EXHIBIT 99.23(d)(7)
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
NATIONS FUNDS TRUST
THIS AGREEMENT is made as of May 17, 2002, by and between BANC OF
AMERICA ADVISORS, LLC, a North Carolina corporation (the "Adviser"), GARTMORE
GLOBAL PARTNERS, a Delaware general partnership (the "Sub-Adviser"), and NATIONS
FUNDS TRUST, a Delaware business trust (the "Trust"), on behalf of those series
of the Trust now or hereafter identified on Schedule I (each a "Fund" and
collectively, the "Funds").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered with the Commission as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act");
WHEREAS, the Sub-Adviser is also registered with the Commission as an
investment adviser under the Advisers Act and is regulated by the Investment
Management Regulatory Organization Limited ("IMRO") of the United Kingdom in the
conduct of its investment business and is a member of IMRO;
WHEREAS, the Adviser and the Trust have entered into an investment
advisory agreement (the "Investment Advisory Agreement"), pursuant to which the
Adviser manages the investment operations of each Fund and may delegate certain
duties of the Adviser to one or more investment sub-adviser(s); and
WHEREAS, the Adviser, with the approval of the Board of Trustees of the
Trust (the "Board"), including a majority of the Trustees who are not
"interested persons" (defined herein) of any party to this Agreement, desires to
delegate to the Sub-Adviser the duty to manage the portfolio investments of the
Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment of Sub-Adviser. The Adviser hereby appoints the Sub-Adviser
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and the Sub-Adviser hereby agrees to manage the portfolio investments of each
Fund subject to the terms of this Agreement and subject to the supervision of
the Adviser and the Board.
2. Services of Sub-Adviser. The Sub-Adviser shall perform all services
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necessary for the management of the portfolio investments of each Fund,
including but not limited to:
(a) Managing the investment and reinvestment of all assets, now or
hereafter acquired by each Fund, including determining what
securities and other investments are to be purchased or sold for
each Fund and executing transactions accordingly;
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(b) Transmitting trades to each Fund's custodian for settlement in
accordance with each Fund's procedures and as may be directed by
the Trust;
(c) Assisting in the preparation of all shareholder communications,
including shareholder reports, and participating in shareholder
relations, as reasonably requested by the Adviser or the Trust;
(d) Making recommendations, or making determinations under authority
delegated by the Adviser or the Trust, as to the manner in which
voting rights, rights to consent to Fund action and any other
rights pertaining to each Fund's portfolio securities shall be
exercised;
(e) Making recommendations to the Adviser and the Board with respect
to Fund investment policies and procedures, and carrying out such
investment policies and procedures as are approved by the Board
or by the Adviser under authority delegated by the Board to the
Adviser;
(f) Supplying reports, evaluations, analyses, statistical data and
information to the Adviser, the Board or to the Funds' officers
and other service providers as the Adviser or the Board may
reasonably request from time to time or as may be necessary or
appropriate for the operation of the Trust as an open-end
investment company or as necessary to comply with Section 3(a) of
this Agreement;
(g) Maintaining all books and records as are required to comply with
Section 3(a) of this Agreement with respect to the investment
decisions and securities transactions for each Fund;
(h) Furnishing any and all other services, upon reasonable request
and subject to review by the Board, that the Adviser from time to
time determines to be necessary or useful to perform its
obligations under the Investment Advisory Agreement or as the
Board may reasonably request from time to time.
3. Responsibilities of Sub-Adviser. In carrying out its obligations under
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this Agreement, the Sub-Adviser agrees that it will:
(a) Comply with all applicable law, including but not limited to the
1940 Act and the Advisers Act, the rules and regulations of the
Commission thereunder, the conditions of any order affecting the
Trust or a Master Portfolio issued thereunder of which it
receives written notice from the Adviser or the Trust, and the
Conduct of Business Rules of IMRO ("IMRO Rules") to the extent
that the IMRO Rules are not inconsistent with any applicable
requirements under the 1940 Act, the Advisers Act, other United
States federal or state law, or the terms of this Agreement;
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(b) Use the same skill and care in providing such services as it uses
in providing services to other fiduciary accounts for which it
has investment responsibilities;
(c) Not make loans to any person for the purpose of purchasing or
carrying Fund shares;
(d) Place, or arrange for the placement of, all orders pursuant to
its investment determinations for the Funds either directly with
the issuer or with any broker or dealer (including any affiliated
broker or dealer). In executing portfolio transactions and
selecting brokers or dealers, the Sub-Adviser will use its best
efforts to seek on behalf of each Fund the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it
deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Sub-Adviser may also
consider whether such broker or dealer furnishes research and
other information or services to the Sub-Adviser; and
(e) Adhere to the investment objective, strategies and policies and
procedures of the Trust adopted on behalf of each Fund.
4. Confidentiality of Information. Each party agrees that it will treat
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confidentially all information provided by another party regarding such other
party's business and operations, including without limitation the investment
activities or holdings of a Fund. All confidential information provided by a
party hereto shall not be disclosed to any unaffiliated third party without the
prior consent of the providing party. The foregoing shall not apply to any
information that is public when provided or thereafter becomes public or which
is required to be disclosed by any regulatory authority in the lawful and
appropriate exercise of its jurisdiction over a party, by any auditor of the
parties hereto, by judicial or administrative process or otherwise by applicable
law or regulation.
5. Services Not Exclusive. The services furnished by the Sub-Adviser
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hereunder are deemed not to be exclusive, and the Sub-Adviser shall be free to
furnish similar services to others so long as its provision of services under
this Agreement is not impaired thereby. To the extent that the purchase or sale
of securities or other investments of the same issuer may be deemed by the
Sub-Adviser to be suitable for two or more accounts managed by the Sub-Adviser,
the available securities or investments may be allocated in a manner believed by
the Sub-Adviser to be equitable to each account. It is recognized that in some
cases this procedure may adversely affect the price paid or received by a Fund
or the size of the position obtainable for or disposed of by a Fund.
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6. Delivery of Documents. The Trust will provide the Sub-Adviser with
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copies, properly certified or authenticated, of each of the following:
(a) the Trust's Agreement and Declaration of Trust (such Agreement
and Declaration of Trust, as presently in effect and as from time
to time amended, is herein called the "Declaration of Trust");
(b) the Trust's Bylaws, if any;
(c) the most recent prospectus(es) and statement(s) of additional
information relating to each Fund (such prospectus(es) together
with the related statement(s) of additional information, as
presently in effect and all amendments and supplements thereto,
are herein called the "Prospectus"); and
(d) any and all applicable policies and procedures approved by the
Board.
The Trust will promptly furnish the Sub-Adviser with copies of any and all
amendments of or additions or supplements to the foregoing.
7. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, the Sub-Adviser hereby agrees that all records that it
maintains for each Fund under this Agreement are the property of the Trust and
further agrees to surrender promptly to the Trust or the Adviser any of such
records upon request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act. However, nothing in this clause
shall be interpreted to provide the Adviser, the Trust, or the Funds with any
property right in any software owned or developed by the Sub-Adviser to maintain
such records. Upon surrendering such records, the Sub-Adviser may retain copies
of any such records necessary to meet regulatory or legal requirements.
8. Expenses of the Funds. Except to the extent expressly assumed by the
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Sub-Adviser and except to any extent required by law to be paid or reimbursed by
the Sub-Adviser, the Sub-Adviser shall have no duty to pay any ordinary
operating expenses incurred in the organization and operation of the Funds.
Ordinary operating expenses include, but are not limited to, brokerage
commissions and other transaction charges, taxes, legal, auditing, printing, or
governmental fees, other Fund service providers' fees and expenses, expenses of
issue, sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, expenses relating to Board and shareholder meetings,
and the cost of preparing and distributing reports and notices to shareholders.
The Sub-Adviser shall pay all other expenses incurred by it in connection with
its services under this Agreement.
9. Compensation. Except as otherwise provided herein, for the services
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provided to each Fund and the expenses assumed pursuant to this Agreement, the
Adviser will pay the Sub-Adviser and the Sub-Adviser will accept as full
compensation therefor a fee determined in accordance with Schedule I attached
hereto. It is understood that the Adviser shall be solely
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responsible for compensating the Sub-Adviser for performing any of the duties
delegated to the Sub-Adviser and the Sub-Adviser agrees that it shall have no
claim against the Trust or any Fund with respect to compensation under this
Agreement. To the extent that the advisory fee the Adviser receives pursuant to
the Investment Advisory Agreement with respect to a Fund is reduced or
reimbursed, and there is no corresponding increase in another fee received by
the Adviser from the Fund, the fee that the Sub-Adviser would otherwise receive
pursuant to this Agreement shall be reduced or reimbursed proportionately. The
parties agree that an increase in another fee that is attributable to an
enhancement in non-advisory services provided to a Fund shall not be deemed to
correspond to a reduction or reimbursement of fees received under the Investment
Advisory Agreement.
10. Liability of Sub-Adviser. The Sub-Adviser shall not be liable for any
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error of judgment or mistake of law or for any loss suffered by the Adviser or
the Trust in connection with the performance of its duties under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services, from willful misfeasance, bad faith or
negligence on the part of the Sub-Adviser or any of its officers, directors,
employees or agents, in connection with the performance of their duties under
this Agreement, from reckless disregard by it or its officers, directors,
employees or agents of any of their obligations and duties under this Agreement,
or from any violations of securities laws, rules, regulations, statutes and
codes, whether federal or state, by the Sub-Adviser or any of its officers,
directors, employees or agents.
11. Indemnification. The Sub-Adviser shall indemnify and hold harmless the
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Funds and the Adviser from and against any and all direct or indirect claims,
losses, liabilities or damages (including reasonable attorney's fees and other
related expenses) resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services, from willful misfeasance, bad faith or
negligence on the part of the Sub-Adviser or any of its officers, directors,
employees or agents, in connection with the performance of their duties under
this Agreement, from reckless disregard by it or its officers, directors,
employees or agents of any of their obligations and duties under this Agreement,
or resulting from any violations of securities laws, rules, regulations,
statutes and codes, whether federal or state, by the Sub-Adviser or any of its
officers, directors, employees or agents; provided, however, that the
Sub-Adviser shall not be required to indemnify or otherwise hold the Funds or
the Adviser harmless under this Section 11 where the claim against, or the loss,
liability or damage experienced by the Funds or the Adviser, is caused by or is
otherwise directly related to the Funds' or the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard by the Funds
or the Adviser of their duties under this Agreement.
12. Term and Approval. This Agreement will become effective as of the date
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set forth herein above, and shall continue in effect until the second
anniversary of its effective date. This Agreement will become effective with
respect to each additional Fund as of the date set forth on Schedule I when each
such Fund is added thereto. The Agreement shall continue in effect for a Fund
after the second anniversary of the effective date for successive annual periods
ending on each anniversary of such date, provided that the continuation of the
Agreement is specifically approved for the Fund at least annually:
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(a)(i) by the Board or (ii) by the vote of "a majority of the
outstanding voting securities" of the Fund (as defined in
Section 2(a)(42) of the 0000 Xxx); and
(b) by the affirmative vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of a party to this
Agreement (other than as Trustees of the Trust), by votes cast
in person at a meeting specifically called for such purpose.
13. Termination. This Agreement may be terminated without payment of any
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penalty at any time by:
(a) the Trust with respect to a Fund, by vote of the Board or by
vote of a majority of a Fund's outstanding voting securities,
upon sixty (60) days' written notice to the other parties to
this Agreement; or
(b) the Adviser or the Sub-Adviser with respect to a Fund, upon
sixty (60) days' written notice to the other parties to this
Agreement.
Any party entitled to notice may waive the notice provided for herein. This
Agreement shall automatically terminate in the event of its assignment, unless
an order is issued by the Commission conditionally or unconditionally exempting
such assignment from the provisions of Section 15(a) of the 1940 Act, in which
event this Agreement shall remain in full force and effect subject to the terms
of such order. For the purposes of this paragraph, the definitions contained in
Section 2(a) of the 1940 Act and the applicable rules under the 1940 Act shall
apply.
14. Code of Ethics. The Sub-Adviser represents that it has adopted a
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written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and will provide the Adviser or the Trust with a copy of such code, any
amendments or supplements thereto and its policies and/or procedures implemented
to ensure compliance therewith.
15. Insurance. The Sub-Adviser shall maintain for the term of this
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Agreement and provide evidence thereof to the Trust or the Adviser a blanket
bond and professional liability (error and omissions) insurance in an amount
reasonably acceptable to Adviser.
16. Representations and Warranties. Each party to this Agreement represents
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and warrants that the execution, delivery and performance of its obligations
under this Agreement are within its powers, have been duly authorized by all
necessary actions and that this Agreement constitutes a legal, valid and binding
obligation enforceable against it in accordance with its terms. The Sub-Adviser
further represents and warrants that it is duly registered as an investment
adviser under the Advisers Act.
17. Amendment of this Agreement. No provision of this Agreement may be
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changed, discharged or terminated except by an instrument in writing signed by
all parties.
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18. Notices. Any notices under this Agreement shall be in writing,
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addressed and delivered or mailed postage paid to such address as may be
designated for the receipt of such notice. Until further notice, it is agreed
that the address of the Trust shall be c/o Stephens Inc., 000 Xxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Secretary, that of the Adviser shall be
Xxx Xxxx xx Xxxxxxx Xxxxx, 00xx Xxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: President and that of the Sub-Adviser shall be
Xxxxxxxx Xxxxx, 0 Xxxxxxxxx Xxxxx, Xxxxxx XX0X 0XX, Xxxxxxx, Attention: Xxxxx
Xxxxxxx (Director), Xxxxxxx Xxxxxx (Chief Investment Officer), and Xxxxx Xxxxxxx
(Relationship Manager). The Sub-Adviser agrees to promptly notify the Adviser
and the Trust in writing of the occurrence of any event which could have a
material impact on the performance of its duties under this Agreement, including
but not limited to (i) the occurrence of any event which could disqualify the
Sub-Adviser from serving as an investment adviser pursuant to Section 9 of the
1940 Act; (ii) any material change in the Sub-Adviser's business activities;
(iii) any event that would constitute a change in control of the Sub-Adviser;
(iv) any change in the portfolio manager or portfolio management team of a Fund;
(v) the existence of any pending or threatened audit, investigation,
examination, complaint or other inquiry (other than routine audits or regulatory
examinations or inspections) relating to any Fund; and (vi) any material
violation of the Sub-Adviser's code of ethics.
19. Release. The names "Nations Funds Trust" and "Trustees of Nations Funds
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Trust" refer respectively to the Trust created by the Declaration of Trust and
the Trustees as Trustees but not individually or personally. All parties hereto
acknowledge and agree that any and all liabilities of the Trust arising,
directly or indirectly, under this Agreement will be satisfied solely out of the
assets of the Trust and that no Trustee, officer or shareholder shall be
personally liable for any such liabilities. All persons dealing with any Fund of
the Trust must look solely to the property belonging to such Fund for the
enforcement of any claims against the Trust.
20. Miscellaneous. This Agreement contains the entire understanding of the
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parties hereto. Each provision of this Agreement is intended to be severable. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
21. Governing Law. This Agreement shall be governed by, and construed in
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accordance with, Delaware law and the federal securities laws, including the
1940 Act and the Advisers Act.
22. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original.
23. Use of the Name "Nations Funds". The Sub-Adviser agrees that it will
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not use the name "Nations Funds", any derivative thereof, or the name of the
Adviser, the Trust or any Master Portfolio except in accordance with such
policies and procedures as may be mutually agreed to in writing.
24. IMRO Rules. Addendum A attached hereto sets forth certain requirements
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under the IMRO Rules which are applicable to the Sub-Adviser, that are expressly
incorporated herein and made a part hereof, but only to the extent that such
requirements are not inconsistent with
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any applicable requirements under the 1940 Act, the Advisers Act, other United
States federal or state law, or the policies and procedures of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
NATIONS FUNDS TRUST
on behalf of the Funds
By:
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A. Xxx Xxxxxx
President and Chairman of
the Board of Trustees
BANC OF AMERICA ADVISORS, LLC
By:
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Xxxxxx X. Xxxxxx
President
GARTMORE GLOBAL PARTNERS
By:
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Xxxxx Xxxxxxx
Director
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SCHEDULE I
The Adviser shall pay the Sub-Adviser, as full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under the Sub-Adviser's
management:
Rate of
Fund Compensation Effective Date
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Nations Emerging Markets Fund 0.66% 5/17/02
Approved: October 10, 2001
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ADDENDUM A
1. To the extent that the Sub-Adviser receives any commissions or other forms
of remuneration, directly or indirectly, in connection with Fund
transactions, no portion of the Sub-Adviser's accrued investment advisory
fee shall be abated thereby.
2. Subject to the supervision of the Adviser and the policies and ultimate
control of the Trust's Board of Trustees, the Sub-Adviser shall advise the
Trust and the Adviser on the management of the Funds' investments in
accordance with the terms of this Agreement and in accordance with the
investment parameters (including, inter alia, percentage limitations,
quality standards, investment selection criteria and types of permissible
investments and investment techniques, such as borrowing, options and
futures transactions, portfolio securities lending, etc.) established
pursuant to the investment objectives, policies and restrictions
specifically embodied in the Trust's Registration Statement on Form N-1A,
and any amendments thereto, under the Securities Act of 1933 and the 1940
Act (the "Fund's Registration Statement").
3. The Sub-Adviser shall not have or maintain custody of any securities, cash
or other assets of the Funds. Custody of the Funds' assets will be
maintained by the custodian bank pursuant to an agreement approved by the
Funds' Board of Trustees. It is expected that such custodian, or any
successor thereto, will not be an "Associate" of the Sub-Adviser as that
term is defined under IMRO Rules.
4. In the event the Funds or the Adviser has a significant complaint regarding
the services provided by the Sub-Adviser under the Sub-Advisory Agreement
by and among the Trust, the Adviser and the Sub-Adviser, a Fund officer
should communicate such complaint to the Sub-Adviser, whereupon such
complaint will be recorded on a standard form prepared by the Sub-Adviser
for such purposes. The Sub-Adviser's complaints procedure requires that if
a complaint has not been cleared within twenty-one (21) days, the
Sub-Adviser must so advise IMRO and the Fund also must be advised that it
has the right to issue its complaint directly to the Investment Ombudsman.
A statement describing the Funds' right to compensation (if any) in the
event that the Sub-Adviser is unable to meet its liabilities is available
on request.
5. The Sub-Adviser will provide to the Funds' Board of Trustees written
financial reports and analyses on the Funds' securities transactions and
the operations of comparable investment companies on a quarterly basis or
more frequently as requested by the Board of Trustees. Such reports and
analyses shall include information as of the last day of an applicable
reporting period.
6. The Funds may from time to time request or instruct the Sub-Adviser,
directly or through the Adviser, to act or not to act regarding certain
Fund-related investment and/or operational matters. Such request or
instructions will be communicated orally or in writing to the Sub-Adviser,
directly or through the Adviser and will be acknowledged in the same manner
in which they are communicated. To the extent that a particular request
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or instruction is, or may be, refused (i.e., because it (a) is in
contravention of (i) a law or regulation, (ii) an investment policy of the
Fund, or (iii) a provision of this Agreement or (b) is not operationally
feasible), such refusal shall be communicated by the Sub-Adviser, including
through the Adviser, and the Fund and the Sub-Adviser, upon advice of
counsel, shall discuss alternatives and determine an appropriate course of
action which will be reported to the full Board at the next meeting of the
Fund's Board of Trustees for its approval.
7. Notwithstanding that all required disclosure concerning the risks
associated with the Funds' permissible investments and investment
techniques is included in the Funds' Registration Statement, which
Statement is intended for review by the investors in the Funds and to be
retained by them for future reference, with respect to the Funds' specified
use of options and futures transactions, the following shall be
specifically noted herein:
"Options and futures markets can be highly volatile and
transactions of this type carry a high risk of loss. Moreover,
a relatively small adverse market movement with respect to
these types of transactions may result not only in loss of the
original investment but also in unquantifiable further loss
exceeding any margin deposited."
Further, in managing the Funds' assets, the Sub-Adviser shall consider
the risks associated with the Fund's permissible investments and
investment techniques.
8. The Sub-Adviser or its representatives may from time to time recommend to
the Funds or effect on behalf of the Funds with respect to Fund
transactions in securities the subject of a recent new issue, the price of
which transactions may have been influenced by bids made or transactions
effected for the purpose of stabilizing the price of those securities. Such
transactions would at all times be effected in accordance with the
provisions of IMRO Rule 14 and, in particular, with the conditions of the
IMRO Rule 14.02, including the requirement that the Sub-Adviser, with
respect to any specific transaction, communicate to the Fund orally or in
writing a statement in a form substantially similar to that which is set
forth in IMRO Rule 14.02(c). In addition, with respect to these
transactions, it is understood when executing this Agreement and thereafter
when approving the continuance of this Agreement in accordance with its
terms, that management of the Fund has carefully read the following
paragraphs in order to enable Fund management to judge whether it wishes a
Fund's assets to be invested at all in such securities or, if so, whether
it wishes to authorize the Sub-Adviser generally to effect transactions in
such securities on behalf of the Fund without further reference to Fund
management or whether Fund management wishes to be consulted before any
particular transaction is effected on behalf of the Fund.
Stabilization is a process whereby the market price of a security is pegged
or fixed during the period in which a new issue of securities is sold to
the public. Stabilization may take place in the new issue or in other
securities related to the new issue in such a way that the price of the
other securities may affect the price of the new issue or vice versa.
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The reason stabilization is permitted is that when a new issue is brought
to market the sudden glut will sometimes force the price lower for a period
of time before buyers are found for the securities on offer.
As long as it obeys a strict set of rules, the "stabilizing manager,"
normally the issuing house chiefly responsible for bringing a new issue to
market, is entitled to buy securities in the market that it has previously
sold to investors or allotted to institutions who were included in the new
issue but who have decided not to continue participating. The effect of
this may be to keep the price at a higher level than would otherwise be the
case during the period of stabilizing.
The rules referred to above in the immediately preceding paragraph limit
the period in which the stabilizing manager may stabilize, fix the price at
which it may stabilize (in the case of shares and warrants but not bonds),
and require the stabilizing manager to disclose that it may be (but not
that it is) stabilizing. The fact that a new issue or a related security is
being stabilized does not in itself mean that investors are not interested
in the issue, but neither should the existence of transactions in an issue
where the stabilizing may take place be relied upon as an indication that
investors are interested in the new issue or interested in purchasing at
the price at which transactions are taking place.
9. A report containing the Funds' financial statements (including the contents
and valuation of the Funds) shall be submitted to shareholders and to the
Securities and Exchange Commission at least semi-annually. Such reports
shall include information as at the last day of any semi-annual period for
which such reports relate. To the extent that any performance information
is included in such report, it shall conform to the standards set forth in
the Funds' Registration Statement.
10. Except as permitted by or pursuant to Section 17 of the 1940 Act and the
Rules promulgated thereunder, the Sub-Adviser, or an "affiliate" thereof
(as that term is defined in the 1940 Act), may not effect transactions: (i)
with or for the Funds in which the Sub-Adviser or such affiliate has
directly or indirectly a material interest or a relationship of any kind
with another party which may involve a conflict with the Sub-Adviser's
responsibilities to the Funds as a sub-investment adviser; or (ii) with or
through the agency or another person with whom the Sub-Adviser or such
affiliate maintains an arrangement as described in Rule 6.01 of Chapter IV
of the IMRO Rules.
11. Upon termination of the Sub-Advisory Agreement by and among the Company,
the Adviser and the Sub-Adviser, unless otherwise directed by the Fund's
Board of Trustees, all securities positions and other portfolio
transactions then in progress shall be transferred to the successor
investment adviser selected by the Board of Trustees. Termination shall be
without prejudice to the completion of transactions already initiated.
12. The Sub-Adviser shall be entitled at its discretion to disclose any
information known to it relating to the Fund's business or affairs to the
Securities and Investment Board or to IMRO on the terms that the
information so disclosed shall not without its consent be
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further disclosed otherwise than is permitted in respect of Restricted
Information under the provisions of Part VIII of the Financial Services Act
of 1986.
13. The Funds and the Adviser agree to waive their right to receive a contract
note for each transaction and agree to waive the right to receive the
information which would have been contained in the contract notes in the
periodic valuation.
14. The initial value and composition of the assets managed by the Sub-Adviser
under this Agreement shall be as agreed.
15. The Sub-Adviser may effect transactions under this Agreement with or
through the agency of a person who provides services under any Soft
Commission Agreement and such transactions will be effected in accordance
with the IMRO Rule of Best Execution disregarding any benefit which might
enure directly or indirectly to the Funds or the Adviser from the services
or benefit provided under any such arrangement. It is the policy of the
Sub-Adviser's group ("Gartmore") to conduct part of its business through
brokers on an agency basis, rather than dealing direct as principal with
market makers, because of the benefits of the services which they provide.
Gartmore uses a number of full service brokers who provide research which
benefits the whole range of Gartmore's clients by contributing to its
investment decision making processes. These services are provided on a no
commitment basis.
Gartmore also uses agency brokers offering soft commission arrangements to
obtain more specialized services which also benefits the full range of our
clients by assisting in our investment decision making processes. Some such
specialized services are also obtained for the benefit of one or more
specific clients.
Services from agency brokers through soft commission arrangements are
obtained in exchange for a commitment from Gartmore to provide them with an
agreed amount of business. Currently, Gartmore has a policy of committing
no more than 25% of its total commission payments to soft commission
arrangements. When Gartmore decides through whom to effect a securities
transaction on our client's behalf and whether to transact the business on
a soft commission basis, Gartmore takes no account of the benefits derived
from the soft commission arrangement and will also provide best execution.
Although some of the services obtained by soft commission arrangements are
also available for cash, Gartmore prefers to obtain them through agency
brokers because this practice results, we believe, in an efficient use of
commission payments and it also helps to minimize the extent to which such
costs need to be defrayed by other means, such as clients' fees.
VAT is generally chargeable on the services received under a soft
commission arrangement but part of the VAT is recoverable from Customs and
Excise. In practice, the agency broker will pay the supplier of the
services provided under the soft commission arrangement for the cost of
those services. As the benefits provided by soft commission
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arrangements must consist only of disclosable softing services and must not
include cash received following the recovery of VAT, Gartmore will pay soft
commission brokers a cash equivalent of the recoverable VAT. The broker
will pay the supplier the full cost of the services (including VAT) and
will charge our soft commission account with the net amount. Gartmore will
recover part of the VAT from Customs and Excise.
This soft commission policy applies on a combined basis to the Gartmore
group as a whole.
Gartmore has entered into soft commission agreements with the following:
Xxxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxxxx & Co Ltd
ABN Amro Equities (UK) Ltd
Credit Suisse First Boston
Deutsche Bank XX
Xxxxxxx Xxxxxx Read
Xxxxxxx X'Xxxxx & Co
Xxxxxxx Xxxxx International
Dresdner Kleinwort Xxxxxx Securities Ltd
Instinet UK Ltd
HSBC Investment Bank PLC
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