Exhibit 23(d)(65)
(Active Bond)
INTERIM
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXX XXXXXXX ADVISERS, LLC
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
INTERIM SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 2nd day of June, 2003 by and among Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust (the "Trust"), Xxxx
Xxxxxxx Advisers LLC, a Delaware limited liability corporation ("Advisers"), and
Xxxx Xxxxxxx Life Insurance Company, a Massachusetts corporation ("JHLICO").
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, XXXXXX and Advisers are engaged in the business of rendering
investment advice under the Investment Advisers Act of 1940; and
WHEREAS, the Trust offers shares in several series, one of which is
designated as the Active Bond Fund, (together with all other series established
by the Trust, 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 12, 1988 (the "Investment Management Agreement"), pursuant to which it may
contract with one or more sub-managers with respect to the Active Bond Fund (the
"Subject Fund"), one of the Funds of the Trust;
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NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. Advisers is hereby appointed and Advisers hereby accepts
the appointment to act as investment adviser and manager to the Subject Fund for
the period and on the terms herein set forth, for the compensation herein
provided.
(b) 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.
(c) Advisers Representations. Advisers represents, warrants and agrees (i)
that it is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended, and that it will remain so registered and will comply with
the requirements of said Act, and the rules and regulations thereunder, at all
times while this Agreement remains in effect, (ii) that it will promptly notify
JHLICO of any change in the identity of the personnel who manage the Subject
Assets, (iii) that it has adopted a code of ethics complying with the
requirements of Section 17(j) and Rule 17j-1 under the 1940 Act and has and will
provide, upon request, true and complete copies of such code to the Trust and to
JHLICO, and has and will adopt procedures designed to prevent violations of any
such code.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Advisers will provide for the Subject Fund's assets as may be designated
to it by JHLICO in writing (including electronic communication) from time to
time (the "Subject Assets") a continuing and suitable investment program
consistent with the investment policies, objectives and restrictions of said
Fund. Advisers, as Sub-Manager, will manage the investment and reinvestment of
the Subject Assets, and perform the functions set forth below, subject to the
overall supervision, direction,
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control and review of the Board of Trustees of the Trust, JHLICO and, as in
effect from time to time, the provisions of the Trust's Declaration of Trust,
Bylaws, prospectus, statement of additional information, the 1940 Act and all
other applicable laws and regulations (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 to time). In the event that, in addition to Advisers, other investment
advisers or sub-managers are appointed by the Trust or JHLICO to render
investment advisory services to the Subject Fund, JHLICO and the Trust each
acknowledges and agrees that Advisers will not be held responsible for such
other investment advisers' or sub-managers' compliance with policies and
limitations applicable to the Subject Fund.
Advisers will, at its own expense:
(a) advise the Trust in connection with investment decisions to be made by
its Board of Trustees or any committee thereof regarding the Subject Assets and,
upon request, furnish the Trust with research, economic and statistical data in
connection with the investments and investment policies of the Subject Assets;
(b) submit such reports relating to the valuation of the Subject Asset's
securities as the Trust' Board of Trustees may reasonably request;
(c) place orders for purchases and sales of portfolio investments for the
Subject Assets;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Assets;
(e) maintain and preserve the records relating to its activities
hereunder required by the 1940 Act to be maintained and preserved by the Trust,
to the extent not maintained by the Trust' custodian, transfer agent or JHLICO.
(f) at the close of business each day, provide JHLICO and the custodian
with copies of the trade blotter for each transaction effected for the Subject
Assets;
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(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written information on all transactions effected for the
Subject Fund during the month, a summary listing all investments held in such
Fund 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 Fund; and
(h) absent specific instructions to the contrary provided to it by XXXXXX
and subject to Advisers' receipt of all necessary voting materials, vote all
proxies with respect to investments of the Subject Assets in accordance with
Advisers' proxy voting policy as provided to JHLICO upon request.
The Trust and JHLICO will provide timely information to the Sub-Manager
regarding such matters as purchases and redemptions of shares in the Subject
Assets and the cash requirements of, and cash available for investment in, the
Subject Assets, and all information as may be reasonably necessary or
appropriate in order for the Sub-Manager to perform its responsibilities
hereunder. On its own initiative, the Sub-Manager will apprise JHLICO and the
Trust of important developments materially affecting the Subject Assets and will
furnish JHLICO and the Trust' Board of Trustees from time to time such
information as is appropriate for this purpose.
Advisers will not consult with any other sub-manager to the Subject Assets
or to any other Fund of the Trust concerning transactions of the Subject Assets
in securities or other assets, except as such consultations may be reasonably
necessary in order to ensure compliance with paragraphs (a) and (b) of Rule
12d3-1 under the 1940 Act.
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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 Subject Assets and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(b) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental agencies; and
(c) 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.
4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Assets as
herein provided, JHLICO shall pay to the Sub-Manager a fee (for payment of which
the Trust shall have no obligation or liability) based on the Current Net Assets
(as defined below) of the Subject Assets, 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 the Subject Assets
during any calendar month, the fee with respect to the Subject Assets accrued to
termination shall be paid. "Current Net Assets" shall mean the net assets of the
Subject Assets as of the most recent preceding day for which the Subject Fund's
net assets were computed.
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5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the Subject Assets,
Advisers is authorized to select the brokers or dealers that will execute
purchase and sale transactions for the Subject Assets 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 Subject
Assets. 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 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.
The fees payable to Advisers by JHLICO hereunder shall be reduced by any
tender offer solicitation fees or similar payments received by Advisers, in
connection with the tender of investments of any Fund (less direct expenses
incurred by Advisers in connection with obtaining such fees or payments).
Advisers shall use its best efforts to recapture all available tender offer
solicitation fees and similar payments in connection with tenders of the
securities of any Fund, provided that neither Advisers nor any of its affiliates
shall be required to register as a broker-dealer for this purpose. Advisers
shall advise JHLICO and the Trust's Board of Trustees of any fees or payments of
whatever type which it may be possible for Advisers or an affiliate of it to
receive in connection with the purchase or sale of investment securities for the
Subject Fund.
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6. 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 for any reason, all records relating to the Subject Assets shall be
promptly returned to the Trust, free from any claim or retention of rights by
Advisers except that Advisers may retain such books and records (or copies
thereof) required under the 1940 Act record keeping provisions, as amended from
time to time. 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 inspection by representatives
of regulatory authorities or other persons reasonably designated by the Trust.
Advisers further agrees to maintain, prepare and preserve such books and records
in accordance with the 1940 Act and rules thereunder, including but not limited
to, Rules 31a-1 and 31a-2 and to supply all information requested by any
insurance regulatory authorities to determine whether all insurance laws and
regulations are being complied with.
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
if such disclosure is expressly required by applicable federal or state
regulatory authorities.
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 it.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Advisers or
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 gross
negligence in the
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performance of its duties or the reckless disregard of its obligations and
duties under this Agreement or 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 the Subject
Assets; 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
the Subject Fund and with the provisions of the Trust's Declaration of Trust,
Bylaws, prospectus and statement of additional information; shall manage the
Subject Assets (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
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective on the date hereof and
shall remain in full force and effect until the earlier of (i) 150 days from the
date hereof; (ii) the
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date a superseding agreement which has been approved by vote of a majority of
the outstanding voting shares of the Subject Fund becomes effective; or (iii)
such other time as may be mutually agreed to by the parties hereto.
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 at any time, without
payment of any penalty, by vote of the Trustees of the Trust, by vote of a
majority of the outstanding shares of the Subject 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 or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE.
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 portfolio management services and
advice to other investment companies, whether or not registered, and other
investment advisory clients.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Assets, the 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
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the Subject Fund with those for other registered investment companies managed 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.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing. 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 Trust personally, but only bind the trust property of the Trust, as
provided in the Trust' Declaration of Trust.
13. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
XXXX XXXXXXX VARIABLE SERIES
TRUST I
ATTEST:
By: ____________________
Title: Chairman
ATTEST: XXXX XXXXXXX LIFE INSURANCE
COMPANY
By: ____________________
Title: Senior Vice Presiden
ATTEST: XXXX XXXXXXX ADVISERS, LLC
By: ____________________
Title: ____________________
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SCHEDULE I
FEES
----
Active Bond Fund
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
On the first $100 million of Subject Assets 25 basis points
(0.25%) per annum
On the next $150 million of Subject Assets 20 basis points
(0.20%) per annum
On the next $250 million of Subject Assets 16 basis points
(0.16%) per annum
On the next $500 million of Subject Assets 12.5 basis points
(0.125%) per annum
On Subject Assets over $1 billion 10 basis points
(0.10%) per annum
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