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EXHIBIT 99.B5(a)(i)
ADVISORY CONTRACT
VARIABLE INSURANCE PRODUCT TRUST
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
March 31, 1994
Xxxxx Fargo Bank, N.A.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the Funds listed in Appendix A (each a "Fund") and Xxxxx Fargo Bank,
N.A. (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of four investment portfolios, but which may from time to
time consist of a greater or lesser number of investment portfolios (the
"Funds"). The Trust proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objective and restrictions specified in the Trust's currently
effective prospectus and the currently effective statement of additional
information incorporated by reference therein relating to the Fund and the
Trust (such prospectus and such statement of additional information being
collectively referred to as the "Prospectus") included in the Trust's
Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Trust under the Investment Company Act of 1940 (the
"Act") and the Securities Act of 1933. Copies of the documents referred to in
the preceding sentence have been furnished to the Adviser. Any amendments to
those documents shall be furnished to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Trustees of the Trust. Pursuant to an administration agreement
between the Trust and Xxxxxxxx Inc. (the "Administrator") on behalf of the
Fund, the Trust has engaged the Administrator to provide the administrative
services specified therein.
3. (a) The Adviser shall make investments for the account of the Fund in
accordance with the Adviser's best judgment and consistent with the investment
objective and restrictions set forth in the Trust's Prospectus, the Act and the
provisions of the Internal Revenue Code relating to regulated investment
companies and variable annuity contracts, subject to policy decisions adopted
by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Fund and shall, when requested by the
Trust's officers or Board of Trustees, supply the reasons for making particular
investments.
(b) The Adviser shall provide to the Trust investment guidance and policy
direction in connection with its daily management of the Fund's portfolio,
including oral and written research, analysis, advice, statistical and economic
data and information and judgments, and shall furnish to the Trust's Board
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of Trustees periodic reports on the investment strategy and performance of the
Fund and such additional reports and information as the Trust's Board of
Trustees and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Fund prepared by it, or prepared at its request,
other than such costs relating to proxy statements, prospectuses, reports for
holders of beneficial interests ("Interests") of the Fund ("Holders") and other
materials distributed to existing or prospective Holders on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate with itself
such persons as the Adviser believes appropriate to assist it in performing its
obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services to
the Fund hereunder, has engaged Xxxxx Fargo Nikko Investment Advisors
("WFNIA"), to provide certain sub-advising services pursuant to a separate
Sub-Advisory Contract with WFNIA. The Adviser will not seek to amend the
Sub-Advisory Contract with WFNIA to materially alter the obligations of the
parties unless the Adviser gives the Trust at least 60 days' prior written
notice thereof.
5. Except as provided in each of the Trust's advisory contracts and
administration agreements, the Trust shall bear all costs of its operations,
including the compensation of its trustees who are not affiliated with the
Adviser, the Administrator or any of their affiliates; advisory and
administration fees; governmental fees; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Interests; expenses of
preparing and printing Interest certificates, prospectuses (except the expense
of printing and mailing prospectuses used for promotional purposes), Holders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of trustees, officers and employees; office supplies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of any custodian,
including those for keeping books and accounts and calculating the net asset
value per Interest of the Fund; expenses of Holders' meetings; expenses
relating to the issuance, registration and qualification of Interests of the
Fund; pricing services, if any; organizational expenses; and any extraordinary
expenses. Expenses attributable to one or more, but not all, of the Funds are
charged against the assets of the relevant Funds. General expenses of the
Funds are allocated among the Funds in a manner proportionate to the net assets
of each Fund, on a transactional basis or on such other basis as the Board of
Trustees deems equitable.
6. The Adviser shall give the Trust the benefit of the Adviser's best
judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Trust
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Trust or its Holders 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 under this
contract or by reason of reckless disregard of its obligations and duties
hereunder.
7. In consideration of the services to be rendered by the Adviser under
this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at an annual rate, listed in Appendix B, of the
average daily value (as determined on each day that such value is determined
for the Fund at the time set forth in the Prospectus for determining net asset
value per Interest) of the Fund's
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net assets during the preceding month. If the fee payable to the Adviser
pursuant to this paragraph 7 begins to accrue before the end of any month or if
this contract terminates before the end of any month, the fee for the period
from the effective date to the end of that month or from the beginning of that
month to the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Fund's net assets shall be computed in the manner specified in the
Prospectus and the Trust's Declaration of Trust for the computation of the
value of the Fund's net assets in connection with the determination of the net
asset value of Fund Interests.
8. If in any fiscal year the total expenses of the Fund incurred by, or
allocated to, the Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized
in accordance with generally accepted accounting principles and extraordinary
expenses of the Fund, but including the fees provided for in paragraph 7 and
those provided for pursuant to the Fund's Administration Agreement ("includible
expenses"), exceed the most restrictive expense limitation applicable to the
Fund imposed by state securities laws or regulations thereunder, as these
limitations may be raised or lowered from time to time, the Adviser shall waive
or reimburse that portion of the excess derived by multiplying the excess by a
fraction, the numerator of which shall be the percentage at which the excess
portion attributable to the fee payable pursuant to this agreement is
calculated under paragraph 7 hereof, and the denominator of which shall be the
sum of such percentage plus the percentage at which the excess portion
attributable to the fee payable pursuant to the Fund's Administration Agreement
is calculated (the "Applicable Ratio"), but only to the extent of the fee
hereunder for the fiscal year. If the fees payable under this agreement and/or
the Fund's Administration Agreement contributing to such excess portion are
calculated at more than one percentage rate, the Applicable Ratio shall be
calculated separately on the basis of, and applied separately to, the portions
of the fees calculated at the different rates. At the end of each month of the
Trust's fiscal year, the Trust shall review the includible expenses accrued
during that fiscal year to the end of the period and shall estimate the
contemplated includible expenses for the balance of that fiscal year. If as a
result of that review and estimation it appears likely that the includible
expenses will exceed the limitations referred to in this paragraph 8 for a
fiscal year with respect to the Fund, the monthly fee set forth in paragraph 7
payable to the Adviser for such month shall be reduced, subject to a later
adjustment, by an amount equal to the Applicable Ratio times the pro rata
portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includible expenses
for the fiscal year are expected to exceed the limitations provided for in this
paragraph 8. For purposes of computing the excess, if any, over the most
restrictive applicable expense limitation, the value of the Fund's net assets
shall be computed in the manner specified in the last sentence of paragraph 7,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Trust's fiscal year.
9. This contract shall become effective on its execution date and shall
thereafter continue in effect, provided that this contract shall continue in
effect for a period of more than two years from the date hereof only so long as
the continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the Act) or
by the Trust's Board of Trustees and (b) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this contract or "interested persons" (as defined in the Act) of
any such party. This contract may be terminated at any time by the Trust,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustees on 60 days' written notice to
the Adviser or by the Adviser, at any time after the second anniversary of the
effective date of this contract, on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
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10. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
11. This agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this agreement shall only be binding upon the assets and
property of the relevant Fund, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any trustee, officer or
shareholder of the Trust or Fund individually.
12. The Trust shall own and control all records generated on behalf of the
Trust as a result of services provided under this contract. In addition, the
Trust shall have the right to inspect, audit, and/or copy all records
pertaining to the performance of services under this contract.
13. This contract shall be governed by and construed in accordance with
the laws of the State of California.
If the foregoing correctly sets forth the agreement between the Trust and
the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
VARIABLE INSURANCE PRODUCT
TRUST
By: /s/Xxxxxxx X. Xxxxx, Xx.
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chief Operating Officer
ACCEPTED as of the date
set forth above:
XXXXX FARGO BANK, N.A.
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
By: /s/Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: Senior Vice President
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APPENDIX A
Asset Allocation Fund
U.S. Government Allocation Fund
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APPENDIX B
INVESTMENT ADVISORY FEE SCHEDULE
Fund Advisory Fee Rate
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(as annualized %
of average net assets
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Asset Allocation Fund 0.60%
U.S. Government Allocation Fund 0.60%
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