SUB-ADVISORY AGREEMENT
AGREEMENT
made as of the 21st day of March, 2007 by and between Mercer Global Investments,
Inc., a Delaware corporation (the “Advisor”), and Numeric Investors LLC, a
Delaware limited liability company (the “Sub-Advisor”).
WHEREAS,
the Advisor has been retained to act as investment adviser pursuant to an
Investment Advisory Agreement, dated July 1, 2005 (the “Advisory Agreement”),
with MGI Funds (the “Trust”), a Delaware statutory trust registered with the
U.S. Securities and Exchange Commission (the “SEC”) as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
“1940 Act”), which consists of several separate series of shares, each having
its own investment objectives and policies, and which is authorized to create
additional series in the future; and
The
Advisor will provide the Sub-Advisor with reasonable advance notice, in writing,
of: (i) any change in a Fund’s investment objectives, policies and restrictions
as stated in the Prospectus; (ii) any change to the Trust’s Declaration of Trust
or By-Laws; or (iii) any material change in the Trust Compliance Procedures;
and
the Sub-Advisor, in the performance of its duties and obligations under this
Agreement, shall manage the Sub-Advisor Assets consistently with such changes,
provided the Sub-Advisor has received such prior notice of the effectiveness
of
such changes from the Trust or the Advisor. In addition to such notice, the
Advisor shall provide to the Sub-Advisor a copy of a modified Prospectus
and
copies of the revised Trust Compliance Procedures, as applicable, reflecting
such changes. The Sub-Advisor hereby agrees to provide to the Advisor in
a
timely manner, in writing, such information relating to the Sub-Advisor and
its
relationship to, and actions for, a Fund as may be required to be contained
in
the Prospectus or in the Trust’s registration statement on Form N-1A, or
otherwise as reasonably requested by the Advisor.
In
order
to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”)
to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the
Sub-Advisor shall provide to the Trust CCO: (i) direct access to the
Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”) during regular
business hours, as reasonably requested by the Trust CCO; (ii) quarterly
reports
confirming that the Sub-Advisor has complied with the Trust Compliance
Procedures in managing the Sub-Advisor Assets; and (iii) quarterly
certifications that there were no Material Compliance Matters (as that term
is
defined by Rule 38a-1(e)(2)) that arose under the Trust Compliance Procedures
that related to the Sub-Advisor’s management of the Sub-Advisor
Assets.
In
connection with its management of the Sub-Advisor Assets and consistent with
its
fiduciary obligation to the Sub-Advisor Assets and other clients, the
Sub-Advisor, to the extent permitted by applicable laws and regulations,
may,
but shall be under no obligation to, aggregate the securities or futures
contracts to be 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 or futures contracts so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Advisor in
the
manner the Sub-Advisor considers to be, over time, the most equitable and
consistent with its fiduciary obligations to the Sub-Advisor’s Assets and to
such other clients.
The
Sub-Advisor acknowledges that the Advisor and the Trust may rely on Rule
17a-7,
Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and
the
Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor
to the Trust with respect to transactions in securities for the Sub-Advisor
Assets or any other transactions of Trust assets.
The
Sub-Advisor is authorized to engage in transactions in which the Sub-Advisor,
or
an affiliate of the Sub-Advisor, acts as a broker for both the Fund and for
another party on the other side of the transaction (“agency cross
transactions”). The Sub-Advisor shall effect any such agency cross transactions
in compliance with Rule 206(3)-2 under the Advisers Act and any other applicable
provisions of the federal securities laws and shall provide the Advisor with
periodic reports describing such agency cross transactions. By execution
of this
Agreement, the Advisor authorizes the Sub-Advisor or its affiliates to engage
in
agency cross transactions, as described above. The Advisor may revoke its
consent at any time by written notice to the Sub-Advisor; provided, however,
that the Sub-Advisor will be provided with reasonable advance notice of any
such
revocation.
The
Sub-Advisor hereby represents that it has implemented policies and procedures
reasonably designed to prevent the disclosure by it, its employees or its
agents
of the Trust’s portfolio holdings to any person or entity other than the
Advisor, the Trust’s custodian, or other persons expressly designated by the
Advisor.
(j) Information
Concerning Sub-Advisor Assets and the Sub-Advisor. From time to time as the
Advisor, and any consultants designated by the Advisor, or the Trust may
request, the Sub-Advisor will furnish the requesting party reports on portfolio
transactions and reports on Sub-Advisor Assets held in the portfolio, all
in
such detail as the Advisor, its consultant(s) or the Trust may reasonably
request. The Sub-Advisor will provide the Advisor with information (including
information that is required to be disclosed in the Prospectus) with respect
to
the portfolio managers responsible for Sub-Advisor Assets, any changes in
the
portfolio managers responsible for Sub-Advisor Assets, any changes in the
ownership or management of the Sub-Advisor, or of material changes in the
control of the Sub-Advisor. The Sub-Advisor will promptly notify the Advisor
of
any pending investigation, material litigation, administrative proceeding
or any
other significant regulatory inquiry with respect to the Sub-Advisor and
its
business. Upon reasonable request during normal business hours, the Sub-Advisor
will make available its officers and employees to meet with the Trust’s Board of
Trustees to review the Sub-Advisor Assets.
The
Sub-Advisor also will provide such information or perform such additional
acts
as are customarily performed by a Sub-Advisor and may be required for a Fund
or
the Advisor to comply with their respective obligations under applicable
federal
securities laws, including, without limitation, the 1940 Act, the Advisers
Act,
the 1934 Act, the Securities Act of 1933, as amended (the “Securities Act”), and
any rule or regulation thereunder.
If
this
Agreement is terminated prior to the end of any calendar month, the fee shall
be
prorated for the portion of any month in which this Agreement is in effect
according to the proportion which the number of calendar days, during which
this
Agreement is in effect, bears to the number of calendar days in the month,
and
shall be payable within ten (10) days after the date of
termination.
(a) The
Sub-Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Sub-Advisor is a limited liability company duly organized and validly existing
under the laws of the State of Delaware, with the power to own and possess
its
assets and carry on its business as it is now being conducted;
(c) The
execution, delivery and performance by the Sub-Advisor of this Agreement
are
within the Sub-Advisor’s powers and have been duly authorized by all necessary
action on the part of its Investment Committee and no action by or in respect
of, or filing with, any governmental body, agency or official is required
on the
part of the Sub-Advisor for the execution, delivery and performance by the
Sub-Advisor of this Agreement, and the execution, delivery and performance
by
the Sub-Advisor of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation; (ii) the
Sub-Advisor’s governing instruments; or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Sub-Advisor;
and
(d) The
Form
ADV of the Sub-Advisor previously provided (at least 48 hours prior to the
execution of this Agreement) to the Advisor (a copy of which is attached
as
Exhibit B to this Agreement) is a true and complete copy of the form as
currently filed with the SEC and the information contained therein is accurate
and complete in all material respects and does not omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading. The Sub-Advisor
will
promptly provide the Advisor and the Trust with a complete copy of all
subsequent amendments to its Form ADV.
(a) The
Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Advisor is a corporation duly organized and validly existing under the laws
of
the State of Delaware, with the power to own and possess its assets and carry
on
its business as it is now being conducted;
(c) The
execution, delivery and performance by the Advisor of this Agreement are
within
the Advisor’s powers and have been duly authorized by all necessary action on
the part of its Board of Directors, and no action by or in respect of, or
filing
with, any governmental body, agency or official is required on the part of
the
Advisor for the execution, delivery and performance by the Advisor of this
Agreement, and the execution, delivery and performance by the Advisor of
this
Agreement do not contravene or constitute a default under (i) any provision
of
applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Advisor;
(d) The
Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV (a
copy of which is attached as Exhibit B) prior to the execution of this
Agreement;
(e) The
Advisor and the Trust have duly entered into the Advisory Agreement pursuant
to
which the Trust authorized the Advisor to enter into this Agreement;
and
(f) The
Advisor and the Trust have policies and procedures designed to detect and
deter
disruptive trading practices, including “market timing,” and the Advisor and the
Trust each agree that they will continue to enforce and abide by such policies
and procedures, as amended from time to time, and comply with all existing
and
future laws relating to such matters or to the purchase and sale of interests
in
the Funds generally.
The
Advisor shall indemnify the Sub-Advisor, its affiliates and its controlling
persons (the “Advisor Indemnified Persons”) for any liability and expenses,
including reasonable attorneys’ fees, howsoever arising from, or in connection
with, the Advisor’s breach of this Agreement or its representations and
warranties herein or as a result of the Advisor’s willful misfeasance, bad
faith, negligence, reckless disregard of its duties hereunder or violation
of
applicable law; provided, however, that the Advisor Indemnified Persons shall
not be indemnified for any liability or expenses which may be sustained as
a
result of the Sub-Advisor’s willful misfeasance, bad faith, negligence, or
reckless disregard of its duties hereunder.
This
Agreement shall not be assigned and shall terminate automatically in the
event
of its assignment, except as provided otherwise by any rule, exemptive order
issued by the SEC, or No Action Letter provided or pursuant to the 1940 Act,
or
upon the termination of the Advisory Agreement. In the event that there is
a
proposed change in control of the Sub-Advisor that would act to terminate
this
Agreement, if a vote of shareholders to approve continuation of this Agreement
is at that time deemed by counsel to the Trust to be required by the 1940
Act or
any rule or regulation thereunder, the Sub-Advisor agrees to assume all
reasonable costs associated with soliciting shareholders of the appropriate
Fund(s) of the Trust to approve continuation of this Agreement. Such expenses
include the costs of preparation and mailing of a proxy statement, and of
soliciting proxies. In the event that such proposed change in control of
the
Sub-Advisor shall occur following either: (i) receipt by the Advisor and
the
Trust of an exemptive order issued by the SEC with respect to the appointment
of
sub-advisors absent shareholder approval, or (ii) the adoption of proposed
Rule
15a-5 under the 1940 Act, the Sub-Advisor agrees to assume all reasonable
costs
and expenses (including the costs of mailing) associated with the preparation
of
a statement, required by the exemptive order or Rule 15a-5, containing all
information that would be included in a proxy statement (an “Information
Statement”). In addition, if the Sub-Advisor shall resign, the Sub-Advisor
agrees to assume all reasonable costs and expenses (including the costs of
mailing) associated with the preparation of an Information
Statement.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
(a) If
to the
Advisor:
Xxxxxx
Global Investments, Inc.
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Chief Counsel
(b) If
to the
Sub-Advisor:
Numeric
Investors
Xxx
Xxxxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxxx
Managing
Director and Chief Financial Officer
16. 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.
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 SEC, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
XXXXXX
GLOBAL INVESTMENTS, INC.
By:
/s/
Xxxx Xxxxxxxxxxxx
Xxxx
Xxxxxxxxxxxx
Chief
Investment Officer
SUB-ADVISOR
NUMERIC
INVESTORS
By:
/s/
Xxxxxxx Even
Xxxxxxx
Even
Chief
Executive Officer
EXHIBIT
A
BETWEEN
XXXXXX GLOBAL INVESTMENTS, INC.
AND
NUMERIC
INVESTORS
March
21,
2007
MGI
US
LARGE CAP VALUE EQUITY FUND
FEE
SCHEDULE
ASSETS COMPENSATION
Up
to
$100 million 0.45%
From
$100
million to $200 million 0.40%
From
$200
million to $400 million 0.30%
Over
$400
million 0.25%
Global
Fee Arrangement: The parties hereto agree that the fee schedule set forth
herein
shall apply to
all
relationship
assets relating to portfolios of Xxxxxx Global Investments, Inc. and its
affiliates (collectively, “MGI”) managed by the Sub-Advisor and each of its
affiliates. For
the
purpose of determining “relationship assets”, all MGI Large Cap Value Equity
portfolios
managed
by the Sub-Adviser and its affiliates worldwide will be added together and
applied against the fee schedule set forth herein.
As
soon
as practicable after the end of each calendar quarter, the Sub-Advisor shall
send to the Advisor a calculation (the “Calculation”) in reasonable detail of
the fee for the calendar quarter then ended as of the close of business on
the
last day of such calendar quarter. The Advisor may approve or disapprove
the
Calculation within ten (10) business days of its receipt. In the event that
the
Calculation has been accurately prepared in accordance with the terms of
this
Agreement, the Advisor shall pay the fee to the Sub-Advisor. In the event
of a
dispute between the parties regarding the accuracy of the Calculation, it
is
hereby agreed that all discussions in resolution of such dispute will be
conducted promptly and in good faith.
The
foregoing fee shall be accrued for each calendar day and the sum of the daily
fee accruals shall be paid quarterly in arrears by the Advisor to the
Sub-Advisor as described herein. The daily fee accruals will be computed
by
multiplying the fraction of one over the number of calendar days in the year
by
the applicable annual rate set forth in the schedule above and multiplying
this
product by the net assets of the Sub-Advisors Assets, as determined in
accordance with the Prospectus as of the close of business on the previous
business day on which the Trust was open for business. If this Agreement
is
terminated prior to the end of any calendar quarter, the fee shall be prorated
for the portion of any quarter in which this Agreement is in effect according
to
the proportion which the number of calendar days, during which this Agreement
is
in effect, bears to the number of calendar days in the quarter.
EXHIBIT
B
SUB-ADVISOR
FORM
ADV
(Please
attach)