XXXXXX FUNDS
SUB MANAGEMENT CONTRACT
This Sub Management Contract is dated as of February 27, 2014
between XXXXXX INVESTMENT MANAGEMENT, LLC, a Delaware limited liability
company (the Manager ) and XXXXXX INVESTMENTS LIMITED, a company
organized under the laws of England and Wales (the Sub Manager ).
WHEREAS, the Manager is the investment manager of each of the
investment companies registered under the United States Investment
Company Act of 1940, as amended, that are identified on Schedule A
hereto, as it may from time to time be amended by the Manager (the Funds
), and a registered investment adviser under the United States Investment
Advisers Act of 1940, as amended;
WHEREAS, the Sub Manager is licensed as an investment manager by
the Financial Conduct Authority of the United Kingdom (the FCA ); and
WHEREAS, the Manager desires to engage the Sub Manager from time to
time to manage a portion of certain of the Funds:
NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY SUB MANAGER.
(a) The Sub Manager, at its expense, will furnish continuously an
investment program for that portion of any Fund the management of which
is allocated from time to time by the Manager to the Sub Manager (an
Allocated Sleeve ). The Manager shall, in its sole discretion, determine
which Funds will have an Allocated Sleeve and the amount of assets
allocated from time to time to each such Allocated Sleeve; provided that,
with respect to any Fund, the Trustees of such Fund must have approved
the use of the Sub Manager prior to the creation of an Allocated Sleeve
for such Fund. The Sub Manager will determine what investments shall be
purchased, held, sold or exchanged by any Allocated Sleeve and what
portion, if any, of the assets of the Allocated Sleeve shall be held
uninvested and shall, on behalf of the Fund, make changes in the Fund s
investments held in such Allocated Sleeve.
(b) The Manager may also, at its discretion, request the Sub
Manager to provide assistance with purchasing and selling securities for
any Fund, including the placement of orders with broker dealers selected
in accordance with Section 1(d), even if the Manager has not established
an Allocated Sleeve for such Fund.
(c) The Sub Manager at its expense will furnish all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties faithfully.
(d) The Sub Manager shall place all orders for the purchase and
sale of portfolio investments for any Allocated Sleeve with brokers or
dealers selected by the Sub Manager. In the selection of such brokers or
dealers and the placing of such orders, the Sub Manager shall use its
best efforts to obtain for the related Fund the most favorable price and
execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain for the Fund the
most favorable price and execution available, the Sub Manager, bearing in
mind the Fund 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. Subject to such policies as the
Trustees of the Funds may determine, the Sub Manager shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Contract or otherwise solely by reason of its having caused a Fund to pay
a broker or dealer that provides brokerage and research services to the
Manager or the Sub Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Sub Manager determines in good faith that such amount
of 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 its overall responsibilities
with respect to the Fund and to other clients of the Manager or the Sub
Manager as to which the Manager or the Sub Manager exercises investment
discretion. The Sub Manager agrees that in connection with purchases or
sales of portfolio investments for any Fund, neither the Sub Manager nor
any officer, director, employee or agent of the Sub Manager shall act as
a principal or receive any commission other than as provided in Section
3.
(e) The Sub Manager shall not be obligated to pay any expenses of
or for the Manager or any Fund not expressly assumed by the Sub Manager
pursuant to this Section 1.
(f) In the performance of its duties, the Sub Manager will comply
with the provisions of the Agreement and Declaration of Trust and By Laws
of each applicable Fund and such Fund s stated investment objectives,
policies and restrictions, and will use its best efforts to safeguard and
promote the welfare of such Fund and to comply with other policies which
the Manager or the Trustees may from time to time determine and shall
exercise the same care and diligence expected of the Manager.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers
and employees of a Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, the Sub Manager, and in any
person controlled by or under common control with the Sub Manager, and
that the Sub Manager and any person controlled by or under common control
with the Sub Manager may have an interest in such Fund. It is also
understood that the Sub Manager and any person controlled by or under
common control with the Sub Manager have and may have advisory,
management, service or other contracts with other organizations and
persons, and may have other interests and business.
3. COMPENSATION.
Except as provided below, the Manager will pay to the Sub Manager
as compensation for the Sub Manager s services rendered, a fee, computed
and paid quarterly at the annual rate of 0.35% per annum of average
aggregate net asset value of the assets in equity and asset allocation
Allocated Sleeves and 0.40% per annum of average aggregate net asset
value of the assets in fixed income Allocated Sleeves, except for fixed
income Allocated Sleeves in certain fixed income Funds enumerated as
follows (with the per annum fee provided in parentheses): Xxxxxx Money
Market Liquidity Fund (0.20%), Xxxxxx Short Term Investment Fund (0.20%),
Xxxxxx Money Market Fund (0.25%), Xxxxxx Tax Exempt Money Market Fund
(0.25%), Xxxxxx VT Money Market Fund (0.25%), Xxxxxx Short Duration
Income Fund (0.25%), Xxxxxx Short Term Municipal Income Fund (0.25%),
Xxxxxx American Government Income Fund (0.25%), Xxxxxx Income Fund
(0.25%), Xxxxxx U.S. Government Income Trust (0.25%), Xxxxxx VT American
Government Income Fund (0.25%), and Xxxxxx VT Income Fund (0.25%).
Such average net asset value shall be determined by taking an
average of all of the determinations of such net asset value during a
quarter at the close of business on each business day during such quarter
while this Contract is in effect. Such fee shall be payable for each
quarter within 30 days after the close of such quarter. The Sub Manager
shall look only to the Manager for payment of its fees. No Fund shall
have any responsibility for paying any fees due the Sub Manager.
With respect to each of Xxxxxx High Income Securities Fund, Xxxxxx
Master Intermediate Income Trust and Xxxxxx Premier Income Trust, the
Manager will pay to the Sub Manager as compensation for the Sub Manager s
services rendered, a fee, computed and paid quarterly at the annual rate
of 0.40% of Average Weekly Assets in Allocated Sleeves. Average Weekly
Assets means the average of the weekly determinations of the difference
between the total assets of the Fund (including any assets attributable
to leverage for investment purposes) attributable to an Allocated Sleeve
and the total liabilities of the Fund (excluding liabilities incurred in
connection with leverage for investment purposes) attributable to such
Allocated Sleeve, determined at the close of the last business day of
each week, for each week which ends during the quarter. Such fee shall be
payable for each quarter within 30 days after the close of such quarter.
As used in this Section 3, leverage for investment purposes means any
incurrence of indebtedness the proceeds of which are to be invested in
accordance with the Fund s investment objective. For purposes of
calculating Average Weekly Assets, liabilities associated with any
instruments or transactions used to leverage the Fund s portfolio for
investment purposes (whether or not such instruments or transactions are
covered within the meaning of the Investment Company Act of 1940 and the
rules and regulations thereunder, giving effect to any interpretations of
the Securities and Exchange Commission and its staff) are not considered
liabilities. For purposes of calculating Average Weekly Assets, the total
assets of the Fund will be deemed to include (a) any proceeds from the
sale or transfer of an asset (the Underlying Asset ) of the Fund to a
counterparty in a reverse repurchase or dollar roll transaction and (b)
the value of such Underlying Asset as of the relevant measuring date.
In the event that the Manager s management fee from any of Xxxxxx
High Income Securities Fund, Xxxxxx Master Intermediate Income Trust or
Xxxxxx Premier Income Trust is reduced pursuant to the investment
management contract between such Fund and the Manager because during any
Measurement Period (as defined below) the amount of interest payments and
fees with respect to indebtedness or other obligation of the Fund
incurred for investment leverage purposes, plus additional expenses
attributable to any such leverage for investment purposes, exceeds the
portion of the Fund s net income and net short term capital gains (but
not long term capital gains) accruing during such Measurement Period as a
result of the fact that such indebtedness or other obligation was
outstanding during the Measurement Period, the fee payable to the Sub
Manager with respect to such Fund shall be reduced in the same proportion
as the fee paid to the Manager with respect to such Fund is so reduced.
Measurement Period shall be any period for which payments of interest or
fees (whether designated as such or implied) are payable in connection
with any indebtedness or other obligation of the Fund incurred for
investment purposes.
If the Sub Manager shall serve for less than the whole of a
quarter, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate without the payment of
any penalty, in the event of its assignment; and this Contract shall not
be amended with respect to any Allocated Sleeve unless such amendment be
approved at a meeting by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Trustees of
the related Fund who are not interested persons of such Fund or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as
follows:
(a) Either party hereto or, with respect to any Allocated Sleeve,
the related Fund may at any time terminate this Contract by not more than
sixty days nor less than thirty days written notice delivered or mailed
by registered mail, postage prepaid, to the other party, or
(b) With respect to any Allocated Sleeve, if (i) the Trustees of
the related Fund or the shareholders by the affirmative vote of a
majority of the outstanding shares of such Fund, and (ii) a majority of
the Trustees of such Fund who are not interested persons of such Fund or
of the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Contract, then this Contract shall
automatically terminate at the close of business on the anniversary of
its execution, or upon the expiration of one year from the effective date
of the last such continuance, whichever is later, or
(c) With respect to any Allocated Sleeve, automatically upon
termination of the Manager s investment management contract with the
related Fund.
Action by a Fund under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority
of the outstanding shares of such Fund.
Termination of this Contract pursuant to this Section 5 will be
without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the affirmative vote of a
majority of the outstanding shares of a Fund means the affirmative vote,
at a duly called and held meeting of shareholders of such Fund, (a) of
the holders of 67% or more of the shares of such Fund 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 such Fund 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 such Fund entitled to vote at such
meeting, whichever is less.
For the purposes of this Contract, the terms affiliated person,
control, interested person and assignment shall have their
respective meanings defined in the United States Investment Company Act
of 1940 and the Rules and Regulations thereunder (the 1940 Act ),
subject, however, to such exemptions as may be granted by the Securities
and Exchange Commission under said Act; the term specifically approve at
least annually shall be construed in a manner consistent with the 1940
Act, and the Rules and Regulations thereunder; and the term brokerage
and research services shall have the meaning given in the United States
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NON LIABILITY OF SUB MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Sub Manager, or reckless disregard of its
obligations and duties hereunder, the Sub Manager shall not be subject to
any liability to the Manager, any Fund or to any shareholder of any Fund,
for any act or omission in the course of, or connected with, rendering
services hereunder.
8. ADDITIONAL PROVISIONS.
(a) The Sub Manager represents that it is regulated by the FCA in
the conduct of its investment business. The Sub Manager has in operation
a written procedure in accordance with FCA rules for the effective
consideration and proper handling of complaints from customers. Any
complaint by the Manager or any Fund should be sent to the Compliance
Officer of the Sub Manager. The Manager and any Fund is also entitled to
make any complaints about the Sub Manager to the Financial Ombudsman
Service established by the FCA. The Manager and any Fund may also request
a statement describing its rights to compensation in the event of the Sub
Manager s inability to meet its liabilities.
(b) The Manager represents that it and each Fund are Professional
Customers in the meaning of the FCA s rules.
(c) Although each Fund is not a party hereto and shall have no
responsibility for the Manager s or the Sub Manager s obligations
hereunder, each Fund is named as explicit third party beneficiary of the
parties agreements hereunder.
IN WITNESS WHEREOF, XXXXXX INVESTMENTS LIMITED and XXXXXX
INVESTMENT MANAGEMENT, LLC have each caused this instrument to be
signed in duplicate on its behalf by an officer duly authorized, all
as of the day and year first above written.
XXXXXX INVESTMENTS LIMITED
By:
_/s/ Simon Davis________
Xxxxx Xxxxx
XXXXXX INVESTMENT MANAGEMENT, LLC
By:
/s/ Xxxxx X. Xxxxxx ____________
Xxxxx X. Xxxxxx
Director of Trustee Relations and
Authorized Person
Schedule A
Xxxxxx Absolute Return 100 Fund
Xxxxxx Absolute Return 300 Fund
Xxxxxx Absolute Return 500 Fund
Xxxxxx Absolute Return 700 Fund
Xxxxxx American Government Income Fund
Xxxxxx AMT Free Municipal Fund
Xxxxxx Arizona Tax Exempt Income Fund
Xxxxxx Asia Pacific Equity Fund
Xxxxxx California Tax Exempt Income Fund
Xxxxxx Capital Spectrum Fund
Xxxxxx Capital Opportunities Fund
Xxxxxx Convertible Securities Fund
Xxxxxx Diversified Income Trust
Xxxxxx Dynamic Asset Allocation Balanced Fund
Xxxxxx Dynamic Asset Allocation Conservative Fund
Xxxxxx Dynamic Asset Allocation Equity Fund
Xxxxxx Dynamic Asset Allocation Growth Fund
Xxxxxx Dynamic Risk Allocation Fund
Xxxxxx Equity Income Fund
Xxxxxx Emerging Markets Equity Fund
Xxxxxx Emerging Markets Income Fund
Xxxxxx Europe Equity Fund
Xxxxxx Equity Spectrum Fund
Xxxxxx Floating Rate Income Fund
The Xxxxxx Xxxxxx Fund of Boston d/b/a Xxxxxx Xxxxxx Balanced Fund
Xxxxxx Global Consumer Fund
Xxxxxx Global Dividend Fund
Xxxxxx Global Energy Fund
Xxxxxx Global Equity Fund
Xxxxxx Global Financials Fund
Xxxxxx Global Health Care Fund
Xxxxxx Global Income Trust
Xxxxxx Global Industrials Fund
Xxxxxx Global Natural Resources Fund
Xxxxxx Global Sector Fund
Xxxxxx Global Technology Fund
Xxxxxx Global Telecommunications Fund
Xxxxxx Global Utilities Fund
The Xxxxxx Fund for Growth and Income
Xxxxxx Growth Opportunities Fund
Xxxxxx High Income Securities Fund
Xxxxxx High Yield Advantage Fund
Xxxxxx High Yield Trust
Xxxxxx Income Fund
Xxxxxx Intermediate Term Municipal Income Fund
Xxxxxx International Capital Opportunities Fund
Xxxxxx International Equity Fund
Xxxxxx International Value Fund
Xxxxxx International Growth Fund
Xxxxxx Investors Fund
Xxxxxx Low Volatility Equity Fund
Xxxxxx Managed Municipal Income Trust
Xxxxxx Massachusetts Tax Exempt Income Fund
Xxxxxx Master Intermediate Income Trust
Xxxxxx Michigan Tax Exempt Income Fund
Xxxxxx Minnesota Tax Exempt Income Fund
Xxxxxx Money Market Fund
Xxxxxx Money Market Liquidity Fund
Xxxxxx Mortgage Recovery Fund
Xxxxxx Multi Cap Core Fund
Xxxxxx Multi Cap Growth Fund
Xxxxxx Multi Cap Value Fund
Xxxxxx Municipal Opportunities Trust
Xxxxxx New Jersey Tax Exempt Income Fund
Xxxxxx New York Tax Exempt Income Fund
Xxxxxx Ohio Tax Exempt Income Fund
Xxxxxx Pennsylvania Tax Exempt Income Fund
Xxxxxx Premier Income Trust
Xxxxxx Research Fund
Xxxxxx Retirement Income Fund Lifestyle 1
Xxxxxx Retirement Income Fund Lifestyle 2
Xxxxxx Retirement Income Fund Lifestyle 3
Xxxxxx RetirementReady 2055 Fund
Xxxxxx RetirementReady 2050 Fund
Xxxxxx RetirementReady 2045 Fund
Xxxxxx RetirementReady 2040 Fund
Xxxxxx RetirementReady 2035 Fund
Xxxxxx RetirementReady 2030 Fund
Xxxxxx RetirementReady 2025 Fund
Xxxxxx RetirementReady 2020 Fund
Xxxxxx RetirementReady 2015 Fund
Xxxxxx Short Duration Income Fund (effective March 7, 2014)
Xxxxxx Short Term Investment Fund
Xxxxxx Short Term Municipal Income Fund
Xxxxxx Small Cap Growth Fund
Xxxxxx Small Cap Value Fund
Xxxxxx Strategic Volatility Equity Fund
Xxxxxx Tax Exempt Income Fund
Xxxxxx Tax Exempt Money Market Fund
Xxxxxx Tax Free High Yield Fund
Xxxxxx U.S. Government Income Trust
Xxxxxx Voyager Fund
Xxxxxx VT Absolute Return 500 Fund
Xxxxxx VT American Government Income Fund
Xxxxxx VT Capital Opportunities Fund
Xxxxxx VT Diversified Income Fund
Xxxxxx VT Equity Income Fund
Xxxxxx VT Xxxxxx Xxxxxx Balanced Fund
Xxxxxx VT Global Asset Allocation Fund
Xxxxxx VT Global Equity Fund
Xxxxxx VT Global Health Care Fund
Xxxxxx VT Global Utilities Fund
Xxxxxx VT Growth and Income Fund
Xxxxxx VT Growth Opportunities Fund
Xxxxxx VT High Yield Fund
Xxxxxx VT Income Fund
Xxxxxx VT International Equity Fund
Xxxxxx VT International Value Fund
Xxxxxx VT International Growth Fund
Xxxxxx VT Investors Fund
Xxxxxx VT Money Market Fund
Xxxxxx VT Multi Cap Growth Fund
Xxxxxx VT Multi Cap Value Fund
Xxxxxx VT Research Fund
Xxxxxx VT Small Cap Value Fund
Xxxxxx VT Voyager Fund
XXXXXX INVESTMENTS LIMITED
By:
___/s/ Xxxxx Xxxxx __________
Xxxxx Xxxxx
XXXXXX INVESTMENT MANAGEMENT, LLC
By:
/s/ Xxxxx X. Xxxxxx __________
Xxxxx X. Xxxxxx
Director of Trustee Relations and
Authorized Person
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Schedule A
(continued)
A-3
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A-1
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