Item 77Q1: Exhibit
INVESTMENT ADVISORY CONTRACT
This Investment Advisory Contract is made as of this 4th day of May,
2001, between Wachovia Variable Insurance Funds, a Massachusetts business
trust (the "Trust"), and Wachovia Fund Advisers, a registered investment
adviser and a division of Wachovia Bank, N.A. (the "Adviser").
WHEREAS, the Trust is a Massachusetts business trust, consisting of one
or more series ("Portfolios"), which operates as an open-end management
investment company and will so register under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services;
WHEREAS, the Trust desires to retain the Adviser as investment adviser
to those of its Portfolios which are identified in an exhibit hereto, and the
Adviser is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Adviser; Services and Duties.
(a) The Trust hereby appoints the Adviser as investment adviser for
each of the Portfolios of the Trust which executes an exhibit to this
Contract, and the Adviser accepts the appointments. Subject to the direction
of the Trustees of the Trust, the Adviser shall provide investment research
and supervision of the investments of such Portfolios and conduct a
continuous program of investment evaluation and of appropriate investment,
sale or other disposition and reinvestment of the Portfolios' assets.
(b) The Adviser shall direct the investments of each such Portfolio
subject to and in accordance with the Portfolio's investment objective,
policies, limitations and other provisions contained in the Portfolio's
prospectus and statement of additional information, as amended from time to
time, the Trust's Declaration of Trust and By-Laws, and any other directions
and policies which the Trustees of the Trust may issue to the Adviser from
time to time.
2. Execution and Allocation of Brokerage.
(a) The Adviser, subject to the control and direction of the Trustees,
shall have authority and discretion to select brokers and dealers to execute
portfolio transaction for each Portfolio, and to select the markets on or in
which the transactions will be executed. In acting pursuant to this
paragraph 2, the Adviser will place orders through such brokers or dealers in
conformity with the policies with respect to portfolio transactions set forth
in the applicable Portfolio's prospectus and statement of additional
information. It is understood that neither the Trust nor the Adviser will
adopt a formula for allocation of each Portfolio's brokerage. It is
understood that the Adviser may, to the extent permitted by applicable laws
and regulations, aggregate securities to be sold or purchased for a Portfolio
and for other clients in order to obtain the most favorable price and
efficient execution. In that event, allocation of the securities purchased
or sold, as well as expenses incurred in the transaction, will be made by the
Adviser in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Trust and to its other clients. The
Adviser shall provide such reports as the Trustees may reasonably request
with respect to each Portfolio's total brokerage and portfolio transaction
activities and the manner in which that business was allocated.
(b) The Adviser agrees that in placing orders with brokers and dealers,
it will attempt to obtain the best net results in terms of price and
execution; provided that, on behalf of any Portfolio, the Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide research, analysis, advice and similar services, and the
Adviser may pay to those brokers and dealers, in return for research and
analysis, a higher commission or spread than may be charged by other brokers
and dealers, subject to the Adviser determining in good faith that such
commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of the Adviser to such Portfolio
and its other clients and that the total commissions or spreads paid by such
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. In no instance will portfolio securities be purchased
from or sold to the Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules, regulations and
orders thereunder.
(c) The Trust hereby authorizes the Adviser and any entity or person
associated with the Adviser which is a member of a national securities
exchange to effect any transaction on such exchange for the account of any
Portfolio, which transaction 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 by the Adviser or any person or
entity associated with the Adviser for such transactions in accordance with
Rule 11a2-2(T)(a)(2)(iv).
3. Records. The Adviser shall create and maintain all necessary books
and records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment advisory services performed by it and not
otherwise created and maintained by another party pursuant to contract with
the Trust. Where applicable, such records shall be maintained by the Adviser
for the periods and in the places required by Rule 31a-2 under the 1940 Act.
The books and records pertaining to the Trust which are in the possession of
the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at
all times during the Adviser's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided
promptly by the Adviser to the Trust or the Trust's authorized
representatives.
4. Activities and Affiliates of the Adviser.
(a) The services furnished by the Adviser hereunder to the Trust are
not to be deemed exclusive, the Adviser being free to render services to
others and engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement, interfere,
in a material manner, with the Adviser's ability to meet all of its
obligations with respect to rendering services to the Trust hereunder.
(b) The Trust acknowledges that the Adviser or one or more of its
affiliated persons may have investment responsibilities or render investment
advice to or perform other investment advisory services for other individuals
or entities and that the Adviser, its affiliated persons or any of its or
their directors, officers, agents or employees may buy, sell or trade in
securities for its or their respective accounts ("Affiliated Accounts").
Subject to the provisions of paragraph 2, the Trust agrees that the Adviser
or its affiliated persons may give advice or exercise investment
responsibility and take such other action with respect to Affiliated Accounts
which may differ from the advice given or the timing or nature of action with
respect to a Portfolio of the Trust, provided that the Adviser acts in good
faith. The Trust acknowledges that one or more of the Affiliated Accounts
may at any time hold, acquire, increase, decrease, dispose of or otherwise
deal with positions in investments in which a Portfolio may have an interest.
The Adviser shall have no obligation to recommend for a Portfolio a position
in any investment which an Affiliated Account may acquire, and the Trust
shall have no first refusal, co-investment or other rights in respect of any
such investment, either for its Portfolios or otherwise.
(c) Subject to and in accordance with the Trust's Declaration of Trust
and By-Laws, as currently in effect and as amended from time to time, the
1940 Act and the rules thereunder, and the Banking Act of 1933, it is
understood that Trustees, officers, agents and shareholders of the Trust are
or may be interested in the Adviser or its affiliated persons as directors,
officers, agents or shareholders of the Adviser or its affiliated persons;
that directors, officers, agents and shareholders of the Adviser or its
affiliated persons are or may be interested in the Trust as trustees,
officers, agents, shareholders or otherwise; that the Adviser or its
affiliated persons may be interested in the Trust as shareholders or
otherwise; and that the effect of any such interests shall be governed by
said Declaration of Trust, By-Laws and the 1940 Act and the rules thereunder.
5. Expenses. The Adviser shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide investment advisory services to the Trust. Each
Portfolio shall pay or cause to be paid all of its own expenses and its
allocable share of Trust expenses, including, without limitation, the
expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for administrative
services; fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the 1940 Act and any
amendments thereto; expenses of registering and qualifying the Trust, the
Portfolios, and shares ("Shares") of the Portfolios under federal and state
laws and regulations; expenses of preparing, printing, and distributing
prospectuses (and any amendments thereto) to existing shareholders; interest
expense, taxes, fees, and commissions of every kind; expenses of issue
(including cost of Share certificates), purchase, repurchase, and redemption
of Shares, including expenses attributable to a program of periodic issue;
charges and expenses of custodians, transfer agents, dividend disbursing
agents, shareholder servicing agents, and registrars; printing and mailing
costs, auditing, accounting, and legal expenses; reports to shareholders and
governmental officers and commissions; expenses of meetings of Trustees and
shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Trust and
the Portfolios. Each Portfolio will also pay its allocable share of such
extraordinary expenses as may arise including expenses incurred in connection
with litigation, proceedings, and claims and the legal obligations of the
Trust to indemnify its officers and Trustees and agents with respect thereto.
6. Compensation.
(a) The Trust shall pay to the Adviser, for all services rendered to
each Portfolio by the Adviser hereunder, the fees set forth in the exhibits
attached hereto. If applicable, for purposes of calculating such fees, the
value of each Portfolio's net assets shall be determined pursuant to the
applicable provisions of the Portfolio's prospectus and statement of
additional information, the Trust's Declaration of trust and By-laws and the
0000 Xxx.
(b) The Adviser agrees to reimburse the Trust or to waive all or part
of its advisory fee, with the same frequency with which the advisory fee is
paid to the Adviser, to the extent the annual operating expenses of any
Portfolio or class thereof exceeds the highest applicable expense limitation
established pursuant to the statutes or regulations of any jurisdiction in
which the Shares of the Portfolios are qualified or registered for offer and
sale.
(c) The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation from a Portfolio (and, if appropriate,
assume expenses of one or more of the Portfolios or classes thereof) to the
extent the expenses of any Portfolio or a class thereof exceed such lower
expense limitation as the Adviser may, by notice to the Portfolio,
voluntarily declare to be effective.
(d) To the extent the Adviser has reimbursed the Trust or waived all or
part of its advisory fee, the Trust agrees to reimburse the Adviser if so
requested by the Adviser, provided that such reimbursement does not cause the
annual operating expenses of any Portfolio or class thereof to exceed the
highest applicable expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the Shares of the Portfolios are
qualified or registered for offer and sale.
7. Effective Date; Term. This Contract shall begin for each Portfolio
as of the date of execution of the applicable exhibit and shall continue in
effect with respect to each Portfolio initially set forth on an exhibit (and
any subsequent Portfolios added pursuant to an exhibit during the initial
term of this contract) for two years from the date of this contract set forth
above, provided that this Contract has first been approved by a vote of a
majority of (a) those Trustees who are not parties to this Contract or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval and (b) the Portfolio's outstanding
voting securities. Thereafter, this Contract shall continue for successive
periods of one year, subject to the provisions for termination and all of the
other terms and conditions hereof, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of the
Trustees who are not parties to this Contract or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval and (b) by the Board of Trustees or with respect to any given
Series by vote of a majority of the outstanding voting securities. If a
Portfolio is added after the first approval by the Trustees as described
above, this Contract will be effective as to that Portfolio upon execution of
the applicable exhibit and will continue in effect until the next annual
approval of this Contract by the Trustees and thereafter for successive
periods of one year, subject to approval as described above.
8. Termination. Notwithstanding any provision in this Contract, it may
be terminated at any time with respect to any Portfolio, without the payment
of any penalty, by the Trustees of the Trust or by a vote of the majority of
the outstanding voting securities of that Portfolio on sixty (60) days'
written notice to the Adviser, or by the Adviser on sixty (60) days' written
notice to the Trust. Termination of this Contract with respect to any given
Portfolio shall in no way affect the continued validity of this Contract or
the performance thereunder with respect to any other Portfolio. This
Contract will terminate automatically in the event of its assignment.
9. Assignment. This Contract may not be assigned by the Adviser and
shall automatically terminate in the event of any assignment. The Adviser
shall notify the Trust in writing in advance of any proposed change of
control of the Adviser to enable the Trust to take the steps necessary to
enter into a new advisory contract.
10. Liabilities of the Adviser.
(a) Except as provided below, in the absence of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the obligations or
duties under this Contract on the part of the Adviser, the Adviser shall not
be liable to the Trust or to any of the Portfolios or to any shareholder for
any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding, or
sale of any security or the making of any investment for or on behalf of the
Trust.
(b) No provision of this Contract shall be construed to protect any
Trustee or officer of the Trust, or the Adviser, from liability in violation
of Sections 17(h), 17(i) or 36(b) of the 1940 Act.
11. Amendment. This Contract may be amended at any time by agreement
of the parties provided that the amendment shall be approved both by the vote
of a majority of the Trustees of the Trust, including a majority of the
Trustees who are not parties to this Contract or interested persons of any
such party to this Contract (other than as Trustees of the Trust) cast in
person at a meeting called for that purpose, and, where required by the 1940
Act, on behalf of a Portfolio by a majority of the outstanding voting
securities of such Portfolio.
12. Limitation of Liability. The Adviser is expressly put on notice of
the limitation of liability as set forth in the Trust's Declaration of Trust
and agrees that the obligations assumed by the Trust or any Portfolio
pursuant to this Agreement shall be limited in any case to the Trust and its
assets and that the Adviser shall not seek satisfaction of any such
obligations from the Shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
13. Definitions. As used in this Contract, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in
the 1940 Act and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the Securities and Exchange
Commission.
14. Governing law. This Contract shall be construed in accordance with
and governed by the laws of the State of North Carolina, provided, however,
that nothing herein shall be construed in a manner inconsistent with the 1940
Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
EXHIBIT A
to the
Investment Advisory Contract
For all services rendered by Adviser hereunder, each Fund shall pay to
Adviser, and Adviser agrees to accept as full compensation for all services
rendered hereunder, the annual investment advisory fee provided below. The
fee shall be accrued daily at the rate of 1/365th of the applicable annual
rate provided below, applied to the daily net assets of the Fund, and paid
monthly to Adviser.
The Wachovia Funds Annual Advisory Fee
Wachovia Balanced Fund II 0.70%
Wachovia Equity Fund II 0.70%
Wachovia Special Values Fund II 0.80%
Witness the due execution hereof this 4th day of May, 2001.
Wachovia Fund Advisers
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chief Investment Officer
The Wachovia Funds
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
Amendment to
Investment Advisory Contract
between
Wachovia Variable Insurance Funds
and
Wachovia Fund Advisers
This Amendment to the Investment Advisory Contract ("Agreement") dated
May 4, 2001, between Wachovia Variable Insurance Funds ("Fund") and Wachovia
Fund Advisers ("Service Provider") is made and entered into as of the 7th
day of June, 2001.
WHEREAS, the Fund has entered into the Agreement with the Service
Provider;
WHEREAS, the Securities and Exchange Commission has adopted Regulation
S-P at 17 CFR Part 248 to protect the privacy of individuals who obtain a
financial product or service for personal, family or household use;
WHEREAS, Regulation S-P permits financial institutions, such as the
Fund, to disclose "nonpublic personal information" ("NPI") of its
"customers" and "consumers" (as those terms are therein defined in
Regulation S-P) to affiliated and nonaffiliated third parties of the Fund,
without giving such customers and consumers the ability to opt out of such
disclosure, for the limited purposes of processing and servicing transactions
(17 CFR S 248.14) ("Section 248.14 NPI"); for specified law enforcement and
miscellaneous purposes (17 CFR S 248.15) ("Section 248.15 NPI") ; and to
service providers or in connection with joint marketing arrangements (17 CFR
S 248.13) ("Section 248.13 NPI");
WHEREAS, Regulation S-P provides that the right of a customer and
consumer to opt out of having his or her NPI disclosed pursuant to 17 CFR S
248.7 and 17 CFR S 248.10 does not apply when the NPI is disclosed to service
providers or in connection with joint marketing arrangements, provided the
Fund and third party enter into a contractual agreement that prohibits the
third party from disclosing or using the information other than to carry out
the purposes for which the Fund disclosed the information (17 CFR S 248.13);
NOW, THEREFORE, the parties intending to be legally bound agree as
follows:
0 The Fund and the Service Provider hereby acknowledge that the Fund may
disclose shareholder NPI to the Service Provider as agent of the Fund and
solely in furtherance of fulfilling the Service Provider's contractual
obligations under the Agreement in the ordinary course of business to support
the Fund and its shareholders.
1 The Service Provider hereby agrees to be bound to use and redisclose such
NPI only for the limited purpose of fulfilling its duties and obligations
under the Agreement, for law enforcement and miscellaneous purposes as
permitted in 17 CFR SS 248.15, or in connection with joint marketing
arrangements that the Funds may establish with the Service Provider in
accordance with the limited exception set forth in 17 CFR S 248.13.
2 The Service Provider further represents and warrants that, in accordance
with 17 CFR S 248.30, it has implemented, and will continue to carry out for
the term of the Agreement, policies and procedures reasonably designed to:
? insure the security and confidentiality of records and NPI of Fund
customers,
? protect against any anticipated threats or hazards to the security
or integrity of Fund customer records and NPI, and
? protect against unauthorized access to or use of such Fund customer
records or NPI that could result in substantial harm or
inconvenience to any Fund customer.
4. The Service Provider may redisclose Section 248.13 NPI only to: (a)
the Funds and affiliated persons of the Funds ("Fund Affiliates"); (b)
affiliated persons of the Service Provider ("Service Provider
Affiliates") (which in turn may disclose or use the information only
to the extent permitted under the original receipt); (c) a third party
not affiliated with the Service Provider of the Funds ("Nonaffiliated
Third Party") under the service and processing (S248.14) or
miscellaneous (S248.15) exceptions, but only in the ordinary course of
business to carry out the activity covered by the exception under which
the Service Provider received the information in the first instance;
and (d) a Nonaffiliated Third Party under the service provider and
joint marketing exception (S248.13), provided the Service Provider
enters into a written contract with the Nonaffiliated Third Party that
prohibits the Nonaffiliated Third Party from disclosing or using the
information other than to carry out the purposes for which the Funds
disclosed the information in the first instance.
5. The Service Provider may redisclose Section 248.14 NPI and Section
248.15 NPI to: (a) the Funds and Fund Affiliates; (b) Service Provider
Affiliates (which in turn may disclose the information to the same
extent permitted under the original receipt); and (c) a Nonaffiliated
Third Party to whom the Funds might lawfully have disclosed NPI
directly.
6. The Service Provider is obligated to maintain beyond the termination
date of the Agreement the confidentiality of any NPI it receives from
the Fund in connection with the Agreement or any joint marketing
arrangement, and hereby agrees that this Amendment shall survive such
termination.
WITNESS the due execution hereof this 7th day of June, 2001.
Wachovia Variable Insurance Funds
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
Wachovia Fund Advisers
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chief Investment Officer
