EXHIBIT D UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG, S-K
MDT FUNDS
Investment Management Agreement
THIS INVESTMENT MANAGEMENT AGREEMENT (this "Agreement") is made as of
November 17, 2006, by and between MDT Funds, a Delaware statutory trust (the
"Trust),on behalf of each series of the Trust (each, a "Fund" and collectively,
the "Funds") listed in Appendix A hereto, as the same may be amended from time
to time, and Federated MDTA LLC, a Delaware limited liability company (the
"Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged
in the business of supplying investment advice, investment management and
administrative services, as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Funds pursuant to the terms and provisions of this Agreement,
and the Manager desires to furnish said advice and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual promises
set forth herein, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Manager. The Trust hereby employs the Manager and
the Manager hereby accepts such employment, to provide management services and
to render investment advice and related services with respect to the assets of
the Funds for the period .and on the terms set forth in this Agreement, subject
to the supervision and direction of the Trust's Board of Trustees (the "Board").
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment manager
to each of the Funds and shall supervise investments of each Fund on behalf of
the Fund in accordance with the investment objectives, policies and restrictions
of the Fund as set forth in the Fund's and Trust's governing documents,
including, without limitation, the Trust's Agreement and Declaration of Trust
and By-Laws; the Trust's prospectus, statement of additional information and
undertakings; and such other limitations, policies and procedures as the
Trustee: may impose from time to time in writing to the Manager. Without
limiting the generality of the foregoing, the Manager shall: (i) furnish each
Fund with advice and recommendations with respect to the investment of the
Fund's assets and the purchase and sale of portfolio securities for the Fund,
including the taking of such steps as may be necessary to implement such advice
and recommendations (i.e., placing the orders); (ii) manage and oversee the
investments of the Fund, subject to the ultimate supervision and direction of
the Board; (iii) vote proxies for the Fund, file ownership reports under Section
13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
the Fund, and take other related actions on behalf of the Fund; (iv) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the officers or
Trustees of the Trust may reasonably request; and (v) render to the Trust's
Board of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request.
(b) Brokerage. The Manager shall place orders for the purchase
and sale of securities either directly with the issuer or with a broker or
dealer selected by the Manager. In placing each Fund's securities trades, it is
recognized that the Manager will give primary consideration to securing the most
favorable price and efficient execution, so that each Fund's total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Manager may consider
the financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party.
It is also understood that it is desirable for the Funds that the Manager
have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Funds than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to review by the Board
from time to time with respect to the extent and continuation of this practice
to determine whether each Fund benefits, directly or indirectly, from such
practice. It is understood by both parties that the Manager may select broker-
dealers for the execution of the Funds' portfolio transactions who provide
research and analysis as the Manager may lawfully and appropriately use in its
investment management and advisory capacities, whether or not such research and
analysis may also be useful to the Manager in connection with its services to
other clients.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of one or more of the Funds as well as of other clients,
the Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Manager in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
3. Best Efforts and Judgment. The Manager shall use its best judgment
and efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. Independent Contractor. The Manager shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Manager to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Manager's Personnel. The Manager shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Board may desire and reasonably request.
6. Reports by Funds to Manager. Each Fund will from time to time
furnish to the Manager detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Manager such financial reports, proxy statements, legal and other
information relating to each Fund's investments as may be in its possession or
available to it, together with such other information as the Manager may
reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, and to the extent
not paid or reimbursed through a plan adopted by the Fund pursuant to Rule 12b-1
under the Investment Company Act, the Manager is responsible for (i) the
compensation of any of the Trust's trustees, officers, and employees who are
affiliates of the Manager (but not the compensation of employees performing
services in connection with expenses which are the Fund's responsibility under
Subparagraph 7(b) below), (ii) the expenses of printing and distributing the
Funds' prospectuses, statements of additional information, and sales and
advertising materials (but not the legal, auditing or accounting fees attendant
thereto) to prospective investors (but not to existing shareholders), and (iii)
providing office space and equipment reasonably necessary for the operation of
the Funds.
(b) Each Fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including the Fund's portion of all fees and expenses of the
Trust's custodian, shareholder services agent and accounting services agent;
interest charges on any borrowings; costs and expenses of pricing and
calculating the Fund's daily net asset value and of maintaining its books of
account required under the Investment Company Act; taxes, if any; expenditures
in connection with meetings of each Fund's shareholders and the Board that are
payable by the Fund; the Fund's portion of salaries and expenses of officers of
the Trust, including without limitation the Trust's Chief Compliance Officer (as
agreed by the Board) and fees and expenses of members of the Board or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Manager; insurance premiums on property or personnel
of each Fund which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Fund or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues or educational program expenses
determined appropriate by the Board; fees and expenses (including legal fees) of
registering and maintaining registration of its shares for sale under federal
and applicable state and foreign securities laws; all expenses of maintaining
and servicing shareholder accounts, including all charges for transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other agents for
the benefit of the Funds, if any; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Manager may voluntarily absorb certain Fund expenses or
waive all or a portion of the Manager's own advisory fee
(d) To the extent the Manager incurs any costs by assuming
expenses which are an obligation of a Fund as set forth herein, such Fund shall
promptly reimburse the Manager for such costs and expenses, except to the extent
the Manager has otherwise agreed to bear such expenses. To the extent the
services for which a Fund is obligated to pay are performed by the Manager, the
Manager shall be entitled to recover from such Fund to the extent of the
Manager's actual costs for providing such services. In determining the
Manager's actual costs, the Manager may take into account an allocated portion
of the salaries and overhead of personnel performing such services.
8. Investment Advisory and Management Fee.
(a) Each Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to such Fund pursuant to this Agreement, a management fee
at the annual rate set forth in the Fee Schedule attached hereto as Appendix A,
as may be amended in writing from time to time by the Trust and the Manager.
(b) The management fee shall be accrued daily by each Fund and
paid to the Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Manager shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the 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.
(d) The Manager may, but is not required to, waive all or a
portion of its fees and/or reimburse the Funds for other expenses in order to
reduce the operating expenses of the Funds. Any such reduction, reimbursement,
waiver, or payment (collectively "subsidies") shall be applicable only to such
specific subsidy and shall not constitute an agreement to continue such subsidy
in the future. Any such subsidy will be agreed to prior to accrual of the
related expense or fee and will be estimated daily and reconciled and paid on a
monthly basis. The Manager may also agree contractually to limit a Fund's
operating expenses. To the extent such a voluntary or contractual expense
limitation has been agreed to by the Manager and such limit has been disclosed
to shareholders of such Fund in a prospectus, the limit cannot be changed
without first disclosing the change in an updated prospectus.
The Manager may seek reimbursement in a subsequent fiscal year
of any subsidies made by the Manager either voluntarily or pursuant to
agreement. The reimbursement of any subsidy must be approved by the Board and
must be sought no later than the end of the third fiscal year following the year
to which the subsidy relates. The Manager may not request and receive
reimbursement for any subsidies before payment of a Fund's ordinary operating
expenses for the current year and cannot cause a Fund to exceed any agreed upon
expense limitation for that year in making such reimbursement.
(e) The Manager may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the Fund. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Manager hereunder.
9. Fund Share Activities of Manager's Officers and Employees. The
Manager agrees that neither it nor any of its officers or employees shall take
any short position in the shares of the Funds. This prohibition shall not
prevent the purchase of such shares by any of the officers or bona fide
employees of the Manager or any trust, pension, profit-sharing or other benefit
plan for such persons or affiliates thereof, at a price not less than the net
asset value thereof at the time of purchase, as allowed pursuant to rules
promulgated under the Investment Company Act.
10. Conflicts with Trust's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust, By-
Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of its responsibility for and control of the conduct of the affairs of the
Trust and Funds.
11. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Manager, the Manager shall not be subject to liability to the Trust
or the Funds or to any shareholder of the Funds 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 by the
Funds. Notwithstanding the foregoing, federal securities laws and certain state
laws impose liabilities under certain circumstances on persons who have acted in
good faith, and therefore nothing herein shall in any way constitute a waiver or
limitation of any rights which the Trust, a Fund or any shareholder of a Fund
may have under any federal securities law or state law.
(b) The Funds shall indemnify and hold harmless the Manager and
the directors, members, shareholders, officers and employees of the Manager (any
such person, an "Indemnified Party") against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating and defending any
alleged loss, liability, claim, damage or expenses and reasonable counsel fees
incurred in connection therewith) arising out of the Indemnified Party's
performance or non-performance of any duties under this Agreement provided,
however, that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or director, member or officer of the
Manager, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. Non-Exclusivity. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. If
this Agreement is terminated with respect to any Fund, this Agreement shall
remain in full force and effect with respect to all other Funds listed on
Appendix A hereto, as the same may be amended. Likewise, the Manager may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from buying, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Manager expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Fund under this Agreement; and provided further that the Manager will adhere to
a code of ethics governing employee trading and trading for proprietary accounts
that conforms to the requirements of the Investment Company Act and the Advisers
Act and has been approved by the Board.
13. Term.
(a) This Agreement shall become effective as of the date that
certain Interim Investment Management Agreement, dated July 14, 2006, between
the parties terminates and this Agreement is approved by the shareholders as
required under the Investment Company Act, and shall remain in effect for a
period of two (2) years, unless sooner terminated as hereinafter provided. This
Agreement shall continue in effect thereafter for additional periods not
exceeding one (1) year so long as such continuation is approved for each Fund at
least annually by (i) the Board or by the vote of a majority of the outstanding
voting securities of each Fund and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement nor interested persons
thereof, cast in person at a meeting called for the purpose of voting on such
approval. The terms "majority of the outstanding voting securities" and
"interested persons" shall have the meanings as set forth in the Investment
Company Act.
(b) Each Fund may use the names "Optimum Q" or any name derived
from or using the name "Optimum Q" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect. Within sixty (60)
days from such time as this Agreement shall no longer be in effect in respect of
a Fund, the Fund shall cease to use such a name or any other name connected with
the Manager without the prior written consent of the Manager.
14. Termination. This Agreement may be terminated by the Trust on
behalf of any one or more of the Funds at any time without payment of any
penalty, by the Board or by vote of a majority of the outstanding voting
securities of a Fund, upon sixty (60) days' written notice to the Manager, and
by the Manager upon sixty (60) days' written notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the Investment Company Act.
16. Transfer, Assignment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. Nonpublic Personal Information. Notwithstanding any provision
herein to the contrary, the Manager hereto agrees on behalf of itself and its
directors, officers, and employees (1) to treat confidentially and as
proprietary information of the Trusts (a) all records and other information
relative to the Funds and their prior, present or potential shareholders (and
clients of said shareholders) and (b) any Nonpublic Personal Information, as
defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated
under the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (the "G-L-B Act"), and (2) not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by the privacy
policies adopted by the Trust, Regulation S-P or the G-L-B Act, except after
prior notification to and approval in writing by the Trust. Such written
approval shall not unreasonably be withheld by the Trust and may not be withheld
where the Manager may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
18. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
19. Definitions. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
Investment Company Act.
20. Notice of Declaration of Trust. The Manager agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee, officer, employee or
agent of the Trust or the Funds.
21. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
22. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Massachusetts without giving effect
to the conflict of laws principles thereof; provided that nothing herein shall
be construed to preempt, or to be inconsistent with, any federal law, regulation
or rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
MDT FUNDS Federated MDTA LLC
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer Title: President and Chief Executive Officer
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Appendix A to
Investment Management
Agreement
FEE SCHEDULE
Name of Fund Applicable Fee
MDT Balanced Fund 0.75%
MDT Small Cap Value Fund 1.25%
MDT Small Cap Growth Fund 1.25%
MDT Mid Cap Growth Fund 0.90%
MDT Large Cap Growth Fund 0.75%
MDT Short-Term Bond Fund 0.40%
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