Exhibit No. EX-99(d)(2)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the 28th day of February
2005 by and between GARTMORE MUTUAL FUNDS (the "Trust"), a Delaware statutory
trust, and GARTMORE XXXXXX CAPITAL MANAGEMENT, INC. (the "Adviser"), an Oregon
corporation registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act").
WITNESSETH:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust desires to retain the Adviser to furnish certain
investment advisory services, as described herein, with respect to certain of
the series of the Trust, all as now are or may be hereafter listed on Exhibit A
to this Agreement (each, a "Fund"); and
WHEREAS, the Adviser represents that it is willing and possesses legal
authority to render such services subject to the terms and conditions set forth
in this Agreement,
NOW, THEREFORE, the Trust and the Adviser do mutually agree and promise
as follows:
1. APPOINTMENT AS ADVISER. The Trust hereby appoints the Adviser
to act as investment adviser to each Fund subject to the terms and conditions
set forth in this Agreement. The Adviser hereby accepts such appointment and
agrees to furnish the services hereinafter described for the compensation
provided for in this Agreement.
2. DUTIES OF ADVISER.
(a) INVESTMENT MANAGEMENT SERVICES.
(i) Subject to the supervision of the Trust's Board
of Trustees (and except as otherwise permitted under the terms of any exemptive
relief obtained by the Adviser from the Securities and Exchange Commission, or
by rule or regulation), the Adviser will provide, or arrange for the provision
of, a continuous investment program and overall investment strategies for each
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in each Fund. The Adviser will
determine, or arrange for others to determine, from time to time what securities
and other investments will be purchased, retained or sold by each Fund and will
implement, or arrange for others to implement, such determinations through the
placement, in the name of a Fund, of orders for the execution of portfolio
transactions with or through such brokers or dealers as may be so selected. The
Adviser will provide, or arrange for the provision of, the services under this
Agreement in accordance with the stated investment policies and restrictions of
each Fund as set forth in that Fund's current prospectus and statement of
additional information as currently in effect and as supplemented or amended
from time to time (collectively referred to hereinafter as the "Prospectus") and
subject to the directions of the Trust's Board of Trustees.
(ii) Subject to the provisions of this Agreement and
the 1940 Act and any exemptions thereto, the Adviser is authorized to appoint
one or more qualified subadvisers (each a "Subadviser") to provide each Fund
with certain services required by this Agreement. Each Subadviser shall have
such investment discretion and shall make all determinations with respect to the
investment of a Fund's assets as shall be assigned to that Subadviser by the
Adviser and the purchase and sale of portfolio securities with respect to those
assets and shall take such steps as may be necessary to implement its decisions.
The Adviser shall not be responsible or liable for the investment merits of any
decision by a Subadviser to purchase, hold, or sell a security for a Fund.
(iii) Subject to the supervision and direction of the
Trustees, the Adviser shall (i) have overall supervisory responsibility for the
general management and investment of a Fund's assets; (ii) determine the
allocation of assets among the Subadvisers, if any; and (iii) have full
investment discretion to make all determinations with respect to the investment
of Fund assets not otherwise assigned to a Subadviser.
(iv) The Adviser shall research and evaluate each
Subadviser, if any, including (i) performing initial due diligence on
prospective Subadvisers and monitoring each Subadviser's ongoing performance;
(ii) communicating performance expectations and evaluations to the Subadvisers;
and (iii) recommending to the Trust's Board of Trustees whether a Subadviser's
contract should be renewed, modified or terminated. The Adviser shall also
recommend changes or additions to the Subadvisers and shall compensate the
Subadvisers.
(v) The Adviser shall provide to the Trust's Board of
Trustees such periodic reports concerning a Fund's business and investments as
the Board of Trustees shall reasonably request.
(b) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS.
In the performance of its duties and obligations under this Agreement, the
Adviser shall act in conformity with the Trust's Agreement and Declaration of
Trust, as from time to time amended and/or restated, and By-Laws, as from time
to time amended and/or restated, and the Prospectus and with the instructions
and directions received from the Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended (the "Code") (including the requirements for qualification as a
regulated investment company) and all other applicable federal and state laws
and regulations.
The Adviser acknowledges and agrees that subject to the
supervision and directions of the Trust's Board of Trustees, it shall be solely
responsible for compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or a Fund,
including, without limitation, the 1940 Act, and the rules and regulations
thereunder, except that each Subadviser shall have liability in connection with
information furnished by the Subadviser to a Fund or to the Adviser.
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(c) CONSISTENT STANDARDS. It is recognized that the Adviser
will perform various investment management and administrative services for
entities other than the Trust and the Funds; in connection with providing such
services, the Adviser agrees to exercise the same skill and care in performing
its services under this Agreement as the Adviser exercises in performing similar
services with respect to the other fiduciary accounts for which the Adviser has
investment responsibilities.
(d) BROKERAGE. The Adviser is authorized, subject to the
supervision of the Trust's Board of Trustees, (1) to establish and maintain
accounts on behalf of each Fund with, and to place orders for the purchase and
sale of assets not allocated to a Subadviser, with or through, such persons,
brokers or dealers ("brokers") as the Adviser may select; and (2) to negotiate
commissions to be paid on such transactions. In the selection of such brokers
and the placing of such orders, the Adviser shall seek to obtain for a Fund the
most favorable price and execution available, except to the extent the Adviser
may be permitted to pay higher brokerage commissions for brokerage and research
services, as provided below. In using its reasonable efforts to obtain for a
Fund the most favorable price and execution available, the Adviser, bearing in
mind the Fund's best interests at all times, shall consider all factors it deems
relevant, including price, the size of the transaction, the nature of the market
for the security, the amount of the commission, if any, the timing of the
transaction, market prices and trends, the reputation, experience and financial
stability of the broker involved, and the quality of service rendered by the
broker in other transactions. Subject to such policies as the Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused a Fund to pay a broker that provides brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange Act of
1934, as amended) to the Adviser an amount of commission for effecting a Fund
investment transaction that is in excess of the amount of commission that
another broker would have charged for effecting that transaction, if, but only
if, the Adviser 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 either that particular transaction or the
overall responsibilities of the Adviser with respect to the accounts as to which
it exercises investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Adviser in connection with the Adviser's services to other
clients. On occasions when the Adviser deems the purchase or sale of a security
to be in the best interests of a Fund as well as other clients of the Adviser,
the Adviser, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of securities so
sold or purchased, as well as the expenses incurred in the transaction, will be
made by the Adviser in the manner the Adviser considers to be the most equitable
and consistent with its fiduciary obligations to each Fund and to such other
clients.
(e) SECURITIES TRANSACTIONS. The Adviser will not purchase
securities or other instruments from or sell securities or other instruments to
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a Fund; PROVIDED, HOWEVER, the Adviser may purchase securities or other
instruments from or sell securities or other instruments to a Fund if such
transaction is permissible under applicable laws and regulations, including,
without limitation, the 1940 Act, the Advisers Act and the rules and regulations
promulgated thereunder or any exemption therefrom.
The Adviser agrees to observe and comply with Rule 17j-1 under
the 1940 Act and the Trust's Code of Ethics, as the same may be amended from
time to time.
(f) BOOKS AND RECORDS. In accordance with the 1940 Act and the
rules and regulations promulgated thereunder, the Adviser shall maintain
separate books and detailed records of all matters pertaining to the Funds and
the Trust (the "Fund's Books and Records"), including, without limitation, a
daily ledger of such assets and liabilities relating thereto and brokerage and
other records of all securities transactions. The Adviser acknowledges that the
Fund's Books and Records are property of the Trust. In addition, the Fund's
Books and Records shall be available to the Trust at any time upon request and
shall be available for telecopying without delay to the Trust during any day
that the Funds are open for business.
3. EXPENSES. During the term of this Agreement, the Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for a Fund. The Adviser shall, at its sole expense, employ or
associate itself with such persons as it believes to be particularly fitted to
assist it in the execution of its duties under this Agreement. The Adviser shall
be responsible for the expenses and costs for the officers of the Trust and the
Trustees of the Trust who are "interested persons" (as defined in the 0000 Xxx)
of the Adviser.
It is understood that the Trust will pay all of its own expenses,
including, without limitation, (1) all charges and expenses of any custodian or
depository appointed by the Trust for the safekeeping of its cash, securities
and other assets, (2) all charges and expenses paid to an administrator
appointed by the Trust to provide administrative or compliance services, (3) the
charges and expenses of any transfer agents and registrars appointed by the
Trust, (4) the charges and expenses of independent certified public accountants
and of general ledger accounting and internal reporting services for the Trust,
(5) the charges and expenses of dividend and capital gain distributions, (6) the
compensation and expenses of Trustees of the Trust who are not "interested
persons" of the Adviser, (7) brokerage commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to which the
Trust is a party, (8) all taxes and fees payable by the Trust to Federal, State
or other governmental agencies, (9) the cost of stock certificates representing
shares of the Trust, (10) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses and reports to
shareholders, (11) charges and expenses of legal counsel for the Trust in
connection with legal matters relating to the Trust, including without
limitation, legal services rendered in connection with the Trust's existence,
financial structure and relations with its shareholders, (12) insurance and
bonding premiums, (13) association membership dues, (14) bookkeeping and the
costs of calculating the net asset value of shares of the Trust's Funds, and
(15) expenses relating to the issuance, registration and qualification of the
Trust's shares.
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4. COMPENSATION. For the services provided and the expenses
assumed with respect to a Fund pursuant to this Agreement, the Adviser will be
entitled to the fee listed for each Fund on Exhibit A. Such fees will be
computed daily and payable monthly at an annual rate based on a Fund's average
daily net assets.
The method of determining net assets of a Fund for purposes hereof
shall be the same as the method of determining net assets for purposes of
establishing the offering and redemption price of the Shares as described in
each Fund's Prospectus. If this Agreement shall be effective for only a portion
of a month, the aforesaid fee shall be prorated for the portion of such month
during which this Agreement is in effect.
Notwithstanding any other provision of this Agreement, the Adviser may
from time to time agree not to impose all or a portion of its fee otherwise
payable hereunder (in advance of the time such fee or portion thereof would
otherwise accrue). Any such fee reduction may be discontinued or modified by the
Adviser at any time.
5. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser
represents and warrants to the Trust as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser is a business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware with the
power to own and possess its assets and carry on its business as it is now being
conducted;
(c) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly authorized by
all necessary action on the part of its shareholders and/or trustees, and no
action by or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Adviser for the execution, delivery and
performance by the Adviser of this Agreement, and the execution, delivery and
performance by the Adviser of this Agreement do not contravene or constitute a
default under (i) any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Adviser;
(d) The Form ADV of the Adviser provided to the Trust is a
true and complete copy of the form, including that part or parts of the Form ADV
filed with the SEC, that part or parts maintained in the records of the Adviser,
and/or that part or parts provided or offered to clients, in each case as
required under the Advisers Act and rules thereunder, and the information
contained in such Form ADV is accurate and complete in all material respects and
does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made by the Adviser pursuant to
Section 5 shall survive for the duration of this Agreement and the parties
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hereto shall promptly notify each other in writing upon becoming aware that any
of the foregoing representations and warranties are no longer true.
7. LIABILITY AND INDEMNIFICATION.
(a) LIABILITY. In the absence of willful misfeasance, bad
faith or gross negligence on the part of the Adviser or a reckless disregard of
its duties hereunder, the Adviser shall not be subject to any liability to a
Fund or the Trust, for any act or omission in the case of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of Fund assets; PROVIDED, HOWEVER, that nothing herein
shall relieve the Adviser from any of its obligations under applicable law,
including, without limitation, the federal and state securities laws.
(b) INDEMNIFICATION. The Adviser shall indemnify the Trust and
its officers and trustees, for any liability and expenses, including attorneys
fees, which may be sustained as a result of the Adviser's willful misfeasance,
bad faith, gross negligence, reckless disregard of its duties hereunder or
violation of applicable law, including, without limitation, the federal and
state securities laws.
8. DURATION AND TERMINATION.
(a) DURATION. Unless sooner terminated, this Agreement shall
continue until February 27, 2006 with respect to any Fund covered by this
Agreement initially and, for any Fund subsequently added to this Agreement, an
initial period of no more than two years that terminates on the second February
27th that occurs following the effective date of this Agreement with respect to
such Fund, and thereafter shall continue automatically for successive annual
periods with respect to each of the Funds; PROVIDED that such continuance is
specifically approved at least annually by the Trust's Board of Trustees or the
vote of the lesser of (a) 67% of the shares of a Fund represented at a meeting
if holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund;
PROVIDED FURTHER that in either event its continuance also is approved by a
majority of the Trust's Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval.
(b) TERMINATION. Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be terminated at any time, without
payment of any penalty by vote of a majority of the Trust's Board of Trustees,
or, with respect to a Fund, by "vote of a majority of the outstanding voting
securities" (as defined in the 0000 Xxx) of that Fund, or by the Adviser, in
each case, upon not less than sixty (60) days' written notice to the other
party.
This Agreement shall not be assigned (as such term is defined in the
0000 Xxx) and shall terminate automatically in the event of its assignment.
9. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. It is understood that the action taken by the Adviser
under this Agreement may differ from the advice given or the timing or nature of
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action taken with respect to other clients of the Adviser, and that a
transaction in a specific security may not be accomplished for all clients of
the Adviser at the same time or at the same price.
10. AMENDMENT. This Agreement may be amended by mutual consent of
the parties, provided that the terms of each such amendment shall be in writing
and approved by the Trust's Board of trustees or by a vote of a majority of the
outstanding voting securities of a Fund (as required by the 1940 Act).
11. CONFIDENTIALITY. Subject to the duties of the Adviser and the
Trust to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to a Fund and the Trust and the actions
of the Adviser and the Funds in respect thereof.
12. NOTICE. Any notice that is required to be given by the parties
to each other under the terms of this Agreement shall be in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Adviser:
Gartmore Xxxxxx Capital Management, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department.
Facsimile: (000) 000-0000
(b) If to the Trust:
Gartmore Mutual Funds
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department.
Facsimile: (000) 000-0000
13. JURISDICTION. This Agreement shall be governed by and
construed to be in accordance with substantive laws of the State of Delaware
without reference to choice of law principles thereof and in accordance with the
1940 Act. In the case of any conflict, the 1940 Act shall control.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
15. CERTAIN DEFINITIONS. For the purposes of this Agreement,
"interested person," "affiliated person," "assignment" shall have their
respective meanings as set forth in the 1940 Act, subject, however, to such
exemptions as may be granted by the SEC.
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16. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
17. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
18. GARTMORE MUTUAL FUNDS AND ITS TRUSTEES. The terms "Gartmore
Mutual Funds" and the "Trustees of Gartmore Mutual Funds" refer respectively to
the Trust created and the Trustees, as trustees but not individually or
personally, acting from time to time under an Agreement and Declaration of Trust
made and dated as of September 30, 2004, as has been or may be amended and/or
restated from time to time, and to which reference is hereby made.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
ADVISER:
GARTMORE XXXXXX CAPITAL MANAGEMENT, INC.
By: /S/XXXX XXXXXX
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Name: XXXX XXXXXX
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Title: SVP
---------------------------------
TRUST:
GARTMORE MUTUAL FUNDS
By: /S/XXXXX XXXXXXXXX
------------------------------------
Name: XXXXX XXXXXXXXX
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Title: ASSISTANT SECRETARY
---------------------------------
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EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN GARTMORE MUTUAL FUNDS
AND GARTMORE XXXXXX CAPITAL MANAGEMENT, INC.
EFFECTIVE FEBRUARY 28, 2005
FUNDS OF THE TRUST ADVISORY FEES (APPLICABLE FOR EACH FUND)
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Gartmore Short Duration Bond Fund 0.35% on assets up to $500 million*
(formerly Xxxxxx Capital Accumulation Fund) 0.34% on assets of $500 million and more but less than $1 billion
0.325% on assets of $1 billion and more but less than $3 billion
0.30% on assets of $3 billion and more but less than $5 billion
0.285% on assets of $5 billion and more but less than $10 billion
0.275% for assets of $10 billion and more
Gartmore Xxxxxx Enhanced Income Fund 0.35% on assets up to $500 million
(formerly Xxxxxx Enhanced Income Fund) 0.34% on assets of $500 million and more but less than $1 billion
0.325% on assets of $1 billion and more but less than $3 billion
0.30% on assets of $3 billion and more but less than $5 billion
0.285% on assets of $5 billion and more but less than $10 billion
0.275% for assets of $10 billion and more
ADVISER:
GARTMORE XXXXXX CAPITAL MANAGEMENT, INC.
By: /S/XXXX XXXXXX
------------------------------------
Name: XXXX XXXXXX
----------------------------------
Title: SVP
---------------------------------
TRUST:
GARTMORE MUTUAL FUNDS
By: /S/XXXXX XXXXXXXXX
------------------------------------
Name: XXXXX XXXXXXXXX
----------------------------------
Title: ASSISTANT SECRETARY
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* Effective until at least February 27, 2006, the Adviser has agreed to cap its
Advisory Fee at 0.25%.
