EXHIBIT 99.(d)(x)
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INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement ("Agreement") is made as of the 30th day
of September, 2004 by and between Wilshire Associates Incorporated, a California
corporation ("Adviser") and New Star Institutional Managers Limited, a company
incorporated in England, whose registered office is at 0 Xxxxxxxxxxxxx Xxxxx,
Xxxxxx, XX0X 0XX, Xxxxxx Xxxxxxx. ("Sub-Adviser").
Whereas Adviser is the investment adviser of the Wilshire Variable
Insurance Trust (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
Equity Fund, the Income Fund, the Balanced Fund, the Short-Term
Investment Fund, the Socially Responsible Fund, the International
Equity Fund, and the Small-Cap Growth 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
Trustees 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 each Portfolio Segment's investments, and will comply with the
provisions of the Fund's Declaration of Trust and By-laws, as amended from time
to time, insofar as they impact on the provisions of services by Sub-Adviser
hereunder 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. Adviser will give Sub-Adviser prompt
written notice of any amendments, insofar as they impact on the provisions of
services by Sub-Adviser hereunder, to the Fund's Declaration of Trust and
By-laws
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.
The Sub-Adviser is an authorised person for the purposes of the Financial
Services and Markets Act 2000 (the "Act") and as such is regulated by the
Financial Services Authority of the United Kingdom in the conduct of its
regulated activities. The Adviser is an Intermediate Customer within the meaning
of the Act and the Sub-Adviser will provide its services hereunder on that
basis.
Sub-Adviser will provide reports at least quarterly to the Board of Trustees and
to Adviser. Sub-Adviser will make its officers and employees available to
Adviser and the Board of Trustees 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 and
Section 817(h) of the Internal Revenue Code as if it were a regulated
investment company thereunder;
(c) to the extent directed by Adviser in writing, will use its best
efforts to execute purchases and sales of portfolio securities 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-Advisor determines that such brokers or
dealers will provide best execution in view of such other benefits, 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
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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 each 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 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 each Fund Portfolio, or be in breach of any obligation owing
to the Fund or in respect of each 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;
(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 eligible 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 the
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 Trustees and
will make appropriate persons available for the purpose of reviewing
with representatives of Adviser and the Board of Trustees 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
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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 Trustees 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. Such instructions
will be in writing from Adviser and will be given by letter or by
facsimile, and in either case, signed by an authorized officer of the
Adviser (being any person authorized from time to time to instruct the
Sub-Advisor and whose specimen signature has been delivered to the
Sub-Advisor). In relation to the provision of any general information,
including but not limited to performance reporting and reconciliations,
electronic mail will be the preferred method of communication, although
other forms of communication may, save in the case of instructions and
notices, be utilized;
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.
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 therefore, 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 Trustees that
Sub-Adviser acts 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 the Portfolio Segment.
6. 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 its
jurisdiction with the power to own and possess its assets and carry on its
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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 the membership of the senior management and investment professional
staff of the Sub-Adviser within a reasonable time after such change. In
addition, Sub-Adviser represents that it has provided Adviser with copies of
each of the following documents: (i) Sub-Adviser's Form ADV as filed with the
Securities Exchange Commission; and (ii) separate lists of persons who
Sub-Adviser wishes to have authorized to give written and/or oral instructions
to Custodians of Fund assets for the Portfolio. Sub-Adviser will furnish Adviser
from time to time with copies, properly certified or otherwise authenticated, of
all material amendments of or supplements to the foregoing, if any. Such
amendments or supplements as to items (i) through (ii) will be provided within
30 days of the time such materials became available to Sub-Adviser.
7. 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 in connection with its management of the
portfolio segments 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 representative 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 electronic books, records or other information as
maintained pursuant to Rule 31a-1, as described above, of the 1940 Act shall be
returned to Adviser or the Fund by way of electronic data transfer (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.
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Both parties acknowledge that, pursuant to the Agreement, information may be
passed between the parties which the disclosing party regards as confidential,
including (but not limited to) information relating to the disclosing party's
operations, processes, methodologies, dealings, proprietary data structures,
plans or intentions (including the existence as well as the content of such
plans or intentions), product information, know-how, design rights, trade
secrets, software, market opportunities, customers, customer details, and
information furnished to the Funds' Board of Trustees, and business affairs
("Confidential Information"). Save as provided in the foregoing paragraph, both
parties agree that they shall not use or disclose any of the other party's
Confidential Information except to the extent that:
(a) such use or disclosure is expressly authorized in writing by the
other party; or
(b) such information is obtained by the recipient party from a bona
fide third party reasonably believed by that party to have free right
of disposal of such information; or
(c) such information is or becomes publicly known otherwise than as a
result of a breach of this paragraph of this letter; or
(d) there is a statutory, legal or regulatory requirement for such
disclosure and then only after first disclosing to the disclosing party
the content of the Confidential Information, so as to give the
disclosing party an opportunity to seek an appropriate protective
order; or
(e) such disclosure is to the disclosing party's professional, legal or
accountancy advisers; or
(f) there is a requirement for the disclosure in order that a party
performs its obligations under the Agreement; or
(g) such information is independently developed by the recipient party
without use of any Confidential Information received from the
disclosing party, as proven by the recipient party's written records.
8. Code of Ethics Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1(b) and (c) 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, a
director 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. In the event
that the Sub-Adviser is aware that a violation has occurred that is material to
the Fund, the Sub-Adviser shall inform the Adviser of such violation as soon as
reasonably practicable notwithstanding the 35 day period referred to above.
9. Limitation of Liability Neither Sub-Adviser nor any of its directors,
officers, stockholders, agents or employees shall have any liability to Adviser,
the Fund or any shareholder of the Fund
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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 gross 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. Sub-Adviser specifically acknowledges that the
Fund is a third party beneficiary of this Agreement and that the Fund is
entitled to bring a lawsuit against the Sub-Adviser for breach of this Agreement
or any other duty in any court of competent jurisdiction.
Sub-Adviser agrees to indemnify Adviser, its officers, directors, employees and
any person who controls Adviser for any direct loss or expense (including
reasonable attorneys' fees) arising out of or in connection with any claim,
demand, action, suit or proceeding incurred or suffered by Adviser as a result
of the negligence, wilful default or fraud of the Sub-Adviser.
10. Term and Termination Unless otherwise agreed in writing, this Agreement
shall become effective with respect to each Portfolio Segment on the date
hereof, and shall remain in full force until September 30, 2005, 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 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 each Fund Portfolio by action
of the Board of Trustees or by a vote of a majority of the outstanding
voting securities of each 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 each Fund
Portfolio at any time without payment of any penalty by Adviser, the
Board of Trustees 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 in the event the
Investment Management Agreement between Adviser and the Fund with
respect to a 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
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termination. Termination of this Agreement shall be without prejudice to the
completion of transactions already initiated. Such transactions will be
completed by the Sub-Advisor as soon as practicable.
11. Notice Any notice under this Agreement by a party shall be in writing,
addressed and personally 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. Notices
personally delivered shall be deemed to have been given when delivered or
dispatched. Notices given by pre-paid airmail or first class post as appropriate
shall be deemed to have been given seven days after posting. Evidence that the
notice was properly addressed, stamped and put in the post shall be conclusive
evidence of posting.
12. Limitations on Liability All parties are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments thereto, and the
limitation of shareholder and trustee liability contained therein. The
obligations of the Fund entered into in the name or on behalf thereof by any of
its Trustees, representatives or agents are made not individually but only in
such capacities and are not binding upon any of the Trustees, 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, with respect to a Fund
Portfolio, must look solely to the assets belonging to each Fund Portfolio for
the enforcement of any claims.
13. Adviser Responsibility Adviser will provide Sub-Adviser with copies of the
Fund's Declaration of Trust, 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. The Adviser represents that it is authorized to appoint the
Sub-Adviser and to execute and deliver this Agreement and that all shareholder
and Board action on the part of the Adviser required to be taken to make such
appointment and enter into this Agreement has been taken.
15. 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.
16. Applicable Law This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 12 above which will be
construed in accordance with Delaware law) the laws of the state of California.
Any proceedings to resolve disputes regarding or arising out of this Agreement
shall be conducted in the Superior Court of the State of California or any other
court having jurisdiction.
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17. Communications with Wilshire, at a minimum, should include:
Monthly accounting statements including:
Reconciliation between month-end valuations of cash and positions
provided by custodian and sub-advisor's own valuations of same,
itemizing and explaining any difference. Portfolio Holdings Portfolio
income and accruals
Transactions (buys/sells)
Contributions/withdrawal activity
Monthly performance statements including:
Total returns stated in gross of fee and net of fee terms
Quarterly written statements, including actions taken in the portfolio, the
current outlook, expected changes in the portfolio and performance results
Meetings with Wilshire as determined by Wilshire
Regular submission of Form ADV
Pertinent changes in the Sub-Advisor should be reported as they occur, by phone
and in writing. Pertinent changes include, but are not limited to, the
following:
Changes in ownership
Changes in key personnel
Major changes in areas of responsibility of key personnel
Adviser and Sub-Adviser have caused this Agreement to be executed as of the date
and year first above written.
WILSHIRE ASSOCIATES INCORPORATED NEW STAR INSTITUTIONAL MANAGERS LIMITED
By_____________________________ By_________________________________
Title__________________________ Title________________________________
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EXHIBIT 1
FUND PORTFOLIO LISTING
International Equity Fund
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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 rate:
[FEE SCHEDULE]
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.
