Exhibit (d)(16)
INVESTMENT SUBADVISORY CONTRACT
FOR THE
CLEARWATER INTERNATIONAL FUND,
A SERIES OF
CLEARWATER INVESTMENT TRUST
AGREEMENT made as of the 5th day of January, 2009, by and among CLEARWATER
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), CLEARWATER
MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and PARAMETRIC
PORTFOLIO ASSOCIATES, LLC (the "Subadviser").
W I T N E S S E T H:
WHEREAS, the Manager acts as the investment advisor for Clearwater
International Fund (the "Fund"), a series of the Clearwater Investment Trust, a
Massachusetts business trust (the "Trust"), pursuant to a Management Agreement
between the Manager and the Trust;
WHEREAS, the Manager provides general management services to the Fund and
has overall supervisory responsibility for the general management and investment
of the Fund's portfolio, including the establishment of the Fund's overall
investment strategies, the selection, monitoring and evaluation of Fund
subadvisers, and the allocation of Fund assets among subadvisers;
WHEREAS, specific portfolio purchases and sales for all or a portion of
the Fund's assets may be made by one or more subadvisers selected and appointed
by the Manager, subject to the pre-approval of the Board of Trustees of the
Trust (the "Board");
WHEREAS, the Manager desires to utilize the services of the Subadviser
with respect to all or a portion of the Fund's assets; and
WHEREAS, the Subadviser is willing to perform such services on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and benefits
herein contained, it is agreed as follows:
1. The Subadviser's Appointment and Services.
(a) The Manager hereby appoints the Subadviser to act as investment
subadviser for that portion of the assets of the Fund that the Manager
determines to allocate to the Subadviser from time to time (such assets referred
to hereafter as the "Fund" or Sub-Advisory Portfolio). The Subadviser accepts
the appointment and agrees to furnish the services described herein for the
compensation set forth below. Subject to the supervision of the Manager and the
Trust's Board of Trustees, the investment policies and restrictions applicable
to the Fund as set forth in the Trust's registration statement, such resolutions
as from time to time may be adopted by the Trust's Trustees and furnished to the
Subadviser and such other applicable policies and procedures of the Trust as
contained in its program adopted pursuant to Rule 38a-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"), in each case to the extent
such policies and restrictions, resolutions, and other applicable policies and
procedures have been communicated promptly to the Subadviser with reasonable
advance notice prior to their effectiveness, the
Subadviser is hereby authorized and directed and hereby agrees to develop,
recommend and implement such investment program and strategy for the Fund as may
from time to time in the circumstances appear most appropriate to the
achievement of the investment objectives of the Fund as stated in the aforesaid
registration statement, to provide research and analysis relative to the
investment program and investments of the Fund, to determine what securities
should be purchased and sold and what portion of the assets of the Fund should
be held in cash or cash equivalents or other assets and to monitor on a
continuing basis the performance of the portfolio securities of the Sub-Advisory
Portfolio. In addition, the Subadviser will place orders for the purchase and
sale of portfolio securities and will advise the Manager and the custodian for
the Sub-Advisory Portfolio on a prompt basis of each purchase and sale of a
portfolio security specifying the name of the issuer, the description and amount
or number of shares of the security purchased, the market price, commission and
gross or net price, trade date, settlement date and identity of the effecting
broker or dealer.
The Subadviser does not guarantee the future performance of the
Sub-Advisory Portfolio or any specific level of performance, the success of any
investment decision or strategy that the Subadviser may use, or the success of
the Subadviser's overall management of the Sub-Advisory Portfolio. The Manager
understands that investment decisions made for the Fund by the Subadviser are
subject to various market, currency, economic, political and business risks, and
that those investment decisions will not always be profitable.
(b) The Subadviser shall vote all proxies with respect to securities held
in the Sub-Advisory Portfolio in accordance with the Subadviser's proxy voting
guidelines and procedures in effect from time to time. In the event material
changes are made to such proxy voting guidelines, the Subadviser agrees to
provide the Manager with a copy of the revised proxy voting guidelines. The
Manager agrees to instruct the Fund's custodian to forward all proxy materials
and related shareholder communications to the Subadviser promptly upon receipt.
The Subadviser agrees to promptly inform the Manager and the Fund of any
conflict of interest of which the Subadviser is aware that the Subadviser has in
voting proxies with respect to securities held in the Sub-Advisory Portfolio.
The Subadviser shall not be liable with regard to voting of proxies or other
corporate actions if the proxy materials and related communications are not
received in a timely manner.
(c) From time to time as the Trustees of the Trust or the Manager may
reasonably request, the Subadviser will furnish to the Trust's officers and to
each of its Trustees reports relating to the Sub-Advisory Portfolio, including
reports concerning investment performance, portfolio transactions, Sub-Advisory
Portfolio holdings, compliance, brokerage practices and proxy voting, all in
such detail as any such Trustee or the Manager may reasonably request. The
Subadviser also will inform the Trust's officers and Trustees on a current basis
of material changes in investment strategy or tactics. The Subadviser will make
its officers and employees available to meet with the Trust's officers and
Trustees and the Manager at least quarterly on due and reasonable notice to
review the investments and investment program of the Fund in the light of
current and prospective economic and market conditions.
(d) The Subadviser has provided the Manager with a true and complete copy
of its compliance policies and procedures that are reasonably designed to
prevent violations of the "federal securities laws" (as such term is defined in
Rule 38a-1 under the 0000 Xxx) and Rule 206(4)-7 under the Investment Advisers
Act of 1940, as amended (the "Advisers Act") as they relate to the Subadviser's
services to the Fund (the "Subadviser Compliance Policies"). The Subadviser's
chief compliance officer (the "Subadviser CCO") shall provide to the Trust's
Chief Compliance Officer (the "Trust CCO") or his or her delegate, promptly (and
in no event more than 10 business days) after identifying the occurrence of the
triggering event, the following:
(i) a report of any material changes to the Subadviser
Compliance Policies;
(ii) a report of any "material compliance matters," as defined
by Rule 38a-1 under the 1940 Act, that have occurred in
connection with the Subadviser Compliance Policies;
(iii) a copy of a summary of the Subadviser CCO's report with
respect to the annual review of the Subadviser Compliance
Policies pursuant to Rule 206(4)-7 under the Advisers Act; and
(iv) an annual (or more frequently as the Trust CCO may
request) certification regarding the Subadviser's compliance
with Rule 206(4)-7 under the Advisers Act and Section 38a-1
under the 1940 Act as well as the foregoing sub- paragraphs
(i) - (iii).
(e) The Subadviser will timely notify the Manager of any material
violations by the Subadviser of the Fund's investment policies or restrictions,
in each case to the extent such policies and restrictions have been communicated
promptly to the Subadviser with reasonable advance notice prior to their
effectiveness, or any applicable law or regulation.
(f) In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser hereby agrees that all records which it specifically maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any of such records upon the Fund's or the
Manager's request, subject to applicable laws and regulations. The Subadviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records relating to its activities hereunder required to be
maintained by Rule 31a-1 under the 1940 Act and to preserve the records relating
to its activities hereunder required by Rule 204-2 under the Advisers Act for
the period specified in said Rule.
(g) The Subadviser agrees to cooperate with all reasonable requests of the
Manager or Trust officers on behalf of the Trust involving the Trust's financial
reports and filings and any certifications by the Trust officers relating
thereto.
2. Brokerage Practices.
(a) In connection with purchases and sales of portfolio securities for the
Sub-Advisory Portfolio, the Subadviser will not act as a principal or agent or
receive any commission except as permitted by the 1940 Act. The Subadviser shall
arrange for the placing of all orders for the purchase and sale of portfolio
securities for the Sub-Advisory Portfolio with brokers or dealers selected by
the Subadviser. In the selection of such brokers or dealers and the placing of
such orders, the Subadviser is directed at all times to seek for the
Sub-Advisory Portfolio the most favorable execution and net price available
except as otherwise described herein. It is understood that it is desirable for
the Fund that the Subadviser have access to supplemental investment and market
research and security and economic analyses provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities for the Fund with such brokers
consistent with the requirements of Section 28(e) of the Securities Exchange Act
of 1934 and applicable regulatory guidance, subject to review by the Trust's
Trustees from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Subadviser in connection with its services
(and the services of the Subadviser's affiliates) to other clients. The
Subadviser will not execute any portfolio transactions with a broker or dealer
which is an "affiliated person" (as defined in the 0000 Xxx) of the Subadviser
or the Manager, except pursuant to any Board approved 17e-1 Policies and
Procedures for affiliated brokerage transactions.
(b) On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Sub-Advisory Portfolio as well as
other clients, the Subadviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased in order to
obtain the best execution and lower brokerage commissions, if any. 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 Subadviser in the
manner it considers to be equitable and consistent with applicable regulatory
obligations as well as its fiduciary obligations to the Fund and to such
clients.
3. Other Relationships, Clients etc.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Subadviser, any interested person (as defined
in the 0000 Xxx) of the Subadviser, any organization in which the Subadviser may
have an interest or any organization which may have an interest in the
Subadviser and that the Subadviser, any such interested person or any such
organization may have an interest in the Trust. It is also understood that the
Subadviser, the Manager and the Trust may have advisory, management, service or
other contracts with other individuals or entities, and may have other interests
and businesses. When a security proposed to be purchased or sold for the Trust
is also to be purchased or sold for other accounts managed by the Subadviser at
the same time, the Subadviser shall make such purchases or sales on a pro rata,
rotating or other equitable basis so as to avoid any one account being preferred
over any other account. The Manager recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or sold for
the Sub-Advisory Portfolio. In addition, the Manager understands that the
persons employed by the Subadviser to assist in the performance of the
Subadviser's duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict the right of
the Subadviser or any affiliate of the Subadviser to engage in and devote time
and attention to other business or to render services of whatever kind or
nature.
4. Disclosure.
(a) Neither the Manager, on its own behalf or on behalf of the Fund, or
the Subadviser shall disclose information of a confidential nature acquired in
consequence of this Agreement, except for information that they may be entitled
or bound to disclose by law, regulation or that is disclosed to their advisors
where reasonably necessary for the performance of their professional services.
(b) Notwithstanding the provisions of Subsection 4(a), to the extent that
any market counterparty with whom the Subadviser deals requires information
relating to the Fund (including, but not limited to, the identity of the Manager
or the Fund and market value of the Fund), the Subadviser shall be permitted to
disclose such information to the extent necessary to effect transactions on
behalf of the Fund in accordance with the terms of this Agreement.
(c) Notwithstanding the provisions of Subsections 4(a) and 4(b), the
Subadviser acknowledges that the Manager and the Fund intend to rely on Rule
17a-7, Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act to
the extent applicable, and the
Subadviser hereby agrees that it (i) shall not consult with any other subadviser
to the Fund with respect to transactions in securities for the Sub-Advisory
Portfolio or any other transactions of Fund assets and (ii) will provide advice
and otherwise perform services hereunder exclusively with respect to the
Sub-Advisory Portfolio of the Fund. The provision of historical transaction data
in electronic format for wash sale monitoring purposes shall not be deemed to be
in violation of (i) above
5. Instruction to Custodian.
The Subadviser shall not have control of the investments or cash,
including the investment of such cash, in the Fund but shall have authority to
issue to the Fund's custodian such instructions as it may consider appropriate
in connection with the settlement of any transaction relating to the
Sub-Advisory Portfolio that it has initiated. In addition, the Fund's custodian
shall be responsible for executing all foreign exchange transactions made or
required to be made in conjunction with settling the purchase and sale of
securities in the Sub-Advisory Portfolio. The Manager shall ensure that the
Fund's custodian is obliged to comply with any instructions of the Subadviser
given in accordance with this Agreement. The Subadviser will not be responsible
for supervising the Fund's custodian.
6. Subadviser's Compensation.
The Manager shall pay to the Subadviser for its services hereunder a fee
at the annual rate set forth below based on the Fund's net assets under the
Subadviser's management.
All assets .15 of 1%
Such fee shall be calculated and accrued on a monthly basis as a percentage of
the Fund's month end net assets under the Subadviser's management, and shall be
payable quarterly after the end of each calendar quarter on or before the 15th
day of January, April, July and October of each year with respect to the
preceding quarter. If this Agreement shall be effective for only a portion of a
calendar quarter, the aforesaid fee shall be prorated for that portion of such
calendar quarter during which this Agreement is in effect. The Subadviser will
bear all of its expenses in connection with the performance of its services
under this Agreement.
7. Assignment and Amendment.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the 0000 Xxx) or in the
event of the termination of the Management Contract between the Trust and the
Manager insofar as it applies to the Fund; provided, that such termination shall
not relieve either party of any liability incurred hereunder. The terms of this
Agreement shall not be changed unless such change is approved in accordance with
the requirements of the 1940 Act, and as such requirements may be modified by
rule, regulation or order of the Securities and Exchange Commission (the "SEC").
8. Effective Period and Termination of this Agreement.
(a) This Agreement shall become effective on the date hereof and shall
remain in full force and effect until one year from the date hereof and from
year to year thereafter, but only so long as its continuance is approved
annually in accordance with the requirements of the 1940 Act, and as such
requirements may be modified by rule, regulation or order of the SEC, subject to
the respective rights of the Trust, the Manager and the Subadviser to terminate
this Agreement as provided in paragraphs (b) and (c) hereof.
(b) The Trust or the Manager may at any time terminate this Agreement by
not more than sixty (60) days' nor less than thirty (30) days' written notice
given to the Subadviser.
(c) The Subadviser may at any time terminate this Agreement by not less
than one hundred twenty (120) days' written notice given to the Trust and the
Manager.
9. Representations and Warranties.
The Subadviser represents and warrants to the Manager that the Subadviser:
(a) is experienced in providing the types of services it has been retained
to provide under this Agreement and with all applicable laws and regulations
relating thereto;
(b) is registered as an "investment adviser" under the Advisers Act;
(c) and any of its affiliated persons have not committed acts that would
subject them to disqualification under Section 9(a) of the 1940 Act;
(d) is not currently the subject of, and has not been the subject of
during the last three (3) years, any enforcement action by a regulator; and
(e) maintains insurance coverage in an appropriate amount and shall upon
request provide to the Manager any information it may reasonably require
concerning the amount of or scope of such insurance.
10. Complete Agreement.
This Agreement states the entire agreement of the parties hereto, and is
intended to be the complete and exclusive statement of the terms hereof. It may
not be added to or changed orally, and may not be modified or rescinded except
by a writing signed by the parties hereto and in accordance with Section 7
hereof and the applicable requirements of the 1940 Act.
11. Nonliability of the Subadviser.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Subadviser, or of reckless disregard of its obligations and
duties hereunder, the Subadviser shall not be subject to, and shall be held
harmless from, any liability to the Manager or the Trust, to any shareholder of
the Fund, or to any person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder. Nothing herein,
however, shall derogate from the Subadviser's obligations under applicable
federal and state securities laws.
12. Limitation of Liability of the Trustees, Officers and Shareholders.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations under this Agreement are
not binding upon any of the Trustees, officers or shareholders of the Trust but
are binding only upon the assets and property of the Fund.
13. Notices.
Any notice, instruction, request or other communications required or
contemplated by this Agreement shall be in writing and shall be duly given when
deposited by first class mail, postage prepaid, addressed to (or delivered by
hand with confirmation to) the Trust, the Manager or the Subadviser at the
applicable address set forth below
If to Subadviser:
Parametric Portfolio Associates, LLC
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
If to Trust:
Clearwater Investment Trust
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxx, XX 00000-0000
If to Manager:
Clearwater Management Co., Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxx, XX 00000-0000
14. Disclosure Statement.
The Manager and the Trust acknowledge receipt of the Subadviser's written
disclosure statement required by Rule 204-3 under Advisers Act not less than 48
hours prior to entering into this Agreement.
15. Governing Law.
This Agreement and all performance hereunder shall be governed by,
interpreted, construed and enforced in accordance with the laws of the State of
Minnesota.
16. Severability
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms or provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
17. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and as of the day and year first
written above.
CLEARWATER INVESTMENT TRUST
By: /s/ X.X. Xxxxxxxxxxxx, Xx.
--------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx, Xx.
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
PARAMETRIC PORTFOLIO ASSOCIATES, LLC
By: /s/ Xxxxx Xxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxx
Title: CFO
