Exhibit d.1
MEMBERS MUTUAL FUNDS
MANAGEMENT AGREEMENT
AMENDED AND RESTATED NOVEMBER 29, 2007
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT ("AGREEMENT") is made
effective as of this 29th day of November, 2007, by and between MEMBERS MUTUAL
FUNDS, a statutory trust organized and existing under the laws of the State of
Delaware (the "TRUST"), and MEMBERS CAPITAL ADVISORS, INC. (the "MANAGER"), a
corporation organized and existing under the laws of the state of Iowa.
RECITALS
1. The Trust is a series-type, open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 ACT"), that
currently consists of the investment portfolios (each, a "FUND") designated on
Exhibit A hereto, each such Fund having its own investment objective;
2. The Trust issues a separate series of shares of beneficial interest for each
Fund, which shares represent fractional undivided interests in the Fund;
3. The Manager is engaged principally in rendering investment advisory services
and is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "ADVISERS ACT");
4. The Trust desires to retain the Manager to provide or to arrange to provide
investment advisory and certain administrative services, in the manner and on
the terms and conditions set forth in this Agreement; and
5. The Manager is willing to provide or to arrange to provide investment
advisory services to the Trust and each Fund on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
AGREEMENT
ARTICLE I
DUTIES OF THE MANAGER
The Trust hereby engages the Manager to act as the Trust's investment
manager to provide or to arrange to provide directly or through third parties,
investment advisory and certain administrative services to each existing Fund of
the Trust and to any additional Funds that the Trust may establish in the
future; and to provide or to arrange to provide the above services subject to
the supervision of the board of trustees of the Trust (the "BOARD"), for the
period and on the terms and conditions set forth in this Agreement. The Manager
hereby accepts such
engagement and agrees during such period, at its own expense, to provide or to
arrange to provide, such investment advisory and management services, and to
assume the obligations set forth in this Agreement for the compensation provided
for herein. Subject to the provisions of the 1940 Act and the Advisers Act, the
Manager may retain any affiliated or unaffiliated parties including, but not
limited to, investment adviser(s) and/or investment sub-adviser(s) and
administrator(s) to perform any or all of the services set forth in this
Agreement.
The Manager, its affiliates and any investment adviser(s), sub-adviser(s),
administrator(s) or other parties performing services for the Manager shall for
all purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust or a Fund in any way or otherwise be deemed agents of the
Trust or a Fund.
The Manager shall, for purposes of this Agreement, have and exercise full
investment discretion and authority to act as agent for the Trust in buying,
selling or otherwise disposing of or managing the Trust's investments, directly
or through sub-advisers, subject to supervision by the Board.
The Manager and any other party performing services covered by this
Agreement (each such party is hereafter referred to as a "SERVICE PROVIDER")
shall be subject to: (1) the restrictions of the Declaration of Trust of the
Trust, as amended from time to time; (2) the provisions of the 1940 Act and the
Advisers Act; (3) the statements relating to the Funds' investment objectives,
investment policies and investment restrictions as set forth in the currently
effective (and as amended from time to time) registration statement of the Trust
(the "REGISTRATION STATEMENT") under the Securities Act of 1933, as amended (the
"1933 ACT"); (4) appropriate state securities laws; and (5) any applicable
provisions of the Internal Revenue Code of 1986, as amended (the "CODE").
(A) INVESTMENT ADVISORY SERVICES.
The Manager shall provide the Trust directly or through sub-advisers with
such investment research, advice and supervision as the Trust may from time to
time consider necessary for the proper management of the assets of each Fund,
shall furnish continuously an investment program for each Fund, shall determine
from time to time which securities or other investments shall be purchased, sold
or exchanged and what portions of each Fund shall be held in the various
securities or other investments or cash, and shall take such steps as are
necessary to implement an overall investment plan for each Fund, including
providing or obtaining such services as may be necessary in managing, acquiring
or disposing of securities, cash or other investments.
The Trust has furnished or will furnish the Manager (who is authorized to
furnish any Service Provider) with copies of the Trust's registration statement
and Declaration of Trust as currently in effect and agrees during the
continuance of this Agreement to furnish the Manager with copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Manager and any Service Providers will be
entitled to rely on all documents furnished by the Trust.
2
The Manager represents that in performing investment advisory services for
each Fund, the Manager shall make every effort to ensure that: (1) each Fund
continuously qualifies as a regulated investment company under Subchapter M of
the Code or any successor provision; and (2) any applicable state securities law
restrictions on investments that operate to limit or restrict the investments
that a Fund may otherwise make are complied with as well as any changes thereto.
Except as instructed by the Board, the Manager shall also make decisions for the
Trust as to the manner in which voting rights, rights to consent to corporate
action, and any other rights pertaining to the Trust's securities shall be
exercised. If the Board at any time makes any determination as to investment
policy and notifies the Manager of such determination, the Manager shall be
bound by such determination for the period, if any, specified in the notice or
until similarly notified that such determination has been revoked.
The Manager shall take, on behalf of each Fund, all actions which it deems
necessary to implement the investment policies of such Fund, and in particular,
to place all orders for the purchase or sale of portfolio investments for the
account of each Fund with brokers, dealers, futures commission merchants or
financial institutions selected by the Manager. The Manager also is authorized
as the agent of the Trust to give instructions to any custodian of the Trust as
to deliveries of securities and payments of cash for the account of each Fund.
In selecting brokers or dealers and placing purchase and sale orders with
respect to assets of the Fund, the Manager is directed at all times to seek to
obtain best execution and price within the policy guidelines determined by the
Board and set forth in the current registration statement. Subject to this
requirement and the provisions of the Act, the Advisers Act, the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), and other applicable
provisions of law, the Manager may select brokers or dealers that are affiliated
with the Manager or the Trust.
In addition to seeking the best price and execution, the Manager may also
take into consideration research and statistical information, wire, quotation
and other services provided by brokers and dealers to the Manager. The Manager
is also authorized to effect individual securities transactions at commission
rates in excess of the minimum commission rates available, if the Manager
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage, research and other services provided by
such broker or dealer, viewed in terms of either that particular transaction or
the Manager's overall responsibilities with respect to each Fund. The execution
of such transactions shall not be deemed to represent an unlawful act or breach
of any duty created by this Agreement or otherwise. The policies with respect to
brokerage allocation, determined from time to time by the Board are those
disclosed in the currently effective registration statement. The Manager will
periodically evaluate the statistical data, research and other investment
services provided to it by brokers and dealers. Such services may be used by the
Manager in connection with the performance of its obligations under this
Agreement or in connection with other advisory or investment operations
including using such information in managing its own accounts.
3
As part of carrying out its obligations to manage the investment and
reinvestment of the assets of each Fund consistent with the requirements under
the 1940 Act, the Manager shall:
(1) Perform research and obtain and analyze pertinent economic,
statistical, and financial data relevant to the investment
policies of each Fund as set forth in the Trust's registration
statement;
(2) Consult with the Board and furnish to the Board recommendations
with respect to an overall investment strategy for each Fund for
approval, modification, or rejection by the Board;
(3) Seek out and implement specific investment opportunities,
consistent with any investment strategies approved by the Board;
(4) Take such steps as are necessary to implement any overall
investment strategies approved by the Board for each Fund,
including making and carrying out day-to-day decisions to acquire
or dispose of permissible investments, managing investments and
any other property of the Fund, and providing or obtaining such
services as may be necessary in managing, acquiring or disposing
of investments;
(5) Regularly report to the Board with respect to the implementation
of any approved overall investment strategy and any other
activities in connection with management of the assets of each
Fund including furnishing, within 60 days after the end of each
quarter, a statement of investment performance for the period
since the last report and a schedule of investments and other
assets of each Fund as of the end of the quarter;
(6) Maintain all required accounts, records, memoranda, instructions
or authorizations relating to the acquisition or disposition of
investments for each Fund and the Trust;
(7) Furnish any personnel, office space, equipment and other
facilities necessary for the operation of each Fund as
contemplated in this Agreement;
(8) Provide the Trust with such accounting or other data concerning
the Trust's investment activities as shall be necessary or
required to prepare and to file all periodic financial reports or
other documents required to be filed with the Securities and
Exchange Commission and any other regulatory entity;
(9) Assist in determining each business day the net asset value of
the shares of each Fund in accordance with applicable law; and
4
(10) Enter into any written investment advisory or investment
sub-advisory contract with another affiliated or unaffiliated
party, subject to any approvals required by Section 15 of the
1940 Act, pursuant to which such party will carry out some or all
of the Manager's responsibilities (as specified in such
investment advisory or investment sub-advisory contract) listed
above.
(B) ADMINISTRATION SERVICES.
The Manager shall provide office space, equipment, facilities, and such
other services as it, subject to review by the Board, shall from time to time
determine to be necessary or useful to perform its obligations under this
Agreement. The Manager shall also provide or arrange for the provision of
certain administrative services necessary for the operation of the Trust
including:
(1) Computation of each Fund's yields and total returns;
(2) Schedule, plan agendas for and conduct meetings of the Board and
shareholders;
(3) Coordinate the efforts of the Trust's counsel and auditors;
(4) Prepare required reports, proxy materials and other
communications with shareholders;
(5) The creation and maintenance of such records relating to the
business of the Trust as the Trust may from time to time
reasonably request not otherwise maintained by the Trust's
custodian, transfer agent, accounting services agent or
sub-advisers;.
(6) Provide clerical, secretarial and bookkeeping services, office
supplies, office space, and related services (including telephone
and other utility services); and
(7) Monitor state and federal law as it may apply to the Trust or the
Funds.
The Manager may contract with qualified Service Providers for the provision
of any of the services necessary for the operation of the Trust as described in
this Section (b). The Manager shall also, on behalf of the Trust, coordinate the
activities of such Service Providers, as well as other agents, attorneys,
brokers and dealers, insurers, sub-advisers and such other persons in any such
other capacity performing services for the Trust, deemed to be necessary or
desirable. The Manager shall make reports to the Board of its performance
hereunder and shall furnish advice and recommendations with respect to such
other aspects of the business and affairs of the Trust as the Board or the
Manager shall consider desirable.
5
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(A) THE MANAGER. The Manager assumes the expense of and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Agreement, and shall at its own expense provide the office space, equipment
and facilities that it is obligated to provide under this Agreement, and shall
pay all compensation of officers of the Trust and all trustees of the Trust who
are affiliated persons of the Manager, except as otherwise specified in this
Agreement.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust, including, without limitation: taxes, expenses for
legal, administration (including amounts paid directly by Trust to third party
providers under separate agreements with the Trust), accounting and auditing
services (including amounts paid directly by Trust to third party providers
under separate agreements with the Trust), costs of printing and distributing
proxy materials, shareholder reports and prospectuses (except to the extent that
such prospectuses and shareholder reports are used in connection with the sale
and distribution of the Trust's shares), custody and transfer agency fees,
expenses of redeeming shares, Securities and Exchange Commission fees, expenses
of registering the Trust's shares under state or federal laws, fees and actual
out-of-pocket expenses of trustees who are not interested persons of the Trust,
accounting and pricing costs (including the daily calculation of the net asset
value), insurance, interest, brokerage expenses, litigation and other
extraordinary or nonrecurring expenses, and other expenses properly payable by
the Trust.
ARTICLE III
COMPENSATION OF THE MANAGER
For the services rendered, the facilities furnished and expenses assumed by
the Manager, the Trust shall pay to the Manager at the end of each calendar
month a fee calculated as a percentage of the average value of the net assets
each day for each Fund during that month at the annual rates set forth in
Exhibit A hereto.
The Manager's fee shall be accrued daily at 1/365th of the applicable
annual rate set forth above. For the purpose of accruing compensation, the net
assets of each Fund shall be determined in the manner and on the dates set forth
in the Declaration of Trust or the current registration statement of the Trust
and, on days on which the net assets are not so determined, the net asset value
computation to be used shall be as determined on the immediately preceding day
on which the net assets were determined.
In the event of termination of this Agreement, all compensation due through
the date of termination will be calculated on a pro-rated basis through the date
of termination and paid within fifteen (15) business days of the date of
termination. During any period when the determination of net asset value is
suspended, the net asset value of a Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
6
ARTICLE IV
LIMITATION OF LIABILITY OF THE MANAGER
The Manager 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 the
management of the Trust, except for (a) 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, and (b) to the extent specified in
section 36(b) of the 1940 Act concerning loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation.
ARTICLE V
ACTIVITIES OF THE MANAGER
The services of the Manager are not deemed to be exclusive, and the Manager
is free to render services to others, so long as the Manager's services under
this Agreement are not impaired. It is understood that trustees, officers,
employees and shareholders of the Trust are or may become interested persons of
the Manager, as directors, officers, employees and shareholders or otherwise,
and that directors, officers, employees and shareholders of the Manager are or
may become similarly interested persons of the Trust, and that the Manager may
become interested in the Trust as a shareholder or otherwise.
It is agreed that the Manager may use any supplemental investment research
obtained for the benefit of the Trust in providing investment advice to its
other investment advisory accounts. The Manager or its affiliates may use such
information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for the Manager or other
entities advised by the Manager will be considered by and may be useful to the
Manager in carrying out its obligations to the Trust.
Securities or other investments held by a Fund of the Trust may also be
held by separate investment accounts or other mutual funds for which the Manager
may act as an investment adviser or by the Manager or its affiliates. Because of
different investment objectives or other factors, a particular security may be
bought by the Manager or its affiliates for one or more clients when one or more
clients are selling the same security. If purchases or sales of securities for a
Fund or other entities for which the Manager or its affiliates act as investment
adviser or for their advisory clients arise for consideration at or about the
same time, the Trust agrees that the Manager may make transactions in such
securities, insofar as feasible, for the respective entities and clients in a
manner deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Manager during the same period may increase the
demand for securities being purchased or the supply of securities being sold,
the Trust recognizes that there may be an adverse effect on price.
It is agreed that, on occasions when the Manager deems the purchase or sale
of a security to be in the best interest of a Fund as well as other accounts or
companies, it may, to the extent permitted by applicable laws or regulations,
but will not be obligated to, aggregate the securities to be sold or purchased
for other accounts or companies in order to obtain favorable execution and lower
brokerage commissions or prices. In that event, allocation of the securities
purchased
7
or sold, as well as the expenses incurred in the transaction, will be made by
the Manager in accordance with any written procedures maintained by the Manager
or, if there are no such written procedures, in the manner it considers to be
most equitable and consistent with its fiduciary obligations to the Trust and to
such other accounts or companies. The Trust recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for a Fund.
ARTICLE VI
BOOKS AND RECORDS
The Manager hereby undertakes and agrees to maintain, in the form and for
the period required by Rule 31a-2 and Rule 2a-7 under the 1940 Act, all records
relating to the Trust's investments that are required to be maintained by the
Trust pursuant to the requirements of Rule 31a-1 and Rule 2a-7 of the 1940 Act.
The Manager agrees that all books and records which it or any other Service
Provider maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any such books, records or information
upon the Trust's request. All such books and records shall be made available,
within five business days of a written request, to the Trust's accountants or
auditors during regular business hours at the Manager's offices. The Trust or
its authorized representative shall have the right to copy any records in the
possession of the Manager or a Service Provider that pertain to the Trust. Such
books, records, information or reports shall be made available to properly
authorized government representatives consistent with state and federal law
and/or regulations. In the event of the termination of this Agreement, all such
books, records or other information shall be returned to the Trust free from any
claim or assertion of rights by the Manager.
The Manager further agrees that it will not disclose or use any records or
information obtained pursuant to this Agreement in any manner whatsoever except
as authorized in this Agreement and that it will keep confidential any
information obtained pursuant to this Agreement and disclose such information
only if the Trust has authorized such disclosure, or if such disclosure is
required by federal or state regulatory authorities.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall not become effective unless and until it is approved
by the Board, including a majority of trustees who are not parties to this
Agreement or interested persons of any such party, and by the vote of a majority
of the outstanding votes attributable to the shares of each Fund of the Trust.
This Agreement shall come into full force and effect on the date which it is so
approved, provided that it shall not become effective as to any subsequently
created Fund until it has been approved by the Board, including a majority of
trustees who are not parties to this Agreement or interested persons of any such
party specifically for such Fund, and by the vote of a majority of the
outstanding votes attributable to the shares of the initial shareholder of each
such Fund. As to each Fund of the Trust, the Agreement shall continue in effect
for two years and shall thereafter continue in effect from year to year so long
as such continuance is
8
specifically approved for each Fund at least annually by (i) the Board, or by
the vote of a majority of the outstanding votes attributable to shares of the
Fund; and (ii) 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.
This Agreement may be terminated at any time as to any Fund or to all
Funds, without the payment of any penalty, by the Board, or by vote of a
majority of the outstanding votes attributable to the series of shares
representing an interest in the applicable Fund, or by the Manager, on 60 days
written notice to the other party. If this Agreement is terminated only with
respect to one or more, but less than all, of the Funds, or if a different
adviser is appointed with respect to a new Fund, the Agreement shall remain in
effect with respect to the remaining Funds. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended as to each Fund by the parties only if such
amendment is specifically approved by (a) the vote of a majority of outstanding
votes attributable to the shares of the Fund, and (b) 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.
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
The terms "assignment," "affiliated person," and "interested person," when
used in this Agreement, shall have the respective meanings specified in the 1940
Act. The term "majority of the outstanding votes" attributable to the shares of
a Fund means the lesser of (a) 67% or more of the votes attributable to such
Fund present at a meeting if the holders of more than 50% of such votes are
present or represented by proxy, or (b) more than 50% of the votes attributable
to shares of the Fund.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
Delaware, and applicable provisions of the 1940 Act, the Advisers Act, and the
1934 Act.
ARTICLE XI
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.
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MEMBERS MUTUAL FUNDS
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
President
ATTEST:
/s/ Xxxxx X. Xxxxxx
------------------------------------
MEMBERS CAPITAL ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
Vice President
ATTEST:
/s/ Xxxxx X. Xxxxxx
------------------------------------
10
EXHIBIT A
Series Name Fee
---------------------------- -------
Conservative Allocation Fund 0.30%
Moderate Allocation Fund 0.30%
Aggressive Allocation Fund 0.30%
Cash Reserves Fund 0.40%*
Bond Fund 0.50%*
High Income Fund 0.55%*
Diversified Income Fund 0.65%*
Large Cap Value Fund 0.55%*
Large Cap Growth Fund 0.75%*
Mid Cap Value Fund 0.95%*
Mid Cap Growth Fund 0.75%*
Small Cap Value Fund 1.00%*
Small Cap Growth Fund 1.00%*
International Stock Fund 1.05%*
* Effective June 15, 2007, the management fee for each of the Funds noted is
reduced by five basis point (0.05%) on assets exceeding $500 million, and
by another 0.05% on assets exceeding $1 billion.
11
