EXHIBIT (d)(2)(i)
SUB-ADVISORY AGREEMENT
Agreement made as of December ___, 2001 (the "Agreement") between
New York Life Investment Management LLC, a Delaware limited liability company
(the "Manager"), and McMorgan & Company LLC, a Delaware limited liability
company (the "Subadvisor").
WHEREAS, the Manager has entered into a Management Agreement, dated
December ___, 2001 (the "Management Agreement") with The MainStay Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the
U.S. Large Cap Equity Fund (the "Fund");
WHEREAS, under the Management Agreement, the Manager has agreed to
provide certain investment advisory and related administrative services to the
Fund,
WHEREAS, the Management Agreement permits the Manager to delegate
certain of its investment advisory duties under the Management Agreement to a
subadvisor; and
WHEREAS, the Manager desires to retain the Subadvisor to furnish
certain investment advisory services with respect to the Fund and the Subadvisor
is willing to furnish such services;
NOW, THEREFORE, the parties agree as follows:
I. Appointment. The Manager hereby appoints the Subadvisor as an investment
subadviser with respect to the Fund for the period and on the terms set forth in
this Agreement. The Subadvisor accepts that appointment and agrees to render the
services herein set forth, for the compensation herein provided.
II. Duties as Subadvisor. Subject to the supervision of the Board of Trustees of
the Trust and the Manager, the Subadvisor shall manage the investment operations
of the Fund and the composition of the portfolio of the Fund, including the
purchase, retention and disposition of securities therein, in accordance with
the investment objectives, policies and restrictions of the Fund, as specified
in the currently effective Prospectus (as hereinafter defined) and subject to
the following understandings:
A. The Subadvisor shall provide supervision of the Fund's investments
and determine from time to time what investments or securities will be
purchased, retained, sold or lent by the Fund, and what portion of the Fund's
assets will be invested or held uninvested as cash.
B. The Subadvisor shall use its best judgment in the performance of its
duties under this Agreement.
C. The Subadvisor, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of Trust,
By-Laws and Prospectus (each as hereinafter defined) of the Trust and with the
instructions and directions of the Board of Trustees and the Manager and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
D. The Subadvisor shall determine the securities to be purchased or
sold by the Fund and will place orders pursuant to its determination with or
through such persons, brokers or dealers (including NYLIFE Securities Inc.) in
conformity with the policy with respect to brokerage as set forth in the Trust's
Registration Statement and Prospectus (each as hereinafter defined) or as the
Board of Trustees may direct from time to time. It is recognized that, in
providing the Fund with investment supervision or the placing of orders for
portfolio transactions, the Subadvisor will give primary consideration to
securing the most favorable price and efficient execution. Consistent with this
policy, the Subadvisor may consider the financial responsibility, research and
investment information and other services provided by brokers or dealers who may
effect or be a party to any such transaction or other transactions to which
other clients of the Subadvisor may be a party. It is understood that neither
the Fund, the Trust, the Manager nor the Subadvisor has adopted a formula for
allocation of the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Subadvisor have access to
supplemental investment and market research and security and economic analyses
provided by certain brokers who may execute brokerage transactions at a higher
cost to the Fund than may result when allocating brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the Subadvisor is authorized to place orders for the purchase and
sale of securities for the Fund with such certain brokers, subject to review by
the Trust's Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful to the Subadvisor in connection with its services to
other clients.
On occasions when the Subadvisor deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients, the
Subadvisor, to the extent permitted by applicable laws and regulations, may, but
shall be under no obligation to, aggregate the securities to be so sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as expenses incurred in the transaction, will be
made by the Subadvisor in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other clients.
E. The Subadvisor shall maintain all books and records with respect to
the Fund's securities transactions required by sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act and any other books
and records required to be maintained by it under the 1940 Act and the Rules
thereunder and shall render to the Manager and to the Trust's Trustees such
periodic and special reports as the Manager or the Trustees may reasonably
request.
F. The Subadvisor shall provide the Fund's Custodian on each business
day with information relating to the execution of all portfolio transactions
pursuant to standing instructions.
III. Subadvisor Personnel. The Subadvisor shall authorize and permit any of its
directors, officers and employees who may be elected or appointed as Trustees or
officers of the Trust to serve in the capacities in which they are elected or
appointed. Services to be furnished by the Subadvisor under this Agreement may
be furnished through the medium of any of such directors, officers, or
employees.
IV. Books and Records. The-Subadvisor shall keep the Fund's books and records
required to be maintained by it, pursuant to paragraph 2 hereof. The Subadvisor
agrees that all records which it maintains for the Fund are the property of the
Fund, and it will surrender promptly to the Fund any of such records upon the
Fund's request. The Subadvisor further agrees to preserve for the periods
prescribed by Rule 31a-2 as promulgated by the Securities and Exchange
Commission (the "Commission") under the 1940 Act any such records as are
required to be maintained by the Subadvisor pursuant to paragraph 2 hereof.
V. Services Not Exclusive. The services furnished by the Subadvisor hereunder
are not to be deemed exclusive and the Subadvisor shall be free to furnish
similar or different services to others so long as its services under this
Agreement are not impaired thereby.
VI. Documents. The Manager has delivered to the Subadvisor copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
A. Declaration of Trust of the Trust, filed with the Secretary of The
Commonwealth of Massachusetts (such Declaration of Trust, as in effect on the
date hereof and as amended from time to time, is herein called the "Declaration
of Trust");
B. By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
C. Certified Resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Subadvisor and approving the form of this
Agreement;
D. Written Instrument to Establish and Designate Separate Series of
Shares;
E. Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed with the
Commission relating to the Fund and the Fund's Shares and all amendments
thereto;
F. Notification of Registration of the Trust under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and
G. Each Prospectus and Statement of Additional Information of the Trust
(such Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time, being herein called
collectively the "Prospectus").
VII. Expenses. During the term of this Agreement, the Subadvisor will bear all
expenses incurred by it in connection with its services under this Agreement.
The Subadvisor shall not be responsible for any expenses incurred by the Trust,
the Fund or the Manager.
VIII. Compensation. For the services provided and the expenses assumed by the
Subadvisor pursuant to this Agreement, the Manager, not the Trust or the Fund,
will pay to the Subadvisor a fee, computed daily and payable monthly, at an
annual rate, as set forth opposite the Fund's name on Schedule A, of the average
daily net assets of the Fund.
IX. Standard of Care. Subject to the applicable law, the Subadvisor shall not be
liable for any error of judgment or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
X. Duration and Termination. This Agreement shall continue in effect for a
period of more than two years from the date hereof only so long as such
continuance is specifically approved at least annually with respect to the Fund
in conformity with the requirements of the 1940 Act and the Rules thereunder.
Notwithstanding the foregoing, this Agreement may be terminated: (a) with
respect to the Fund at any time without penalty upon the vote of a majority of
the Trust's Trustees or by vote of the majority of the Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Subadvisor, (b) by the
Manager at any time without penalty upon sixty (60) days' written notice to the
Subadvisor or immediately upon material breach by the Subadvisor or immediately
if, in the reasonable judgment of the Manager, the Subadvisor becomes unable to
discharge its duties and obligations under this Agreement, or (c) by the
Subadvisor at any time without penalty, upon sixty (60) days' written notice to
the Fund. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 0000 Xxx) or the assignment or termination of the
Management Agreement.
XI. Other Business. Nothing in this Agreement shall limit or restrict the right
of any of the Subadvisor's directors, officers, or employees who may also be a
Trustee, officer, or employee of the Trust to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any business, whether of a similar or dissimilar nature, nor limit or
restrict the Subadvisor's right to engage in any other business or to render
services of any kind to any other corporation, trust, firm, individual or
association.
XII. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved (i) by a vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any such
party, and
(ii) by a vote of a majority of the Fund's outstanding voting
securities (unless in the case of (ii), the Trust receives a Commission order or
no-action letter permitting it to modify the Agreement without such vote).
XIII. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
XIV. Notice. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Manager at NYLIM Center, 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000; or (2) to the Subadvisor at Xxx Xxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
XV. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. 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. As
used in this Agreement, the terms "majority of the outstanding voting
securities," "affiliated person," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell" and "security" shall have the
same meaning as such terms have in the 1940 Act. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. This
Agreement may be signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
By: ___________________________________
Name:
Title:
MCMORGAN & COMPANY LLC
By: ____________________________________
Name:
Title:
SCHEDULE A
FUND ANNUAL RATE*
U.S. Large Cap Equity Fund 0.325%
* of the Fund's average daily net assets
