1
EX-99.B.5(a) Investment Advisory Agreement between First
Variable Advisory Services Corp. and the
Registrant as amended May 1, 1995
2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 22nd day of September, 1994 between VARIABLE
INVESTORS SERIES TRUST, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), and FIRST VARIABLE
ADVISORY SERVICES CORP., a Massachusetts corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, the Trust is authorized to issue separate series, each of which
offers a separate class of shares of common stock, each having its own
investment objective or objectives, policies and limitations;
WHEREAS, the Trust currently offers shares in seven series, designated as
the Cash Management Portfolio, Common Stock Portfolio, High Income Bond
Portfolio, World Equity Portfolio, Multiple Strategies Portfolio, Tilt Utility
Portfolio and U.S. Government Bond Portfolio ("Current Series"), and the Trust
may offer shares of one or more additional series in the future;
WHEREAS, the Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management and administrative services to the Trust with respect to each Current
Series as indicated on the signature page in the manner and on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Services of the Adviser.
1.1 Investment Management Services. The Adviser shall act as the
investment adviser to the Trust and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, business, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Trust in a manner consistent with its investment
objectives, policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by the Trust, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Adviser will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best net price and most favorable execution of its orders,
and (b) may nevertheless in its discretion purchase and sell portfolio
securities from and to brokers and dealers who provide the Adviser with
research, analysis, advice and similar services and pay such brokers and dealers
in return a higher commission or spread than may be charged by other brokers or
dealers. The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by Adviser pursuant to Section 7 of this
Agreement, which is a member of a national securities exchange, to effect any
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(iv).
The Adviser shall carry out its duties with respect to the Trust's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in the Trust's then-current
3
Prospectus and Statement of Additional Information, and subject to such further
limitations as the Trust may from time to time impose by written notice to the
Adviser.
1.2 Administrative Services. The Adviser shall manage the Trust's business
and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other agents
engaged by the Trust; provided, that the Adviser shall not have any obligation
to provide under this Agreement any direct or indirect services to Trust
shareholders, any services related to the distribution of Trust shares, or any
other services which are the subject of a separate agreement or arrangement
between the Trust and the Adviser. Subject to the foregoing, in providing
administrative services hereunder, the Adviser shall:
1.2.1 Office Space, Equipment and Facilities. Furnish without cost to the
Trust, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Trust's needs.
1.2.2 Personnel. Provide, without remuneration from or other cost to the
Trust, the services of individuals competent to perform all of the Trust's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Trust or by the Adviser acting in some
other capacity pursuant to a separate agreement or arrangement with the Trust.
1.2.3 Agents. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust, including the Trust's
shareholder servicing agent, custodian, independent auditors and legal counsel.
1.2.4 Trustees and Officers. Authorize and permit the Adviser's directors,
officers and employees who may be elected or appointed as Trustees or officers
of the Trust to serve in such capacities, without remuneration from or other
cost to the Trust.
1.2.5 Books and Records. Assure that all financial, accounting and other
records required to be maintained and preserved by the Trust are maintained and
preserved by it or on its behalf in accordance with applicable laws and
regulations.
1.2.6 Reports and Filings. Assist in the preparation of (but not pay for)
all periodic reports by the Trust to its shareholders and all reports and
filings required to maintain the registration and qualification of the Trust and
Trust shares, or to meet other regulatory or tax requirements applicable to the
Trust, under federal and state securities and tax laws.
1.3 Additional Series. In the event that the Trust from time to time
designates one or more series in addition to the Current Series ("Additional
Series"), it shall notify the Adviser in writing. If the Adviser is willing to
perform services hereunder to the Additional Series, it shall so notify the
Trust in writing. Thereupon, the Trust and the Adviser shall enter into an
Addendum to this Agreement for the Additional Series and the Additional Series
shall be subject to this Agreement.
2. Expenses of the Trust.
2.1 Expenses to be Paid by Adviser. The Adviser shall pay all salaries,
expenses and fees of the officers, Trustees and employees of the Trust who are
officers, directors or employees of the Adviser.
In the event that the Adviser pays or assumes any expenses of the Trust
not required to be paid or assumed by the Adviser under this Agreement, the
Adviser shall not be obligated hereby to pay or assume the same or any similar
expense in the future; provided, that nothing herein contained shall be deemed
to relieve the Adviser of any obligation to the Trust under any separate
agreement or arrangement between the parties.
4
2.2 Expenses to be Paid by the Trust. The Trust shall bear all expenses of
its operation, except those specifically allocated to the Adviser under this
Agreement or under any separate agreement between the Trust and the Adviser.
Subject to any separate agreement or arrangement between the Trust and the
Adviser, the expenses hereby allocated to the Trust, and not to the Adviser,
include, but are not limited to:
2.2.1 Custody. All charges of depositories, custodians, and other agents
for the transfer, receipt, safekeeping, and servicing of its cash, securities,
and other property.
2.2.2 Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including but not limited to the charges of any
shareholder servicing agent, dividend disbursing agent or other agent engaged by
the Trust to service shareholder accounts.
2.2.3 Shareholder Reports. All expenses of preparing, setting in type,
printing and distributing reports and other communications to shareholders.
2.2.4 Prospectuses. All expenses of preparing, setting in type, printing
and mailing annual or more frequent revisions of the Trust's Prospectus and
Statement of Additional Information and any supplements thereto and of supplying
them to shareholders.
2.2.5 Pricing and Portfolio Valuation. All expenses of computing the
Trust's net asset value per share, including any equipment or services obtained
for the purpose of pricing shares or valuing the Trust's investment portfolio.
2.2.6 Communications. All charges for equipment or services used for
communications between the Adviser or the Trust and any custodian, shareholder
servicing agent, portfolio accounting services agent, or other agent engaged by
the Trust.
2.2.7 Legal and Accounting Fees. All charges for services and expenses of
the Trust's legal counsel and independent auditors.
2.2.8 Trustees' Fees and Expenses. All compensation of Trustees other than
those affiliated with the Adviser, all expenses incurred in connection with such
unaffiliated Trustees' services as Trustees, and all other expenses of meetings
of the Trustees and committees of the Trustees.
2.2.9 Shareholder Meetings. All expenses incidental to holding meetings of
shareholders, including the printing of notices and proxy materials, and proxy
solicitation therefor.
2.2.10 Federal Registration Fees. All fees and expenses of registering and
maintaining the registration of the Trust under the Act and the registration of
the Trust's shares under the Securities Act of 1933 (the "1933 Act"), including
all fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
Statement of Additional Information under the 1933 Act or the Act, and any
amendments or supplements that may be made from time to time.
2.2.11 State Registration Fees. All fees and expenses of qualifying and
maintaining the qualification of the Trust and of the Trust's shares for sale
under securities laws of various states or jurisdictions, and of registration
and qualification of the Trust under all other laws applicable to the Trust or
its business activities (including registering the Trust as a broker-dealer, or
any officer of the Trust or any person as agent or salesman of the Trust in any
state).
2.2.12 Share Certificates. All expenses of preparing and transmitting
the Trust's share certificates.
5
2.2.13 Confirmations. All expenses incurred in connection with the issue
and transfer of Trust shares, including the expenses of confirming all share
transactions.
2.2.14 Bonding and Insurance. All expenses of bond, liability, and other
insurance coverage required by law or regulation or deemed advisable by the
Trustees of the Trust, including, without limitation, such bond, liability and
other insurance expenses that may from time to time be allocated to the Trust in
a manner approved by its Trustees.
2.2.15 Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale or lending of the Trust's portfolio securities.
2.2.16 Taxes. All taxes or governmental fees payable by or with respect to
the Trust to federal, state or other governmental agencies, domestic or foreign,
including stamp or other transfer taxes.
2.2.17 Trade Association Fees. All fees, dues and other expenses incurred
in connection with the Trust's membership in any trade association or other
investment organization.
2.2.18 Nonrecurring and Extraordinary Expenses. Such nonrecurring and
extraordinary expenses as may arise, including the costs of actions, suits, or
proceedings to which the Trust is a party and the expenses the Trust may incur
as a result of its legal obligation to provide indemnification to its officers,
Trustees and agents.
3. Advisory Fee.
3.1 Fee. As compensation for all services rendered, facilities provided
and expenses paid or assumed by the Adviser under this Agreement, the Trust
shall pay the Adviser on the last day of each month, or as promptly as possible
thereafter, a fee calculated at the annual rate of the average daily net assets
of each series of the Trust as set forth below:
3.1.1 Cash Management Portfolio. 0.50% of the first $70 million of
average net assets and 0.45% of average net assets over and above $70 million.
3.1.2 Common Stock Portfolio. 0.70% of average net assets.
3.1.3 High Income Bond Portfolio. 0.70% of the first $40 million of
average net assets, 0.65% of average net assets over and above $40 million but
not exceeding $60 million, 0.55% of average net assets over and above $60
million but not exceeding $75 million, and 0.50% of average net assets over and
above $75 million.
3.1.4 World Equity Portfolio. 0.70% of the first $200 million of average
net assets, 0.625% of average net assets over and above $200 million but not
exceeding $500 million, and 0.50% of average net assets over and above $500
million.
3.1.5 Multiple Strategies Portfolio. 0.70% of average net assets.
3.1.6 Tilt Utility Portfolio. 0.65% of the first $100 million of average
net assets and 0.55% of average net assets over and above $100 million.
3.1.7 U.S. Government Bond Portfolio. 0.60% of the first $200 million of
average net assets and 0.50% of average net assets over and above $200 million.
4. Records.
6
4.1 Tax Treatment. The Adviser shall maintain the books and records of the
Trust in such a manner that treats each series as a separate entity for federal
income tax purposes.
4.2 Ownership. All records required to be maintained and preserved by the
Trust pursuant to the provisions or rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the Act and maintained and preserved
by the Adviser on behalf of the Trust are the property of the Trust and shall be
surrendered by the Adviser promptly on request by the Trust; provided, that the
Adviser may at its own expense make and retain copies of any such records.
5. Reports to Adviser.
The Trust shall furnish or otherwise make available to the Adviser such
copies of the Trust's Prospectus, Statement of Additional Information, financial
statements, proxy statements, reports, and other information relating to its
business and affairs as the Adviser may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.
6. Reports to the Trust.
The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals as the
Trust may reasonably request.
7. Retention of Sub-Adviser(s).
Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain a sub-adviser(s),
at the Adviser's own cost and expense, for the purpose of making investment
recommendations and research information available to the Adviser. Retention of
a sub-adviser(s) shall in no way reduce the responsibilities or obligations of
the Adviser under this Agreement and the Adviser shall be responsible to the
Trust for all acts or omissions of the sub-adviser(s) in connection with the
performance of the Adviser's duties hereunder.
8. Services to Other Clients.
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.
9. Limitation of Liability of Adviser and its Personnel.
Neither the Adviser nor any director, officer or employee of the Adviser
performing services for the Trust at the direction or request of the Adviser in
connection with the Adviser's discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with any matter to which this Agreement relates, and the
Adviser shall not be responsible for any action of the Trustees of the Trust in
following or declining to follow any advice or recommendation of the Adviser;
provided, that nothing herein contained shall be construed (i) to protect the
Adviser against any liability to the Trust or its shareholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of the Adviser's duties, or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement, or (ii) to protect any director, officer or employee of the Adviser
who is or was a Trustee or officer of the Trust against any liability of the
Trust or its shareholders to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.
10. No Personal Liability of Trustees or Shareholders.
7
This Agreement is made by the Trust pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or shareholders of the Trust individually, but bind only the property
of the Trust.
11. Effect of Agreement.
Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or its By-Laws or any applicable
law, regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of the Trust of their responsibility for and
control of the conduct of the business and affairs of the Trust.
12. Term of Agreement.
The term of this Agreement shall begin on the date first above written,
and unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect through September 21, 1996. Thereafter, this Agreement shall
continue in effect with respect to the Trust from year to year, subject to the
termination provisions and all other terms and conditions hereof; provided, such
continuance with respect to the Trust is approved at least annually by vote of
the holders of a majority of the outstanding voting securities of the Trust or
by the Trustees of the Trust; provided, that in either event such continuance is
also approved annually by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Trustees of the Trust
who are not parties to this Agreement or interested persons of either party
hereto; and provided further that the Adviser shall not have notified the Trust
in writing at least sixty (60) days prior to September 21, 1996, or at least
sixty (60) days prior to September 21 of any year thereafter that it does not
desire such continuation. The Adviser shall furnish to the Trust, promptly upon
its request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal or amendment thereof.
13. Amendment or Assignment of Agreement.
Any amendment to this Agreement shall be in writing signed by the parties
hereto; provided, that no such amendment shall be effective unless authorized on
behalf of the Trust (i) by resolution of the Trust's Trustees, including the
vote or written consent of a majority of the Trust's Trustees who are not
parties to this Agreement or interested persons of either party hereto, and (ii)
by vote of a majority of the outstanding voting securities of the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment.
14. Termination of Agreement.
This Agreement may be terminated at any time by either party hereto,
without the payment of any penalty, upon sixty (60) days' prior written notice
to the other party; provided, that in the case of termination by the Trust, such
action shall have been authorized (i) by resolution of the Trust's Board of
Trustees, including the vote or written consent of Trustees of the Trust who are
not parties to this Agreement or interested persons of either party hereto, or
(ii) by vote of a majority of the outstanding voting securities of the Trust.
15. Interpretation and Definition of Terms.
Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts, or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the
8
effect of a requirement of the Act reflected in any provision of this Agreement
is modified, interpreted or relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
16. Captions.
The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
17. Execution in Counterparts.
This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
VARIABLE INVESTORS SERIES TRUST for its
Cash Management Portfolio, Common Stock
Portfolio, High Income Bond Portfolio,
World Equity Portfolio, Multiple
Strategies Portfolio, Tilt Utility
Portfolio and U.S. Government Bond
Portfolio
Attest:
/s/XXXXXXX X. X'XXXX III By: /s/XXXX X. XXXXXXXX
----------------------------- ----------------------------------
Xxxx X. Xxxxxxxx
Treasurer
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
/s/XXXXXXX X. X'XXXX III By: /s/XXXX X. XXXXXXXX
----------------------------- ----------------------------------
Xxxx X. Xxxxxxxx
Treasurer
9
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
BETWEEN VARIABLE INVESTORS SERIES TRUST
AND
FIRST VARIABLE ADVISORY SERVICES CORP.
The Investment Advisory Agreement ("Agreement") between Variable Investors
Series Trust (the "Trust") and First Variable Advisory Services Corp. (the
"Adviser") dated September 22, 1994, is hereby amended to add two Additional
Series to the Trust in accordance with Section 1.3 of the Agreement. The two
Additional Series being added pursuant to this Addendum are the Growth & Income
Portfolio and the Small Cap Portfolio. The fees to be paid to the Adviser, with
respect to each Additional Series, are as follows:
GROWTH & INCOME PORTFOLIO. 0.75% of average net assets.
SMALL CAP PORTFOLIO. 0.85% of average net assets.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
signed by their respective officers thereunto duly authorized and their
respective seals to be hereunto affixed, as of this 1st day of May, 1995.
VARIABLE INVESTORS SERIES TRUST
for its Growth & Income Portfolio and
Small Cap Portfolio
Attest:
_________________________ By:_____________________________________
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
_________________________ By:_____________________________________
