EXHIBIT 99.(d)(5)
PORTFOLIO MANAGEMENT AGREEMENT
PIMCO Advisors L.P.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
____________________, 1998
NFJ Investment Group
0000 Xxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Adviser") and
NFJ Investment Group (the "Portfolio Manager") as follows:
1. PIMCO Variable Insurance Trust (the "Trust") is an open-end investment
company which currently has multiple separate investment portfolios, two of
which are subject to this agreement: the Equity Income Portfolio and the Small-
Cap Value Portfolio (the "Portfolios"). The Adviser serves as investment adviser
to the Portfolios pursuant to an Investment Advisory Contract dated the date
hereof. Additional investment portfolios may be established in the future. This
agreement shall pertain to the Portfolios and to such additional investment
portfolios as shall be designated in supplements to this agreement, as further
agreed between the Adviser and the Portfolio Manager. The Trust engages in the
business of investing and reinvesting the assets of each Portfolio in the manner
and in accordance with the investment objective and restrictions applicable to
that Portfolio as specified in the currently effective Prospectuses (the
"Prospectus") for the Trust included in the registration statement, as amended
from time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "1940 Act") and the Securities Act of 1933
(the "1933 Act"). Copies of the documents referred to in the preceding sentence
have been furnished to the Portfolio Manager. Any amendments to those documents
shall be furnished to the Portfolio Manager promptly.
2. The Adviser hereby appoints the Portfolio Manager to provide the
portfolio management services specified in this agreement and the Portfolio
Manager hereby accepts such appointment.
3. (a) The Portfolio Manager shall, at its expense, (i) employ or
associate with itself such persons as it believes appropriate to assist it in
performing its obligations under this agreement, and (ii) provide all services,
equipment and facilities necessary to perform its obligations under this
agreement.
(b) Under the terms of the Investment Advisory Contract, the Trust
shall be responsible for all of its expenses and liabilities, including
compensation of its Trustees who are not affiliated with the Adviser, the
distributor of its shares or any of their affiliates; taxes and governmental
fees; interest charges; fees and expenses of the Trust's independent accountants
and legal counsel; trade association membership dues; fees and expenses of any
custodian (including maintenance of books and accounts and calculation of the
net asset value of shares of the Trust), transfer agent, registrar and dividend
disbursing agent of the Trust; expenses of issuing, selling, redeeming,
registering and qualifying for sale shares of beneficial interest in the Trust;
expenses of preparing and printing share certificates, Prospectuses and reports
to shareholders or other appropriate recipients, notices, proxy statements and
reports to regulatory agencies; the cost of office supplies, including
stationery; travel expenses of all officers, Trustees and employees; insurance
premiums; brokerage and other expenses of executing portfolio transactions;
expenses of shareholders' or variable insurance contract holders' meetings;
organizational expenses; and extraordinary expenses. Notwithstanding the
foregoing, the Trust may enter into a separate agreement, which shall be
controlling over this agreement, as amended, pursuant to which some or all of
the foregoing expenses of this Section 3(b) shall be the responsibility of the
other party or parties to that agreement.
4. (a) The Portfolio Manager shall provide to the Trust investment
guidance and policy direction in connection with the management of the
Portfolios, including oral and written research, analysis, advice, and
statistical and economic data and information.
Consistent with the investment objectives, policies and restrictions
applicable to the Trust and the Portfolios, the Portfolio Manager will determine
the securities and other assets to be purchased or sold by each Portfolio and
will determine what portion of each Portfolio shall be invested in securities or
other assets, and what portion, if any, should be held uninvested.
The Trust will have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to investment
advisory clients of the Portfolio Manager. It is understood that the Portfolio
Manager will not use any inside information pertinent to investment decisions
undertaken in connection with this agreement that may be in its possession or in
the possession of any of its affiliates, nor will the Portfolio Manager seek to
obtain any such information.
(b) The Portfolio Manager also shall provide to the officers of the
Trust and to the Adviser administrative assistance in connection with the
operation of the Trust and the Portfolios, which shall include (i) compliance
with all reasonable requests of the Trust and the Adviser for information,
including information required in connection with the Trust's filings with the
Securities and Exchange Commission and state securities commissions, and (ii)
such other services as the Portfolio Manager shall from time to time determine
to be necessary or useful to the administration of the Trust and the Portfolios.
(c) As manager of the assets of the Portfolios, the Portfolio Manager
shall make investments for the account of the Portfolios in accordance with the
Portfolio Manager's best judgment and within the investment objectives,
policies, and restrictions set forth in the
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Prospectus, the 1940 Act and the provisions of the Internal Revenue Code
relating to regulated investment companies that serve as underlying investment
media of variable insurance contracts, subject to policy decisions adopted by
the Trust's Board of Trustees and to the supervision of the Adviser.
(d) The Portfolio Manager shall furnish to the Trust's Board of
Trustees periodic reports on the investment performance of the Trust and the
Portfolios and on the performance of its obligations under this Contract and
shall supply such additional reports and information as the Trust's officers or
Board of Trustees or the Adviser shall reasonably request.
(e) On occasions when the Portfolio Manager deems the purchase or sale
of a security to be in the best interest of a Portfolio as well as other of its
clients, the Portfolio Manager, to the extent permitted by applicable law, may
aggregate the securities to be so sold or purchased in order to obtain the best
execution of the order or lower brokerage commissions, if any. The Portfolio
Manager may also on occasion purchase or sell a particular security for one or
more clients in different amounts. On either occasion, and to the extent
permitted by applicable law and regulations, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Portfolio Manager in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Trust and to such
other customers.
(f) The Portfolio Manager may cause a Portfolio to pay a broker that
provides brokerage and research services to the Portfolio Manager a commission
for effecting a securities transaction in excess of the amount another broker
might have charged. Such higher commissions may not be paid unless the Portfolio
Manager determines in good faith that the amount paid is reasonable in relation
to the services received in terms of the particular transaction or the Portfolio
Manager's overall responsibilities to the Trust and any other of the Portfolio
Manager's clients.
5. (a) The Portfolio Manager shall immediately notify the Trust and the
Adviser in the event (1) that the Securities and Exchange Commission has
censured the Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as an investment
adviser; or has commenced proceedings or an investigation that may result in any
of these actions, (2) upon having a reasonable basis for believing that any
Portfolio has ceased to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that any Portfolio has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or the Regulations
thereunder. The Portfolio Manager further agrees to notify the Trust and the
Adviser immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not contained in the
Registration Statement or Prospectus for the Trust, or any amendment or
supplement thereto, or of any statement contained therein that becomes untrue.
(b) The Portfolio Manager shall be responsible for making inquiries
and for reasonably ensuring that any employee of the Portfolio Manager, any
person or firm that the
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Portfolio Manager has employed or with which it has associated, or any employee
has not, to the best of the Portfolio Manager's knowledge, in any material
connection with the handling of Trust assets: (i) been convicted, in the last
ten (10) years, of any felony or misdemeanor arising out of conduct involving
embezzlement, fraudulent conversion, or misappropriation of funds or securities,
or involving violations of Sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx
Xxxxxx Code; or (ii) been found by any state regulatory authority, within the
last ten (10) years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit or knowing
misrepresentation; or (iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have violated or to have
acknowledged violation of any provisions of federal or state securities laws
involving fraud, deceit or knowing misrepresentation.
6. The Portfolio Manager shall give the Trust the benefit of the Portfolio
Manager's best judgment and efforts in rendering services under this agreement.
As an inducement to the Portfolio Manager's undertaking to render these
services, the Adviser agrees that the Portfolio Manager shall not be liable
under this agreement for any mistake in judgment or in any other event
whatsoever, provided that nothing in this agreement shall be deemed to protect
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or purport to protect the Portfolio Manager against any liability to the Adviser
or to the Trust or its shareholders to which the Portfolio Manager would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Portfolio Manager's duties under this
agreement or by reason of the Portfolio Manager's reckless disregard of its
obligations and duties hereunder.
7. In consideration of the services to be rendered by the Portfolio
Manager under this agreement, the Adviser shall pay the Portfolio Manager a
monthly fee on the first business day of each month, based upon the average
daily value (as determined on each business day at the time set forth in the
Prospectus for determining net asset value per share) of the net assets of the
Portfolio during the preceding month, at the following annual rates: Equity
Income Portfolio - 0.35%; and Small-Cap Value Portfolio - 0.50%.
If the fees payable to the Portfolio Manager pursuant to this paragraph
7 begin to accrue before the end of any month or if this agreement terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination, as
the case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Portfolio shall be computed in the manner specified in the Prospectus for the
computation of net asset value. For purposes of this agreement, a "business day"
is any day the New York Stock Exchange is open for trading or as otherwise
provided in the Prospectus.
8. The Portfolio Manager acknowledges that the Trust will offer its shares
so that it may serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies, as well as to
qualified pension and retirement plans and other appropriate investors. Shares
of the Portfolios may be offered only to separate accounts and general accounts
of insurance companies that are approved in writing by the Adviser. The
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Portfolio Manager shall be under no obligation to investigate insurance
companies to which the Trust offers or proposes to offer its shares.
9. (a) This Contract shall become effective with respect to the
Portfolios on ___________, 1998 (and, with respect to any amendment, or with
respect to any additional portfolio, the date of the amendment or supplement
hereto) and shall continue in effect with respect to a Portfolio for a period of
more than two years from that date (or, with respect to any additional
portfolio, the date of the supplement) only so long as the continuance is
specifically approved at least annually (i) by the vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Portfolio or
by the Trust's Board of Trustees and (ii) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this agreement or "interested persons" (as defined in the 0000
Xxx) of any such party.
(b) This agreement may be terminated with respect to a Portfolio (or
any additional portfolio) at any time, without the payment of any penalty, by
the Adviser, by a vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Portfolio or by a vote of a majority of the
Trust's entire Board of Trustees on 60 days' written notice to the Portfolio
Manager or by the Portfolio Manager on 60 days' written notice to the Trust and
the Adviser. This agreement (or any supplement hereto) shall terminate
automatically in the event of its assignment (as defined in the 0000 Xxx) or in
the event of the termination of the Investment Advisory Contract.
10. Except to the extent necessary to perform the Portfolio Manager's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Portfolio Manager, or any affiliate of the Portfolio
Manager, or any employee of the Portfolio Manager, to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
11. The portfolio management services of the Portfolio Manager to the Trust
under this agreement are not to be deemed exclusive as to the Portfolio Manager,
and the Portfolio Manager will be free to render similar services to others.
12. This agreement shall be construed in accordance with the laws of the
State of California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
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If the foregoing correctly sets forth the agreement between the Adviser and
the Portfolio Manager, please so indicate by signing and returning to the
Adviser the enclosed copy hereof.
Very truly yours,
PIMCO ADVISORS L.P.
By: __________________________________
Title:
ACCEPTED:
NFJ INVESTMENT GROUP
By: ____________________________________
Title:
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