VIRTUS VARIABLE INSURANCE TRUST
Virtus Multi-Sector Fixed Income Series
Virtus Strategic Allocation Series
SUBADVISORY AGREEMENT
June 17, 2011
Newfleet Asset Management, LLC
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
RE: Subadvisory Agreement
Ladies and Gentlemen:
Virtus Variable Insurance Trust (the "Fund") is an open-end
investment company of the series type registered under the
Investment Company Act of 1940 (the "Act"), and is subject to
the rules and regulations promulgated thereunder. The shares
of the Fund are offered or may be offered in several series,
including the Virtus Multi-Sector Fixed Income Series and
Virtus Strategic Allocation Series (collectively, sometimes
hereafter referred to as the "Series").
Virtus Investment Advisers, Inc. (the "Adviser") evaluates and
recommends series advisers for the Series and is responsible
for the day-to-day management of the Series.
1. Employment as a Subadviser. The Adviser, being duly
authorized, hereby employs Newfleet Asset Management, LLC
(the "Subadviser") as a discretionary series adviser to
invest and reinvest that discrete portion of the assets
of the Series designated by the Adviser as set forth on
Schedule F attached hereto (the "Designated Series") on
the terms and conditions set forth herein. The services
of the Subadviser hereunder are not to be deemed
exclusive; the Subadviser may render services to others
and engage in other activities that do not conflict in
any material manner with the Subadviser's performance
hereunder.
2. Acceptance of Employment; Standard of Performance. The
Subadviser accepts its employment as a discretionary
series adviser of the Designated Series and agrees to use
its best professional judgment to make investment
decisions for the Designated Series in accordance with
the provisions of this Agreement and as set forth in
Schedule D attached hereto and made a part hereof.
3. Services of Subadviser. In providing management services
to the Designated Series, the Subadviser shall be subject
to the investment objectives, policies and restrictions
of the Fund as they apply to the Designated Series and as
set forth in the Fund's then current prospectus
("Prospectus") and statement of additional information
("Statement of Additional Information") filed with the
Securities and Exchange Commission (the "SEC") as part of
the Fund's Registration Statement, as may be periodically
amended and provided to the Subadviser by the Adviser,
and to the investment restrictions set forth in the Act
and the Rules thereunder, to the supervision and control
of the Trustees of the Fund (the "Trustees"), and to
instructions from the Adviser. The Subadviser shall not,
without the Fund's prior written approval, effect any
transactions that would cause the Designated Series at
the time of the transaction to be out of compliance with
any of such restrictions or policies.
4. Transaction Procedures. All series transactions for the
Designated Series shall be consummated by payment to, or
delivery by, the Custodian(s) from time to time
designated by the Fund (the "Custodian"), or such
depositories or agents as may be designated by the
Custodian in writing, of all cash and/or securities due
to or from the Series. The Subadviser shall not have
possession or custody of such cash and/or securities or
any responsibility or liability with respect to such
custody. The Subadviser shall advise the Custodian and
confirm in writing to the Fund all investment orders for
the Designated Series placed by it with brokers and
dealers at the time and in the manner set forth in
Schedule A hereto (as amended from time to time). The
Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of
any transaction initiated by the Subadviser. The Fund
shall be responsible for all custodial arrangements and
the payment of all custodial charges and fees, and, upon
giving proper instructions to the Custodian, the
Subadviser shall have no responsibility or liability with
respect to custodial arrangements or the act, omissions
or other conduct of the Custodian.
5. Allocation of Brokerage. The Subadviser shall have
authority and discretion to select brokers and dealers to
execute Designated Series transactions initiated by the
Subadviser, and to select the markets on or in which the
transactions will be executed.
A. In placing orders for the sale and purchase of
Designated Series securities for the Fund, the
Subadviser's primary responsibility shall be to seek
the best execution of orders at the most favorable
prices. However, this responsibility shall not
obligate the Subadviser to solicit competitive bids
for each transaction or to seek the lowest available
commission cost to the Fund, so long as the
Subadviser reasonably believes that the broker or
dealer selected by it can be expected to obtain a
"best execution" market price on the particular
transaction and determines in good faith that the
commission cost is reasonable in relation to the
value of the brokerage and research services (as
defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) provided by such broker or
dealer to the Subadviser, viewed in terms of either
that particular transaction or of the Subadviser's
overall responsibilities with respect to its
clients, including the Fund, as to which the
Subadviser exercises investment discretion,
notwithstanding that the Fund may not be the direct
or exclusive beneficiary of any such services or
that another broker may be willing to charge the
Fund a lower commission on the particular
transaction.
B. The Subadviser may manage other portfolios and
expects that the Fund and other portfolios the
Subadviser manages will, from time to time, purchase
or sell the same securities. The Subadviser may
aggregate orders for the purchase or sale of
securities on behalf of the Designated Series with
orders on behalf of other portfolios the Subadviser
manages. Securities purchased or proceeds of
securities sold through aggregated orders, as well
as expenses incurred in the transaction, shall be
allocated to the account of each portfolio managed
by the Subadviser that bought or sold such
securities in a manner considered by the Subadviser
to be equitable and consistent with the Subadviser's
fiduciary obligations in respect of the Designated
Series and to such other accounts.
C. The Subadviser shall not execute any Series
transactions for the Designated Series with a broker
or dealer that is an "affiliated person" (as defined
in the Act) of the Fund, the Subadviser or the
Adviser without the prior written approval of the
Fund. The Fund shall provide the Subadviser with a
list of brokers and dealers that are "affiliated
persons" of the Fund or the Adviser.
D. Consistent with its fiduciary obligations to the Fund
in respect of the Designated Series and the
requirements of best price and execution, the
Subadviser may, under certain circumstances, arrange
to have purchase and sale transactions effected
directly between the Designated Series and another
account managed by the Subadviser ("cross
transactions"), provided that such transactions are
carried out in accordance with applicable law or
regulation and any applicable policies and
procedures of the Fund. The Fund shall provide the
Subadviser with applicable policies and procedures.
6. Proxies.
A. Unless the Adviser or the Fund gives the Subadviser
written instructions to the contrary, the
Subadviser, or a third party designee acting under
the authority and supervision of the Subadviser,
shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in
relation to the assets of the Designated Series.
Unless the Adviser or the Fund gives the Subadviser
written instructions to the contrary, the Subadviser
will, in compliance with the proxy voting procedures
of the Designated Series then in effect, vote or
abstain from voting, all proxies solicited by or
with respect to the issuers of securities in which
assets of the Designated Series may be invested.
The Adviser shall cause the Custodian to forward
promptly to the Subadviser all proxies upon receipt,
so as to afford the Subadviser a reasonable amount
of time in which to determine how to vote such
proxies. The Subadviser agrees to provide the
Adviser in a timely manner with a record of votes
cast containing all of the voting information
required by Form N-PX in an electronic format to
enable the Fund to file Form N-PX as required by
Rule 30b1-4 under the Act.
B. The Subadviser is authorized to deal with
reorganizations, exchange offers and other voluntary
corporate actions with respect to securities held in
the Series in such manner as the Subadviser deems
advisable, unless the Fund or the Adviser otherwise
specifically directs in writing. With the Adviser's
approval, the Subadviser shall also have the
authority to: (i) identify, evaluate and pursue
legal claims, including commencing or defending
suits, affecting the securities held at any time in
the Series, including claims in bankruptcy, class
action securities litigation and other litigation;
(ii) participate in such litigation or related
proceedings with respect to such securities as the
Subadviser deems appropriate to preserve or enhance
the value of the Series, including filing proofs of
claim and related documents and serving as "lead
plaintiff" in class action lawsuits; (iii) exercise
generally any of the powers of an owner with respect
to the supervision and management of such rights or
claims, including the settlement, compromise or
submission to arbitration of any claims, the
exercise of which the Subadviser deems to be in the
best interest of the Series or required by
applicable law, including ERISA, and (iv) employ
suitable agents, including legal counsel, and to pay
their reasonable fees, expenses and related costs
from the Series.
7. Prohibited Conduct. In providing the services described
in this Agreement, the Subadviser's responsibility
regarding investment advice hereunder is limited to the
Designated Series, and the Subadviser will not consult
with any other investment advisory firm that provides
investment advisory services to the Fund or any other
investment company sponsored by Virtus Investment
Partners, Inc. regarding transactions for the Fund in
securities or other assets. The Fund shall provide the
Subadviser with a list of investment companies sponsored
by Virtus Investment Partners, Inc. and the Subadviser
shall be in breach of the foregoing provision only if the
investment company is included in such a list provided to
the Subadviser prior to such prohibited action. In
addition, the Subadviser shall not, without the prior
written consent of the Fund and the Adviser, delegate any
obligation assumed pursuant to this Agreement to any
affiliated or unaffiliated third party.
8. Information and Reports.
A. The Subadviser shall keep the Fund and the Adviser
informed of developments relating to its duties as
Subadviser of which the Subadviser has, or should
have, knowledge that would materially affect the
Designated Series. In this regard, the Subadviser
shall provide the Fund, the Adviser and their
respective officers with such periodic reports
concerning the obligations the Subadviser has
assumed under this Agreement as the Fund and the
Adviser may from time to time reasonably request.
In addition, prior to each meeting of the Trustees,
the Subadviser shall provide the Adviser and the
Trustees with reports regarding the Subadviser's
management of the Designated Series during the most
recently completed quarter, which reports: (i) shall
include Subadviser's representation that its
performance of its investment management duties
hereunder is in compliance with the Fund's
investment objectives and practices, the Act and
applicable rules and regulations under the Act, and
the diversification and minimum "good income"
requirements of Subchapter M under the Internal
Revenue Code of 1986, as amended, and (ii) otherwise
shall be in such form as may be mutually agreed upon
by the Subadviser and the Adviser.
B. Each of the Adviser and the Subadviser shall provide
the other party with a list, to the best of the
Adviser's or the Subadviser's respective knowledge,
of each affiliated person (and any affiliated person
of such an affiliated person) of the Adviser or the
Subadviser, as the case may be, and each of the
Adviser and Subadviser agrees promptly to update
such list whenever the Adviser or the Subadviser
becomes aware of any changes that should be added to
or deleted from the list of affiliated persons.
C. The Subadviser shall also provide the Adviser with
any information reasonably requested by the Adviser
regarding its management of the Designated Series
required for any shareholder report, amended
registration statement, or Prospectus supplement to
be filed by the Fund with the SEC.
9. Fees for Services. The compensation of the Subadviser for
its services under this Agreement shall be calculated and
paid by the Adviser in accordance with the attached
Schedule C. Pursuant to the Investment Advisory
Agreement between the Fund and the Adviser, the Adviser
is solely responsible for the payment of fees to the
Subadviser.
10. Limitation of Liability. Except as otherwise stated in
this Agreement, the Subadviser shall not be liable for
any action taken, omitted or suffered to be taken by it
in its best professional judgment, in good faith and
believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement,
or in accordance with specific directions or instructions
from the Fund, provided, however, that such acts or
omissions shall not have constituted a material breach of
the investment objectives, policies and restrictions
applicable to the Designated Series as defined in the
Prospectus and Statement of Additional Information and
that such acts or omissions shall not have resulted from
the Subadviser's willful misfeasance, bad faith or gross
negligence, or reckless disregard of its obligations and
duties hereunder.
11. Confidentiality. Subject to the duty of the Subadviser
and the Fund to comply with applicable law, including any
demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Designated
Series and the actions of the Subadviser and the Fund in
respect thereof. Notwithstanding the foregoing, the Fund
and the Adviser agree that the Subadviser may (i)
disclose in marketing materials and similar
communications that the Subadviser has been engaged to
manage assets of the Designated Series pursuant to this
Agreement, and (ii) include performance statistics
regarding the Series in composite performance statistics
regarding one or more groups of Subadviser's clients
published or included in any of the foregoing
communications, provided that the Subadviser does not
identify any performance statistics as relating
specifically to the Series.
12. Assignment. This Agreement shall terminate automatically
in the event of its assignment, as that term is defined
in Section 2(a)(4) of the Act. The Subadviser shall
notify the Fund and the Adviser in writing sufficiently
in advance of any proposed change of control, as defined
in Section 2(a)(9) of the Act, as will enable the Fund to
consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and to take the steps
necessary to enter into a new contract with the
Subadviser.
13. Representations, Warranties and Agreements of the
Subadviser. The Subadviser represents, warrants and
agrees that:
A. It is registered as an "investment adviser" under the
Investment Advisers Act of 1940, as amended
("Advisers Act").
B. It will maintain, keep current and preserve on behalf
of the Fund, in the manner required or permitted by
the Act and the Rules thereunder including the
records identified in Schedule B (as Schedule B may
be amended from time to time). The Subadviser
agrees that such records are the property of the
Fund, and shall be surrendered to the Fund or to the
Adviser as agent of the Fund promptly upon request
of either. The Fund acknowledges that Subadviser may
retain copies of all records required to meet the
record retention requirements imposed by law and
regulation.
C. It shall maintain a written code of ethics (the "Code
of Ethics") complying with the requirements of Rule
204A-1 under the Advisers Act and Rule 17j-l under
the Act and shall provide the Fund and the Adviser
with a copy of the Code of Ethics and evidence of
its adoption. It shall institute procedures
reasonably necessary to prevent Access Persons (as
defined in Rule 17j-1) from violating its Code of
Ethics. The Subadviser acknowledges receipt of the
written code of ethics adopted by and on behalf of
the Fund. Each calendar quarter while this
Agreement is in effect, a duly authorized compliance
officer of the Subadviser shall certify to the Fund
and to the Adviser that the Subadviser has complied
with the requirements of Rules 204A-1 and 17j-l
during the previous calendar quarter and that there
has been no material violation of its Code of
Ethics, or of Rule 17j-1(b), or that any persons
covered under its Code of Ethics has divulged or
acted upon any material, non-public information, as
such term is defined under relevant securities laws,
and if such a violation has occurred or the code of
ethics of the Fund, or if such a violation of its
Code of Ethics has occurred, that appropriate action
was taken in response to such violation. Annually,
the Subadviser shall furnish to the Fund and the
Adviser a written report which complies with the
requirements of Rule 17j-1 concerning the
Subadviser's Code of Ethics. The Subadviser shall
permit the Fund and the Adviser to examine the
reports required to be made by the Subadviser under
Rules 204A-1(b) and 17j-l(d)(1) and this
subparagraph.
D. It has adopted and implemented, and throughout the
term of this Agreement shall maintain in effect and
implement, policies and procedures reasonably
designed to prevent, detect and correct violations
by the Subadviser and its supervised persons, and,
to the extent the activities of the Subadviser in
respect of the Fund could affect the Fund, by the
Fund, of "federal securities laws" (as defined in
Rule 38a-1 under the Act), and that the Subadviser
has provided the Fund with true and complete copies
of its policies and procedures (or summaries
thereof) and related information reasonably
requested by the Fund and/or the Adviser.. The
Subadviser agrees to cooperate with periodic reviews
by the Fund's and/or the Adviser's compliance
personnel of the Subadviser's policies and
procedures, their operation and implementation and
other compliance matters and to provide to the Fund
and/or the Adviser from time to time such additional
information and certifications in respect of the
Subadviser's policies and procedures, compliance by
the Subadviser with federal securities laws and
related matters as the Fund's and/or the Adviser's
compliance personnel may reasonably request. The
Subadviser agrees to promptly notify the Adviser of
any compliance violations which affect the
Designated Series.
E. The Subadviser will immediately notify the Fund and
the Adviser of the occurrence of any event which
would disqualify the Subadviser from serving as an
investment adviser of an investment company pursuant
to Section 9 of the Act or otherwise. The
Subadviser will also immediately notify the Fund and
the Adviser if it is served or otherwise receives
notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any
court, public board or body, involving the affairs
of the Designated Series.
14. No Personal Liability. Reference is hereby made to the
Declaration of Trust establishing the Fund, a copy of
which has been filed with the Secretary of the State of
Delaware and elsewhere as required by law, and to any and
all amendments thereto so filed with the Secretary of the
State of Delaware and elsewhere as required by law, and
to any and all amendments thereto so filed or hereafter
filed. The name "Virtus Variable Insurance Trust" refers
to the Trustees under said Declaration of Trust, as
Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Fund shall be held to
any personal liability in connection with the affairs of
the Fund; only the trust estate under said Declaration of
Trust is liable. Without limiting the generality of the
foregoing, neither the Subadviser nor any of its
officers, directors, partners, shareholders or employees
shall, under any circumstances, have recourse or cause or
willingly permit recourse to be had directly or
indirectly to any personal, statutory, or other liability
of any shareholder, Trustee, officer, agent or employee
of the Fund or of any successor of the Fund, whether such
liability now exists or is hereafter incurred for claims
against the trust estate.
15. Entire Agreement; Amendment. This Agreement, together
with the Schedules attached hereto, constitutes the
entire agreement of the parties with respect to the
subject matter hereof and supersedes any prior written or
oral agreements pertaining to the subject matter of this
Agreement. This Agreement may be amended at any time, but
only by written agreement among the Subadviser, the
Adviser and the Fund, which amendment, other than
amendments to Schedules A, B, D, E and F, is subject to
the approval of the Trustees and the shareholders of the
Fund as and to the extent required by the Act, subject to
any applicable orders of exemption issued by the SEC.
16. Effective Date; Term. This Agreement shall become
effective on the date set forth on the first page of this
Agreement, and shall continue in effect until _________.
The Agreement shall continue from year to year thereafter
only so long as its continuance has been specifically
approved at least annually by the Trustees in accordance
with Section 15(a) of the Act, and by the majority vote
of the disinterested Trustees in accordance with the
requirements of Section 15(c) thereof.
17. Termination. This Agreement may be terminated by any
party, without penalty, immediately upon written notice
to the other parties in the event of a material breach of
any provision thereof by a party so notified, or
otherwise upon thirty (30) days' written notice to the
other parties, but any such termination shall not affect
the status, obligations or liabilities of any party
hereto to the other parties.
18. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United
States heretofore or hereafter enacted, as the same may
be amended from time to time, this Agreement shall be
administered, construed and enforced according to the
laws of the State of Delaware.
19. Severability. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any
application, then the remainder of this Agreement shall
not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
20. Notices. Any notice or other communication required to
be given pursuant to this Agreement shall be deemed duly
given if delivered personally or by overnight delivery
service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by
facsimile addressed to the parties at their respective
addresses set forth below, or at such other address as
shall be designated by any party in a written notice to
the other party.
(a) To Virtus Investment Advisers, Inc. at:
Virtus Investment Advisers, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Vice President and Clerk
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxx.xxxx@xxxxxx.xxx
(b) To the Subadviser at Newfleet Asset Management, LLC:
Newfleet Asset Management, LLC
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn:
Telephone:
Facsimile:
Email:
21. Certifications. The Subadviser hereby warrants and
represents that it will provide the requisite
certifications reasonably requested by the chief
executive officer and chief financial officer of the Fund
necessary for those named officers to fulfill their
reporting and certification obligations on Form N-CSR and
Form N-Q as required under the Xxxxxxxx-Xxxxx Act of 2002
to the extent that such reporting and certifications
relate to the Subadviser's duties and responsibilities
under this Agreement. Subadviser shall provide a
quarterly certification in a form substantially similar
to that attached as Schedule E.
22. Indemnification. The Adviser agrees to indemnify and
hold harmless the Subadviser and the Subadviser's
directors, officers, employees and agents from and
against any and all losses, liabilities, claims, damages,
and expenses whatsoever, including reasonable attorneys'
fees (collectively, "Losses"), arising out of or relating
to (i) any breach by the Adviser of any provision of this
Agreement; (ii) the negligence, willful misconduct, bad
faith, or breach of fiduciary duty of the Adviser; (iii)
any violation by the Adviser of any law or regulation
relating to its activities under this Agreement; and (iv)
any dispute between the Adviser and any Fund shareholder,
except to the extent that such Losses result from the
gross negligence, willful misconduct, bad faith of the
Subadviser or the Subadviser's reckless disregard of its
obligations and duties hereunder.
23. Receipt of Disclosure Document. The Fund and the Adviser
acknowledge receipt, at least 48 hours prior to entering
into this Agreement, of a copy of Part II of the
Subadviser's Form ADV containing certain information
concerning the Subadviser and the nature of its business.
24. Counterparts; Fax Signatures. This Agreement may be
executed in any number of counterparts (including
executed counterparts delivered and exchanged by
facsimile transmission) with the same effect as if all
signing parties had originally signed the same document,
and all counterparts shall be construed together and
shall constitute the same instrument. For all purposes,
signatures delivered and exchanged by facsimile
transmission shall be binding and effective to the same
extent as original signatures.
[signature page follows]
VIRTUS VARIABLE INSURANCE TRUST
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
VIRTUS INVESTMENT ADVISERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice
President
ACCEPTED:
Newfleet Asset Management, LLC
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
SCHEDULES: A. Operational Procedures
B. Record Keeping Requirements
C. Fee Schedule
D. Subadviser Functions
E. Form of Sub-Certification
F. Designated Series
SCHEDULE A
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be
necessary for a flow of information to be supplied by
Subadviser to The Bank of New York Mellon (the "Custodian")
and BNY Mellon, Inc., (the "Sub-Accounting Agent") for the
Fund.
The Subadviser must furnish the Custodian and the Sub-
Accounting Agent with daily information as to executed trades,
or, if no trades are executed, with a report to that effect,
no later than 6:30 p.m. (Eastern Time) on the day of the trade
each day the Fund is open for business. When necessary, trade
information for executed trades can be sent to the Sub-
Accounting Agent on trade date+1 by 11:00 a.m. (Subadviser
will be responsible for reimbursement to the Fund for any loss
caused by the Subadviser's failure to comply.) The necessary
information can be sent via facsimile machine or electronic
delivery to the Custodian and by facsimile machine or batch
files to the Sub-Accounting Agent. Information provided to
the Custodian and the Sub-Accounting Agent shall include the
following:
1. Purchase or sale;
2. Security name;
3. CUSIP number, ISIN or Sedols (as applicable);
4. Number of shares and sales price per share or
aggregate principal amount;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing
security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed;
14. Identified tax lot (if applicable); and
15. Trade commission reason: best execution, soft
dollar or research.
When opening accounts with brokers for, and in the name of,
the Fund, the account must be a cash account. No margin
accounts are to be maintained in the name of the Fund.
Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash
availability report via access to the Custodian website, or by
email or by facsimile and the Sub-Accounting Agent will
provide a five day cash projection. This will normally be
done by email or, if email is unavailable, by another form of
immediate written communication, so that the Subadviser will
know the amount available for investment purposes.
SCHEDULE B
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage
order, and all other series purchases and sales, given by
the Subadviser on behalf of the Fund for, or in
connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall
include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modifications or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf
of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter,
completed within ten (10) days after the end of the
quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and sale
of series securities to named brokers or dealers was
effected, and the division of brokerage commissions or
other compensation on such purchase and sale orders.
Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or
dealers.
(ii) The supplying of services or benefits by
brokers or dealers to:
(a) The Fund,
(b) The Adviser,
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the
technical qualifications of the brokers and
dealers as such.
B. Shall show the nature of the services or benefits
made available.
C. Shall describe in detail the application of any
general or specific formula or other determinant
used in arriving at such allocation of purchase and
sale orders and such division of brokerage
commissions or other compensation.
D. Shall show the name of the person responsible for
making the determination of such allocation and such
division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an
appropriate memorandum identifying the person or persons,
committees or groups authorizing the purchase or sale of
series securities. Where a committee or group makes an
authorization, a record shall be kept of the names of its
members who participate in the authorization. There
shall be retained as part of this record: any
memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of series securities and
such other information as is appropriate to support the
authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents
as are required to be maintained by registered investment
advisers by rule adopted under Section 204 of the
Advisers Act, to the extent such records are necessary or
appropriate to record the Subadviser's transactions for
the Fund.
5. Records as necessary under Board approved policies and
procedures, including without limitation those related to
valuation determinations.
* Such information might include: current financial
information, annual and quarterly reports, press releases,
reports by analysts and from brokerage firms
(including their recommendations, i.e., buy, sell, hold)
or any internal reports or subadviser review.
SCHEDULE C
SUBADVISORY FEE
(a) For services provided to the Fund, the Adviser will
pay to the Subadviser a fee, payable in arrears, at the annual
rate stated below. The fees shall be prorated for any month
during which this Agreement is in effect for only a portion of
the month. In computing the fee to be paid to the Subadviser,
the net asset value of the Fund and each Designated Series
shall be valued as set forth in the then current registration
statement of the Fund.
(b) The fee to be paid to the Subadviser is to be 0.20%
of the average daily net assets of the Virtus Multi-Sector
Fixed Income Series, and 0.23% of the average daily fixed
income assets of the Virtus Strategic Allocation Series.
SCHEDULE D
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment
of the Designated Series' assets, the Subadviser shall
provide, at its own expense:
(a) An investment program for the Designated Series
consistent with its investment objectives based upon
the development, review and adjustment of buy/sell
strategies approved from time to time by the Board
of Trustees and the Adviser in paragraph 3 of this
Subadvisory Agreement;
(b) Periodic reports, on at least a quarterly basis, in
form and substance acceptable to the Adviser, with
respect to: i) compliance with the Code of Ethics
and the Fund's code of ethics; ii) compliance with
procedures adopted from time to time by the Trustees
of the Fund relative to securities eligible for
resale under Rule 144A under the Securities Act of
1933, as amended; iii) diversification of Designated
Series assets in accordance with the then prevailing
Prospectus and Statement of Additional Information
pertaining to the Designated Series and governing
laws; iv) compliance with governing restrictions
relating to the fair valuation of securities for
which market quotations are not readily available or
considered "illiquid" for the purposes of complying
with the Designated Series' limitation on
acquisition of illiquid securities; v) any and all
other reports reasonably requested in accordance
with or described in this Agreement; and vi) the
implementation of the Designated Series' investment
program, including, without limitation, analysis of
Designated Series performance;
(c) Promptly after filing with the SEC an amendment to
its Form ADV, a copy of such amendment to the
Adviser and the Trustees;
(d) Attendance by appropriate representatives of the
Subadviser at meetings requested by the Adviser or
Trustees at such time(s) and location(s) as
reasonably requested by the Adviser or Trustees; and
(e) Notice to the Trustees and the Adviser of the
occurrence of any event which would disqualify the
Subadviser from serving as an investment adviser of
an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise.
(f) Provide reasonable assistance in the valuation of
securities including the participation of
appropriate representatives at fair valuation
committee meetings.
SCHEDULE E
FORM OF SUB-CERTIFICATION
To:
Re: Subadviser's Form N-CSR and Form N-Q Certification for
the [Name of Designated Series].
From: [Name of Subadviser]
Representations in support of Investment Company Act Rule
30a-2 certifications of Form N-CSR and Form N-Q.
[Name of Designated Series].
In connection with your certification responsibility
under Rule 30a-2 and Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act of 2002, I have reviewed the following
information presented in the schedule of investments for
the period ended [Date of Reporting Period] (the
"Report") which forms part of the N-CSR or N-Q, as
applicable, for the Fund.
Schedule of Investments
Our organization has designed, implemented and maintained
internal controls and procedures, designed for the purpose of
ensuring the accuracy and completeness of relevant portfolio
trade data transmitted to those responsible for the
preparation of the Schedule of Investments. As of the date of
this certification there have been no material modifications
to these internal controls and procedures.
In addition, our organization has:
a. Designed such internal controls and procedures to ensure
that material information is made known to the
appropriate groups responsible for servicing the above-
mentioned mutual fund.
b. Evaluated the effectiveness of our internal controls and
procedures, as of a date within 90 days prior to the date
of this certification and we have concluded that such
controls and procedures are effective.
c. In addition, to the best of my knowledge there has been
no fraud, whether or not material, that involves our
organization's management or other employees who have a
significant role in our organization's control and
procedures as they relate to our duties as subadviser to
the Designated Series.
I have read the draft of the Report which I understand to be
current as of [Date of Reporting Period] and based on my
knowledge, such draft of the Report does not, with respect to
the Designated Series, contain any untrue statement of a
material fact or omit to state a material fact necessary to
make the information contained therein, in light of the
circumstances under which such information is presented, not
misleading with respect to the period covered by such draft
Report.
I have disclosed, based on my most recent evaluation, to the
Designated Series' Chief Accounting Officer:
a. All significant changes, deficiencies and material
weakness, if any, in the design or operation of the
Subadviser's internal controls and procedures which could
adversely affect the Registrant's ability to record,
process, summarize and report financial data with respect
to the Designated Series in a timely fashion;
b. Any fraud, whether or not material, that involves the
Subadviser's management or other employees who have a
significant role in the Subadviser's internal controls
and procedures for financial reporting.
I certify that to the best of my knowledge:
a. The Subadviser's Portfolio Manager(s) has/have complied
with the restrictions and reporting requirements of the
Code of Ethics (the "Code"). The term Portfolio Manager
is as defined in the Code.
b. The Subadviser has complied with the Prospectus and
Statement of Additional Information of the Designated
Series and the Policies and Procedures of the Designated
Series as adopted by the Designated Series Board of
Trustees.
c. I have no knowledge of any compliance violations except
as disclosed in writing to the Virtus Compliance
Department by me or by the Subadviser's compliance
administrator.
d. The Subadviser has complied with the rules and
regulations of the 33 Act and 40 Act, and such other
regulations as may apply to the extent those rules and
regulations pertain to the responsibilities of the
Subadviser with respect to the Designated Series as
outlined above.
This certification relates solely to the Designated Series
named above and may not be relied upon by any other fund or
entity.
The Subadviser does not maintain the official books and
records of the above Designated Series. The Subadviser's
records are based on its own portfolio management system, a
record-keeping system that is not intended to serve as the
Designated Series official accounting system. The Subadviser
is not responsible for the preparation of the Report.
_______________________________ __________________________
[Name of Subadviser] Date
[Name of Authorized Signer]
[Title of Authorized Signer]
SCHEDULE F
DESIGNATED SERIES
Virtus Multi-Sector Fixed Income Series
Virtus Strategic Allocation Series - fixed income assets only
