SUBADVISORY AGREEMENT
Xxxxx Global Partners plc
0-0 Xx. Xxxxxx'x Xxxx
Xxxxxx XX0X 0XX Xxxxxxx
Gentlemen:
Countrywide 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 Global Bond Fund (the
"Fund") has been established as a series of the Trust.
Countrywide Investments, Inc. (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.
1. Appointment as an Adviser. The Trust being duly
authorized hereby appoints and employs Xxxxx Global Partners plc ("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 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,
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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 Fund's
registration statements 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 The Northern Trust Company or any 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. 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
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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, 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
Fund, 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 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
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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 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 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
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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 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 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, the
Adviser or any portfolio manager of the Trust without the prior written 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 Fund's request, the Adviser shall
provide the Trust with its recommendations as to the voting of such proxies.
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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.
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 up to and including
$100,000,000 and 30/100 of 1% of such assets in excess of $100,000,000. The
Adviser agrees to waive all advisory fees for the first sixty days of the Fund's
operations. Thereafter, however, the Adviser shall not be required to waive any
portion of its fees if not required by an applicable statute or regulation.
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
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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 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
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authorized to act on behalf of the Trust, the Fund, the Manager and/or the
Adviser.
12. Limitation of Liability. The Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with (or
in the absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or gross negligence, a violation of the standard
of care established by and applicable to the Adviser in its actions under this
Agreement or breach of its duty or of its obligations hereunder. Nothing in this
paragraph 12 shall be construed in a manner inconsistent with Sections 17(h) and
(i) of the Act.
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 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
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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:
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,
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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 has been no violation of
the Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was 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. With respect to income from foreign
sources, the Adviser will undertake any reasonable procedural
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steps required to reduce, eliminate or reclaim non-U.S. withholding taxes under
the terms of applicable United States income tax treaties.
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.
18. Effective Date; Term. This Agreement shall become
effective on the date of its execution and shall remain in force for a period
of two (2) years from that 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
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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 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
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time to time, this Agreement shall be administered, construed and enforced
according to the laws of the State of Ohio.
COUNTRYWIDE INVESTMENTS, INC. COUNTRYWIDE INVESTMENT TRUST
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ----------------------------
Title: President Title: President
Date: February 28, 1997 Date: February 28, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
XXXXX GLOBAL PARTNERS plc
By: /s/ Xxxx Xxxxx
------------------------
Title: Director
Date: February 28, 1997
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or 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
(e) any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
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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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