EXHIBIT 4(A)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated September 29, 2006, between Quantitative Master Series
Trust (the "Trust"), a Delaware statutory trust, on behalf of Master Aggregate
Bond Index Series, Master Enhanced S&P 500 Series, Master Enhanced International
Series, Master Extended Market Index Series, Master Enhanced Small Cap Series,
Master International Index Series, Master S&P 500 Index Series, Master Small Cap
Index Series and Master MidCap Index Series (each a "Fund" and together the
"Funds"), and BlackRock Advisors, LLC, a Delaware limited liability company (the
"Advisor").
WHEREAS, the Advisor has agreed to furnish investment advisory services to
each Fund, series of the Trust, an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Board of Trustees of the Trust has established and designated
the Fund as a series of the Trust; and
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Advisor is willing to furnish such services
upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General. The Advisor agrees, all as more fully set forth herein, to
act as investment advisor to the Funds with respect to the investment of the
Funds' assets and to supervise and arrange for the day to day operations of the
Funds and the purchase of securities for and the sale of securities held in the
investment portfolios of the Funds.
2. Duties and Obligations of the Advisor with Respect to Investment of
Assets of the Funds. Subject to the succeeding provisions of this section and
subject to the direction and control of the Trust's Board of Trustees, the
Advisor shall (i) act as investment advisor for and supervise and manage the
investment and reinvestment of the Funds' assets and in connection therewith
have complete discretion in purchasing and selling securities and other assets
for the Funds and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Funds; (ii)
supervise continuously the investment program of each Fund and the composition
of its investment portfolio; (iii) arrange, subject to the provisions of
paragraph 4 hereof, for the purchase and sale of securities and other assets
held in the investment portfolios of the Funds; and (iv) provide investment
research to the Funds.
3. Duties and Obligations of Advisor with Respect to the Administration of
the Funds. The Advisor also agrees to furnish office facilities and equipment
and clerical, bookkeeping and administrative services (other than such services,
if any, provided by the Funds' Custodian, Transfer Agent and Dividend Disbursing
Agent and other service providers)
for the Fund. To the extent requested by the Fund, the Advisor agrees to provide
the following administrative services:
(a) Oversee the determination and publication of each Fund's net
asset value in accordance with the Fund's policy as adopted from time to
time by the Board of Trustees;
(b) Oversee the maintenance by the Funds' Custodian and Transfer
Agent and Dividend Disbursing Agent of certain books and records of the
Funds as required under Rule 31a1(b)(4) of the 1940 Act and maintain (or
oversee maintenance by such other persons as approved by the Board of
Trustees) such other books and records required by law or for the proper
operation of the Funds;
(c) Oversee the preparation and filing of each Fund's federal, state
and local income tax returns and any other required tax returns;
(d) Review the appropriateness of and arrange for payment of each
Fund's expenses;
(e) Prepare for review and approval by officers of the Trust's
financial information for the Funds' semiannual and annual reports, proxy
statements and other communications with shareholders required or
otherwise to be sent to Fund shareholders, and arrange for the printing
and dissemination of such reports and communications to shareholders;
(f) Prepare for review by an officer of the Trust the Funds'
periodic financial reports required to be filed with the Securities and
Exchange Commission ("SEC") on Form N-SAR, Form N-CSR, Form N-PX, Form
N-Q, and such other reports, forms and filings, as may be mutually agreed
upon;
(g) Prepare such reports relating to the business and affairs of the
Funds as may be mutually agreed upon and not otherwise appropriately
prepared by the Funds' custodian, counsel or auditors;
(h) Make such reports and recommendations to the Board of Trustees
concerning the performance of the independent accountants as the Board of
Trustees may reasonably request or deems appropriate;
(i) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Funds' Custodian and Transfer
Agent and Dividend Disbursing Agent as the Board of Trustees may
reasonably request or deems appropriate;
(j) Oversee and review calculations of fees paid to the Funds'
service providers;
(k) Oversee each Fund's portfolio and perform necessary calculations
as required under Section 18 of the 1940 Act;
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(l) Consult with the Trust's officers, independent accountants,
legal counsel, custodian, accounting agent and transfer and dividend
disbursing agent in establishing the accounting policies of the Funds and
monitor financial and shareholder accounting services;
(m) Determine the amounts available for distribution as dividends
and distributions to be paid by each Fund to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and provide
the Funds' dividend disbursing agent and custodian with such information
as is required for such parties to effect the payment of dividends and
distributions and to implement the Funds' dividend reinvestment plan;
(n) Prepare such information and reports as may be required by any
banks from which a Fund borrows funds;
(o) Provide such assistance to the Custodian and the Trust's counsel
and auditors as generally may be required to properly carry on the
business and operations of the Fund;
(p) Respond to or refer to the Trust's officers or transfer agent,
shareholder (including any potential shareholder) inquiries relating to
the Funds; and
(q) Supervise any other aspects of the Funds' administration as may
be agreed to by the Trust and the Advisor.
All services are to be furnished through the medium of any directors,
officers or employees of the Advisor or its affiliates as the Advisor deems
appropriate in order to fulfill its obligations hereunder.
The Funds will reimburse the Advisor or its affiliates for all out of
pocket expenses incurred by them in connection with the performance of the
administrative services described in this paragraph 3. The Funds will reimburse
the Advisor and its affiliates for their costs in providing accounting services
to the Funds.
4. Covenants. (a) In the performance of its duties under this Agreement,
the Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended, and all applicable Rules and Regulations of
the Securities and Exchange Commission; (ii) any other applicable provision of
law; (iii) the provisions of the Declaration of Trust and By Laws of the Trust,
as such documents are amended from time to time; (iv) the investment objectives
and policies of the Funds as set forth in its Registration Statement on Form
N-1A and/or the resolutions of the Board of Trustees; and (v) any policies and
determinations of the Board of Trustees of the Trust; and
(b) In addition, the Advisor will:
(i) place orders either directly with the issuer or with any broker
or dealer. Subject to the other provisions of this paragraph, in placing
orders with brokers and dealers, the Advisor will attempt to obtain the
best price and the most favorable execution of its orders. In placing
orders, the Advisor will consider the experience and skill of the
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firm's securities traders as well as the firm's financial responsibility
and administrative efficiency. Consistent with this obligation, the
Advisor may select brokers on the basis of the research, statistical and
pricing services they provide to the Funds and other clients of the
Advisor. Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be performed by
the Advisor hereunder. A commission paid to such brokers may be higher
than that which another qualified broker would have charged for effecting
the same transaction, provided that the Advisor determines in good faith
that such commission is reasonable in terms either of the transaction or
the overall responsibility of the Advisor to the Funds and its other
clients and that the total commissions paid by each Fund will be
reasonable in relation to the benefits to the Fund over the long term.
Subject to the foregoing and the provisions of the 1940 Act, the
Securities Exchange Act of 1934, as amended, and other applicable
provisions of law, the Advisor may select brokers and dealers with which
it or the Trust is affiliated;
(ii) maintain a policy and practice of conducting its investment
advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Advisor makes investment
recommendations for the Funds, its investment advisory personnel will not
inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for each Fund's account are customers of the
commercial department of its affiliates; and
(iii) treat confidentially and as proprietary information of the
Funds all records and other information relative to the Funds, and the
Funds' prior, current or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by each Fund, which approval shall not be
unreasonably withheld and may not be withheld where the Advisor may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by the Funds.
5. Services Not Exclusive. Nothing in this Agreement shall prevent the
Advisor or any officer, employee or other affiliate thereof from acting as
investment advisor for any other person, firm or corporation, or from engaging
in any other lawful activity, and shall not in any way limit or restrict the
Advisor or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Advisor
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
6. Sub-Advisors. The Advisor may from time to time, in its sole discretion
to the extent permitted by applicable law, appoint one or more sub-advisors,
including, without limitation, affiliates of the Advisor, to perform investment
advisory services with respect to the Funds. The Advisor may terminate any or
all sub-advisors in its sole discretion at any time to the extent permitted by
applicable law.
7. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Trust are the
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property of the Trust and further agrees to surrender promptly to the Trust any
such records upon the Trust's request. The Advisor further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Advisor will bear all
costs and expenses of its employees and any overhead incurred in connection with
its duties hereunder and shall bear the costs of any salaries or trustees' fees
of any officers or trustees of the Trust who are affiliated persons (as defined
in the 0000 Xxx) of the Advisor; provided that the Board of Trustees of the
Trust may approve reimbursement to the Advisor of the pro rata portion of the
salaries, bonuses, health insurance, retirement benefits and all similar
employment costs for the time spent on Fund operations, (including, without
limitation, compliance matters) (other than the provision of investment advice
and administrative services required to be provided hereunder) of all personnel
employed by the Advisor who devote substantial time to Fund operations or the
operations of other investment companies advised by the Advisor.
9. Compensation of the Advisor. (a) The Trust, on behalf of each Fund,
agrees to pay to the Advisor and the Advisor agrees to accept as full
compensation for all services rendered by the Advisor as such, a monthly fee
(the "Investment Advisory Fee") in arrears at an annual rate equal to the amount
set forth in Schedule A hereto of the average daily value of each Fund's Net
Assets. "Net Assets" means the total assets of a Fund minus the sum of the
accrued liabilities. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case
may be.
(b) For purposes of this Agreement, the net assets of each Fund
shall be calculated pursuant to the procedures adopted by resolutions of
the Trustees of the Trust for calculating the value of each Fund's assets
or delegating such calculations to third parties.
10. Indemnity. (a) A Fund may, in the discretion of the Board of Trustees
of the Trust, indemnify the Advisor, and each of the Advisor's directors,
officers, employees, agents, associates and controlling persons and the
directors, partners, members, officers, employees and agents thereof (including
any individual who serves at the Advisor's request as director, officer,
partner, member, trustee or the like of another entity) (each such person being
an "Indemnitee") against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable state law) reasonably
incurred by such Indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnitee may be or may have
been involved as a party or otherwise or with which such Indemnitee may be or
may have been threatened, while acting in any capacity set forth herein or
thereafter by reason of such Indemnitee having acted in any such capacity,
except with respect to any matter as to which such Indemnitee shall have been
adjudicated not to have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Trust and furthermore, in
the case of any criminal proceeding, so long as such Indemnitee had no
reasonable cause to believe that the conduct was unlawful; provided, however,
that (1) no Indemnitee shall be indemnified hereunder against any liability to
the Trust or a Fund or its shareholders or any expense of such Indemnitee
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arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross
negligence or (iv) reckless disregard of the duties involved in the conduct of
such Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by such Indemnitee,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of a
Fund and that such Indemnitee appears to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of a
Fund and did not involve disabling conduct by such Indemnitee and (3) with
respect to any action, suit or other proceeding voluntarily prosecuted by any
Indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such Indemnitee was
authorized by a majority of the full Board of Trustees of the Trust.
(b) A Fund may make advance payments in connection with the expenses
of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse a Fund
unless it is subsequently determined that such Indemnitee is entitled to
such indemnification and if the Trustees of the Trust determine that the
facts then known to them would not preclude indemnification. In addition,
at least one of the following conditions must be met: (A) the Indemnitee
shall provide security for such Indemnitee undertaking, (B) the Trust
shall be insured against losses arising by reason of any unlawful advance,
or (C) a majority of a quorum consisting of Trustees of the Trust who are
neither "interested persons" of the Trust (as defined in Section 2(a)(19)
of the 0000 Xxx) nor parties to the proceeding ("Disinterested Non Party
Trustees") or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to a
full trial type inquiry), that there is reason to believe that the
Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to the standards for
indemnification hereunder shall be made (1) by a final decision on the
merits by a court or other body before whom the proceeding was brought
that such Indemnitee is not liable or is not liable by reason of disabling
conduct, or (2) in the absence of such a decision, by (i) a majority vote
of a quorum of the Disinterested Non Party Trustees of the Trust, or (ii)
if such a quorum is not obtainable or, even if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written
opinion. All determinations that advance payments in connection with the
expense of defending any proceeding shall be authorized and shall be made
in accordance with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these provisions shall not
exclude any other right to which such Indemnitee may be lawfully entitled.
11. Limitation on Liability. The Advisor will not be liable for any error
of judgment or mistake of law or for any loss suffered by the Advisor or by the
Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless
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disregard by it of its duties under this Agreement. As used in this Section 11,
the term "Advisor" shall include any affiliates of the Advisor performing
services for the Trust contemplated hereby and partners, directors, officers and
employees of the Advisor and of such affiliates.
12. Duration and Termination. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Funds as
provided herein, shall continue in effect for a period of two years. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Funds for successive periods of 12 months, provided such continuance is
specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or the vote of a majority of the outstanding
voting securities of each Fund at the time outstanding and entitled to vote, and
(b) by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Trust, on behalf of a
Fund, at any time, without the payment of any penalty, upon giving the Advisor
60 days' notice (which notice may be waived by the Advisor), provided that such
termination by the Trust, on behalf of a Fund, shall be directed or approved by
the vote of a majority of the Trustees of the Trust in office at the time or by
the vote of the holders of a majority of the voting securities of each Fund at
the time outstanding and entitled to vote, or by the Advisor on 60 days' written
notice (which notice may be waived by the Trust, on behalf of a Fund). This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
13. Notices. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
14. Amendment of this Agreement. This Agreement may be amended by the
parties only if such amendment is specifically approved by the vote of the Board
of Trustees of the Trust, including a majority of those Trustees 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, where
required by the 1940 Act, by a vote of a majority of the outstanding voting
securities of each Fund.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York for contracts to be performed
entirely therein without reference to choice of law principles thereof and in
accordance with 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, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
16. Use of the Name BlackRock. The Advisor has consented to the use by the
Trust of the name or identifying word "BlackRock" in the name of the Trust and
the Funds. Such consent is conditioned upon the employment of the Advisor as the
investment advisor to the Funds. The name or identifying word "BlackRock" may be
used from time to time in other
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connections and for other purposes by the Advisor and any of its affiliates. The
Advisor may require a Fund to cease using "BlackRock" in the name of the Trust
and the Funds if the Funds ceases to employ, for any reason, the Advisor, any
successor thereto or any affiliate thereof as investment advisor of the Funds.
17. 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. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
18. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
QUANTITATIVE MASTER SERIES TRUST
By:
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
BLACKROCK ADVISORS, LLC
By:
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
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Schedule A
Investment Advisory Fee
Name of Series Investment Advisory Fee
-------------- -----------------------
Master Aggregate Bond Index Series.............................. 0.01%
Master Enhanced S&P 500 Series.................................. 0.01%
Master Enhanced International Series............................ 0.01%
Master Extended Market Index Series............................. 0.01%
Master Enhanced Small Cap Series................................ 0.01%
Master International Index Series............................... 0.01%
Master S&P 500 Index Series..................................... 0.01%
Master Small Cap Index Series................................... 0.01%
Master MidCap Index Series...................................... 0.01%
