WILSHIRE VARIABLE INSURANCE TRUST
EXHIBIT 77Q1(e)
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement ("Agreement")
is made as of the 30th day of November, 2007 by and between
Wilshire Associates Incorporated, a California corporation
("Adviser"), and Xxxxxx Xxxxx International, LTD, a registered
investment adviser ("Sub-Adviser").
Whereas Adviser is the investment adviser of the Wilshire
Variable Insurance Trust Funds (the "Fund"), an open-end
diversified, management investment company registered under
the Investment Company Act of 1940, as amended ("1940
Act"), currently consisting of seven separate series or
portfolios (collectively, the "Fund Portfolios") including
the Wilshire Variable Insurance Trust Equity Fund, the
Wilshire Variable Insurance Trust Income Fund, the
Wilshire Variable Insurance Trust Balanced Fund, the
Wilshire Variable Insurance Trust Short-Term Investment
Fund, the Wilshire Variable Insurance Trust Socially
Responsible Fund, the Wilshire Variable Insurance Trust
International Equity Fund, and the Wilshire Variable
Insurance Trust Small-Cap Growth Fund, the Wilshire
Insurance Variable Trust 2010 Conservative Fund, the
Wilshire Insurance Variable Trust 2010 Moderate Fund, the
Wilshire Insurance Variable Trust 2010 Aggressive Fund, the
Wilshire Insurance Variable Trust 2015 Moderate Fund, the
Wilshire Insurance Variable Trust 2025 Moderate Fund, the
Wilshire Insurance Variable Trust 2035 Moderate Fund, and
the Wilshire Insurance Variable Trust 2045 Moderate Fund;
Whereas Adviser desires to retain Sub-Adviser to furnish
investment advisory services for the Fund Portfolio(s) as
described in Exhibit 1 - Fund Portfolio Listing, as may be
amended from time to time, and Sub-Adviser wishes to
provide such services, upon the terms and conditions set
forth herein;
Now Therefore, in consideration of the mutual covenants
herein contained, the parties agree as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to
provide certain sub-investment advisory services to each Fund
Portfolio for the period and on the terms set forth in this
Agreement. Sub-Adviser hereby accepts such appointment and
agrees to furnish the services set forth for the compensation
herein provided.
2. Sub-Adviser Services. Subject always to the supervision of
the Fund's Board of Directors and Adviser, Sub-Adviser will
furnish an investment program in respect of, and make investment
decisions for, such portion of the assets of each Fund Portfolio
as Adviser shall from time to time designate (each a "Portfolio
Segment") and place all orders for the purchase and sale of
securities on behalf of each Portfolio Segment. In the
performance of its duties, Sub-Adviser will satisfy its
fiduciary duties to the Fund and each Fund Portfolio and will
monitor a Portfolio Segment's investments, and will comply with
the provisions of the Fund's Articles of Incorporation and By-
laws, as amended from time to time, and the stated investment
objectives, policies and restrictions of each Fund Portfolio as
set forth in the prospectus and Statement of Additional
Information for each Fund Portfolio, as amended from time to
time, as well as any other objectives, policies or limitations
as may be provided by Adviser to Sub-Adviser in writing from
time to time.
Sub-Adviser will provide reports at least quarterly to
the Board of Directors and to Adviser. Sub-Adviser will make its
officers and employees available to Adviser and the Board of
Directors from time to time at reasonable times to review
investment policies of each Fund Portfolio with respect to each
Portfolio Segment and to consult with Adviser regarding the
investment affairs of each Portfolio Segment.
Sub-Adviser agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(b) will conform with all applicable provisions of the
1940 Act and rules and regulations of the Securities and
Exchange Commission in all material respects and in
addition will conduct its activities under this Agreement
in accordance with any applicable laws and regulations of
any governmental authority pertaining to its investment
advisory activities, including all portfolio
diversification requirements necessary for each Portfolio
Segment to comply with subchapter M of the Internal Revenue
Code as if each were a regulated investment company
thereunder;
(c) to the extent authorized by Adviser in writing, and to
the extent permitted by law, will execute purchases and
sales of portfolio securities and other investments for
each Portfolio Segment through brokers or dealers
designated by management of the Fund to Adviser for the
purpose of providing direct benefits to the Fund, provided
that Sub-Adviser determines that such brokers or dealers
will provide best execution in view of all appropriate
factors, and is hereby authorized as the agent of the Fund
to give instructions to the Fund's custodian as to
deliveries of securities or other investments and payments
of cash of each Portfolio Segment to such brokers or
dealers for the account of the relevant Fund Portfolio.
Adviser and the Fund understand that the brokerage
commissions or transaction costs in such transactions may
be higher than those which the Sub-Adviser could obtain
from another broker or dealer, in order to obtain such
benefits for the Fund;
(d) is authorized to and will select all other brokers or
dealers that will execute the purchases and sales of
portfolio securities for each Portfolio Segment and is
hereby authorized as the agent of the Fund to give
instructions to the Fund's custodian as to deliveries of
securities or other investments and payments of cash of
each Portfolio Segment for the account of each Fund
Portfolio. In making such selection, Sub-Adviser is
directed to use its best efforts to obtain best execution,
which includes most favorable net results and execution of
a Portfolio Segment's orders, taking into account all
appropriate factors, including price, dealer spread or
commission, size and difficulty of the transaction and
research or other services provided. With respect to
transactions under sub-paragraph (c) or this sub-paragraph
(d), it is understood that Sub-Adviser will not be deemed
to have acted unlawfully, or to have breached a fiduciary
duty to the Fund or in respect of any Fund Portfolio, or be
in breach of any obligation owing to the Fund or in respect
of any Fund Portfolio under this Agreement, or otherwise,
solely by reason of its having caused a Fund Portfolio to
pay a member of a securities exchange, a broker or a dealer
a commission for effecting a securities transaction of a
Fund Portfolio in excess of the amount of commission
another member of an exchange, broker or dealer would have
charged if Sub-Adviser determined in good faith that the
commission paid was reasonable in relation to the brokerage
and research services provided by such member, broker, or
dealer, viewed in terms of that particular transaction or
Sub-Adviser's overall responsibilities with respect to its
accounts, including the Fund, as to which it exercises
investment discretion. The Adviser may, from time to time,
engage other sub-advisers to advise portions of a Fund
Portfolio other than the Portfolio Segment. The Sub-
Adviser agrees that it will not consult with any other sub-
adviser engaged by the Adviser with respect to transactions
in securities or other assets concerning a Fund Portfolio,
except to the extent permitted by certain exemptive rules
under the 1940 Act that permit certain transactions with a
sub-adviser or its affiliates.
(e) is authorized to consider for investment by each
Portfolio Segment securities that may also be appropriate
for other funds and/or clients served by Sub-Adviser. To
assure fair treatment of each Portfolio Segment and all
other clients of Sub-Adviser in situations in which two or
more clients' accounts participate simultaneously in a buy
or sell program involving the same security, such
transactions will be allocated among each Portfolio Segment
and other clients in a manner deemed equitable by Sub-
Adviser. Sub-Adviser is authorized to aggregate purchase
and sale orders for securities held (or to be held) in each
Portfolio Segment with similar orders being made on the
same day for other client accounts or portfolios managed by
Sub-Adviser. When an order is so aggregated, the actual
prices applicable to the aggregated transaction will be
averaged and each Portfolio Segment and each other account
or portfolio participating in the aggregated transaction
will be treated as having purchased or sold its portion of
the securities at such average price, and all transaction
costs incurred in effecting the aggregated transaction will
be shared on a pro-rata basis among the accounts or
portfolios (including each Portfolio Segment) participating
in the transaction. Adviser and the Fund understand that
Sub-Adviser may not be able to aggregate transactions
through brokers or dealers designated by Adviser with
transactions through brokers or dealers selected by Sub-
Adviser, in which event the prices paid or received by each
Portfolio Segment will not be so averaged and may be higher
or lower than those paid or received by other accounts or
portfolios of Sub-Adviser;
(f) will report regularly to Adviser and to the Board of
Directors and will make appropriate persons available for
the purpose of reviewing with representatives of Adviser
and the Board of Directors on a regular basis at reasonable
times the management of each Portfolio Segment, including
without limitation, review of the general investment
strategies of each Portfolio Segment, the performance of
each Portfolio Segment in relation to standard industry
indices, interest rate considerations and general
conditions affecting the marketplace, and will provide
various other reports from time to time as reasonably
requested by Adviser;
(g) will prepare such books and records with respect to
each Portfolio Segment's securities transactions as
requested by Adviser and will furnish Adviser and the
Fund's Board of Directors such periodic and special reports
as the Board or Adviser may reasonably request;
(h) will vote all proxies with respect to securities in
each Portfolio Segment; and
(i) will act upon reasonable instructions from Adviser
which, in the reasonable determination of Sub-Adviser, are
not inconsistent with Sub-Adviser's fiduciary duties under
this Agreement.
3. Expenses. During the term of this Agreement, Sub-Adviser
will provide the office space, furnishings, equipment and
personnel required to perform its activities under this
Agreement, and will pay all customary management expenses
incurred by it in connection with its activities under this
Agreement, which shall not include the cost of securities
(including brokerage commissions, if any) purchased for each
Portfolio Segment. Sub-Adviser agrees to bear any Portfolio
expenses caused by future changes in control of the Sub-Adviser
or by future changes in portfolio managers at Sub-Adviser
responsible for providing services to the Fund, such expenses
including but not limited to preparing, printing, and mailing to
Portfolio shareholders of information statements or stickers to
or complete prospectuses or statements of additional
information.
4. Compensation. For the services provided and the expenses
assumed under this Agreement, Adviser will pay Sub-Adviser, and
Sub-Adviser agrees to accept as full compensation therefor, a
sub-advisory fee computed and paid as set forth in Exhibit 2 -
Fee Schedule.
5. Other Services. Sub-Adviser will for all purposes herein
be deemed to be an independent contractor and will, unless
otherwise expressly provided or authorized, have no authority to
act for or represent Adviser, the Fund or a Fund Portfolio or
otherwise be deemed an agent of Adviser, the Fund or a Fund
Portfolio. Adviser understands and has advised the Fund's Board
of Directors that Sub-Adviser may act as an investment adviser
or sub-investment adviser to other investment companies and
other advisory clients. Sub-Adviser understands that during the
term of this Agreement Adviser may retain one or more other sub-
advisers with respect to any portion of the assets of a Fund
Portfolio other than each Portfolio Segment.
6. Affiliated Broker. Sub-Adviser or an affiliated person of
Sub-Adviser may act as broker for each Fund Portfolio in
connection with the purchase or sale of securities or other
investments for each Portfolio Segment, subject to: (a) the
requirement that Sub-Adviser seek to obtain best execution as
set forth above; (b) the provisions of the Investment Advisers
Act of 1940, as amended (the "Advisers Act"); (c) the provisions
of the Securities Exchange Act of 1934, as amended; and
(d) other applicable provisions of law. Subject to the
requirements of applicable law and any procedures adopted by the
Fund's Board of Directors, Sub-Adviser or its affiliated persons
may receive brokerage commissions, fees or other remuneration
from the Fund Portfolio or the Fund for such services in
addition to Sub-Adviser's fees for services under this
Agreement.
7. Representations of Sub-Adviser. Sub-Adviser is registered
with the Securities and Exchange Commission under the Advisers
Act. Sub-Adviser shall remain so registered throughout the term
of this Agreement and shall notify Adviser immediately if Sub-
Adviser ceases to be so registered as an investment adviser.
Sub-Adviser: (a) is duly organized and validly existing under
the laws of the state of its organization with the power to own
and possess its assets and carry on its business as it is now
being conducted, (b) has the authority to enter into and perform
the services contemplated by this Agreement, (c) is not
prohibited by the 1940 Act or the Advisers Act from performing
the services contemplated by this Agreement, (d) has met, and
will continue to seek to meet for the duration of this
Agreement, any other applicable federal or state requirements,
and the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform
its services under this Agreement, (e) will promptly notify
Adviser of the occurrence of any event that would disqualify it
from serving as an investment adviser to an investment company
pursuant to Section 9(a) of the 1940 Act, and (f) will notify
Adviser of any change in control of the Sub-Adviser within a
reasonable time after such change.
8. Books and Records. Sub-Adviser will maintain, in the form
and for the period required by Rule 31a-2 under the 1940 Act,
all records relating to each Portfolio Segment's investments
that are required to be maintained by the Fund pursuant to the
requirements of paragraphs (b)(5), (b)(6), (b)(7), (b)(9),
(b)(10) and (f) of Rule 31a-1 under the 1940 Act. Sub-Adviser
agrees that all books and records which it maintains for each
Fund Portfolio or the Fund are the property of the Fund and
further agrees to surrender promptly to the Adviser or the Fund
any such books, records or information upon the Adviser's or the
Fund's request (provided, however, that Sub-Adviser may retain
copies of such records). All such books and records shall be
made available, within five business days of a written request,
to the Fund's accountants or auditors during regular business
hours at Sub-Adviser's offices. Adviser and the Fund or either
of their authorized representatives shall have the right to copy
any records in the possession of Sub-Adviser which pertain to
each Fund Portfolio or the Fund. Such books, records,
information or reports shall be made available to properly
authorized government representatives consistent with state and
federal law and/or regulations. In the event of the termination
of this Agreement, all such books, records or other information
shall be returned to Adviser or the Fund (provided, however,
that Sub-Adviser may retain copies of such records as required
by law).
Sub-Adviser agrees that it will not disclose or use any records
or confidential information obtained pursuant to this Agreement
in any manner whatsoever except as authorized in this Agreement
or in writing by Adviser or the Fund, or if such disclosure is
required by federal or state regulatory authorities. Sub-
Adviser may disclose the investment performance of each
Portfolio Segment, provided that such disclosure does not reveal
the identity of Adviser, each Fund Portfolio or the Fund or the
composition of each Portfolio Segment. Sub-Adviser may,
however, disclose that Adviser, the Fund and each Fund Portfolio
are its clients. Notwithstanding the foregoing, Sub-Adviser may
disclose (i) the investment performance of each Portfolio
Segment to Fund officers and directors and other service
providers of the Fund, and (ii) any investment performance that
is public information to any person.
9. Code of Ethics. Sub-Adviser has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the
1940 Act and will provide Adviser and the Fund with a copy of
such code. Within 35 days of the end of each calendar quarter
during which this Agreement remains in effect, the chief
compliance officer of Sub-Adviser shall certify to Adviser or
the Fund that Sub-Adviser has complied with the requirements of
Rule 17j-1 during the previous quarter and that there have been
no violations of Sub-Adviser's code of ethics or, if any
violation has occurred that is material to the Fund, the nature
of such violation and of the action taken in response to such
violation.
10. Limitation of Liability. Neither Sub-Adviser nor any of
its partners, officers, stockholders, agents or employees shall
have any liability to Adviser, the Fund or any shareholder of
the Fund for any error of judgment, mistake of law, or loss
arising out of any investment, or for any other act or omission
in the performance by Sub-Adviser of its duties hereunder,
except for liability resulting from willful misfeasance, bad
faith, or negligence on Sub-Adviser's part in the performance of
its duties or from reckless disregard by it of its obligations
and duties under this Agreement, except to the extent otherwise
provided in Section 36(b) of the 1940 Act concerning loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services.
Sub-Adviser agrees to indemnify and defend Adviser, its
officers, directors, employees and any person who controls
Adviser for any loss or expense (including reasonable attorneys'
fees) arising out of or in connection with any claim, demand,
action, suit or proceeding relating to any actual or alleged
material misstatement or omission in the Fund's registration
statement, any proxy statement, or any communication to current
or prospective investors in each Fund Portfolio, made by Sub-
Adviser and provided to Adviser or the Fund by Sub-Adviser.
11. Term and Termination. This Agreement shall become
effective with respect to each Portfolio Segment on November 30,
2007, and shall remain in full force until November 30, 2009,
unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter
with respect to each Fund Portfolio, but only as long as such
continuance is specifically approved for each Fund Portfolio at
least annually in the manner required by the 1940 Act and the
rules and regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for a Fund
Portfolio, Sub-Adviser may continue to serve in such capacity
for such Fund Portfolio in the manner and to the extent
permitted by the 1940 Act and the rules and regulations
thereunder.
This Agreement shall terminate as follows:
(a) This Agreement shall automatically terminate in the
event of its assignment (as defined in the 0000 Xxx) and
may be terminated with respect to any Fund Portfolio at any
time without the payment of any penalty by Adviser or by
Sub-Adviser on sixty days written notice to the other
party. This Agreement may also be terminated by the Fund
with respect to any Fund Portfolio by action of the Board
of Directors or by a vote of a majority of the outstanding
voting securities of such Fund Portfolio (as defined in the
0000 Xxx) on sixty days written notice to Sub-Adviser by
the Fund.
(b) This Agreement may be terminated with respect to any
Fund Portfolios at any time without payment of any penalty
by Adviser, the Board of Directors or a vote of majority of
the outstanding voting securities of such Fund Portfolio in
the event that Sub-Adviser or any officer or director of
Sub-Adviser has taken any action which results in a
material breach of the covenants of Sub-Adviser under this
Agreement.
(c) This Agreement shall automatically terminate with
respect to a Fund Portfolio in the event the Investment
Management Agreement between Adviser and the Fund with
respect to that Fund Portfolio is terminated, assigned or
not renewed.
Termination of this Agreement shall not affect the right of Sub-
Adviser to receive payments of any unpaid balance of the
compensation described in Section 4 earned prior to such
termination.
12. Notice. Any notice under this Agreement by a party shall
be in writing, addressed and delivered, mailed postage prepaid,
or sent by facsimile transmission with confirmation of receipt,
to the other party at such address as such other party may
designate for the receipt of such notice.
13. Limitations on Liability. The obligations of the Fund
entered into in the name or on behalf thereof by any of its
directors, representatives or agents are made not individually
but only in such capacities and are not binding upon any of the
directors, officers, or shareholders of the Fund individually
but are binding upon only the assets and property of the Fund,
and persons dealing with the Fund must look solely to the assets
of the Fund and those assets belonging to each Fund Portfolio
for the enforcement of any claims.
14. Adviser Responsibility. Adviser will provide Sub-Adviser
with copies of the Fund's Articles of Incorporation, By-laws,
prospectus, and Statement of Additional Information and any
amendment thereto, and any objectives, policies or limitations
not appearing therein as they may be relevant to Sub-Adviser's
performance under this Agreement; provided, however, that no
changes or modifications to the foregoing shall be binding on
Sub-Adviser until it is notified thereof.
15. Arbitration of Disputes. Any claim or controversy arising
out of or relating to this Agreement which is not settled by
agreement of the parties shall be settled by arbitration in
Santa Monica, California before a panel of three arbitrators in
accordance with the commercial arbitration rules of the American
Arbitration Association then in effect. The parties agree that
such arbitration shall be the exclusive remedy hereunder, and
each party expressly waives any right it may have to seek
redress in any other forum. Any arbitrator acting hereunder
shall be empowered to assess no remedy other than payment of
fees and out-of-pocket damages. Each party shall bear its own
expenses of arbitration, and the expenses of the arbitrators and
of a transcript of any arbitration proceeding shall be divided
equally between the parties. Any decision and award of the
arbitrators shall be binding upon the parties, and judgment
thereon may be entered in the Superior Court of the State of
California or any other court having jurisdiction. If
litigation is commenced to enforce any such award, the
prevailing party will be entitled to recover reasonable
attorneys' fees and costs.
16. Miscellaneous. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof and may be amended only by written consent of both
parties. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement is
held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to
the benefit of the parties and their respective successors.
17. Applicable Law. This Agreement shall be construed in
accordance with applicable federal law and the laws of the state
of California.
18. Adviser acknowledges receipt of Sub-Adviser's Form ADV,
Part II not later than the date of execution of this agreement.
If Adviser received Sub-Adviser's Form ADV, Part II less than 48
hours prior to executing this agreement, Adviser shall have the
option to immediately terminate this agreement, without penalty
within five business days after the date of execution of this
agreement; provided, however, that any investment action taken
by Sub-Adviser with respect to any Portfolio Segments prior to
the effective date of such termination shall be at the Adviser's
risk.
Adviser and Sub-Adviser have caused this Agreement to be
executed as of the date and year first above written.
WILSHIRE ASSOCIATES
INCORPORATED
By: /s/ Xxxxxxxx X. Xxxxxxx
Print Name: Xxxxxxxx X. Xxxxxxx
Title: President
XXXXXX XXXXX INTERNATIONAL,
LTD
By: /s/ Xxxxxxx X. Xxxxxxx
Print Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
EXHIBIT 1
FUND PORTFOLIO LISTING
Wilshire Variable Insurance Trust - International Equities Fund
EXHIBIT 2
FEE SCHEDULE
Adviser shall pay Sub-Adviser, promptly after receipt
by Adviser of its advisory fee from the Fund with respect to
each Fund Portfolio each calendar month during the term of this
Agreement, a fee based on the average daily net assets of each
Portfolio Segment, at the following annual rates:
XX% on all assets
Sub-Adviser's fee shall be accrued daily at 1/365th of
the annual rate set forth above. For the purpose of accruing
compensation, the net assets of each Portfolio Segment will be
determined in the manner and on the dates set forth in the
current prospectus of the Fund with respect to each Fund
Portfolio and, on days on which the net assets are not so
determined, the net asset value computation to be used will be
as determined on the immediately preceding day on which the net
assets were determined. Upon the termination of this Agreement,
all compensation due through the date of termination will be
calculated on a pro-rata basis through the date of termination
and paid within thirty business days of the date of termination.
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