
officers, and employees (1) to treat confidentially and as proprietary
information of the Trust (a) all records and other information relative to the
Fund and its prior, present, or potential shareholders (and clients of
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said shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "Privacy Act"), and (2) not to use such records and
information for any purpose other than the performance of its responsibilities
and duties hereunder, or as otherwise permitted by the privacy policies adopted
by the Trust, Regulation S-P or the Privacy Act, except after prior notification
to and approval in writing by the Trust. Such written approval shall not be
unreasonably withheld by the Trust and may not be withheld where the Manager may
be exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
23. Anti-Money Laundering Compliance. The Manager acknowledges that, in
compliance with the Bank Secrecy Act, as amended, and implementing regulations
("BSA"), the Fund has adopted an Anti-Money Laundering Policy. The Manager
agrees to comply with the Fund's Anti-Money Laundering Policy and the BSA, as
the same may apply to the Manager, now and in the future. The Manager further
agrees to provide to the Fund and/or the Trust such reports, certifications and
contractual assurances as may be requested by the Fund or the Trust. The Trust
and the Fund may disclose information respecting the Manager to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as may
be required by applicable law or regulation.
24. Certifications; Disclosure Controls and Procedures. The Manager
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act of 2002, and the
implementing regulations promulgated thereunder, the Fund is required to make
certain certifications and have adopted disclosure controls and procedures. To
the extent reasonably requested by the Trust or the Fund,
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the Manager agrees to use its best efforts to assist the Trust and the Fund in
complying with the Xxxxxxxx-Xxxxx Act and implementing the Fund's disclosure
controls and procedures. The Manager agrees to inform the Trust and the Fund of
any material development related to the Trust or the Fund that the Manager
reasonably believes is relevant to the certification obligations of the Fund
under the Xxxxxxxx-Xxxxx Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
THE XXXXXXXXXX FUNDS III GARTMORE GLOBAL ASSET MANAGEMENT
TRUST.
By: By:
---------------------------------- ------------------------------
Name: Name:
Title: Title:
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Appendix A
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Fund and Fee Schedule - The Xxxxxxxxxx Funds III
Xxxxxxxxxx Variable Series: Emerging Markets Fund 1.25% of the first $250
million of net assets;
plus 1.00% of net assets
over $250 million
THE XXXXXXXXXX FUNDS III GARTMORE GLOBAL ASSET MANAGEMENT
TRUST.
By: By:
---------------------------------- ------------------------------
Name: Name:
Title: Title:
Date: Date:
00
Xxxxxxxx X
----------
Limitation on Fund Operating Expenses
The Manager hereby agrees to limit the Fund's Operating Expenses to the
respective annual rate of total Operating Expenses specified for that Fund in
the table below (the "Operating Expense Cap"). The term "Operating Expenses"
with respect to the Fund is defined to include all expenses necessary or
appropriate for the operation of the Fund including the Manager's investment
advisory or management fee under Section 8 of the Interim Investment Management
Agreement, and other expenses described in Section 7 of the Interim Investment
Management Agreement, but does not include any Rule 12b-1 fees, front-end or
contingent deferred loads, taxes, interest, short sale dividend expenses,
brokerage commissions, expenses incurred in connection with any merger or
reorganization or extraordinary expenses such as litigation.
Fund Operating Expense Cap
---- ---------------------
Xxxxxxxxxx Variable Series: Emerging Markets Fund 1.75% of net assets
THE XXXXXXXXXX FUNDS III GARTMORE GLOBAL ASSET MANAGEMENT
TRUST
By: By:
--------------------------- -------------------------
Name: Name:
Title: Title:
Date: Date:
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