Exhibit D(10)
(Overseas Equity B and Overseas Equity C Funds)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXX XXXXXXX LIFE INSURANCE COMPANY
AND
CAPITAL GUARDIAN TRUST COMPANY
-1-
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of May, 2004 by and among Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust (the "Trust"), Xxxx
Xxxxxxx Life Insurance Company, a Massachusetts corporation ("JHLICO"), and
Capital Guardian Trust Company, a California corporation ("Advisers");
WHEREAS, the Trust is organized and is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940 (the "1940 Act"); and
WHEREAS, JHLICO is engaged in the business of rendering investment advice
under the Investment Advisers Act of 1940, and the Advisers is a state-chartered
bank exempt from registration under the Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of capital stock in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several classes, including, without
limit, the Overseas Equity B Fund and the Overseas Equity C Fund (together with
all other classes established by the Trust, collectively referred to as the
"Funds"), each of which pursues its investment objectives through separate
investment policies; and
WHEREAS, the Trust has retained JHLICO to render investment management
services to the Trust pursuant to an Investment Management Agreement dated as of
April 14, 1998 (the "Investment Management Agreement"), pursuant to which it may
contract with Advisers as a Sub-Manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Initial Subject Funds. Advisers is hereby appointed and Advisers
hereby accepts the appointment to act as investment adviser and
manager to the Overseas Equity B Fund and the Overseas Equity C (the
"Subject Funds") for the period and on the terms herein set forth, for
the compensation herein provided.
(b) Additional Subject Funds. In the event that the Trust and JHLICO
desire to retain Advisers to render investment advisory services
hereunder for any other Fund, they shall so notify Advisers in
writing. If it is willing to render such services, Advisers shall
notify the Trust in writing, whereupon such Fund shall become a
Subject Fund hereunder.
-2-
(c) Incumbency Certificates. Advisers shall furnish to JHLICO, immediately
upon execution of this Agreement, a certificate of authorized
personnel of Advisers setting forth (by name and title, and including
specimen signatures) those individuals of Advisers who are authorized
to act on behalf of the Subject Funds pursuant to the provisions of
this Agreement. Advisers shall promptly provide supplemental
certificates in connection with each additional Subject Fund (if any)
and further supplemental certificates, as needed, to reflect all
changes with respect to such authorized personnel for any Subject
Fund. On behalf of the Trust, JHLICO shall instruct the custodian for
each Subject Fund to accept instructions with respect to that Subject
Fund from the authorized personnel of Advisers so named.
(d) Independent Contractor. Advisers shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or be
deemed an agent of the Trust.
(e) Advisers' Representations. Advisers represents, warrants and agrees
(i) that it is a "bank" as defined in the Investment Advisers Act of
1940 and exempt from registration as an investment adviser under the
Investment Advisers Act of 1940, (ii) that it will promptly notify
JHLICO if the foregoing representation and agreement shall cease to be
true (in any material respect) at any time during the term of this
Agreement, (iii) that it will promptly notify JHLICO of any material
change in the senior management or ownership of Advisers, or of any
change in the identity of the personnel who manage the Subject
Fund(s), (iv) that it has adopted a code of ethics complying with the
requirements of Rule 17j-1 of the Securities and Exchange Commission
(the "SEC") under the 1940 Act and has provided true and complete
copies of such code to the Trust and to JHLICO, and has adopted
procedures reasonably designed to prevent violations of such code, and
(v) that, if applicable, it has furnished the Trust and JHLICO each
with a copy of Advisers' Form ADV, as most recently filed with the
SEC, and will promptly furnish copies of each future amendment
thereto.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Advisers will provide for each Subject Fund a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Fund, as established by the Trust and JHLICO. From time to
time, JHLICO or the Trust may provide Advisers in writing (including, without
limit, electronic communication) with additional or amended investment policies,
procedures, guidelines and restrictions with the opportunity for prior review by
Advisers. Advisers, as Sub-Manager, will use due care to manage the investment
and reinvestment of the assets in the Subject Fund, and perform the functions
set forth below, subject to the overall supervision, direction, control and
review of JHLICO and the Board of Trustees of the Trust, consistent with the
applicable investment policies, guidelines and restrictions, the provisions of
the Trust's Declaration of Trust, Bylaws, prospectus, statement of additional
information (each as in effect from time to time), provisions of the 1940 Act
and all other applicable laws and regulations deemed to be Sub-Advisers' duty
under the Subject Funds' compliance manual and procedures (including any
applicable investment restrictions imposed by state insurance laws and
regulations or any directions or instructions delivered to Advisers in writing
by JHLICO or the Trust from time
-3-
to time) as is mutually agreed to from time to time, such agreement not to be
unreasonably withheld. By its signature below, Advisers acknowledges receipt of
a copy of the Trust's Declaration of Trust, Bylaws, prospectus, and statement of
additional information, each as in effect on the date of this Agreement.
Advisers will, at its own expense:
(a) upon request, furnish the Trust with research, economic and
statistical data in connection with said Fund's investments and
investment policies including , without limit, investment policy
decisions to be made by the Trust's Board of Trustees or any committee
thereof regarding the Subject Fund;
(b) submit such reports and information as JHLICO or the Trust's Board of
Trustees may reasonably request, to reasonably assist the custodian in
its determination of the market value of securities held in the
Subject Fund;
(c) place orders for purchases and sales of portfolio investments for the
Subject Fund;
(d) give instructions to the Subject Funds' custodian concerning the
delivery of securities and transfer of cash for the Subject Funds;
(e) maintain and preserve the records relating to its activities hereunder
required by the 1940 Act to be maintained and preserved by the Trust;
(f) at the close of business each day, provide JHLICO and the custodian
with copies of trade tickets for each transaction effected for the
Subject Funds, and promptly forward to the custodian copies of all
brokerage or dealer confirmations;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written statements showing all transactions
effected for the Subject Funds during the month, a summary listing all
investments held in the Subject Funds as of the last day of the month,
and such other information as JHLICO may reasonably request in
connection with the accounting services that JHLICO provides for the
Subject Funds;
(h) subject to its receipt of all necessary voting materials, vote all
proxies with respect to investments of the Subject Funds in accordance
with Advisers' proxy voting policy as most recently supplied to
JHLICO, or in such other manner as JHLICO and Advisers may reasonably
agree upon from time to time; and
(i) provide timely information to JHLICO and the Trust concerning Advisers
and its activities hereunder in connection with the Subject Funds to
assure accurate disclosure of such matters (including information
necessary to make the statements not misleading) in any Prospectus,
Statement of Additional Information or registration statement of the
Trust or JHLICO, or in any sales literature or materials for the sale
or distribution of the Trust's shares, it being understood that JHLICO
and the Trust shall otherwise be solely responsible for the accuracy
of such documents.
-4-
On its own initiative, Advisers will apprise JHLICO and the Trust of
important economic developments materially affecting the marketplace or the
Subject Funds, and will furnish JHLICO and the Trust's Board of Trustees from
time to time such information as is appropriate for this purpose. Advisers will
also make its personnel available in Boston or other reasonable locations as
often as quarterly to discuss the Subject Funds and Advisers' management
thereof, to educate JHLICO sales personnel with respect thereto (in such manner
and format as the parties reasonably agree upon from time to time), and for such
other purposes as the Trust or JHLICO may reasonably request.
The Trust and JHLICO will provide timely information to Advisers regarding
such matters as purchases and redemptions of shares in the Subject Funds and the
cash requirements of, and cash available for investment in, the Subject Funds.
JHLICO will timely provide Advisers with copies of monthly accounting statements
for the Subject Funds, and such other information (including, without
limitation, reports concerning the classification of portfolio securities of the
Subject Funds for purposes of Subchapter M of the Internal Revenue Code and
Treasury Regulations Section 1.817) as may be reasonably necessary or
appropriate in order for Advisers to perform its responsibilities hereunder.
Advisers shall have no duty or obligation to the Trust or to JHLICO, and
shall not be expected or responsible to perform any service or function with
respect thereto, except as is expressly stated in this Agreement.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Trust specifically
agrees to assume the expense of:
(a) brokerage commissions for transactions in the portfolio investments of
the Trust and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(b) custodian fees and expenses;
(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental
agencies; and
(d) interest payable on the Trust's borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Trust and JHLICO in the Investment Management Agreement
or any other agreement to which they are parties.
-5-
4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Funds as
herein provided, JHLICO shall pay to Advisers a fee (for the payment of which
the Trust shall have no obligation or liability), based on the Current Net
Assets (as defined below) of the Subject Funds, as set forth in Schedule I
attached hereto and made a part hereof. Such fee shall be accrued daily and
payable monthly, as soon as practicable after the last day of each calendar
month. In the case of termination of this Agreement with respect to a Subject
Fund during any calendar month, the fee with respect to such Fund accrued to but
excluding the date of termination shall be paid promptly following such
termination. For purposes of computing the amount of advisory fee accrued for
any day, "Current Net Assets" shall mean a Subject Fund's net assets as of the
most recent preceding day for which that Subject Fund's net assets were
determined by the Subject Fund's Custodian or by the Subject Fund's
administrator, as the case may be.
5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the assets of a
Subject Fund, Advisers is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Fund and to use its best efforts
to obtain the best available price and most favorable execution with respect to
all such purchases and sales of portfolio securities for said Fund. Advisers
shall maintain records adequate to demonstrate compliance with this requirement.
Subject to this primary requirement, and maintaining as its first consideration
the benefits to the Subject Fund and its shareholders, Advisers shall have the
right subject to the control of the Board of Trustees, and to the extent
authorized by the Securities Exchange Act of 1934, to follow a policy of
selecting brokers who furnish brokerage and research services to the Subject
Fund or to the Advisers, and who charge a higher commission rate to the Subject
Fund than may result when allocating brokerage solely on the basis of seeking
the most favorable price and execution. Advisers shall determine in good faith
that such higher cost was reasonable in relation to the value of the brokerage
and research services provided.
Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by
Advisers on the Trust's behalf and, in the event of termination of this
Agreement with respect to any Subject Fund for any reason, upon request of the
Trust or its designee, all records relating to that Fund shall be promptly
returned to the Trust, free from any claim or retention of rights by Advisers,
provided that (subject to the last paragraph of this Section 6) Advisers may
retain copies of such records. Advisers also agrees, upon request of the Trust,
promptly to surrender such books and records or, at its expense, copies thereof,
to the Trust or make such books and records available for audit or inspection by
representatives of regulatory authorities or other persons reasonably designated
by the Trust. Advisers further agrees that with respect to its activities
hereunder, it shall maintain, prepare and preserve such books and records as are
required in accordance with the 1940 Act and rules thereunder, including but not
limited to Rules 31a-1 and 31a-2, and supply all information requested by any
insurance
-6-
regulatory authorities to determine whether all insurance laws and regulations
are being complied with. Advisers shall supply the Board of Trustees and
officers of the Trust and JHLICO with all statistical information regarding
investments which is reasonably required by them and reasonably available to
Advisers.
Advisers shall not disclose or use any records or information obtained
pursuant hereto in any manner whatsoever except as expressly authorized herein,
and will keep confidential any information obtained pursuant hereto, and
disclose such information only if the Trust has authorized such disclosure, or
(after reasonable notice to the Trust) if such disclosure is expressly requested
by applicable federal or state regulatory authorities.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Advisers against
any liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or negligence in the
performance of its duties or the reckless disregard of its obligations and
duties under this Agreement. No provision of this Agreement shall be deemed to
protect JHLICO against any liability to the Trust or its shareholders to which
it might otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under the Investment Management Agreement. Nor shall any
provision hereof be deemed to protect any trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason of
any willful misfeasance, bad faith or negligence in the performance his duties
or the reckless disregard of his obligations and duties. Advisers shall employ
only qualified personnel to manage a Subject Fund; shall comply with all
applicable laws and regulations in the discharge of its duties under this
Agreement; shall (as provided in Section 2 above) use due care to comply with
the investment policies, guidelines and restrictions of each Subject Fund and
with the provisions of the Trust's Declaration of Trust, Bylaws, prospectus and
statement of additional information; shall manage each Subject Fund (subject to
the receipt of, and based upon the information contained in, periodic reports
from JHLICO or the custodian concerning the classification of Fund securities
for such purposes) as a regulated investment company in accordance with
subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury Regulations Section 1.817-5(b); shall act at all times in the best
interests of the Trust; and shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of a similar enterprise. However, Advisers shall not be obligated to
perform any service not described in this Agreement, and shall not be deemed by
virtue of this Agreement to have made any representation or warranty that any
level of investment performance or level of investment results will be achieved.
-7-
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to a
Subject Fund described in paragraph 1(a) hereof on the date hereof;
and, with respect to any additional Subject Fund described in
paragraph 1(b) hereof, on the date of receipt by the Trust of notice
from Advisers in accordance with said paragraph that it is willing to
serve with respect to such Fund. Unless terminated as herein provided,
this Agreement shall remain in full force and effect with respect to a
Subject Fund described in paragraph 1(a) hereof for two years from the
effective date with respect to that Fund and, with respect to each
additional Subject Fund described in paragraph 1(b) hereof, until two
years following the date on which such Fund becomes a Subject Fund
hereunder, and shall continue in full force and effect thereafter with
respect to each Subject Fund so long as such continuance with respect
to any such Fund is approved at least annually (a) by either the Board
of Trustees of the Trust or by vote of a majority of the outstanding
voting shares of such Fund, and (b) in either event by the vote of a
majority of the trustees of the Trust 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.
Any approval of this Agreement by the holders of a majority of the
outstanding shares of any Subject Fund shall be effective to continue
this Agreement with respect to any such Fund notwithstanding (A) that
this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund affected hereby, and (B) that
this Agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. The terms
"assignment," "vote of a majority of the outstanding shares" and
"interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and rules thereunder.
(b) Termination. This Agreement may be terminated with respect to any
Subject Fund at any time, without payment of any penalty, by vote of
the trustees of the Trust or by vote of a majority of the outstanding
shares of such Fund, by Advisers on at least sixty days' written
notice to the Trust and JHLICO, or by JHLICO on at least sixty days'
written notice to the Trust and Advisers.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as
permitted pursuant to Section 15 below) or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.
(a) The services of Advisers to the Trust are not to be deemed exclusive
and it shall be free to render similar services to others so long as
its services hereunder are not impaired thereby. It is specifically
understood that directors, officers and employees of Advisers and of
its subsidiaries and affiliates may continue to engage in providing
Fund management services and advice to other investment companies,
whether or not registered, and other investment advisory clients.
-8-
(b) The parties agree that the name "Capital Guardian Trust Company", the
names of the Advisers' affiliates within The Capital Group Companies,
Inc. as listed on Schedule II to this Agreement, and any logo or trade
or service xxxx (including but not limited to the American Funds Group
of mutual funds) (collectively referred to as the "Protected
Information"), are the valuable property of the Advisers and its
affiliates. The Trust and JHLICO shall have the right to use the
Protected Information provided that, prior to distribution of any
materials which refer to Advisers or the Protected Information, JHLICO
shall consult with Advisers and shall furnish to Advisers a copy of
such materials. Advisers agrees to cooperate with JHLICO and to review
such materials promptly. JHLICO shall not distribute such materials if
Advisers reasonably objects in writing, within five (5) business days
of its receipt of such copy (or such other time as may be mutually
agreed), to the manner in which its name and the Protected Information
are used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of a
Subject Fund, Advisers and its directors, officers and employees will not act as
principal or agent or receive any commission. Nothing in this Agreement,
however, shall preclude the combination of orders for the sale or purchase of
portfolio securities of the Subject Fund with those for other accounts by
Advisers or its affiliates, if orders are allocated in a manner deemed equitable
by Advisers among the accounts and at a price approximately averaged.
Advisers will not consult with any other sub-manager to a Subject Fund or
to any other Fund of the Trust concerning transactions of any Subject Fund in
securities or other assets, except as such consultations may be reasonable
necessary in order to ensure compliance with paragraphs (a) and (b) of Rule
12d-3 under the 1940 Act.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing agreed to by the parties
hereto. Additionally, no amendment of this Agreement shall be effective with
respect to any Fund until approved specifically by (a) the Board of Trustees of
the Trust, or by vote of a majority of the outstanding shares of that Fund, and
(b) by vote of a majority of those trustees of the Trust who are not interested
persons of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust.
-9-
13. NOTICES
Notices and other communications required or permitted under this Agreement
shall be in writing, shall be deemed to be effectively delivered when actually
received, and may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, by hand or by commercial overnight delivery service,
addressed as follows:
ADVISERS: Capital Guardian Trust Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Treasurer
Fax #: (000) 000-0000
JHLICO: Xxxx Xxxxxxx Life Insurance Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
14. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act and
rules thereunder.
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part, without the prior written consent of each other party.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
ATTEST: XXXX XXXXXXX VARIABLE SERIES TRUST I
By:
-------------------------------------- -----------------------------------
Title:
-------------------------------------- --------------------------------
ATTEST: XXXX XXXXXXX LIFE INSURANCE COMPANY
By:
-------------------------------------- -----------------------------------
Title:
-------------------------------------- --------------------------------
ATTEST: CAPITAL GUARDIAN TRUST COMPANY
By:
-------------------------------------- -----------------------------------
Title:
-------------------------------------- --------------------------------
SCHEDULE I
FEES
----
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
For the Overseas Equity B Fund:
-------------------------------
On the first $300 million 60 basis points (0.60%) per annum
On the next $200 million 40 basis points (0.40%) per annum
On amounts over $500 million 35 basis points (0.35%) per annum
For the Overseas Equity C Fund:
-------------------------------
On the first $300 million 60 basis points (0.60%) per annum
On the next $200 million 40 basis points (0.40%) per annum
On amounts over $500 million 35 basis points (0.35%) per annum
SCHEDULE II
The Capital Group Companies, Inc. and its Affiliates
----------------------------------------------------
1. AFD American Funds Distributors, Inc.
2. AFS American Funds Service Company
3. CGC The Capital Group Companies, Inc.
4. CGII Capital Group International, Inc.
5. CGRI Capital Group Research, Inc.
6. CGCI Capital Guardian (Canada), Inc.
7. CGRC Capital Guardian Research Company
8. CGTC Capital Guardian Trust Company
9. CGTN Capital Guardian Trust Company, a Nevada Corporation
10. CIAC Capital International Advisory Company S.A.
11. CIACFMC Capital International All Countries Fund Management Company
S.A.
12. CIEFMC Capital International Europe Fund Management Company
13. CIGSMC Capital International Global Small Cap Fund Management Company
S.A.
14. CII Capital International, Inc.
15. CIKK Capital International K.K.
16. CIKFMC Capital International Kokusai Fund Management Company S.A.
17. CIL Capital International Limited
18. CIL-B Capital International Limited (Bermuda)
19. CIMC Capital International Management Company S.A.
20. CIRI Capital International Research, Inc.
21. CISA Capital International S.A.
22. CMS Capital Management Services, Inc.
23. CRC Capital Research Company
24. CRMC Capital Research and Management Company
25. CSR Capital Strategy Research, Inc.
26. CIHACFMC CIHAC Fund Management Company S.A.
27. CIAM Capital International Asset Management, Inc.
28. CIAM Canada Capital International Asset Management (Canada), Inc.
29. CIFS Capital International Financial Services, Inc.
