SUBADVISORY AGREEMENT
CityFund Advisory, Inc.
000 X. Xxxx Xxxx Xxx, Xxx. #000
Xxxxxxxxxx, XX 00000
Gentlemen:
Dunhill Investment Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The Regional Opportunity
Fund: Ohio Indiana Kentucky (the "Fund") has been established as a series of the
Trust.
Dunhill Investment Advisors, Limited (the "Manager") acts as the investment
manager for the Fund pursuant to the terms of a Management Agreement. The
Manager is responsible for the coordination of investment of the Fund's assets
in portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Manager and approved by the Board of Trustees of the Trust.
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1. Appointment as an Adviser. The Trust being duly authorized hereby
appoints and employs CityFund Advisors, Inc. (the "Adviser") as the
discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
2. Acceptance of Appointment; Standard of Performance. The Adviser
accepts the appointment as the discretionary portfolio manager and agrees to use
its best professional judgment to make timely investment decisions for the Fund
in accordance with the provisions of this Agreement.
3. Portfolio Management Services of Adviser. The Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities of the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the Adviser shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Adviser, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A
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hereto and instructions from the Manager. The Adviser is not authorized by the
Fund to take any action, including the purchase or sale of securities for the
Fund, in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence. The Adviser shall maintain on
behalf of the Fund the records listed in Schedule A hereto (as amended from time
to time). At the Trust's reasonable request, the Adviser will consult with the
Manager with respect to any decision made by it with respect to the investments
of the Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will
provide the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Adviser with such further information concerning the investment objectives,
policies and restrictions applicable thereto as the Adviser may from time to
time reasonably request. The Trust retains the right, on written notice to the
Adviser from the Trust or the Manager, to modify any such objectives, policies
or restrictions in any manner at any time.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by Fifth Third Bank or any
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successor custodian (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Fund, and the Adviser shall not have
possession or custody thereof. If the Manager has authorized the Adviser to
place orders for portfolio transactions of the Fund, the Adviser shall advise
the Custodian and confirm in writing to the Trust and to the Manager all
investment orders for the Fund placed by it with brokers and dealers. The
Adviser shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Adviser. It
shall be the responsibility of the Adviser to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
6. Allocation of Brokerage. The Adviser shall have the authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser, and for the selection of the markets on or in which
the transactions will be executed.
A. In doing so, the Adviser will give primary consideration to
securing the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability,
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financial responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer. Consistent
with this policy, the Adviser may select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the other accounts over which it
exercises investment discretion. It is understood that neither the Trust, the
Manager nor the Adviser have adopted a formula for allocation of the Fund's
investment transaction business. It is also understood that it is desirable for
the Fund that the Manager and/or the Adviser have access to supplemental
investment and market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher commission to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the lowest commission. Therefore, the Adviser is authorized to place
orders for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this practice, provided that the
Adviser determines in good faith that the amount of the commission is reasonable
in relation to the value of the brokerage and research services provided by the
executing broker
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or dealer. The determination may be viewed in terms of either a particular
transaction or the Adviser's overall responsibilities with respect to the Fund
and to the other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Adviser, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its
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fiduciary obligations to the Fund with respect to the Fund and to such other
clients.
For each fiscal quarter of the Fund, the Adviser shall prepare and
render reports to the Manager and the Trust's Board of Trustees of the total
brokerage business placed by the Adviser and the manner in which the allocation
has been accomplished. Such reports shall set forth at a minimum the information
required to be maintained by Rule 31a-1(b)(9) under the Act.
B. Adviser agrees that it will not execute any portfolio
transactions for the Fund's account with a broker or dealer which is an
"affiliated person" (as defined in the Act) of the Trust, the Manager or the
Adviser without the prior approval of the Manager. The Manager agrees that it
will provide the Adviser with a list of brokers and dealers which are
"affiliated persons" of the Trust, the Manager or the Adviser.
7. Proxies. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the Trust's request, the Adviser shall provide the Trust
with its recommendations as to the voting of such proxies.
8. Reports to the Adviser. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
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9. Fees for Services. For the services provided to the Fund, the
Manager shall pay the Adviser a fee equal to the annual rate of 35/100 of 1% of
the average value of the daily net assets of the Fund.
The Adviser's fees shall be payable monthly within ten days following
the end of each month. Pursuant to the provisions of the Management Agreement
between the Trust and the Manager, the Manager is solely responsible for the
payment of fees to the Adviser, and the Adviser agrees to seek payment of the
Adviser's fees solely from the Manager.
10. Other Investment Activities of the Adviser. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that
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the Adviser acts in good faith, and provided further, that it is the Adviser's
policy to allocate, within its reasonable discretion, investment opportunities
to the Fund over a period of time on a fair and equitable basis relative to the
Affiliated Accounts, taking into account the investment objectives and policies
of the Fund and any specific investment restrictions applicable thereto. The
Trust acknowledges that one or more of the Affiliated Accounts may at any time
hold, acquire, increase, decrease, dispose of or otherwise deal with positions
in investments in which the Fund may have an interest from time to time, whether
in transactions which involve the Fund or otherwise. The Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Fund or otherwise.
11. Certificate of Authority. The Trust, the Manager and the Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Board of Trustees or Board of Directors or executive
committees, as the case may be, evidencing the authority of officers and
employees who are authorized to act on behalf of the Trust, the Fund, the
Manager and/or the Adviser.
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12. Limitation of Liability. The Adviser (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Adviser in the performance of its duties
or from the reckless disregard by the Adviser of its obligations and duties
under this Agreement ("disabling conduct"). However, the Adviser will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Adviser
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Adviser was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written opinion.
The Fund will advance attorneys' fees or other expenses incurred by the Adviser
in defending a proceeding, upon the undertaking by or on behalf of the Adviser
to repay the advance unless it is ultimately
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determined that the Adviser is entitled to indemnification, so long as the
Adviser meets at least one of the following as a condition to the advance: (1)
the Adviser shall provide a security for its undertaking, (2) the Fund shall be
insured against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of the disinterested, non-party trustees of the Trust, or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Adviser ultimately will be found
entitled to indemnification. Any person employed by the Adviser who may also be
or become an employee of the Trust shall be deemed, when acting within the scope
of his employment by the Trust, to be acting in such employment solely for the
Trust and not as the Adviser's employee or agent.
13. Confidentiality. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
14. Assignment. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate
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automatically in the event of such assignment. The Adviser shall notify the
Trust in writing sufficiently in advance of any proposed change of control, as
defined in Section 2(a)(9) of the Act, as will enable the Trust to consider
whether an assignment will occur, and to take the steps necessary to enter into
a new contract with the Adviser.
15. Representations, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Board of
Trustees of the Trust to provide investment services to the Fund as contemplated
hereby.
B. The Trust will deliver to the Adviser a true and complete
copy of its then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times
comply with the requirements imposed upon the Fund by applicable laws and
regulations.
16. Representations, Warranties and Agreements of the Adviser. The
Adviser represents, warrants and agrees that:
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A. The Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on
behalf of the Fund, in the manner and for the time periods required or permitted
by the Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases
or sales of securities on behalf of the Fund as the Manager or the Trust may
from time to time require to ensure compliance with the Act, the Internal
Revenue Code and applicable state securities laws.
D. The Adviser will adopt a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president of the Adviser
shall certify to the Trust that the Adviser has complied with the requirements
of Rule 17j-1 during the previous year and that there have been no violations of
the Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was
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taken in response to such violation. Upon the written request of the Trust, the
Adviser shall submit to the Trust the reports required to be made to the Adviser
by Rule 17j-1(c)(1).
E. The Adviser will promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund.
G. The Adviser will immediately notify the Trust and the
Manager of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the Act or otherwise.
17. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
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18. Effective Date; Term. This Agreement shall become effective on the
date of its execution and shall remain in force for an initial term of two (2)
years from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust, the Manager or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
19. Termination. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
20. Shareholder Liability. The Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Trust and agrees that
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obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Fund and its assets. The Adviser agrees that it shall not seek
satisfaction of any such obligations from the shareholders or any individual
shareholder of the Fund, nor from the Trustees or any individual Trustee of the
Trust.
21. Definitions. As used in paragraphs 14 and 18 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
22. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
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DUNHILL INVESTMENT ADVISOR'S, DUNHILL INVESTMENT TRUST
LIMITED
By: By:
---------------------------- --------------------------------
Title: President Title: President
------------------------- -----------------------------
Date: , 1998 Date: , 1998
--------------- ---------------
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
CITYFUND ADVISORY,INC.
By:
--------------------------------
Title: President
-----------------------------
Date: , 1998
----------------
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
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1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Manager;
(c) the Adviser;
(d) any other portfolio adviser of the Trust; and
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(e) any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rules adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Fund.
------------
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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