Securities Act File No. 333-41237
Investment Company Act File No. 811-08523
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2
(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.
<PAGE>
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
<PAGE>
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............................ Not applicable
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" or the "Variable
Insurance 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 March ,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.
<PAGE>
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
<PAGE>
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 May , 1998
2
<PAGE>
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%.
<PAGE>
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 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
4
<PAGE>
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
<PAGE>
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
5
<PAGE>
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
<PAGE>
capital growth and that they are not overvalued in the marketplace, such shares
are ordinarily retained. Thus, it is expected that the Fund's annual rate of
portfolio turnover will be relatively low compared to that of most common stuck
mutual funds, normally not more than 25%
Foreign Investments
There are foreign companies that fit the profile of Global
6
<PAGE>
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
7
<PAGE>
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
<PAGE>
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.
Year 2000. Like other mutual funds, financial and business organizations around
the world, the Fund could be adversely affected if the computer systems used by
it, the Advisor and other service providers and entities with computer systems
that are linked to Fund records do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 issue." The Fund and Advisor are taking steps
that are reasonably designed to address the Year 2000 issue with respect to the
computer systems they use and to obtain satisfactory assurances that comparable
steps are being taken by each of the Fund's other, major service providers.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Fund.
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: RELATED MUTUAL FUNDS
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
Variable Insurance Fund. The portfolio manager for the U.S. Global Fund is the
same individual who manages the Variable Insurance 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.
8
<PAGE>
As noted above, fees and charges are imposed pursuant to the terms of the
Contracts funded by the separate accounts that invest in the Variable Insurance
Fund. Performance information for the Variable Insurance Fund will be presented
in conjunction with performance information about these Contracts. Purchasers
should bear in mind that the total returns for the separate account assets that
relate to the Contracts will be lower than the total returns for the U.S. Global
Leaders Growth Fund set forth below, which was not subject to the fees and
charges assessed under the Contracts. Purchasers should not rely on the past
performance data for the U.S. Global Leaders Growth Fund or for the Variable
Insurance Fund itself as an indication of future performance of the Contracts or
the Variable Insurance Fund.
<PAGE>
U.S. Global Leaders Growth Fund
Average Annual Total Return
Year Ended March 31, 1998 59.60%
Inception on Sept. 29, 1995 through
March 31, 1998 36.42%
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, who has been associated with the
advisor since its inception. 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
9
<PAGE>
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
<PAGE>
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 next
determined after receipt of a purchase order. 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.
10
<PAGE>
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. 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,
11
<PAGE>
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
<PAGE>
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
12
<PAGE>
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
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
Advisor
Yeager, Wood & Marshall, Incorporated
630 Fifth Avenue
New York, NY 10111
(212) 765-5350
Custodian
Star Bank
425 Walnut St.
Cincinnati, OH 45202
<PAGE>
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
15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May , 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
</TABLE>
USG SAI B-1
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
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>
<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, their
affiliations, dates of birth and principal occupations for the past five years
are set forth below.
<PAGE>
Steven J. Paggioli,* 04/03/50 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, 08/12/43 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, 09/10/39 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.
Carl A. Froebel, 05/23/38 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. (asset management computer and software
products). Formerly President and Founder, National Investor Data Services, Inc.
(investment related computer software).
Rowley W.P. Redington, 06/01/44 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*, 08/05/57 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*, 11/17/56 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. (investment management) (1991-93).
Robert H. Wadsworth*, 01/25/40 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 $1,000. Trustees also receive a fee of $1000 for any special meeting
attended. 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
<PAGE>
portfolios of the Trust.
Name of Trustee Total Annual Compensation
Dorothy A. Berry $1,000
Wallace L. Cook $1,000
Carl A. Froebel $1,000
Rowley W.P. Redington $1,000
As of the date of this Statement, officers and Trustees owned less than 1%
of the Fund's outstanding voting securities.
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
<PAGE>
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
<PAGE>
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services, including analytical
reports, statistical or other related information 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, and (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.
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
<PAGE>
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. Under that Rule,
the Fund may elect to redeem shares in assets other than cash, but must pay in
cash all redemptions with respect to any shareholder during any 90 day period in
an amount equal to the lesser of (i) $250,000 or (ii) 1% of the net asset value
of the Fund at the beginning of the period.
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.
FUND SERVICE PROVIDERS
Investors in the Fund will be informed of the Fund's progress through
<PAGE>
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, and as such safekeeps the Fund's
portfolio securities, collects all income and other payments relating to the
Fund's holdings, disburses funds at the Fund's request and maintains certain
Fund records. 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 public accountants for the Fund, and audit the Fund's financial
statements.
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.
<PAGE>
FINANCIAL STATEMENTS
U. S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND
STATEMENT OF ASSETS AND LIABILITIES
May 11, 1998
ASSETS
Cash $100,000
Deferred organization expenses 13,250
Total assets 13,250
LIABILITIES
Organization expenses payable 13,250
NET ASSETS $100,000
Net asset value, offering and redemption price per share
($100,000/10,000 sharespending issuance; unlimited
number of shares authorized without par value) $10.00
Note 1. Organization:
U.S. Global Leaders Growth Variable Insurance Fund (the "Fund") was
organized in Delaware on October 6, 1997 and is registered with the Securities
and Exchange Commission as a non-diversified series of U.S. Global Leaders
Growth Variable Insurance Trust (the "Trust"), an open-end management investment
company offering redeemable shares of beneficial interest. The investment
objective of the Fund is to seek growth of capital.
Organization expenses estimated at $13,250 will be deferred and
amortized on a straight-line basis over a 60-month period from the date the Fund
commences operations. In the event that any of the initial shares of the Fund
are redeemed during the amortization period by any holder thereof, the
redemption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of such shares being redeemed bears to the
number of initial shares that are outstanding at the time of the redemption.
Note 2. Agreements:
The Fund intends to enter into an investment advisory agreement with
Yeager, Wood, & Marshall, Inc. (the "Investment Advisor") pursuant to which the
Investment Advisor will be responsible for providing investment advisory
services to the Fund (the "Advisory Agreement"). For services under the
Investment Advisory Agreements, the Fund will pay the Investment Advisor at an
annual rate of 1.00% of the average daily net asset value of the Fund.
The Fund intends to enter into an administrative agreement with
Investment Company Administration Corporation (the "Administrator") pursuant to
which the Administrator will provide the Fund with certain administrative
services. For its services, the Administrator will receive a monthly fee at the
following annual rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator.
The Fund intends to enter into a custody agreement with Star Bank (the
"Custodian") pursuant to which the Custodian will provide the Fund with custody
services for the Fund's assets. The custody agreement provides for custodial
fees computed and paid monthly at an annual rate based on the amount of assets
under custody, plus transactional fees.
The Fund intends to enter into an agreement with American Data
Services, Inc. (the Fund Accountant") pursuant to which the Fund Accountant will
provide the Fund with accounting services. The agreement provides for accounting
services computed and paid monthly at an annual rate based on the average net
assets of the Fund, plus out-of pocket expenses.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of U.S. Global Leaders Growth
Variable Insurance Fund
We have audited the accompanying statement of assets and liabilities of
U.S. Global Leaders Growth Variable Insurance Fund (the "Fund") as of May 11,
1998. This financial statement is the responsibility of the Fund's management.
Our responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to
above presents fairly, in all material respects, the financial position of the
Fund as of May 11, 1998 in conformity with generally accepted accounting
principles.
ERNST & YOUNG, LLP
Los Angeles, California
May 11, 1998
<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-1
(2) By-Laws-1
(3) Voting Trust Agreement -- Not applicable
(4) Specimen Share Certificate
(5) Form of Investment Advisory Agreement-1
(6) Form of Distribution Agreement-Not applicable
(7) Benefit Plan -- Not applicable
(8) Form of Custodian and Transfer Agent Agreements
(9) Form of Administration Agreement-1
(10) Consent and Opinion of Counsel as to legality of shares
(11) Consent of Accountants
(12) All Financial Statements omitted from Item 23 --
Not applicable
(13) Letter of Understanding relating to initial capital
(14) Model Retirement Plan Documents - Not applicable
(15) Form of Plan pursuant to Rule 12b-1-Not Applicable
(16) Schedule for Computation of Performance
Quotations--Not applicable
1-Filed with Registration Statement on Form N-1A on November 28, 1997
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 May 15, 1998
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 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 2020 E.
Financial Way, Ste. 100, 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 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 May 14, 1998.
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 May 14, 1998
Steven J. Paggioli
Eric M. Banhazl Principal May 14, 1998
Eric M. Banhazl Financial
Officer
Dorothy A. Berry Trustee May 14, 1998
Dorothy A. Berry
Wallace L. Cook Trustee May 14, 1998
Wallace L. Cook
Carl A. Froebel Trustee May 14, 1998
Carl A. Froebel
Rowley W. P. Redington Trustee May 14, 1998
- ----------------------
Rowley W. P. Redington
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE FUND
a series of
U.S. Global Leaders Variable Insurance Trust
(A Delaware Business Trust)
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES THAT CUSIP
is the owner of shares of beneficial interest in the U.S. Global
Leaders Growth Variable Insurance Fund (the "Fund") series of U.S. Global
Leaders Variable Insurance Trust (the "Trust"), fully paid and nonassessable,
the said shares being issued and held subject to the provisions of the Agreement
and Declaration of Trust of the Trust, and all amendments thereto. The said
owner by accepting this certificate agrees to and is bound by all of the said
provisions. The shares represented hereby are transferable in writing by
the owner thereof in person or by attorney upon surrender of this
certificate to the Fund properly endorsed for transfer. This certificate is
executed on behalf of the Trustees of the Trust as Trustees and not
individually and the obligations hereof are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the U.S. Global Leaders Growth Variable Insurance Fund
series of the Trust.
Dated,
SEAL
TREASURER PRESIDENT
<PAGE>
For value received, ______________________ hereby sell, assign and transfer unto
(Please print of typewrite name and address, including zip code, of assignee)
Shares of beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint Attorney to transfer the said shares
on the books of U.S. Global Leaders Variable Insurance Trust with full power of
substitution in the premises.
Dated, _________________
Owner
Signature guaranteed by:
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of 1998,
by and between U.S. Global Leaders Variable Insurance Trust, (the "Trust")
and Star Bank, National Association, (the "Custodian"), a national banking
association having its principal office at 425 Walnut Street, Cincinnati, Ohio,
45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
ARTICLE I
Definitions
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended. 1934 Act - the
Securities and Exchange Act of 1934, as amended.
Authorized Person - any (i) Officer of the Trust or (ii) any other
person, whether or not any such person is an officer or employee of the Trust,
who is duly authorized by the Board of Trustees of the Trust to give Oral
Instructions and Written Instructions on behalf of the Trust or any Fund, and
named in Appendix A attached hereto and as amended from time to time by
resolution of the Board of Trustees, certified by an Officer, and received by
the Custodian.
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time
amended.
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the then currently effective prospectus and Statement of
Additional Information of each Fund, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets that the Custodian
has the facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the shares of beneficial interest
issued by the Trust on account of such Fund. Trust - the U.S.
Global Leaders Variable Insurance Trust, a business trust organized
under the laws of Delaware, which is an open-end management
investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Trustees and the resolution is certified by an Officer and delivered to the
Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
A. Appointment of Custodian. The Trust hereby constitutes and appoints
the Custodian as custodian of all Securities and cash owned by the Trust at any
time during the term of this Agreement.
B. Acceptance of Custodian. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as hereinafter set
forth.
C. Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement, to the Custodian by the Trust:
1. A copy of the Declaration of Trust of the Trust
certified by the Secretary or an Assistant Secretary..
2. A copy of the By-Laws of the Trust certified by the
Secretary or an Assistant Secretary.
3. A copy of the resolution of the Board of Trustees of
the Trust appointing the Custodian, certified by the
Secretary or an Assistant Secretary.
4. A copy of the latest amendment to the Trust's
Registration Statement.
5. A Certificate of the President and Secretary of
the Trust setting forth the names and signatures of the current Officers of the
Trust and other Authorized Persons.
D. Notice of Appointment of Dividend and Transfer Agent. The
Trust agrees to notify the Custodian in writing of the appointment, termination
or change in appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Trust Assets
A. Delivery of Moneys. During the term of this Agreement, the Trust
will deliver or cause to be delivered to the Custodian all moneys to be held by
the Custodian for the account of any Fund. The Custodian shall be entitled to
reverse any deposits made on any Fund's behalf where such deposits have been
entered and moneys are not finally collected within 30 days of the making of
such entry.
B. Delivery of Securities. During the term of this Agreement,
the Trust will deliver or cause to be delivered to the Custodian all Securities
to be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian.
C. Payments for Shares. As and when received, the Custodian
shall deposit to the account(s) of a Fund any and all payments for Shares of
that Fund issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
D. Duties Upon Receipt. The Custodian shall not be responsible
for any Securities, moneys or other assets of any Fund until actually received
by it.
E. Validity of Title. The Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received or delivered by it pursuant to this Agreement.
ARTICLE IV
Disbursement of Trust Assets
A. Declaration of Dividends by Trust. The Trust shall furnish to the
Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary or an Assistant Secretary, either (i) setting
forth the date of the declaration of any dividend or distribution in respect of
Shares of any Fund of the Trust, the date of payment thereof, the record date as
of which the Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date, and the
total amount to be paid by the Dividend and Transfer Agent on the payment date,
or (ii) authorizing the declaration of dividends and distributions in respect of
Shares of a Fund on a daily basis and authorizing the Custodian to rely on
Written Instructions setting forth the date of the declaration of any such
dividend or distribution, the date of payment thereof, the record date as of
which the Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
C. Disbursements of Custodian. Upon receipt of a Proper Instructions
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
D. Payment of Custodian Fees. Upon receipt of Written
Instructions directing payment, the Custodian shall disburse moneys from the
assets of the Trust in payment of the Custodian's fees and expenses as provided
in Article VIII hereof.
ARTICLE V
Custody of Trust Assets
A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
B. Segregation of Non-Cash Assets. All Securities and non-cash property
held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
C. Securities in Bearer and Registered Form. All Securities held which
are issued or issuable only in bearer form, shall be held by the Custodian in
that form; all other Securities held for the Fund may be registered in the name
of the Custodian, any sub-custodian appointed in accordance with this Agreement,
or the nominee of any of them. The Trust agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold, or deliver in proper
form for transfer, any Securities that it may hold for the account of any Fund
and which may, from time to time, be registered in the name of a Fund.
D. Duties of Custodian As to Securities. Unless otherwise instructed by
the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect to
such Securities;
2.) Present for payment and collect amounts payable
upon all Securities which may mature or be called,
redeemed, or retired, or otherwise become payable;
3.) Surrender interim receipts or Securities in temporary
form for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be
designated in such Written Instructions proxies, consents, authorizations, and
any other instruments whereby the authority of the Trust as beneficial owner of
any Securities may be exercised;
2.) Deliver any Securities in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or recapitalization of any
trust, or the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in
connection with the reorganization, refinancing,
merger, consolidation, recapitalization, or sale of
assets of any trust, and receive and hold under the
terms of this Agreement such certificates of deposit,
interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the assets of any
Fund and take such other steps as shall be stated in
the Written Instructions to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Trust; and
5.) Deliver any Securities held for any Fund to the
depository agent for tender or other similar offers.
F. Custodian to Deliver Proxy Materials. The Custodian shall promptly
deliver to the Trust all notices, proxy material and executed but unvoted
proxies pertaining to shareholder meetings of Securities held by any Fund. The
Custodian shall not vote or authorize the voting of any Securities or give any
consent, waiver or approval with respect thereto unless so directed by Written
Instructions.
G. Custodian to Deliver Tender Offer Information. The Custodian shall
promptly deliver to the Trust all information received by the Custodian and
pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights. If the Trust
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Trust shall notify the Custodian at least five Business
Days prior to the date on which the Custodian is to take such action. The Trust
will provide or cause to be provided to the Custodian all relevant information
for any Security which has unique put/option provisions at least five Business
Days prior to the beginning date of the tender period.
ARTICLE VI
Purchase and Sale of Securities
A. Purchase of Securities. Promptly after each purchase of Securities
by the Trust, the Trust shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, Written
Instructions, and (ii) with respect to each purchase of Money Market Securities,
Proper Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through
which, the purchase was made,
7.) the name of the person to whom such amount is
payable, and
8.) the Fund for which the purchase was made. The Custodian
shall, against receipt of Securities purchased by or for the Trust, pay out of
the moneys held for the account of such Fund the total amount specified in the
Written Instructions, or Oral Instructions, if applicable, to the person named
therein. The Custodian shall not be under any obligation to pay out moneys to
cover the cost of a purchase of Securities for a Fund, if in the relevant Fund
custody account there is insufficient cash available to the Fund for which such
purchase was made.
B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through
which, the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made. The Custodian shall
deliver the Securities against receipt of the total amount specified in the
Written Instructions, or Oral Instructions, if applicable. Notwithstanding any
other provision of this Agreement, the Custodian, when properly instructed as
provided herein to deliver Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to deliver such Securities
prior to actual receipt of final payment therefor. In any such case, the Fund
for which the Securities were delivered shall bear the risk that final payment
for the Securities may not be made or that the Securities may be returned or
otherwise held or disposed of by or through the person to whom they were
delivered, and the Custodian shall have no liability for any of the foregoing.
C. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery. Any
such credit shall be conditioned upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received in full.
D. Credit of Moneys Prior to Receipt. With respect to any credit given
prior to actual receipt of final payment, the Custodian may, in its sole
discretion and from time to time, permit a Fund to use funds so credited to its
Fund custody account in anticipation of actual receipt of final payment. Any
such funds shall be deemed a loan from the Custodian to the Trust payable on
demand and bearing interest accruing from the date such loan is made up to but
not including the date on which such loan is repaid at the rate per annum
customarily charged by the Custodian on similar loans.
E. Segregated Accounts. The Custodian shall, upon receipt of
Proper Instructions so directing it, establish and maintain a segregated account
or accounts for and on behalf of a Fund. Cash and/or Securities may be
transferred into such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement
among the Trust, the Custodian, and a broker-dealer
registered under the 1934 Act, and also a member of
the NASD (or any futures commission merchant
registered under the Commodity Exchange Act),
relating to compliance with the rules of the Options
Clearing Corporation and of any registered national
securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any
similar organization or organizations requiring
escrow or other similar arrangements in connection
with transactions by the Fund;
2.) for purposes of segregating cash or Securities in
connection with options purchased, sold, or written by
the Fund or commodity futures contracts or options
thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements,
firm commitment agreements, standby commitment
agreements, and short sales by Act Release No. 10666,
or any subsequent release or releases or rule of the
SEC relating to the maintenance of segregated accounts
by registered investment companies;
4.) for the purpose of segregating collateral for loans of
Securities made by the Fund; and
5.) for other proper corporate purposes, but only upon
receipt of, in addition to Proper Instructions, a copy
of a resolution of the Board of Trustees, certified by
an Officer, setting forth the purposes of such
segregated account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
F. Advances for Settlement. Except as otherwise may be agreed upon by
the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
ARTICLE VII
Trust Indebtedness
In connection with any borrowings by the Trust, the Trust will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Trust shall promptly
deliver to the Custodian Written Instructions specifying with respect to each
such borrowing: (a) the name of the bank or broker, (b) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Trust, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the
Trust on the borrowing date, and (f) the description of the Securities securing
the loan, including the name of the issuer, the title and the number of shares
or other units or the principal amount. The Custodian shall deliver on the
borrowing date specified in the Written Instructions the required collateral
against the lender's delivery of the total loan amount then payable, provided
that the same conforms to that which is described in the Written Instructions.
The Custodian shall deliver, in the manner directed by the Trust, such
Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
A. Limitations on Liability of Custodian. Except as otherwise provided
herein, the Custodian shall not be liable for any loss or damage resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own gross negligence or willful misconduct. The Trust shall
defend, indemnify and hold harmless the Custodian and its directors, officers,
employees and agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Trust's duties hereunder or any other action or inaction of the
Trust or its Trustees, officers, employees or agents, except such as may arise
from the grossly negligent action or omission, willful misconduct or breach of
this Agreement by the Custodian. The Custodian shall be entitled to rely on and
may act upon the advice and opinion of counsel on all matters, at the expense of
the Trust, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice or opinion of counsel. The provisions under this
paragraph shall survive the termination of this Agreement.
B. Actions Not Required By Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the
capacity of Custodian hereunder, shall be under no obligation
to inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased
by or for the account of any Fund, the legality of the
purchase thereof, or the propriety of the amount paid
therefor;
2.) The legality of the sale of any Securities by or for
the account of any Fund, or the propriety of the
amount for which the same are sold;
3.) The legality of the issue or sale of any Shares of any
Fund, or the sufficiency of the amount to be received
therefor;
4.) The legality of the redemption of any Shares of any
Fund, or the propriety of the amount to be paid
therefor;
5.) The legality of the declaration or payment of any
dividend by the Trust in respect of Shares of any
Fund;
6.) The legality of any borrowing by the Trust on behalf
of the Trust or any Fund, using Securities as
collateral;
7.) Whether the Trust or a Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions
of the Trust's Declaration of Trust or by-laws, or its
investment objectives and policies as then in effect.
C. No Duty to Collect Amounts Due From Dividend and Transfer Agent. The
Custodian shall not be under any duty or obligation to take action to effect
collection of any amount due to the Trust from any Dividend and Transfer Agent
of the Trust nor to take any action to effect payment or distribution by any
Dividend and Transfer Agent of the Trust of any amount paid by the Custodian to
any Dividend and Transfer Agent of the Trust in accordance with this Agreement.
D. No Enforcement Actions. Notwithstanding Section D of Article V, the
Custodian shall not be under any duty or obligation to take action, by legal
means or otherwise, to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to take such
action by Written Instructions and (ii) it shall be assured to its satisfaction
(including prepayment thereof) of reimbursement of its costs and expenses in
connection with any such action.
E. Authority to Use Agents and Sub-Custodians. The Trust acknowledges
and hereby authorizes the Custodian to hold Securities through its various
agents described in Appendix C annexed hereto. The Trust hereby represents that
such authorization has been duly approved by the Board of Trustees of the Trust
as required by the Act.
In addition, the Trust acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Funds. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. The Funds shall reimburse the Custodian for all costs incurred by the
Custodian in connection with opening accounts with any such agents or
sub-custodians. Upon request, the Custodian shall promptly forward to the Trust
any documents it receives from any agent or sub-custodian appointed hereunder
which may assist trustees of registered investment companies to fulfill their
responsibilities under Rule 17f-5 of the Act.
F. No Duty to Supervise Investments. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time delivered
to or held by it for the account of the Trust are such as properly may be held
by the Trust under the provisions of the Articles of Incorporation and the
Trust's By-Laws.
G. All Records Confidential. The Custodian shall treat all records and
other information relating to the Trust and the assets of all Funds as
confidential and shall not disclose any such records or information to any other
person unless (i) the Trust shall have consented thereto in writing or (ii) such
disclosure is required by law.
H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian such compensation as shall
be determined pursuant to Appendix E attached hereto, or as shall be determined
pursuant to amendments to Appendix E. The Custodian shall be entitled to charge
against any money held by it for the account of any Fund, the amount of any of
its fees, any loss, damage, liability or expense, including counsel fees. The
expenses which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of agents or sub-custodians incurred in
settling transactions involving the purchase and sale of Securities of the Fund.
I. Reliance Upon Instructions. The Custodian shall be entitled to rely
upon any Proper Instructions. The Trust agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
telex, facsimile or otherwise, on the same Business Day on which such Oral
Instructions were given. The Trust agrees that the failure of the Custodian to
receive such confirming instructions shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no liability to the Trust
for acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions.
J. Books and Records. The Custodian will (i) set up and maintain proper
books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
K. Internal Accounting Control Systems. The Custodian shall send to
the Trust any report received on the systems of internal accounting control of
the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
L. No Management of Assets By Custodian. The Custodian performs only
the services of a custodian and shall have no responsibility for the management,
investment or reinvestment of the Securities or other assets from time to time
owned by any Fund. The Custodian is not a selling agent for Shares and
performance of its duties as custodian shall not be deemed to be a
recommendation to any Fund's shareholders or others of Shares as an investment.
The Custodian shall have no duties or obligations whatsoever except such duties
and obligations as are specifically set forth in this Agreement, and no covenant
or obligation shall be implied in this Agreement against the Custodian.
M. Assistance to Trust. The Custodian shall take all reasonable action,
that the Trust may from time to time request, to assist the Trust in obtaining
favorable opinions from the Trust's independent accountants, with respect to the
Custodian's activities hereunder, in connection with the preparation of the
Trust's Form N- IA, Form N-SAR, or other annual reports to the SEC.
N. Grant of Security Interest. The Trust hereby pledges to and grants
the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Trust to the Custodian, whether acting in its
capacity as Custodian or otherwise, or on account of money borrowed from the
Custodian. This pledge is in addition to any other pledge of collateral by the
Trust to the Custodian.
ARTICLE IX
Initial Term; Termination
A. Initial Term. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
B. Termination. Either party hereto may terminate this Agreement after
the Initial Term for any reason by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than ninety
(90) days after the date of giving of such notice. If such notice is given by
the Trust, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Trust, certified by the Secretary or an Assistant Secretary of
the Trust, electing to terminate this Agreement and designating a successor
custodian or custodians. In the event such notice is given by the Custodian, the
Trust shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of the Board of Trustees of the Trust, certified by the
Secretary or an Assistant Secretary, designating a successor custodian or
custodians to act on behalf of the Trust. In the absence of such designation by
the Trust, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Trust
shall pay to the Custodian on behalf of the Trust such compensation as may be
due as of the date of such termination. The Trust agrees on behalf of the Trust
that the Custodian shall be reimbursed for its reasonable costs in connection
with the termination of this Agreement.
C. Failure to Designate Successor Trustee. If a successor custodian is
not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Trust shall, upon the delivery by the Custodian to the Trust of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Trust) and moneys then owned by the Trust, be deemed to be the custodian
for the Trust, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System, which cannot be delivered to the
Trust, which shall be held by the Custodian in accordance with this Agreement.
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian, in the event of a failure
or delay, shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE XI
Miscellaneous
A. Designation of Authorized Persons. Appendix A sets forth the names
and the signatures of all Authorized Persons as of this date, as certified by
the Secretary or an Assistant Secretary of the Trust. The Trust agrees to
furnish to the Custodian a new Appendix A in form similar to the attached
Appendix A, if any present Authorized Person ceases to be an Authorized Person
or if any other or additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the then current Authorized Persons as set forth in the last
delivered Appendix A.
B. Limitation of Personal Liability. No recourse under any obligation
of this Agreement or for any claim based thereon shall be had against any
organizer, shareholder, officer, trustee, past, present or future as such, of
the Trust or of any predecessor or successor, either directly or through the
Trust or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the Trust, and that no such personal liability whatever shall attach to,
or is or shall be incurred by, the organizers, shareholders, officers, or
trustees of the Trust or of any predecessor or successor, or any of them as
such. To the extent that any such liability exists, it is hereby expressly
waived and released by the Custodian as a condition of, and as a consideration
for, the execution of this Agreement.
C. Authorization By Board. The obligations set forth in this Agreement
as having been made by the Trust have been made by the Board of Trustees, acting
as such Trustees for and on behalf of the Trust, pursuant to the authority
vested in them under the laws of the State of Delaware, the Declaration of Trust
and the By-Laws of the Trust. This Agreement has been executed by Officers of
the Trust as officers, and not individually, and the obligations contained
herein are not binding upon any of the Trustees, Officers, agents or holders of
shares, personally, but bind only the Trust.
D. Custodian's Consent to Use of Its Name. The Trust shall review with
the Custodian all provisions of the Prospectus and any other documents
(including advertising material) specifically mentioning the Custodian (other
than merely by name and address) and shall obtain the Custodian's consent prior
to the publication and/or dissemination or distribution thereof.
E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 4455 E. Camelback Road, Suite E261,
Phoenix, AZ 85018, or at such other place as the Trust may from time to time
designate in writing.
G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
H. Successors and Assigns. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted assignment by the Trust or the Custodian
shall be effective without the written consent of the other party hereto.
I. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Ohio.
J. Jurisdiction. Any legal action, suit or proceeding to be instituted
by either party with respect to this Agreement shall be brought by such party
exclusively in the courts of the State of Ohio or in the courts of the United
States for the Southern District of Ohio, and each party, by its execution of
this Agreement, irrevocably (i) submits to such jurisdiction and (ii) consents
to the service of any process or pleadings by first class U.S. mail, postage
prepaid and return receipt requested, or by any other means from time to time
authorized by the laws of such jurisdiction.
K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto
duly authorized as of the day and year first above written.
ATTEST: TRUST: U.S. Global Leaders Variable Insurance Trust
By:________________________
Title:_______________________
ATTEST: CUSTODIAN: Star Bank, N.A.
By:_________________________
Title:_______________________
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the day of , 1998 by and between [Name of Fund] (the "Fund"), a
series of U.S. Global Leaders Variable Insurance Trust (the "Trust") and
AMERICAN DATA SERVICES, INC., a New York corporation ("ADS").
BACKGROUND
WHEREAS, the Trust is an open-end management investment company registered with
the Securities and Exchange Commission under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Trust desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Trust certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Trust and ADS hereby agree as follows:
1. DUTIES OF ADS
ADS will perform the following services for the Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily net asset
value and communicate such value to the Fund and its transfer agent. All
portfolio securities will be valued in accordance with the methods that are
specified in the section of the Fund's prospectus that sets forth the procedures
utilized to calculate the daily net asset value per share of the Fund.;
(b) The Trust will select the pricing agent used by ADS to obtain the daily
market quotations to value the securities in the Fund's portfolio. ADS has
electronic interfaces with the following pricing agents:
1. Interactive Data Services Corporation
2. Kenny S&P
3. Muller Data Corporation
Should the Trust select a pricing agent other than those listed above ( an
"Alternative Pricing Agent"), ADS will take the necessary steps to open an
account with the Alternative Pricing Agent, obtain the file formats of the
electronic download to be received from the Alternative Pricing Agent that will
contain the daily market quotations, and make the necessary programming changes
to enable the ADS portfolio accounting system, PAIRS, automatically receive the
electronic download from the Alternative Pricing Agent.
Should the Trust select an Alternative Pricing Agent, ADS will charge the Fund a
fee ("Programming Fee") to make the aforementioned programming changes to PAIRS.
The Programming Fee will be calculated using the rate specified in Schedule A of
this Agreement under the Heading "Custom Programming".
(c) Maintain and keep current all books and records of the Fund as required
by Rule 31a-1 under the 1940 Act, as such rule or any successor rule may be
amended from time to time ("Rule 31a-1"), that are applicable to the fulfillment
of ADS's duties hereunder, as well as any other documents necessary or advisable
for compliance with applicable regulations as may be mutually agreed to between
the Trust and ADS. Without limiting the generality of the foregoing, ADS will
prepare and maintain the following records upon receipt of information in proper
form from the Trust or its authorized agents:
o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Capital Gain/Loss record
o Purchase and sales - portfolio securities
journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and
collateral therefore
o Foreign currency journals
o Trial balances
(d) Provide the Fund and its investment adviser with daily portfolio
valuation, net asset value calculation and other standard operational reports as
requested from time to time.
(e) Provide all raw data available from our fund accounting system (PAIRS)
for management's or the administrators preparation of the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1A;
5. Annual proxy statement.
6. Financial data necessary to calculate all dividends and
capital gains distributions in accordance with Subchapter
M of the Internal Revenue Code.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
2. COMPENSATION OF ADS
In consideration of the services to be performed by ADS as set forth herein
for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Trust agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS may rely upon the advice of the Trust, or of counsel for the Trust
and upon statements of the Trust's independent accountants, brokers and other
persons reasonably believed by it in good faith to be expert in the matters upon
which they are consulted and for any actions reasonably taken in good faith
reliance upon such statements and without negligence or misconduct, ADS shall
not be liable to anyone.
(b) ADS shall be liable to the Trust for any losses arising out of any act
or omission in the course of its duties, the negligence, misfeasance, bad faith
of ADS or breach of the agreement by ADS or disregard of ADS's obligations and
duties under this agreement or the willful violation of any applicable law.
(c) ADS, the Trust and their respective shareholders, officers, director,
trustees, employees and agents (as "Indemnified Parties") and each of ADS and
the Trust (as "Indemnifying Parties") agree to the following indemnifications.
Except as may otherwise be provided by applicable law, no Indemnified Party
shall be subject to, and the Indemnifying Party shall indemnify and hold such
Indemnified Party harmless from and against, any liability for and any damages,
expenses or losses incurred by reason of the inaccuracy of information furnished
to such Indemnified Party provided that the Trust shall not have any
indemnification obligations with respect to inaccurate information supplied by
pricing agents selected by ADS and ADS shall not have any indemnification
obligations in circumstances where ADS has acted in accordance with the standard
of care established in Subparagraph (b) of this Section. An Indemnified Party
shall promptly notify the Indemnifying Party of the assertion of a claim for
which the Indemnifying Party may be required to indemnify the Indemnified Party
and shall keep the Indemnifying Party advised with respect to all developments
regarding such claim. The Indemnifying Party shall have the option to
participate in the defense of such claim. An Indemnified Party in no case shall
confess any claim or make any compromise in any case in which the Indemnifying
Party may be required to indemnify the Indemnified Party except with the
Indemnifying Party `s prior written consent.
4. REPORTS
(a) The Trust shall provide to ADS on a quarterly basis a report of a duly
authorized officer of the Trust representing that all information furnished to
ADS during the preceding quarter was true, complete and correct in all material
respects. ADS shall not be responsible for the accuracy of any information
furnished to it by the Trust or its authorized agents, and the Trust shall hold
ADS harmless in regard to any liability incurred by reason of the inaccuracy of
such information.
(b) Whenever, in the course of performing its duties under this Agreement,
ADS determines, on the basis of information supplied to ADS by the Trust or its
authorized agents, that a violation of applicable law has occurred or that, to
its knowledge, a possible violation of applicable law may have occurred or, with
the passage of time, would occur, ADS shall promptly notify the Trust and its
counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed exclusive,
and ADS shall be free to render similar services to others so long as its
services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS
The accounts and records maintained by ADS shall be the property of the
Trust, and shall be surrendered to the Trust promptly upon request by the Trust
in the form in which such accounts and records have been maintained or preserved
(including the electronic or computerized format in which such accounts and
records have been maintained). ADS agrees to maintain a back-up set of accounts
and records of the Trust (which back-up set shall be updated on at least a
weekly basis) at a location other than that where the original accounts and
records are stored. ADS shall assist the Trust's independent auditors, or, upon
approval of the Trust, any regulatory body, in any requested review of the
Trust's accounts and records. ADS shall preserve the accounts and records as
they are required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all information obtained pursuant to, and all transactions
contemplated by this Agreement, and all other information germane thereto, as
confidential and not to be disclosed to any person except as may be authorized
by the Trust.
8. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Trust exercise its right to terminate, all expenses incurred by
ADS associated with the movement of records and material will be borne by the
Trust. Such expenses will include all out-of-pocket expenses and all time
incurred to train or consult with the successor fund accounting agent with
regard to the transfer of fund accounting responsibilities. The charge for all
time incurred by ADS will be calculated in accordance with the rates specified
in Schedule A paragraph (c).
9. ASSIGNMENT
This Agreement shall extend to and shall be binding upon the parties hereto
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the prior written consent
of ADS, or by ADS without the prior written consent of the Trust.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT
This Agreement may be amended by the parties hereto only if such amendment
is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Trust: To ADS:
Steven J. Paggioli Michael Miola
President President
U.S. Global Leaders Variable Insurance Trust American Data Services, Inc.
479 West 22nd Street P.O. Box 5536
New York, NY 10011 Hauppauge, NY 11788-0132
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Michael Miola, President
----------------------------
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the____day of _____, 1998, by and between U.S. Global Leaders
Variable Insurance Trust a Delaware business trust, (the "Trust") with
respect to the Trust's [Name of Fund] series (the "Fund"), and American
Data Services, Inc., a New York corporation having its principal office and
place of business at 24 West Carver Street., Huntington, New York 11743 ("ADS").
WHEREAS, the Trust desires to appoint ADS as the transfer agent, dividend
disbursing agent and agent of the Fund in connection with certain other
activities, and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement, the
Trust hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of beneficial
interest, $________ par value, ("Shares"), dividend disbursing agent and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with the Trust's Registration Statement, which describes
how sales and redemptions of Shares shall be made, ADS shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefore to the
Custodian of the Fund authorized by the Board of Trustees of the Trust (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
full and fractional Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefore to the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund, and effect dividend and capital gains distribution
reinvestments in accordance with Shareholder instructions;
(vii) Serve as a record keeping transfer agent for the Fund, and
maintain records of account for and advise the Fund and its Shareholders as to
the foregoing; and
(viii) Record the issuance of Shares and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares which are authorized,
based upon data provided to it by the Fund, and issued and outstanding. ADS
shall also provide the Fund each business day with the following: (I) the total
number and dollar amount of Shares issued and outstanding as of the close of
business on the preceding business day; (ii) the total number and dollar amount
of Shares sold on the preceding business day; (iii) the total number and dollar
amount of Shares redeemed on the preceding business day; (iv) the total number
and dollar amount of Shares sold on the preceding business day pursuant to
dividend and capital gains distribution reinvestments; and (v) the total number
and dollar amount of Shares which are authorized and issued and outstanding as
of the opening of business on such day.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), ADS shall:
(i) Perform all of the customary services of a transfer agent,
dividend disbursing agent, including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases redemptions of
Shares and other confirmable transactions in Shareholder accounts as prescribed
in the federal securities laws or as described in the Trust's Registration
Statement, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system and reports
which will enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky reporting for each
State and (ii) monitor the daily activity for each State, as provided by ADS.
The responsibility of ADS pursuant to this Agreement for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Trust and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Trust agrees to
pay ADS an annual maintenance fee for each Shareholder account and transaction
fees for each portfolio or class of Shares serviced under this Agreement (See
Schedule A) as set out in the fee schedule attached hereto. Such fees and out-of
pocket expenses and advances identified under Section 2.02 below may be changed
from time to time subject to mutual written agreement between the Trust and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Trust agrees
to reimburse ADS for out-of-pocket expenses or advances incurred by ADS for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by ADS at the request or with the consent of the Trust, will
be reimbursed by the Trust.
2.03 The Trust agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to ADS by the Trust at least seven (7) days prior to
the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Trust that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities
Exchange Act of 1934 and shall continue to be registered throughout the
remainder of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to ADS that;
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Declaration of Trust and By-Laws have
been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end management investment company registered under the
Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
or will become effective and will remain effective, and appropriate state
securities law filings as required, have been or will be made and will continue
to be made, with respect to all Shares being offered for sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Trust shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of ADS or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence, willful misconduct, or in reckless disregard of
its duties under this Agreement..
(b) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Trust hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its agents
or subcontractors and furnished to it by or on behalf of the Trust, and (ii)
have been prepared and/or maintained by the Trust or any other person or firm on
behalf of the Trust.
(d) The reliance on, or the carrying out by ADS or its agents or
subcontractors of any written instruction signed by an officer of the Trust, or
any legal opinion of counsel to the Trust.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 ADS shall indemnify and hold the Trust harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission to
act by ADS as a result of ADS's lack of good faith, negligence or willful
misconduct or the breach of any warranty or representation of ADS hereunder.
5.03 At any time ADS may apply to any officer of the Trust for
instructions, and may consult with the Trust's legal counsel with respect to any
matter arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Trust, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Trust, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE TRUST AND ADS
6.01 The Trust Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Trustees of the Trust authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Trust and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Trust on
and in accordance with its request.
6.04 ADS and the Trust agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Trust of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Trust.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
remain in force through and shall automatically terminate on , 199 , provided
however, that both parties to this Agreement have the option to terminate the
Agreement, without penalty, upon ninety (90) days prior written notice.
7.02 Should the Trust exercise its right to terminate, all expenses
incurred by ADS associated with the movement of records and material will be
borne by the Trust. Such expenses will include all out-of-pocket expenses and
all time incurred to train or consult with the successor transfer agent with
regard to the transfer of shareholder accounting and stock transfer
responsibilities. The charge for all time incurred by ADS will be calculated in
accordance with the rates specified in the Fee Schedule paragraph (e).
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Trust.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Trust: To ADS:
Steven J. Paggioli Michael Miola
President President
U.S. Global Leaders Variable Insurance Trust American Data Services, Inc.
479 West 22nd Street P.O. Box 5536
New York, NY 10011 Hauppauge, NY 11788-0132
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
U.S. GLOBAL LEADERS VARIABLE INSURANCE TRUST AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Michael Miola, President
----------------------------
Law Offices Of
PAUL, HASTINGS, JANOFSKY & WALKER
345 California Street
San Francisco, California 94104-2636
May 19, 1998
U.S. Global Leaders Variable Insurance Trust
630 Fifth Avenue
New York , NY 10111
Re: U.S. Global Leaders Variable Insurance Trust
Ladies and Gentlemen:
We have acted as counsel to U.S. Global Leaders Variable Insurance Trust, a
Delaware business trust (the "Trust'), in connection with the pre-effective
amendments to the Trust's Registration Statement filed on Form N-1A with the
Securities and Exchange Commission (the "Pre-Effective Amendments") and relating
to the issuance by the Trust of an indefinite number of $0.01 par value shares
of beneficial interest, (the "Shares") of U.S. Global Leaders Variable Insurance
Fund (the "Fund"), a series of the Trust.
In connection with this opinion, we have assumed the authenticity of all
records, documents, and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all records, documents and instruments submitted
to us as copies. We have based our opinion upon our review of the following
records, documents and instruments:
(a) the Trust's Certificate of Trust as filed with the Secretary
of State of Delaware on October 8, 1997, certified to us as
in effect on the date hereof;
(b) the Trust's Agreement and Declaration of Trust dated October
8, 1997 (the "Trust Instrument"), certified to us by an
officer of the Trust as being true and complete and in effect
on the date hereof;
(c) the Bylaws of the Trust dated October 8, 1997, certified to
us by an officer of the Trust as being true and complete an
in effect on the date hereof;
(d) resolutions of the Trustees of the Trust adopted at a
meeting on March 19, 1998, authorizing the establishment of
the Fund and the issuance of its Shares
<PAGE>
(e) the Pre-Effective Amendments; and
(f) a certificate of an officer of the Trust concerning certain
factual matters relevant to this opinion.
In rendering our opinion below, we have not conducted an independent examination
of the books and records of the Trust for the purpose of determining whether all
of the Shares were fully paid prior to their issuance and do not believe it to
be our obligation to do so.
Our opinion below is limited to the federal law of the United States of America
and the business trust law of the State of Delaware. We are not licensed to
practice law in the State of Delaware, and we have based our opinion below
solely on our review of Chapter 38 of Title 12 of the Delaware Code (the
"Delaware Business Trust Act") and the case law interpreting such Chapter as
reported in Delaware Laws Annotated (CSC The United States Corporation Company,
April 1997) as updated on Lexis on May 11, 1998. We have not undertaken a review
of other Delaware law or of any administrative or court decisions in connection
with rendering this opinion. We disclaim any opinion as to any law other than
that of the United States of America and the business trust law of the State of
Delaware as described above, and we disclaim any opinion as to any statute,
rule, regulation, ordinance, order or other promulgation of any regional or
local governmental authority.
Based on the foregoing and our examinations of such questions of law as we have
deemed necessary and appropriate for the purpose of this opinion, and assuming
that (I) all of the Shares will be issued and sold for cash at the per share
public offering price on the date of their issuance in accordance with
statements in the Fund's Prospectus included in the Pre-Effective Amendments and
in accordance with the Trust Instrument, (ii) all consideration for the Shares
will be actually received by the Trust, and (iii) all applicable securities laws
will be complied with, then it is our opinion that, when issued and sold by the
Trust, the Shares will be legally issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Pre-Effective Amendments
and is solely for your benefit. This opinion may not be relied upon by you for
any other purpose or relied upon by any other person, firm or corporation or
other entity for any purpose, without our prior written consent. We disclaim any
obligation to advise you of any developments in areas covered by this opinion
that occur after the date of this opinion.
Sincerely yours,
Paul, Hastings, Janofsky & Walker LLP
Paul, Hastings, Janofsky & Walker LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Pre-Effective Amendment
No. 2 to the Registration Statement on Form N-1A of U.S. Global Leaders
Variable Insurance Trust and to the use of our report dated May 11, 1998 on
the statement of assets and liabilities of the U.S. Global Leaders Growth
Variable Insurance Fund ("Fund"). Such statement of assets and liabilities
appears in the Fund's Statement of Additional Information.
Ernst & Young LLP
Los Angeles, CA
May 14, 1998
SUBSCRIPTION AGREEMENT
U.S. GLOBAL LEADERS GROWTH VARIABLE INSURANCE TRUST (the "Trust") , a
registered open-end management investment company, and Yeager, Wood and
Marshall, (the "Purchaser"), intending to be legally bound, hereby agree as
follows:
1. In order to provide the Trust with its initial capital, the Trust hereby
sells to the Purchaser, and the Purchaser hereby purchases 10,000 shares of
beneficial interest, no par value of the Trust (the "Shares"), at a price of
$10.00 per share. The Trust hereby acknowledges receipt from the Purchaser of
funds in the amount of $100,000 in full payment for the shares.
2. The Purchaser represents and warrants to the Trust that the Shares are
bding acquired for investment and not with a view to distribution thereof and
that the Purchaser has no present intention to redeem or dispose of any of the
Shares.
3. The Purchaser hereby agrees that it will not offer for sale or sell or
tender for redemption any of the Shares prior to the time that the Trust has
completed the amortization of its organizational expenses. In the event that the
Trust liquidates before the deferred organizational expenses are fully
amortized, then the Shares shall bear their proporationate share of such
unamortized organization expenses.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 11th
day of May, 1998.
U.S. GLOBAL LEADERS GROWTH
VARIABLE INSURANCE TRUST
By_______________________________
YEAGER, WOOD AND MARSHALL
By__________________________________
