STEINROE VARIABLE INVESTMENT TRUST
MORTGAGE SECURITIES INCOME FUND
FUND ADVISORY AGREEMENT
FUND ADVISORY AGREEMENT dated May 1, 1993 between STEINROE
VARIABLE INVESTMENT TRUST, a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), on
behalf of Mortgage Securities Income Fund (the "Fund"), and XXXXX XXX
& XXXXXXX INCORPORATED, a corporation organized under the laws
of the State of Delaware (the "Investment Advisor").
WHEREAS, the Trust has been organized as an open-end
management investment company registered as such under the
Investment Company Act of 1940 ("Investment Company Act"), and
is authorized to issue shares of beneficial interest in one or
more separate series each representing interests in a separate
portfolio of securities and other assets, including the Fund,
which shares are to be issued and sold to and held by various
separate accounts of Keyport Life Insurance Company ("Keyport")
or separate accounts of other insurance companies that are
affiliated or are not affiliated with Keyport ("Participating
Insurance Company");
WHEREAS, the Trust desires the Investment Adviser to render
investment management services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
WHEREAS, the Trust is entering into a Fund Administration
Agreement (the "Administration Agreement") of even date herewith
with Liberty Investment Services, Inc. (the "Administrator")
providing for certain administrative services to the Trust other
than investment management services;
WHEREAS, the Investment Advisor is registered as an
investment adviser under the Investment Advisers Act of 1940 and
as a commodities trading advisor under the Commodity Exchange
Act, and desires to provide services to the Fund in
consideration of and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the Trust, on behalf of the Fund, and the
Investment Advisor agree as follows:
1. Employment of the Investment Adviser. The Trust hereby
engages the Investment Adviser to manage the investment and
reinvestment of the Trust's assets represented by Fund shares
("Fund assets" or "assets of the Fund") and to advise with
respect thereto for the period, in the manner, and on the terms
hereinafter set forth. The Investment Adviser hereby accepts
such engagement and agrees during such period to render the
services and to assume the obligations herein set forth. The
Investment Adviser shall for all purposes herein be deemed to be
an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust or the Fund in any
way or otherwise be deemed an agent of the Trust or the Fund.
2. Management Services. (a) The Investment Adviser will
manage and supervise the investment and reinvestment of the
assets of the Fund and advise with respect thereto, subject to
the direction and overall control of the Board of Trustees of
the Trust and giving due consideration to the investment
objective of the Fund and the investment policies and
investment restrictions of and the other statements concerning
the Fund set forth from time to time in the Trust's then current
prospectus and statement of additional information and other
governing documents, and to the provisions of the Internal
Revenue Code and regulations thereunder applicable to the Fund
as a regulated investment company and as the designated
investment vehicle for variable annuity, endowment, or life
insurance contracts. In furtherance of its duties set forth
above, the Investment Adviser is authorized on behalf of the
Fund (i) to buy, sell, exchange, convert, lend and otherwise
trade in the Fund's portfolio securities and assets, and (ii) to
place orders for the execution of transactions in the Fund's
portfolio securities with or through such brokers, dealers,
underwriters or issuers as the Investment Adviser may select,
and to negotiate the terms of such transactions, including
brokerage commissions on brokerage transactions, all in
accordance with the Trust's policies concerning allocation of
its portfolio brokerage, as permitted by law including but not
limited to Section 28(e) of the Securities Exchange Act of 1934,
and with the statements concerning the allocation of orders for
the purchase and sale of securities among the Fund and other
accounts of the Investment Adviser set forth from time to time
in the Trust's then current prospectus and statement of
additional information, and in doing so the Investment Adviser
shall not be required to make any reduction of its investment
advisory fee hereunder.
(b) The Investment Adviser shall provide to the Trust and
the Administrator such information, records and reports
concerning the Investment Adviser and its investment management
of the Fund's portfolio securities pursuant hereto as the Trust
and the Administrator may reasonably request.
(c) The Investment Adviser will preserve for the Trust all
records it maintains for the Trust as prescribed by the rules
and regulations of the Securities and Exchange Commission in the
manner and for the time periods prescribed by such rules. The
Investment Adviser agrees that all such records shall be the
property and under the control of the Trust and shall be made
available, within five business days of request therefor, to the
Trust's Board of Trustees or auditors during regular business
hours at the Investment Adviser's offices. In the event of
termination of this Agreement for any reason, all such records
shall be returned, without charge, promptly to the Trust, free
from any claim or retention of rights by the Investment Adviser,
except that the Investment Adviser may retain copies of such
records.
(d) The Investment Adviser will report to the Trustees of
the Trust any potential or existing material irreconcilable
conflict among the interests of the shareholders (the separate
accounts of insurance companies investing in the Trust) of which
it is aware. The Investment Adviser will assist the Trustees in
carrying out their responsibilities under an Order from the SEC,
dated July 1, 1988, granting insurance companies and variable
annuity and variable life insurance separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of
the Investment Company Act and Rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares
of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of insurance companies
affiliated and unaffiliated with each other. The Investment
Adviser shall provide the Trustees with all information
reasonably necessary for the Trustees to consider any issues
raised.
(e) The Investment Adviser will not disclose or use any
records or information obtained pursuant to this Agreement in
any manner whatsoever except as expressly authorized herein, and
will keep confidential any information obtained pursuant to this
Agreement, and disclose such information only if the Trust has
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
3. Expenses Borne by Investment Adviser. To the extent
necessary to perform its obligations under this Agreement, the
Investment Adviser, at its own expenses, shall furnish executive
and other personnel and office space, equipment and facilities,
and shall pay any other expenses incurred by it, in connection
with the performance of its duties hereunder. The Investment
Adviser shall pay all salaries, fees and expenses of Trustees or
officers of the Trust who are employees of the Investment
Adviser. The Investment shall not be obligated to bear
any other expenses incidental to the operations and business of
the Trust. The Investment Adviser shall not be required to pay
or provide any credit for services provided by the Trust's
custodian, transfer agent or other agents, including the
Administrator.
4. Expenses Borne by the Trust and Fund. The Trust or the
Fund, as appropriate, shall pay all expenses incidental to the
operations and business of the Trust and the Fund not
specifically assumed or agreed to be paid by the Investment
Adviser or the Administrator pursuant to this Agreement or the
Administration Agreement, or by Keyport or any Participating
Insurance Company, including, without limitation:
(a) the fees of the Investment Adviser as provided in
Section 5 below, and of the Administrator;
(b) fees payable pursuant to any plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act;
(c) all fees and charges of depositories, custodians, and
other agencies for the safekeeping and servicing of the cash,
securities, and other property of the Trust;
(d) all fees and charges of transfer, shareholder
servicing, shareholder record keeping and dividend disbursing
agents and all other expenses relating to the issuance and
redemption of shares of the Trust (including shares of the Fund)
and the maintenance and servicing of shareholder accounts;
(e) all charges for equipment or services used for
obtaining price quotations or for communication among the
Investment Adviser, any sub-adviser appointed by the Trust, the
Administrator, the Trust, Keyport or any Participating Insurance
Company, the custodian or any sub-custodian, transfer agent or
any other agent selected by the Trust or the Fund;
(f) all expenses incurred in periodic calculations of the
net asset value of the shares of the Trust (including the shares
of the Fund);
(g) all charges for bookkeeping, accounting and tax
information services provided to the Trust by the custodian or
any subcustodian;
(h) all charges for services of the Trust's independent
auditors;
(i) all charges and expenses of legal counsel for the Trust
and for the Trustees of the Trust in connection with legal
matters relating to the Trust or the Fund;
(j) all compensation of the Trustees of the Trust other
than those Trustees who are interested persons of the Trust
including, without limitation, Trustees who are interested
persons of the Investment Adviser, the Administrator, Keyport or
any Participating Insurance Company, or the principal
underwriter of the Trust, and all expenses (including expenses
incident to Trustees' meetings) incurred in connection with
their services to the Trust;
(k) all expenses of preparation, printing and mailing of
notices and proxy solicitation material and of reports and other
communications to the shareholders and beneficial owners of the
Trust, and all other expenses (including proxy solicitation
expenses) incidental to meetings of the shareholders or
beneficial owners of the Trust;
(l) all expenses of preparation (including type setting)
and printing of annual or more frequent revisions of the Trust's
prospectuses and statements of additional information and
supplements thereto, of supplying each then-existing shareholder
or beneficial owner of shares of the Fund or purchaser thereof
with a copy of such revised prospectus or SAI supplements, and
of supplying copies of such statements of additional information
to persons requesting the same;
(m) all expenses, if any, related to preparing, printing
and engraving and transmitting certificates representing shares
of the Trust;
(n) all expenses of bond and insurance coverage required by
law or deemed advisable by the Board of Trustees;
(o) all brokers' commissions and other normal charges
incident to the purchase and sale of portfolio securities;
(p) costs, including interest expense, of borrowing money;
(q) all taxes and corporate fees payable to federal, state
or other governmental agencies, domestic or foreign, and all
costs and expenses incident to the maintenance of the Trust's
legal existence;
(r) all expenses of registering and maintaining the
registration of the Trust under the Investment Company Act and
the shares of the Trust under the Securities Act of 1933, and
all expenses, if any, of qualifying and maintaining the
qualification of the shares of the Trust for sale under
securities laws of various states or other jurisdictions and of
registration and qualification of the Trust under all other laws
applicable to the Trust or its business activities;
(s) all fees, dues, and other expenses incurred by the
Trust in connection with its membership in any trade association
or other investment organization; and
(t) all miscellaneous business expenses.
The Trust or the Fund, as appropriate, shall also bear all
extraordinary non-recurring expenses as may arise, including but
not limited to expenses incurred in connection with litigation,
proceedings and claims and expenses incurred in connection with
any obligation of the Trust or the Fund to indemnify any person.
Expenses which are directly charged to or attributable to
the Fund or any other Fund of the Trust shall be borne by that
Fund, and expenses which are not solely attributable to any one
Fund of the Trust shall be allocated among the Funds of the
Trust on a basis that the Trustees of the Trust deem fair and
equitable.
5. Investment Advisory Fee. For the services to be
rendered by the Investment Adviser hereunder, the Trust, for the
benefit of the Fund, shall pay the Investment Adviser out of
Fund assets an annual fee in the amount shown in Schedule A
attached hereto and made a part hereof.
6. Non-Exclusivity. The services of the Investment
Adviser to the Fund hereunder are not to be deemed exclusive and
the Investment Adviser shall be free to render similar services
to others.
7. Standard of Care. Neither the Investment Adviser, nor
any of its directors, officers or stockholders (or partners of
stockholders), agents or employees shall be liable or
responsible to the Trust or the Fund or their shareholders (or
the beneficial owners of their shares) for any error of
judgment, mistake of law or any loss arising out of any
investment, or for any other act or omission in the performance
by the Investment Adviser of its duties under this Agreement,
except for liability resulting from willful misfeasance, bad
faith or gross negligence on the Investment Adviser's part or
from reckless disregard by the Investment Adviser of its
obligations and duties under this Agreement.
8. Amendment. This Agreement may be amended at any time
by a written agreement executed by both parties hereto, provided
that with respect to amendments of substance such execution on
behalf of the Fund shall have been approved by the vote of a
majority of the outstanding voting securities of the Fund and by
the vote of a majority of those Trustees who are not interested
persons of the Trust, the Investment Adviser, the Administrator,
Keyport or a Participating Insurance Company cast in person at a
meeting called for the purpose of voting on such approval.
9. Term and Termination. This Agreement shall begin on
the date first written above, and may be terminated at any time,
without payment of any penalty, by the Board of Trustees of the
Trust, or by the vote a majority of the outstanding voting
securities of the Fund, upon sixty (60) days' written notice to
the Investment Adviser. This Agreement may be terminated by the
Investment Adviser at any time upon sixty 60 days' written
notice to the Trust. This Agreement shall terminate
automatically in the event of its assignment. Unless terminated
as hereinabove provided, this Agreement shall continue in effect
until April 30, 1995 and thereafter from year to year only so long
as such continuance is specifically approved at least annually in
conformity with the requirements of the Investment Company Act and
the rules and regulations thereunder (a) by the vote of a majority
of those Trustees who are not parties to this Agreement or
interested persons of the Trust, the Investment Adviser, the
Administrator, Keyport, or a Participating Insurance Company, cast
in person at a meeting called for the purpose of voting on such
approval, and (b) by either the Board of Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of
the Fund.
10. Non-Liability of Trustees and Shareholders. As
provided in the Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of the Commonwealth of
Massachusetts, any obligation of the Trust or the Fund hereunder
shall be binding only upon the assets and property of the Trust
or the Fund, as the case may be, and shall not be binding upon
any Trustee, officer, employee, agent or shareholder (or
beneficial owner of shares) of the Trust, including, without
limitation, the officer of the Trust executing this Agreement on
its behalf. Neither the authorization of any action by the
Trustees or shareholders (or beneficial owners of shares) of the
Trust nor the execution of this Agreement on behalf of the Trust
shall impose any liability upon any Trustee or any shareholder
(or beneficial owner of shares).
11. Use of Investment Adviser's Name. The Trust may use
the name "Xxxxx Xxx Variable Investment Trust" or any other name
derived from the name "Xxxxx Xxx & Farnham" only for so long as
this Agreement or any extension, renewal, or amendment hereof
remains in effect, including any similar agreement with any
organization that shall have succeeded to the business of the
Investment Adviser. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Trust will cease to
use any name derived from the name "Xxxxx Xxx & Xxxxxxx," any
name similar thereto, or any other name indicating that it is
advised by or otherwise connected with Investment Adviser, or
with any organization which shall have succeeded to Investment
Adviser's business as investment adviser.
12. Definitions, References and Headings. As used in this
Agreement, the terms "vote of a majority of the outstanding
voting securities", "interested person", "principal underwriter"
and "assignment" shall have the respective meanings provided in
the Investment Company Act and the rules thereunder, subject,
however, to such exemptions or no-action responses as may be
granted by the Securities and Exchange Commission under said
Act. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or
affect the meaning, construction or effect of this Agreement.
13. Interpretation; Governing Law. This Agreement shall
be interpreted under, and the performance of the Investment
Adviser under this Agreement shall be consistent with, the
provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust, as in effect from time to time, the terms of the
Investment Company Act, other applicable laws and regulations
thereunder (including any amendments hereafter adopted), the
Internal Revenue Code of 1986, and regulations thereunder, and
the Trust's prospectus and statement of additional information.
The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of Illinois (except
Section 10 hereof which shall be construed and interpreted in
accordance with the laws of Massachusetts), without giving
effect to the conflict of laws provisions thereof, provided,
however, that if such law or any of the provisions of this
Agreement conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
14. Severability. If any provision of this Agreement
shall be held or made invalid by a court decision, a statute, a
rule, or otherwise, the remainder of this Agreement shall not be
affected thereby.
15. Effective Date. This Advisory Agreement shall become
effective as of its date, and supersedes the Advisory Agreement
dated December 9, 1988.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed
this agreement on the date first above written.
MORTGAGE SECURITIES INCOME FUND
STEINROE VARIABLE INVESTMENT TRUST
By: XXXXXXX X. XXXXXXXXXXX
XXXXX XXX & XXXXXXX INCORPORATED
By: XXXXXXX X. XXXXXXXXXXX
Chairman and CEO
SCHEDULE A
Fund Advisory Agreement
Mortgage Securities Income Fund
The annual investment advisory fee referred to in paragraph
5 of this Agreement shall be 0.40% of the average daily net assets.
The fee shall be accrued for each calendar day and the sum of the
daily fee accruals shall be paid monthly on or before the tenth
day of the following calendar month. The daily accruals of the
fee will be computed by multiplying the annual rate referred to
above by the fraction the numerator of which is one and the
denominator of which is the number of calendar days in the year,
and multiplying such product by the net asset value of the Fund
as determined in accordance with the Fund's prospectus as of the
previous business day on which the Fund was open for business.
The foregoing fee shall be prorated for any month during which
this Agreement is in effect for only a portion of the month.
