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GATEWAY SMALL CAP INDEX FUND
INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT made this 15th day of December, 1995, by and between THE
GATEWAY TRUST, an Ohio business trust (the "Trust"), and GATEWAY INVESTMENT
ADVISERS, L.P., a Delaware limited partnership (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, the shares of
beneficial interest ("Shares") of which are registered under the Securities Act
of 1933; and
WHEREAS, the Trust is authorized to issue shares in separate series
with each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust offers Shares in a series known as the Gateway Small
Cap Index Fund, herein referred to as the "Fund;" and
WHEREAS, the Trust desires at this time to retain the Adviser to render
investment advisory and management services to the Fund, and the Adviser is
willing to render such services;
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. The Adviser shall act as investment manager for the Fund and
shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties
comprising the assets of the Fund, subject at all times to the
policies applicable to the Fund and to the control of the Board
of Trustees of the Trust. The Adviser shall give the Trust the
benefit of its best judgment, efforts and facilities in
rendering its services as investment manager.
2. In carrying out its obligations under paragraph 1 hereof, the
Adviser shall:
(a) obtain and evaluate pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the Fund or the economy generally, and whether
concerning the individual companies whose securities or
options therefore are included in the Fund or the
industries in which they engage, or with respect to other
securities or options therefore which the Adviser
considers desirable for inclusion in the Fund;
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(b) determine what industries and companies shall be
represented in the Fund and regularly report them to the
Board of Trustees of the Trust;
(c) formulate and implement programs for the purchases and
sales of any securities or options and regularly report
thereon to the Board of Trustees of the Trust;
(d) place all orders for the purchase and sale of investments
for the Fund, including the purchase and/or sale of
options and the effecting of closing purchase
transactions, for the Fund's account with brokers or
dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the
Adviser shall always seek best execution, which is to
execute the Fund's transactions where the most favorable
combination of price and execution services in particular
transactions can be obtained or provided on a continuing
basis or with respect to individual transactions by a
broker or dealer, and to deal directly with a principal
market maker in connection with over-the-counter
transactions, except when it is believed that best
execution is obtainable elsewhere. Subject to such
policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement, or
otherwise, solely by reason of its having either (i) dealt
with an affiliate of the Adviser, or (ii) caused the Fund
to pay a broker or dealer that provides brokerage,
research and statistical services to the Adviser an amount
of commission for effecting a portfolio investment
transaction, including the sale of an option or a closing
purchase transaction, in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determines in
good faith and in the best interests of the Fund that (x)
the commission and other expenses of any such affiliate
are comparable to the commission and other expenses
charged by unaffiliated brokers and dealers, and (y) such
amount of commission was reasonable in relation to the
value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that
particular transaction or its overall responsibilities
with respect to the Fund and to any other of its clients
as to which it exercises investment discretion;
(e) present a written report to the Board of Trustees of the
Trust at least quarterly indicating total brokerage
expenses, actual or imputed, as well as the services
obtained in consideration for such expenses; and
(f) take, on behalf of the Fund, all actions which appear to
the Adviser necessary to carry into effect such purchase
and sale programs and supervisory functions as aforesaid.
3. Any investment program undertaken by the Adviser pursuant to
this Agreement, as well as any other activities undertaken by
the Adviser on behalf of the Fund
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pursuant thereto, shall at all times be subject to any
directives of the Board of Trustees of the Trust.
4. In carrying out its obligations under this Agreement, Adviser
shall at all times conform to:
(a) all applicable provisions of the Investment Company Act of
1940, as amended, and any rules and regulations adopted
thereunder;
(b) the provisions of the Agreement and Declaration of Trust
of the Trust, as amended from time to time;
(c) the provisions of the By-Laws of the Trust, as amended
from time to time;
(d) the provisions of the Registration Statements of the Trust
under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended from time to time; and
(e) any other applicable provision of state or federal law.
5. (a) The Adviser, at its sole expense, shall provide the Trust
with (i) investment recommendations regarding the Fund's
investments; (ii) office space, including secretarial,
clerical and other office help, telephones, securities
valuations and other office equipment; and (iii) the
services of all officers of the Trust.
(b) The Adviser shall bear all expenses incurred in connection
with (i) advertising and other marketing expenses in
connection with the sale of the shares of the Fund and
with the expense of printing and distributing all the
Trust's registration statements and related documents
regarding the Fund to prospective shareholders; and (ii)
association membership dues, except the annual dues of the
Trust for its membership in the Investment Company
Institute, which shall be paid by the Trust.
(c) Except as set forth above, the Trust has agreed to pay all
its operating expenses, including without limitation the
expenses of continuing the Trust's existence; the expenses
of trustees not employed by the Adviser; expenses of
printing and distributing all Trust registration
statements and prospectuses to current Trust shareholders;
expenses of registering or qualifying the Trust or its
shares under federal and various state laws and
maintaining and updating such registrations and
qualifications on a current basis; interest expenses,
taxes, fees and commissions of every kind; expenses of
issue, including cost of share certificates; repurchases
and redemption of shares; charges and expenses of
custodians, transfer agents, dividend disbursing agents
and registrars; expenses of valuing shares of each Fund;
printing and mailing costs
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other than those expressly assumed by the Adviser;
auditing, accounting and legal expenses; reports to
shareholders and governmental agencies and their officers;
expenses of shareholder meetings and proxy solicitations
therefore; insurance expenses; membership fees of the
Investment Company Institute; and all "extraordinary
expenses" as may arise, including all losses and
liabilities in administering the Trust; expenses incurred
in connection with litigation proceedings and claims and
the legal obligations of the Trust to indemnify its
officers, trustees, and agents with respect thereto. A
majority of the Board of Trustees of the Trust and a
majority of the trustees who are not parties to this
agreement (except as a trustee of the Trust), voting
separately, shall determine which expenses shall be
characterized as "extraordinary expenses." The expenses
to be borne by the Trust under this subparagraph shall be
allocated among the funds of the Trust in such manner as
shall be determined by the Board of Trustees of the Trust.
(d) All ordinary business expenses of the Trust shall be borne
by the Trust unless subparagraph 5(a) or 5(b) hereof
specifically provides otherwise.
6. The Trust will pay the Adviser, as full compensation for
services rendered hereunder, a monthly fee computed at an annual
rate of 9/10 of 1% of the first $50 million of the average daily
net asset value of the Fund; 7/10 of 1% of the average daily net
asset value of the Fund in excess of $50 million and up to $100
million of the net assets of such Fund; and 6/10 of 1% of the
average daily net asset value of the Fund in excess of $100
million.
7. If, for any fiscal year, the total of all business expenses of
the Fund (including compensation paid to the Adviser but
excluding taxes, interest, brokerage commissions and
"extraordinary expenses" as determined in accordance with
subparagraph 5(c) hereof) would exceed 2.0% of the average daily
net asset value of the Fund, the Adviser will bear any such
excess expenses. Every month the investment advisory fee with
respect to the Fund will be determined and the Fund's expenses
projected. If the Fund's projected expenses are in excess of
the expense limitation set forth above, the investment advisory
fee with respect to the Fund paid to the Adviser will be reduced
by the amount of the excess expenses, subject to an annual
adjustment; provided, however, that if such amount of reduction
should exceed such monthly investment advisory fee, the Adviser
will repay to the Fund such portion of its investment advisory
fee previously received with respect to such fiscal year as may
be required to make up the deficiency. Any reimbursement with
respect to the Fund pursuant to the expense limitations set
forth in this paragraph 7 will be limited on an annual basis to
compensation received by the Adviser from the Fund pursuant to
this Agreement.
8. The Trust shall at all times keep the Adviser fully informed
with regard to the securities owned by the Fund, the funds
available or to become available to the Fund for investment, and
generally as to the condition of the Fund's affairs. It shall
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furnish the Adviser with a copy of all financial statements
certified by its financial officer, and a signed copy of each
financial statement prepared by certified public accountants
with respect to it.
9. This contract shall become effective on the date hereof. It
shall remain in effect, subject to subparagraph 10(a) hereof,
until December 31, 1996, and thereafter, provided that its
continuance for the Fund for each renewal year is specifically
approved, in advance, (i) by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities
(as defined in Section 2(a)(42) of the Investment Company Act of
1940, as amended) of the Fund, and (ii) by vote of a majority of
the trustees who are not parties to this Agreement or interested
persons of a party to this Agreement (other than as trustees of
the Trust), by votes cast in person at a meeting specifically
called for such purpose; provided, however, that if the
continuation of this Agreement is not approved for the Fund, the
Adviser may continue to serve in such capacity for the Fund in
the manner and to the extent permitted by the Investment Company
Act of 1940 and the rules and regulations thereunder.
10. (a) This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board of Trustees
of the Trust or by vote of the holders of a majority of
the outstanding voting securities of the Fund, or by the
Adviser, on sixty days' written notice to the other party.
The notice provided for herein may be waived by either
party.
(b) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, it shall not be
subject to liability to the Trust or to any shareholder of
the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or
sale of any security or other investment, except that
nothing under this subparagraph shall be deemed to be a
waiver of any rights of the Trust or of any shareholder of
the Fund that may exist under the federal securities laws.
11. It is understood that the Adviser may perform investment
advisory services for various other clients, including
investment companies. The Adviser agrees to report to the Board
of Trustees (at regular quarterly meetings and at such other
times as the Board of Trustees reasonably shall request) (i) the
financial condition and prospects of the Adviser, (ii) the
nature and amount of transactions affecting the Fund that
involve the Adviser and affiliates of the Adviser, (iii)
information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory
services to the Fund and to its other accounts, and (iv) such
other information as the Board of Trustees shall reasonably
request regarding the Fund, the Fund's performance, the services
provided by the Adviser to the Fund as compared to its other
accounts and the plans of, and the capability of, the Adviser
with respect to providing future services to the Fund and its
other accounts. At least
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annually, the Adviser shall report to the Trustees the total
number and type of such other accounts and the approximate total
asset value thereof (but not the identities of the beneficial
owners of such accounts). The Trust agrees that the Adviser may
give advice and take action with respect to any of its clients
which may differ from advice given or the timing or nature of
the action taken with respect to the Fund, so long as it is the
Adviser's policy, to the extent practicable, to allocate
investment transactions among the Fund and its other accounts,
over a period of time, on a fair and equitable basis. The
Adviser agrees to submit to the Trust a statement defining its
policies with respect to the allocation of business among the
Fund and its other clients.
Broker-dealer affiliates of the Adviser may effect orders on
national securities exchanges for the Fund and may retain
compensation in connection with effecting such transactions, so
long as the Adviser furnishes the Board of Trustees, at least
annually, with a statement setting forth the total amount of all
compensation retained by such broker-dealer affiliates in
connection with effecting such transaction within the preceding
year for the Trust.
12. This Agreement may be amended from time to time by agreement of
the parties hereto provided that such amendment shall be
approved both by the vote of a majority of trustees of the
Trust, including a majority of trustees who are not parties to
this Agreement or interested persons of any such party to this
Agreement (other than as trustees of the Trust), cast in person
at a meeting called for that purpose, and by vote of the
shareholders of the Fund.
13. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the Investment Company Act
of 1940, as amended.
14. All parties hereto are expressly put on notice of (i) The
Gateway Trust Second Amended Agreement and Declaration of Trust
dated as of December 29, 1992, as further amended on or about
January 25, 1993, December 20, 1993, and August 25, 1994, and
all subsequent amendments thereto, all of which are or shall be
on file with the Secretary of the State of Ohio, and (ii) the
limitation of shareholder and trustee liability contained
therein and in Chapter 1746 of the Ohio Revised Code. Notice is
hereby given that the obligations of this Agreement are not
binding upon any of the Trustees, officers, or shareholders of
the Trust individually but are binding upon only the assets and
property of the Trust. With respect to any claim by Adviser for
recovery of any portion of the investment management fee (or any
other liability of the Trust arising hereunder), whether in
accordance with the express terms hereof or otherwise, the
Adviser shall have recourse solely against the assets of the
Fund to satisfy such claim and shall have no recourse against
the assets of any other funds of the Trust for such purpose.
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15. This contract shall be construed in accordance with and governed
by applicable federal law and the laws of the State of Ohio.
16. Any notices under this Agreement shall be in writing addressed
and delivered or mailed postage paid, to the other party at such
address as such other party may designate for the receipt of
such notice. Until further notice to the other party, it is
agreed that the address of the Trust and that of the Adviser for
this purpose shall be 000 XxxxxxXxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxx, 00000.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on the day and year first above written.
THE GATEWAY TRUST
By /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Chairman
ATTEST:
By /s/ Xxxxx X. Xxxxxx
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Secretary
GATEWAY INVESTMENT ADVISERS, L.P.
By GATEWAY INVESTMENT ADVISERS, INC.
By /s/ J. Xxxxxxx Xxxxxx
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President
ATTEST:
By /s/ Xxxxx X. Xxxxxx
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Secretary
