INVESTMENT ADVISORY CONTRACT
PIMCO EQUITY SERIES
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
March 30, 2010
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Dear Sirs:
This contract dated March 30, 2010 (the "Contract") is between PIMCO Equity
Series (the "Trust") and Pacific Investment Management Company LLC (the
"Adviser"). This Contract will confirm the agreement between the Trust and
Adviser as follows:
1. The Trust is an open-end investment company which has separate investment
portfolios, listed on Exhibit A attached hereto and made a part hereof, as such
Exhibit A may be amended from time to time (the "Funds" and each, a "Fund") all
of which are subject to this Contract, as supplemented. Additional investment
portfolios may be established in the future. This Contract shall pertain to the
Funds and to such additional investment portfolios as shall be designated in
amendments or Supplements to this Contract, as further agreed between the Trust
and the Adviser. The Trust engages in the business of investing and reinvesting
the assets of each Fund in the manner and in accordance with the investment
objective and restrictions applicable to that Fund as specified in the
currently effective Prospectus (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
Adviser. Any amendments to those documents shall be furnished to the Adviser
promptly. Pursuant to a Distribution Contract (the "Distribution Contract"),
between the Trust and the Trust's principal underwriter (the "Distributor"),
the Trust has employed the Distributor to serve as principal underwriter for
the shares of beneficial interest of the Trust. Pursuant to a Supervision and
Administration Agreement between the Trust and the Adviser, the Trust has also
retained the Adviser to provide the Trust with supervisory, administrative and
other services.
2. The Trust hereby appoints the Adviser to provide the investment advisory
services specified in this Contract and the Adviser hereby accepts such
appointment.
3. (a) The Adviser 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 Contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract. The
Adviser may from time to time seek research assistance and rely on investment
management resources available to it through its affiliated companies, but in
no case shall such reliance relieve the Adviser of any of its obligations
hereunder, nor shall the Trust be responsible for any additional fees or
expenses hereunder as a result.
(b) 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 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, 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, 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' meetings;
organizational expenses; and extraordinary expenses. Notwithstanding the
foregoing, the Trust may enter into a separate agreement, which shall be
controlling over this Contract, 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 Adviser shall provide to the Trust investment guidance and policy
direction in connection with the management of the Funds, 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 Funds, the Adviser will determine the securities and other
assets to be purchased or sold or the other techniques to be utilized
(including, but not limited to, securities lending) by each Fund and will
determine what portion of each Fund 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 Adviser. It is understood that the Adviser will not, to the
extent inconsistent with applicable law, use any material nonpublic information
pertinent to investment decisions undertaken in connection with this Contract
that may be in its possession or in the possession of any of its affiliates.
(b) The Adviser also shall provide to the officers of the Trust administrative
assistance in connection with the operation of the Trust and the Funds, which
shall include (i) compliance with all reasonable requests of the Trust 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 Adviser shall from time to
time determine to be necessary or useful to the administration of the Trust and
Funds.
(c) As manager of the assets of the Funds, the Adviser shall make investments
for the account of the Funds in accordance with the Adviser's best judgment and
within the investment objectives, policies, and restrictions set forth in the
Prospectus, the 1940 Act and the provisions of the Internal Revenue Code
relating to regulated investment companies, subject to policy decisions adopted
by the Trust's Board of Trustees.
(d) The Adviser shall furnish to the Trust's Board of Trustees periodic reports
on the investment performance of the Trust and its Funds 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 shall reasonably
request.
(e) On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of a Fund as well as other of its clients, the Adviser,
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 Adviser 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 Adviser 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 Adviser may cause a Fund to pay a broker which provides brokerage and
research services to the Adviser 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 Adviser determines in good faith
that the amount paid is reasonable in relation to the services received in
terms of the particular transaction or the Adviser's overall responsibilities
to the Trust and any other of the Adviser's clients.
(g) The Adviser may itself, or may cause a Fund to, commence, join in, consent
to or oppose the reorganization, recapitalization, consolidation, sale, merger,
foreclosure, liquidation or readjustment of the finances of any person or the
securities or other property thereof, and to deposit any securities or other
property with any protective, reorganization or similar committee. Without
limiting the generality of the foregoing, the Adviser may represent a Fund on a
creditors' (or similar) committee.
(h) The Adviser shall have sole authority to exercise whatever powers the Trust
may possess with respect to any of the assets of a Fund, including, but not
limited to, the right to vote proxies, the power to exercise rights, options,
warrants, conversion privileges and redemption privileges, and to tender
securities pursuant to a tender offer.
(i) The Adviser shall have the authority to enter into any agreements and
execute any documents (e.g., any derivatives documentation such as exchange
traded and over-the-counter, as applicable) required to meet the obligations of
a Fund with respect to any investments made for the Fund which shall include
any market and/or industry standard documentation and the standard
representations and/or indemnifications contained therein.
5. The Adviser shall give the Trust the benefit of the Adviser's best judgment
and efforts in rendering services under this Contract. 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
Contract, the Trust agrees that neither the Adviser nor its members, officers,
directors, or employees 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
Contract, except by reason of willful misfeasance, bad faith, or gross
negligence in performance of the Adviser's duties, or by reason of reckless
disregard of the Adviser's obligations and duties under this Contract. This
provision shall govern only the liability to the Trust of the Adviser and that
of its members, officers, directors, and employees, and shall in no way govern
the liability to the Trust or the Adviser or provide a defense for any other
person including persons that provide services for the Funds as described in
this Contract.
6. In consideration of the services to be rendered by the Adviser under this
Contract, each Fund shall pay the Adviser 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 Fund, during the preceding month, at
the annual rates provided for in Exhibit A, as such Exhibit A may be amended
from time to time.
If the fees payable to the Adviser pursuant to this Section 6 begin to accrue
before the end of any month or if this Contract 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 Fund shall be
computed in the manner specified in the Prospectus for the computation of net
asset value. For purposes of this Contract, a "business day" is any day a Fund
is open for business or as otherwise provided in the Trust's Prospectus.
7. (a) This Contract shall become effective with respect to the Funds on March
30, 2010 (and, with respect to any amendment, or with respect to any additional
fund, the date of the amendment or Supplement hereto) and shall continue in
effect with respect to a Fund for a period of more than two years from that
date (or, with respect to any additional fund, the date of the Supplement) and
shall continue thereafter 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 1940 Act) of the Fund or by the Trust's
Board of Trustees and (ii) by the vote, cast in person at a meeting called for
such purpose, of a majority of the Trust's trustees who are not parties to this
Contract or "interested persons" (as defined in the 1940 Act) of any such
party.
(b) This Contract may be terminated with respect to a Fund (or any additional
fund) at any time, without the payment of any penalty, by a vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of the Fund
or by a vote of a majority of the Trust's entire Board of Trustees on 60 days'
written notice to the Adviser or by the Adviser on 60 days' written notice to
the Trust. This Contract (or any Supplement hereto) shall terminate
automatically in the event of its assignment (as defined in the 1940 Act).
8. Except to the extent necessary to perform the Adviser's obligations under
this Contract, nothing herein shall be deemed to limit or restrict the right of
the Adviser, or any affiliate of the Adviser, or any employee of the Adviser,
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.
9. The investment management services of the Adviser to the Trust under this
Contract are not to be deemed exclusive as to the Adviser and the Adviser will
be free to render similar services to others.
10. It is understood that the names "Pacific Investment Management Company
LLC" or "PIMCO" or any derivative thereof or logo associated with those names
and other servicemarks and trademarks owned by the Adviser or its affiliates
are the valuable property of the Adviser and its affiliates, and that the Trust
and/or the Funds may use such names (or derivatives or logos) only as permitted
by the Adviser.
11. Notices of any kind to be given to PIMCO by the Trust shall be in
writing and shall be duly given if mailed or delivered to PIMCO at 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or to such other address or to
such individual as shall be specified by PIMCO. Notices of any kind to be given
to the Trust by PIMCO shall be in writing and shall be duly given if mailed or
delivered to 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or to
such other address or to such individual as shall be specified by the Trust.
12. This Contract may be executed in one or more counterparts, each of
which shall be deemed to be an original.
13. This Contract shall be construed in accordance with the laws of the
of California, provided that nothing herein shall be construed in a manner
State inconsistent with the 1940 Act.
(a) If any provision of this Contract shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Contract
shall not be affected thereby and, to this extent, the provisions of this
Contract shall be deemed to be severable. To the extent that any provision of
this Contract shall be held or made invalid by a court decision, statute, rule
with regard to any party hereunder, such provisions with respect to other
or otherwise parties hereto shall not be affected thereby.
(b) The captions in this Contract are included for convenience only and in
no way define any of the provisions hereof or otherwise affect their
construction or effect.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
PIMCO EQUITY SERIES
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
ACCEPTED:
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Director
Investment Advisory Contract
EXHIBIT A
(as of March 30, 2010)
PIMCO Equity Series
Fund Investment Advisory Fee#
PIMCO EqS Pathfinder Fund 0.75%
# Each Fund may invest in shares of PIMCO Funds: Private Account Portfolio
Series: Short-Term Floating NAV Portfolio, a series of PIMCO Funds ("PAPS
Short-Term Floating NAV Portfolio"). PAPS Short-Term Floating NAV Portfolio is
offered only to series of the Trust (each an "Investing Fund") or other series
of registered investment companies for which PIMCO serves as investment
adviser. PAPS Short-Term Floating NAV Portfolio does not pay an investment
advisory fee to PIMCO. By investing in the PAPS Short-Term Floating NAV
Portfolio, each Investing Fund and PIMCO agree that a portion of the fee that
each Investing Fund is currently obligated to pay PIMCO as indicated on this
Exhibit A, will be designated as compensation for the investment advisory
services PIMCO provides to PAPS Short-Term Floating NAV Portfolio under its
investment advisory contract with PIMCO. Specifically, to the extent that an
Investing Fund invests in the Short-Term Floating NAV Portfolio, a fee of 0.01%
of the average daily value (as calculated in Section 6 hereof) of the assets of
the Investing Fund so invested shall be designated as compensation to PIMCO for
the services provided to the Short-Term Floating NAV Portfolio.
