PORTFOLIO MANAGEMENT AGREEMENT For The Commodity Related Securities Portfolio
Exhibit (d)(46)
PORTFOLIO MANAGEMENT AGREEMENT
For The Commodity Related Securities Portfolio
For The Commodity Related Securities Portfolio
AGREEMENT
made this ___ day of _________, 2010, between Pacific Investment Management Company LLC, a
limited liability company organized under the laws of Delaware (“Portfolio Manager”), and The
Xxxxxx Xxxxxxxxx Trust, a Delaware Statutory Trust (“Trust”).
WHEREAS, the Trust is registered as an open-end, diversified, management investment company under
the Investment Company Act of 1940, as amended (“Investment Company Act”) which offers several
series of shares of beneficial interests (“shares”) representing interests in separate investment
portfolios; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a continuous program of
investment management to that portion of the assets of The Commodity Related Securities Portfolio
of the Trust (“Portfolio”) that may, from time to time be allocated to it by, or under the
supervision of, the Trust’s Board of Trustees, and Portfolio Manager is willing, in accordance with
the terms and conditions hereof, to provide such services to the Trust;
NOW THEREFORE, in consideration of the promises and covenants set forth herein and intending to be
legally bound hereby, it is agreed between the parties as follows:
1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager to provide
the investment services set forth herein and Portfolio Manager agrees to accept such appointment.
In carrying out its responsibilities under this Agreement, the Portfolio Manager shall at all times
act in accordance with the investment objectives, policies and restrictions applicable to the
Portfolio as set forth in the then current Registration Statement of the Trust delivered by the
Trust to the Portfolio Manager, applicable provisions of the Investment Company Act and the rules
and regulations promulgated under the Investment Company Act and other applicable federal
securities laws.
2. Duties of Portfolio Manager. (a) Portfolio Manager shall provide a continuous program
of investment management for that portion of the assets of the Portfolio (“Account”) that may, from
time to time be allocated to it by, or under the supervision of, the Trust’s Board of Trustees, as
indicated in writing by an authorized officer of the Trust. It is understood that the Account may
consist of all, a portion of or none of the assets of the Portfolio, and that the Board of Trustees
and/or Xxxxxx Xxxxxxxxx & Co., LLC, the Trust’s investment adviser, has the right to allocate and
reallocate such assets to the Account at any time, and from time to time, upon such notice to the
Portfolio Manager as may be reasonably necessary, in the view of the Trust, to ensure orderly
management of the Account or the Portfolio. The Portfolio Manager’s responsibility for providing
portfolio management services to the Portfolio shall be limited to the Account.
(b) Subject to the general supervision of the Trust’s Board of Trustees, Portfolio Manager shall
have sole investment discretion with respect to the Account, including investment research,
selection of the securities to be purchased and sold and the portion of the Account, if any, that
shall be held uninvested, and the selection of brokers and dealers through which securities
transactions in the Account shall be executed. The Portfolio Manager shall not consult with any
other portfolio manager of the Portfolio concerning transactions for the Portfolio in securities or
other assets. Specifically, and without limiting the generality of the foregoing, Portfolio
Manager agrees that it will:
(i) advise the Portfolio’s designated custodian bank and administrator or accounting agent on
each business day of each purchase and sale, as the case may be, made on behalf of the Account,
specifying the name and quantity of the security purchased or sold, the unit and aggregate purchase
or sale price, commission paid, the market on which the transaction was effected, the trade date,
the settlement date, the identity of the effecting broker or dealer and/or such other information,
and in such manner, as may from time to time be reasonably requested by the Trust;
(ii) maintain all applicable books and records with respect to the securities transactions of
the Account. Specifically, Portfolio Manager agrees to maintain with respect to the Account those
records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment
Company Act with respect to transactions
in the Account including, without limitation, records which reflect securities purchased or
sold in the Account, showing for each such transaction, the name and quantity of securities, the
unit and aggregate purchase or sale price, commission paid, the market on which the transaction was
effected, the trade date, the settlement date, and the identity of the effecting broker or dealer.
Portfolio Manager will preserve such records in the manner and for the periods prescribed by Rule
31a-2 under the Investment Company Act. Portfolio Manager acknowledges and agrees that all records
it maintains for the Trust are the property of the Trust, and Portfolio Manager will surrender
promptly to the Trust any such records upon the Trust’s request. The Trust agrees, however, that
Portfolio Manager may retain copies of those records that are required to be maintained by
Portfolio Manager under federal or state regulations to which it may be subject or are reasonably
necessary for purposes of conducting its business;
(iii) provide, in a timely manner, such information as may be reasonably requested by the
Trust or its designated agents in connection with, among other things, the Trust’s daily
computation of the Portfolio’s net asset value and net income, preparation of proxy statements or
amendments to the Trust’s registration statement and monitoring investments made in the Account to
ensure compliance with the various limitations on investments applicable to the Portfolio and to
ensure that the Portfolio will continue to qualify for the special tax treatment accorded to
regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended
(“Code”); and
(iv) render regular reports to the Trust concerning the performance of Portfolio Manager of
its responsibilities under this Agreement. In particular, Portfolio Manager agrees that certain
specified account management personnel will, at the reasonable request of the Board of Trustees,
attend meetings of the Board or its validly constituted committees and will, in addition, make its
officers and employees available to meet with the officers and employees of the Trust at least
quarterly and at other times upon reasonable notice, to review the investments and investment
program of the Account.
(v) Portfolio Manager may delegate trade execution and other support functions (but not
portfolio management) to its affiliates which are either controlled by or under common control with
the Portfolio Manager including PIMCO Asia Limited, PIMCO Australia Pty Ltd, PIMCO Asia Pte Ltd.,
PIMCO Global Advisors (Ireland) Limited, PIMCO Luxembourg S.A., PIMCO Japan Ltd., PIMCO Canada Corp
and PIMCO Europe Ltd. Information may be shared between such companies as necessary to accomplish
the purposes of this agreement. Additionally, Portfolio Manager will have the ability to delegate
back office services to State Street Investment Manager Solutions, LLC. In all cases, Portfolio
Manager shall remain liable as if such services were provided directly. No additional fees shall
be imposed for such services except as otherwise agreed.
3. Portfolio Transaction and Brokerage. In placing orders for portfolio securities with
brokers and dealers, Portfolio Manager shall use its best efforts to obtain best execution on
behalf of the Account. Portfolio Manager may, in its discretion, direct orders to brokers that
provide to Portfolio Manager research, analysis, advice and similar services, and Portfolio Manager
may cause the Account to pay to those brokers a higher commission than may be charged by other
brokers for similar transactions, provided that Portfolio Manager determines in good faith that
such commission is reasonable in terms either of the particular transaction or of the overall
responsibility of the Portfolio Manager to the Account and any other accounts with respect to which
Portfolio Manager exercises investment discretion, and provided further that the extent and
continuation of any such practice is subject to review by the Trust’s Board of Trustees. Portfolio
Manager shall not execute any portfolio transactions for the Trust with a broker or dealer which is
an “affiliated person” of the Trust or Portfolio Manager, including any other investment advisory
organization that may, from time to time act as a portfolio manager for the Portfolio or any of the
Trust’s other Portfolios, except as permitted under the Investment Company Act and rules
promulgated thereunder. The Trust shall provide a list of such affiliated brokers and dealers to
Portfolio Manager and will promptly advise Portfolio Manager of any changes in such list.
Portfolio Manager shall not be deemed to have breached this section if the list currently in the
possession of the Portfolio Manager prior to the purchase in question did not name such broker or
dealer as an affiliate.
4. Expenses and Compensation. Except for expenses specifically assumed or agreed to be paid
by the Portfolio Manager under this Agreement, the Portfolio Manager shall not be liable for any
expenses of the Portfolio or the Trust, including, without limitation: (i) interest and taxes;
(ii) brokerage commissions and other costs in connection with the purchase and sale of securities
or other investment instruments with respect to the Portfolio; and (iii) custodian fees and
expenses. For its services under this Agreement, Portfolio Manager shall be entitled to
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receive an annual fee of 0.49% of the first $100 million in assets that may, from time to time, be
allocated to it by Xxxxxx Xxxxxxxxx or the Board, 0.45% of the next $100 million and 0.40% of
assets exceeding $200 million.
5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Portfolio or the Trust
in connection with the matters to which this Agreement relates including, without limitation,
losses that may be sustained in connection with the purchase, holding, redemption or sale of any
security or other investment by the Trust on behalf of the Portfolio, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Portfolio Manager in the
performance of its duties or from reckless disregard by it of its duties under this Agreement.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the Trust may rely upon:
(i) the Portfolio Manager’s current Form ADV; and (ii) information provided, in writing, by
Portfolio Manager to the Trust in accordance with Section 9 of this Agreement or otherwise to the
extent such information was provided by Portfolio Manager for the purpose of inclusion in SEC
Filings, as hereinafter defined provided that a copy of each SEC Filing is provided to Portfolio
Manager: (i) at least 10 business days prior to the date on which it will become effective, in
the case of a registration statement; (ii) at least 10 business days prior to the date upon which
it is filed with the SEC in the case of the Trust’s semi-annual-report on Form N-SAR or any
shareholder report or proxy statement; or (iii) at least 10 business days prior to first use, in
the case of any other SEC Filing. For purposes of this Section 5, “SEC Filings” means the Trust’s
registration statement and amendments thereto and any periodic reports relating to the Trust and
its Portfolios that are required by law to be furnished to shareholders of the Trust and/or filed
with the Securities and Exchange Commission.
(c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each of its Trustees,
officers, employees and control persons from any claims, liabilities and reasonable expenses,
including reasonable attorneys’ fees (collectively, “Losses”), to the extent that such Losses arise
out of any untrue statement of a material fact contained in an SEC Filing or the omission to state
therein a material fact necessary to make the statements therein, in light of the circumstances
under which they are made, not materially misleading, if such statement or omission was made in
reliance upon the Portfolio Manager’s current Form ADV or written information furnished by the
Portfolio Manager for the purpose of inclusion in such SEC Filings or other appropriate SEC
Filings; provided that a copy of each SEC Filing was provided to Portfolio Manager: (i) at least
10 business days prior to the date on which it will become effective, in the case of a
registration statement; (ii) at least 10 business days prior to the date upon which it is filed
with the SEC in the case of the Trust’s semi-annual-report on Form N-SAR or any shareholder report
or proxy statement; or (iii) at least 10 business days prior to first use, in the case of any other
SEC Filing.
(d) In the event that a legal proceeding is commenced against the Trust on the basis of claims for
which the Portfolio Manager would, if such claims were to prevail, be required to indemnify the
Trust pursuant to Section 5(c) above, Portfolio Manager will, at its expense, provide such
assistance as the Trust may reasonably request in preparing the defense of the such claims
(including by way of example making Portfolio Manager’s personnel available for interview by
counsel for the Trust, but specifically not including retention or payment of counsel to defend
such claims on behalf of the Trust); provided that the Portfolio Manager will not be required to
pay any Losses of the Trust except to the extent it may be required to do so under Section 5(c)
above.
(e) The indemnification obligations set forth in Section 5 (c) shall not apply unless: (i) the
statement or omission in question accurately reflects information provided to the Trust in writing
by the Portfolio Manager; (ii) the statement or omission in question was made in an SEC Filing in
reliance upon written information provided to the Trust by the Portfolio Manager specifically for
use in such SEC Filing; (iii) the Portfolio Manager was afforded the opportunity to review the
statement (or the omission was specifically identified to it) in connection with the 10 business
day review requirement set forth in Section 5(b) above; and (iv) upon receipt by the Trust of any
notice of the commencement of any action or the assertion of any claim to which the
indemnification obligations set forth in Section 5(c) may apply, the Trust notifies the Portfolio
Manager, within 30 days and in writing, of such receipt and provides to Portfolio Manager the
opportunity to participate in the defense and/or settlement of any such action or claim. Further,
Portfolio Manager will not be required to indemnify any person under this Section 5 to the extent
that Portfolio Manager relied upon statements or information furnished to the Portfolio Manager, in
writing, by any officer, employee or Trustee of the Trust, or by the Trust’s custodian,
administrator or accounting agent or any other agent of the Trust, in preparing written information
provided to the Trust and upon which the Trust relied in preparing the SEC Filing(s) in question.
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(f) The Portfolio Manager shall not be liable for: (i) any acts of any other portfolio manager to
the Portfolio or the Trust with respect to the portion of the assets of the Portfolio or the Trust
not managed by the Portfolio Manager; and (ii) acts of the Portfolio Manager which result from acts
of the Trust, including, but not limited to, a failure of the Trust to provide accurate and current
information with respect to the investment objectives, policies, or restrictions applicable to the
Portfolio, actions of the Trustees, or any records maintained by Trust or any other portfolio
manager to the Portfolio. The Trust agrees that, to the extent the Portfolio Manager complies
with the investment objectives, policies, and restrictions applicable to the Account as provided to
the Portfolio Manager by the Trust, and with laws, rules, and regulations applicable to the
Portfolio (including, without limitation, any requirements relating to the qualification of the
Portfolio as a regulated investment company under Subchapter M of the Code) in the management of
the assets of the Portfolio specifically committed to management by the Portfolio Manager, without
regard to any other assets or investments of the Portfolio, Portfolio Manager will be conclusively
presumed for all purposes to have met its obligations under this Agreement to act in accordance
with the investment objectives, polices, and restrictions applicable to the Portfolio and with
laws, rules, and regulations applicable to the Portfolio, it being the intention that for this
purpose the assets committed to management by the Portfolio Manager shall be considered a separate
and discrete investment portfolio from any other assets of the Portfolio; without limiting the
generality of the foregoing, the Portfolio Manager will have no obligation to inquire into, or to
take into account, any other investments of the Portfolio in making investment decisions under this
Agreement. In no event shall the Portfolio Manager or any officer, director, employee, member, or
agent or the Portfolio Manager have any liability arising from the conduct of the Trust and any
other portfolio manager with respect to the portion of the Portfolio’s assets not allocated to the
Portfolio Manager.
6. Permissible Interest. Subject to and in accordance with the Trust’s Declaration of
Trust and Bylaws and corresponding governing documents of Portfolio Manager, Trustees, officers,
agents and shareholders of the Trust may have an interest in the Portfolio Manager as officers,
directors, agents and/or shareholders or otherwise. Portfolio Manager may have similar interests
in the Trust. The effect of any such interrelationships shall be governed by said governing
documents and the provisions of the Investment Company Act.
7. Duration, Termination and Amendments. This Agreement shall become effective as of the
date first written above and shall continue in effect thereafter for two years. This Agreement
shall continue in effect from year to year thereafter for so long as its continuance is
specifically approved, at least annually, by: (i) a majority of the Board of Trustees or the vote
of the holders of a majority of the Portfolio’s outstanding voting securities; and (ii) the
affirmative vote, cast in person at a meeting called for the purpose of voting on such continuance,
of a majority of those members of the Board of Trustees (“Independent Trustees”) who are not
“interested persons” of the Trust or any investment adviser to the Trust.
This Agreement may be terminated by the Trust or by Portfolio Manager at any time and without
penalty upon sixty days written notice to the other party, which notice may be waived by the party
entitled to it. This Agreement may not be amended except by an instrument in writing and signed by
the party to be bound thereby provided that if the Investment Company Act requires that such
amendment be approved by the vote of the Board, the Independent Trustees and/or the holders of the
Trust’s or the Portfolio’s outstanding shareholders, such approval must be obtained before any such
amendment may become effective. This Agreement shall terminate upon its assignment. For purposes
of this Agreement, the terms “majority of the outstanding voting securities,” “assignment” and
“interested person” shall have the meanings set forth in the Investment Company Act.
8. Confidentiality; Use of Name. Portfolio Manager and the Trust acknowledge and agree
that during the term of this Agreement the parties may have access to certain information that is
proprietary to the Trust or Portfolio Manager, respectively (or to their affiliates and/or service
providers). The parties agree that their respective officers and employees shall treat all such
proprietary information as confidential and will not use or disclose information contained in, or
derived from such material for any purpose other than in connection with the carrying out of their
responsibilities under this Agreement and the management of the Trust’s assets, provided, however,
that this shall not apply in the case of: (i) information that is or becomes publicly known or
available through no act or failure to act of the receiving party under this Agreement; (ii)
information that was lawfully obtained by the receiving party from a third party without any
obligation known to the recipient to maintain the information as proprietary or confidential; (iii)
information that was independently developed by the recipient without any use of or reference to
such proprietary information; and (iv) disclosures required by law or requested by any regulatory
authority that may
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have jurisdiction over Portfolio Manager or the Trust, as the case may be, in which case such
party shall request such confidential treatment of such information as may be reasonably
available. In addition, each party shall use its reasonable efforts to ensure that its agents or
affiliates who may gain access to such proprietary information shall be made aware of the
proprietary nature and shall likewise treat such materials as confidential.
It is acknowledged and agreed that the names “Xxxxxx Xxxxxxxxx,” “Xxxxxx Xxxxxxxxx Chief Investment
Officers” (which is a registered trademark of Xxxxxx Xxxxxxxxx & Co., LLC (“HCCI”)), and any
derivative of either, as well as any logo that is now or shall later become associated with either
name (“Marks”) are valuable property of HCCI and that the use of the Marks, or any one of them, by
the Trust or its agents is subject to the license granted to the Trust by HCCI. Portfolio Manager
agrees that it will not use any Xxxx without the prior written consent of the Trust. Portfolio
Manager consents to use of its name, performance data, biographical data and other pertinent data,
and the Pacific Investment Management Company LLC Marks (as defined below), by the Trust for use in
marketing and sales literature, provided that any such marketing and sales literature shall not be
used by the Trust without the prior written consent of Portfolio Manager, which consent shall not
be unreasonably withheld. The Trust shall have full responsibility for the compliance by any such
marketing and sales literature with all applicable laws, rules, and regulations, and Portfolio
Manager will have no responsibility or liability therefor. For purposes of this Section 8,
performance data shall mean data regarding the performance achieved by the Portfolio Manager in
managing the Account and information that is available through third party organizations engaged in
the business of gathering and evaluating performance and other data relating to the investment
management industry.
It is acknowledged and agreed that the names “Pacific Investment Management Company LLC” and
“PIMCO” and any portion or derivative thereof, as well as any logo that is now or shall later
become associated with the names (“PIMCO Marks”), are valuable property of the Portfolio Manager
and that the use of the PIMCO Marks by the Trust or its agents is permitted only so long as this
Agreement is in place.
The provisions of this Section 8 shall survive termination of this Agreement.
9. Representation, Warranties and Agreements.
Portfolio Manager represents and warrants that:
(a) It is registered as an investment adviser under the Investment Advisers Act of 1940, as amended
(“Investment Advisers Act”), it will maintain such registration in full force and effect and will
promptly report to the Trust the commencement of any formal proceeding that could render the
Portfolio Manager ineligible to serve as an investment adviser to a registered investment company
under Section 9 of the Investment Company Act.
(b) Portfolio Manager understands that the Trust is subject to various regulations under the
Investment Company Act which require that the Board review and approve various procedures adopted
by portfolio managers and may also require disclosure regarding the Board’s consideration of these
matters in various documents required to be filed with the SEC. Portfolio Manager represents that
it will, upon reasonable request of the Trust, provide to the Trust information regarding all such
matters including, but not limited to, codes of ethics required by Rule 17j-1 under the Investment
Company Act and compliance procedures required by Rule 206(4)-7 under the Investment Advisers Act,
as well as certifications that, as contemplated under Rule 38a-1 under the Investment Company Act,
Portfolio Manager has implemented a compliance program that is reasonably designed to prevent
violations of the federal securities laws by the Portfolio with respect to those services provided
to the Account pursuant to this Agreement. Portfolio Manager acknowledges that the Trust may, in
response to regulations or recommendations issued by the SEC or other regulatory agencies, from
time to time, request additional information regarding the policies of Portfolio Manager with
regard to personal trading of its directors, partners, officers and employees. Portfolio Manager
agrees that it will make reasonable efforts to respond to the Trust’s reasonable requests in this
area.
(c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust with any
non-confidential information concerning Portfolio Manager and its members, employees and affiliates
that the Trust may reasonably require in connection with the preparation of its registration
statements, proxy materials, reports and other documents required, under applicable state or
Federal laws, to be filed with state or Federal agencies and/or provided to shareholders of the
Trust.
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10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and agree
that the relationship between Portfolio Manager and the Trust is that of an independent contractor
and under no circumstances shall any employee of Portfolio Manager be deemed an employee of the
Trust or any other organization that the Trust may, from time to time, engage to provide services
to the Trust, its Portfolios or its shareholders. The parties also acknowledge and agree that
nothing in this Agreement shall be construed to restrict the right of Portfolio Manager or its
affiliates to perform investment management or other services to any person or entity, including
without limitation, other investment companies and persons who may retain Portfolio Manager to
provide investment management services and the performance of such services shall not be deemed to
violate or give rise to any duty or obligations to the Trust.
11. Counterparts and Notice. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original. Any notice required to be given under this
Agreement shall be deemed given when received, in writing addressed and delivered, by certified
mail, by electronic mail, by hand or via overnight delivery service as follows:
If to the Trust:
Xx. Xxxxxx X. Xxxx, Vice President
The Xxxxxx Xxxxxxxxx Trust
Five Tower Bridge, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
The Xxxxxx Xxxxxxxxx Trust
Five Tower Bridge, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
If to Portfolio Manager:
General Counsel
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Cc: Xxxxxxx Xxxxx, Account Manager
Email: xxxxxxx.xxxxx@xxxxx.xxx
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Cc: Xxxxxxx Xxxxx, Account Manager
Email: xxxxxxx.xxxxx@xxxxx.xxx
12. Miscellaneous. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. 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
thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by the law of the State of Delaware provided
that nothing herein shall be construed as inconsistent with the Investment Company Act or the
Investment Advisers Act.
The Trust acknowledges receipt of Part II of Portfolio Manager’s Form ADV, copies of which have
been provided to the Trust’s Board of Trustees.
Portfolio Manager is hereby expressly put on notice of the limitations of shareholder and Trustee
liability set forth in the Declaration of Trust of the Trust and agrees that obligations assumed by
the Trust pursuant to this Agreement shall be limited in all cases to the assets of the Portfolio.
Portfolio Manager further agrees that it will not seek satisfaction of any such obligations from
the shareholders or any individual shareholder of the Trust, or from the Trustees of the Trust or
any individual Trustee of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers
thereunto duly authorized as of the day and year first written above.
| ATTEST: | Pacific Investment Management Company, LLC |
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| By: | ||||
| ATTEST: | The Xxxxxx Xxxxxxxxx Trust (on behalf of The Commodity Related Securities Portfolio) |
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| By: | ||||
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