Exhibit (d)(5)
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT, made this 8th day of October, 2001 by and between USAllianz
Advisers, LLC (the "Manager"), USAllianz Variable Insurance Products Trust (the
"Trust") and Xxx Xxxxxx Asset Management Inc. ("Portfolio Manager").
WHEREAS, the Trust is a Delaware business trust of the series type
organized under an Agreement and Declaration of Trust dated July 13, 1999 (the
"Declaration") and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, management series-type investment
company;
WHEREAS, the Manager has been appointed by the Trust, pursuant to an
investment management agreement dated April 27, 2001 ("Investment Management
Agreement"), to act as investment manager to the Trust with respect to each of
its present and future series not advised by its affiliate Allianz of America,
Inc. ("Sub-Advised Funds");
WHEREAS, the Manager wishes to retain the Portfolio Manager to render
portfolio management services to the Trust with respect to the portfolio(s) set
forth in Exhibit A hereto (the "Fund(s)") and the Portfolio Manager is willing
to furnish such services;
WHEREAS, the Portfolio Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Manager and the Portfolio Manager as
follows:
1. APPOINTMENT. Pursuant to authority granted in the Investment
Management Agreement and with the approval of the Trustees, the Manager hereby
appoints the Portfolio Manager to act as portfolio manager for the Funds for the
periods and on the terms set forth in this Agreement. The Portfolio Manager
accepts such appointment and agrees to furnish the services herein set forth,
for the compensation herein provided.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the overall supervision of
the Trustees of the Trust and the Manager, the Portfolio Manager is hereby
granted full responsibility and discretion, with respect to such portion of each
Fund's assets as shall be allocated to it by the Manager for management pursuant
to this Agreement from time to time (the "Assets"), for (a) the management of
the Assets in accordance with the Fund's investment objectives, policies and
limitations as stated in its prospectus and Statement of Additional Information
included as part of the Trust's registration statement filed with the Securities
and Exchange Commission ("SEC"), as they may be amended from time to time,
("Registration Statement") copies of which shall be provided to the Portfolio
Manager by the Manager; and (b) the placement of orders to purchase and sell
securities for the Fund. At the request of the Trustees or the Manager, the
Portfolio Manager shall, upon receipt of reasonable notice from the Manager,
report to the Board of Trustees of the Trust regularly at such times and in such
detail as the Board or the Manager may from time to time determine to be
appropriate. The Manager has herewith furnished the Portfolio Manager copies of
each Fund's current Prospectus, Statement of Additional Information, Declaration
and Bylaws and agrees during the continuance of this Agreement to furnish the
Portfolio Manager copies of any amendments or supplements thereto before or at
the time the amendments or supplements become effective. The Portfolio Manager
will be entitled to rely on all such documents furnished to it by the Manager or
the Trust.
The Portfolio Manager further agrees that, in performing its duties
hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code (the "Code") and all other
applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Trustees;
(b) use reasonable efforts to manage the Assets, and to coordinate its
activities with the Manager and any other portfolio manager of a particular
Fund, if any, so that the Fund will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M and Section 817(h) of
the Code. In connection with such compliance tests, the Manager shall prepare
and provide reports to the Portfolio Manager within ten (10) business days of a
calendar quarter end relating to the diversification of the Fund under
Subchapter M and Section 817(h) of the Code. If the Manager determines that the
Fund is not in compliance with the requirements noted above, the Portfolio
Manager, upon notification from the Manager, will take prompt action to bring
the Fund back into compliance within the time permitted under the Code;
(c) place orders for the investment of the Assets directly with the
issuer, or with any broker or dealer, in accordance with applicable policies
expressed in the prospectus and/or Statement of Additional Information with
respect to each Fund and in accordance with applicable legal requirements.
Specifically, in executing portfolio transactions and selecting broker-dealers,
the Portfolio Manager will use its best efforts to seek best execution on behalf
of each Fund. In assessing the best execution available for any transaction, the
Portfolio Manager shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker-dealer, and the reasonableness
of the commission, if any (all for the specific transaction and on a continuing
basis). In evaluating the best execution available, and in selecting the
broker-dealer to execute a particular transaction, the Portfolio Manager may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities and Exchange Act of 1934) provided to a Fund and
/or other accounts over which the Portfolio Manager or an affiliate of the
Portfolio Manager exercises investment discretion. The Portfolio Manager is
authorized to pay a broker-dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for a Fund which is
in excess of the amount of commission another broker-dealer would have charged
for effecting that transaction if, but only if, the Portfolio Manager determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker-dealer viewed in
terms of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised;
(d) furnish to the Trust and the Manager whatever statistical
information the Trust , the Manager or such other portfolio manager, if any, may
reasonably request with respect to the Assets or contemplated investments; keep
the Manager and the Trustees informed of developments materially affecting each
Fund's portfolio; and, on the Portfolio Manager's own initiative, furnish to the
Trust and the Manager from time to time whatever information the Portfolio
Manager believes appropriate;
(e) make available to the Trust's administrator (the "Administrator"),
the Trust or the Manager, promptly upon their request, such copies of its
investment records and ledgers with respect to each Fund as may be required to
assist the Administrator, the Trust and the Manager in their compliance with
applicable laws and regulations. The Portfolio Manager will furnish the Trustees
with such periodic and special reports regarding the Fund as the Trustees may
reasonably request;
(f) immediately notify the Trust and the Manager in the event that the
Portfolio Manager or any of its advisory affiliates, as defined in the
instructions to Form ADV: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Portfolio Manager from serving as a portfolio
manager pursuant to this Agreement; or (2) becomes aware that it is the subject
of a publicly announced administrative proceeding or enforcement action by the
SEC or other regulatory authority. The Portfolio Manager further agrees to
notify the Trust and the Manager immediately of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager that is not
contained in the Trust's
Registration Statement regarding the Funds, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect;
(g) in making investment decisions with respect to the Assets, use no
inside information 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.
Except as otherwise provided in this Agreement, the Portfolio Manager
shall not be responsible hereunder for compliance monitoring, reporting or
testing or for preparing or maintaining books and records for a Fund or
otherwise providing accounting services to the Fund and such services shall be
provided by others retained by the Fund. The Portfolio Manager shall have access
to such reports and records to assist it in performing its services hereunder.
3. BANKING AND CUSTODY ACCOUNTS. The Portfolio Manager shall not be
required to provide or arrange for banking accounts for a Fund or to hold money
or assets on the Fund's behalf. The Portfolio Manager shall not be required to
act as the registered holder of any investment or to provide or procure any
custody or settlement services in connection with its services hereunder. Each
Fund has entered into one or more agreements with providers of banking and
custody services (Custodians) whom the Fund will authorize to act upon
instructions from properly authorized representatives of the Portfolio Manager,
in connection with its services hereunder, directing the Custodian(s) to pay,
deliver or receive cash and securities in settlement of transactions authorized
by the Portfolio Manager on the Fund's behalf. The Fund's agreement(s) with such
Custodian(s) will require the Custodian(s) to settle all transactions directed
by the Portfolio Manager on the Fund's behalf.
4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically
provided in this section 4, the Portfolio Manager shall pay the compensation and
expenses of all its directors, officers and employees who serve as Trustees,
officers and executive employees of the Trust, if any (including the Trust's
share of payroll taxes), and the Portfolio Manager shall make available, without
expense to the Funds, the services of its directors, officers and employees who
may be duly elected officers or Trustees of the Trust, subject to their
individual consent to serve and to any limitations imposed by law.
The Portfolio Manager shall not be required to pay any expenses of the
Trust or a Fund other than those specifically allocated to the Portfolio Manager
in this section 4. In particular, but without limiting the generality of the
foregoing, the Portfolio Manager shall not be responsible, except to the extent
of the reasonable compensation of such of the Trust's employees as are officers
or employees of the Portfolio Manager whose services may be involved, if any,
for the following expenses of the Trust or the Fund: organization and offering
expenses of the Trust and the Fund (including out-of-pocket expenses, but not
including the Portfolio Manager's overhead and employee costs); fees payable to
or expenses of other portfolio managers or consultants; legal expenses; auditing
and accounting expenses; interest expenses; telephone, telex, facsimile, postage
and other communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by or with respect to the Trust or the Fund in connection with
membership in investment company trade organizations; costs of insurance; fees
and expenses of the Trust's Administrator or of any custodian, subcustodian,
transfer agent, registrar, or dividend disbursing agent of the Trust or the
Fund; payments for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; other expenses in connection
with the issuance, offering, distribution, redemption or sale of securities
issued by the Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to shareholders; costs of preparing,
printing and filing documents with regulatory agencies; costs of stationery and
other office supplies; expenses of any litigation or other extraordinary or
nonrecurring events and expenses relating to the issuance, registration and
qualification of the shares of the Funds; costs of shareholders' and other
meetings; the compensation and all expenses (specifically including travel
expenses relating to the business of the Trust or the Funds) of officers,
Trustees and employees of the Trust who are not interested persons of
the Portfolio Manager; and travel expenses (or an appropriate portion thereof)
of officers or Trustees of the Trust who are officers, directors or employees of
the Portfolio Manager to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust , or any committees thereof or
advisory group thereto or other business of the Trust or the Funds.
5. COMPENSATION. As compensation for the services provided and expenses
assumed by the Portfolio Manager under this Agreement, the Manager, out of its
fees from the Funds pursuant to the Investment Management Agreement or from
other resources of the Manager, will pay the Portfolio Manager at the end of
each calendar month an investment management fee computed daily at an annual
rate equal to the percentage of each Fund's average daily net assets specified
in Exhibit A hereto. The "average daily net assets" shall mean the average of
the values placed on the net assets as of the time at which, and on such days
as, the Fund lawfully determines the value of its net assets in accordance with
the prospectus or otherwise. The value of the net assets, and of the net assets
of the Fund, shall always be determined pursuant to the applicable provisions of
the Declaration and the Registration Statement. If, pursuant to such provisions,
the determination of net asset value for a Fund is suspended for any particular
business day, then for the purposes of this section 5, the value of the net
Assets as last determined shall be deemed to be the value of the net assets as
of the close of the New York Stock Exchange, or as of such other time as the
value of the net assets of the Fund's portfolio may lawfully be determined, on
that day. If the determination of the net asset value of the shares of the Fund
has been so suspended for a period including any month end when the Portfolio
Manager's compensation is payable pursuant to this section, then the Portfolio
Manager's compensation payable at the end of such month shall be computed on the
basis of the value of the net assets as last determined (whether during or prior
to such month). If the Fund determines the value of the net assets of its
portfolio more than once on any day, then the last such determination thereof
with respect to the net assets on that day shall be deemed to be the sole
determination thereof on that day with respect to the net assets for the
purposes of this section 5. If the Portfolio Manager serves less than the whole
of any period specified, its compensation will be prorated. The Portfolio
Manager may, but is not required to, from time to time and for such periods as
deemed appropriate reduce its compensation to the extent that the Fund's
expenses exceed such lower expense as the manager may, by notice to the Trust,
voluntarily declare to be effective. If the Manager deems it appropriate to
reduce its compensation, this shall not affect the amount payable to the
Portfolio Manager pursuant to Exhibit A.
6. BOOKS AND RECORDS. The Portfolio Manager agrees to maintain such
books and records with respect to its services to each Fund as are required by
Section 31 under the 1940 Act, and rules adopted thereunder, and by other
applicable legal provisions, and to preserve such records for the periods and in
the manner required by that Section, and those rules and legal provisions. The
Portfolio Manager also agrees that records it maintains and preserves pursuant
to Rules 31a-1 and 31a-2 under the 1940 Act and otherwise in connection with its
services hereunder are the property of the Trust and will be surrendered
promptly to the Trust upon its request. The Portfolio Manager further agrees
that it will furnish to regulatory authorities having the requisite authority
any information or reports in connection with its services hereunder which may
be requested in order to determine whether the operations of the Trust and the
Funds are being conducted in accordance with applicable laws and regulations.
7. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Portfolio Manager
shall exercise its best judgment in rendering the services provided by it under
this Agreement. The Portfolio Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or a Fund or
the holders of the Fund's shares in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Portfolio Manager against any liability to the
Trust, the Fund or to holders of the Fund's shares to which the Portfolio
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Portfolio Manager's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 7, the term "Portfolio Manager" shall
include any officers, directors, employees or other affiliates of the Portfolio
Manager performing services with respect to the Trust or the Fund.
8. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Portfolio Manager are not exclusive, and that nothing in this Agreement shall
prevent the Portfolio Manager from providing
similar services to other investment companies or to other series of investment
companies (whether or not their investment objectives and policies are similar
to those of a Fund or another Sub-advised Fund of the Trust) or from engaging in
other activities, provided such other services and activities do not, during the
term of this Agreement, interfere in a material manner with the Portfolio
Manager's ability to meet its obligations to the Trust, the Manager and the
Funds hereunder. When the Portfolio Manager recommends the purchase or sale of a
security for other investment companies and other clients, and at the same time
the Portfolio Manager recommends the purchase or sale of the same security for a
Fund, it is understood that in light of its fiduciary duty to the Fund, such
transactions will be executed on a basis that is fair and equitable to the Fund.
In connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Portfolio Manager nor any of its Trustees, officers or
employees shall act as a principal or agent or receive any commission. If the
Portfolio Manager provides any advice to its clients concerning the shares of
the Fund or other funds of the Trust, the Portfolio Manager shall act solely as
investment counsel for such clients and not in any way on behalf of the Trust,
the Fund or another Sub-Advised Fund of the Trust.
9. DURATION AND TERMINATION. This Agreement is an "Interim Contract"
within the meaning of Investment Company Act Rule 15a-4(a)(2). It shall continue
in effect for 150 days from the date set forth above. This Agreement shall
become a "standard contract" (as described in the following paragraph), in the
discretion of the Manager, in the event that the Manager notifies the Portfolio
Manager that the Manager and the Board of Trustees of the Trust have elected to
make the contract a standard contract, and either (i) the Funds have obtained
approval of the Agreement in the manner set forth in Investment Company Act
Section 15(a) and (c), or (ii) the Funds receive a "manager of managers"
exemptive order from the Securities and Exchange Commission and such order
expressly or implicitly permits conversion of this Agreement from an Interim
Contract to a standard contract without a shareholder vote. In the event that
this Agreement is submitted to a shareholder vote as set forth in (i) above, the
Portfolio Manager will provide all reasonable cooperation in the preparation and
filing of a proxy statement for soliciting the vote of shareholders, and also in
the conduct of the shareholder meeting.
In the event that this Agreement becomes a standard contract, it shall
continue in effect for two years from the date set forth above and thereafter
shall continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by (i) the Trustees or
(ii) by vote of a "majority" (as defined in the 0000 Xxx) of the applicable
Fund's outstanding voting securities (as defined in the 1940 Act), provided that
in either event the continuance is also approved by a majority of the Trustees
who are not parties to this Agreement or "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. Notwithstanding the
foregoing, this Agreement may be terminated: (a) at any time without penalty (i)
by the Manager, (ii) by the Trust upon the vote of a majority of the Trustees or
(iii) by vote of the majority of the Fund's outstanding voting securities, each
upon sixty (60) days' written notice to the Portfolio Manager; or (b) by the
Portfolio Manager at any time without penalty, upon sixty (60) days' written
notice to the Trust or the Manager. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act). In
the event that this Agreement becomes a standard contract, the name of the Funds
shall be changed to include the name of the Portfolio Manager. The use of the
Portfolio Manager's name shall be subject to that Name Use Agreement Among the
Trust, the Manager, and the Portfolio Manager dated October 8, 2001.
10. AMENDMENTS. Except as otherwise provided by applicable law or
regulatory relief, no provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, or (ii) a majority of the Trustees, including a
majority of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
11. PROXIES AND RIGHTS. Unless the Trust or the Manager gives timely
written instructions to the contrary, the Portfolio Manager shall (a) vote all
proxies solicited by or with respect to
the issuers of securities in which the Assets are invested, using its best good
faith judgment to vote such proxies in a manner which best serves the interests
of the Fund's shareholders, and (b) exercise all other rights attaching to or
arising with respect to the Assets, subject to the Fund's investment objectives,
policies and limitations as stated in its Registration Statement, directing the
Custodian to make any required payment or settlement in connection therewith.
12. MISCELLANEOUS.
a. This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
b. The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
c. 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.
d. Nothing herein shall be construed as constituting the Portfolio
Manager as an agent of the Trust or a Fund.
e. This Agreement may be executed via facsimile signatures and in any
number of counterparts, each of which, when executed and delivered shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date first above
written.
USAllianz Variable Insurance Products Trust
By ______________________________
President
Xxx Xxxxxx Asset Management Inc.
By ______________________________
President
USAllianz Advisers, LLC
By ______________________________
President
EXHIBIT A
Fees payable to the Portfolio Manager pursuant to paragraph 5 hereof
shall be at the following annual rates for each Fund:
American Growth Fund 0.50%
Strategic Growth Fund 0.60%
The management fee shall be accrued and paid to the Portfolio Manager as
provided in Section 5 of the Portfolio Management Agreement.
