INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 16th day of March, 2000 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.
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:
(1) 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.
(2) 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.
(3) 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
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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.
(4) 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.
(5) 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.
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(6) 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.
(7) 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:
(1) the Trust's Registration Statement as filed with the SEC and any
amendments thereto; and
(2) 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 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.
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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):
(1) Expenses of all audits by Trust's independent public
accountants;
(2) Expenses of the Trust's transfer agent(s), registrar, dividend
disbursing agent(s), and shareholder recordkeeping services;
(3) Expenses of the Trust's custodial services, including
recordkeeping services provided by the custodian;
(4) Expenses of obtaining quotations for calculating the value of
each Portfolio's net assets;
(5) Expenses of obtaining Portfolio Activity Reports for each
Portfolio;
(6) Expenses of maintaining the Trust's tax records;
(7) 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;
(8) Taxes, if any, levied against the Trust or any of its
Portfolios;
(9) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for any of the Portfolios;
(10) Costs, including the interest expenses, of borrowing money;
(11) 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;
(12) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
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(13) Costs of printing certificates representing shares of the
Trust;
(14) 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;
(15) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(16) Association membership dues;
(17) 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
(18) 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 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
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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:
(1) 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 vote of a majority of the
outstanding voting shares of the 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 0000 Xxx) of the Trust;
(2) 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
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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.
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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.
(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.
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: /s/ XXXXX X. XXXXXX
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Title: President
PIMCO ADVISORS, L.P.
Attest: /s/ XXXX XXXXXXXX By: /s/ XXXXXXX X. XXXXXXXX
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Title: Sr. Fund Administrator Title: Executive Vice President
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