Securities Act File No. 333-_____
Investment Company Act File No. 811-____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
Amendment No.
(Check appropriate box or boxes)
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST
(Exact Name of Registrant as Specified in Charter)
630 Fifth Ave., Ste. 2910
New York, NY 10111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 765-5350
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker
345 California St.
San Francisco, CA, 94104
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as
practicable after the date of effectiveness of this Registration
Statement.
Title of Securities Being Registered: Shares of Beneficial
Interest, no par value.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
(as required by Rule 495)
N-1A Item No. Location
Part A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Expense
Table
Item 3. Financial Highlights................. Financial
Highlights
Item 4. General Description of Registrant.... Objective and
Investment
Approach of the
Fund
Item 5. Management of the Fund............... Management
of the Fund
Item 5A Management's Discussion of Fund See Annual
Performance Reports to
Shareholders
Item 6. Capital Stock and Other Securities. . . Distributions
and Taxes;
How the
Fund's Per
Share Value
is Determined
Item 7. Purchase of Securities Being Offered . . Purchases and
Redemptions;
How the
Fund's Per
Share Value
is Determined
Item 8. Redemption or Repurchase. . . . . . . . Purchases and
Redemptions
Item 9. Pending Legal Proceedings . . . . . . . N/A
Part B
Item 10. Cover Page ............................. Cover Page
Item 11. Table of Contents....................... Table of
Contents
Item 12. General Information and History . . . . The Trust;
General
Information
Item 13 Investment Objectives and Policies .... Investment
Objective and
Policies;
Investment
Restrictions
Item 14. Management of the Fund................... Trustees and
Executive Officers
Item 15. Control Persons and Principal Holders
of Securities............................ General Information
Item 16. Investment Advisory and Other Services.... Investment
Advisor; the Fund's
Administrator; General
Information
Item 17. Brokerage Allocation...................... Execution of
Portfolio
Transactions
Item 18. Capital Stock and Other Securities........ General
Information
Item 19. Purchase, Redemption and Pricing of
Shares Being Offered.............. Additional
Purchase &
Redemption
Information
Item 20. Tax Status.............................. Distributions
& Tax Infor-
mation
Item 21. Underwriters............................ The Fund's
Distributor
Item 22. Performance Information.................. Performance
Information
Item 23. Financial Statements.................... N/A
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement
<PAGE>
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND
630 Fifth Avenue
New York, NY 10111
(212) 765-5350
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND (the "Fund") is a mutual fund
with the investment objective of seeking growth of capital. The Fund seeks to
achieve its objective by investing primarily in common stocks of United States
companies that have substantial international activities ("U.S. Global
Leaders"). The Fund does not have a policy of investment in any specific number
of countries outside the U.S., although it may invest in securities of foreign
companies that meet the Advisor's criteria of global leadership. Yeager, Wood &
Marshall Incorporated (the "Advisor") serves as investment advisor to the Fund.
Shares of the Fund are offered only to insurance company separate accounts to
fund the benefits of variable life insurance policies or variable annuity
contracts owned by their respective policy holders or contract holders.
("Contracts").
This Prospectus sets forth basic information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated January ,1998, as
may be amended from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge upon written request to the
Fund at the address given above.
TABLE OF CONTENTS
Expense Table
Objective and Investment Approach of the Fund Management of the Fund How To
Invest in the Fund How To Redeem an Investment in the Fund Services Available to
the Fund's Shareholders How the Fund's Per Share Value Is Determined
Distributions and Taxes General Information
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Performance Information
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated January , 1998
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EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Fund. The
purpose of the following fee table is to provide an understanding of the various
costs and expenses which may be borne directly or indirectly by an investment in
the Fund. Actual expenses may be more or less than those shown.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases . . . . None
Maximum Sales Load Imposed on Reinvested
Dividends............................. None
Deferred Sales Load ........................... None
Redemption Fees................................ None
Exchange Fee.................................... None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Advisory Fees 1.00%
Other Expenses (after waiver) 0.48%**
Total Fund Operating Expenses (after waiver) 1.48%**
**The Advisor has agreed to reduce its fees or make payments to assure that the
Fund's ratio of operating expenses to average net assets will not exceed 1.48%.
In the absence of the Advisor's agreement, it is estimated that "other expenses"
would amount to 1.00% and the Fund's total annual operating expenses for its
initial fiscal period would amount to 2.48%.
Example
1 year 3 years
$15 $49
This table illustrates the net transaction and operating expenses that
would be incurred by an investment in the Fund over different time periods
assuming a $1,000 investment, a 5% annual return, and redemption at the end of
each time period.
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower. See "Management of the
Fund."
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND (the "Fund") is a
non-diversified series of U.S. Global Leaders Variable Insurance Trust (the
"Trust"), an open-end management investment company offering redeemable shares
of beneficial interest.
Shares of the Fund are offered only to insurance company separate accounts that
fund the Contracts. An insurance company separate account's interest is limited
to the Fund(s) in which the separate account invests. Separate accounts may
purchase or redeem shares at net asset value without any sales or redemption
charge. Fees and charges imposed by the separate account, however, will affect
the actual return to the holder of a Contract. A separate account may also
impose certain restrictions or limitations on the allocation of purchase
payments or Contract value to the Fund. Prospective investors should consult the
applicable Contract prospectus for information regarding fees and expenses of
the Contract and separate account and any applicable restrictions or
limitations.
Shares of the Fund may be offered to the separate accounts of various unrelated
insurance companies ("shared funding"). Shares of the Fund may serve as the
underlying investments for both variable annuity and variable life insurance
contracts of the same or related insurance companies("mixed funding"). Due to
the differences in tax treatment or other considerations to such mixed and
shared funding, the interests of various Contract owners might at some time be
in conflict. The Fund currently does not foresee any such conflict. However, the
Fund's Board of Trustees intends to monitor events to identify any material
irreconcilable conflict that may arise and to determine what
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action, if any, should be taken in response to such conflict. If such a conflict
were to occur, one or more insurance companies' separate accounts might be
required to withdraw its investments in the Fund. This might force the Fund to
sell securities at disadvantageous prices.
OBJECTIVE AND INVESTMENT APPROACH OF THE FUND
The investment objective of the Fund is to seek growth of capital. The Fund
seeks to achieve its objective by investing primarily in common stocks of United
States companies that have substantial international activities ("U.S. Global
Leaders"). Under normal market conditions, at least 65% of the Fund's total
assets will be invested in stocks of companies the Advisor regards as U.S.
Global Leaders as set forth below. Unlike mutual funds that are classified as
"global" funds, the Fund does not have a policy of investment in any specific
number of countries outside the U.S., although it may invest in securities of
foreign companies that meet the Advisor's criteria of global leadership.
There is, of course, no assurance that the Fund's objective will be achieved.
The Fund is not designed for investors seeking income rather than growth of
capital.
Because prices of securities held by the Fund fluctuate, the value of an
investment in the Fund will vary, as the market value of its investment
portfolio changes and when shares are redeemed, they may be worth more or less
than their original cost.
Investment Approach: U.S. Global Leaders. In selecting common stocks for the
Fund, the Advisor focuses on companies it views as "U.S. Global Leaders":
Companies that have leading positions in growing markets in the developed
countries and also derive a substantial portion of their profits in fast-growing
emerging markets. Under normal market conditions, the Fund will invest at least
65% of the value of its total assets in securities of such companies.
U.S. Global Leaders portfolio companies typically:
-Hold leading market shares of their relevant growth markets, and
hence possess the pricing flexibility that results
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in high profit margins and high investment returns.
-Supply consumable products or services so that their revenue streams
are recurring rather than derived from infrequent or postponable sales of
big-ticket items.
-Maintain strong balance sheets with relatively low
debt to equity ratios.
The Advisor believes that companies with these characteristics should have
relatively low business risk and relatively high sustainability of earnings
growth.
The Advisor believes that leading multinational companies traded publicly in
U.S. securities markets have a number of advantages that make them attractive
investments. U.S. capital markets are large and liquid. Accounting practices are
consistent and well regulated. Currency and political risks are minimized, and
the costs associated with investing abroad are reduced.
Companies that have leading positions in growing markets in the U.S. and other
developed countries and also derive a significant portion of their profits in
fast-growing emerging markets are relatively limited in number at this time.
Because of the difficulty and expense in building broad-based distribution in
newer global markets, it appears likely that the number of such companies will
not expand rapidly. Thus, the Advisor's view is that the stocks of multinational
companies that can sustain superior global earnings growth are likely to be
accorded premium relative valuations.
The Advisor's investment policy is to identify U.S. Global Leaders companies
with superior long-term earnings prospects and to continue to own them as long
as their managements are fulfilling their mission. As long as the Advisor
believes that shares of such companies continue to enjoy favorable prospects for
capital growth and that they are not overvalued in the marketplace, such shares
are ordinarily retained.
Foreign Investments
There are foreign companies that fit the profile of Global
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Leaders companies developed by the Advisor, and the Advisor may invest in such
companies. While the Advisor is permitted to invest up to 25% of the Fund's net
assets in foreign companies, under normal circumstances, the level of such
investment is not expected to exceed 15%. Investment in foreign companies
generally will be in the form of American Depositary Receipts and European
Depositary Receipts ("ADRs" and "EDRs"). These are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar
financial institution. Designed for use in U.S. and European securities markets,
respectively, ADRs and EDRs are alternatives to the purchase of the underlying
securities in their national market and currencies.
The Advisor intends to limit its investment in foreign companies to large
capitalization, well-established issuers the securities of which are publicly
traded in the U.S. and which provide their financial data in accordance with
generally accepted accounting principles in the United States. Thus the Advisor
expects to minimize the risks associated with investing in foreign companies
generally. For further information on foreign investing, including the risks
associated with such investments, see the Statement of Additional Information.
Non-Diversification
The Fund is a non-diversified investment company portfolio, which means that the
Fund is required to comply only with the diversification requirements of the
Internal Revenue Code so that the Fund will not be subject to U.S. taxes on its
net investment income. These provisions, among others, require that at the end
of each calendar quarter, (1) not more than 25% of the value of the Fund's total
assets can be invested in the securities of a single issuer, and (2) with
respect to 50% of the value of the Fund's total assets, no more than 5% of the
value of its total assets can be invested in the securities of a single issuer
and the Fund may not own more than 10% of the outstanding voting securities of a
single issuer.
Since the Fund, as a non-diversified investment company portfolio could invest
in a smaller number of individual issuers than a diversified investment company,
the value of the Fund's investments could be more affected by any single adverse
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occurrence than would the value of the investments of a diversified investment
company. However, it is the policy of the Fund to attempt to reduce its overall
exposure to risk from declines in individual securities by spreading its
investments over a number of different companies and a variety of industries.
Other Permitted Investments and Risks
Under normal market conditions, it is expected that the Fund will be
substantially fully invested, and cash and cash equivalent investment should
account for less than 5% of Fund assets. However, if the Advisor believes market
conditions warrant a temporary, defensive position, the Fund may invest without
limit in cash, certificates of deposit, bankers acceptances and other short-term
bank deposit accounts, short-term U.S. Government, agency and instrumentality
obligations, repurchase agreements with respect to such obligations and in other
domestic debt rated in one of the two highest grades by one or more of the
nationally recognized statistical ratings organizations, or if unrated, believed
by the Advisor to be of comparable quality.
The Fund has adopted certain investment restrictions, which are described fully
in the Statement of Additional Information. Like the Fund's investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.
PERFORMANCE INFORMATION: U.S. GLOBAL LEADERS GROWTH FUND
Set forth below is the average annual total return for the U.S. Global Leaders
Growth Fund (the "U.S. Global Fund"), a registered open-end investment company
with the same investment adviser, investment objectives and policies as the
Fund. The portfolio manager for the U.S. Global Fund is the same individual who
manages the Fund. The returns shown for the U.S. Global Fund are net of advisory
fees and other operating expenses; the U.S. Global Fund does not impose any
sales charges.
The U.S. Global Fund is offered to individual and institutional investors and
other taxable accounts generally and is not offered to separate accounts of
insurance companies funding Contracts.
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Thus, shareholders of the Fund should be aware that performance figures for the
U.S. Global Fund set forth below, and those for the Fund will not reflect
charges made pursuant to the terms of the Contracts funded by the separate
accounts that invest in the Fund. Fund performance information will be presented
in conjunction with performance information about these Contracts. Purchasers of
Contracts, therefore, should recognize that the total return on the separate
account assets relating to such contracts would be lower than the total returns
of the Fund and of the U.S. Global Fund for the same period. Purchasers of
Contracts should not rely on the past performance data for the U.S. Global Fund
as an indication of future performance of the Fund or of the Contracts.
U.S. Global Leaders Growth Fund
Average Annual Total Return
Year Ended September 30, 1997 36.68%
Inception on Sept. 29, 1995 through
September 30, 1997 33.21%
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. The Advisor is located at 630
Fifth Avenue, New York, NY 10111. The Advisor was founded in 1968 and is
controlled by Mr. George M. Yeager, President. Mr. Yeager is responsible for the
management of the Fund's portfolio. The Advisor provides investment advisory
services to individual and institutional investors with assets of over $
400,000,000 and is investment advisor to the U.S. Global Leaders Growth Fund, a
mutual fund with the same objective s and polices as the Fund.
The Advisor provides the Fund with advice on buying and selling securities,
manages the investments of the Fund, furnishes the Fund with office space and
certain administrative services, and provides most of the personnel needed by
the Fund. As compensation, the Fund pays the Advisor a monthly management fee
(accrued daily) based upon the average daily net assets of the Fund at the rate
of
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1.00% annually.
Investment Company Administration Corporation (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. Under that agreement,
the Administrator prepares various federal and state regulatory filings, reports
and returns for the Fund, prepares reports and materials to be supplied to the
trustees, monitors the activities of the Fund's custodian, transfer agent and
accountants, and coordinates the preparation and payment of Fund expenses and
reviews the Fund's expense accruals. For its services, the Administrator
receives a monthly fee at the following annual rate: Under $15 million-$30,000;
$15 to $50 million-0.20% of average net assets; $50 to $100 million-0.15% of
average net assets; $100 to $150 million-0.10% of average net assets; over $150
million-0.05% of average net assets. The Fund is responsible for its own
operating expenses. The Advisor is currently undertaking to limit the Fund's
annual operating expenses to no more than 1.48% of average net assets by waiving
fees and/or reimbursing fund operating expenses. Any such reductions made by the
Advisor in its fees or payments or reimbursement of expenses which are the
Fund's obligation may be subject to reimbursement by the Fund.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
PURCHASES AND REDEMPTIONS
Shares of the Fund are offered only to the insurance company separate accounts
that fund the Contracts. All such shares may be purchased or redeemed by the
separate accounts without any sales or redemption charge at net asset value.
Proceeds from redemptions of shares in the Fund will be paid on or before the
seventh day following the request for redemption by a Contract holder.
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HOW THE FUND'S PER SHARE VALUE IS DETERMINED
The net asset value of a Fund share is determined once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated by dividing the value of the Fund's total assets, less its
liabilities, by the number of Fund shares outstanding.
Portfolio securities are valued using current market values, if available.
Securities for which market quotations are not readily available are valued at
fair values as determined in good faith by or under the supervision of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.
DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund distributes all of its net investment
income as dividends to its shareholders shortly after the close of the Fund's
fiscal year on December 31. At the same time, the Fund also distributes all of
its net short-term capital gain and net capital gain (the excess of net
long-term capital gain over net short-term capital loss). The Fund may make a
second distribution of net investment income, net short-term capital gain, and
net capital gain if necessary to avoid income tax. Dividends and capital gain
distributions are paid in additional shares of the Fund at the net asset value
per share on the reinvestment date unless the Fund's transfer agent is
instructed otherwise.
Federal Income Tax. The Fund intends to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As long as the fund continues to qualify, and as
long as the Fund distributes all of its income each year to the shareholders,
the Fund will not be subject to any federal income or excise taxes.
Dividends and other distributions declared by the Fund in October,
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November or December of any year and payable to shareholders of record on a date
in any of those months will be deemed to have been paid by the Fund and received
by shareholders on December 31 of that year if the distributions are paid by the
Fund during the succeeding January.
Fund shares are offered only to insurance company separate accounts that fund
the Contracts. Under the Internal Revenue Code, no tax is imposed on an
insurance company with respect to income of a qualifying separate account
properly allocable to the value of eligible variable annuity or variable life
insurance contracts. See the applicable Contract prospectus for a discussion of
the federal income tax status of (1) the separate accounts that purchase and
hold shares of the Fund and (2) the holders of Contracts funded through those
accounts.
The Fund intends to comply with the diversification requirements imposed by
section 817(h) of the Internal Revenue Code and the regulations thereunder.
These requirements, in addition to the diversification requirements that apply
to the Fund under Subchapter M of the Code, place certain limitations on the
assets of the Fund that may be invested in securities of a single
issuer.Specifically, the regulations provide that as of the end of each calendar
quarter or within 30 days thereafter, no more than 55% of the total assets of
the Fund may be represented by any one investment, no more than 70% by any two
investments, no more than 80% by any three investments and no more than 90% by
any four investments. For this purpose, all securities of the same issuer are
considered a single investment, and each U.S. Government agency and
instrumentality is considered a separate issuer. Section 817(h) provides a "safe
harbor", that a separate account will be treated as being adequately diversified
if the diversification requirements under Subchapter M are satisfied and no more
than 55% of the value of the account's total assets are cash and cash items,
government securities and securities of other regulated investment companies.
Failure of the Fund to satisfy the Section 817(h) requirements would result in
taxation of the insurance company issuing the Contracts and treatment of the
Contract holders other than as described in the applicable Contract Prospectus.
Even if the diversification requirements of Section 817(h) are met, a Contract
owner might be subject to current federal income taxation if the owner has
excessive control over the investments underlying the Contract. The Treasury
Department has indicated that guidelines
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might be forthcoming that address this issue. At this time it is impossible to
predict what the guidelines will include and the extent, if any, to which they
may be retroactive.
The foregoing is only a summary of some of the important federal in come tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a more detailed discussion. Prospective
shareholders are urged to consult their tax advisers.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its total return. These figures are
based on historical earnings and are not intended to indicate future
performance. Total return shows how much an investment in the Fund would have
increased (or decreased) over a specified period of time (i.e., one, five or ten
years or since inception of the Fund) assuming that all distributions and
dividends by the Fund to investors were invested on the reinvestment dates
during the period. Total return takes into account any applicable sales charges,
but does not take into account any federal or state income taxes which may be
payable. The Fund may include comparative performance information in advertising
or marketing its shares. Such performance information may include data from
Lipper Analytical Services, Inc., other industry publications, business
periodicals, rating services and market indices.
Performance figures for the Fund will not reflect charges made pursuant to the
terms of the Contracts funded by the separate accounts that invest in the Fund.
Fund performance information will be presented in conjunction with performance
information about these Contracts. Purchasers of Contracts, therefore, should
recognize that the total return on the separate account assets relating to such
Contracts would be lower than the total return of the Fund for the same period.
GENERAL INFORMATION
The Trust. The Trust was organized as a Delaware business trust on October 6,
1997. The Agreement and Declaration of Trust permits the Board of Trustees to
issue an unlimited number of full and
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fractional shares of beneficial interest, without par value, which may be issued
in any number of series. The Board of Trustees may from time to time issue other
series, the assets and liabilities of which will be separate and distinct from
any other series. The fiscal year of the Fund ends on December 31. Shareholder
Rights. Shares issued by the Fund have no preemptive, conversion, or
subscription rights. Shareholders have equal and exclusive rights as to
dividends and distributions as declared by the Fund and to the net assets of the
Fund upon liquidation or dissolution. The Fund, as a separate series of the
Trust, votes separately on matters affecting only the Fund (e.g., approval of
the Advisory Agreement); all series of the Trust vote as a single class on
matters affecting all series jointly or the Trust as a whole (e.g., election or
removal of Trustees). Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in any election of Trustees can, if they so
choose, elect all of the Trustees. While the Trust is not required and does not
intend to hold annual meetings of shareholders, such meetings may be called by
the Trustees in their discretion, or upon demand by the holders of 10% or more
of the outstanding shares of the Trust for the purpose of electing or removing
Trustees.
Shareholders of the Fund will vote shares in the separate accounts as required
by law, as amended or changed from time to time. Under current law, an insurance
company that sponsors a separate account investing in the Fund is required to
request voting instructions from Contract owners and must vote shares held by
the separate account in proportion to the voting instructions received. For
further information regarding voting rights of Contract owners, see the Contract
prospectus.
Custodian and Transfer Agent. Star Bank, 425 Walnut St., Cincinnati, OH 45202,
serves as custodian of the Fund's assets. American Data Services, Inc.. P.O. Box
5536, Hauppauge, NY 11788- 0132 is the Fund's Transfer and Dividend Disbursing
Agent. See the Contract Prospectus for information on how Contract inquiries can
be made.
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Advisor
Yeager, Wood & Marshall, Incorporated
630 Fifth Avenue
New York, NY 10111
(212) 765-5350
Custodian
Star Bank
425 Walnut St.
Cincinnati, OH 45202
Transfer and Dividend Disbursing Agent
American Data Services
P.O. Box 5536
Hauppauge, NY 11788-0132
Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, CA 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, CA 94104
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STATEMENT OF ADDITIONAL INFORMATION
January , 1998
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND
630 Fifth Avenue
New York, NY 10111
(212) 765-5350
This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the U.S. Global Leaders
Growth Variable Insurance Fund (the "Fund"). A copy of the prospectus of the
Fund dated January , 1998 is available by calling the number listed above or
(212) 633-9700.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust.........................................................................................................2
Investment Objective And Policies.................................................................................2
Investment Restrictions...........................................................................................4
Distributions and Tax Information.................................................................................5
Trustees And Executive Officers...................................................................................7
Investment Advisor................................................................................................9
The Fund's Administrator.........................................................................................10
Execution of Portfolio Transactions..............................................................................11
Additional Purchase and Redemption Information...................................................................12
Determination of Share Price.....................................................................................13
General Information..............................................................................................15
Financial Statements.............................................................................................16
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USG SAI B-1
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THE FUND
The Fund is a series of U.S. Global Leaders Variable Insurance Trust
(the "Trust"), which is a registered, open-end management investment company
organized as a Delaware business trust.
This Statement of Additional Information relates only to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The U.S. Global Leaders Growth Variable Insurance Fund is a mutual fund
with the investment objective of seeking growth of capital. The following
discussion supplements the discussion of the Fund's investment objective and
policies as set forth in the Prospectus. There can be no assurance the objective
of the Fund will be attained.
Repurchase Agreements
The Fund may enter into repurchase agreements as discussed in the
Prospectus. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the U.S.
Government security itself. Such repurchase agreements will be made only with
banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. The
Fund will generally enter into repurchase agreements of short durations, from
overnight to one week, although the underlying securities generally have longer
maturities. The Fund may not enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of the value of the Fund's
total assets would be invested in illiquid securities including such repurchase
agreements.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
U.S. Government security subject to the repurchase agreement. It is not clear
whether a court would consider the U.S. Government security acquired by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller. As an unsecured creditor,
the Fund would be at the risk of losing some or all of the principal and income
involved in
USG SAI B-2
<PAGE>
the transaction. As with any unsecured debt instrument purchased for the Fund,
the Investment Advisor seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case the
seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security. However, the
Fund will always receive as collateral for any repurchase agreement to which it
is a party securities acceptable to it, the market value of which is equal to at
least 100% of the amount invested by the Fund plus accrued interest, and the
Fund will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian. If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the U.S. Government security to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that the
Fund will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.
Foreign Investments
The Advisor is permitted to invest up to 25% of the Fund's net assets
in foreign companies, although the level of such investment is not expected to
exceed 15% under normal circumstances. The Advisor intends to invest only in
large capitalization, well established foreign issuers the securities of which
are traded in the U.S., and which present their financial data in accordance
with generally accepted accounting principles in the U.S. Thus, the Advisor thus
expects that there will be little, if any risk associated with its foreign
investments.
The risks associated with foreign issuers include political and
economic risks. Foreign investments may be affected by actions of foreign
governments adverse to the interests of U.S. investors, including the
possibility of expropriation or nationalization of assets, confiscatory
taxation, restrictions on U.S. investment or on the ability to repatriate assets
or convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also involve
a risk of local political, economic, or social instability, military action or
unrest, or adverse diplomatic developments. While the Advisor believes it
unlikely that the companies and countries in which the Advisor invests would be
subject to such circumstances, there is no assurance that the Advisor will be
able to anticipate or counter these potential events in selecting foreign
issuers for the Fund's portfolio.
Borrowing
The Fund may borrow money from banks in an aggregate amount not to exceed
one-third of the value of the Fund's total assets to meet temporary or emergency
purposes, and may pledge its assets in connection with such borrowings. The Fund
will not purchase any securities while any such borrowings exceed 5% of that
Fund's total assets.
USG SAI B-3
<PAGE>
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by
the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. The Fund may not:
1. Make loans to others, except (a) through the occasional purchase of
debt securities in accordance with its investment objectives and policies, (b)
to the extent the entry into a repurchase agreement is deemed to be a loan.
2. (a) Borrow money, except as stated in the Prospectus and this
Statement of Additional Information. Any such borrowing will be made only if
immediately thereafter there is an asset coverage of at least 300% of all
borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite securities. (Does
not preclude the Fund from obtaining such short-term credit as may be necessary
for the clearance of purchases and sales of its portfolio securities.)
4. Purchase or sell real estate, commodities or commodity contracts
(the Board of Trustees may in the future authorize the Fund to engage in certain
activities regarding futures contracts for bona fide hedging purposes; any such
authorization will be accompanied by appropriate notification to shareholders).
5. Invest 25% or more of the market value of its assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)
6. Issue senior securities, as defined in the 1940 Act, except that
this restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into repurchase
transactions.
7. Invest in any issuer for purposes of exercising control or
management.
The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Fund may not:
8. Invest in securities of other investment companies which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the
USG SAI B-4
<PAGE>
Fund owning securities of another investment company having an aggregate value
in excess of 5% of the value of the Fund's total assets, or the Fund owning
securities of investment companies in the aggregate which would exceed 10% of
the value of the Fund's total assets.
9. Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.
DISTRIBUTIONS AND TAX INFORMATION
Distributions
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually, as described in the
Prospectus after the conclusion of the Fund's fiscal year (December 31). Also,
the Fund expects to distribute any undistributed net investment income on or
about December 31 of each year. Any net capital gains realized through the
period ended October 31 of each year will also be distributed by December 31 of
each year.
Tax Information
Shares of the Fund are offered only to insurance company separate
accounts that fund the Contracts. See the applicable Contract prospectus for a
discussion of the special taxation of insurance companies with respect to such
accounts and of the Contract holders.
The Fund, as a series of the Trust, is treated as a separate entity for
federal income tax purposes. The Fund intends to qualify and elect to be treated
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), provided it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of distributions. The Fund's policy is to distribute to its
shareholders all of its investment company taxable income and any net realized
long-term capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income or excise taxes. To comply with the requirements, the Fund
must also distribute (or be deemed to have distributed) by December 31 of each
calendar year (I) at least 98% of its ordinary income for such year, (ii) at
least 98% of the excess of its realized capital gains over its realized capital
losses for the 12-month period ending on October 31 during such year and (iii)
any amounts from the prior calendar year that were not distributed and on which
the Fund paid no federal income tax.
USG SAI B-5
<PAGE>
Net investment income consists of interest and dividend income, less
expenses. Net realized capital gains for a fiscal period are computed by taking
into account any capital loss carryforward of the Fund.
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code, the Fund must distribute to
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, and net
short-term capital gain) and must meet several other requirements. The Fund must
(1) derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, futures or forward currency contracts) derived
from the business of investing in securities or those currencies; (2) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs and other securities, with these other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and; (3) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. government
securities or the securities of other RICs) of any one issuer.
As noted in the Prospectus, the Fund must comply with the
diversification requirements imposed by Section 817(h) of the Internal Revenue
Code and the regulations thereunder. These requirements, which are in addition
to the diversification requirements mentioned above, place certain limitation on
the proportion of the Fund's assets that may be represented by any single
investment (which includes all securities of the same issuer). For these
purposes, each U.S. Government agency or instrumentality is treated as a
separate issuer.
The foregoing is only a general summary of some of the important
federal income tax considerations generally affecting the Fund and its
shareholders. No attempt is made to present a complete explanation of the
federal tax treatment of the Fund's activities or of the Contracts, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential investors are urged to consult their own tax advisers for
more detailed information and for information regarding any state, local or
foreign taxes applicable to the Fund and to dividends and other distributions
therefrom.
This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Fund. The Trustees, in turn, elect the officers of
the
USG SAI B-6
<PAGE>
Trust, who are responsible for administering the day-to-day operations of the
Trust and its separate series. The current Trustees and officers and their
affiliations and principal occupations for the past five years are set forth
below.
Steven J. Paggioli,* 47 President and Trustee
479 West 22nd Street, New York, New York 10011. Executive Vice President, The
Wadsworth Group (consultants) since 1986; Executive Vice President of Investment
Company Administration Corporation ("ICAC") (mutual fund administrator and the
Trust's administrator),and Vice President of First Fund Distributors, Inc.
("FFD") (a registered broker-dealer and the Fund's Distributor) since 1990.
Dorothy A. Berry, 54 Trustee
14 Five Roses East, Ancram, NY 12517. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment advisor and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).
Wallace L. Cook, 57 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 59 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. Formerly President and Founder, National
Investor Data Services, Inc. (investment related computer software).
Rowley W.P. Redington, 53 Trustee
202 North Mountain Avenue, Montclair, New Jersey 07042. President; Intertech
(consumer electronics and computer service and marketing); formerly Vice
President, PRS of New Jersey, Inc. (management consulting), and Chief Executive
Officer, Rowley Associates (consultants).
Eric M. Banhazl*, 40 Treasurer
2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.
Robin Berger*, 40 Secretary
USG SAI B-7
<PAGE>
479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth Group
since June, 1993; formerly Regulatory and Compliance Coordinator, Equitable
Capital Management, Inc. (1991-93).
Robert H. Wadsworth*, 57 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of The
Wadsworth Group since 1982, President of ICAC and FFD since 1990.
*Indicates an "interested person" of the Trust as defined in the 1940 Act.
Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust. This total amount
is allocated among the portfolios. Disinterested trustees receive an annual
retainer of $______. Trustees also receive a fee of $1000 for any special
meeting attended. The Chairman of the Board of Trustees receives an additional
annual retainer of $ Disinterested trustees are also reimbursed for expenses in
connection with each Board meeting attended. No other compensation or retirement
benefits are received by any Trustee or officer from the Fund or any other
portfolios of the Trust.
Name of Trustee Total Annual Compensation
Dorothy A. Berry $
Wallace L. Cook $
Carl A. Froebel $
Rowley W.P. Redington $
INVESTMENT ADVISOR
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. The Advisor is located at 630
Fifth Avenue, New York, NY 10111. The Advisor was founded in 1968 and is
controlled by Mr. George M. Yeager, President. The Advisor provides investment
advisory services to individual and institutional investors with assets of over
$400 million. Mr. Yeager is responsible for management of the Fund's portfolio.
Under the Investment Advisory Agreement with the Fund, the Advisor
provides the Fund with advice on buying and selling securities, manages the
investments of the Fund, furnishes the Fund with office space and certain
administrative services, and provides most of the personnel needed by the Fund.
As compensation, the Fund pays the Advisor a monthly investment advisory fee
(accrued daily) based upon the average daily net assets of the Fund at the rate
of 1.00% annually.
USG SAI B-8
<PAGE>
The Investment Advisory Agreement continues in effect for successive
annual periods so long as such continuation is approved at least annually by the
vote of (1) the Board of Trustees of the Trust (or a majority of the outstanding
shares of the Fund to which the agreement applies), and (2) a majority of the
Trustees who are not interested persons of any party to the Agreement, in each
case cast in person at a meeting called for the purpose of voting on such
approval. Any such agreement may be terminated at any time, without penalty, by
either party to the agreement upon sixty days' written notice and is
automatically terminated in the event of its "assignment," as defined in the
1940 Act.
THE FUND'S ADMINISTRATOR
The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Fund; prepare all required filings necessary to maintain the Fund's
qualification and/or registration to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, ICAC receives a monthly fee at the following annual rate:
Average net assets Fee or fee rate
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, the Advisor determines
which securities are to be purchased and sold by the Fund and which
broker-dealers will be used to execute the Fund's portfolio transactions.
Purchases and sales of securities in the over-the-counter market will be
executed directly with a "market-maker" unless, in the opinion of the Advisor, a
better price and execution can otherwise be obtained by using a broker for the
transaction.
USG SAI B-9
<PAGE>
Purchases of portfolio securities for the Fund also may be made
directly from issuers or from underwriters. Where possible, purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own account. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one broker, dealer or underwriter are comparable, the
order may be allocated to a broker, dealer or underwriter that has provided
research or other services as discussed below.
In placing portfolio transactions, the Advisor will use its best
efforts to choose a broker-dealer capable of providing the services necessary to
obtain the most favorable price and execution available. The full range and
quality of services available will be considered in making these determinations,
such as the size of the order, the difficulty of execution, the operational
facilities of the firm involved, the firm's risk in positioning a block of
securities, and other factors. In those instances where it is reasonably
determined that more than one broker-dealer can offer the most favorable price
and execution available, consideration may be given to those broker-dealers
which furnish or supply research and statistical information to the Advisor that
it may lawfully and appropriately use in its investment advisory capacities, as
well as provide other services in addition to execution services. The Advisor
considers such information, which is in addition to and not in lieu of the
services required to be performed by it under its Agreement with the Fund, to be
useful in varying degrees, but of indeterminable value. Portfolio transactions
may be placed with broker-dealers who sell insurance contracts funded by shares
of the Fund subject to rules adopted by the National Association of Securities
Dealers, Inc.
While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Advisor, even if the specific services are not directly useful to the Fund and
may be useful to the Advisor in advising other clients. In negotiating
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be measured in light of the Advisor's overall responsibilities to the
Fund.
Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds managed or advised by the Advisor.
Nevertheless, it is possible that at times identical securities will be
acceptable for both the Fund and one or more of such client accounts. In such
event, the position of the Fund and such client account(s) in the same issuer
may vary and the length of time that each may choose to hold its investment in
the same issuer may likewise vary. However, to the extent any of these client
accounts seeks to acquire the same security as the Fund
USG SAI B-10
<PAGE>
at the same time, the Fund may not be able to acquire as large a portion of such
security as it desires, or it may have to pay a higher price or obtain a lower
yield for such security. Similarly, the Fund may not be able to obtain as high a
price for, or as large an execution of, an order to sell any particular security
at the same time. If one or more of such client accounts simultaneously
purchases or sells the same security that the Fund is purchasing or selling,
each day's transactions in such security will be allocated between the Fund and
all such client accounts in a manner deemed equitable by the Advisor, taking
into account the respective sizes of the accounts and the amount being purchased
or sold. It is recognized that in some cases this system could have a
detrimental effect on the price or value of the security insofar as the Fund is
concerned. In other cases, however, it is believed that the ability of the Fund
to participate in volume transactions may produce better executions for the
Fund.
The Fund does not effect securities transactions through brokers solely
for selling shares of the Fund, although the Fund may consider the sale of
shares as a factor in allocating brokerage. However, as stated above,
broker-dealers who execute brokerage transactions may effect purchases of shares
of the Fund for their customers.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Trust reserves the right in its sole discretion (I) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Advisor such rejection is in the best
interest of the Fund, and (iii) to reduce or waive the minimum for initial and
subsequent investments for certain fiduciary accounts or under circumstances
where certain economies can be achieved in sales of the Fund's shares.
Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the Fund's Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that the Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (C) for such other period as the SEC may permit for the
protection of the Fund's shareholders. At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund.
The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price. Although the Fund does not anticipate that it will make any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash. The
Fund has elected to
USG SAI B-11
<PAGE>
be governed by the provisions of Rule 18f-1 under the 1940 Act, which contains a
formula for determining the minimum redemption amounts that must be paid in
cash.
The value of shares on redemption or repurchase may be more or less
than the investor's cost, depending upon the market value of the Fund's
portfolio securities at the time of redemption or repurchase.
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of the close of public
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. It is expected that the Exchange
will be closed on Saturdays and Sundays and on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas. The Fund does not expect to determine
the net asset value of its shares on any day when the Exchange is not open for
trading even if there is sufficient trading in its portfolio securities on such
days to materially affect the net asset value per share.
In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.
The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
Investors in the Fund will be informed of the Fund's progress through
periodic reports. Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.
Star Bank, 425 Walnut Street, Cincinnati, OH 45202 acts as Custodian of
the securities and other assets of the Fund. The Custodian does not participate
in decisions relating to the purchase and sale of securities by the Fund.
American Data Services, P.O. Box 5536, Hauppauge, NY 11743 is the Fund's
Transfer and Dividend Disbursing Agent.
USG SAI B-12
<PAGE>
Ernst & Young, 515 S. Flower St., Los Angeles, CA 90071 are the
independent auditors for the Fund.
Paul, Hastings, Janofsky & Walker LLP , 345 California St., 29th floor,
San Francisco, California 94104, are legal counsel to the Fund.
The Trust is registered with the SEC as a management investment
company. Such a registration does not involve supervision of the management or
policies of the Fund. The Prospectus of the Fund and this Statement of
Additional Information omit certain of the information contained in the
Registration Statement filed with the SEC. Copies of such information may be
obtained from the SEC upon payment of the prescribed fee.
FINANCIAL STATEMENTS
[ To be supplied ]
USG SAI B-13
<PAGE>
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST
FORM N-1A
PART C
Item 24. Financial Statements and Exhibits.
(a) Statement of Assets and Liabilities
Notes to Financial Statements
(To be filed by Amendment)
(b) Exhibits:
(1) Agreement and Declaration of Trust
(2) By-Laws
(3) Voting Trust Agreement -- Not applicable
(4) Specimen Share Certificate-1
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement-Not applicable
(7) Benefit Plan -- Not applicable
(8) Form of Custodian and Transfer Agent
Agreements-1
(9) Form of Administration Agreement
(10) Consent and Opinion of Counsel as to legality of
shares-1
(11) Consent of Accountants-1
(12) All Financial Statements omitted from Item 23 --
Not applicable
(13) Letter of Understanding relating to initial
capital-1
(14) Model Retirement Plan Documents - Not applicable
(15) Form of Plan pursuant to Rule 12b-1-Not Applicable
<PAGE>
(16) Schedule for Computation of Performance
Quotations-1
1 To be filed by Amendment
Item 25. Persons Controlled by or under Common Control with
Registrant.
As of the date of this Amendment to the Registration Statement, there
are no persons controlled or under common control with the Registrant.
Item 26. Number of Holders of Securities.
Number of Record
Holders as of
Title of Class November 21, 1997
Shares of Beneficial Interest, no par value: None
Item 27. Indemnification
Article VII, Section 2 of the Trust's Declaration of Trust provides as follows:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in
<PAGE>
the Securities Act and will be governed by the final adjudication
of such issue.
Item 28. Business and Other Connections of Investment Adviser.
With respect to the Investment Adviser, the response to this item is
incorporated by reference to the Adviser's Form ADV as amended, File No.
801-4995.
Item 29. Principal Underwriters.
(a) Not applicable
(b) Not applicable
(c) Not applicable
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which, with respect to portfolio transactions are kept by each Fund's
Advisor at its address set forth in the prospectus and statement of additional
information and with respect to trust documents by its administrator at 479 West
22nd Street, New York, NY 10011 and 2025 E. Financial Way, Ste. 101, Glendora,
CA 91741.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. Undertakings
The registrant undertakes to file a post-effective amendment with unaudited
financial statements within four to six months from
<PAGE>
the effective date of the Registration Statement, as such requirement and time
periods are interpreted by the staff of the Division of Investment Management.
The registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Fund's latest annual report to shareholders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York in the State of New York on November 21,
1997.
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST
By: Steven J. Paggioli
Steven J. Paggioli
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Steven J. Paggioli Trustee November 21, 1997
Steven J. Paggioli
Eric M. Banhazl Principal November 21, 1997
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee November 21, 1997
Dorothy A. Berry
Wallace L. Cook Trustee November 21, 1997
Wallace L. Cook
Carl A. Froebel Trustee November 21, 1997
Carl A. Froebel
Rowley W. P. Redington Trustee November 21, 1997
- ----------------------
Rowley W. P. Redington
AGREEMENT AND DECLARATION OF TRUST
of
U.S. Global Leaders Variable Insurance TRUST
a Delaware Business Trust
Principal Place of Business:
2025 East Financial Way, Suite #101
Glendora, California 91741
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<PAGE>
TABLE OF CONTENTS
U.S. Global Leaders Variable Insurance TRUST
AGREEMENT AND DECLARATION OF TRUST
<TABLE>
Page
<S> <C>
ARTICLE I Name and Definitions...................................................................1
1. Name............................................................................................1
2. Definitions.....................................................................................1
(a) Trust..................................................................................1
(b) Trust Property.........................................................................1
(c) Trustees...............................................................................1
(d) Shares.................................................................................2
(e) Shareholder............................................................................2
(f) Person.................................................................................2
(g) Investment Company Act.................................................................2
(h) Commission and Principal Underwriter...................................................2
(i) Declaration of Trust...................................................................2
(j) By-Laws................................................................................2
(k) Interested Person......................................................................2
(l) Investment Adviser.....................................................................2
(m) Series.................................................................................2
ARTICLE II Purpose of Trust................................................................................2
ARTICLE III Shares..........................................................................................3
1. Division of Beneficial Interest.................................................................3
2. Ownership of Shares.............................................................................3
3. Investments in the Trust........................................................................4
4. Status of Shares and Limitation of
Personal Liability............................................................................4
5. Power of Board of Trustees to Change
Provisions Relating to Shares.................................................................4
6. Establishment and Designation of Series.........................................................5
(a) Assets With Respect to a Particular Series.............................................5
(b) Liabilities Held With Respect to a
Particular Series....................................................................6
(c) Dividends, Distributions, Redemptions
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<PAGE>
and Repurchases......................................................................6
(d) Voting.................................................................................6
(e) Equality...............................................................................7
(f) Fractions..............................................................................7
(g) Exchange Privilege.....................................................................7
(h) Combination of Series..................................................................7
(i) Elimination of Series..................................................................7
7. Indemnification of Shareholders.................................................................7
ARTICLE IV The Board of Trustees...........................................................................7
1. Number, Election and Tenure.....................................................................7
2. Effect of Death, Resignation, etc., of a Trustee................................................8
3. Powers..........................................................................................8
4. Payment of Expenses by the Trust...............................................................11
5. Payment of Expenses by Shareholders............................................................12
6. Ownership of Assets of the Trust...............................................................12
7. Service Contracts..............................................................................12
ARTICLE V Shareholders' Voting Powers and Meetings..............................................14
1. Voting Powers..................................................................................14
2. Voting Power and Meetings......................................................................14
3. Quorum and Required Vote.......................................................................14
4. Action by Written Consent......................................................................15
5. Record Dates...................................................................................15
6. Additional Provisions..........................................................................16
ARTICLE VI Net Asset Value, Distributions,
and Redemptions.....................................................................16
1. Determination of Net Asset Value, Net
Income and Distributions.....................................................................16
2. Redemptions and Repurchases....................................................................16
3. Redemptions at the Option of the Trust.........................................................16
ARTICLE VII Compensation and Limitation of
Liability of Trustees...............................................................17
1. Compensation...................................................................................17
2. Indemnification and Limitation of Liability....................................................17
3. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety....................................................................17
4. Insurance......................................................................................18
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<PAGE>
ARTICLE VIII Miscellaneous.........................................................................18
1. Liability of Third Persons Dealing with Trustees...............................................18
2. Termination of Trust or Series.................................................................18
3. Merger and Consolidation.......................................................................19
4. Amendments.....................................................................................19
5. Filing of Copies, References, Headings.........................................................19
6. Applicable Law.................................................................................20
7. Provisions in Conflict with Law or Regulations.................................................20
8. Business Trust Only............................................................................20
9. Use of the Identifying Words "U.S. Global Leaders
Variable Insurance " and "U.S. Global Leaders
Variable Insurance Trust"...................................................................20
</TABLE>
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<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
U.S. Global Leaders Variable Insurance TRUST
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and
entered into as of the date set forth below by the Trustees named hereunder for
the purpose of forming a Delaware business trust in accordance with the
provisions hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate
of Trust be filed with Office of the Secretary of State of the State of Delaware
and do hereby declare that the Trustees will hold IN TRUST all cash, securities
and other assets which the Trust now possesses or may hereafter acquire from
time to time in any manner and manage and dispose of the same upon the following
terms and conditions for the pro rata benefit of the holders of Shares in this
Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known asU.S. GLOBAL
LEADERS VARIABLE INSURANCE TRUST, and the Trustees shall conduct the business of
the Trust under that name or any other name as they may from time to time
determine.
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust, including without limitation the rights referenced in Article
VIII, Section 9 hereof;
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<PAGE>
(c) "Trustees" refers to the persons who have signed this
Agreement and Declaration of Trust, so long as they continue in office in
accordance with the terms hereof, and all other persons who may from time to
time be duly elected or appointed to serve on the Board of Trustees in
accordance with the provisions hereof, and reference herein to a Trustee or the
Trustees shall refer to such person or persons in their capacity as trustees
hereunder;
(d) "Shares" means the shares of beneficial interest into
which the beneficial interest in the Trust shall be divided from time to time
and includes fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of outstanding
Shares;
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(g) The "Investment Company Act" refers to the
Investment Company Act of 1940 and the Rules and Regulations
thereunder, all as amended from time to time;
(h) The terms "Commission" and "Principal Underwriter"
shall have the meanings given them in the Investment Company Act;
(i) "Declaration of Trust" shall mean this Agreement
and Declaration of Trust, as amended or restated from time to
time;
(j) "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time and incorporated herein by reference;
(k) The term "Interested Person" has the meaning given
it in the Investment Company Act;
(l) "Investment Adviser" or "Manager" means a party
furnishing services to the Trust pursuant to any contract
described in Article IV, Section 7(a) hereof; and
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<PAGE>
(m) "Series" refers to each Series of Shares
established and designated under or in accordance with the
provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under the Investment
Company Act through one or more Series investing primarily in securities.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into an unlimited number of
Shares, with a par value of $ .01 per Share. The Trustees may authorize the
division of Shares into separate Series and the division of Series into separate
classes of Shares. The different Series shall be established and designated, and
the variations in the relative rights and preferences as between the different
Series shall be fixed and determined, by the Trustees. If only one or no Series
(or classes) shall be established, the Shares shall have the rights and
preferences provided for herein and in this Article III, Section 6 hereof to the
extent relevant and not otherwise provided for herein, and all references to
Series (and classes) shall be construed (as the context may require) to refer to
the Trust.
Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V hereof, and holders
of the Shares of any Series shall be entitled to receive dividends when, if and
as declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions upon termination of
the Trust or of such Series made pursuant to Article VIII, Section 2 hereof. All
dividends and distributions shall be made ratably among all Shareholders of a
particular class of a particular Series and, if no classes, of
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<PAGE>
a particular Series from the assets held with respect to such Series according
to the number of Shares of such class of such Series or of such Series held of
record by such Shareholder on the record date for any dividend or distribution
or on the date of termination, as the case may be. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or any Series. The Trustees may from time to time
divide or combine the Shares of any particular Series into a greater or lesser
number of Shares of that Series without thereby materially changing the
proportionate beneficial interest of the Shares of that Series in the assets
held with respect to that Series or materially affecting the rights of Shares of
any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall
be recorded on the books of the Trust or a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
(or class of each Series). No certificates certifying the ownership of Shares
shall be issued except as the Board of Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider appropriate for
the transfer of Shares of each Series (or class of each Series) and similar
matters. The record books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to the identity of the
Shareholders of each Series (or class of each Series) and as to the number of
Shares of each Series (or class) held from time to time by each.
Section 3. Investments in the Trust. Investments may be
accepted by the Trust from such Persons, at such times, on such terms, and for
such consideration as the Trustees from time to time may authorize.
Section 4. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder, by virtue of having become a
Shareholder, shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but entitles
such representative only to the rights of said deceased Shareholder under this
Trust.
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<PAGE>
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
Section 5. Power of Board of Trustees to Change Provisions
Relating to Shares. Notwithstanding any other provision of this Declaration of
Trust and without limiting the power of the Board of Trustees to amend the
Declaration of Trust as provided elsewhere herein, the Board of Trustees shall
have the power to amend this Declaration of Trust, at any time and from time to
time, in such manner as the Board of Trustees may determine in their sole
discretion, without the need for Shareholder action, so as to add to, delete,
replace or otherwise modify any provisions relating to the Shares contained in
this Declaration of Trust, provided that before adopting any such amendment
without Shareholder approval the Board of Trustees shall determine that it is
consistent with the fair and equitable treatment of all Shareholders or that
Shareholder approval is not otherwise required by the Investment Company Act or
other applicable law. If Shares have been issued, Shareholder approval shall be
required to adopt any amendments to this Declaration of Trust that would
adversely affect to a material degree the rights and preferences of the Shares
of any Series (or class of any Series) or to increase or decrease the par value
of the Shares of any Series (or class of any Series).
Subject to the foregoing Paragraph, the Board of Trustees may
amend the Declaration of Trust to amend any of the provisions set forth in
paragraphs (a) through (i) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series. The
establishment and designation of any Series (or class) of Shares shall be
effective upon the resolution by a majority of the then Trustees, adopting a
resolution that sets forth such establishment and designation and the relative
rights and
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<PAGE>
preferences of such Series (or class). Each such resolution
shall be incorporated herein by reference upon adoption.
Shares of each Series (or class) established pursuant to this
Section 6, unless otherwise provided in the resolution establishing such Series,
shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof from
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably be held with respect to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, are herein referred to as "assets held with
respect to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Asset so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(b) Liabilities Held With Respect to a Particular Series. The
assets of the Trust held with respect to each particular Series shall be charged
against the liabilities of the Trust held with respect to that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities of the Trust which are not readily identifiable as being
held with respect to any particular Series shall be allocated and charged by the
Trustees to and among any one or
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<PAGE>
more of the Series in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. The liabilities, expenses, costs,
charges, and reserves so charged to a Series are herein referred to as
"liabilities held with respect to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all Series for all purposes. All Persons who have
extended credit which has been allocated to a particular Series, or who have a
claim or contract which has been allocated to any particular Series, shall look,
and shall be required by contract to look exclusively, to the assets of that
particular Series for payment of such credit, claim, or contract. In the absence
of an express contractual agreement so limiting the claims of such creditors,
claimants and contract providers, each creditor, claimant and contract provider
will be deemed nevertheless to have impliedly agreed to such limitation unless
an express provision to the contrary has been incorporated in the written
contract or other document establishing the claimant relationship.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or class) with respect to, nor any redemption or repurchase of, the Shares of
any Series (or class) shall be effected by the Trust other than from the assets
held with respect to such Series, nor, except as specifically provided in
Section 7 of this Article III, shall any Shareholder of any particular Series
otherwise have any right or claim against the assets held with respect to any
other Series except to the extent that such Shareholder has such a right or
claim hereunder as a Shareholder of such other Series. The Trustees shall have
full discretion, to the extent not inconsistent with the Investment Company Act,
to determine which items shall be treated as income and which items as capital;
and each such determination and allocation shall be conclusive and binding upon
the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a
matter shall vote separately by Series (and, if applicable, by class): that is,
the Shareholders of each Series (or class) shall have the right to approve or
disapprove matters affecting the Trust and each respective Series (or class) as
if the Series (or classes) were separate companies. There are, however, two
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<PAGE>
exceptions to voting by separate Series (or classes). First, if the Investment
Company Act requires all Shares of the Trust to be voted in the aggregate
without differentiation between the separate Series (or classes), then all the
Trust's Shares shall be entitled to vote on a one-vote-per-Share basis. Second,
if any matter affects only the interests of some but not all Series (or
classes), then only the Shareholders of such affected Series (or classes) shall
be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets held with respect to
that Series (subject to the liabilities held with respect to that Series and
such rights and preferences as may have been established and designated with
respect to classes of Shares within such Series), and each Share of any
particular Series shall be equal to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share of that Series,
including rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by the
Trustees.
(h) Combination of Series. The Trustees shall have the
authority, without the approval of the Shareholders of any Series unless
otherwise required by applicable law, to combine the assets and liabilities held
with respect to any two or more Series into assets and liabilities held with
respect to a single Series.
(i) Elimination of Series. At any time that there are no
Shares outstanding of any particular Series (or class) previously established
and designated, the Trustees may by resolution of a majority of the then
Trustees abolish that Series (or class) and rescind the establishment and
designation thereof.
Section 7. Indemnification of Shareholders. If any
Shareholder or former Shareholder shall be exposed to liability
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<PAGE>
by reason of a claim or demand relating to his or her being or having been a
Shareholder, and not because of his or her acts or omissions, the Shareholder or
former Shareholder (or his or her heirs, executors, administrators, or other
legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled to be held harmless from
and indemnified out of the assets of the applicable Series of the Trust against
all loss and expense arising from such claim or demand.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted meeting, by a
majority of the Board of Trustees, provided, however, that the number of
Trustees shall in no event be less than one (1) nor more than fifteen (15). The
Board of Trustees, by action of a majority of the then Trustees at a duly
constituted meeting, may fill vacancies in the Board of Trustees or remove
Trustees with or without cause. Each Trustee shall serve during the continued
lifetime of the Trust until he or she dies, resigns, is declared bankrupt or
incompetent by a court of appropriate jurisdiction, or is removed, or, if
sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
successor. Any Trustee may resign at any time by written instrument signed by
him or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may fix the number of Trustees and elect Trustees at any meeting of
Shareholders called by the Trustees for that purpose. Any Trustee may be removed
at any meeting of Shareholders by a vote of two-thirds of the outstanding Shares
of the Trust. A meeting of Shareholders for the purpose of electing or removing
one or more Trustees may be called (i) by the Trustees upon their own vote, or
(ii) upon the
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demand of Shareholders owning 10% or more of the Shares of the
Trust in the aggregate.
Section 2. Effect of Death, Resignation, etc. of a Trustee.
The death, declination, resignation, retirement, removal, or incapacity of one
or more Trustees, or all of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Declaration of
Trust. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled as provided in this Article IV, Section l, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration of Trust. As conclusive evidence of such vacancy, a written
instrument certifying the existence of such vacancy may be executed by an
officer of the Trust or by a majority of the Board of Trustees. In the event of
the death, declination, resignation, retirement, removal, or incapacity of all
the then Trustees within a short period of time and without the opportunity for
at least one Trustee being able to appoint additional Trustees to fill
vacancies, the Trust's Investment Adviser(s) are empowered to appoint new
Trustees subject to the provisions of Section 16(a) of the Investment Company
Act.
Section 3. Powers. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the Board of
Trustees, and such Board shall have all powers necessary or convenient to carry
out that responsibility, including the power to engage in securities
transactions of all kinds on behalf of the Trust. Without limiting the
foregoing, the Trustees may: adopt By-Laws not inconsistent with this
Declaration of Trust providing for the regulation and management of the affairs
of the Trust and may amend and repeal them to the extent that such By-Laws do
not reserve that right to the Shareholders; fill vacancies in or remove from
their number, and may elect and remove such officers and appoint and terminate
such agents as they consider appropriate; appoint from their own number and
establish and terminate one or more committees consisting of two or more
Trustees, which may exercise the powers and authority of the Board of Trustees
to the extent that the Trustees determine; employ one or more custodians of the
assets of the Trust and may authorize such custodians to employ subcustodians
and to deposit all or any part of such assets in a system or systems for the
central handling of securities or with a Federal Reserve Bank; retain a transfer
agent or a shareholder
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servicing agent, or both; provide for the issuance and distribution of Shares by
the Trust directly or through one or more Principal Underwriters or otherwise;
redeem, repurchase and transfer Shares pursuant to applicable law; set record
dates for the determination of Shareholders with respect to various matters;
declare and pay dividends and distributions to Shareholders of each Series from
the assets of such Series; and, in general, delegate such authority as they
consider desirable to any officer of the Trust, to any committee of the Trustees
and to any agent or employee of the Trust or to any such custodian, transfer or
shareholder servicing agent, or Principal Underwriter. Any determination as to
what is in the interests of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the Trustees. Unless
otherwise specified or required by law, any action by the Board of Trustees
shall be deemed effective if approved or taken by a majority of the Trustees
then in office.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested, and
to subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, write options on,
lend or otherwise deal in or dispose of contracts for the future acquisition or
delivery of fixed income or other securities, and securities of every nature and
kind, including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, to change the investments of the assets
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<PAGE>
of the Trust; and to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons,
to exercise any of said rights, powers, and privileges in respect of any of said
instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall deem
proper;
(d) To exercise powers and right of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in its
own name or in the name of a custodian or subcustodian or a nominee or nominees
or otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to pay
calls or subscriptions with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
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(h) To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To borrow funds or other property in the name of
the Trust exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property
such insurance as the Trustees may deem necessary or appropriate for the conduct
of the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
or having held any such office or position, or by reason of any action alleged
to have been taken or omitted by any such Person as Trustee, officer, employee,
agent, investment adviser, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
Person against liability; and
(m) To adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
The Trust shall not be limited to investing in obligations
maturing before the possible termination of the Trust or one or more of its
Series. The Trust shall not in any way be bound or limited by any present or
future law or custom in regard to investment by fiduciaries. The Trust shall not
be required to
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obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, principal underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees
shall have the power, as frequently as they may determine, to cause each
Shareholder, or each Shareholder of any particular Series, to pay directly, in
advance or arrears, for charges of the Trust's custodian or transfer,
Shareholder servicing or similar agent, an amount fixed from time to time by the
Trustees, by setting off such charges due from such Shareholder from declared
but unpaid dividends owed such Shareholder and/or by reducing the number of
shares in the account of such Shareholder by that number of full and/or
fractional Shares which represents the outstanding amount of such charges due
from such Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of
the assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on such terms
as the Trustees may determine. The right, title and interest of the Trustees in
the Trust Property shall vest automatically in each Person who may hereafter
become a Trustee. Upon the resignation, removal or death of a Trustee, he or she
shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title
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shall be effective whether or not conveyancing documents has been
executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be
set forth in the By-Laws, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory, management and/or
administrative services for the Trust or for any Series with any corporation,
trust, association or other organization; and any such contract may contain such
other terms as the Trustees may determine, including without limitation,
authority for the Investment Adviser or administrator to determine from time to
time without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated to such
party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal Underwriter for
the Shares of one or more of the Series (or classes) or other securities to be
issued by the Trust. Every such contract shall comply with such requirements and
restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time
to time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent and/or
shareholder servicing agent for the Trust or one or more of its Series. Every
such contract shall comply with such requirements and restrictions as may be set
forth in the By-Laws or stipulated by resolution of the Trustees.
(d) The Trustees are further empowered, at any time and from
time to time, to contract with any entity to provide such other services to the
Trust or one or more of the Series, as the Trustees determine to be in the best
interests of the Trust and the applicable Series.
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(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of
the Trust is a shareholder, director, officer, partner,
trustee, employee, investment adviser, manager, principal
underwriter, distributor, or affiliate or agent of or for any
corporation, trust, association, or other organization, or for
any parent or affiliate of any organization with which an
advisory, management or administration contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other type of service contract may
have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or
(ii) any corporation, trust, association or other
organization with which an advisory, management or
administration contract or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or
other type of service contract may have been or may hereafter
be made also has an advisory, management or administration
contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other service
contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the Investment Company Act.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions
of Article III, Section 6(d), the Shareholders shall have power
to vote only (i) for the election or removal of Trustees as
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provided in Article IV, Section 1, and (ii) with respect to such additional
matters relating to the Trust as may be required by this Declaration of Trust,
the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. As appropriate, voting may be by Series (or class). Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Section 2. Voting Power and Meetings. Meetings of the
Shareholders may be called by the Trustees for the purpose of electing Trustees
as provided in Article IV, Section l and for such other purposes as may be
prescribed by law, by this Declaration of Trust or by the By-Laws. Meetings of
the Shareholders may also be called by the Trustees from time to time for the
purpose of taking action upon any other matter deemed by the Trustees to be
necessary or desirable. A meeting of Shareholders may be held at any place
designated by the Trustees. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by mailing such notice at least
seven (7) days before such meeting, postage prepaid, stating the time and place
of the meeting, to each Shareholder at the Shareholder's address as it appears
on the records of the Trust. Whenever notice of a meeting is required to be
given to a Shareholder under this Declaration of Trust or the By-Laws, a written
waiver thereof, executed before or after the meeting by such Shareholder or his
or her attorney thereunto authorized and filed with the records of the meeting,
shall be deemed equivalent to such notice.
Section 3. Quorum and Required Vote. Except when a larger
quorum is required by applicable law, by the By-Laws or by this Declaration of
Trust, forty percent (40%) of the Shares entitled to vote shall constitute a
quorum at a Shareholders' meeting. When any one or more Series (or classes) is
to vote as
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a single class separate from any other Shares, forty percent (40%) of the Shares
of each such Series (or classes) entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series. Any meeting of Shareholders may be
adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of Article III, Section 6(d), when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by
shareholders may be taken without a meeting if Shareholders holding a majority
of the Shares entitled to vote on the matter (or such larger proportion thereof
as shall be required by any express provision of this Declaration of Trust or by
the By-Laws or by applicable law) and holding a majority (or such larger
proportion as aforesaid) of the Shares of any Series (or class) entitled to vote
separately on the matter consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series (or class) who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to time fix a
time, which shall be not more than ninety (90) days before the date of any
meeting of Shareholders, as the record date for determining the Shareholders of
such Series (or class) having the right to notice of and to vote at such meeting
and any adjournment thereof, and in such case only Shareholders of record on
such record date shall have such right, notwithstanding any transfer of shares
on the books of the Trust after the record date. For the purpose of determining
the Shareholders of any Series (or class) who are entitled to receive payment of
any dividend or of any other distribution, the Trustees may from time to time
fix a date, which shall be before the date for the payment of such dividend or
such other payment, as the record date for determining the Shareholders of such
Series (or class) having the right to
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receive such dividend or distribution. Without fixing a record date the Trustees
may for voting and/or distribution purposes close the register or transfer books
for one or more Series for all or any part of the period between a record date
and a meeting of Shareholders or the payment of a distribution. Nothing in this
Section shall be construed as precluding the Trustees from setting different
record dates for different Series (or classes).
Section 6. Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and
Distributions. Subject to Article III, Section 6 hereof, the Trustees, in their
absolute discretion, may prescribe and shall set forth in the By-laws or in a
duly adopted vote of the Trustees such bases and time for determining the
per-Share net asset value of the Shares of any Series or net income attributable
to the Shares of any Series, or the declaration and payment of dividends and
distributions on the Shares of any Series, as they may deem necessary or
desirable.
Section 2. Redemptions and Repurchases. The Trust shall
purchase such Shares as are offered by any Shareholder for redemption, upon the
presentation of a proper instrument of transfer together with a request directed
to the Trust or a Person designated by the Trust that the Trust purchase such
Shares or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize; and the Trust will pay therefor the
net asset value thereof, in accordance with the By-Laws and applicable law.
Payment for said Shares shall be made by the Trust to the Shareholder within
seven days after the date on which the request is made in proper form. The
obligation set forth in this Section 2 is subject to the provision that in the
event that any time the New York Stock Exchange (the "Exchange") is closed for
other than weekends or holidays, or if permitted by the Rules of the Commission
during periods when trading on the Exchange is restricted or during any
emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets held with respect to such Series or
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during any other period permitted by order of the Commission for the protection
of investors, such obligations may be suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid wholly
or partly in kind if the Trustees determine that such payment is advisable in
the interest of the remaining Shareholders of the Series for which the Shares
are being redeemed. Subject to the foregoing, the fair value, selection and
quantity of securities or other property so paid or delivered as all or part of
the redemption price may be determined by or under authority of the Trustees. In
no case shall the Trust be liable for any delay of any corporation or other
Person in transferring securities selected for delivery as all or part of any
payment in kind.
Section 3. Redemptions at the Option of the Trust. The Trust
shall have the right, at its option and at any time, to redeem Shares of any
Shareholder at the net asset value thereof as described in Section 1 of this
Article VI: (i) if at such time such Shareholder owns Shares of any Series
having an aggregate net asset value of less than an amount determined from time
to time by the Trustees prior to the acquisition of said Shares; or (ii) to the
extent that such Shareholder owns Shares of a particular Series equal to or in
excess of a percentage of the outstanding Shares of that Series determined from
time to time by the Trustees; or (iii) to the extent that such Shareholder owns
Shares equal to or in excess of a percentage, determined from time to time by
the Trustees, of the outstanding Shares of the Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for the same by the Trust.
Section 2. Indemnification and Limitation of
Liability. The Trustees shall not be responsible or liable in
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any event for any neglect or wrong-doing of any officer, agent, employee,
Investment Adviser or principal underwriter of the Trust, nor shall any Trustee
be responsible for the act or omission of any other Trustee, and the Trust out
of its assets shall indemnify and hold harmless each and every Trustee from and
against any and all claims and demands whatsoever arising out of or related to
each Trustee's performance of his or her duties as a Trustee of the Trust;
provided that nothing herein contained shall indemnify, hold harmless or protect
any Trustee from or against any liability to the Trust or any Shareholder to
which he or she would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever issued, executed or done by
or on behalf of the Trust or the Trustees or any of them in connection with the
Trust shall be conclusively deemed to have been issued, executed or done only in
or with respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable to the
Trust and to any Shareholder solely for his or her own wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and shall be under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase with Trust assets
insurance for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection with any claim,
action, suit or proceeding in which he or she becomes involved by virtue of his
or her capacity or former capacity with the Trust.
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ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees.
No Person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees or
to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 2. Termination of Trust or Series. Unless terminated
as provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by vote of a majority of the Shares of each
Series entitled to vote, voting separately by Series, or by the Trustees by
written notice to the Shareholders. Any Series may be terminated at any time by
vote of a majority of the Shares of that Series or by the Trustees by written
notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may
be), after paying or otherwise providing for all charges, taxes, expenses and
liabilities held, severally, with respect to each Series (or the applicable
Series, as the case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets held,
severally, with respect to each Series (or the applicable Series, as the case
may be), to distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds held with respect to each
Series (or the applicable Series, as the case may be), to the Shareholders of
that Series, as a Series, ratably according to the number of Shares of that
Series held by the several Shareholders on the date of termination.
Section 3. Merger and Consolidation. The Trustees may cause
(i) the Trust or one or more of its Series to the extent consistent with
applicable law to be merged into or consolidated with another trust or company,
(ii) the Shares of the Trust or any Series to be converted into beneficial
interests in another business trust (or series thereof) created pursuant to this
Section 3 of this Article VIII, or (iii) the Shares to be exchanged under or
pursuant to any state or federal statute to
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the extent permitted by law. Such merger or consolidation, Share conversion or
Share exchange must be authorized by vote of a majority of the outstanding
Shares of the Trust, as a whole, or any affected Series, as may be applicable;
provided that in all respects not governed by statute or applicable law, the
Trustees shall have the power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation including
the power to create one or more separate business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Series into beneficial interests in such separate business trust or trusts (or
series thereof).
Section 4. Amendments. This Declaration of Trust may be
restated and/or amended at any time by an instrument in writing signed by a
majority of the then Trustees and, if required, by approval of such amendment by
Shareholders in accordance with Article V, Section 3 hereof. Any such
restatement and/or amendment hereto shall be effective immediately upon
execution and approval. The Certificate of Trust of the Trust may be restated
and/or amended by a similar procedure, and any such restatement and/or amendment
shall be effective immediately upon filing with the Office of the Secretary of
State of the State of Delaware or upon such future date as may be stated
therein.
Section 5. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each restatement and/or amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendment, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such restatements and/or
amendments. 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 instrument. Whenever the singular number is used
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herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law. This Agreement and Declaration of
Trust is created under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the Delaware Business Trust
Act, as amended from time to time (the "Business Trust Act"). The Trust shall be
a Delaware business trust pursuant to such Business Trust Act, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a business trust.
Section 7. Provisions in Conflict with Law or
Regulations.
(a) The provisions of the Declaration of Trust
are severable, and if the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with the Investment Company Act, the
regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of the Declaration of Trust; provided, however,
that such determination shall not affect any of the remaining provisions of the
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of the Declaration of Trust
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the
Trustees to create a business trust pursuant to the Business Trust Act, and
thereby to create only the relationship of trustee and beneficial owners within
the meaning of such Business Trust Act between the Trustees and each
Shareholder. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation,
bailment, or any form of legal relationship other than a business trust pursuant
to such Act. Nothing in this
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Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
Section 9. Use of the Identifying Words "U.S. Global Leaders"
and "U.S. Global Leaders Variable Insurance Trust." The identifying words "U.S.
Global Leaders" and "U.S. Global Leaders Variable Insurance Trust" and all
rights to the use of such identifying words belong to __________________, the
proposed Investment Adviser of the Trust's Shares. __________________________
has licensed the Trust to use the identifying words "U.S. Global Leaders" in the
Trust's name and to use the identifying word "U.S. Global Leaders" in the name
of any series of the Trust. In the event that_____________ or an affiliate
of___________________ is not appointed or ceases to be the Investment Adviser of
the Trust, the non-exclusive license may be revoked by
___________________________, and the Trust and any series thereof shall
respectively cease using the identifying words "U.S. Global Leaders Variable
Insurance Trust" and "U.S. Global Leaders" unless otherwise consented to by
______________or any successor to __________________________ interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Trustees named below do hereby make
and enter into this Declaration of Trust as of the __th day of October, 1997.
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BY-LAWS
OF
U.S. Global Leaders Variable Insurance Trust
A Delaware Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix and, from
time to time, may change the location of the principal executive office of the
U.S. Global Leaders Variable Insurance Trust (the "Trust") at any place within
or outside the State of Delaware.
Section 2. DELAWARE OFFICE. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. OTHER OFFICES. The Board of Trustees may at any
time establish branch or subordinate offices at any place or
places where the Trust intends to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders
shall be held at any place designated by the Board of Trustees.
In the absence of any such designation, shareholders' meetings
shall be held at the principal executive office of the Trust.
Section 2. CALL OF MEETING. A meeting of the shareholders
may be called at any time by the Board of Trustees or by the
Chairman of the Board or by the President.
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Section 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 4 of
this Article II not less than seven (7) nor more than seventy-five (75) days
before the date of the meeting. The notice shall specify (i) the place, date and
hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the notice
are intended to be presented for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Trust's Agreement and Declaration of Trust,
(iii) a reorganization of the Trust, or (iv) a voluntary dissolution of the
Trust, the notice shall also state the general nature of that proposal.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address of that shareholder appearing on the books of the
Trust or its transfer agent or given by the shareholder to the Trust for the
purpose of notice. If no such address appears on the Trust's books or is given,
notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the Trust's
principal executive office, or if published at least once in a newspaper of
general circulation in the county where that office is located. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the Trust is returned to the Trust by the
United States Postal Service marked to indicate that the Postal Service is
unable to deliver the notice to the shareholder at that address, all future
notices or reports shall be deemed to have been duly given without further
mailing if these shall be available to the shareholder on written demand of the
shareholder at the principal executive office of the Trust for a period of one
year from the date of the giving of the notice.
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An affidavit of the mailing or other means of giving any notice of any
shareholder's meeting shall be executed by the Secretary, Assistant Secretary or
any transfer agent of the Trust giving the notice and shall be filed and
maintained in the minute book of the Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any shareholder's meeting,
whether or not a quorum is present, may be adjourned from time to time by the
vote of the majority of the shares represented at that meeting, either in person
or by proxy.
When any meeting of shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the original
meeting, in which case the Board of Trustees shall set a new record date. Notice
of any such adjourned meeting shall be given to each shareholder of record
entitled to vote at the adjourned meeting in accordance with the provisions of
Sections 3 and 4 of this Article II. At any adjourned meeting, the Trust may
transact any business which might have been transacted at the original meeting.
Section 6. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of the
Agreement and Declaration of Trust of the Trust, as in effect at such time. The
shareholders' vote may be by voice vote or by ballot, provided, however, that
any election for Trustees must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of Trustees, any
shareholder may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or vote them against the proposal, but if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to the total shares that the shareholder is
entitled to vote on such proposal.
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS. The
transactions of the meeting of shareholders, however called and noticed and
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice if a quorum be present either in person or by proxy and
if
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either before or after the meeting, each person entitled to vote who was not
present in person or by proxy signs a written waiver of notice or a consent to a
holding of the meeting or an approval of the minutes. The waiver of notice or
consent need not specify either the business to be transacted or the purpose of
any meeting of shareholders.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the beginning of the
meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any meeting of shareholders may be taken without a
meeting and without prior notice if a consent in writing setting forth the
action so taken is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all shares entitled to vote on that action
were present and voted. All such consents shall be filed with the Secretary of
the Trust and shall be maintained in the Trust's records. Any shareholder giving
a written consent or the shareholder's proxy holder or a transferee of the
shares or a personal representative of the shareholder or their respective proxy
holders may revoke the consent by a writing received by the Secretary of the
Trust before written consents of the number of shares required to authorize the
proposed action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the shareholders without a meeting. This notice
shall be given in the manner specified in Section 4 of this Article II. In the
case of approval of (i) contracts or transactions in which a Trustee has a
direct or indirect financial interest, (ii) indemnification of agents of the
Trust, and (iii) a reorganization of the Trust, the notice shall be given at
least ten (10) days before the consummation of any action authorized by that
approval.
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Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to action without a meeting, the
Board of Trustees may fix in advance a record date which shall not be more than
ninety (90) days nor less than seven (7) days before the date of any such
meeting as provided in the Agreement and Declaration of Trust of the Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at
the close of business on the business day next preceding the
day on which notice is given or if notice is waived, at the
close of business on the business day next preceding the day
on which the meeting is held.
(b) The record date for determining shareholders entitled
to give consent to action in writing without a meeting,
(i) when no prior action by the Board of Trustees has
been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the
Board of Trustees has been taken, shall be at the close
of business on the day on which the Board of Trustees
adopt the resolution relating to that action or the
seventy-fifth day before the date of such other action,
whichever is later.
Section 10. PROXIES. Every person entitled to vote for Trustees or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the Secretary of the Trust. A proxy shall be deemed signed if the shareholder's
name is placed on the proxy (whether by manual signature, typewriting,
telegraphic transmission or otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) revoked by the
person executing it before the vote pursuant to that proxy by a writing
delivered to the Trust stating that the proxy is revoked or by a subsequent
proxy executed by or attendance at the meeting and voting in person by the
person executing that proxy; or (ii) written notice of the death or incapacity
of the maker of that proxy is received
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by the Trust before the vote pursuant to that proxy is counted; provided
however, that no proxy shall be valid after the expiration of eleven (11) months
from the date of the proxy unless otherwise provided in the proxy.
Section 11. INSPECTORS OF ELECTION. Before any meeting of shareholders,
the Board of Trustees may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the holders of a majority of shares or
their proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as inspector fails
to appear or fails or refuses to act, the Chairman of the meeting may and on the
request of any shareholder or a shareholder's proxy, shall appoint a person to
fill the vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the
meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of
the Agreement and Declaration of Trust of the Trust and these By-
Laws relating to action required to be approved by the
shareholders or by the outstanding shares, the business and
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affairs of the Trust shall be managed and all powers shall be exercised by or
under the direction of the Board of Trustees.
Section 2. NUMBER OF TRUSTEES. The exact number of Trustees within the
limits specified in the Agreement and Declaration of Trust of the Trust shall be
fixed from time to time by a written instrument signed or a resolution approved
at a duly constituted meeting by a majority of the Board of Trustees.
Section 3. VACANCIES. Vacancies in the Board of Trustees may be filled
by a majority of the remaining Trustees, though less than a quorum, or by a sole
remaining Trustee, unless the Board of Trustees calls a meeting of shareholders
for the purposes of electing Trustees. In the event that at any time less than a
majority of the Trustees holding office at that time were so elected by the
holders of the outstanding voting securities of the Trust, the Board of Trustees
shall forthwith cause to be held as promptly as possible, and in any event
within sixty (60) days, a meeting of such holders for the purpose of electing
Trustees to fill any existing vacancies in the Board of Trustees, unless such
period is extended by order of the United States Securities and Exchange
Commission.
Notwithstanding the above, whenever and for so long as the Trust is a
participant in or otherwise has in effect a Plan under which the Trust may be
deemed to bear expenses of distributing its shares as that practice is described
in Rule 12b-1 under the Investment Company Act of 1940, then the selection and
nomination of the Trustees who are not interested persons of the Trust (as that
term is defined in the Investment Company Act of 1940) shall be, and is,
committed to the discretion of such disinterested Trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All meetings of
the Board of Trustees may be held at any place that has been designated from
time to time by resolution of the Board. In the absence of such a designation,
regular meetings shall be held at the principal executive office of the Trust.
With the exception of meetings at which an Investment Management Agreement,
Portfolio Advisory Agreement or any Distribution Plan adopted pursuant to Rule
12b-1 is approved by the Board, any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all Trustees
participating in the meeting can hear one another and all such Trustees shall be
deemed to be present in person at the meeting.
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Section 5. REGULAR MEETINGS. Regular meetings of the Board of Trustees
shall be held without call at such time as shall from time to time be fixed by
the Board of Trustees. Such regular meetings may be held without notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Board
of Trustees for any purpose or purposes may be called at any time
by the Chairman of the Board or the President or any Vice
President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail or
telegram, charges prepaid, addressed to each Trustee at that Trustee's address
as it is shown on the records of the Trust. In case the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of-the meeting. In case the notice is delivered
personally or by telephone or to the telegraph company or by express mail or
similar service, it shall be given at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the Trustee or to a person at the office
of the Trustee whom the person giving the notice has reason to believe will
promptly communicate it to the Trustee. The notice need not specify the purpose
of the meeting or the place if the meeting is to be held at the principal
executive office of the Trust.
Section 7. QUORUM. A majority of the authorized number of Trustees
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 10 of this Article III. Every act or decision done or made
by a majority of the Trustees present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Trustees, subject to the
provisions of the Trust's Agreement and Declaration of Trust. A meeting at which
a quorum is initially present may continue to transact business notwithstanding
the withdrawal of Trustees if any action taken is approved by a least a majority
of the required quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need
not be given to any Trustee who either before or after the
meeting signs a written waiver of notice, a consent to holding
the meeting, or an approval of the minutes. The waiver of notice
or consent need not specify the purpose of the meeting. All such
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waivers, consents, and approvals shall be filed with the records of the Trust or
made a part of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any Trustee who attends the meeting without protesting before or
at its commencement the lack of notice to that Trustee.
Section 9. ADJOURNMENT. A majority of the Trustees
present, whether or not constituting a quorum, may adjourn any
meeting to another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given unless the meeting is adjourned
for more than forty-eight (48) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting in the manner specified
in Section 6 of this Article III to the Trustees who were present at the time of
the adjournment.
Section 11. ACTION WITHOUT A MEETING. With the exception of the
approval of an investment management agreement, portfolio advisory agreement, or
any distribution plan adopted pursuant to Rule 12b-1, any action required or
permitted to be taken by the Board of Trustees may be taken without a meeting if
a majority of the members of the Board of Trustees shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a majority vote of the Board of
Trustees. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board of Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Trustees. This Section 12 shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee or otherwise and receiving compensation for those services.
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two (2) Trustees personally exercise the powers granted to
the Trustees under the Trust's Agreement and Declaration of Trust
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except as otherwise expressly provided herein or by resolution of the Board of
Trustees. Except where applicable law may require a Trustee to be present in
person, a Trustee represented by another Trustee pursuant to such power of
attorney shall be deemed to be present for purposes of establishing a quorum and
satisfying the required majority vote.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Board of Trustees may by
resolution adopted by a majority of the authorized number of Trustees designate
one or more committees, each consisting of one (1) or more Trustees, to serve at
the pleasure of the Board. The Board may designate one or more Trustees as
alternate members of any committee who may replace any absent member at any
meeting of the committee. Any committee to the extent provided in the resolution
of the Board, shall have the authority of the Board, except with respect to:
(a) the approval of any action which under applicable law also
requires shareholders' approval or approval of the outstanding
shares, or requires approval by a majority of the entire Board
or certain members of said Board;
(b) the filling of vacancies on the Board of Trustees or in
any committee;
(c) the fixing of compensation of the Trustees for serving
on the Board of Trustees or on any committee;
(d) the amendment or repeal of the Trust's Agreement and
Declaration of Trust or of the By-Laws or the adoption
of new By-Laws;
(e) the amendment or repeal of any resolution of the Board
of Trustees which by its express terms is not so
amendable or repealable;
(f) a distribution to the shareholders of the Trust, except
at a rate or in a periodic amount or within a
designated range determined by the Board of Trustees;
or
(g) the appointment of any other committees of the Board of
Trustees or the members of these committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and
action of committees shall be governed by and held and taken in
accordance with the provisions of Article III of these By-Laws,
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with such changes in the context thereof as are necessary to substitute the
committee and its members for the Board of Trustees and its members, except that
the time of regular meetings of committees may be determined either by
resolution of the Board of Trustees or by resolution of the committee. Special
meetings of committees may also be called by resolution of the Board of
Trustees. Alternate members shall be given notice of meetings of committees and
shall have the right to attend all meetings of committees. The Board of Trustees
may adopt rules for the government of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a President, a
Secretary and a Treasurer. The Trust may also have, at the discretion of the
Board of Trustees, a Chairman of the Board, one or more Vice Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust, except such
officers as may appointed in accordance with the provisions of Section 3 or
Sections of this Article V, shall be chosen by the Board of Trustees, and each
shall serve at the pleasure of the Board of Trustees, subject to the rights, if
any, of an officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may appoint and
may empower the President to appoint such other officers as the business of the
Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-Laws or as the
Board of Trustees may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights,
if any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by the Board of Trustees at any regular
or special meeting of the Board of Trustees or by the principal executive
officer or
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by such other officer upon whom such power of removal may be conferred by the
Board of Trustees.
Any officer may resign at any time by giving written notice to the
Trust. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Trust under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to that office.
The President may make temporary appointments to a vacant office pending action
by the Board of Trustees.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
Officer is elected, shall, if present, preside at meetings of the Board of
Trustees, subject to the control of the Board of Trustees, have general
supervision, direction and control of the business and the Officers of the Trust
and exercise and perform such other powers and duties as may be from time to
time assigned to him or her by the Board of Trustees or prescribed by the
By-Laws. The Chairman of the Board shall serve as chief executive officer in the
chief executive officer's absence.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the Board of Trustees to the Chairman of the Board, if there be
such an officer, the President shall, subject to the control of the Board of
Trustees and the Chairman, have general supervision, direction and control of
the business and the officers of the Trust. He or she shall preside at all
meetings of the shareholders and, in the absence of the Chairman of the Board or
if there be none, at all meetings of the Board of Trustees. He or she shall have
the general powers and duties of management usually vested in the offices of
president, chief executive officer and chief operating officer of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Trustees or these By-Laws.
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Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Trustees or if not ranked, the Executive Vice President (who shall be
considered first ranked) and such other Vice Presidents as shall be designated
by the Board of Trustees, shall perform all the duties of the President and,
when so acting, shall have all powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall have such other powers and perform
such other duties as from time to time may be prescribed for them respectively
by the Board of Trustees or the President or the Chairman of the Board or by
these By-Laws.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept at
the principal executive office of the Trust or such other place as the Board of
Trustees may direct a book of minutes of all meetings and actions of Trustees,
committees of Trustees and shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given,
the names of those present at Trustees' meetings or committee meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings.
The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a share register or a duplicate share register showing the names of all
shareholders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of
the shareholders and of the Board of Trustees required to be given by these
By-Laws or by applicable law and shall have such other powers and perform such
other duties as may be prescribed by the Board of Trustees or by these By-Laws.
Section 10. TREASURER. The Treasurer shall be the chief financial
officer and chief accounting officer of the Trust and shall keep and maintain or
cause to be kept and maintained adequate and correct books and records of
accounts of the properties and business transactions of the Trust, including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital, retained earnings and shares. The books
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of account shall at all reasonable times be open to inspection by
any Trustee.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Trust with such depositaries as may be designated by
the Board of Trustees. The Treasurer shall disburse the funds of the Trust as
may be ordered by the Board of Trustees, shall render to the President and
Trustees, whenever they request it, an account of all of his or her transactions
as chief financial officer and of the financial condition of the Trust and shall
have other powers and perform such other duties as may be prescribed by the
Board of Trustees or these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES OFFICERS
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article VI, "agent" means any person who is or was a Trustee, officer, employee
or other agent of this Trust or is or was serving at the request of this Trust
as a Trustee, director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise or
was a Trustee, director, officer, employee or agent of a foreign or domestic
corporation that was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes, without limitation, attorney's fees and any expenses of
establishing a right to indemnification under this Article VI.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed: (a) in the case of conduct in his or her
official capacity as a Trustee of the Trust, that his or her conduct was in the
Trust's best interests and (b), in all other cases, that his or her conduct was
at least not opposed to the Trust's best interests and (c) in the case of
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a criminal proceeding, that he or she had no reasonable cause to believe the
conduct of that person was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in good faith and in a manner which the person reasonably believed to be in the
best interests of this Trust or that the person had reasonable cause to believe
that the person's conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that that person is or was an agent
of this Trust, against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if that person acted
in good faith, in a manner that person believed to be in the best interests of
this Trust and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision
to the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article
VI:
(a) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable on the basis that
personal benefit was improperly received by him or her,
whether or not the benefit resulted from an action taken in
the person's official capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of
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the case, that person was not liable by reason of the
disabling conduct set forth in the preceding paragraph and is
fairly and reasonably entitled to indemnity for the expenses
which the court shall determine; or
(c) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
or of expenses incurred in defending a threatened or pending
action that is settled or otherwise disposed of without court
approval, unless the required approval set forth in Section 6
of this Article VI is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of
this Trust has been successful on the merits in defense of any proceeding
referred to in Sections 2 or 3 of this Article VI or in defense of any claim,
issue or matter therein, before the court or other body before whom the
proceeding was brought, the agent shall be indemnified against expenses actually
and reasonably incurred by the agent in connection therewith, provided that the
Board of Trustees, including a majority who are disinterested, non-party
Trustees, also determines that, based upon a review of the facts, the agent was
not liable by reason of the disabling conduct referred to in Section 4 of this
Article VI.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article VI, any indemnification under this Article VI shall be made by this
Trust only if authorized in the specific case on a determination that
indemnification of the agent is proper in the circumstances because the agent
has met the applicable standard of conduct set forth in Sections 2 or 3 of this
Article VI and is not prohibited from indemnification because of the disabling
conduct set forth in Section 4 of this Article VI, by:
(a) a majority vote of a quorum consisting of Trustees who
are not parties to the proceeding and are not
interested persons of the Trust (as defined in the
Investment Company Act of 1940); or
(b) a written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in
defending any proceeding may be advanced by this Trust before the
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<PAGE>
final disposition of the proceeding upon (a) receipt of a written affirmation by
the Trustee of his or her good faith belief that he or she has met the standard
of conduct necessary for indemnification under this Article VI and a written
undertaking by or on behalf of the agent, such undertaking being an unlimited
general obligation to repay the amount of the advance if it is ultimately
determined that he has not met those requirements, and (b) a determination that
the facts then known to those making the determination would not preclude
indemnification under this Article VI. Determinations and authorizations of
payments under this Section must be made in the manner specified in Section 6 of
this Article VI for determining that the indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
VI shall affect any right to indemnification to which persons other than
Trustees and officers of this Trust or any subsidiary hereof may be entitled by
contract or otherwise.
Section 9. LIMITATIONS. No indemnification or advance
shall be made under this Article VI, except as provided in
Sections 5 or 6 in any circumstances where it appears:
(a) that it would be inconsistent with a provision of the
Trust's Agreement and Declaration of Trust, a
resolution of the shareholders of the Trust, or an
agreement in effect at the time of accrual of the
alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were
paid which prohibits or otherwise limits
indemnification; or
(b) that it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article VI and the Trust's Agreement and Declaration of
Trust.
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<PAGE>
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article VI does
not apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section l of
this Article VI. Nothing contained in this Article VI shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contractor, otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article VI.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE OF SHARE REGISTER. This Trust shall keep at its
principal executive office or at the office of its transfer agent or registrar,
if either be appointed and as determined by resolution of the Board of Trustees,
a record of its shareholders, giving the names and addresses of all shareholders
and the number, series and, where applicable, class of shares held by each
shareholder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust shall keep
at its principal executive office the original or a copy of these By-Laws as
amended from time to time, which shall be open to inspection by the shareholders
at all reasonable times during office hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The accounting
books and records and minutes of proceedings of the shareholders and the Board
of Trustees and any committee or committees of the Board of Trustees shall be
kept at such place or places designated by the Board of Trustees or in the
absence of such designation, at the principal executive office of the Trust. The
minutes shall be kept in written form, and the accounting books and records
shall be kept either in written form or in any other form capable of being
converted into written form. The minutes and accounting books and records shall
be open to inspection upon the written demand of any shareholder or holder of a
voting trust certificate at any reasonable time during usual business hours of
the Trust for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. The inspection may
be made
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<PAGE>
in person or by an agent or attorney and shall include the right
to copy and make extracts.
Section 4. INSPECTION BY TRUSTEES. Every Trustee shall have the
absolute right at any reasonable time to inspect all books, records and
documents of every kind as well as the physical properties of the Trust. This
inspection by a Trustee may be made in person or by an agent or attorney, and
the right of inspection includes the right to copy and make extracts of
documents.
Section 5. FINANCIAL STATEMENTS. A copy of any financial statements and
any income statement of the Trust for each quarterly period of each fiscal year
and accompanying balance sheet of the Trust as of the end of each such period
that has been prepared by the Trust shall be kept on file in the principal
executive office of the Trust for at least twelve (12) months, and each such
statement shall be exhibited at all reasonable times to any shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such shareholder.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks, drafts
or other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board of
Trustees, except as otherwise provided in these By-Laws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the Trust and this authority may be
general or confined to specific instances; and unless so authorized or ratified
by
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<PAGE>
the Board of Trustees or within the agency power of an officer, no officer,
agent or employee shall have any power or authority to bind the Trust by any
contract or engagement, to pledge its credit or to render it liable for any
purpose or for any amount.
Section 3. CERTIFICATES FOR SHARES. In the event the Board of Trustees
determines that certificates certifying ownership of shares shall be issued, a
certificate or certificates for shares of beneficial interest in any series of
the Trust may be issued to a shareholder upon the shareholder's request when
such shares are fully paid. All certificates shall be signed in the name of the
Trust by the Chairman of the Board or the President or Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or any Assistant Secretary,
certifying the number of shares and the series of shares owned by the
shareholders. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the Trust with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue. Notwithstanding the
foregoing, the Trust may adopt and use a system of issuance, recordation and
transfer of its shares by electronic or other means.
Section 4. LOST CERTIFICATES. Except as provided in this Section 4, no
new certificate for shares shall be issued to replace an old certificate unless
the latter is surrendered to the Trust and cancelled at the same time. The Board
of Trustees may in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of a replacement
certificate on such terms and conditions as the Board of Trustees may require,
including a provision for indemnification of the Trust secured by a bond or
other adequate security sufficient to protect the Trust against any claim that
may be made against it, including any expense or liability on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST.
The Chairman of the Board, the President, any Vice President or any other person
authorized by resolution of the Board of Trustees or by any of the foregoing
designated officers, is authorized to vote or represent on behalf of the Trust
any and
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<PAGE>
all shares of any corporation, partnership, trusts or other entities, foreign or
domestic, standing in the name of the Trust. The authority granted may be
exercised in person or by a proxy duly executed by such designated person.
Section 6. FISCAL YEAR. The fiscal year of the Trust shall be fixed and
refixed or changed from time to time by resolution of the Trustees. The fiscal
year of the Trust shall be the taxable year of each Series of the Trust.
ARTICLE IX
AMENDMENTS
Section l. AMENDMENT BY SHAREHOLDERS. These By-Laws may be amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise provided by applicable
law or by the Trust's Agreement and Declaration of Trust or these By-Laws.
Section 2. AMENDMENT BY TRUSTEES. Subject to the right of shareholders
as provided in Section l of this Article IX to adopt, amend or repeal By-Laws,
and except as otherwise provided by applicable law or by the Trust's Agreement
and Declaration of Trust, these By-Laws may be adopted, amended or repealed by
the Board of Trustees.
Section 3. INCORPORATION BY REFERENCE INTO AGREEMENT AND DECLARATION OF
TRUST OF THE TRUST. These By-Laws and any amendments thereto shall be
incorporated by reference to the Trust's Agreement and Declaration of Trust.
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<PAGE>
BY-LAWS
for the regulation, except as
otherwise provided by statute or
the Agreement and Declaration of Trust of
U.S. Global Leaders Variable Insurance Trust
a Delaware Business Trust
(As of October __, 1997)
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<PAGE>
<TABLE>
TABLE OF CONTENTS
BY-LAWS
U.S. Global Leaders Variable Insurance Trust
Page
<S> <C>
ARTICLE I OFFICES................................................................................1
Section 1. PRINCIPAL OFFICE.............................................................................1
Section 2. DELAWARE OFFICE..............................................................................1
Section 3. OTHER OFFICES................................................................................1
ARTICLE II MEETINGS OF SHAREHOLDERS........................................................................1
Section 1. PLACE OF MEETINGS............................................................................1
Section 2. CALL OF MEETING..............................................................................1
Section 3. NOTICE OF SHAREHOLDERS' MEETING..............................................................1
Section 4. MANNER OF GIVING NOTICE;
AFFIDAVIT OF NOTICE..................................................................2
Section 5. ADJOURNED MEETING; NOTICE....................................................................2
Section 6. VOTING.......................................................................................3
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT
SHAREHOLDERS.........................................................................3
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING....................................................................3
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING
AND GIVING CONSENTS..................................................................4
Section 10. PROXIES......................................................................................4
Section 11. INSPECTORS OF ELECTION.......................................................................5
ARTICLE III TRUSTEES........................................................................................5
Section 1. POWERS.......................................................................................5
Section 2. NUMBER OF TRUSTEES...........................................................................6
Section 3. VACANCIES....................................................................................6
Section 4. PLACE OF MEETINGS AND MEETINGS BY
TELEPHONE............................................................................6
Section 5. REGULAR MEETINGS.............................................................................6
Section 6. SPECIAL MEETINGS.............................................................................6
Section 7. QUORUM.......................................................................................7
Section 8. WAIVER OF NOTICE.............................................................................7
Section 9. ADJOURNMENT..................................................................................7
Section 10. NOTICE OF ADJOURNMENT........................................................................7
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 11. ACTION WITHOUT A MEETING.....................................................................7
Section 12. FEES AND COMPENSATION OF TRUSTEES............................................................8
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES........................................................8
ARTICLE IV COMMITTEES......................................................................................8
Section 1. COMMITTEES OF TRUSTEES.......................................................................8
Section 2. MEETINGS AND ACTION OF COMMITTEES............................................................9
ARTICLE V OFFICERS...............................................................................9
Section 1. OFFICERS.....................................................................................9
Section 2. ELECTION OF OFFICERS.........................................................................9
Section 3. SUBORDINATE OFFICERS.........................................................................9
Section 4. REMOVAL AND RESIGNATION OF OFFICERS.........................................................10
Section 5. VACANCIES IN OFFICES........................................................................10
Section 6. CHAIRMAN OF THE BOARD.......................................................................10
Section 7. PRESIDENT...................................................................................10
Section 8. VICE PRESIDENTS.............................................................................10
Section 9. SECRETARY...................................................................................11
Section 10. TREASURER...................................................................................11
ARTICLE VI INDEMNIFICATION OF TRUSTEES OFFICERS
EMPLOYEES AND OTHER AGENTS............................................................12
Section 1. AGENTS, PROCEEDINGS AND EXPENSES............................................................12
Section 2. ACTIONS OTHER THAN BY TRUST.................................................................12
Section 3. ACTIONS BY THE TRUST........................................................................12
Section 4. EXCLUSION OF INDEMNIFICATION................................................................13
Section 5. SUCCESSFUL DEFENSE BY AGENT.................................................................13
Section 6. REQUIRED APPROVAL...........................................................................13
Section 7. ADVANCE OF EXPENSES.........................................................................14
Section 8. OTHER CONTRACTUAL RIGHTS....................................................................14
Section 9. LIMITATIONS.................................................................................14
Section 10. INSURANCE...................................................................................14
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN........................................................15
ARTICLE VII RECORDS AND REPORTS...................................................................15
Section 1. MAINTENANCE AND INSPECTION OF SHARE
REGISTER............................................................................15
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS.......................................................15
Section 3. MAINTENANCE AND INSPECTION OF OTHER
RECORDS.............................................................................15
Section 4. INSPECTION BY TRUSTEES......................................................................15
Section 5. FINANCIAL STATEMENTS........................................................................16
ARTICLE VIII GENERAL MATTERS.......................................................................16
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS....................................................16
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED.....................................................16
Section 3. CERTIFICATES FOR SHARES.....................................................................16
Section 4. LOST CERTIFICATES...........................................................................17
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES
HELD BY TRUST.......................................................................17
Section 6. FISCAL YEAR.................................................................................17
ARTICLE IX AMENDMENTS.....................................................................................17
Section 1. AMENDMENT BY SHAREHOLDERS...................................................................17
Section 2. AMENDMENT BY TRUSTEES.......................................................................17
Section 3. INCORPORATION BY REFERENCE INTO AGREEMENT
AND DECLARATION OF TRUST OF THE TRUST...............................................18
</TABLE>
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Ex. 5
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST
INVESTMENT ADVISORY AGREEMENT
[FUND NAME]
THIS INVESTMENT ADVISORY AGREEMENT is made as of the ___ day
of ___________, 199__, by and between U.S. GLOBAL LEADERS VARIABLE INSURANCE
TRUST, a Delaware business trust (hereinafter called the "Trust"), on behalf of
the following series of the Trust, U.S. Global Leaders Growth Variable Insurance
Fund (the "Fund") and Yeager, Wood & Marshall, a New York corporation
(hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); and
WHEREAS, the Fund is a series of the Trust having
separate assets and liabilities; and
WHEREAS, the Advisor is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and is engaged in the
business of supplying investment advice as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render
advice and services to the Fund pursuant to the terms and provisions of this
Agreement, and the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the
mutual promises hereinafter set forth, the parties to this Agreement, intending
to be legally bound hereby, mutually agree as follows:
1. Appointment of Advisor. The Trust hereby employs
the Advisor and the Advisor hereby accepts such employment, to
render investment advice and related services with respect to the
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assets of the Fund for the period and on the terms set forth in this Agreement,
subject to the supervision and direction of the Trust's Board of Trustees.
2. Duties of Advisor.
(a) General Duties. The Advisor shall act as
investment adviser to the Fund and shall supervise investments of the Fund on
behalf of the Fund in accordance with the investment objectives, policies and
restrictions of the Fund as set forth in the Fund's and Trust's governing
documents, including, without limitation, the Trust's Agreement and Declaration
of Trust and By-Laws; the Fund's prospectus, statement of additional information
and undertakings; and such other limitations, policies and procedures as the
Trustees may impose from time to time in writing to the Advisor. In providing
such services, the Advisor shall at all times adhere to the provisions and
restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the Advisor
shall: (i) furnish the Funds with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (i.e., placing the orders); (ii)
manage and oversee the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iii) vote proxies
for the Fund, file Section 13 ownership reports for the Fund, and take other
actions on behalf of the Fund; (iv) maintain the books and records required to
be maintained by the Fund except to the extent arrangements have been made for
such books and records to be maintained by the administrator or another agent of
the Fund; (v) furnish reports, statements and other data on securities, economic
conditions and other matters related to the investment of the Fund's assets
which the Fund's administrator or distributor or the officers of the Trust may
reasonably request; and (vi) render to the Trust's Board of Trustees such
periodic and special reports with respect to each Fund's investment activities
as the Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
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<PAGE>
(b) Brokerage. The Advisor shall be responsible
for decisions to buy and sell securities for the Fund, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Advisor shall not direct order to an affiliated person of the Advisor without
general prior authorization to use such affiliated broker or dealer for the
Trust's Board of Trustees. The Advisor's primary consideration in effecting a
securities transaction will be execution at the most favorable price. In
selecting a broker-dealer to execute each particular transaction, the Advisor
may take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Fund on a
continuing basis. The price to the Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees of the Trust
may determine, the Advisor shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Fund to pay a broker or dealer that provides (directly
or indirectly) brokerage or research services to the Advisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
the Trust. The Advisor is further authorized to allocate the orders placed by it
on behalf of the Fund to such brokers or dealers who alsO provide research or
statistical material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
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<PAGE>
i.e., that such brokers or dealers are able to execute the order promptly and at
the best obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a
security to be in the best interest of one or more of the Fund as well as of
other clients, the Advisor, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Advisor in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
3. Representations of the Advisor.
(a) The Advisor shall use its best judgment and
efforts in rendering the advice and services to the Funds as
contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and
registrations necessary to perform its duties hereunder in good
order.
(c) The Advisor shall conduct its operations at
all times in conformance with the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and any other applicable state and/or
self-regulatory organization regulations.
(d) The Advisor shall maintain errors and
omissions insurance in an amount at least equal to $_____________, with a
deductible not to exceed $___________, throughout the term of this Agreement.
4. Independent Contractor. The Advisor shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Fund in any way, or in any way be deemed an agent for
the Trust or for the Fund. It is expressly understood and agreed that the
services to be rendered by the Advisor to the Funds under the provisions of this
Agreement are not to be deemed exclusive, and the Advisor shall be free to
render similar or different services
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<PAGE>
to others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
5. Advisor's Personnel. The Advisor shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. Expenses.
(a) With respect to the operation of the Fund,
the Advisor shall be responsible for (i) providing the personnel, office space
and equipment reasonably necessary for the operation of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Advisor. If the Advisor has agreed to limit the operating
expenses of the Fund, the Advisor shall also be responsible on a monthly basis
for any operating expenses that exceed the agreed upon expense limit.
(b) The Fund is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its
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<PAGE>
daily net asset value and of maintaining its books of account required under the
Investment Company Act; taxes, if any; a pro rata portion of expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are properly payable by the Fund; salaries and expenses of
officers and fees and expenses of members of the Trust's Board of Trustees or
members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Advisor; insurance premiums on property or
personnel of each Fund which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the Fund or
other communications for distribution to existing shareholders; legal, auditing
and accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Funds, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses, except as
herein otherwise prescribed.
(c) The Advisor may voluntarily absorb certain
Fund expenses or waive the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by
assuming expenses which are an obligation of a Fund as set forth herein, the
Fund shall promptly reimburse the Advisor for such costs and expenses, except to
the extent the Advisor has otherwise agreed to bear such expenses. To the extent
the services for which a Fund is obligated to pay are performed by the Advisor,
the Advisor shall be entitled to recover from such Fund to the extent of the
Advisor's actual costs for providing such services. In determining the Advisor's
actual costs, the Advisor may take into account an allocated portion of the
salaries and overhead of personnel performing such services.
7. Investment Advisory and Management Fee.
(a) The Fund shall pay to the Advisor, and the
Advisor agrees to accept, as full compensation for all investment management and
advisory services furnished or provided to such Fund pursuant to this Agreement,
an annual management fee equal
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<PAGE>
to 1.00% of the Fund's daily net assets, computed on the value of the net assets
of the Fund as of the close of business each day.
(b) The management fee shall be accrued daily by
each Fund and paid to the Advisor on or before the tenth business
day of the succeeding month.
(c) The initial fee under this Agreement shall be
payable on or before the tenth business day of the first month following the
effective date of this Agreement and shall be prorated as set forth below. If
this Agreement is terminated prior to the end of any month, the fee to the
Advisor shall be prorated for the portion of any month in which this Agreement
is in effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Advisor under this
Agreement will be reduced to the extent of any receivable owed by the Advisor to
the Fund and as required under any expense limitation applicable to a Fund.
(e) The Advisor voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant to
this Agreement and may agree to make payments to limit the expenses which are
the responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Advisor hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and
any Fund expense absorbed by the Advisor voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Fund to the Advisor, if so requested
by the Advisor, in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund
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<PAGE>
expenses. Such reimbursement may be paid prior to the Fund's payment of current
expenses if so requested by the Advisor even if such practice may require the
Advisor to waive, reduce or absorb current Fund expenses.
(g) The Advisor may agree not to require payment
of any portion of the compensation or reimbursement of expenses otherwise due to
it pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Advisor hereunder.
8. No Shorting; No Borrowing. The Advisor agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Funds. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Advisor or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Advisor agrees that neither it nor any of its officers or employees shall borrow
from the Fund or pledge or use the Fund's assets in connection with any
borrowing not directly for the Fund's benefit. For this purpose, failure to pay
any amount due and payable to the Fund for a period of more than thirty (30)
days shall constitute a borrowing.
9. Conflicts with Trust's Governing Documents and Applicable
Laws. Nothing herein contained shall be deemed to require the Trust or the Fund
to take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds. In this connection, the Advisor
acknowledges that the Trustees retain ultimate plenary authority over the Fund
and may take any and all actions necessary and reasonable to protect the
interests of shareholders.
10. Reports and Access. The Advisor agrees to supply
such information to the Fund's administrator and to permit such
compliance inspections by the Fund's administrator as shall be
reasonably necessary to permit the administrator to satisfy its
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<PAGE>
obligations and respond to the reasonable requests of the
Trustees.
11. Advisor's Liabilities and Indemnification.
(a) The Advisor shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the statements
in the Fund's offering materials (including the prospectus, the statement of
additional information, advertising and sales materials), except for information
supplied by the administrator or the Trust or another third party for inclusion
therein.
(b) The Advisor shall be liable to the Fund for
any loss (including brokerage charges) incurred by the Fund as a result of any
improper investment made by the Advisor.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Advisor, the Advisor shall not be subject to
liability to the Trust or the Fund or to any shareholder of the Fund for any act
or omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Funds.
(d) Each party to this Agreement shall indemnify
and hold harmless the other party and the shareholders, directors, officers and
employees of the other party (any such person, an "Indemnified Party") against
any loss, liability, claim, damage or expense (including the reasonable cost of
investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or non-performance of any duties
under this Agreement provided, however, that nothing herein shall be deemed to
protect any Indemnified Party against any liability to which such Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or
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<PAGE>
officer of the Advisor, from liability in violation of
Sections 17(h) and (i) of the Investment Company Act.
12. Non-Exclusivity; Trading for Advisor's Own Account. The
Trust's employment of the Advisor is not an exclusive arrangement. The Trust may
from time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Trust' Board of Trustees.
13. Term.
(a) This Agreement shall become effective at the
time the Fund commences operations pursuant to an effective amendment to the
Trust's Registration Statement under the Securities Act of 1933 and shall remain
in effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (l) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of each Fund and (ii)
the vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Fund may use the name "The [ ]
Fund" or any name derived from or using the name "[ ]" only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect.
Within sixty (60) days from such time as this Agreement shall no longer be in
effect, the
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<PAGE>
Fund shall cease to use such a name or any other name connected with the
Advisor.
14. Termination; No Assignment.
(a) This Agreement may be terminated by the Trust
on behalf of the Fund at any time without payment of any penalty, by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of a Fund, upon sixty (60) days' written notice to the Advisor, and
by the Advisor upon sixty (60) days' written notice to a Fund. In the event of a
termination, the Advisor shall cooperate in the orderly transfer of the Fund's
affairs and, at the request of the Board of Trustees, transfer any and all books
and records of the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in
the Investment Company Act.
15. Severability. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or
rule, or shall be otherwise rendered invalid, the remainder of
this Agreement shall not be affected thereby.
16. Notice of Declaration of Trust. The Advisor agrees that
the Trust's obligations under this Agreement shall be limited to the Funds and
to their assets, and that the Advisor shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any trustee, officer,
employee or agent of the Trust or the Funds.
17. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or limit any of the provisions hereof or otherwise affect their
construction or effect.
18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisors Act of 1940 and any rules and regulations promulgated thereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
U.S GLOBAL LEADERS VARIABLE YEAGER, WOOD & MARSHALL
INSURANCE TRUST on behalf of
U.S. Global Leaders Growth
Variable Insurance Fund
By: By:
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ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the ___ day of January, 1998 by and between
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST (the "Trust")a Delaware Business
Trust and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a Delaware Corporation
(the "Administrator").
WITNESSETH
WHEREAS, the Trust is an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), with shares of
beneficial interest organized into separate series ("series" or "portfolios");
and
WHEREAS, the Trust wishes to retain the Administrator to provide certain
administrative services in connection with the management of the operations of
the various portfolio series of the Trust and the Administrator is willing to
furnish such services:
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Administrator to provide
certain administrative services, hereinafter enumerated, in connection with the
management of the portfolios' operations for the period and on the terms set
forth in this Agreement. The Administrator agrees to comply with all relevant
provisions of the 1940 Act, applicable rules and regulations thereunder, and
other applicable law.
2. Services on a Continuing Basis. The Administrator will
perform the following services on a regular basis which would be
daily weekly or as otherwise appropriate:
(A) prepare and coordinate reports and other materials to
be supplied to the Board of Trustees of the Trust;
(B) prepare and/or supervise the preparation and filing of all securities
filings, periodic financial reports, prospectuses,
<PAGE>
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Trust and the portfolios.
(C) prepare all required filings necessary to maintain the Trust's and
portfolios' qualification and/or registration to sell shares in all states where
the Trust and portfolios currently do, or intend to do business;
(D) coordinate the preparation, printing and mailing of all materials
(e.g., Annual Reports) required to be sent to shareholders;
(E) coordinate the preparation and payment of Trust and
portfolio related expenses;
(F) monitor and oversee the activities of the Trust's and the portfolios'
servicing agents (i.e., transfer agent, custodian, fund accountants, etc.);
(G) review and adjust as necessary the portfolios' daily
expense accruals; and
(H) perform such additional services as may be agreed upon by the Trust
and the Administrator.
3. Responsibility of the Administrator. The Administrator shall be under no
duty to take any action on behalf of the Trust or the portfolios except as set
forth herein or as may be agreed to by the Administrator in writing. In the
performance of its duties hereunder, the Administrator shall be obligated to
exercise reasonable care and diligence and to act in good faith and to use its
best efforts. Without limiting the generality of the foregoing or any other
provision of this Agreement, the Administrator shall not be liable for delays or
errors or loss of data occurring by reason of circumstances beyond the
Administrator's control.
4. Reliance Upon Instructions. The Trust agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator from the Board of Trustees of the Trust and shall
incur no liability to the Trust or the investment adviser to any portfolio in
acting upon such oral or written instructions, provided such instructions
reasonably appear to have been received from a
<PAGE>
person duly authorized by the Board of Trustees of the Trust to give oral or
written instructions on behalf of the Trust or any portfolio.
5. Confidentiality; Maintenance of Records. The Administrator agrees on
behalf of itself and its employees to treat confidentially all records and other
information relative to the Trust and portfolios and all prior, present or
potential shareholders of any and all portfolios, except after prior
notification to, and approval of release of information in writing by, the
Trust, which approval shall not be unreasonably withheld where the Administrator
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust or by a portfolio. Any records required to be
maintained and preserved by the Trust or any of its portfolios which are
maintained or preserved by the Administrator under this Agreement are property
of the Trust and its portfolios and will be surrendered to the Trust or its
portfolios promptly upon request.
6. Equipment Failures. In the event of equipment failures or the occurrence
of events beyond the Administrator's control which render the performance of the
Administrator's functions under this agreement impossible, the Administrator
shall take reasonable steps to minimize service interruptions and is authorized
to engage the services of third parties to prevent or remedy such service
interruptions.
7. Compensation. As compensation for services rendered by the
Administrator during the term of this agreement, each portfolio
of the Trust will pay to the Administrator a monthly fee at the
annual rate determined on Schedule A to this agreement.
8. Indemnification. The Trust and portfolios agree to indemnify and hold
harmless the Administrator from all taxes, filing fees, charges, expenses,
assessments, claims and liabilities (including without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act of 1934,
the 1940 Act, and any state and foreign securities laws, all as amended from
time to time) and expenses, including (without limitation) reasonable attorneys
fees and disbursements, arising directly or indirectly from any action or thing
which the Administrator takes or does or omits to take or do at the request of
or in reliance upon the advice of the Board of Trustees of the
<PAGE>
Trust, provided that the Administrator will not be indemnified against any
liability to a Portfolio or to shareholders (or any expenses incident to such
liability) arising out of the Administrator's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties and obligations under this
Agreement. The Administrator agrees to indemnify and hold harmless the Trust and
each of its Trustees from all claims and liabilities (including without
limitation, liabilities under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities laws,
all as amended from time to time) and expenses, including (without limitation)
reasonable attorneys fees and disbursements, arising directly or indirectly from
any action or thing which the Administrator takes or does or omits to take or do
which is in violation of this Agreement or not in accordance with instructions
properly given to the Administrator, or arising out of the Administrator's own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
9. Duration and termination. This Agreement shall continue until
termination by the Trust on behalf of any portfolio (through the Board of
Trustees) or the Administrator on 60 days' written notice to the other. All
notices and other communications hereunder shall be in writing.
10. Amendments. This Agreement or any part hereof may be
changed or waived only by instrument in writing signed by the
party against which enforcement of such change or waiver is
sought.
11. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties thereto with respect to the services to be
performed hereunder, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their
<PAGE>
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first written
above.
By:________________________________________
Title:____________________________________
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST
By:________________________________________
Title:_____________________________________
INVESTMENT COMPANY ADMINISTRATION CORPORATION
<PAGE>
Schedule A
FEE RATES APPLICABLE TO PORTFOLIOS OF U.S. GLOBAL LEADERS
VARIABLE INSURANCE TRUST
I.
U.S. Global Leaders Growth Variable Insurance Fund
Administration fee paid monthly at the following annual rate:
Average net assets of fund Fee or Fee Rate
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
January , 1998
