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EXHIBIT (d)(4)
PROPOSED INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as _____________, __ 2001,
between NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS, a Delaware business trust (the
"Trust"), and NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, a California limited
partnership (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act");
WHEREAS, the Trust currently offers shares of nineteen series (each a
"Fund" and collectively the "Funds"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Trust and each of its Funds;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Investment Adviser to serve as
investment adviser to each of the Funds for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that the Trust establishes one or more series other
than the Funds with respect to which it desires to retain the Investment Adviser
to serve as investment adviser hereunder, it will notify the Investment Adviser
in writing. If the Investment Adviser is willing to render such services under
this Agreement it will so notify the Trust in writing, whereupon such series
will become a "Fund" (as defined hereunder) and will be subject to the
provisions of this Agreement to the same extent as the Funds except to the
extent that such provisions (including those relating to the compensation
payable by the Fund to the Investment Adviser) are modified with respect to such
Fund in writing by the Trust and the Adviser at the time.
2. SERVICES.
(a) Subject to the supervision of the Trust's Board of Trustees (the
"Board"), the Investment Adviser will provide a continuous investment program
for each of the Funds, including investment research and management with respect
to all securities and investments and cash equivalents in the Funds. The
Investment Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Trust with respect to
each Fund. The Investment Adviser will provide the services under this Agreement
in accordance with each Fund's investment objective, policies and restrictions
as stated in the
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Fund's prospectus and statement of additional information, as currently in
effect and as from time to time amended (collectively, the "Prospectus"), and
resolutions of the Board. The Investment Adviser further agrees that it:
(b) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law.
(c) Will place all orders for the purchase and sale of portfolio
securities for the account of each Fund with brokers or dealers selected by the
Investment Adviser. In executing portfolio transactions and selecting brokers or
dealers, the Investment Adviser will use its best efforts to seek on behalf of
the Trust and each Fund the best available price and execution. In assessing the
best overall terms available for any transaction, the Investment Adviser will
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the size of the order, the difficulty
and risk of execution, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the Investment Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended)
provided to any Fund and/or other accounts over which the Investment Adviser or
any affiliate of the Investment Adviser exercises investment discretion. The
Investment Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission or spread for executing a portfolio
transaction for any Fund which is in excess of the amount of commission or
spread another broker or dealer would have charged for effecting that
transaction if, but only if, the Investment Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer viewed in terms of that
particular transaction or in terms of the overall responsibilities of the
Investment Adviser to the particular Fund and to the Trust. The Investment
Adviser may also select brokers who sell shares of the various series of
Nicholas-Applegate Institutional Funds to execute portfolio transactions. The
extent and continuation of these practices will be subject to periodic review by
the Board.
In executing portfolio transactions for any Fund, the Investment
Adviser may, but will not be obligated to, aggregate the securities to be sold
or purchased with those of other Funds and its other clients where such
aggregation is not inconsistent with the policies set forth in the Prospectus,
to the extent permitted by applicable laws and regulations. In such event, the
Investment Adviser will allocate the securities so purchased or sold, and the
expenses incurred in the transaction, in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Funds and such
other clients.
(d) Will maintain all books and records with respect to the securities
transactions of the Funds, keep books of account with respect to the Funds and
furnish the Board with such periodic and special reports as the Board may
request.
(e) Will treat confidentially and as proprietary information of the
Trust all records
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and other information relative to the Trust and shareholders of the Trust
("Investors") or those persons or entities who respond to inquiries concerning
investment in the Trust, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder or
under any other agreement with the Trust except after prior notification to and
approval in writing by the Trust, which approval will not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust. Nothing contained herein, however, will prohibit the Investment
Adviser from advertising to or soliciting the public generally with respect to
other products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or solicitation may
coincidentally include prior or present Investors or those persons or entities
who have responded to inquiries regarding the Trust.
(f) Will obtain the prior written approval of the Board before
retaining the services of any subadviser to manage the assets and portfolio
investments of any Fund
3. SERVICES NOT EXCLUSIVE. The Investment Adviser will for all
purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent. The investment management services furnished by
the Investment Adviser hereunder are not deemed exclusive, and the Investment
Adviser will be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Adviser agrees that all records
which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any such records upon the Trust's
request. In addition, the Investment Adviser agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly (in arrears), at the annual rates set forth in Schedule A
hereto. Such fee as is attributable to each Fund will be a separate charge to
each such Fund and will be the several (and not joint or joint and several)
obligation of each such Fund. The Investment Adviser may also from time to time
agree to reduce its fees or absorb other operating expenses to ensure that the
expenses of a Fund do not exceed certain limitations.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Trust represents and warrants to the Investment Adviser that:
(i) it is a
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business trust duly organized and existing and in good standing under the laws
of the State of Delaware and is duly qualified to conduct its business in the
State of Delaware and in such other jurisdictions wherein the nature of its
activities or its properties owned or leased makes such qualification necessary;
(ii) it is a registered open-end management investment company under the 1940
Act; (iii) a registration statement on Form N-lA under the Securities Act of
1933, as amended, on behalf of the Funds is effective and will remain effective,
and appropriate state securities law filings have been made and will continue to
be made, with respect to all shares of the Funds being offered for sale; (iv) it
is empowered under applicable laws and by its Declaration of Trust and Bylaws to
enter into and perform this Agreement; and (v) all requisite trust proceedings
have been taken to authorize it to enter into and perform this Agreement.
(b) The Investment Adviser represents and warrants to the Trust that:
(i) it is a limited partnership duly organized and existing and in good standing
under the laws of the State of California and is duly qualified to conduct its
business in the State of California and in such other jurisdictions wherein the
nature of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is empowered under applicable laws and by its
partnership agreement to enter into and perform this Agreement; (iii) all
requisite partnership proceedings have been taken to authorize it to enter into
and perform this Agreement; and (iv) it is a registered investment adviser under
the Investment Advisers Act of 1940 and applicable state laws.
8. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) The Investment Adviser will not be liable for any error of judgment
or mistake of law or for any loss suffered by a Fund or the Trust in connection
with the matters to which this Agreement relates, except for liability resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Adviser in the performance of its duties, or by reason of the
Investment Adviser's reckless disregard of its obligations and duties under this
Agreement.
The Trust will indemnify and hold harmless the Investment Adviser
from and against all liabilities, damages, costs and expenses that the
Investment Adviser may incur in connection with any action, suit, investigation
or proceeding arising out of or otherwise based on any action actually or
allegedly taken or omitted to be taken by the Investment Adviser with respect to
the performance of its duties or obligations hereunder or otherwise as an
investment adviser of the Trust and the Funds; provided, however, that the
Investment Adviser will not be entitled to indemnification with respect to any
liability to the Trust or the Investors by reason of willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties, or by reason of the Investment Adviser's reckless
disregard of its obligations and duties under this Agreement.
(b) No trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever, in his or her official or
individual capacity, to any person, including the Investment Adviser, other than
the Trust or its shareholders, in connection with Trust property or the affairs
of the Trust, save only that arising from his or her bad faith, willful
misfeasance, gross negligence or reckless disregard of his or her duty to such
person; and all such persons shall look solely to the Trust property for
satisfaction of claims of any nature against a trustee, officer, employee or
agent of the Trust arising in connection with the
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affairs of the Trust. Moreover, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a Fund shall be
enforceable against the assets and property of the Fund only, and not against
the assets and property of any other series of the Trust.
9. DURATION AND TERMINATION. This Agreement will become effective with
respect to each Fund (currently in existence) on the date first written above.
This Agreement will become effective with respect to any additional Fund on the
date of receipt by the Trust of notice from the Investment Adviser in accordance
with Section l(b) hereof that the Investment Adviser is willing to serve as
investment adviser with respect to such Fund.
Unless sooner terminated as provided herein, this Agreement will continue
in effect for a period of two years from the date hereof. Thereafter, if not
terminated, this Agreement will continue in effect as to a particular Fund for
successive annual periods, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Board 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, and (b) by the Board
or by vote of a majority of the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by the Trust (by vote of the
Board or by vote of a majority of the outstanding voting securities of such
Fund), or by the Investment Adviser, upon not less than 60 days' written notice.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" have the same meaning as the
meaning of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. 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. No amendment of this Agreement will be
effective as to a particular Fund until approved by vote of a majority of the
outstanding voting securities of such Fund.
11. NOTIFICATION OF CHANGE OF PARTNERS. During the term of this
Agreement, the Investment Adviser will notify the Trust of any change in the
membership of the Investment Adviser's partnership within a reasonable time
after such change.
12. NOTICES. Notices of any kind to be given to the Investment Adviser
hereunder by the Trust will be in writing and will be duly given if mailed,
delivered or communicated by answer back facsimile transmission to the
Investment Adviser at 600 West Broadway, 30th Floor, San Diego, California
92101, Facsimile: (619) 687-8138, Attention: General Counsel, or at such other
address or to such individual as will be so specified by the Investment Adviser.
Notices of any kind to be given to the Trust hereunder by the Investment Adviser
will be in writing and will be duly given if mailed or delivered to the Trust at
600 West Broadway, 30th Floor, San Diego, California 92101, Facsimile: (619)
687-8138, Attention: Secretary, or at such other address or to such individual
as will be so specified by the Trust to the Investment Adviser.
13. MISCELLANEOUS.
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(a) This Agreement constitutes the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(b) 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.
(c) If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
(d) This Agreement will be binding upon and will inure to the benefit
of the parties hereto and their respective successors and will be governed by
the internal laws, and not the law of conflicts of laws, of the state of
California; provided that nothing herein will be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, as amended,
or any rule or regulation of the Securities and Exchange Commission thereunder.
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.
NICHOLAS-APPLEGATE NICHOLAS-APPLEGATE
INSTITUTIONAL FUNDS CAPITAL MANAGEMENT
By: By:
E. Blake Moore, Jr. E. Blake Moore, Jr.
Its Secretary Its General Counsel
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SCHEDULE A
INVESTMENT ADVISORY FEES
The Investment Adviser will be compensated for its services under the Agreement
with respect to the Funds at the following annual rates:
1. For the WORLDWIDE GROWTH FUND, INTERNATIONAL SMALL CAP GROWTH FUND
AND INTERNATIONAL CORE GROWTH FUND, 1.00% of the first $500 million of the
Fund's average daily net assets, 0.90% of the next $500 million and 0.85% of the
Fund's average daily net assets in excess of $1 billion.
2. For the MID CAP GROWTH FUND AND CONVERTIBLE FUND, 0.75% of the first
$500 million of each such Fund's average daily net assets, 0.675% of the next
$500 million and 0.65% of the each such Fund's average daily net assets in
excess of $1 billion.
3. For the HIGH QUALITY BOND FUND, 0.45% on the first $500 million of
the Fund's average daily net assets, 0.40% on the next $250 million and 0.35% on
net assets in excess of $750 million.
4. For the SHORT INTERMEDIATE FUND, 0.30% on the first $250 million of
the Fund's average daily net assets and 0.25% on average daily net assests in
excess of $250 million.
5. For the HIGH YIELD BOND FUND,0.60% of the Fund's average daily net
asset value.
6. For the LARGE CAP FUND AND VALUE FUND, 0.75% of the first
$500 million of each Fund's average daily net assets, 0.675 on the next
$500 million, and 0.65% of net assets in excess of $1 billion.
7. For the GLOBAL BLUE CHIP FUND,0.80% of the Fund's average daily net
assets.
8. For the GLOBAL GROWTH & INCOME FUND, 0.85% of the Fund's average net
assets.
9. For the SMALL CAP GROWTH FUND, PACIFIC RIM FUND, GLOBAL TECHNOLOGY
FUND, GLOBAL HEALTH CARE Fund, 1.00% of each Fund's average daily net assets.
10. For MINI CAP GROWTH FUND, LATIN AMERICA FUND, AND EMERGING COUNTRIES
FUND, 1.25% of each Fund's average net assets.
