INTERNATIONAL EQUITY FUND SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 17th day of January, 2, 12:00 p.m. Eastern Standard
Time, among MetLife Portfolios, Inc., a Maryland corporation (the
"Corporation"), MetLife-State Street Investment Services, Inc. (the "Investment
Manager"), a Massachusetts corporation, and GFM International Investors Limited,
an England corporation (the "Sub-Investment Manager");
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as a diversified open-end
management Investment company and is registered as such under the Investment
Company Act of 1940 (the Investment Company Act");
WHEREAS, the Corporation, a series type of investment company, issues
separate classes (or series) of stock, each of which represents a separate
portfolio of investments;
WHEREAS, the Corporation is currently comprised of two portfolios which are
the MetLife International Equity Fund and the MetLife International Fixed Income
Fund, each of which pursues investment objectives through separate investment
policies, and the Corporation may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Adviser Act of 1940; and
WHEREAS, the Corporation has employed the Investment Manager to act as
investment manager of the MetLife International Equity Fund as set forth in the
MetLife International Equity Fund Investment Management Agreement dated January
17, 1992 between the Corporation and Investment Manager (the "MetLife
International Equity Fund Investment Management
Agreement"); and the Corporation and the Investment Manager desire to enter into
a separate sub-investment management agreement with respect to the MetLife
International Equity Fund of the Corporation with the Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation, the Investment Manager and the
Sub-Investment Manager hereby agree as follows:
ARTICLE 1
Duties of the Sub-Investment Manger
-----------------------------------
Subject to the supervision and approval of the Investment Manager and the
Corporation's Board of Directors, the Sub-Investment Manager will manage the
investment and reinvestment of the assets of the Corporation's International
Equity Fund (the "Fund") for the period and on the terms and conditions set
forth in this Agreement. In acting as Sub-Investment Manager to the corporation
with respect to the Fund, the Sub-Investment Manager shall determine which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held in the various securities or other assets in which it
may invest, subject always to any restrictions of the Corporation's Articles of
Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable laws and regulations including the Investment Company
Act, and the statements relating to the Fund's investment objectives, policies
and restrictions as the same are set forth in the prospectus and statement of
additional information of the Corporation then currently effective under the
Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the
Corporation or the Investment Manager at any time, however, make any definite
determination as to investment policy and notify the Sub-Investment Manager
thereof, the Sub-Investment Manager shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. The Sub-Investment Manager shall take, on behalf
the Corporation, all actions which it deems necessary to implement the
investment policies of the Fund, determined as provided above, and in particular
to place all orders for the purchase or
2
sale of portfolio securities for the Fund with brokers or dealers selected by
it.
On the basis of information about the Corporation supplied to the Sub-
Investment Manager, the Sub-Investment Manager will treat the Corporation as a
business investor in relation to the services to be provided in accordance with
this Agreement. As a consequence, certain of the rules of the Investment
Management Regulatory Organization Limited ("IMRO") introduced to protect less
sophisticated investors will not apply to this Agreement.
In connection with the selection of such brokers or dealers and the placing
of such orders, the Sub-Investment Manager is directed at all times to follow
the policies of the Corporation set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with other of the Corporation's series or with other accounts managed
by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any
account over any other and any purchase or sale orders executed
contemporaneously shall be allocated in a manner it deems equitable among the
accounts involved and at a price which is approximately averaged.
Nothing herein contained shall prevent the sale or purchase of investments
of which an issue or offer for sale was underwritten, managed or arranged by
the Sub-Investment Manager or an Associate during the twelve months preceding
such sale or purchase, provided that such sale or purchase is otherwise
permitted under the Investment Company Act and the rules and regulations
thereunder.
If and to the extent that the investment objectives of the Corporation and
the MetLife International Equity Fund permit the holding of units in collective
investment schemes, the Sub-Investment Manager may acquire or dispose of units
in such collective investment schemes operated or advised by the Sub-Investment
Manager or an Associate, provided that such acquisition or disposition is
otherwise permitted by the Investment Company Act and the rules and regulations
thereunder.
The Sub-Investment Manager may not commit the Corporation to underwrite any
issue or
3
offer for sale of securities, except to the extent that the Corporation may be
deemed to be a statutory underwriter for purposes of the Securities Act
of 1933 in selling its portfolio securities.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Fund's investments and conduct a continuous
program of evaluation of their assets. The Sub-Investment Manager will furnish
the Investment Manager and the Corporation such statistical information with
respect to the investments it makes for the Fund as the Investment Manager and
the Corporation may reasonably request. On its own initiative, the
Sub-Investment Manager will apprise the Investment Manager and the Corporation
of important developments materially affecting the Fund and will furnish the
Investment Manager and the Corporation from time to time such information as
may be believed appropriate for this purpose. The Sub-Investment Manager shall
send to the Corporation a half-yearly periodic statement of MetLife
International Equity Fund in accordance with Rule 21, Chapter IV of the rules
of IMRO. In addition, the Sub-Investment Manager will furnish the Investment
Manager and the Corporation's Board of Directors with such periodic and special
reports as either of them may reasonable request.
The Sub-Investment Manager will not hold money or investments on behalf of
the Corporation. The money and investments will be held by the Custodian of the
Corporation, which is not an Associate of the Sub-Investment Manager.
The Sub-Investment Manager will exercise its best judgment in rendering the
services provided for in this Article 1, and the Corporation and the Investment
Manager agree, as an inducement to the Sub-Investment Manager's undertaking so
to do, that the Sub-Investment Manager will not be liable under this Agreement
for any mistake of judgment or in any other event whatsoever, except as
hereinafter provided. Further details of the risks associated with the
investment practices and policies of the Fund are contained in the Risk
Disclosure Statements set out in Appendix B.
The Sub-Investment Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Corporation or the Investment Manager
in any way or otherwise be deemed an agent of the Corporation or the Investment
Manager other than in furtherance of its duties and
4
responsibilities as set forth in this Agreement.
ARTICLE 2
Sub-Investment Management Fee
-----------------------------
The payment of advisory fees and the allocation of charges and expenses
between the Corporation and the Investment Manager with respect to the Fund are
set forth in the MetLife International Equity Fund Investment Management
Agreement. Nothing in this MetLife International Equity Fund Sub-Investment
Management Agreement shall change or affect that arrangement. The payment of
advisory fees and the apportionment of any expenses related to the services of
the Sub-Investment Manager under this Agreement shall be the sole concern of the
Investment Manager and the Sub-Investment Manager and shall not be the
responsibility of the Corporation.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business day
of each month the fee specified by the schedule of fees in Appendix A to this
Agreement. The fee for any period from the date the Fund commences operations
to the end of the month will be prorated according to the proportion which the
period bears to the full month, and, upon any termination of this Agreement
before the end of any month, the fee for the part of the month during which
the Sub-Investment Manager acted under this Agreement will be prorated according
to the proportion which the period bears to the full month and will be payable
upon the date of termination of this Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Fund's net assets will be computed in the manner
specified in the Corporation's Prospectus. The Sub-Investment Manager will bear
all of its own expenses (such as research costs) in connection with the
performance of its duties under this Agreement except for those which the
Investment Manager agrees to pay.
5
Other Matters
-------------
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Corporation or the Investment Manager with
respect to them.
The Corporation and the Investment Manager understand that the Sub-
Investment Manager now acts and will continue to act as investment manager to
various investment companies and fiduciary or other managed accounts, and the
Corporation and the Investment Manager have no objection to the Sub-Investment
Manager's so acting. In addition, the Corporation understands that the persons
employed by the Sub-Investment Manager to assist in the performance of the Sub-
Investment Manager's duties hereunder will not devote their full time to such
service, and nothing herein contained shall be deemed to limit or restrict the
Sub-Investment Manager's right or the right of any of the Sub-Investment
Manager's affiliates to engage in and devote time and attention to other
businesses or to render other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Corporation are the Corporation's property. The Sub-Investment
Manager also agrees upon request of the Investment Manager or the Corporation,
promptly to surrender the books and records to the requester or make the books
and records available for inspection by representatives of regulatory
authorities. The Sub-Investment Manager further agrees to maintain and preserve
its books and records in accordance with the Investment Company Act and rules
thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in connection with
the matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
6
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Corporation's Prospectus, Articles of Incorporation and By-Laws as
currently in effect and agrees during the continuance of this Agreement to
furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the Amendments or Supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager or the Corporation.
ARTICLE 3
Duration and Termination of this Agreement
------------------------------------------
This Agreement shall become effective as of the date first above written
and shall remain in force until January 17, 1994 and thereafter shall continue
in effect, but only so long as such continuance is specifically approved at
least annually by (i) the Board of Directors of the Corporation, or by the vote
of a majority of the outstanding shares of the Fund, and (ii) a majority of
those directors who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the Board of Directors of the
Corporation, or by vote of a majority of the outstanding shares of the Fund, on
sixty days' written notice to the Investment Manager or by the Investment
Manager on sixty days' written notice to the Corporation. This Agreement shall
automatically terminate in the event of its assignment or in the event of
termination of the MetLife International Fixed Income Fund Investment Management
Agreement.
ARTICLE 4
Definitions
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used
7
used in this Agreement, shall have the respective meanings specified under the
Investment Company Act.
The term "Associate" means a holding company or subsidiary of the
Sub-Investment Manager and any other subsidiary of such holding company, and
any other person who alone or with any Associate (as so defined) is entitled to
control the exercise of 15 per cent of the voting power at any general meeting
of the Sub-Investment Manager or such holding company or subsidiary.
The term "Custodian" means State Street Bank and Trust Company of 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
ARTICLE 5
Complaints Procedure
--------------------
The Sub-Investment Manager has in operation a written procedure in
accordance with the rules of IMRO for the effective consideration and proper
handling of complaints from clients. Any complaint by the Corporation should be
sent in writing to the compliance officer of the Sub-Investment Manager at 0X
Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxx, XXX 0XX. If the matter cannot be resolved
immediately to the Corporation's satisfaction then the compliance officer will
conduct an investigation into the complaint and will notify the Corporation
within 14 days as to what action the Sub-Investment Manager intends to take with
regard to the matter. The Corporation is also entitled to make any complaint
about the Sub-Investment Manager to IMRO. At the Corporation's request, IMRO
will provide a statement describing the Corporation's rights to compensation in
the event of the Sub-Investment Manager's inability to meet any liabilities to
the Corporation.
ARTICLE 6
Amendments of this Agreement
----------------------------
8
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Corporation, or by
the vote of a majority of the outstanding shares of the Fund, and (ii) by the
vote of a majority of those directors of the Corporation who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
ARTICLE 7
Governing Law
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
METLIFE PORTFOLIOS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
President
Attest: /s/ P.A. Worthington
----------------------------
Asst. Secretary
METLIFE-STATE STREET INVESTMENT SERVICES. INC.
By /s/ Xxxxxx Xxxxxx
---------------------------------------
President
Attest: /s/ Xxxxxxx X. Xxxxx
----------------------------
Assistant Clerk
GFM INTERNATIONAL INVESTORS LIMITED
By /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Director and Chief Executive Officer
APPENDIX A
GFM INTERNATIONAL INVESTORS LIMITED
----------------------------------
MetLife Portfolios Fee Schedule
-------------------------------
MetLife International Equity Fund .75%
---------------------------------
11
APPENDIX I
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART I
------
This statement is made in compliance with the rules of the Securities and
Investments Board.
The risk of loss in investing in commodity, financial or other futures, options
or contracts for differences can be substantial. The Corporation should
carefully consider whether such investments are suitable for it in light of
its circumstances and financial resources. The Corporation should be aware of
the following points:
1. In a relatively short time it may sustain a total loss of the deposits and of
the margin placed with the Sub-Investment Manager to establish or maintain an
open position if the market moves against it. The Corporation may be called
upon to deposit a substantial additional margin, at short notice, to maintain
its position. If the Corporation does not provide such additional funds
within the time required, its position may be liquidated at a loss and it
will be liable for any resulting deficit.
2. If the Corporation deposits collateral as security for calls made upon it by
the Sub-Investment Manager it will lose its identity as the Corporation's
property once dealings on its behalf are undertaken and may be passed on to
an exchange's clearing house or other brokers. Even if its dealings should
ultimately prove profitable, the Corporation may have to accept payment in
cash and not get back the actual assets which it has deposited. Nor will the
Corporation's deposit be protected to the same extent as would a cash deposit
held on trust in a segregated client bank account.
3. Under certain market conditions it may be difficult or impossible to
liquidate a position. This may occur, for example, at times of rapid price
movement if the price rises or falls in one trading session to such an extent
that, under the rules of the relevant exchange, trading is suspended or
restricted.
4. Placing a stop-loss order will not necessary limit the Corporation's losses
to the intended amounts, for market conditions may make it impossible to
execute such orders at the stipulated price.
5. A spread or straddle position may be as risky as a single long or short
position and can be more complex.
6. Markets in futures, options and contracts for differences can be highly
volatile and investment in them carries a high risk of loss. The high degree
of "gearing" or "leverage" is a particular feature of this type of
transaction. This stems from the margining system applicable to such
contracts which generally involves a comparatively modest deposit of margin
in terms of the
12
overall contract value, so that a relatively small market movement can have a
disproportionately dramatic effect on the Corporation's investment. If the
market movement is in the Corporation's favor, it may achieve a good profit
return, but an equally small adverse market movement can result not only in the
loss of the Corporation's entire original investment, but may also expose it to
the distinct possibility of an unquantifiable loss exceeding its original
investment.
7. If the Corporation takes (buys) an option, its risk in most cases will be
less than trading in futures since the Corporation should not lose more than
the premium it paid plus any commission or other transaction charges.
However, there are many different types of options with different
peculiarities and subject to different conditions. The Corporation should
accordingly require the Sub-Investment Manager to inform it of all relevant
details before committing itself. In all cases the Corporation can easily
lose its entire investment in the option. If the Corporation grants (sells)
an option, its risk of loss may be at least as great as its exposure in
trading futures. Although the Corporation will receive a premium payment for
granting (selling) the option, a relatively small adverse market movement can
quickly eradicate that premium. The Corporation may be liable to pay
substantial additional margins which could involve it in significant losses.
Moreover, the buyer of an option acquires certain rights which may limit the
Corporation's ability to protect itself. Only experienced traders should
contemplate granting options and then only after securing full details from
the Sub-Investment Manager of the applicable conditions and potential risk
exposure.
8. Where the Sub-Investment Manager deals for the Corporation it should, unless
the Corporation has effectively agreed otherwise in circumstances where this
is permitted under the rules of the Securities and Investments Board, do so
only in contracts of the types dealt with on one of the recognized or
designated exchanges. If the Corporation instructs the Sub-Investment Manager
to deal on foreign markets, it will probably instruct a broker in the country
concerned. Normally that broker will not be subject to the rules or
regulations of the Securities and Investments Board and the exchange on which
that foreign broker effects the transactions may not be subject to as strict
regulations as a recognized investment exchange in the United Kingdom. Hence
the degree of protection afforded to the Corporation may be less than if the
Corporation restricts its transactions to United Kingdom markets. The
Corporation should ensure that the Sub-Investment Manager explains the
protections which will operate and ascertain whether it accepts liability for
any default of the foreign broker that he employs. If the Sub-Investment
Manager does not accept such a liability the Corporation could lose all that
it has invested or stands to gain if the foreign broker defaults.
9. The Corporation should require of the Manager prior to the commencement of
trading written confirmation of all commission and other transactions charges
for which the Corporation will be liable. In the event that any charges are
not expressed in money terms, (but, for example, as a percentage of contract
value) the Corporation should obtain a clear written explanation, including
appropriate examples, to establish what such charges are likely to mean in
specific money terms. The Corporation should realise that when commission is
13
charged as a percentage it will normally be as a percentage of the total
contract value and not simply a percentage of the Corporation's deposit.
10. The Sub-Investment Manager may also be a dealer trading for its own account
and may accordingly be involved in the same markets as the Corporation.
Under such circumstances the Company should be aware that the
Sub-Investment Manager's own account involvement could be contrary to the
Corporation's interests. The Sub-Investment Manager is required to inform
the Corporation in advance if the Sub-Investment Manager deals on his own
behalf in relevant markets.*
11. The guarantee of performance by the exchanges' clearing houses applies only
to their contracts with members. They do not guarantee performance of the
Sub-Investment Manager's contracts with the Corporation.
12. The Sub-Investment Manager's insolvency or that of any other brokers
involved may lead to the Corporation's positions being closed without the
Corporation's consent.
13. The Corporation has agreed that its money held by the Sub-Investment
Manager need not be segregated in a client bank account and the Corporation
will lack that protection should the Sub-Investment Manager become
insolvent.+
This brief statement cannot disclose all risks of investments in futures,
options and contracts for differences. They are not suitable for many members of
the public and the Corporation should carefully study such investments before he
commits funds to them. They may also have tax consequences and on this the
Corporation should consult its lawyer, accountant or other tax adviser.
14
GFM INTERNATIONAL INVESTORS LIMITED
I have read and understood Part I of this risk disclosure statement set out
above.
January 17, 1992
------------------------------
Date
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS,INC.
Notwithstanding that the rules of the Securities and Investments Board
require the Sub-Investment Manager to so state, the Sub-Investment Manager
will not be acting as a dealer trading for his own account.
Notwithstanding that the rules of the Securities and Investments Board
require the Sub-Investment Manager to so state, the Corporation has agreed
that its money will not be held by the Sub-Investment Manager, but rather
will be held by its custodian.
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART II
Limited Liability Transaction
-----------------------------
1. Before entering into a limited liability transaction, the Corporation should
obtain from the Sub-Investment Manager a formal written statement confirming
that the extent of the Corporation's loss liability on each transaction will
be limited to an amount agreed by the Corporation prior to entering into the
transaction.
2. The amount of such agreed liability must be indicated in the contract or
confirmation note of the transactions.
3. The Corporation is required under the rules of the Securities and Investments
Board to deposit in cash the amount of the agreed maximum liability assumed
by the Corporation in relation to each transaction.
4. The amount the Corporation can lose in limited liability transactions will be
less than in other margined transactions which have no predetermined loss
limit. Nevertheless, even though the extent of loss will be subject to the
agreed limited, the Corporation may sustain the loss in a relatively short
time. The Corporation's loss may be limited, but the risk of it sustaining
the total loss of his deposit is substantial.
5. The commission or other costs the Corporation will incur in entering into
this type of transaction are likely to be substantially higher than for other
margined transactions where there is no guaranteed loss limit. Such costs
must be included in (and not additional to) the Corporation's agreed loss
liability, and the Corporation should be aware that higher charges increase
the likelihood and extent of his loss.
16
I have read and understood Part II of this risk disclosure statement set out
above.
January 17, 1992
------------------------------
Date
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
INTERNATIONAL FIXED INCOME FUND SUB-INVESTMENT MANAGEMENT
AGREEMENT
AGREEMENT made this 17th day of January, 1992, 12:00 p.m. Eastern Standard
Time, among MetLife Portfolios, Inc., a Maryland corporation (the
"Corporation"), MetLife-State Street Investment Services Inc. (the "Investment
Manager"), a Massachusetts corporation, and GFM International Investors Limited,
an England corporation (the "Sub-Investment Manager");
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Corporation, a series type of investment company, issues
separate classes (or series) of stock, each of which represents a separate
portfolio of investments;
WHEREAS, the Corporation is currently comprised of two portfolios which are
the MetLife International Equity Fund and the MetLife International Fixed Income
Fund, each of which pursues investment objectives through separate investment
policies, and the Corporation may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 and
WHEREAS, the Corporation has employed the Investment Manager to act as
investment manager of MetLife International Fixed Income Fund as set forth in
the MetLife International Fixed Income Fund Investment Management Agreement
dated January 17, 1992 between the
Corporation and the Investment Manager (the "MetLife International Fixed Income
Fund Investment Management Agreement"); and the Corporation and the Investment
Manager desire to enter into a separate sub-investment management agreement with
respect to the MetLife International Fixed Income Fund of the Corporation with
Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained,the Corporation, the Investment Manager and the Sub-Investment Manager
hereby agree as follows:
ARTICLE I
Duties of the Sub-Investment Manager
------------------------------------
Subject to the supervision and approval of the Investment Manager and the
Corporation's Board of Directors, the Sub-Investment Manager will manage the
investment and reinvestment of the assets of the Corporation's International
Fixed Income Fund (the "Fund") for the period and on the terms and conditions
set forth in this Agreement. In acting as Sub-Investment Manager to the
Corporation with respect to the Fund, the Sub-Investment Manager shall determine
which securities shall be purchased, sold or exchanged and what portion of the
assets of the Fund shall be held in the various securities or other assets in
which it may invest, subject always to any restrictions of the Corporation's
Articles of Incorporation and By-Laws, as amended or supplemented from time to
time, the provisions of applicable laws and regulations including the Investment
Company Act, and the statements relating to the Fund's investment objectives,
policies and restrictions as the same are set forth in the prospectus and
statement of additional information of the Corporation then currently effective
under the Securities Act of 1933 (the "Prospectus"). Should the Board of
Directors of the Corporation or the Investment Manager at any time, however,
make any definite determination as to investment policy and notify the Sub-
Investment Manager thereof, the Sub-Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Sub-Investment
Manager shall take, on behalf of the Corporation, all actions which it deems
necessary to implement the investment policies of the Fund, determined as
provided above, and in particular to place all orders for the purchase or
sale of portfolio securities for the Fund with brokers or dealers selected by
it.
On the basis of information about the Corporation supplied to the Sub-
Investment Manager, the Sub-Investment Manager will treat the Corporation as a
business investor in relation to the services to be provided in accordance with
this Agreement. As a consequence, certain of the rules of the Investment
Management Regulatory Organization Limited ("IMRO") introduced to protect less
sophisticated investors will not apply to this Agreement.
In connection with the selection of such brokers or dealers and the placing
of such orders, the Sub-Investment Manager is directed at all times to follow
the policies of the Corporation set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with other of the Corporation's series or with other accounts managed
by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any
account over any other and any purchase or sale orders executed
contemporaneously shall be allocated in a manner it deems equitable among the
accounts involved and at a price which is approximately averaged.
Nothing herein contained shall prevent the sale or purchase of investments
of which an issue or offer for sale was underwritten, managed or arranged by
the Sub-Investment Manager or an Associate during the twelve months preceding
such sale or purchase, provided that such sale or purchase is otherwise
permitted under the Investment Company Act and the rules and regulations
thereunder.
If and to the extent that the investment objectives of the Corporation and
the MetLife International Fixed Income Fund permit the holding of units in
collective investment schemes, the Sub-Investment Manager may acquire or dispose
of units in such collective investment schemes operated or advised by the Sub-
Investment Manager or an Associate, provided that such acquisition or
disposition is otherwise permitted by the Investment Company Act and the rules
and regulations thereunder.
The Sub-Investment Manager may not commit the Corporation to underwrite any
issue or
3
offer for sale of securities, except to the extent that the Corporation may be
deemed to be a statutory underwriter for purposes of the Securities Act of 1933
in selling its portfolio securities.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Fund's investments and conduct a continuous
program of evaluation of their assets. The Sub-Investment Manager will furnish
the Investment Manager and the Corporation such statistical information with
respect to the investments it makes for the Fund as the Investment Manager and
the Corporation may reasonably request. On its own initiative, the
Sub-Investment Manager will apprise the Investment Manager and the Corporation
of important developments materially affecting the Fund and will furnish the
Investment Manager and the Corporation from time to time such information as
may be believed appropriate for this purpose. The Sub-Investment Manager shall
send to the Corporation a half-yearly periodic statement of the MetLife
International Fixed Income Fund in accordance with Rule 21, Chapter IV of the
rules of IMRO. In addition, the Sub-Investment Manager will furnish the
Investment Manager and the Corporation's Board of Directors such periodic and
special reports as either of them may reasonable request.
The Sub-Investment Manager will not hold money or investments on behalf of
the Corporation. The money and investments will be held by the Custodian of the
Corporation, which is not an Associate of the Sub-Investment Manager.
The Sub-Investment Manager will exercise its best judgment in rendering
the services provided for in this Article 1, and the Corporation and the
Investment Manager agree, as an inducement to the Sub-Investment Manager's
undertaking so to do, that the Sub-Investment Manager will not be liable under
this Agreement for any mistake of judgment or in any other event whatsoever,
except as hereinafter provided. Further details of the risks associated with the
investment practices and policies of the Fund are contained in the Risk
Disclosure Statements set out in Appendix B.
The Sub-Investment Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Corporation or the Investment Manager
in any way or otherwise be deemed an agent of the Corporation or the Investment
Manager other than in furtherance of its duties and
4
responsibilities as set forth in this Agreement.
ARTICLE 2
Sub-Investment Management Fee
-----------------------------
The payment of advisory fees and the allocation of charges and expenses
between the Corporation and the Investment Manager with respect to the Fund are
set forth in the MetLife International Fixed Income Fund Investment Management
Agreement. Nothing in this MetLife International Fixed Income Fund Sub-
Investment Management Agreement shall change or affect that arrangement. The
payment of advisory fees and the apportionment of any expenses related to the
services of the Sub-Investment Manager under this Agreement shall be the sole
concern of the Investment Manager and the Sub-Investment Manager and shall not
be the responsibility of the Corporation.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business
day of each month the fee specified by the schedule of fees in Appendix A to
this Agreement. The fee for any period from the date the Fund commences
operations to the end of the month will be prorated according to the proportion
which the period bears to the full month, and, upon any termination of this
Agreement before the end of any month, the fee for the part of the month during
which the Sub-Investment Manager acted under this Agreement will be prorated
according to the proportion which the period bears to the full month and will be
payable upon the date of termination of this Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Fund's net assets will be computed in the manner
specified in the Corporation's Prospectus. The Sub-Investment Manager will bear
all of its own expenses (such as research costs) in connection with the
performance of its duties under this Agreement except for those which the
Investment Manager agrees to pay.
5
Other Matters
-------------
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this Agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Corporation or the Investment Manager with
respect to them.
The Corporation and the Investment Manager understand that the Sub-
Investment Manager now acts and will continue to act as investment manager to
various investment companies and fiduciary or other managed accounts, and the
Corporation and the Investment Manager have no objection to the Sub-Investment
Manager's so acting. In addition, the Corporation understands that the persons
employed by the Sub-Investment Manager to assist in the performance of the Sub-
Investment Manager's duties hereunder will not devote their full time to such
service, and nothing herein contained shall be deemed to limit or restrict the
Sub-Investment Manager's right or the right of any of the Sub-Investment
Manager's affiliates to engage in and devote time and attention to other
businesses or to render other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Corporation are the Corporation's property. The Sub-Investment
Manager also agrees upon request of the Investment Manager or the Corporation,
promptly to surrender the books and records to the requester or make the books
and records available for inspection by representatives of regulatory
authorities. The Sub-Investment Manager further agrees to maintain and preserve
its books and records in accordance with the Investment Company Act and rules
thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in connection with
the matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
6
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Corpoation's Prospectus, Articles of Incorporation and By-Laws as
currently in effect and agrees during the continuance of this Agreement to
furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the Amendments or Supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager of the Corporation.
ARTICLE 3
Duration and Termination of this Agreement
------------------------------------------
This Agreement shall become effective as of the date first above written
and shall remain in force until January 17, 1994 and thereafter shall continue
in effect, but only so long as such continuance is specifically approved at
least annually by (i) the Board of Directors of the Corporation, or by the vote
of majority of the outstanding shares of the Fund, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the Board of Directors of the
Corporation, or by vote of a majority of the outstanding shares of the Fund, on
sixty days' written notice to the Investment Manager or by the Investment
Manager on sixty days' written notice to the Corporation. This Agreement shall
automatically terminate in the event of its assignment or in the event of
termination of the MetLife International Fixed Income and Investment Management
Agreement.
ARTICLE 4
Definitions
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used
7
used in this Agreement, shall have the respective meanings specified under the
Investment Company Act.
The term "Associate" means a holding company or subsidiary of the Sub-
Investment Manager and any other subsidiary of such holding company, and any
other person who alone or with any Associate (as so defined) is entitled to
control the exercise of 15 per cent of the voting power at any general meeting
of the Sub-Investment Manager or such holding company or subsidiary.
The term "Custodian" means State Street Bank and Trust Company of 000
Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000.
ARTICLE 5
Complaints Procedure
--------------------
The Sub-Investment Manager has in operation a written procedure in
accordance with the rules of IMRO for the effective consideration and proper
handling of complaints from clients. Any complaint by the Corporation should be
sent in writing to the compliance officer of the Sub-Investment Manager at 0X
Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxx, XXX 0XX. If the matter cannot be resolved
immediately to the Corporation's satisfaction then the compliance officer will
conduct an investigation into the complaint and will notify the Corporation
within 14 days as to what action the Sub-Investment Manager intends to take with
regard to the matter. The Corporation is also entitled to make any complaint
about the Sub-Investment Manager to IMRO. At the Corporation's request, IMRO
will provide a statement describing the Corporation's rights to compensation in
the event of the Sub-Investment Manager's inability to meet any liabilities to
the Corporation.
ARTICLE 6
Amendments of this Agreement
----------------------------
8
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Corporation, or by
the vote of a majority of the outstanding shares of the Fund, and (ii) by the
vote of a majority of those directors of the corporation who are not parties to
this Agreement or interested persons of any such party cast in person a meeting
called for the purpose of voting on such approval.
ARTICLE 7
Governing Law
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
METLIFE PORTFOLIOS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------
President
Attest:
/s/ PA. Worthington
--------------------
Asst. Secretary
METLIFE-STATE STREET INVESTMENT SERVICES, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------
President
Attest:
/s/ Xxxxxxx X. Xxxxx
--------------------
Assistant Clerk
GFM INTERNATIONAL INVESTORS LIMITED
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------------
Directors and Chief Executive Officer
Attest:
--------------------
APPENDIX A
GFM INTERNATIONAL INVESTORS LIMITED
-----------------------------------
MetLife Portfolios Fee Schedule
-------------------------------
MetLife International Fixed Income Fund - .55%
---------------------------------------
11
APPENDIX B
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART I
------
This statement is made in compliance with the rules of the Securities and
Investments Board.
The risk of loss in investing in commodity, financial or other futures,
options or contracts for differences can be substantial. The Corporation should
carefully consider whether such investments are for it in the light of its
circumstances and financial resources. The Corporation should be aware of the
following points:
1. In a relatively short time it may sustain a total loss of the deposits and of
the margin place with the Sub-Investment Manager to establish or maintain an
open position if the market moves against it. The Corporation may be called
upon to deposit a substantial additional margin, at short notice, to maintain
its position. If the Corporation does not provide such additional funds
within the time required, its position may be liquidated at a loss and it
will be liable for any resulting deficit.
2. If the Corporation deposits collateral as security for calls made upon it by
the Sub-Investment Manager it will lose its identity as the Corporation's
property once dealings on its behalf are undertaken and may be passed on to
an exchange's clearing house or other brokers. Even if its dealings should
ultimately prove profitable, the Corporation may have to accept payment in
cash and not get back the actual assets which it has deposited. Nor will the
Corporation's deposit be protected to the same extent as would a cash deposit
held on trust in a segregated client bank account.
3. Under certain market conditions it may be difficult or impossible to
liquidate a position. This may occur, for example, at times of rapid price
movement if the price rises or falls in one trading session to such an extent
that, under the rules of the relevant exchange, trading is suspended or
restricted.
4. Placing a stop-loss order will not necessarily limit the Corporation's losses
to the intended amounts, for market conditions may make it impossible to
execute such orders at the stipulated price.
5. A spread or straddle position may be as risky as a single long or short
position and can be more complex.
6. Markets in futures, options and contracts for differences can be highly
volatile and investment in them carries a high risk of loss. The high degree
of "gearing" or "leverage" is a particular feature of this type of
transaction. This stems from the margining system applicable to such
contracts which generally involves a c omparatively modest deposit of margin
in terms of the
12
overall contract value, so that a relatively small market movement can have a
disproportionately dramatic effect on the Corporation's investment. If the
market movement is in the Corporation's favour, it may achieve a good profit
return, but an equally small adverse market movement can result not only in
the loss of the Corporation's entire original investment, but may also expose
it to the distinct possibility of an unquantifiable loss exceeding its
original investment.
7. If the Corporation takes (buys) an option, its risk in most cases will be
less than trading in futures since the Corporation should not lose more than
the premium it paid plus any commission or other transaction charges.
However, there are many different types of options with different
peculiarities and subject to different conditions. The Corporation should
accordingly require the Sub-Investment Manager to inform it of all relevant
details before committing itself. In all cases the Corporation can easily
lose its entire investment in the option. If the Corporation grants (sells)
an option, its risk of loss may be at least as great as its exposure in
trading futures. Although the Corporation will receive a premium payment for
granting (selling) the option, a relatively small adverse market movement can
quickly eradicate that premium. The Corporation may be liable to pay
substantial additional margins which could involve it in significant losses.
Moreover, the buyer of an option acquires certain rights which may limit the
Corporation's ability to protect itself. Only experienced traders should
contemplate granting options and then only after securing full details from
the Sub-Investment Manager of the applicable conditions and potential risk
exposure.
8. Where the Sub-Investment Manager deals for the Corporation it should, unless
the Corporation has effectively agreed otherwise in circumstances where this
is permitted under the rules of the Securities and Investments Board, do so
only in contracts of the types dealt with on one of the recognized or
designated exchanges. If the Corporation instructs the Sub-Investment Manager
to deal on foreign markets, it will probably instruct a broker in the country
concerned. Normally that broker will not be subject to the rules or
regulations of the Securities and Investments Board and the exchange on which
that foreign broker effects the transactions may not be subject to as strict
regulations as a recognized investment exchange in the United Kingdom. Hence
the degree of protection afforded to the Corporation may be less than if the
Corporation restricts its transactions to United Kingdom markets. The
Corporation should ensure that the Sub-Investment Manager explains the
protections which will operate and ascertain whether it accepts liability for
any default of the foreign broker that he employs. If the Sub-Investment
Manager does not accept such a liability the Corporation could lose all that
it has invested or stands to gain if the foreign broker defaults.
9. The Corporation should require of the Manager prior to the commencement of
trading written confirmation of all commission and other transactions charges
for which the Corporation will be liable. In the event that any charges are
not expressed in money terms, (but, for example, as a percentage of contract
value) the Corporation should obtain a clear written explanation, including
appropriate examples, to establish what such charges are likely to mean in
specific money terms. The Corporation should realise that when commission is
13
charged as a percentage it will normally be as a percentage of the total
contract value and not simply a percentage of the Corporation's deposit.
10. The Sub-Investment Manager may also be a dealer trading for its own account
and may accordingly be involved in the same markets as the Corporation.
Under such circumstances the Company should be aware that the Sub-Investment
Manager's own account involvement could be contrary to the Corporation's
interests. The Sub-Investment Manager is required to inform the Corporation
in advance if the Sub-Investment Manager deals on his own behalf in relevant
markets.*
11. The guarantee of performance by the exchanges' clearing houses applies only
to their contracts with members. They do not guarantee performance of the
Sub-Investment Manager's contracts with the Corporation.
12. The Sub-Investment Manager's insolvency or that of any other brokers
involved may lead to the Corporation's positions being closed without the
Corporation's consent.
13. The Corporation has agreed that its money held by the Sub-Investment
Manager need not be segregated in a client bank account and the Corporation
will lack that protection should the Sub-Investment Manager become
insolvent.+
This brief statement cannot disclose all risks of investments in futures,
options and contracts for differences They are not suitable for many members of
the public and the Corporation should carefully study such investments before he
commits funds to them. They may also have tax consequences and on this the
Corporation should consult its lawyer, accountant or other tax adviser.
14
GFM INTERNATIONAL INVESTORS LIMITED
I have read and understood Part I of this risk disclosure statement set out
above
January 17, 1992
--------------------
Date
/s/ Xxxxxxx X. Xxxxxxx
--------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
* Notwithstanding that the rules of the Securities and Investments Board require
the Sub-Investment Manager to so state, the Sub-Investment Manager will not be
acting as a dealer trading for his own account.
+ Notwithstanding that the rules of the Securities and Investments Board require
the Sub-Investment Manager to so state, the Corporation has agreed that its
money will not be held by the Sub-Investment Manager, but rather will be held
by its custodian.
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART II
Limited Liability Transaction
-----------------------------
1. Before entering into a limited liability transaction, the Corporation should
obtain from the Sub-Investment Manager a formal written statement confirming
that the extent of the Corporation's loss liability on each transaction will
be limited to an amount agreed by the Corporation prior to entering into the
transaction.
2. The amount of such agreed liability must be indicated in the contract or
confirmation note of the transactions.
3. The Corporation is required under the rules of the Securities and Investments
Board to deposit in cash the amount of the agreed maximum liability assumed
by the Corporation in relation to each transaction.
4. The amount the Corporation can lose in limited liability transactions will be
less than in other margined transactions which have no predetermined loss
limit. Nevertheless, even though the extent of loss will be subject to the
agreed limited, the Corporation may sustain the loss in a relatively short
time. The Corporation's loss may be limited, but the risk of it sustaining
the total loss of his deposit is substantial.
5. The commission or other costs the Corporation will incur in entering into
this type of transaction are likely to be substantially higher than for other
margined transactions where there is no guaranteed loss limit. Such costs
must be included in (and not additional to) the Corporation's agreed loss
liability, and the Corporation should be aware that higher charges increase
the likelihood and extent of his loss.
16
I have read and understood Part II of this risk disclosure statement set out
above.
January 17, 1992
------------------------------
Date
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
