INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the _____ day of November, 1999 between Fixed Income
SHares ("Trust"), a Massachusetts business trust, and PIMCO Advisors L.P.
("Adviser"), a limited partnership.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust has established multiple series, including operational
series or series that are expected to be operational that are designated as the
FISH: Series C and FISH: Series M, such series together with any other series
subsequently established by the Trust, with respect to which the Trust desires
to retain the Adviser to render investment advisory services hereunder, and
with respect to which the Adviser is willing to do so, being herein
collectively referred to also as the "Portfolios"; and
WHEREAS, the Adviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940; and
WHEREAS, the Adviser is the parent company or an affiliate of other
companies that render investment advisory services and are registered as
investment advisers under the Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser so that it and its
subsidiaries and affiliates will render investment advisory services to the
Portfolios in the manner and on the terms hereinafter set forth; and
WHEREAS, the Adviser is willing to render such services and engage its
subsidiaries, affiliates, and others to render such services to the Trust;
NOW THEREFORE, in consideration of the premises, the promises, and mutual
covenants herein contained, it is agreed between the parties as follows:
1. APPOINTMENT. The Trust hereby appoints the Adviser to provide
investment advisor services to the Trust with respect to the Portfolios for the
period and on the terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
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In the event the Trust establishes and designates additional series with
respect to which it desires to retain the Adviser to render investment advisory
services hereunder, it shall notify the Adviser in writing. If the Adviser is
willing to render such services it shall notify the Trust in writing, whereupon
such additional series shall become a Portfolio hereunder.
2. DUTIES. Subject to the general supervision of the Board of Trustees,
the Adviser shall provide general, overall advice and guidance with respect to
the Portfolios and provide advice and guidance to the Trust's Trustees. In
discharging these duties the Adviser shall, either directly or indirectly
through others ("Portfolio Managers") engaged by it pursuant to Section 3 of
this Agreement, provide continuous investment program for each Portfolio and
determine the composition of the assets of each Portfolio, including
determination of the purchase, retention, or sale of the securities, cash, and
other investments for the Portfolio. The Adviser (or Portfolio Manager) will
provide investment research and analysis, which may consist of a computerized
investment methodology, and will conduct a continuous program of evaluation,
investment, sales, and reinvestment of the Portfolio assets by determining the
securities and other investments that shall be purchased, entered into, sold,
closed, or exchanged for the Portfolio, when these transactions should be
executed, and what portion of the assets of the Portfolio should be held in the
various securities and other investments in which it may invest, and the
Adviser (or Portfolio Manager) is hereby authorized to execute and perform such
services on behalf of the Portfolio. To the extent permitted by the investment
policies of the Portfolio, the Adviser (or Portfolio Manager) shall make
decisions for the Portfolio as to foreign currency matters and make
determinations as to the retention or disposition of foreign currencies or
securities or other instruments denominated in foreign currencies or derivative
instruments based upon foreign currencies, including forward foreign currency
contracts and options and futures on foreign currencies, and shall execute and
perform the same. The Adviser (or Portfolio Manager) will provide the services
under this Agreement for each Portfolio in accordance with the Portfolio's
investment objective or objectives, investment policies, and investment
restrictions as stated in the Trust's Registration Statement filed on Form N-1A
with the SEC as supplemented or amended from time to time.
In performing these duties, the Adviser, either directly or indirectly
through others selected by the Adviser:
(a) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations, with
any applicable procedures adopted by the Trust's Board of Trustees, and with
the provisions of the Trust's Registration Statement filed on Form N-1A as
supplemented or amended from time to time.
(b) Shall use reasonable efforts to manage each Portfolio so that it
qualifies as a regulated investment company under Subchapter M of the Internal
Revenue Code.
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(c) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments for
the Portfolios, for broker-dealer and futures commission merchant ("FCM")
selection, and for negotiation of commission rates. The Adviser's (or
Portfolio Manager's) primary consideration in effecting a security or other
transaction will be to obtain the best execution for the Portfolio, taking into
account the factors specified in the Prospectus and Statement of Additional
Information for the Trust, as they may be amended or supplemented from time to
time. Subject to such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, the
Adviser (or Portfolio Manager) shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Portfolio to pay a broker or dealer, acting as
agent, for effecting a portfolio transaction at a price in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction, if the Adviser (or Portfolio Manager) determines in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's (or Portfolio
Manager's) overall responsibilities with respect to the Portfolio and to their
other clients as to which they exercise investment discretion. To the extent
consistent with these standards, and in accordance with Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-(T) thereunder, and subject to
any other applicable laws and regulations, the Adviser (or Portfolio Manager)
is further authorized to allocate the orders placed by it on behalf of the
Portfolio to the Adviser (or Portfolio Manager) if it is registered as a broker
or dealer with the SEC, to its affiliate that is registered as a broker or
dealer with the SEC, or to such brokers and dealers that also provide research
or statistical research and material, or other services to the Portfolio or the
Adviser (or Portfolio Manager). Such allocation shall be in such amounts and
proportions as the Adviser shall determine consistent with the above standards,
and, upon request, the Adviser will report on said allocation regularly to the
Board of Trustees of the Trust indicating the broker-dealers to which such
allocations have been made and the basis therefor.
(d) May, on occasions when the purchase or sale of a security is deemed
to be in the best interest of a Portfolio as well as any other investment
advisory clients, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so sold or
purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Registration Statement. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser (or Portfolio
Manager) in a manner that is fair and equitable in the judgment of the Adviser
(or Portfolio Manager) in the exercise of its fiduciary obligations to the
Trust and to such other clients.
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(e) Will, in connection with the purchase and sale of securities for each
Portfolio, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or other numbers that
identify securities to be purchased or sold on behalf of the Portfolio, as may
be reasonably necessary to enable the custodian to perform its administrative
and recordkeeping responsibilities with respect to the Portfolio, and, with
respect to portfolio securities to be purchased or sold through the Depository
Trust Company, will arrange for the automatic transmission of the confirmation
of such trades to the Trust's custodian.
(f) Will make available to the Trust, promptly upon request, any of the
Portfolios' investment records and ledgers as are necessary to assist the Trust
to comply with requirements of the 1940 Act and the Investment Advisers Act of
1940, as well as other applicable laws, and will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with such services which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
(g) Will regularly report to the Trust's Board of Trustees on the
investment program for each Portfolio and the issuers and securities
represented in each Portfolio's portfolio, and will furnish the Trust's Board
of Trustees with respect to the Portfolios such periodic and special reports as
the Trustees may reasonably request.
3. APPOINTMENT OF PORTFOLIO MANAGERS. The Adviser may, at its expense
and subject to its supervision, engage one or more persons, including, but not
limited to, subsidiaries and affiliated persons of the Adviser, to render any
or all of the investment advisory services that the Adviser is obligated to
render under this Agreement including, for one or more of the Portfolios and,
to the extent required by applicable law, subject to the approval of the
Trust's Board of Trustees and/or the shareholders of one or more of the
Portfolios, a person to render investment advisory services including the
provision of a continuous investment program and the determination of the
composition of the securities and other assets of such Portfolio or Portfolios.
4. DOCUMENTATION. The Trust has delivered copies of each of the
following documents to the Adviser and will deliver to it all future amendments
and supplements thereto, if any:
(a) the Trust's Registration Statement as filed with the SEC and any
amendments thereto; and
(b) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
The Adviser has delivered to the Trust copies of the Adviser's and the
Portfolio Manager's Uniform Application for Investment Adviser Registration on
Form ADV, as filed with
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the SEC. The Adviser agrees to provide the Trust with current copies of the
Adviser's and the Portfolio Manager's Forms ADV, and any supplements or
amendments thereto, as filed with the SEC.
5. RECORDS. The Adviser agrees to maintain and to preserve for the
periods prescribed under the 1940 Act any such records as are required to be
maintained by the Adviser with respect to the Portfolios by the 1940 Act. The
Adviser further agrees that all records which it maintains for the Portfolios
are the property of the Trust and it will promptly surrender any of such
records upon request.
6. EXPENSES. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its obligations under this
Agreement, except such expenses as are assumed by the Portfolios under this
Agreement and any expenses that are paid by a party other than the Trust under
the terms of any other agreement to which the Trust is a party or a third-party
beneficiary. The Adviser further agrees to pay or cause its subsidiaries or
affiliates to pay all salaries, fees, and expenses of any officer or Trustee of
the Trust who is an officer, director, or employee of the Adviser or a
subsidiary or affiliate of the Adviser. The adviser assumes and shall pay for
maintaining its staff and personnel and shall, at its own expense provide the
equipment, office space, and facilities necessary to perform its obligations
under this Agreement. The Adviser shall not, under the terms of this
Agreement, bear the following expenses (although the Adviser or an affiliate
may bear some or all of these expenses under one or more other agreements):
(a) Expenses of all audits by Trust's independent public accountants;
(b) Expenses of the Trust's transfer agent(s), registrar, dividend
disbursing agent(s), and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services, including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of each
Portfolio's net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each Portfolio;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors, stockholders,
or employees of the Adviser, its subsidiaries or affiliates, or any Portfolio
Manager of the Trust;
(h) Taxes, if any, levied against the Trust or any of its Portfolios;
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(i) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for any of the Portfolios;
(j) Costs, including the interest expenses, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's shareholders,
the preparation and mailings of Prospectuses and reports of the Trust to is
shareholders, the filing of reports with regulatory bodies, the maintenance of
the Trust's existence and qualification to do business, and the registration of
shares with federal and state securities authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Costs of printing certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Adviser, its subsidiaries or affiliates, or
any Portfolio Manager of the Trust;
(o) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses as may arise, including expenses incurred in
connection with litigation, proceedings, other claims and the legal obligations
of the Trust to indemnify its trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(r) Organizational and offering expenses and, if applicable,
reimbursement (with interest) of underwriting discounts and commissions.
7. LIABILITY. The Adviser shall give the Trust the benefit of the
Adviser's best judgment and efforts in rendering services under this Agreement.
The Adviser may rely on information reasonably believed by it to be accurate
and reliable. As an inducement for the Adviser's undertaking to render
services under this Agreement, the Trust agrees that neither the Adviser nor
its stockholders, partners, limited partners, officers, directors, employees,
or agents shall be subject to any liability for, or any damages, expenses or
losses incurred in connection with, any act or omission or mistake in judgment
connected with or arising out of any services rendered under this Agreement,
except by reason of willful misfeasance, bad faith, or gross
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negligence in performance of the Adviser's duties, or by reason of reckless
disregard of the Adviser's investment advisory obligations and duties under
this Agreement.
8. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees of the Trust from time
to time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent.
9. COMPENSATION. The Adviser shall receive no investment advisory or
other fee from the Trust for the services provided under this Agreement.
10. NON-EXCLUSIVITY. It is understood that the services of the Adviser
hereunder are not exclusive, and the Adviser shall be free to render similar
services to other investment companies and other clients whether or not their
investment objectives are similar to those of any of the Portfolios.
11. TERM AND CONTINUATION. This Agreement shall take effect as of the
date hereof, and shall remain in effect, unless sooner terminated as provided
herein, with respect to a Portfolio for a period of two years following the
date set forth on the attached Schedule. This Agreement shall continue
thereafter on an annual basis with respect to a Portfolio provided that such
continuance is specifically approved at least annually (a) by the vote of a
majority of the Board of Trustees of the Trust, or (b) by vote of a majority of
the outstanding voting shares of the Portfolio, and provided continuance is
also approved by the vote of a majority of the Board of Trustees of the Trust
who are not parties to this Agreement of "interested persons" (as defined in
the 0000 Xxx) of the Trust, or the Adviser, cast in person at a meeting called
for the purpose of voting on such approval. This Agreement may not be
materially amended without a majority vote of the outstanding voting shares (as
defined in the 0000 Xxx) of the pertinent Portfolio or Portfolios.
However, any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 0000 Xxx) of a particular Portfolio
shall be effective to continue this Agreement with respect to such Portfolio
notwithstanding (a) that this Agreement has not been approved by the holders of
a majority of the outstanding shares of any other Portfolio or (b) that this
Agreement has not been approved by the vote of a majority of the outstanding
shares of the Trust, unless such approval shall be required by any other
applicable law or otherwise. This Agreement will terminate automatically with
respect to the services provided by the Adviser in event of its assignment, as
that term is defined in the 1940 Act, by the Adviser.
This Agreement may be terminated:
(a) by the Trust at any time with respect to the services provided by the
Adviser, without the payment of any penalty, by vote of a majority of the Board
of Trustees of the Trust or by a vote of a majority of the outstanding voting
shares of the
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Trust or, with respect to a particular Portfolio, by vote of a majority of the
outstanding voting shares of such Portfolio, on 60 days' written notice to the
Adviser or, by a vote of a majority of the Trustees of the Trust who are not
"interested persons" (as such term is defined in the 1940 Act) of the Trust;
(b) by the Adviser at any time, without the payment of any penalty, upon
60 days' written notice to the Trust.
12. USE OF NAME. It is understood that the name "PIMCO Advisory
Services" or "PIMCO" or any derivative thereof or logo associated with those
names are the valuable property of the Adviser and its affiliates, and that the
Trust and/or the Portfolios have the right to use such names (or derivatives or
logos) only so long as this Agreement shall continue with respect to such Trust
and/or Portfolios. Upon termination of this Agreement, the Trust (or
Portfolio) shall forthwith cease to use such names (or derivatives or logos)
and, in the case of the Trust, shall promptly amend its Declaration of Trust to
change its name.
13. NOTICES. Notices of any kind to be given to the Adviser by the Trust
shall be in writing and shall be duly given if mailed or delivered to the
Adviser at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000, or to such other
address or to such individual as shall be specified by the Adviser. Notices of
any kind to be given to the Trust by the Adviser shall be in writing and shall
be duly given if mailed or delivered to 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, or to such other address or to such individual as shall be
specified by the Trust.
14. PORTFOLIO OBLIGATION. A copy of the Trust's Agreement and
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and notice is hereby given that the Agreement has been executed
on behalf of the Trust by a trustee of the Trust in his or her capacity as
trustee and not individually. The obligations of this Agreement shall only be
binding upon the assets and property of the Trust and shall not be binding upon
any trustee, officer, or shareholder of the Trust individually.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
16. MISCELLANEOUS. (a) This Agreement shall be governed by the laws of
Massachusetts, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any
rule or order of the SEC thereunder.
(b) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected hereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable. To the extent that any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise with regard to any party hereunder, such provisions with respect
to other parties hereto shall not be affected thereby.
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(c) The captions in this Agreement are included for convenience only and
in no way define any of the provisions hereof or otherwise affect their
construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
FIXED INCOME SHARES
By: ________________________________
Title:
PIMCO ADVISORS L.P.
Attest: ___________________________ By: ________________________________
Title: Sr. Fund Administrator Title: Executive Vice President
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