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Exhibit (d)(2)
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this ___ day of ____ , 1999, by and between Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company , a Delaware Corporation (the "Investment Manager"), and
Wellington Management Company, LLP (the "Sub-Adviser").
WHEREAS, the Company is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, which may
consist of several series, each having its own investment policies; and
WHEREAS, one of those series is the Commonfund Short Duration Fund (the
"Fund"); and
WHEREAS, the Company has entered into an investment advisory agreement
with the Investment Manager pursuant to which the Investment Manager will act as
investment manager to the Fund; and
WHEREAS, the Investment Manager, acting with the approval of the
Company, wishes to retain the Sub-Adviser to render discretionary investment
advisory services with respect to that portion of the Fund that may be allocated
by the Investment Manager for management by the Sub-Adviser from time to time
(together with all income earned on those assets and all realized and unrealized
capital appreciation related to those assets (the "Managed Assets"), and the
Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF SUB-ADVISER. The Sub-Adviser shall manage the
investment and reinvestment of the Managed Assets and determine
in its discretion, the securities and other property to be
purchased or sold and the portion of the Managed Assets to retain
in cash. The Sub-Adviser shall review all proxy solicitation
materials and shall exercise any voting rights associated with
securities comprising the Managed Assets in the best interests of
the Fund and its shareholders. The Sub-Adviser shall provide the
Investment Manager and the Company with records concerning the
Sub-Adviser's activities that the Company is required to
maintain, and to render regular reports to the Investment Manager
and to the Company concerning the Sub-Adviser's discharge of the
foregoing responsibilities.
The Sub-Adviser shall discharge the foregoing responsibilities
subject to the written instructions and directions of the Company
and its Board of Directors
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and their agents, including the officers of the Company and the
Investment Manager, and in compliance with (i) such policies as
the Company may from time to time establish and communicate to
the Sub-Adviser, (ii) the objectives, policies, and limitations
for the Fund set forth in the Prospectus and Statement of
Additional Information as those documents may from time to time
be amended or supplemented from and delivered to the Sub-Adviser
(the "Prospectus and Statement of Additional Information"), (iii)
the Declaration of Trust of the Company, and (iv) applicable laws
and regulations including the Investment Company Act of 1940 (the
"1940 Act") and the Internal Revenue Code of 1986. If a conflict
in policies or guidelines referenced herein occurs, the
Prospectus and Statement of Additional Information shall control.
The Sub-Adviser agrees to perform such duties at its own expense
and to provide the office space, furnishings and equipment and
the personnel required by it to perform the services on the terms
and for the compensation provided herein. The Sub-Adviser will
not, however, pay for the cost of securities, commodities, and
other investments (including brokerage commissions and other
transaction charges, if any) purchased or sold for the Fund, nor
will the Sub-Adviser bear any expenses that would result in the
Company's inability to qualify as a regulated investment company
under provisions of the Internal Revenue Code.
2. DUTIES OF INVESTMENT MANAGER The Investment Manager shall
continue to have responsibility for all services to be provided
to the Fund pursuant to the Advisory Agreement between it and the
Company and shall oversee and review the Sub-Adviser's
performance under this Agreement.
The Investment Manager shall furnish to the Sub-Adviser current
and complete copies of the Declaration of Trust and By-laws of
the Company, and the current Prospectus and Statement of
Additional Information as those documents may be amended from
time to time.
3. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES. The Company shall
designate one or more custodians to hold the Managed Assets. The
custodians, as so designated, will be responsible for the
custody, receipt and delivery of securities and other assets of
the Fund including the Managed Assets, and the Sub-Adviser shall
have no authority, responsibility or obligation with respect to
the custody, receipt or delivery of securities or other assets of
the Fund including the Managed Assets. In the event that any cash
or securities of the Fund are delivered to the Sub-Adviser, it
will promptly deliver the same over to the custodian for the
benefit of and in the name of the Fund.
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Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by
payment to or delivery by the Fund of cash or securities due to
or from the Managed Assets.
Repurchase agreements including tri-party repurchase agreements
and other trading agreements may be entered into by the Fund
acting through designated officers or agents; custodians under
tri-party repurchase agreements will act as sub-custodians of the
Fund.
4. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Adviser is authorized to select
the brokers or dealers that will execute the purchases and sales
of portfolio securities and other property for the Fund in a
manner that implements the policy with respect to brokerage set
forth in the Prospectus and Statement of Additional Information
for the Fund or as the Board of Directors or the Investment
Manager may direct from time to time and in conformity with
federal securities laws.
In executing Fund transactions and selecting brokers or dealers,
the Sub-Adviser will use its best efforts to seek on behalf of
the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser
shall consider all factors that it deems relevant, including the
breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services
provided (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Directors and communicated to the
Sub-Adviser, the Sub-Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
that is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but
only if, the Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer
viewed in terms of that particular transaction or terms of the
overall responsibilities of the Sub-Adviser to the Fund. In
addition, the Sub-Adviser is authorized to allocate purchase and
sale orders for securities to brokers or dealers (including
brokers and dealers
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that are affiliated with the Investment Manager, Sub-Adviser or
the Company's principal underwriter) to take into account the
sale of shares of the Company if the Sub-Adviser believes that
the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance,
however, will Fund assets be purchased from or sold to the
Investment Manager, Sub-Adviser, the Company's principal
underwriter, or any affiliated person of either the Company, the
Investment Manager or the principal underwriter, acting as
principal in the transaction, except to the extent permitted by
the Securities and Exchange Commission ("SEC") and the 1940 Act.
b) Aggregating Orders. The that Sub-Adviser may aggregate orders
for purchase or sale of Managed Assets with similar orders being
made concurrently for other accounts managed by Sub-Adviser, if,
in Sub-Adviser's reasonable judgment, such aggregation shall
result in an overall economic benefit to the Fund, taking into
consideration the transaction price, brokerage commission and
other expenses. The Fund acknowledges that the determination of
such economic benefit to the Fund by Sub-Adviser may represent
Sub-Adviser's evaluation that the Fund is benefited by relatively
better purchase or sales prices, lower commission expenses and
beneficial timing of transactions or a combination of these and
other factors. In any single transaction in which purchases and
or sales of securities of any issuer for the account of the Fund
are aggregated with other accounts managed by Sub-Adviser, the
actual prices applicable to the transaction will be averaged
among the accounts for which the transaction is effected,
including the account of Fund.
5. COMPENSATION OF THE SUB-ADVISER. For the services to be rendered
by the Sub-Adviser under this Agreement, the Investment Manager
shall pay to the Sub-Adviser compensation at the rate specified
in Schedule 1 as it may be amended from time to time. Such
compensation shall be paid at the times and on the terms set
forth in Schedule 1. All rights of compensation under this
Agreement for services performed as of the termination date shall
survive the termination of this Agreement. Except as may
otherwise be prohibited by law or regulation (including any then
current SEC staff interpretations), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
6. OTHER EXPENSES. The Company shall pay all expenses relating to
mailing prospectuses, statements of additional information, proxy
solicitation material and shareholder reports to shareholders.
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7. REPORTS.
(i) The Company and the Sub-Adviser agree to furnish to each
other, current prospectuses, proxy statements, reports to
shareholders, certified copies of financial statements, and
such other information with regard to their affairs as each may
reasonably request. The Investment Manager will furnish to the
Sub-Adviser advertising and sales literature or other material
prepared for distribution to Fund shareholders or the public,
which refer to the Sub-Adviser or its clients in any way, prior
to the use thereof, and the Investment Manager shall not use
any such materials if the Sub-Adviser reasonably objects in
writing within ten (10) business days (or such other time as
may be mutually agreed) after receipt thereof.
(ii) The Sub-Adviser shall provide to the Fund's custodian, on
each business day, information relating to all transactions in
the Managed Assets and shall provide such information to the
Investment Manager upon request. The Sub-Adviser will make all
reasonable efforts to notify the Custodian of all orders to
brokers for the Managed Assets by 9:00 am EST on the day
following the trade date and will affirm the trade to the
Custodian before the close of business one business day after
the trade date (T + 1).
(iii) The Sub-Adviser will promptly communicate to the
Investment Manager and to the Company such information relating
to portfolio transactions as they may reasonably request.
(iv) The Sub-Adviser shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair
the ability of the Sub-Adviser to fulfill its commitments under
this Agreement.
8. STATUS OF SUB-ADVISER. The Sub-Adviser is and will continue to be
registered as such under the federal Investment Advisers Act of
1940. The services of the Sub-Adviser to the Company for the Fund
are not to be deemed exclusive, and the Sub-Adviser shall be free
to render similar services to others so long as its services to
the Fund are not impaired thereby. The Sub-Adviser shall be
deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to
act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
9. CERTAIN RECORDS. The Sub-Adviser shall maintain all books and
records with respect to transactions involving the Managed Assets
required by
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subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph
(f) of Rule 31a-1 under the 1940 Act. The Sub-Adviser shall
provide to the Investment Manager or the Board of Directors such
periodic and special reports, balance sheets or financial
information, and such other information with regard to its
affairs as the Investment Manager or the Board of Directors may
reasonably request.
The Sub-Adviser shall keep the books and records relating to the
Managed Assets required to be maintained by the Sub-Adviser under
this Agreement and shall timely furnish to the Investment Manager
all information relating to the Sub-Adviser's services under this
Agreement needed by the Investment Manager to keep the other
books and records of the Company required by Rule 31a-1 under the
1940 Act. The Sub-Adviser shall also furnish to the Investment
Manager any other information relating to the Managed Assets that
is required to be filed by the Investment Manager or the Company
with the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder) or any exemptive or
other relief that the Investment Manager or the Company obtains
from the SEC. The Sub-Adviser agrees that all records that it
maintains on behalf of the Company are property of the Company
and the Sub-Adviser will surrender promptly to the Company any of
such records upon the Company's request; provided, however, that
the Sub-Adviser may retain a copy of such records. In addition,
for the duration of this Agreement, the Sub-Adviser shall
preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said records to
any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Investment
Manager).
10. LIMITATION OF LIABILITY OF SUB-ADVISER. The duties of the
Sub-Adviser shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted
against the Sub-Adviser hereunder. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in
carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of
its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law or Federal
securities law which cannot be waived or modified hereby. (As
used in this Paragraph 10, the term "Sub-Adviser" shall include
directors, officers, employees and other corporate agents of the
Sub-Adviser as well as that entity itself).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company may
be interested in the Sub-Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the
Sub-Adviser are or may be interested in the
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Company as shareholders or otherwise; and the Sub-Adviser (or any
successor) is or may be interested in the Company as a
shareholder or otherwise. In addition, brokerage transactions for
the Company may be effected through affiliates of the Sub-Adviser
if approved by the Board of Directors of the Company subject to
the rules and regulations of the Securities and Exchange
Commission.
12. DURATION AND TERMINATION. This Agreement shall become effective
upon its approval by the Board of Directors of the Company and by
a vote of the majority of the outstanding voting securities of
the Fund; provided, however, that at any time the Adviser shall
have obtained exemptive relief from the Securities and Exchange
Commission permitting it to engage a Sub-Adviser without first
obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Fund(s) involved, the
Agreement shall become effective upon its approval by the
Company's Board of Directors. This Agreement shall remain in
effect until two years from date of execution, and thereafter,
for periods of one year so long as such continuance thereafter is
specifically approved at least annually by the vote of a (a)
majority of those Directors of the Company 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, and (b) by the Directors of the Company, or by the vote
of a majority of the outstanding voting securities of the Fund;
provided, however, that if the shareholders of the Fund fail to
approve the Agreement as provided herein, the Sub-Adviser may
continue to serve hereunder in the manner and to the extent
permitted by the Investment Company Act of 1940 and rules and
regulations thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the rules and regulations
thereunder.
This Agreement may be terminated at any time, without the payment
of any penalty, by vote of a majority of the Directors of the
Company or by vote of a majority of the outstanding voting
securities of the Fund on not less than 30 days nor more than 60
days written notice to the Sub-Adviser, by the Investment Manager
at any time without the payment of a penalty upon 90 days written
notice to the Sub-Adviser, or by the Sub-Adviser at any time
without the payment of any penalty on 90 days written notice to
the Investment Manager. This Agreement will automatically and
immediately terminate in the event of its assignment or in the
event of the termination of the Investment Manager's advisory
agreement with the Company. Any termination of this Agreement in
accordance with the terms hereof will not affect the obligations
or liabilities accrued prior to termination. Any notice
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under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at any office
of such party.
As used in this Section 12, the terms "assignment", "interested
persons," and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
1940 Act and the rules and regulations thereunder; subject to
such exceptions as may be granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by the
party giving notice to the other party at the last address
furnished by the other party to the party giving notice. At the
outset, such notices shall be delivered to the following
addresses:
(i) if to the Company:
c/o Commonfund Asset Management Company
Attention: President
000 Xxxx Xxxx Xxxx
Xxxxxxxx, XX. 00000;
(ii) if to the Investment Manager, at the foregoing address;
and
(iii) if to the Sub-Adviser:
Wellington Management Company, LLP
Attention: Regulatory Affairs
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000.
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable
provisions of the 1940 Act. To the extent that the applicable
laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the
latter shall control.
16. MISCELLANEOUS. This instrument constitutes the sole and only
agreement of the parties to it relating to its object; any prior
agreements, promises or representations not expressly set forth
in this Agreement are of no force and effect. No waiver or
modification of this Agreement shall be effective unless reduced
to writing and signed by the party to be charged. No failure to
exercise and no delay in exercising on the part of any party
hereto of any right, remedy, power or privilege hereunder shall
operate as a waiver thereof.
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Except as set forth in Section 12, this Agreement binds and
inures to the benefit of parties, their successors and assigns.
This Agreement may be executed in more than one counterpart each
of which shall be deemed an original and both of which, taken
together, shall be deemed to constitute one and the same
instrument. A copy of the Certificate of Trust of the Company is
on file with the Secretary of State of the State of Delaware and
notice is hereby given that the obligations under this instrument
are not binding on any of the Directors, officers or shareholders
of the Company. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by rule,
regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
COMMONFUND INSTITUTIONAL FUNDS
By:
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Attest:
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COMMONFUND ASSET MANAGEMENT COMPANY
By:
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Attest:
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WELLINGTON MANAGEMENT COMPANY, LLP
By:
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Attest:
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SCHEDULE 1
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED ___________, 0000
XXXXX
XXXXXXXXXX INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY
AND
WELLINGTON MANAGEMENT COMPANY
FEES
Daily Accrual
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Fees shall be accrued each day by applying to the Net Asset Value of the
Managed Assets at the end of that day, the daily rate, using a 365 day year,
equivalent to the following:
Rate
Managed Assets($) (% Per Annum)
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First $ 100 million 0.10%
Next $ 100 million 0.075%
Over $ 200 million 0.055%
Quarterly Payment
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Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET MANAGEMENT COMPANY WELLINGTON MANAGEMENT COMPANY, LLP
By: By:
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Name: Name:
Title: Title:
Date of this Schedule 1:
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