INVESTMENT SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the
29th day of January, 1999, by and among AMERICAN CENTURY CAPITAL PORTFOLIOS,
INC. ("the Issuer"), a Maryland corporation acting on behalf of the AMERICAN
CENTURY EQUITY INDEX FUND (the "Fund"), a series of shares of the Issuer,
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM"), a Delaware corporation,
and BARCLAYS GLOBAL FUND ADVISERS (the "Subadvisor"), a California corporation.
WITNESSETH:
WHEREAS, the Issuer is an open-end management investment company
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended;
WHEREAS, ACIM and the Subadvisor are both investment advisors
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended;
WHEREAS, the Issuer has engaged ACIM to serve as the investment manager
for the Fund pursuant to a Management Agreement dated January 29,1999 (the
"Management Agreement");
WHEREAS, the Issuer and ACIM desire to engage the Subadvisor as a
subadvisor for the Fund, and the Subadvisor desires to accept such engagement;
and
WHEREAS, the Boards of Directors of the Issuer, ACIM, and the
Subadvisor have determined that it is advisable to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:
1. APPOINTMENT OF SUBADVISOR. Subject to and in accordance with the
provisions hereof, the Issuer hereby appoints the Subadvisor as investment
subadvisor to provide advisory services to the Fund subject to the restrictions
set forth herein and in such manner and to such extent as may be approved by the
Board of Directors of the Issuer from time to time. The Subadvisor hereby
accepts the appointment as investment subadvisor of the Fund and agrees to
furnish the services described herein.
2. INVESTMENT SUBADVISORY SERVICES.
(a) Subject to the general supervision of ACIM and the Board of
Directors of the Issuer, the Subadvisor will (i) manage the investments and
determine the composition of the assets of the Fund in accordance with the
Fund's investment objective, policies, and limitations as stated in the Fund's
Prospectus and other governing documents (including without limitation the
Statement of Additional Information) and with such guidelines as ACIM or the
Board may provide from time to time and (ii) implement its investment program
through the purchase and sale of securities and other investments on behalf of
the Fund.
(b) If in the performance of its duties hereunder the Subadvisor shall
believe that a change in any of the policies of the Fund shall be advisable, it
shall recommend such change to ACIM and the Board of Directors of the Issuer.
Any change to any such policies shall require the approval of ACIM and the
Issuer's Board of Directors prior to the implementation of any such change.
(c) Notwithstanding anything herein to the contrary, the Subadvisor is
not authorized to take any action, including the purchase and sale of securities
or other investments, in contravention of any restriction, limitation,
objective, policy, or instruction described herein.
3. ADMINISTRATIVE AND OTHER SERVICES.
(a) The Subadvisor will furnish (i) all necessary investment and
management facilities, including without limitation salaries of personnel
required for it to execute its duties faithfully, and (ii) administrative
facilities, including bookkeeping, clerical personnel and equipment necessary
for the efficient conduct of the investment affairs of the Fund (excluding
determination of net asset values and shareholder accounting services).
(b) The Subadvisor will maintain all accounts, books and records with
respect to the Fund as required of an investment adviser of a registered
investment company pursuant to the Investment Company Act of 1940, the
Investment Advisers Act of 1940, and the rules promulgated thereunder. The
Subadvisor agrees that such records are the property of the Issuer and will be
surrendered to the Issuer promptly upon request. ACIM shall be granted
reasonable access to all records and documents in Subadvisor's possession
relating to the Fund.
(c) The Subadvisor will provide such information as is necessary to
enable ACIM to (i) prepare and update the Fund's registration statement (and any
supplement thereto) and the Fund's financial statements; (ii) prepare periodic
and other reports; (iii) prepare reports to the Board of Directors in connection
with the periodic review, renewal, amendment, or termination of the Fund, this
Agreement, or the Management Agreement; and (iv) access such additional
documents and information as it may reasonably request in the management of its
affairs. The Subadvisor understands that the Fund and ACIM will rely on such
information in the preparation of the Issuer's registration statement, the
Fund's financial statements, and any such reports, and hereby covenants that any
such information shall be true and complete in all material respects.
(d) The Subadvisor will keep the Issuer and ACIM informed of
developments materially affecting the Fund and will take initiative to furnish
the Issuer and ACIM on at least quarterly basis with whatever information the
Subadvisor and ACM believe is appropriate for this purpose. Such regular
quarterly reports shall include (i) a discussion of the Fund's performance
relative to its benchmark; (ii) an assessment of investment decisions and
analysis of the components of the Fund's performance; (iii) the decisions it has
made with respect to the Fund's assets and the purchase and sale of its
portfolio securities; (iv) the reasons for such decisions and related actions;
and (v) the extent to which those decisions have been implemented.
(e) At least twice annually a representative of the Subadvisor will
attend a meeting of the Board of Directors to make a presentation on the Fund's
performance during the preceding six and twelve months periods, as well as such
other time periods as the Subadvisor and ACIM may reasonably request.
(f) The Subadvisor will furnish to regulatory authorities any
information or reports in connection with such services as may be lawfully
requested. The Subadvisor shall also, at the Issuer's request, certify to the
Issuer's independent auditors that sales or purchases aggregated with those of
other clients of the Subadvisor, as described in Section 3 above, were equitably
allocated.
(g) The Subadvisor will vote the Fund's investment securities in the
manner in which the Subadvisor believes to be in the best interests of the Fund,
and shall review its proxy voting activities on a periodic basis with the Board
of Directors.
4. BROKERAGE.
(a) In executing transactions for the Fund and selecting brokers or
dealers, the Subadvisor will use its best efforts to obtain the best net price
and execution available and shall execute or direct the execution of all such
transactions as permitted by law and in a manner that best suits the interest of
the Fund and its shareholders. In assessing the best net price and execution
available for any Fund transaction, the Subadvisor will consider all factors it
deems relevant including, but not limited to, breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission for
the specific transaction and on a continuing basis. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, the Subadvisor may, at its discretion, execute
transactions with brokers and dealers who provide the Fund with research advice
and other services, but in all instances best net price and execution shall
control. The Subadvisor is authorized to place purchase and sale orders for the
Fund with brokers and/or dealers subject to the supervision of ACIM and the
Board of Directors of the Issuer and in accordance with the limitations set
forth in the registration statement for the Fund shares then in effect.
(b) On occasion when the Subadvisor deems the purchase or sale of a
security to be in the best interest of the Fund as well as one or more of its
other clients, the Subadvisor may to the extent permitted by applicable law, but
shall not be obligated to, aggregate the securities to be sold or purchased with
those of its other clients. In such event, allocation of the securities so
purchased or sold will be made by the Subadvisor in a manner it considers to be
equitable and consistent with its fiduciary obligations to the Issuer and to
such other clients. Securities so allocated will be delivered in proportion to
the consideration paid. The expenses incurred in the transaction shall be
allocated pro-rata.
5. INFORMATION TO BE PROVIDED BY ACIM. ACIM will provide the Subadvisor
with copies of (a) the Issuer's currently effective Registration Statement under
the Investment Company Act of 1940 and the Securities Act of 1933, (b) any
instructions, investment policies or other restrictions adopted by the Fund's
Board of Directors or by ACIM supplemental thereto, and (c) the Management
Agreement. ACIM will provide the Subadvisor with such further documentation
concerning the investment objective, policies, and restrictions applicable to
the fund as the Subadvisor may reasonably request from time to time.
6. CONFIDENTIALITY. The parties to this Agreement agree that each shall
treat as confidential all information provided by a party to the others
regarding such party's business and operations, including without limitation the
investment activities, holdings, or identities of shareholders of the Fund. All
confidential information provided by a party hereto shall be used by any other
parties hereto solely for the purposes of rendering services pursuant to this
Agreement and, except as may be required in carrying out the terms of this
Agreement, shall not be disclosed to any third party without the prior consent
of such providing party. The foregoing shall not be applicable to any
information that is publicly available when provided or which thereafter becomes
publicly available other than in contravention of this paragraph. The foregoing
shall also not apply to any information which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of its jurisdiction
over a party, by any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation; provided,
however, that the disclosing party shall provide reasonable notice to the other
parties hereto prior to any such disclosure.
7. LIABILITY AND INDEMNIFICATION.
(a) The Subadvisor shall be responsible for the exercise of reasonable
care in carrying out its responsibilities hereunder; provided, however, that no
provision of this Agreement be construed to protect any trustee, director,
officer, agent or employee of the Subadvisor or an affiliate from liability by
reason of gross negligence, willful malfeasance, bad faith in the performance of
such person's duties or by reason of reckless disregard of obligations and
duties hereunder. No party shall be liable for any actions or omissions taken or
made pursuant to this Agreement unless such actions or omissions result from
gross negligence, willful malfeasance, or bad faith in the performance of such
party's duties or by reason of reckless disregard of obligations and duties
hereunder.
(b) ACIM agrees to indemnify and hold harmless the Subadvisor and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Subadvisor within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 7(b))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from (a) a breach by the Issuer or ACIM
of a material provision of this Agreement, (b) gross negligence, willful
malfeasance or bad faith in the performance by the Issuer or ACIM of its
respective duties or reckless disregard by the Issuer or ACIM of its respective
duties or reckless disregard by the Issuer or ACIM of its respective duties
hereunder, or (c) any violation by the Issuer or ACIM of any applicable law or
regulation where the Subadvisor was not contributing to or a part of the
violation. ACIM will reimburse any legal or other expenses reasonably incurred
by the Indemnified Parties in connection with investigating or defending any
such Losses. ACIM shall not be liable for indemnification hereunder if such
Losses are attributable to the gross negligence or misconduct of the Subadvisor
in performing its obligations under this Agreement.
(c) The Subadvisor agrees to indemnify and hold harmless ACIM and the
Issuer, and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls ACIM or the Issuer within the meaning of
the Securities Act of 1933 (collectively, the "Indemnified Parties" for purposes
of this Section 7(c)) against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses result from (a) a breach by the
Subadvisor of a material provision of this Agreement, (b) gross negligence,
willful malfeasance, or bad faith in performance by the Subadvisor or its
affiliates of their duties or reckless disregard by the Subadvisor or its
affiliates of their duties hereunder, or (c) any violation by the Subadvisor of
any applicable law or regulation where neither the Issuer or ACIM was
contributing to or was a part of the violation. The Subadvisor will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Subadvisor shall
not be liable for indemnification hereunder if such Losses are attributable to
the gross negligence or misconduct of ACIM or the Issuer in performing their
obligations under this Agreement.
(d) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 5. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish to, assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 5 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
(e) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
8. COMPENSATION.
(a) In consideration of the services rendered pursuant to this
Agreement, ACIM will pay the Subadvisor a per annum management fee (the
"Applicable Fee") based on the net assets of the Fund as follows:
0.05% of the first $200,000,000
0.02% of the next $300,000,000
0.01% over $500,000,000
(b) On the first business day of each month, ACIM shall pay the
Subadvisor the Applicable Fee for the previous month. The fee Applicable Fee for
the previous month shall be calculated based on the aggregate average daily
closing value of all classes of the Fund's net assets during the previous month,
and further multiplying that fee by a fraction, the numerator of which shall be
the number of days in the previous month, and the denominator of which shall be
365 (366 in leap years).
(c) The Subadvisor shall have no right to obtain compensation directly
from the Fund or the Issuer for services provided hereunder and agrees to look
solely to ACIM for payment of fees due. Upon termination of this Agreement
before the end of a month, or in the event the Agreement begins after the
beginning of the month, the fee for that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
9. EXPENSES. The Subadvisor will bear all of its expenses in connection
with the performance of its services under this Agreement, which expenses shall
not include brokerage fees or commissions in connection with the execution of
securities transactions.
10. SERVICES TO OTHER COMPANIES OR ACCOUNTS; ALLOCATION. The Issuer
understands that the Subadvisor or its affiliates now acts and will continue to
act as investment advisor to other clients. The Issuer has no objection to the
Subadvisor so acting, provided that, as described in Section 3 above, whenever
the Fund and one or more other clients of the Subadvisor have funds available
for investment, investments suitable and appropriate for each will be allocated
equitably to each entity in accordance with procedures, with no preference given
to other clients. Similarly, opportunities to sell securities will be allocated
in an equitable manner, with no preference given to other clients. In addition,
the Issuer understands that the persons employed by the Subadvisor to assist in
the performance of the Subadvisor'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 Subadvisor of any affiliate of the Subadvisor to
engage in and devote time and attention to other business or to render services
of whatever kind or nature. Further, from time to time, the Subadvisor may refer
or introduce certain institutional investors and existing clients of the
Subadvisor and its affiliates to the Issuer. The Issuer understands that nothing
herein shall be deemed to limit or restrict the right of the Subadvisor, in the
event the Subadvisor's clients purchase shares of the Issuer, to subsequently
suggest or induce such clients to redeem such shares and open a separate
advisory account with the Subadvisor.
11. TERM OF AGREEMENT. This Agreement shall become effective as of the
date first written above and shall continue until January 29, 2000 and
thereafter so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Issuer or (ii) a vote of a
majority of the Fund's outstanding voting securities, provided that in either
event the continuance is also approved by a majority of the Board of Directors
who are not interested persons (as defined in the Investment Company Act) of any
party to this Agreement, by a vote cast at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty on sixty
days' written notice by (i) the Board of Directors of the Issuer, (ii) by vote
of holders of a majority of the Fund's shares, (iii) by ACIM, or (iv) by the
Subadvisor. This Agreement will terminate automatically without penalty upon any
termination of the Management Agreement or in the event of its assignment (as
defined in the Investment Company Act). The Subadvisor agrees to notify the
Issuer of any circumstances that might result in this Agreement being deemed to
be or have been assigned.
12. REPRESENTATIONS OF ACIM, THE SUBADVISOR AND THE ISSUER.
(a) ACIM and the Subadvisor each hereby represents that it is
registered as an investment advisor under the Investment Act, that it will use
its reasonable best efforts to maintain such registration, and that it will
promptly notify the other if it ceases to be so registered, if its registration
is suspended for any reason, or if it is notified by any regulatory organization
or court of competent jurisdiction that it should show cause why its
registration should not be suspended or terminated. ACIM and the Subadvisor each
further represents that it is registered under the laws of all jurisdictions in
which the conduct of its business hereunder requires such registration.
(b) The Issuer and ACIM represent and warrant that (i) the appointment
of the Subadvisor has been duly authorized; and (ii) each of them has full power
and authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause either to be in violation of its Articles of Incorporation, Bylaws, or any
material laws.
(c) The Subadvisor represents and warrants that (i) its service as
Subadvisor hereunder has been duly authorized; (ii) it has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause it to be in violation of its organizational documents, its Bylaws or
material laws; and (iii) it will at all times in the performance of its duties
hereunder act in conformity with the provisions of the Investment Company Act of
1940, the Investment Advisers Act of 1940, the Internal Revenue Code and all
other applicable federal and state laws and regulations, as the same may be
amended from time to time.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
14. LIMITATION OF LIABILITY. This Agreement has been executed on behalf
of the Issuer by the undersigned officer of the Issuer solely in his capacity as
an officer of the Issuer.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter described herein.
16. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Subadvisor is and shall be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Issuer or ACIM in any way, or otherwise be deemed to be an agent
of the Issuer or ACIM.
17. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or similar authority, the
remainder of this Agreement shall not be affected thereby.
18. NOTICES. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopy, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Subadvisor:
Barclays Global Fund Advisers
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Phone: 000-000-0000
Fax: 000-000-0000
To The Issuer or ACIM:
American Century Investments
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Phone: 000-000-0000
Fax: 000-000-0000
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below on the day and year
written above
BARCLAYS GLOBAL FUND AMERICAN CENTURY CAPITAL
ADVISERS PORTFOLIOS, INC.
By: /s/Xxxxxxxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxx
Name: Xxxxxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Principal Title: Vice President
AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC.
By: /s/Xxxxxx X. Puff
Name: Xxxxxx X. Puff
Title: President
