EXHIBIT 5.3
INVESTMENT SUBADVISORY AGREEMENT WITH
WELLINGTON MANAGEMENT COMPANY LLP
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement is made by and between Hartford
Investment Financial Services Company, a Delaware corporation ("HIFSCO") and
Wellington Management Company, LLP, a Massachusetts partnership ("Wellington
Management").
WHEREAS, HIFSCO has entered into an agreement for the provision of
investment management services to the ITT Hartford Mutual Funds, Inc. (the
"Company") currently comprised of the ITT Hartford Small Company Fund, ITT
Hartford Capital Appreciation Fund, ITT Hartford International Opportunities
Fund, ITT Hartford Dividend and Growth Fund, ITT Hartford Stock Fund, ITT
Hartford Advisers Fund, ITT Hartford Bond Income Strategy Fund and ITT Hartford
Money Market Fund, and
WHEREAS, HIFSCO wishes to engage the services of Wellington Management
Company as Sub-Adviser to the ITT Hartford Small Company Fund, ITT Hartford
Capital Appreciation Fund, ITT Hartford International Opportunities Fund, ITT
Hartford Dividend and Growth Fund, ITT Hartford Stock Fund and ITT Hartford
Advisers Fund (each a "Portfolio" and together the "Portfolios"), and
WHEREAS, Wellington Management is willing to perform advisory services on
behalf of the Portfolios upon the terms and conditions and for the compensation
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the parties hereto agree as follows:
1. HIFSCO hereby employs Wellington Management to serve as Sub-Adviser with
respect to the assets of the Portfolios and to perform the services
hereinafter set forth subject to the terms and conditions of the investment
objectives, policies and restrictions of each Portfolio, and Wellington
Management hereby accepts such employment and agrees during such period to
assume the obligations herein set forth for the compensation herein
provided.
2. Wellington Management shall evaluate and implement an investment program
appropriate for each Portfolio which program shall be amended and updated
from time to time as financial and other economic conditions change as
determined by HIFSCO and Wellington Management.
3. Wellington Management, in consultation with HIFSCO when appropriate, will
make all determinations with respect to the investment of the assets of the
Portfolios and the purchase or sale of portfolio securities, and shall take
such
steps as may be necessary to implement the same. Such determinations and
services shall include advising the Company's Board of Directors of the
manner in which voting rights, rights to consent to corporate action, and
any other non-investment decisions pertaining to a Portfolio's securities
should be exercised.
4. Wellington Management will regularly furnish reports with respect to the
Portfolios at periodic meetings of the Company's Board of Directors and at
such other times as may be reasonably requested by the Company's Board of
Directors, which reports shall include Wellington Management's economic
outlook and investment strategy and a discussion of the portfolio activity
and the performance of the Portfolios since the last report. Copies of all
such reports shall be furnished to HIFSCO for examination and review within
a reasonable time prior to the presentation of such reports to the
Company's Board of Directors.
5. Wellington Management shall manage each Portfolio in conformity with the
Company's Articles of Incorporation and By-laws, each as amended from time
to time, and the Investment Company Act of 1940, as amended, other
applicable laws, and to the investment objectives, policies and
restrictions of each Portfolio as set forth in the Portfolios' prospectus
and statement of additional information, or any investment guidelines or
other instructions received in writing from HIFSCO, and subject further to
such policies and instructions as the Board of Directors or HIFSCO may from
time to time establish and deliver to Wellington Management.
In addition, Wellington Management will cause the Portfolios to comply with
the requirements of (a) Section 851(b)(2) of the Internal Revenue Code of
1986, as amended (the "Code") regarding derivation of income from specified
investment activities; (b) Section 851(b)(3) of the Code regarding the
limitation of gains from the disposition of securities and certain other
investments held less than three months; and (c) Section 851(b)(4) of the
Code regarding diversification of the Portfolios' assets.
6. Wellington Management will select the brokers or dealers that will execute
the purchases and sales of portfolio securities for the Portfolios and
place, in the name of each Portfolio or its nominees, all such orders.
When placing such orders, Wellington Management shall use its best efforts
to obtain the best net security price available for each Portfolio. Subject
to and in accordance with any directions that the Board of Directors may
issue from time to time, Wellington Management may also be authorized to
effect individual securities transactions at commission rates in excess of
the minimum commission rates
2
available, if Wellington Management determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage or research services provided by such broker or dealer, viewed in
terms of either that particular transaction or Wellington Management's
overall responsibilities with respect to the Portfolios and Wellington
Management's other advisory clients. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty
created by this Agreement or otherwise. Wellington Management will promptly
communicate to the Board of Directors such information relating to
portfolio transactions as they may reasonably request.
7. (a) As compensation for the performance of the services by Wellington
Management hereunder, HIFSCO shall pay to Wellington Management, as
promptly as possible after the last day of each calendar year quarter, a
fee accrued daily and paid quarterly, based upon the following annual rates
and calculated based upon the average daily net asset values of each of the
Portfolios as follows:
ITT HARTFORD SMALL COMPANY FUND, ITT HARTFORD CAPITAL APPRECIATION
FUND AND ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND.
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $50,000,000 0.40%
Next $100,000,000 0.30%
Next $350,000,000 0.25%
Next $500,000,000 0.20%
Over $1 Billion 0.175%
ITT HARTFORD DIVIDEND AND GROWTH FUND, ITT HARTFORD STOCK FUND AND
ITT HARTFORD ADVISERS FUND.
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $50,000,000 0.325%
Next $100,000,000 0.25%
Next $350,000,000 0.20%
Next $500,000,000 0.15%
Over $1 Billion 0.125%
Wellington Management may waive all or a portion of its fees from
time to time as agreed between the parties.
3
If it is necessary to calculate the fee for a period of time which is
not a calendar quarter, then the fee shall be (i) calculated at the
annual rates provided above but prorated for the number of days
elapsed in the period in question, as a percentage of the total number
of days in such period, (ii) based upon the average of each
Portfolio's daily net asset value for the period in question, and
(iii) paid within a reasonable time after the close of such period.
(b) Wellington Management will bear all expenses in connection with the
performance of its services under this Agreement.
(c) Wellington Management will not be entitled to receive any payment for
the performance of its services hereunder from the Portfolios.
(d) Wellington Management agrees to notify HIFSCO of any change in
Wellington Management's personnel that are directly involved in the
management of the Portfolios within a reasonable time following the
occurrence of such change.
8. Wellington Management shall not be liable for any loss or losses sustained
by reason of any investment including the purchase, holding or sale of any
security as long as Wellington Management shall have acted in good faith
and with due care; provided, however, that no provision in this Agreement
shall be deemed to protect Wellington Management, and Wellington Management
shall indemnify HIFSCO, for any and all loss, damage, judgment, fine or
award paid in settlement and attorney's fees related to Wellington
Managements' willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. (a) This Agreement shall become effective on March 3, 1997 and shall
continue in effect through July 22, 1998. This Agreement, unless
sooner terminated in accordance with 9(b) below, shall continue in
effect from year to year thereafter provided that its continuance is
specifically approved at least annually (1) by a vote of the majority
of the members of the Board of Directors of the Company or by a vote
of a majority of the outstanding voting securities of each Portfolio,
and (2) in either event, by the vote of a majority of the members of
the Company's Board of 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 this Agreement.
4
(b) This Agreement (1) may be terminated with respect to each Portfolio at
any time without the payment of any penalty either by vote of the
members of the Board of Directors of the Company or by a vote of a
majority of any Portfolio's outstanding voting securities, or by
HIFSCO on written notice to Wellington Management, (2) shall
immediately terminate in the event of its assignment, (3) may be
terminated by Wellington Management on ninety days' prior written
notice to HIFSCO, but such termination will not be effective until
HIFSCO shall have contracted with one or more persons to serve as a
successor Sub-Adviser for the Portfolio (or HIFSCO or an affiliate of
HIFSCO agrees to manage the Portfolio) and such person(s) shall have
assumed such position, and (4) will terminate automatically upon
termination of the advisory agreement between HIFSCO and the Company
of even date herewith.
(c) As used in this Agreement, the terms "assignment," "interested
parties" and "vote of a majority of the Company's outstanding voting
securities" shall have the meanings set forth for such terms in the
Investment Company Act of 1940, as amended.
(d) Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party or parties at
the current office address provided by each party.
10. Nothing in this Agreement shall limit or restrict the right of any partner,
officer, or employee of Wellington Management to engage in any business or
to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of Wellington Management to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
11. HIFSCO agrees that neither it nor any affiliate of HIFSCO will use
Wellington Management's name or refer to Wellington Management or
Wellington Management's clients in marketing and promotional materials
without prior notification to and authorization by Wellington Management,
such authorization not to be unreasonably withheld.
12. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
5
13. The amendment of this Agreement for the sole purpose of adding one or more
Portfolios shall not be deemed an amendment affecting an already existing
Portfolio and requiring the approval of shareholders of that Portfolio.
14. To the extent that federal securities laws do not apply, this Agreement and
all performance hereunder shall be governed by the laws of the State of
Connecticut which apply to contracts made and to be performed in the State
of Connecticut.
[The remainder of this page is left blank intentionally.]
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the 3rd day of March, 1997.
HARTFORD INVESTMENT FINANCIAL
SERVICES COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
WELLINGTON MANAGEMENT COMPANY, LLP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
7