Exhibit No. EX-99.d.1
INVESTMENT MANAGEMENT AGREEMENT
MGI FUNDS
AGREEMENT made this ____ day of ____________, 2005, by and between the MGI
Funds, a Delaware statutory trust (the "Trust"), and Mercer Global Investments,
Inc., a Delaware corporation (the "Advisor").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
is authorized to create separate series of shares, each having its own
investment objectives and policies; and
WHEREAS, the Advisor is a registered investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and engages in
the business of providing investment management services; and
WHEREAS, the Trust desires to retain the Advisor to render investment
management and other services with respect to the series of the Trust listed on
Schedule A, as may be amended from time to time, attached hereto and made a part
of this Agreement (each a "Fund," and collectively, the "Funds"), and the
Advisor is willing to render such services on the following terms and
conditions.
NOW, THEREFORE, in consideration of mutual covenants recited below, the
parties agree and promise as follows:
1. DUTIES OF THE TRUST
(a) The Trust, except as otherwise provided in this Agreement, is
responsible for conducting its own business and affairs and for all
necessary and incidental expenses and salaries including, but not
limited to, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer
of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; preparation and filing of such
forms as may be required by the various jurisdictions in which the
Trust's shares may be sold; preparation, printing and mailing of
reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and
state and federal registration fees.
(b) In the conduct of the respective businesses of the parties and in the
performance of this Agreement, the Trust and the Advisor may share
facilities common to each, with appropriate proration of expenses
between them.
(c) To the extent the Advisor incurs any costs by assuming expenses that
are an obligation of the Trust as set forth herein, the Trust shall
promptly reimburse the Advisor for such costs and expenses, except to
the extent the Advisor has otherwise agreed to bear such expenses. To
the extent the services for which the Trust is obligated to pay are
performed by the Advisor, the Advisor shall be entitled to recover
from the Trust to the extent of the Advisor's actual costs for
providing such services.
2. DUTIES OF THE ADVISOR
(a) The Trust employs the Advisor generally to manage the investment and
reinvestment of the assets of each Fund. Subject always to the
supervision and control of the Trust's Board of Trustees, the Advisor
will have: (i) overall supervisory responsibility for the general
management and investment of each Fund's assets; (ii) full discretion
to select new or additional sub-advisors for each Fund; (iii) full
discretion to enter into and materially modify existing sub-advisory
agreements with sub-advisors; (iv) full discretion to terminate and
replace any sub-advisor; and (v) full investment discretion to make
all determinations with respect to the investment of a Fund's assets
then managed by a sub-advisor; provided that, any agreement with a
sub-advisor will be in compliance with, and approved as required by,
the 1940 Act, or in accordance with exemptive relief granted by the
U.S. Securities and Exchange Commission (the "Commission") under the
1940 Act. In connection with the Advisor's responsibilities under this
Agreement, the Advisor will assess each Fund's investment focus and
will seek to implement decisions with respect to the allocation and
reallocation of the Fund's assets among one or more current or
additional sub-advisors, from time to time, as the Advisor deems
appropriate, to enable the Fund to achieve its investment
objective(s). To the extent that the Advisor does hire any
sub-advisor, the Advisor will thereafter continuously review,
supervise and (where appropriate) administer the investment program of
the Fund. In addition, the Advisor will oversee and coordinate the
Funds' securities lending agent, and oversee the Funds' brokerage
commission recapture arrangements (if any).
(b) In addition to the investment management services described above, the
Trust employs the Advisor to provide the following administrative
services: (i) legal services necessary to maintain the Trust's
corporate existence; (ii) legal administration services (including
supervising the preparation of various reports filed with regulatory
authorities, including without limitation, Form N-SARs, Form N-CSRs,
Form N-Qs, proxy statements, periodic reports to shareholders, and
U.S. and foreign ownership reports; and preparing notices of
dividends, capital gains distributions and tax credits); (iii)
preparing materials for meetings of the Trust's Board of Trustees and
coordinating Board reporting; (iv) providing treasury functions
(including expense and expense limitation budgeting; authorizing
expenditures; and approving bills for payment on behalf of the Funds);
(vi) overseeing the Trust's independent registered public accounting
firm and the Trust's tax-related work; (vi) overseeing non-advisory
transition management matters; (vii) providing compliance services,
including monitoring each Fund's compliance with: the 1940 Act, and
the rules and regulations thereunder; state and foreign laws and
regulations applicable to the operation of investment companies; and
the Code of Ethics and other policies adopted by the Board or by
Mercer, in its capacity as investment advisor of the Funds, and
applicable to the Funds; and (viii) providing executive, clerical and
secretarial personnel needed to carry out the above responsibilities.
(c) The Advisor will provide, or direct any sub-advisor to provide, to the
administrator and the Trust, records concerning the Advisor's and
sub-advisor(s)' activities which the Trust is required to maintain,
and to render regular reports to the administrator and to the Trust's
officers and Trustees concerning the Advisor's and sub-advisor(s)'
performance of the foregoing responsibilities. The retention of a
sub-advisor by the Advisor shall not relieve the Advisor of its
responsibilities under this Agreement.
(d) The Advisor shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust, and in compliance
with such policies as the Trustees, from time to time, may establish,
and in compliance with the objectives, policies, and limitations for
each such Fund set forth in the Trust's prospectus(es) and statement
of additional information, as amended from time to time (referred to
collectively as the "Prospectus"), and applicable laws and
regulations. The Trust will furnish the Advisor, from time to time,
with copies of all amendments to the Prospectus, if any.
(e) The Advisor accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings, and
equipment and the personnel (including the costs of retaining any
sub-advisors) required by the Advisor to perform the services on the
terms and for the compensation provided herein. The Advisor 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 by the Funds. The Trust and the
Advisor acknowledge that the same individual may serve as the Chief
Compliance Officer (as that term is used in Rule 38a-1 under the 1940
Act and Rule 206(4)-7 under the Advisers Act) (the "CCO") of the Trust
and the Advisor, respectively, and that the same personnel may provide
compliance services to the Trust and the Advisor. The costs of the CCO
and the compliance personnel, including their salaries, may be
allocated among the Trust and the Advisor.
3. DELIVERY OF DOCUMENTS
(a) The Trust has furnished the Advisor with copies properly certified or
authenticated of each of the following, and will furnish any
amendments and restatements as they are effected:
(i) The Trust's Agreement and Declaration of Trust (such Agreement
and Declaration of Trust, as presently in effect and as it shall,
from time to time, be amended, is herein called the "Declaration
of Trust");
(ii) By-Laws of the Trust (such By-Laws, as in effect on the date of
this Agreement and as amended, from time to time, are herein
called the "By-Laws"); and
(iii) Prospectus(es) of the Fund(s).
(b) The Advisor has furnished to the Trust a copy of its Form ADV, as
filed with the Commission, and will furnish any amendment thereto as
may be effected.
4. OTHER COVENANTS
The Advisor agrees that it:
(a) will comply with all applicable rules and regulations of the
Commission and, in addition, will conduct its activities under this
Agreement in accordance with other applicable law;
(b) will place, or will direct the sub-advisors to place, orders pursuant
to its/their investment determinations for the Fund(s) either directly
with the issuer or with any broker or dealer. In executing portfolio
transactions and selecting brokers or dealers, the Advisor will, or
will direct the sub-advisors to, use its/their best efforts to seek on
behalf of a Fund the best overall terms available. In assessing the
best overall terms available for any transaction, the Advisor (or any
sub-advisor) 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 or dealer to execute a particular transaction, the Advisor (or
any sub-advisor) may also consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to a Fund and/or other
accounts over which the Advisor or an affiliate of the Advisor may
exercise investment discretion. The Advisor (or any sub-advisor) is
authorized to pay to a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio
transaction for any 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 Advisor (or any sub-advisor)
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 in terms of the overall responsibilities of the Advisor
to a Fund. Such authorization is subject to termination at any time by
the Trust's Board of Trustees for any reason. In no instance, will any
Fund's securities be purchased from or sold to the Advisor, any
sub-advisor engaged with respect to that Fund, the Trust's principal
underwriter, or any affiliated person of the Trust, the Advisor, any
sub-advisor or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Commission and the
1940 Act.
5. COMPENSATION OF THE ADVISOR
(a) For the services to be rendered by the Advisor as provided in Sections
1 and 2 of this Agreement, the Trust shall pay to the Advisor
compensation at the rates specified in Schedule A, as may be amended
from time to time, attached hereto and made a part of this Agreement.
Such compensation shall be paid to the Advisor at the end of each
month and shall be calculated by applying a daily rate to the assets
of each Fund, based on the annual percentage rates as specified in the
attached Schedule A. The fee shall be based on the average daily net
assets for the month involved.
(b) Any advisory fees that may be charged by any sub-advisors hired by the
Advisor are the sole obligation of the Advisor, and not of the Trust.
(c) If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion
that the number of calendar days during which the Agreement is in
effect, bears to the number of calendar days in the month, and shall
be payable within 10 days after the date of termination.
(d) The Advisor may voluntarily or contractually agree to reduce any
portion of the compensation or reimbursement of expenses due to the
Advisor pursuant to this Agreement and may similarly agree to make
payments to limit expenses that are the responsibility of the Trust
under this Agreement. Any such reduction or payment shall be
applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or
reimbursement due to the Advisor hereunder or to continue future
payments. Any such reduction will be agreed upon prior to accrual of
the related expense or fee and will be estimated daily. Any fee
voluntarily reduced by the Advisor and any Fund expense paid by the
Advisor voluntarily or pursuant to an agreed expense limitation shall
be reimbursed by the Fund to the Advisor in the first, second, or
third (or any combination thereof) fiscal year next succeeding the
fiscal year of the withholding, reduction, or payment to the extent
permitted by applicable law if the aggregate expenses for the next
succeeding fiscal year, second fiscal year or third succeeding fiscal
year do not exceed any limitation to which the Advisor has agreed.
6. REPORTS
The Advisor shall furnish the Trust's Board of Trustees such periodic and
special reports as the Board reasonably may request, including reports on the
nature and quality of services provided by any sub-advisors. The Advisor shall
provide such information as the Board of Trustees may reasonably request and
such information as shall be reasonably necessary to evaluate the terms of any
investment management contract.
7. STATUS OF THE ADVISOR
The services of the Advisor to the Trust are not to be deemed exclusive,
and the Advisor shall be free to render similar services to others so long as
its services to the Trust are not impaired thereby. The Advisor shall be deemed
to be an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Trust in any way
or otherwise be deemed an agent of the Trust. To the extent that the purchase or
sale of securities or other investments of any issuer may be deemed by the
Advisor to be suitable for two or more accounts managed by the Advisor, the
available securities or investments may be allocated in a manner believed by the
Advisor to be equitable to each account. It is recognized that, in some cases,
this may adversely affect the price paid or received by the Trust or the size or
position obtainable for or disposed by the Trust or any Fund.
8. USE OF THE MGI NAME
In accordance with the Declaration of Trust of the Trust, in the event that
the Advisor ceases to be the Trust's investment manager for any reason, the
Trust will (unless the Advisor otherwise agrees in writing) take all necessary
steps to cause the Trust to change to a name not including the word "MGI,"
within a reasonable period of time.
9. CERTAIN RECORDS
The Advisor shall maintain, and cause any sub-advisors to maintain, books
and records with respect to the Advisor's and the sub-advisor's respective
services to the Funds in accordance with good practice, applicable federal and
state securities laws, and such instructions as may be provided to it by the
Trust from time to time.
10. LIMITATION OF LIABILITY OF THE ADVISOR
The duties of the Advisor shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the
Advisor hereunder. The Advisor 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 malfeasance, 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
federal and state law that cannot be waived or modified hereby. (As used in this
Section 10, the term "Advisor" shall include directors, officers, employees and
other corporate agents of the Advisor, as well as that corporation itself.)
11. PERMISSIBLE INTERESTS
Trustees, agents, and shareholders of the Trust are or may be interested in
the Advisor (or any successor thereof) as directors, partners, officers, or
shareholders, or otherwise; directors, partners, officers, agents, and
shareholders of the Advisor are or may be interested in the Trust as Trustees,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Trust as a shareholder or otherwise subject to the
provisions of applicable law. All such interests shall be fully disclosed
between the parties on an ongoing basis and in the Trust's Prospectuses as
required by law. In addition, brokerage transactions for the Trust may be
effected through affiliates of the Advisor or any sub-advisor if approved by the
Board of Trustees, subject to the rules and regulations of the Commission.
12. DURATION AND TERMINATION
This Agreement, unless sooner terminated as provided herein, shall for each
Fund listed on Schedule A attached hereto remain in effect from the date of
execution or, if later, the date the initial capital to a series of the Trust is
first provided (the "Effective Date"), until two years from the Effective Date,
and thereafter, for periods of one year so long as such continuance thereafter
is specifically approved at least annually: (i) by the vote of a majority of
those 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, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Fund; provided, however,
that if the shareholders of any Fund fail to approve the Agreement as provided
herein, the Advisor may continue to serve hereunder in the manner and to the
extent permitted by the 1940 Act and the 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
1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Fund at any time, without the
payment of any penalty, by vote of a majority of the Trustees of the Trust 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 Advisor, or by the
Advisor at any time without the payment of any penalty, on 90 days written
notice to the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment (as that term is interpreted under the 1940 Act).
This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
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 exemptions as may be granted by the Commission.
13. GOVERNING LAW
This Agreement shall be governed by the internal laws of the State of New
York, without regard to conflict of law principles; provided, however, that
nothing herein shall be construed as being inconsistent with the 1940 Act.
14. NOTICE
Any notice, advice or report to be given pursuant to this Agreement shall
be deemed sufficient if delivered or mailed by registered, certified or
overnight mail, postage prepaid addressed by the party giving notice to the
other party at the last address furnished by the other party:
To the Advisor at: To the Trust at:
1166 Avenue of the Americas 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel Attention: Secretary
15. 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.
16. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings relating
to this Agreement's subject matter. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but such
counterparts, together, shall constitute only one instrument.
A copy of the Certificate of Trust of the Trust is on file with the
Secretary of State of Delaware, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees, and is not
binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
No series of the Trust shall be liable for the obligations of any other
series of the Trust. Without limiting the generality of the foregoing, the
Advisor shall look only to the assets of a particular Fund for payment of fees
for services rendered to that Fund.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXXX GLOBAL INVESTMENTS, INC. MGI FUNDS
By: By:
Schedule A
Investment Advisory Fee
---------------------------------------
----------------- ---------------------
Series Assets Up to Assets in Excess of
$750 Million $750 Million
MGI US Large Cap Growth Equity Fund 0.55 of 1% 0.53 of 1%
MGI US Large Cap Value Equity Fund 0.53 of 1% 0.51 of 1%
MGI US Small/Mid Cap Growth Equity Fund 0.90 of 1% 0.88 of 1%
MGI US Small/Mid Cap Value Equity Fund 0.90 of 1% 0.88 of 1%
MGI Non-US Core Equity Fund 0.75 of 1% 0.73 of 1%
MGI Core Opportunistic Fixed Income Fund 0.35 of 1% 0.33 of 1%
MGI US Short Maturity Fixed Income Fund 0.25 of 1% 0.23 of 1%
