SUBADVISORY CONTRACT
AGREEMENT made as of the 22nd day of June 1994 by and between
PIONEERING MANAGEMENT CORPORATION, a Delaware corporation (the "Manager"), and
ITI PIONEER AMC LTD., a corporation organized under the laws of India ("ITI
Pioneer").
WITNESSETH:
WHEREAS, the Manager desires to utilize the technical services of ITI
Pioneer as financial counsel with respect to the portfolio investments of
Pioneer India Fund, a Delaware business trust and a registered open-end
investment company (the "Fund"); and
WHEREAS, ITI Pioneer is willing to perform such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follows:
1. ITI Pioneer's Services. ITI Pioneer will provide the following
technical services, including investment advisory services, to the Manager,
which is located outside India:
(a) Subject to the directions of the Manager and the
limitations set forth below and elsewhere herein, ITI Pioneer will act
as investment adviser with respect to such portion of the Fund's assets
as the Manager designates from time to time. In such capacity, ITI
Pioneer will purchase, hold and sell portfolio securities and monitor
on a continuing basis the performance of such portfolio securities;
provided, however, that, before investing any such assets in a
particular initial public offering, ITI Pioneer will obtain the
Manager's written authorization to make such investment. ITI Pioneer
will make investments hereunder only in securities markets located in
India.
(b) ITI Pioneer will advise the Manager on a prompt basis each
day by electronic telecommunication of each confirmed purchase and sale
of a portfolio security that it effects hereunder, and will provide the
Manager with a separate confirmation for each lot involved in the
trade. Each such communication will specify the name of the issuer, the
full description of the security including its class, the amount or
number of shares or units of the security purchased or sold, the market
price, commission, government charges and gross or net price, trade
date, settlement date and identity of the effecting broker or dealer
and, if different, the identity of the clearing broker. Each such
communication will also contain settlement instructions for the
transaction (unless standing instructions previously provided by ITI
Pioneer apply to the transaction) and specify the exchange on which the
trade was executed, the nature of the settlement arrangements and the
lot-level of the trade. With respect to any security purchased
hereunder, ITI Pioneer will also provide the Manager with the local
identification number of the security, the industry sector of the
issuer and the total amount of the issuer's issued and outstanding
voting securities. ITI Pioneer will not have any authority to instruct
the Fund's custodian or any of the Fund's subcustodians concerning the
Fund's portfolio securities.
(c) ITI Pioneer will arrange for the placing of orders for the
purchase and sale of securities hereunder with brokers or dealers
selected by ITI Pioneer, and will provide the Manager at all times with
a current master list of brokers and dealers in India with which such
orders may be placed. In the selection of such brokers or dealers and
the placing of such orders, ITI Pioneer is directed at all times to
seek the most favorable price and execution available (from the Fund's
perspective). In seeking the most favorable price and execution, ITI
Pioneer will consider all factors it deems relevant, including by way
of illustration, the size and type of the transaction; the nature of
the market for the security to be purchased or sold; the execution
efficiency, settlement capability and financial condition of the
dealer; the dealer's execution services
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rendered on a continuing basis; and the reasonableness of any dealer
spreads.
(d) ITI Pioneer will assure that at least two representatives
of the Manager, as specified by the Manager, are authorized at all
times to give directions (without restriction of any kind) to brokers
and dealers employed by ITI Pioneer to execute portfolio transactions
for the Fund; provided, that notwithstanding anything herein to the
contrary ITI Pioneer will have no responsibility for knowing of any
such direction given unless the Manager has given ITI Pioneer written
notice of the giving of such direction.
(e) ITI Pioneer's portfolio management personnel will make
themselves available on a regular basis to discuss (via telephone) the
Fund's investments and prospective investments and other matters
relevant to the Fund with a representative of the Manager.
(f) ITI Pioneer will provide the Manager with the following
information on a regular basis (unless a different frequency is
specified):
(i) advice concerning the Fund's investments
that are not direct investments in
securities markets located in India,
including recommendations to purchase, sell
or hold securities;
(ii) immediate comment by telex or facsimile on
earnings reports, creditworthiness changes
and other public announcements or
developments concerning Indian issuers of
securities held, or being considered for
purchase, by the Fund (including American,
Global or other types of depositary receipts
for such securities), followed by more
detailed comment and analysis;
(iii) comments by telex or facsimile, at the end
of each day on which one or more Indian
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securities markets are open for business,
describing major relevant news items and
reasons for price fluctuations in India's
securities markets on such day;
(iv) research reports on industries and
individual issuers of Indian securities;
(v) macro-economic analyses, including analyses
of economic and political trends and
developments and their potential effect on
India's securities markets and the Fund's
investments;
(vi) information concerning regulatory and
procedural developments with respect to
India's securities markets (e.g., changes in
settlement or registration procedures,
changes in the laws/guidelines governing
foreign investment in India);
(vii) the current market price of each portfolio
security of the Fund that is under ITI
Pioneer's management and identification of
the source for such price (e.g., price at
which last reported sale of security was
effected on the principal exchange for such
security), on a daily basis so that such
information can be used in calculating the
Fund's net asset value on such day; and
(viii) information that the Manager considers
necessary to determine whether the portfolio
securities of the Fund that are under ITI
Pioneer's management are liquid.
(ix) other information upon which the Manager and
ITI Pioneer agree in writing from time to
time and which is described on Schedule A
hereto.
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2. Information To Be Provided By The Manager. The Manager will provide
ITI Pioneer with the following information at the specified frequencies:
(i) a daily report of the Fund's cash balance;
(ii) a weekly list of all portfolio assets of the Fund, showing
the cost and market value of each such asset, the net
asset value of the Fund and the percentage of the Fund's
assets represented by each holding;
(iii) a weekly status report on the registration of the Fund's
portfolio securities and the liquidity of the Fund's
portfolio;
(iv) a weekly report on unsettled portfolio trades of the Fund;
(v) a weekly report of variances between contracted and actual
settlement amounts;
(vi) upon reasonable request by ITI Pioneer, a report on
foreign ownership levels for particular Indian issuers;
(vii) upon reasonable request by ITI Pioneer, a report showing
the amount of a particular Indian issuer's total issued
capital owned by the Fund and any other investor whose
securities holdings in such issuer, together with the
Fund's, are subject to a percentage limitation imposed by
Indian law; and
(viii) other information upon which the Manager and ITI Pioneer
agree in writing from time to time and which is described
on Schedule A hereto.
3. Additional Services.
(a) ITI Pioneer will be responsible for monitoring corporate
actions, including without limitation dividends, stock splits and
rights offerings (collectively, "Corporate
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Actions"), of Indian issuers of securities held by the Fund, which
securities are not registered in the Fund's name, and for giving the
Manager timely notice of each such Corporate Action. ITI Pioneer will
also be responsible for (i) assisting the Manager in monitoring
Corporate Actions of Indian issuers of securities held by the Fund,
which securities are registered in the Fund's name, and (ii) providing
the Manager with book closure dates for all portfolio securities of the
Fund under ITI Pioneer's management.
(b) ITI Pioneer will maintain an investment ledger showing the
details of all portfolio transactions effected by ITI Pioneer
hereunder. In addition, ITI Pioneer will require that its Access
Persons (as defined in the Code of Ethics described in Section 4(a)
hereof) provide ITI Pioneer with monthly reports of their personal
securities transactions. These books, records and reports will be
available to the Manager at any time upon request and, upon request by
the Manager, will be made available (by facsimile and express mail)
without delay to the Manager during any day that the Fund is open for
business.
(c) From time to time as the Manager may reasonably request,
ITI Pioneer will furnish to the Manager reports on securities held in
the Fund's portfolio, all in such detail as the Manager may reasonably
request. ITI Pioneer will also inform the Manager on a current basis of
changes in its investment strategy or key personnel. ITI Pioneer will
make its key personnel available to meet with representatives of the
Manager in the United States, or at such other location on which ITI
Pioneer and the Manager agree, at least annually on due notice to
review the investments made hereunder in light of current and
prospective political, economic and market conditions in India.
(d) ITI Pioneer will be responsible for ensuring compliance
with any transaction volume limit with respect to the Fund's
investments in India's securities markets, imposed by the Fund's
subcustodian in India or otherwise, except that, with respect to any
such limit that is not imposed by Indian law, ITI Pioneer will have no
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responsibility hereunder unless the Manager has informed ITI Pioneer in
writing of such limit.
(e) ITI Pioneer will furnish to the Manager such information
as may reasonably be necessary in order for the Trustees of the Fund to
evaluate this Contract or any proposed amendments hereto for the
purpose of casting a vote pursuant to Section 8 or 12 hereof.
(f) ITI Pioneer will be responsible for providing such other
services with respect to the Fund as the Manager may reasonably
request.
4. Compliance.
(a) ITI Pioneer will not effect portfolio transactions or
provide advice hereunder that is contrary to the Fund's investment
policies and restrictions as stated in the Fund's prospectus and
statement of additional information, as such prospectus and statement
of additional information are revised and updated from time to time.
The Manager will forward promptly prospectuses and statements of
additional information, as so revised and updated, to ITI Pioneer. ITI
Pioneer will not effect portfolio transactions or provide advice
hereunder that conflicts with applicable requirements imposed by the
U.S. Investment Company Act of 1940, as amended (the "1940 Act"), the
U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"),
or the laws, rules or guidelines of the Government of India, any agency
or instrumentality thereof, or any Indian stock exchange, including
without limitation percentage limitations that apply to the Fund's
investments in Indian issuers (collectively, "Applicable Law"). As used
herein, the term "Applicable Law" will include without limitation the
investment restrictions and compliance matters listed in ITI Pioneer's
compliance manual as provided by the Manager to ITI Pioneer, as the
same may be revised and updated from time to time.
(b) Without limiting the foregoing, under no circumstances may
ITI Pioneer or any other "affiliated
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person" (as defined in the 0000 Xxx) of the Fund, or any affiliated
person of ITI Pioneer or of any such other affiliated person, act as a
principal in a portfolio transaction with the Fund or any other
investment company managed by the Manager. In addition, no portfolio
transaction on behalf of the Fund may be executed by or through ITI
Pioneer or any such affiliated person as a broker, except on terms
expressly approved in advance by the Manager, which terms are in
compliance with Section 17(e) of the 1940 Act.
5. ITI Pioneer's Registration and Other Agreements. ITI Pioneer
represents and warrants to the Manager that it is registered as an investment
adviser under the Advisers Act and will remain so registered for the duration of
this Contract. It is understood that ITI Pioneer and the Manager may have
advisory, management, service or other contracts with other individuals or
entities, and may have other interests and businesses. When recommending a
portfolio transaction hereunder in which ITI Pioneer, any affiliated person of
ITI Pioneer (other than the Manager), or any other advisory client of ITI
Pioneer has a direct or indirect interest, ITI Pioneer will notify the Manager
of such interest.
6. Compensation. The Manager will pay to ITI Pioneer for its technical
services hereunder a fee at the annual rate of:
0.10% of the Fund's average gross assets invested in India's
securities markets, including assets invested in American,
Global or other types of depositary receipts for securities
traded in India's securities markets if such gross assets are
no greater than $15,000,000;
0.20% of such gross assets if such gross assets are greater
than $15,000,000 but no greater than $45,000,000;
0.40% of such gross assets if such gross assets are greater
than $45,000,000 but no greater than $60,000,000; and
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0.60% of such gross assets if such gross assets are greater
than $60,000,000.
To illustrate the application of the foregoing, if such gross assets equal
$50,000,000 for any particular year, then ITI Pioneer's annual fee hereunder
will be $200,000 (0.40% X $50,000,000). ITI Pioneer's fees hereunder will be
calculated and accrued monthly based on the average of the Fund's gross assets
invested in India's securities markets and in such depositary receipts on the
first and last day (on which this Contract is effective) of each calendar month,
and such fee will be payable quarterly) after the end of each calendar quarter
on the 15th day of January, April, July and October of each year with respect to
the preceding quarter. If this Contract is effective for only a portion of a
quarter, the aforesaid fee will be prorated for that portion of such quarter
during which this Contract is in effect.
7. Liability and Indemnification. ITI Pioneer will not be liable for
any error of judgment or for any loss sustained by reason of the adoption of any
investment policy or the purchase, sale, or retention of any security, except
that nothing contained herein will be construed to protect ITI Pioneer against
any liability to the Manager by reason of (a) willful misfeasance, bad faith or
gross negligence in the performance of its duties, (b) its reckless disregard of
its obligations and duties under this Contract or (c) any mistake or negligence
of ITI Pioneer with respect to (i) Applicable Law, (ii) the direction of
portfolio transactions to a broker or dealer that is an affiliated person of the
Fund or an affiliated person of such an affiliated person (including affiliated
persons of ITI Pioneer) in violation of the terms and provisions hereof, (iii)
ITI Pioneer's responsibilities with respect to Corporate Actions of issuers of
securities held by the Fund, but not registered in the Fund's name, or (iv) ITI
Pioneer's responsibilities under Section 3(d) hereof (collectively,
"Malfeasance").
The Manager will indemnify ITI Pioneer for all liabilities and related
costs, including reasonable attorney's fees, which ITI Pioneer may sustain in
the discharge of its obligations hereunder without Malfeasance and in accordance
with Applicable
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Law; provided, that indemnifiable liabilities and costs will not include the
costs of performing the services that ITI Pioneer is obligated to perform
pursuant to this Contract. The amounts specified in Section 6 hereof will be ITI
Pioneer's sole compensation with respect to the performance of such services.
ITI Pioneer will indemnify the Manager for all liabilities and related costs,
including reasonable attorney's fees, which the Manager may sustain as a result
of ITI Pioneer's Malfeasance or violation of Applicable Law, including without
limitation the amount of any payment made by the Manager to the Fund for the
purpose of reimbursing the Fund for a loss caused by ITI Pioneer's Malfeasance
or violation of Applicable Law, regardless of whether or not the Manager was
legally required to make such payment to the Fund.
8. Term and Renewal. This Contract will become effective on the date
hereof and will remain in force until June 22, 1996 and from year to year
thereafter, but only so long as its continuance is approved annually by a vote
of the Trustees of the Fund voting in person, including a majority of its
Trustees who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such parties, at a meeting of Trustees called
for the purpose of voting on such approval or by a vote of a "majority of the
outstanding voting securities" (as defined in the 0000 Xxx) of the Fund, subject
to the respective rights of the Fund, the Manager and ITI Pioneer to terminate
this Contract as provided in Section 9 hereof.
9. Termination. Either party hereto may, without penalty, terminate
this Contract by vote of its Board of Directors. In addition, the Fund may cause
this Contract to terminate by vote of a "majority of its outstanding voting
securities" (as defined in the 0000 Xxx) and the giving of 60 days' written
notice to the Manager and ITI Pioneer.
10. Assignment. This Contract will terminate automatically in the event
of its "assignment" (as defined in the 1940 Act).
11. Independent Contractor Status. ITI Pioneer is an independent
contractor and not an employee of the Manager or of the Fund for any purpose.
Unless otherwise expressly provided herein or otherwise authorized in writing,
ITI Pioneer will have
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no authority to act for or represent the Fund or the Manager in any way or
otherwise be deemed to be an agent of the Fund or of the Manager. If any
occasion should arise in which ITI Pioneer gives any advice to its clients
concerning the shares of the Fund, ITI Pioneer will act solely as investment
counsel for such clients and not in any way on behalf of the Manager, the Fund
or any series thereof.
12. Entire Agreement. This Contract 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 the 1940 Act, when applicable.
13. Applicable Law. This Contract and all performance hereunder will be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts. ITI Pioneer consents to the jurisdiction of courts, both state
and federal, in Boston, Massachusetts with respect to any dispute under this
Contract.
14. Savings Clause. Any term or provision of this Contract which is
invalid or unenforceable in any jurisdiction will be ineffective, as to such
jurisdiction, to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Contract or affecting the validity or enforceability of any of the terms or
provisions of this Contract in any other jurisdiction.
15. Counterparts. This Contract may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
16. Captions. Captions of sections have been added only for convenience
and will not be deemed to be a part of this Contract.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their duly authorized officers and
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their seal to be hereto affixed as of the day and year first above written.
ATTEST: PIONEERING MANAGEMENT CORPORATION
/s/Xxxxxx X. Xxxxx /s/Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
Secretary President
ATTEST: ITI PIONEER AMC LTD.
/s/Xxxxx Xxxxx
Chief Executive
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