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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_
Pre-Effective Amendment No. 1
X
Post-Effective Amendment No.
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
_
Amendment No. 2
X
SAGE LIFE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
ONE EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 573-1556
Name and Address of Agent for Service: Copies to:
Julie A. Tedesco, Esq. Kimberly J. Smith, Esq.
First Data Investor Services Group, Inc Sutherland Asbill & Brennan LLP
One Exchange Place 1275 Pennsylvania Avenue, N.W.
Boston, Massachusetts 02109 Washington, D.C. 20004-2404
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the Registration Statement.
It is proposed that this filing will become effective: [ ]
immediately upon filing pursuant to paragraph (b), or [ X ] on
November 16, 1998 pursuant to paragraph (b) [ ] 60 days after
filing pursuant to paragraph (a)(i), or [ ] on ( ) pursuant to
paragraph (a)(i) [ ] 75 days after filing pursuant to paragraph
(a)(ii) [ ] on (_______) pursuant to paragraph (a)(ii) of Rule
485
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SAGE LIFE INVESTMENT TRUST
FORM N-1A
Part A
CROSS REFERENCE SHEET
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Item No. Caption
Item 1. Cover Page....................................Cover Page
Item 2. Synopsis................................................... Not Applicable
Item 3. Condensed Financial Information...............Not Applicable
Item 4. General Description of Registrant............ The Funds; Who May Want to
Invest; Investment Principles and Risks; Investment Objectives and
Policies
Item 5. Management of the Fund........................... Management of the Trust;
Shareholder and Account Policies
Item 5A. Management's Discussion of
Fund Performance.............................Not Applicable
Item 6. Capital Stock and Other Securities.............Dividends, Distributions and
Taxes
Item 7. Purchase of Securities Being Offered........Net Asset Value; Purchase and
Redemption of Shares
Item 8. Redemption or Repurchase........................ Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings........................ Not Applicable
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<PAGE>
PROSPECTUS
for
SAGE LIFE INVESTMENT TRUST
S&P 500 Equity Index Fund
EAFE Equity Index Fund
Money Market Fund
Dated November 16, 1998
This Prospectus offers shares of the S&P 500 Equity Index Fund and the EAFE
Equity Index Fund (together, the "Index Funds") and the Money Market Fund
(together with the Index Funds, the "Funds" and individually, each a "Fund"),
all series of Sage Life Investment Trust (the "Trust"), an open-end management
investment company currently offering these three series. Shares of the Funds
are available to separate accounts funding certain variable annuity and variable
life insurance contracts (the "Contract(s)") issued by various insurance
companies (each an "Insurer" and collectively, the "Insurers") and to various
pension and profit-sharing plans ("Retirement Plans").
The S&P 500 Equity Index Fund (the "S&P 500 Fund") seeks to replicate as closely
as possible the performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index(R)") before the deduction of fund expenses.
The EAFE Equity Index Fund (the "EAFE Fund") seeks to replicate as closely as
possible the performance of the Morgan Stanley Capital International Europe,
Australia, Far East Index (the "EAFE Index(R)") before the deduction of fund
expenses. Special risks are associated with investments in foreign securities,
including currency, political and economic, regulatory and market risks.
The Money Market Fund seeks to provide high current income consistent with the
preservation of capital and liquidity. Although the Fund seeks to maintain a
constant net asset value of $1.00 per share, there can be no assurance that the
Fund can do so on a continuous basis. An investment in the Fund is not
guaranteed.
Sage Advisors, Inc. ("Sage" or the "Manager") is the investment manager of the
Funds. State Street Global Advisors ("State Street") is the investment adviser
to the Index Funds and Conning Asset Management Company ("Conning," and together
with State Street, the "Advisers" and each an "Adviser") is the investment
adviser to the Money Market Fund.
Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Funds that you should
know and refer to in deciding whether the Funds' goals are appropriate for your
needs.
A Statement of Additional Information (the "SAI"), with the same date, has been
filed with the Securities and Exchange Commission (the "SEC"), and is
incorporated herein by reference. It includes additional information about the
Funds. You may request a free copy of the SAI or make inquiries regarding the
Funds by calling the Trust at 1-877-835-7243 or by writing to Sage Life
Investment Trust, Customer Service Center, 1290 Silas Deane Highway,
Wethersfield, Connecticut 06109. In addition, the SEC maintains a Web site
(http://www.sec.gov) that contains the SAI and other information regarding the
Funds. THIS PROSPECTUS MUST BE ACCOMPANIED BY THE CURRENT PROSPECTUS OR
DISCLOSURE DOCUMENT FOR THE CONTRACT IF DELIVERED IN CONNECTION WITH A VARIABLE
ANNUITY OR VARIABLE LIFE INSURANCE POLICY. The Funds' shares are not deposits or
obligations of, or guaranteed by, any financial institution. Shares are not
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of the
principal amount invested. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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The Funds......................................................................................................3
Fee Table......................................................................................................3
Description of the Funds.......................................................................................4
Who May Want to Invest.........................................................................................4
Investment Principles and Risks................................................................................5
The Funds in Detail............................................................................................5
Investment Objectives and Policies............................................................................5
Risk Factors and Certain Securities and Investment Practices..................................................7
Portfolio Turnover Rate......................................................................................13
Net Asset Value..............................................................................................13
Performance Information and Reports...........................................................................14
Management of the Trust.......................................................................................15
Board of Trustees............................................................................................15
Investment Manager............................................................................................15
Investment Advisers..........................................................................................16
Expenses.....................................................................................................16
Sub-Administrator............................................................................................17
Distributor and Distribution Plan............................................................................17
Custodian and Transfer Agent..................................................................................17
Organization of the Trust....................................................................................17
Year 2000.....................................................................................................18
Shareholder and Account Policies.............................................................................19
Purchase and Redemption of Shares............................................................................19
Dividends, Distributions and Taxes...........................................................................19
Account Services..............................................................................................20
Appendix Describing Indexes...................................................................................22
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<PAGE>
THE FUNDS
Fee Table
.........
The following table sets forth certain costs and expenses that an investor will
incur either directly or indirectly as a shareholder of the Funds based on fees
and estimated operating expenses for the current fiscal year. Sage pays all the
Funds' expenses, except brokerage fees, taxes, interest, fees and expenses of
the non-interested Trustees (including counsel fees), Rule 12b-1 fees (if
applicable) and extraordinary expenses (collectively, "Other Expenses" as shown
in the table below). In order to compensate Sage for paying virtually all of the
Funds' expenses, the Funds' management fee may be higher than the investment
advisory fees paid by other investment companies. Most, if not all, such
companies also pay for a portion of the non-investment advisory expenses that
are not paid by such companies' investment advisers. See "Management of the
Trust" for more information. Shares of the Funds are sold without an initial or
contingent deferred sales charge to fund variable annuity contracts and variable
life insurance policies and to various pension and profit-sharing plans. The
table does not reflect Contract charges and expenses. See the prospectus or
disclosure document for the Contract for a description of such charges and
expenses. Additional information regarding each Fund's performance may be
obtained free of charge by requesting a Fund's financial report.
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S&P Money
500 EAFE Market
Fund Fund Fund
Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Management Fees (after waivers*)............ 0.38% 0.73% 0.48%
Other Expenses**............................ 0.17% 0.17% 0.17%
Total Fund Operating Expenses*.............. 0.55% 0.90% 0.65%
* Reflects voluntary waivers which will remain in effect until notice is
given by Sage to the Board of Trustees of the Trust. See "Management of the
Trust." Absent such expense limitation and fee waivers, the ratio of
advisory fees to average net assets for each Fund would be as follows: the
S&P 500 Fund, 0.55%; the EAFE Fund, 0.90%; and the Money Market Fund,
0.65%. The ratio of total Fund operating expenses to average net assets for
each Fund would be as follows: the S&P 500 Fund, 0.72%; the EAFE Fund,
1.07%; and the Money Market Fund, 0.82%.
** "Other Expenses" for the Funds are based on estimated amounts for the
Funds' fiscal year ending December 31, 1999. A Rule 12b-1 Plan (the "Plan")
has been adopted by each Fund; however, no Plan payments will accrue or be
made for the fiscal years ending December 31, 1998 and December 31, 1999.
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Example:
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
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S&P Money
500 EAFE Market
Fund Fund Fund
1 Year $ 6 $ 9 $ 7
3 Years $ 18 $ 29 $ 21
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The example is based upon estimated expenses for the current fiscal year.
The example should not be considered
as representative of past or future expenses and actual expenses may be greater
or less than those indicated.
Moreover, while the example assumes a 5% annual return, each Fund's performance
will vary and may result in an actual return greater or less than 5%, including
returns, i.e., losses.
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Description of the Funds
The S&P 500 Fund seeks to replicate as closely as possible (before the deduction
of fund expenses) the total return of the S&P 500 Index, an index emphasizing
large-capitalization U.S. common stocks. The Fund will invest in the common
stock of companies included in the S&P 500 Index, selected on the basis of
computer-generated statistical data, that are deemed representative of the
entire S&P 500 Index.
The EAFE Fund seeks to replicate as closely as possible (before the deduction of
fund expenses) the total return of the EAFE Index, a market
capitalization-weighted equity index representing the stock markets that invest
primarily in equity securities of business enterprises organized and domiciled
in the regions of Europe, Australia and the Far East or for which the principal
trading market is outside of North America, South America and Africa.
Statistical methods will be employed to replicate the EAFE Index by buying most
of the securities reflected in the EAFE Index. Securities purchased for the Fund
will generally, but not necessarily, be traded on a foreign securities exchange.
The Money Market Fund seeks to provide high current income consistent with the
preservation of capital and liquidity. The Fund invests in U.S.
dollar-denominated debt securities with remaining maturities of 13 months or
less which, in accordance with guidelines adopted by the Board of Trustees, are
determined to present minimal credit risk. The Fund maintains an average
dollar-weighted portfolio maturity of 90 days or less.
Who May Want to Invest
Shares of the Funds are available to insurance company separate accounts funding
Contracts and may be offered to various Retirement Plans. Each Fund, by itself,
is not a balanced investment plan. Holders of Contracts ("Contract Owners")
should consider their investment objectives and tolerance for risk when making
an investment decision.
The Index Funds may be appropriate for investors who are willing to endure stock
market fluctuations in pursuit of potentially higher long-term returns. The
Index Funds invest for growth and do not pursue income as a primary objective.
Over time, stocks, although more volatile, have shown greater growth potential
than other types of securities. In the shorter term, however, stock prices can
fluctuate dramatically in response to market factors. Each Index Fund is
intended to be a long-term investment vehicle and is not designed to provide
investors with a means of speculating on short-term market movements. Although
State Street expects that under normal conditions each Index Fund will be as
fully invested as possible, the Funds may hold uninvested cash pending the
investment of late payments for purchase orders (or other payments) or during
temporary defensive periods. Uninvested cash will not earn income.
The S&P 500 Fund may be appropriate for investors who want to pursue
their investment goals in the U.S.
securities market, through large-capitalization U.S. common stocks as reflected
in the S&P 500 Index.
The EAFE Fund may be appropriate for investors who want to pursue their
investment goals in securities markets in the regions of Europe, Australia and
the Far East. By including international investments in their portfolio,
investors can achieve an extra level of diversification and also participate in
investment opportunities around the world. However, there are substantial risks
involved with international investing. The performance of international funds
depends upon currency values, the political and regulatory environment, and
overall economic factors in the countries and regions in which the Fund invests.
See "Risk Factors and Certain Securities and Investment Practices - The EAFE
Fund" in this Prospectus.
The Money Market Fund is designed for investors who desire income, liquidity and
stability of principal. The Fund invests its assets conservatively and, as a
result, it will likely not earn as high a return as other funds that invest in
longer term or lower quality debt securities or in equity securities. Longer
term and lower quality securities, however, generally offer less liquidity,
greater market risk and more fluctuation in market value. Investors who are more
aggressive in their investment approach or who desire a potentially higher rate
of return may wish to invest in one of the Index Funds.
Investment Principles and Risks
The Index Funds are not managed according to traditional methods of "active"
investment management, which involve the buying and selling of securities based
upon economic, financial and market analysis and investment judgment. Instead,
the Index Funds utilize a "passive" or "indexing" investment approach and
attempt to replicate the investment performance of their respective indexes
through statistical procedures.
The value of each Index Fund's investment varies based on many factors. Stock
values fluctuate, sometimes dramatically, in response to the activities of
individual companies and general economic conditions. Over time, however, stocks
have shown greater long-term growth potential than other types of securities.
Economic factors in the U.S. and in various world markets will also affect stock
values, and therefore impact the value of an investor's investment.
The Money Market Fund invests mostly in short-term debt securities, so rises and
falls in interest rate levels, in general, as well as in the value of the
specific instruments held by the Fund, can affect the Fund's performance. The
Fund attempts to maintain a constant net asset value of $1.00 per share and an
investment in the Fund is not guaranteed.
THE FUNDS IN DETAIL
Investment Objectives and Policies
The following is a discussion of the various investments of and techniques
employed by the Funds. Additional information about the investment policies of
each Fund appears in the "Risk Factors and Certain Securities and Investment
Practices" section in this Prospectus and in the Funds' SAI. There can be no
assurance that the investment objectives of each Fund will be achieved.
The Funds' Investment Objectives
The S&P 500 Fund seeks to replicate as closely as possible the performance of
the S&P 500 Index before the deduction of fund expenses.
The EAFE Fund seeks to replicate as closely as possible the performance of the
EAFE Index before the deduction of fund expenses.
The Money Market Fund seeks to provide high current income consistent with the
preservation of capital and liquidity.
The Funds' Investment Policies
The S&P 500 Fund. In seeking to replicate the performance of the S&P 500 Index,
before the deduction of fund expenses, State Street will attempt over time to
allocate the Fund's investments among common stocks in approximately the same
proportions as they are represented in the S&P 500 Index. The S&P 500 Index is a
well-known stock market index that includes common stocks of 500 companies from
several industrial sectors representing a significant portion of the market
value of all common stocks publicly traded in the United States, most of which
are listed on the New York Stock Exchange (the "NYSE"). Stocks in the S&P 500
Index are weighted according to their market capitalization (i.e., the number of
shares outstanding multiplied by the stock's current price). The composition of
the S&P 500 Index is determined by Standard & Poor's Corporation ("S&P") and may
be changed from time to time.
The S&P 500 Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes
no representation regarding the advisability of investing in funds generally or
in this Fund (see "Appendix A" for an additional discussion).
The EAFE Fund. The EAFE Index is a market capitalization-weighted equity index
representing the stock markets in the regions of Europe, Australia and the Far
East. In seeking to replicate the performance of the EAFE Index, before the
deduction of fund expenses, State Street will attempt over time to allocate the
Fund's investments among stocks in approximately the same proportions as they
are represented in the EAFE Index. However, not all companies represented in the
EAFE Index will be represented in the Fund at the same time. The countries
currently included in the EAFE Index are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. Stocks are selected for inclusion in the Fund based on country of
origin, market capitalization, yield, volatility and industry sector. The
Adviser will manage the Fund using advanced statistical techniques to determine
which stocks are to be purchased or sold to replicate the EAFE Index. From time
to time, adjustments may be made in the Fund because of changes in the
composition of the EAFE Index, but such changes should be infrequent. The
composition of the EAFE Index may be changed from time to time.
The Fund is not sponsored, endorsed, sold or promoted by Morgan Stanley. Morgan
Stanley makes no representation or warranty, express or implied, to the
shareholders of the Fund or any member of the public regarding the advisability
of investing in funds generally or in this Fund particularly, or the ability of
the EAFE Index to track general stock market performance (see "Appendix A" for
an additional discussion).
The Money Market Fund seeks to provide high current income consistent with the
preservation of capital and liquidity. The Money Market Fund may invest in U.S.
government securities, obligations of financial institutions such as
certificates of deposit and bankers' acceptances, commercial paper, adjustable
rate securities, Eurodollar securities and shares of other investment companies.
The Fund may purchase securities on a when-issued and a delayed delivery basis.
No more than 10% of the Money Market Fund's net assets may be invested in
illiquid or not readily marketable securities (including repurchase agreements
and time deposits with maturities of more than seven (7) days). The Money Market
Fund is subject to additional diversification requirements. See the "Risk
Factors and Certain Securities and Investment Practices" section of this
Prospectus and "Risk Factors and Certain Securities and Investment Practices"
section of the SAI for more information about the investment practices of the
Fund.
The Index Funds
Each Index Fund over time seeks to maintain a correlation between its
performance and the performance of its respective index of 0.95 or higher,
before the deduction of fund expenses. A correlation of 1.00 would indicate
perfect correlation, which would be achieved when the net asset value of a Fund,
including the value of its dividends and any capital gains distributions,
increases or decreases in exact proportion to changes in the respective index.
Each Fund's ability to track its index may be affected by, among other things,
transaction costs, administration and other expenses incurred by the Fund,
changes in either the composition of the respective Fund's index or the assets
of the Fund, and the timing and amount of Fund investor contributions and
withdrawals, if any. In the unlikely event that a high correlation is not
achieved, the Board of Trustees will consider alternatives. Because each Fund
seeks to track its respective index, State Street will not attempt to judge the
merits of any particular stock as an investment.
Each Index Fund under normal circumstances, will invest at least 80% of its
total assets in the securities that comprise its respective index.
Each Fund is a diversified fund and no more than 5% of the total assets of each
Fund may be invested in the securities of any one issuer (other than U.S.
Government securities), except that up to 25% of each Fund's total assets may be
invested without regard to this limitation. Each Fund will not invest 25% or
more of its total assets in the securities of issuers in any one industry. In
the unlikely event that a Fund's respective index should concentrate to an
extent greater than that amount, the Fund's ability to achieve its objective may
be impaired. These are fundamental investment policies of each Fund that may not
be changed without shareholder approval. No more than 15% of each Index Fund's
net assets may be invested in illiquid or not readily marketable securities.
Each Index Fund may invest in stock index futures, options on stock index
futures and options on stock indices. These instruments may be considered
derivatives. Derivatives are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. While derivatives can be used effectively in furtherance
of a Fund's investment objective, under certain market conditions they can
increase the volatility of a Fund's net asset value and decrease the liquidity
of a Fund's investments. See the "Risk Factors and Certain Securities and
Investment Practices - Stock Index Futures, Options on Stock Indices and Options
on Stock Index Futures Contracts" section in the Funds' SAI for more information
on such instruments.
Each Fund may lend its investment securities and borrow money for temporary or
emergency purposes or to meet redemption requests. See the "Risk Factors and
Certain Securities and Investment Practices" section of this Prospectus and the
SAI for more information about the investment practices of each Fund. Additional
investment policies of each Fund are contained in the SAI.
Risk Factors and Certain Securities and Investment Practices
The following pages contain more detailed information about the types of
instruments in which each Fund may invest, related risks, and strategies the
Advisers may employ in pursuit of each Fund's investment objective.
The Advisers may not buy all of these instruments or use all of these techniques
to the full extent permitted, unless they believe that doing so will help a Fund
achieve its goal. Holdings and recent investment strategies are described in the
financial reports of each Fund, which are sent to Contracts Owners on a
semi-annual and annual basis ("shareholder reports").
Risk Factors
Because each Index Fund invests primarily in common stocks, each is subject to
market risk (i.e., the possibility that common stock prices will decline,
possibly dramatically, over short or even extended periods). The U.S. and
foreign stock markets tend to be cyclical, with periods when stock prices
generally rise and periods when stock prices generally decline.
The EAFE Fund. The following risks of investing in foreign securities pertain
specifically to the EAFE Fund. Investors should realize that investing in
securities of foreign issuers involves considerations not typically associated
with investing in securities of companies organized and operating in the United
States. The value of the Fund's foreign investments may be adversely affected by
changes in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, currency exchange rates, limitations
on the removal of funds or assets, or imposition of (or changes in) exchange
control or tax regulations in foreign countries. Currency trading costs and
higher asset custody charges may reduce the value of the Fund's investments. In
addition, changes in government administrations or economic or monetary policies
in the United States or abroad could result in appreciation or depreciation of
portfolio securities and could favorably or unfavorably affect the Fund's
operations. Also, the economies of individual foreign nations may differ from
the U.S. economy, whether favorably or unfavorably, in areas such as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position; it may also be more difficult
to obtain and enforce a judgment against a foreign issuer. In general, less
information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by the
Fund must be made in compliance with U.S. and foreign currency restrictions and
tax laws restricting the amounts and types of foreign investments.
The Fund's foreign investments may be less liquid and their prices may be more
volatile than comparable investments in securities of U.S. companies. The
settlement periods for foreign securities, which are often longer than those for
securities of U.S. issuers, also may affect Fund liquidity. Finally, there may
be less government supervision and regulation of securities exchanges, brokers
and issuers in foreign countries than in the United States.
The Money Market Fund invests mostly in short-term debt securities, so rises and
falls in interest rate levels, in general, as well as in the value of the
specific instruments held by the Fund, can affect the Fund's performance.
In General
Each Fund's investment objective is not a fundamental policy and may be changed
upon notice to, but without the approval of, each Fund's shareholders. If there
is a change in a Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. For descriptions of each Fund's investment objective,
policies and restrictions, see the "The Funds in Detail" and the "Risk Factors
and Certain Securities and Investment Practices" sections in this Prospectus and
in the SAI. See the "Risk Factors and Certain Securities and Investment
Practices" section in the SAI for a description of the fundamental policies and
investment restrictions of each Fund that cannot be changed without approval by
"the vote of a majority of the outstanding voting securities" (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of each Fund.
For a description of each Fund's management and expenses, see the "Management of
the Trust" sections in this Prospectus and in the SAI.
Securities and Investment Practices
Asset-Backed Securities. Subject to applicable maturity and credit criteria, the
Money Market Fund may purchase asset-backed securities (i.e., securities backed
by mortgages, installment sales contracts, credit card receivables or other
assets). The average life of asset-backed securities varies with the maturities
of the underlying instruments which, in the case of mortgages, have maximum
maturities of 40 years. The Fund may purchase securities that have maturities in
excess of the Money Market Fund's maturity limitations but are deemed to have
shorter maturities because the Money Market Fund can demand payment of the
principal of the securities at least once within the maturity periods permitted
on not more than 30 days' notice (this demand feature is not required if the
securities are guaranteed by the U.S. Government or an agency or instrumentality
thereof). The average life of a mortgage-backed instrument, for example, is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities as the result of scheduled principal payments and
mortgage prepayments. The rate of such mortgage prepayments, and hence the life
of the certificates, will be primarily a function of current market rates and
current conditions in the relevant housing markets. The relationship between
mortgage prepayment and interest rates may give some high-yielding
mortgage-related securities less potential for growth in value than conventional
bonds with comparable maturities. In addition, in periods of falling interest
rates, the rate of mortgage prepayment tends to increase. During such periods,
the reinvestment of prepayment proceeds by the Fund will generally be at lower
rates than the rates that were carried by the obligations that have been
prepaid. Because of these and other reasons, an asset-backed security's total
return may be difficult to predict precisely. To the extent that the Money
Market Fund purchases mortgage-related or mortgage-backed securities at a
premium, mortgage prepayments (which may be made at any time without penalty)
may result in some loss of the Money Market Fund's principal investment to the
extent of the premium paid.
Bank Obligations. The Money Market Fund may purchase U.S. dollar-denominated
bank obligations, including certificates of deposit, bankers' acceptances, bank
notes, deposit notes and interest-bearing savings and time deposits, issued by
U.S. or foreign banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. For this purpose, the assets of a bank or
savings institution include the assets of both its domestic and foreign
branches. See "Foreign Securities" for a discussion of the risks associated with
investments in obligations of foreign banks and foreign branches of domestic
banks. The Money Market Fund will invest in the obligations of domestic banks
and savings institutions only if their deposits are federally insured.
Investments by the Money Market Fund in obligations of foreign banks and foreign
branches of domestic banks will not exceed 25% of the Fund's total assets at the
time of investment.
Borrowing. Each Fund may borrow money in amounts up to 5% of the value of its
total assets at the time of such borrowings for temporary purposes, and is
authorized to borrow money in excess of the 5% limit as permitted by the 1940
Act (not to exceed 30% of a Fund's total assets) in order to meet redemption
requests. This borrowing may be unsecured. No Fund will make any additional
purchases of portfolio securities at any time its borrowings exceed 5% of its
assets. The 1940 Act requires each Fund to maintain continuous asset coverage of
300% of the amount it has borrowed. If the 300% asset coverage should decline as
a result of market fluctuations or other reasons, a Fund may be required to sell
some of its portfolio holdings within three (3) days to reduce the debt and
restore the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. Borrowing may exaggerate
the effect on net asset value of any increase or decrease in the market value of
a Fund. Money borrowed will be subject to interest costs which may or may not be
recovered by an appreciation of the securities purchased. A Fund may also be
required to maintain minimum average balances in connection with borrowing or to
pay a commitment or other fees to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.
A Fund may, in connection with permissible borrowings, transfer as collateral
securities owned by a Fund.
Derivatives. Each Index Fund may invest in various instruments that are commonly
known as derivatives. Some derivatives, such as mortgage-related and other
asset-backed securities, are in many respects like any other investment,
although they may be more volatile or less liquid than more traditional debt
securities. There are, in fact, many different types of derivatives and many
different ways to use them. There are a range of risks associated with those
uses. Futures and options are commonly used for traditional hedging purposes in
an effort to protect a fund from exposure to adversely changing interest rates,
securities prices or currency exchange rates, and as a low cost method of
gaining positive exposure to a particular securities market without investing
directly in those securities. The Index Funds will use financial futures,
contracts and related options for "bona fide hedging" purposes, as such term is
defined in applicable regulations of the Commodity Futures Trading Commission.
State Street will only use derivatives for cash management purposes and for
hedging the Index Funds' portfolios. Derivatives will not be used to leverage,
or to increase, portfolio risk above the level that would be achieved using only
traditional investment securities or to acquire exposure to changes in the value
of assets or indexes that by themselves would not be purchased for an Index
Fund.
o Securities Index Futures and Related Options. When an Index Fund receives
cash from new investments or holds a portion of its assets in money market
instruments, it may enter into index futures or options in order to increase its
exposure to the market. Strategies an Index Fund could use to accomplish this
include purchasing futures contracts, writing put options and purchasing call
options. When an Index Fund wishes to sell securities, because of shareholder
redemptions or otherwise, it may use index futures or options to hedge against
market risk until the sale can be completed. These strategies could include
selling futures contracts, writing call options and purchasing put options.
o Swap Agreements. The Index Funds may enter into interest rate, index,
equity and currency exchange rate swap agreements. These transactions would be
entered into in an attempt to obtain a particular return when it is considered
desirable to do so, possibly at a lower cost to the Funds than if the Funds had
invested directly in the asset that yielded the desired return. Swap agreements
are two-party contracts entered into primarily by institutional investors for
periods ranging from a few weeks to more than one year. In a standard swap
transaction, two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined investments or
instruments, which may be adjusted for an interest factor. The gross returns to
be exchanged or "swapped" between the parties are generally calculated with
respect to a "normal amount" (i.e., the return on or increase in value of a
particular dollar amount invested at a particular interest rate, in a particular
foreign currency, or in a "basket" of securities representing a particular
index). Forms of swap agreements include interest rate caps, under which, in
return for a premium, one party agrees to make payments to the other to the
extent that interest rates exceed a specified rate, or "cap"; interest rate
floors, under which, in return for a premium, one party agrees to make payments
to the other to the extent that interest rates fall below a specified level, or
"floor"; and interest rate collars, under which a party sells a cap and
purchases a floor or vice versa in an attempt to protect itself against interest
rate movements exceeding given minimum or maximum levels.
o Additional Risks Associated with using Futures and Options. The risk of
loss associated with futures contracts in some strategies can be substantial
(indeed, unlimited) due to both the low margin deposits required and the
extremely high degree of leverage involved in futures pricing. As a result, a
relatively small price movement in a futures contract may result in an immediate
and substantial loss or gain. However, an Index Fund will not use futures
contracts or options for speculative purposes or to leverage its assets.
Accordingly, the primary risks associated with the use of futures contracts and
options by an Index Fund are: (i) imperfect correlation between the change in
market value of the securities held by the Fund and the prices of futures
contracts and options; (ii) possible lack of a liquid secondary market for a
futures contract and the resulting inability to close a futures position prior
to its maturity date; and (iii) State Street's failing to accurately forecast
the direction or the extent of movements in securities prices or other market
factors, resulting in a possible loss to the Fund. The risk of imperfect
correlation will be minimized by investing only in those contracts whose
behavior is expected to resemble that of an Index Fund's underlying securities.
The risk that an Index Fund will be unable to close out a futures position will
be minimized by entering into transactions on an exchange with an active and
liquid secondary market.
o Asset Coverage. In order to assure that futures and related options are
not used by an Index Fund to achieve excessive investment leverage, the Fund
will cover such transactions, as required under applicable interpretations of
the SEC, either by owning the underlying securities, entering into an
off-setting transaction, or by establishing a segregated account with the Fund's
custodian containing cash or liquid portfolio securities in an amount at all
times equal to or exceeding the Fund's commitment with respect to these
instruments or contracts.
Euro-Denominated Securities. The European Monetary Union ("EMU") plans to
implement a new currency unit, the Euro, on January 1, 1999, that is expected to
reshape financial markets, banking systems and monetary policies in Europe and
other parts of the world.
As of January 1, 1999 financial transactions and market information, including
share quotations and company accounts, in participating countries will be in
Euros, and monetary policy for participating countries will be uniformly managed
by a new central bank, the European Central Bank. Since it is not possible to
predict the impact of the Euro on the Funds, this transition may change the
economic environment and behavior of investors and the Advisers may need to
adapt their investment strategies accordingly.
Foreign Securities. The EAFE Fund may invest in the securities of foreign
issuers and The Money Market Fund may invest in U.S. dollar-denominated foreign
securities issued by foreign banks and companies. There are certain risks and
costs involved in investing in securities of companies and governments of
foreign countries, which are in addition to the usual risks inherent in U.S.
investments. Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect the payment of principal and interest on
foreign obligations. Additionally, foreign banks and foreign branches of
domestic banks may be subject to less stringent reserve requirements, and to
different accounting, auditing and recordkeeping requirements.
The EAFE Fund may invest in foreign securities in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and other
similar securities. These securities may not be denominated in the same currency
as the securities they represent. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. Generally, ADRs, in registered form, are
designed for use in the United States securities markets, and EDRs, in bearer
form, are designed for use in the European securities markets. The EAFE Fund
typically will only purchase ADRs which are listed on a domestic securities
exchange or included in the NASDAQ National Market System. Ownership of
unsponsored ADRs may not entitle the EAFE Fund to financial or other reports
from the issuer, to which it would be entitled as the owner of the sponsored
ADRs. Interest or dividend payments on such securities may be subject to foreign
withholding taxes.
Guaranteed Investment Contracts. The Money Market Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S. insurance
companies. Pursuant to such contracts, the Money Market Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Money Market Fund on a monthly basis
interest which is based on an index that is guaranteed not to be less than a
certain minimum rate. A GIC is normally a general obligation of the issuing
insurance company and not funded by a separate account. The purchase price paid
for a GIC becomes part of the general assets of the insurance company, and the
contract is paid from the company's general assets. The Money Market Fund will
only purchase GICs from insurance companies which, at the time of purchase, have
assets of $1 billion or more and meet quality and credit standards established
by the Adviser pursuant to guidelines approved by the Board of Trustees.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Therefore, GICs will normally be considered illiquid
investments, and will be acquired subject to the Money Market Fund's limitation
on illiquid investments.
Illiquid Securities. The Index Funds will not invest more than 15% of the value
of their respective net assets, and the Money Market Fund will not invest more
than 10% of the value of its net assets, (determined at the time of acquisition)
in securities that are illiquid. If, after the time of acquisition, events cause
this limit to be exceeded, the applicable Fund will take steps to reduce the
aggregate amount of illiquid securities as soon as reasonably practicable in
accordance with policies of the SEC. Repurchase agreements and time deposits
that do not provide for payment within seven (7) days are subject to this
limitation.
Investment Company Securities. The Money Market Fund, in connection with the
management of its daily cash position, may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., money market funds).
Securities of other investment companies will be acquired within limits
prescribed by the 1940 Act. These limitations, among other matters, restrict
investments in securities of other investment companies to no more than 10% of
the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses the Money Market Fund bears
directly in connection with its own operations.
Money Market Fund Valuation. The Money Market Fund will use the amortized cost
method to determine the value of its portfolio securities pursuant to Rule 2a-7
under the 1940 Act. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until maturity
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which the value, as determined by amortized cost, is higher or
lower than the price which the Money Market Fund would receive if the security
were sold. During these periods, the yield to a shareholder may differ somewhat
from that which could be obtained from a similar fund which utilizes a method of
valuation based upon market prices. Thus, during periods of declining interest
rates, if the use of the amortized cost method resulted in lower value of the
Money Market Fund's portfolio on a particular day, a prospective investor in
that Fund would be able to obtain a somewhat higher yield than would result from
an investment in a fund utilizing solely market values and existing Fund
shareholders would receive correspondingly less income. The converse would apply
during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized cost
method, the Money Market Fund must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase securities having remaining maturities of
397 days or less and invest only in U.S. dollar denominated eligible securities
determined by the Board of Trustees to be of minimal credit risk and which: (1)
have received one of the two highest short-term ratings by at least two NRSROs,
such as "A-1" by Standard & Poor's Ratings Service ("Standard & Poor's") and
"P-1" by Moody's Investors Service, Inc. ("Moody's"); (2) are single rated and
have received the highest short-term rating by a Nationally Recognized
Statistical Rating Organization ("NRSRO"); or (3) are unrated, but are
determined to be of comparable quality by the Adviser pursuant to guidelines
approved by the Board of Trustees.
Repurchase Agreements. Each Fund may enter into repurchase agreements with
"primary dealers" in U.S. Government securities and member banks of the Federal
Reserve System which furnish collateral at least equal in value or market price
to the amount of their repurchase obligations. In a repurchase agreement, a Fund
purchases a debt security from a seller which undertakes to repurchase the
security at a specified resale price on an agreed future date (ordinarily a week
or less). The resale price generally exceeds the purchase price by an amount
which reflects an agreed-upon market interest rate for the term of the
repurchase agreement. The principal risk is that, if the seller defaults, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by a Fund are less than the
repurchase price. In determining whether to enter into an agreement, the
Advisers will consider all relevant facts and circumstances, including the
creditworthiness of the counterparty.
Securities Lending. Each Fund may lend its investment securities to qualified
institutional investors on either a short- or long-term basis in order to
realize additional income. Loans of securities entered into by a Fund will be
collateralized by cash, letters of credit, or securities issued or guaranteed by
the U.S. Government or its agencies. The collateral will equal at least 100% of
the value of the loaned securities, and such loans may not exceed 30% of the
value of each Fund's net assets. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in and/or
difficulties or delays in recovering the collateral, should the borrower fail
financially. In determining whether to lend securities, the Advisers will
consider all relevant facts and circumstances, including the creditworthiness of
the borrower.
Short-Term Investments. Each Fund may invest in short-term fixed income
securities in order to invest uncommitted cash balances, to maintain liquidity
to meet shareholder redemptions, or, in the case of the Index Funds, to serve as
collateral for the obligations underlying the Funds' investments in securities
index futures or related options. The securities each Fund may invest in
include: obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or by any U.S. state, district or commonwealth
and U.S. dollar-denominated bank obligations, including certificates of deposit,
bankers' acceptances, bank notes, commercial paper, deposit notes,
interest-bearing savings and time deposits, issued by U.S. or foreign banks or
savings institutions having total assets at the time of purchase in excess of $1
billion. For this purpose, the assets of a bank or savings institution include
the assets of both its domestic and foreign branches. A Fund will invest in the
obligations of domestic banks and savings institutions only if their deposits
are federally insured. Short-term obligations purchased by a Fund will either
(i) have short-term debt ratings at the time of purchase in the top two
categories by one or more unaffiliated NRSROs or be issued by issuers with such
ratings or (ii) if unrated will be of comparable quality as determined by the
Adviser.
With respect to the Money Market Fund, securities (other than U.S. Government
securities) must be rated (generally, by at least two NRSROs) within the two
highest rating categories assigned to short-term debt securities. In addition,
the Money Market Fund (a) will not invest more than 5% of its total assets in
securities rated in the second highest rating category by such NRSROs and will
not invest more than 1% of its total assets in such securities of any one
issuer, and (b) intends to limit investments in the securities of any single
issuer (other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) to not more than 5% of the Fund's total assets at
the time of purchase, provided that the Fund may invest up to 25% of its total
assets in the securities of any one issuer for a period of up to three (3)
business days. Unrated and certain single rated securities (other than U.S.
Government securities) may be purchased by the Money Market Fund, but are
subject to a determination by Conning, in accordance with procedures established
by the Board of Trustees, that the unrated and single rated securities are of
comparable quality to the appropriate rated securities.
Subsequent to its purchase by a Fund, a rated security may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund. The Board of Trustees or the relevant Adviser, pursuant to guidelines
established by the Board, will consider such an event in determining whether the
Fund involved should continue to hold or should dispose of the security in
accordance with the interests of the Fund and applicable regulations of the SEC.
Stripped Securities. The Money Market Fund may purchase participations in trusts
that hold U.S. Treasury and agency securities (such as TIGRs and CATs) and also
may purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or the future
principal payments on U.S. Government obligations. These instruments are issued
at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors.
U.S. Government Securities. Each Fund may purchase U.S. Government securities,
which are obligations issued by, or guaranteed by, the U.S. Government, its
agencies or instrumentalities. Some U.S. Government securities, such as Treasury
bills, notes and bonds, are backed by the full faith and credit of the United
States; others, such as those of the Federal Home Loan Banks, are backed by the
right of the issuer to borrow from the Treasury; others, such as those of the
Federal National Mortgage Association, are backed by the discretionary authority
of the U.S. Government to purchase the agency's obligations; and still others,
such as those of the Student Loan Marketing Association, are backed only by the
credit of the agency.
Variable and Floating Rate Securities. The Money Market Fund may purchase
variable and floating rate securities which may have stated maturities in excess
of the Fund's maturity limitations but are deemed to have shorter maturities
because the Fund can demand payment of the principal of the securities at least
once within such periods on not more than 30 days' notice (this demand feature
is not required if the securities are guaranteed by the U.S. Government or an
agency or instrumentality thereof). These securities may include variable amount
master demand notes that permit the indebtedness to vary in addition to
providing for periodic adjustments in the interest rate. Unrated variable and
floating rate securities will be determined by the Adviser to be of comparable
quality at the time of purchase to rated instruments purchasable by the Money
Market Fund. The absence of an active secondary market, however, could make it
difficult to dispose of the instruments, and the Money Market Fund could suffer
a loss if the issuer defaulted or during periods that the Fund is not entitled
to exercise its demand rights.
When-Issued and Delayed Delivery Securities. Each Fund may purchase securities
on a when-issued or delayed delivery basis. Delivery of and payment for these
securities may take place as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to a Fund until settlement
takes place. A Fund maintains with its custodian a segregated account containing
cash or liquid portfolio securities in an amount at least equal to these
commitments.
Portfolio Turnover Rate
The frequency of each Index Fund's transactions (i.e., a Fund's turnover rate)
will vary from year to year depending on market conditions, changes in the
stocks that comprise the relevant index, and a Fund's cash flows.
Each Index Fund's annual portfolio turnover rate is not expected to exceed 80%.
Net Asset Value
Each Fund is open for business each day when the NYSE is open (a "Valuation
Day"). The net asset value per share of each Fund is calculated once on each
Valuation Day as of the close of regular trading on the NYSE (normally 4:00
p.m., Eastern Time).
Each Fund will not process orders on any day the NYSE is closed. Orders received
on such days will be priced on the next day a Fund computes its net asset value.
As such, investors may experience a delay in purchasing or redeeming shares of a
Fund. Securities in which the EAFE Fund invests may be listed on foreign
exchanges which trade on Saturdays or other days when the NYSE is closed. Since
the EAFE Fund does not price on these days, the Fund's net asset value may be
significantly affected on days when an investor has no access to the Fund's
assets.
The net asset value per share of each Fund is computed by dividing the value of
each Fund's assets, less all liabilities, by the total number of its shares
outstanding. The Index Funds' securities and other assets are valued primarily
on the basis of market quotations or, if quotations are not readily available,
by a method which the Board of Trustees believes reflects their fair value. The
Money Market Fund uses the amortized cost method of valuing its portfolio
securities to maintain a constant net asset value of $1.00 per share. Under this
method of valuation, the Money Market Fund values its portfolio securities at
their cost at the time of purchase and not at market value, thus minimizing
fluctuations in value due to interest rate changes or market conditions.
PERFORMANCE INFORMATION AND REPORTS
Each Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications disseminated to existing or
prospective shareholders or Contract Owners. Past performance does not indicate
or project future performance. Performance information may include a Fund's
investment results and/or comparisons of its investment results to the Fund's
respective index or other various unmanaged indexes or results of other mutual
funds with similar investment objectives or investment or savings vehicles. A
Fund's investment results, as used in such communications, will be calculated on
a total return basis or yield in the manner set forth below. From time to time,
fund rankings may be quoted from various sources, such as Lipper Analytical
Services, Inc., Value Line and Morningstar Inc.
Each Fund may provide periodic and average annualized "total return" quotations.
A Fund's "total return" refers to the change in the value of an investment in a
Fund over a stated period based on any change in net asset value per share and
including the value of any shares purchasable with any dividends or capital
gains distributed during such period. Periodic total returns may be annualized.
An annualized total return is a compounded total return which assumes that the
total return is generated over a one-year period, and that all dividends and
capital gains distributions are reinvested. An annualized total return will be
higher than a periodic total return, if the period is shorter than one year, due
to the compounding effect.
The current yield of shares in the Money Market Fund refers to the net income
generated by an investment in the Fund's shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly, but
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
Quotations of Fund total returns and yields will not reflect Contract charges
and expenses. The prospectus for a Contract will contain information about
performance of the relevant separate account and Contract.
Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return or yield of each Fund will vary
depending upon, among other things, the current market value of the securities
held by a Fund and changes in a Fund's expenses. In addition, during certain
periods for which total return and/or yield quotations may be provided, the
Manager, the Advisers and/or the Funds' other service providers may have
voluntarily agreed to waive portions of their respective fees, or reimburse
certain Fund operating expenses, on a month-to-month basis. Such waivers will
have the effect of increasing a Fund's net income (and therefore its total
return and/or yield) during the period such waivers are in effect.
Shareholders and Contract Owners will receive reports semi-annually and
annually that include each Fund's
financial statements, including listings of investment securities held by a
Fund as of those dates. Each Fund's
annual report is audited by the Fund's independent accountants.
MANAGEMENT OF THE TRUST
Board of Trustees
The affairs of the Funds are managed under the supervision of the Board of
Trustees of the Trust, of which each Fund is a series. The Trustees meet
periodically throughout the year to oversee the Funds' operations, review
contractual arrangements with companies that provide services to the Funds and
review each Fund's performance. By virtue of the responsibilities assumed by
Sage, neither the Trust nor the Funds require employees. None of the officers of
the Trust devotes full time to the affairs of the Trust or the Funds.
For more information with respect to the Trustees of the Trust, see the
"Management of the Trust" section in the SAI.
Investment Manager
Sage is the investment manager of each Fund and has responsibility for the
management and administration of each Fund's affairs, under the supervision of
the Board of Trustees of the Trust. Each Fund's investment portfolio is managed
on a day-to-day basis by the Fund's Adviser under the general oversight of Sage
and the Board of Trustees. Sage is responsible for providing investment
management and administrative services to the Funds, and in the exercise of such
responsibility selects the investment advisers for the Funds and monitors the
Advisers' investment programs and results, reviews brokerage matters, oversees
compliance by the Funds with various federal and state statutes, and carries out
the directives of the Board of Trustees. Sage monitors and evaluates the
Advisers, to assure that the Advisers are managing the Funds consistently with
each Fund's investment objective, policies, restrictions, applicable laws and
guidelines.
The Manager is responsible for providing the Funds with office space, office
equipment, and personnel necessary to operate and administer the Funds'
business, and also supervise the provisions of services by third parties such as
the Funds' custodian and transfer agent. Pursuant to a sub-administration
agreement, First Data Investor Services Group, Inc. ("Investor Services Group"),
the sub-administrator to the Funds, assists the Manager in the performance of
its administrative responsibilities to the Funds.
Sage was organized in 1997 and has no prior experience managing mutual funds.
The address of Sage is 300 Atlantic Street, Stamford, CT 06901. It is a
wholly-owned subsidiary of Sage Insurance Group, Inc. Sage Insurance Group,
Inc., is the holding company for Sage and affiliated companies that are in the
business of underwriting, issuing and distributing the variable insurance
products of Sage Life Assurance of America, Inc. a direct, wholly-owned
subsidiary of Sage Insurance Group, Inc. As compensation for its management
services to the Funds, Sage is entitled to receive a fee from each Fund, accrued
daily and paid monthly, equal on an annual basis of the average daily net assets
of each Fund as follows: (i) the S&P 500 Fund, 0.55%; (ii) the EAFE Fund, 0.90%;
and (iii) the Money Market Fund, 0.65%. Sage has agreed to waive its management
fees for the S&P 500 Fund to 0.38%; for the EAFE Fund to 0.73%; and for the
Money Market Fund to 0.48%, until such time as notice is given by Sage to the
Board of Trustees of the Trust.
The Manager is responsible for and will bear all expenses relating to: custodian
fees; transfer agent fees; pricing costs (including the daily calculation of net
asset value); accounting fees; legal fees (except extraordinary litigation
expenses); expenses of shareholders' and/or trustees' meetings; bookkeeping
expenses related to shareholder accounts; insurance charges; cost of printing
and mailing shareholder reports and proxy statements; cost of printing and
mailing registration statements and updated prospectuses to current
shareholders; and the fees of any trade association of which the Trust is a
member.
An Insurer may be compensated by the Manager for certain administrative services
for the Funds in connection with the Contracts issued through separate accounts
of such Insurer. Under these arrangements, the Manager may pay compensation to
an Insurer in an amount based on the assets of the Funds attributable to
Contracts issued through separate accounts of the Insurer.
Investment Advisers
Sage has retained the services of State Street to serve as the investment
adviser to the Index Funds, and has retained the services of Conning to serve as
the investment adviser to the Money Market Fund. Pursuant to Investment
Sub-Advisory Agreements between the Manager and each Adviser, the Advisers,
under the supervision of the Manager and the Board of Trustees, manage each
Fund's assets in accordance with each Fund's investment objective and policies,
make investment decisions for each Fund, place purchase and sales orders on
behalf of each Fund, and provide investment research. As compensation for the
Advisers' services and the related expenses they incur with respect to each
Fund, the Manager pays the applicable Adviser a fee, computed daily and payable
monthly (quarterly with respect to the Money Market Fund), equal on an annual
basis with respect to each Fund's average daily net assets as follows: (i) the
S&P 500 Fund, 0.05% of the first $50 million of assets under management, 0.04%
of the next $50 million of assets under management, and 0.02% on amounts in
excess of $100 million of assets under management with a minimum annual fee of
$50,000; (ii) the EAFE Fund, 0.15% of the first $50 million of assets under
management, 0.10% of the next $50 million of assets under management, and 0.08%
on amounts in excess of $100 million of assets under management with a minimum
annual fee of $65,000; and (iii) the Money Market Fund, 0.15% of the first $100
million of assets under management, 0.10% of the next $200 million of assets
under management, and 0.075% on amounts in excess of $300 million of assets
under management.
The Investment Sub-Advisory Agreements contain provisions relating to the
selection of securities brokers to effect the portfolio transactions of each
Fund. Under those provisions, subject to applicable law and procedures adopted
by the Trustees, an Adviser may: (1) direct Fund portfolio brokerage to any
broker-dealer affiliates of the Manager or Adviser; (2) pay commissions to
brokers which are higher than might be charged by another qualified broker to
obtain brokerage and/or research services considered by the Adviser to be useful
or desirable for its investment management of the Funds and/or other advisory
accounts of itself and any investment adviser affiliated with it; and (3)
consider the sales of Contracts and/or shares of the Funds and any other
registered investment companies managed by the Manager or Adviser and its
affiliates by brokers and dealers as a factor in its selection of brokers and
dealers to execute portfolio transactions for the Funds.
State Street, the Adviser for the Index Funds, located at Two International
Place, Boston, Massachusetts 02110, a division of State Street Bank and Trust
Company, has been providing institutional investment management services since
1987. As of September 30, 1998, State Street served as investment adviser to
various institutional clients with aggregate assets under management of $441
billion. State Street Bank and Trust Company is a wholly-owned subsidiary of
State Street Corporation. State Street Corporation services financial assets,
including custody, pricing and asset management, for retail and institutional
clients.
Conning, the Adviser for the Money Market Fund, located at City Place II, 185
Asylum Street, Hartford, CT 06103-4105, has been providing institutional
investment management services since 1982. As of September 30, 1998, Conning
manages assets of $28.8 billion. The Adviser is a majority-owned subsidiary of
General American Life Insurance Company.
Expenses
In addition to the fees of the Manager, the Trust is responsible for the payment
of the following, including, without limitation: fees and expenses of
disinterested Trustees (including any independent counsel to the disinterested
Trustees); brokerage commissions; dealer mark-ups and other expenses incurred in
the acquisition or disposition of any securities or other investments; costs,
including the interest expense, of borrowing money; fees and expenses for
independent audits and auditors; taxes; and extraordinary expenses (including
extraordinary litigation and consulting expenses) as approved by a majority of
the disinterested Trustees. Fund specific expenses are paid by the particular
Fund. Expenses of the Trust not attributable to a particular Fund are allocated
to each Fund on the basis of their relative net assets.
Sub-Administrator
Investor Services Group, a subsidiary of First Data Corporation, located at 53
State Street, Boston, Massachusetts 02109, serves as each Fund's
sub-administrator pursuant to a Sub-Administration Agreement with the Manager.
Under the terms of the Sub-Administration Agreement, Investor Services Group
generally assists in all aspects of the Funds' operations, other than providing
investment advice, subject to the overall authority of the Board of Trustees.
Pursuant to the terms of the Sub-Administration Agreement the Manager has agreed
to pay Investor Services Group a monthly fee at the annual rate of 0.05 of 1% of
the value of the Trust's monthly net assets up to aggregate assets of $2
million, 0.04 of 1% of the Trust's monthly net assets up to aggregate assets of
the next $2 million, and 0.03 of 1% of the Trust's monthly average net assets
greater than $4 million. In addition, the Manager has agreed to pay Investor
Services Group for fund accounting services an annual fee of $27,500 per Fund on
Trust assets up to $50 million; $30,000 per Fund on Trust assets of the next $50
million, and $36,000 per Fund on Trust assets greater than $100 million.
Additionally, Investor Services Group is paid certain out-of-pocket fees and
other special services fees for providing services for the operation of the
Funds.
Distributor and Distribution Plan
Sage Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of
Sage Insurance Group, Inc., serves as
the distributor of each Fund's shares. The principal business address of the
Distributor is 300 Atlantic Street,
Stamford, Connecticut 06901.
The shareholders of each Fund have approved a Distribution Plan for the Funds
which authorizes payments by the Funds in connection with the distribution of
shares at an annual rate of up to 0.25% of a Fund's average daily net assets.
Under each Fund's Distribution Plan the Fund may pay the Distributor for various
costs actually incurred or paid in connection with the distribution of the
Fund's shares and/or servicing of shareholder accounts. Such costs include the
costs of financing activities primarily intended to result in the sale of the
Funds' shares, such as the costs (1) of printing and mailing the Funds'
prospectuses, SAIs and shareholder reports to prospective shareholders and
Contract Owners; (2) relating to the Funds' advertisements, sales literature and
other promotional materials; (3) of obtaining information and providing
explanations to shareholders and Contract Owners regarding the Funds; (4) of
training sales personnel and of personal service; and/or (5) maintenance of
shareholders' and Contract Owners' accounts with respect to each Fund's shares
attributable to such accounts. The Distributor, in turn, may compensate Insurers
or others for such activities.
No payments will be made by the Funds under the 12b-1 Plans for the fiscal years
ending December 31, 1998 and December 31, 1999. Shareholders will be given prior
notice if such payments are to commence at a future date.
The Distribution Plan may be terminated at any time. The Board of Trustees will
evaluate the appropriateness of the Distribution Plan and any payments made
thereunder on a continuous basis.
Custodian and Transfer Agent
The Bank of New York, located at One Wall Street, New York, New York 10286,
serves as custodian of the assets of the Funds and Investor Services Group,
located at 53 State Street, Boston, Massachusetts 02109, serves as the transfer
agent for the Funds.
Organization of the Trust
The Trust was organized on January 9, 1998, as a business trust under the laws
of the State of Delaware. Each Fund is a separate series of the Trust. The Trust
offers shares of beneficial interest of each Fund at a par value $0.001 per
share. The shares of each Fund are offered through this Prospectus. No series of
shares of the Trust has any preference over any other series. All shares, when
issued, will be fully paid and non-assessable. The Board of Trustees has the
authority to create additional series without obtaining shareholder approval.
The Insurers (or affiliates thereof) and the Retirement Plans will be the Funds'
sole shareholders of record, and pursuant to the 1940 Act, such shareholders may
be deemed to be in control of the Funds. As of the date of this Prospectus, Sage
Insurance Group, Inc., and/or affiliates thereof, control the Funds because they
are the sole shareholders of each Fund. When a shareholders' meeting occurs,
each Insurer (and the Retirement Plans, to the extent required by applicable law
and/or the terms of the applicable Retirement Plans) solicits and accepts voting
instructions from its Contract Owners (or participants) who have allocated or
transferred monies for an investment in the Funds as of the record date of the
meeting. Each shareholder then votes a Fund's shares that are attributable to
its interests in the Fund, and any other Fund shares which it is entitled to
vote, in proportion to the voting instructions received.
The shares of each Fund are entitled to one vote for each dollar of net asset
value, and fractional shares are entitled to fractional votes. The shares of
each Fund have non-cumulative voting rights, so the vote of more than 50% of a
Fund's shares can elect 100% of the Trustees. Shares of each Fund are entitled
to vote separately to approve investment advisory agreements or changes in
investment restrictions, but shares of all Funds vote together in the election
of Trustees or in the selection of the independent accountants. Each Fund is
also entitled to vote separately on any other matter that affects solely that
Fund, but will otherwise vote together with all shares of the other Funds on all
other matters on which shareholders are entitled to vote.
The Trust is not required, and does not intend, to hold regular annual
shareholder meetings, but may hold special meetings for consideration of
proposals requiring shareholder approval. It is the intention of the Trust not
to hold annual shareholder meetings. The Trustees may call a special meeting of
shareholders for action by shareholder vote as may be required by the 1940 Act,
the Declaration of Trust or the By-laws of the Trust. In addition, the Trust
will call a special meeting of shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees, if requested to do so by the
holders of at least 10% of the Trust's outstanding shares.
The Funds are available through separate accounts relating to both variable
annuity and variable life insurance contracts and to certain Retirement Plans,
each in accordance with section 817(h) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Funds do not currently foresee any disadvantages to
Contract Owners arising from offering their shares to variable annuity and
variable life insurance policy separate accounts and Retirement Plans
simultaneously, and the Board of Trustees continuously monitors events for the
existence of any material irreconcilable conflict between or among Contract
Owners and Retirement Plans. Material conflicts could result from, for example,
(i) changes in state insurance laws; (ii) changes in federal income tax laws; or
(iii) differences in voting instructions between those given by variable life
owners and by variable annuity owners. If a material irreconcilable conflict
arises, as determined by the Board of Trustees, one or more separate accounts
may withdraw their investment in a Fund. This could possibly require a Fund to
sell portfolio securities at disadvantageous prices. Each Insurer will bear the
expenses of establishing separate portfolios for its variable annuity and
variable life insurance separate accounts if such action becomes necessary;
however, ongoing expenses that are ultimately borne by Contract Owners will
likely increase due to the loss of economies of scale benefits that can be
provided to separate accounts with substantial assets.
Year 2000
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this data
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Funds' service
providers to prepare for year 2000. Based on information currently available,
the Manager does not expect that it or the Funds will incur significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have a material impact on its or the Funds' ability to provide service at
anticipated levels, there can be no assurance that the steps taken in
preparation for the year 2000 will be sufficient to avoid any adverse impact on
the Funds.
The Manager and its affiliates have addressed Year 2000 issues and have
completed the necessary transition work. The Manager is in the process of
confirming with each of the service providers to the Funds that their systems
are addressing Year 2000 compliance on a timely basis. If systems of service
providers are not available or malfunction because of Year 2000 problems, then
the Funds would experience substantial delays in performing certain functions
(for example, processing purchase and sales transactions). The Manager does not
currently anticipate that the service providers will be unable to perform these
functions, or be unable to conduct business, due to the Year 2000 transition.
SHAREHOLDER AND ACCOUNT POLICIES
Purchase and Redemption of Shares
Shares of the Funds are continuously offered to Insurers and Retirement Plans at
the net asset value per share next determined after a proper purchase request
has been received and accepted by the Trust. Each Insurer (or Retirement Plan)
submits purchase and redemption orders to the Trust based on allocation
instructions for premium payments, transfer instructions and surrender or
partial withdrawal requests which are furnished to the Insurer by such Contract
Owners (or by participants). The Trust, the Funds and the Distributor reserve
the right to reject any purchase order from any party for shares of any Fund.
Payment for redeemed shares will ordinarily be made within seven (7) business
days after a proper redemption order has been received and accepted by the
Trust. A proper redemption order will contain all the necessary information and
signatures required to process the redemption order. The redemption price will
be the net asset value per share next determined after the Trust receives and
accepts the shareholder's request in proper form.
Each Fund may suspend the right of redemption or postpone the date of payment
during any period when trading on the NYSE is restricted, or the NYSE is closed
for other than weekends and holidays; when an emergency makes it not reasonably
practicable for a Fund to dispose of its assets or calculate its net asset
value; or as permitted by the SEC.
The accompanying Prospectus for the Insurer's variable annuity or variable life
insurance policy or disclosure document describes the allocation, transfer and
withdrawal provisions of such annuity or policy.
Dividends, Distributions and Taxes
Each Fund distributes substantially all of its net income and capital gains to
shareholders each year. Each Index Fund distributes capital gains and income
dividends annually and the Money Market Fund distributes capital gains and
income dividends, if any, monthly. All dividends and capital gains distributions
paid by a Fund will be automatically reinvested, at net asset value in that
respective Fund.
Each Fund will be treated as a separate entity for federal income tax purposes.
Each Fund intends to qualify as a "regulated investment company" under the Code.
As a regulated investment company each Fund will not be subject to U.S. Federal
income tax on its investment company taxable income and net capital gains (the
excess of net long-term capital gains over net short-term capital losses), if
any, that it distributes to shareholders. Each Fund intends to distribute to its
shareholders, at least annually, substantially all of its investment company
taxable income and net capital gains, and therefore, does not anticipate
incurring a Federal income tax liability.
For a discussion of the impact on Contract Owners of income taxes an Insurer may
owe as a result of (i) its ownership of shares of the Funds, (ii) its receipt of
dividends and distributions thereon, and (iii) its gains from the purchase and
sale thereof, reference should be made to the Prospectus for the Contracts
accompanying this Prospectus.
The Code and Treasury Department regulations promulgated thereunder require that
mutual funds that are offered through insurance company separate accounts must
meet certain diversification requirements to preserve the tax-deferral benefits
provided by the variable contracts which are offered in connection with such
separate accounts. The Advisers intend to diversify each Fund's investments in
accordance with those requirements.
The foregoing is only a brief summary of important tax law provisions that
affect each Fund. Other Federal, state or local tax law provisions may also
affect each Fund and their operations. Anyone who is considering allocating,
transferring or withdrawing monies held under a variable contract to or from a
Fund should consult a qualified tax adviser.
Account Services
Contract Owners should direct any inquiries to Sage by calling 1-877-835-7243 or
by writing to Sage Life Assurance of America, Inc., Customer Service Center,
1290 Silas Deane Highway, Wethersfield, Connecticut 06109. All shareholder
inquiries should be directed to the Trust at 1-877-835-7243 or by writing to
Sage Life Investment Trust, Customer Service, 1290 Silas Deane Highway,
Wethersfield, Connecticut 06109.
<PAGE>
Investment Manager and Administrator of the Funds
SAGE ADVISORS, INC.
Investment Adviser of the Index Funds
STATE STREET GLOBAL ADVISORS
Investment Adviser of the Money Market Fund
CONNING ASSET MANAGEMENT COMPANY
Sub-Administrator and Transfer Agent
FIRST DATA INVESTOR SERVICES GROUP, INC.
Distributor
SAGE DISTRIBUTORS, INC.
Custodian
THE BANK OF NEW YORK
Independent Accountants
ERNST & YOUNG, L.L.P.
Counsel
SUTHERLAND ASBILL & BRENNAN LLP
..............................................................
No person has been authorized to give any information or to make any
representation other than those contained in the Funds' Prospectus, its SAI or
the Funds' approved sales literature in connection with the offering of the
Funds' shares and, if given or made, such other information or representations
must not be relied on as having been authorized by a Fund. This Prospectus does
not constitute an offer in any state in which, or to any person to whom, such
offer may not lawfully be made.
........................................................
<PAGE>
G:\shared\clients\sage\agreemen\mgmt.doc
APPENDIX A
DESCRIBING INDEXES
The S&P 500 Fund:
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P
makes no representation or warranty, express or implied, to the owners of the
Fund or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the S&P 500
Index to trace general stock market performance. S&P's only relationship to the
licensee is the licensing of certain trademarks and trade names of S&P and of
the S&P 500 Index which is determined, composed and calculated by S&P without
regard to the Trust or the Fund. S&P has no obligation to take the needs of the
Trust or the owners of the Fund into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of the Fund or the
timing of the issuance or sale of the Fund or in the determination or
calculation of the equation by which the Fund is to be converted into cash. S&P
has no obligation or liability in connection with the administration, marketing
or trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGE.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by the licensee. The Fund is not sponsored, endorsed, sold or promoted
by S&P and S&P's makes no representation regarding the advisability of investing
in the Fund.
The EAFE Fund:
The Fund is not sponsored, endorsed, sold or promoted by Morgan Stanley. Morgan
Stanley makes no representation or warranty, express or implied, to the owners
of the Fund or any member of the public regarding the advisability of investing
in funds generally or in the Fund particularly or the ability of the EAFE Index
to track general stock market performance. Morgan Stanley is the licenser of
certain trademarks, service marks and trade names of Morgan Stanley and of the
EAFE Index which is determined, composed and calculated by Morgan Stanley
without regard to the issuer of the Fund or the Fund itself. Morgan Stanley has
no obligation to take the needs of the issuer of the Fund or the owners of the
Fund into consideration in determining, composing or calculating the EAFE Index.
Morgan Stanley is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of the Fund to be
issued or in the determination or calculation of the equation by which the Fund
is redeemable for cash. Morgan Stanley has no obligation or liability to owners
of the Fund in connection with the administration, marketing or trading of the
Fund.
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN
THE CALCULATION OF THE INDICES FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES
OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR
FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY EXPRESS
OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
The EAFE Index is the exclusive property of Morgan Stanley. Morgan Stanley
Capital International is a service mark of Morgan Stanley and has been licensed
for use by Sage Advisors, Inc.
<PAGE>
SAGE LIFE INVESTMENT TRUST
FORM N-1A
Part B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Item No. Caption
Item 10. Cover Page..................................................... Cover Page
Item 11. Table of Contents........................................... Cover Page
Item 12. General Information and History..................... Not Applicable
Item 13. Investment Objectives and Policies...................Investment Restrictions; Risk
Factors and Certain Securities and Investment Practices
Item 14. Management of the Fund..................................Management of the Trust
Item 15. Control Persons and Principal
Holders of Securities........................................Management of the Trust
Item 16. Investment Advisory and
Other Services..................................................Management of the Trust
Item 17. Brokerage Allocation and
Other Practices................................................ Investment
Restrictions; Risk Factors and Certain
Securities and Investment Practices; Determination of
Net Asset value; Portfolio Transactions and Brokerage
Commissions
Item 18. Capital Stock and Other Securities................... Investment Restrictions;
Risk Factors and Certain Securities and Investment
Practices
Item 19. Purchase, Redemption and
Pricing of Securities Being Offered...................Determination of Net
Asset Value
Item 20. Tax Status....................................................... Distributions and
Taxes
Item 21. Underwriters.................................................... Determination of
Net Asset Value
Item 22. Calculation of Performance Data..................... Performance Information
Item 23. Financial Statements........................................ Not Applicable
</TABLE>
<PAGE>
SAGE LIFE INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
for
S&P 500 Equity Index Fund
EAFE Equity Index Fund
Money Market Fund
dated November 16, 1998
Sage Life Investment Trust (the "Trust") is currently comprised of three
series: S&P 500 Equity Index Fund ("S&P 500 Fund") and EAFE Equity Index Fund
("EAFE Fund") (together, the "Index Funds") and the Money Market Fund (together
with the Index Funds, the "Funds" and each individually, a "Fund"). The shares
of the Funds are described herein. Capitalized terms not otherwise defined
herein shall have the same meaning as in the Fund's Prospectus.
Shares of the Funds are available through the purchase of certain variable
annuity and variable life insurance contracts ("Contract(s)") issued by various
insurance companies (each, an "Insurer" or collectively, the "Insurers") and are
offered to various pension and profit-sharing plans ("Retirement Plans"). The
investment manager and administrator of the Funds is Sage Advisors, Inc. (the
"Manager" or "Sage"). The investment adviser of the Index Funds is State Street
Global Advisors ("State Street"), a division of State Street Bank and Trust
Company, and the investment adviser of the Money Market Fund is Conning Asset
Management Company ("Conning" and, together with State Street, the "Advisers").
The Trust's distributor is Sage Distributors, Inc. (the "Distributor").
The Prospectus for the Funds is dated November 16, 1998. The Prospectus
provides the basic information an investor should know about a Fund before
investing and may be obtained without charge by calling the Trust at
1-800-877-835-7243. This Statement of Additional Information (the "SAI") is not
a prospectus and is intended to provide additional information regarding the
activities and operations of the Funds and should be read in conjunction with
the Funds' Prospectus. This SAI is not an offer of shares of any Fund for which
an investor has not received a Fund's Prospectus.
<TABLE>
<CAPTION>
<S> <C> <C>
Table of Contents
Investment Restrictions.......................................................................... 2
Risk Factors and Certain Securities and Investment Practices..................................... 3
Portfolio Transactions and Brokerage Commissions................................................. 11
Performance Information.......................................................................... 12
Determination of Net Asset Value................................................................. 13
Management of the Trust.......................................................................... 14
Organization of the Trust........................................................................ 18
Distributions and Taxes.......................................................................... 19
</TABLE>
INVESTMENT RESTRICTIONS
The following investment restrictions are "fundamental policies" of each
Fund and may not be changed without the approval of a "majority of the
outstanding voting securities" of each Fund. "Majority of the outstanding voting
securities" under the Investment Company Act of 1940, as amended (the "1940
Act"), and as used in this SAI and the Prospectus, means, with respect to a
Fund, the lesser of (I) 67% or more of the outstanding voting securities of the
Fund present at a meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy or (ii) more
than 50% of the outstanding voting securities of the Fund.
As a matter of fundamental policy, no Fund may:
300 issue senior securities, mortgage or pledge assets, or borrow money,
except (a) a Fund may borrow from banks in amounts up to 30% of its
total assets (including the amount borrowed); (b) a Fund may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities; and (c) an Index Fund may
engage in futures and options transactions as permitted by the 1940
Act and enter into collateral arrangements relating thereto;
(2) underwrite securities issued by other persons except insofar as the
Trust or a Fund may technically be deemed an underwriter under the Securities
Act of 1933, as amended (the "1933 Act"), in selling a portfolio security;
(3) make loans to other persons except: (a) through the lending of a Fund's
portfolio securities and provided that any such loans not exceed 30% of a Fund's
total assets (taken at market value); or (b) through the use of repurchase
agreements or the purchase of short-term obligations;
(4) purchase or sell commodities or real estate (including limited
partnership interests but excluding securities secured by real estate or
interests therein) in the ordinary course of business (except that the Index
Funds may engage in futures and options transactions as permitted by the 1940
Act and enter into collateral arrangements relating thereto, and each Fund may
hold and sell, for the Fund's portfolio, real estate acquired as a result of a
Fund's ownership of securities);
300 concentrate its investments in any particular industry (excluding U.S.
Government securities), but if it is deemed appropriate for the
achievement of a Fund's investment objective, up to 25% of its total
assets may be invested in any one industry;
(6) purchase the securities of any one issuer if as a result more than 5%
of the value of its total assets would be invested in the securities of such
issuer or a Fund would own more than 10% of the outstanding voting securities of
such issuer, except that up to 25% of the value of a Fund's total assets may be
invested without regard to these limitations, and provided that there is no
limitation with respect to investments in U.S.
Government securities.
Additional non-fundamental investment restrictions adopted by each Fund,
which may be changed by the Board of Trustees, provide that no Fund may:
300 purchase any security or evidence of interest therein on margin, except
that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained, and except that
deposits of initial deposit and variation margin may be made in
connection with the purchase, ownership, holding or sale of futures;
and
300 invest for the purpose of exercising control or management.
There will be no violation of any investment restriction if that restriction is
complied with at the time the relevant action is taken notwithstanding a later
change in market value of an investment or in net or total assets.
RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT PRACTICES
Investment Objectives
The investment objective of each Fund is described in the Funds'
Prospectus. There can, of course, be no assurance that any Fund will achieve its
investment objective.
Investment Practices
This section contains supplemental information concerning certain types of
securities and other instruments in which one or more of the Funds may invest,
the investment policies and portfolio strategies that the Funds may utilize, and
certain risks attendant to such investments, policies and strategies.
Money Market Fund. Rule 2a-7 under the 1940 Act provides that in order to value
its portfolio using the amortized cost method, the Money Market Fund must
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase securities having remaining maturities of 397 days or less and invest
only in U.S. dollar denominated eligible securities determined by the Board of
Trustees to be of minimal credit risk and which: (1) have received one of the
two highest short-term ratings by at least two Nationally Recognized Statistical
Rating Organizations ("NRSROs"), such as "A-1" by Standard & Poor's Ratings
Service ("Standard & Poor's") and "P-1" by Moody's Investors Service, Inc.
("Moody's"); (2) are single rated and have received the highest short-term
rating by an NRSRO; or (3) are unrated, but are determined to be of comparable
quality by Conning pursuant to guidelines approved by the Board of Trustees.
In addition, the Money Market Fund will not invest more than 5% of its
total assets in the securities (including the securities collateralizing a
repurchase agreement) of a single issuer, except that the Fund may invest in
U.S. Government securities or repurchase agreements that are collateralized by
U.S. Government securities without any such limitation. Furthermore, the
limitation does not apply with respect to conditional and unconditional puts
issued by a single issuer, provided that with respect to 75% of the Money Market
Fund's assets, no more than 10% of the Fund's total assets are invested in
securities issued or guaranteed by the issuer of the put. Investments in rated
securities not rated in the highest category by at least two rating
organizations (or one rating organization if the instrument was rated by only
one such organization), and unrated securities not determined by the Board of
Trustees to be comparable to those rated in the highest rating category, will be
limited to 5% of the Fund's total assets, with investment in any one such issuer
being limited to no more than the greater of 1% of the Fund's total assets or $1
million.
Pursuant to Rule 2a-7, the Board of Trustees has established procedures designed
to stabilize, to the extent reasonably possible, the price per share of the
Money Market Fund, as computed for the purpose of sales and redemptions, at
$1.00 per share. Such procedures include review of the Money Market Fund's
portfolio holdings by the Board of Trustees, at such intervals as it may deem
appropriate, to determine whether the asset value of the Fund calculated by
using available market quotations deviates from $1.00 per share based on
amortized cost. The extent of any deviation will be examined by the Board of
Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the event the Board
of Trustees determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing shareholders, the
Board of Trustees will take such corrective action as it regards as necessary
and appropriate.
Bank Obligations. Bank obligations which a Fund may purchase include, but are
not limited to, the following: certificates of deposits, time deposits,
Eurodollar and Yankee dollar obligations, bankers' acceptances, commercial
paper, bank deposit notes and other promissory notes, including floating or
variable rate obligations issued by U.S. or foreign bank holding companies and
their bank subsidiaries, branches and agencies. Certificates of deposit are
issued against funds deposited in an eligible bank (including its domestic and
foreign branches, subsidiaries and agencies), are for a definite period of time,
earn a specified rate of return and are normally negotiable. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with a commercial transaction. The borrower is liable for
payment, as is the bank, which unconditionally guarantees to pay the draft at
its face amount on the maturity date. Eurodollar obligations are U.S. dollar
obligations issued outside the United States by domestic or foreign entities.
Yankee dollar obligations are U.S. dollar obligations issued inside the United
States by foreign entities. Bearer deposit notes are obligations of a bank,
rather than a bank holding company. Similar to certificates of deposit, deposit
notes represent bank level investments and, therefore, are senior to all holding
company corporate debt, except certificates of deposit. All investments in bank
obligations are limited to the obligations of financial institutions having more
than $1 billion in total assets at the time of purchase.
Commercial Paper. Commercial paper includes short-term (usually from 1 to 270
days) unsecured promissory notes issued by corporations in order to finance
their current operations, and variable demand notes and variable rate master
demand notes issued by domestic and foreign bank holding companies, corporations
and financial institutions. A variable amount master demand note represents a
direct borrowing arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine to invest
varying amounts. Investments by a Fund in commercial paper will consist of
issues rated at the time A-1 and/or P-1 by Standard & Poor's or Moody's. In
addition, the Funds may acquire unrated commercial paper and corporate bonds
that are determined by the Adviser at the time of purchase to be of comparable
quality to rated instruments that may be acquired by such Fund as previously
described (see "Money Market Fund" herein for a discussion of certain investment
limitations).
Short-Term Instruments. When an Index Fund experiences large cash inflows
through the sale of shares, and desirable equity securities that are consistent
with the Fund's investment objective are unavailable in sufficient quantities or
at attractive prices, the Fund may hold short-term investments for a limited
time pending availability of such equity securities. Short-term instruments
consist of: (I) short-term obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities or by any U.S. state;
(ii) other short-term debt securities rated AA or higher by Standard & Poor's or
Aa or higher by Moody's or, if unrated, of comparable quality in the opinion of
the Adviser; (iii) commercial paper; (iv) bank obligations, including negotiable
certificates of deposit, time deposits and bankers' acceptances; and (v)
repurchase agreements. At the time an Index Fund invests in commercial paper,
bank obligations or repurchase agreements, the issuer or the issuer's parent
must have outstanding debt rated AA or higher by Standard & Poor's or Aa or
higher by Moody's or outstanding commercial paper or bank obligations rated A-1
by Standard & Poor's or Prime-1 by Moody's; or, if no such ratings are
available, the instrument must be of comparable quality in the opinion of the
Adviser.
Euro-Denominated Securities. On January 1, 1999, the European Monetary Union
("EMU") plans to implement a new currency unit, the Euro, which is expected to
reshape financial markets, banking systems and monetary policies in Europe and
other parts of the world. The countries initially expected to convert to the
Euro include Austria, Belgium, France, Germany, Luxembourg, the Netherlands,
Ireland, Finland, Italy, Portugal and Spain.
Beginning January 1, 1999, financial transactions and market information,
including share quotations and company accounts, in participating countries will
be in Euros. Approximately 46% of the stock exchange capitalization of the total
European market may be reflected in Euros, and participating governments will
issue their bonds in Euros. Monetary policy for participating countries will be
uniformly managed by a new central bank, the European Central Bank (the "ECB").
Although it is not possible to predict the impact of the Euro on the Funds, the
transition may change the economic environment and behavior of investors,
particularly in European markets. In addition, investors may begin to view those
countries participating in the EMU as a single entity. The Advisers may need to
adapt investment strategies accordingly. The process of implementing the Euro
also may adversely affect financial markets world-wide and may result in changes
in the relative strength and value of the U.S. dollar or other major currencies,
as well as possible adverse tax consequences as a result of currency conversions
to the Euro. Until the Euro develops its reputation and the ECB gains experience
in managing monetary policy, it will be difficult to predict the strengths and
weaknesses of the Euro.
Foreign Securities. The Money Market Fund may invest in U.S. dollar-denominated
foreign securities issued by foreign banks and companies and the EAFE Fund may
invest in foreign securities of all types and in American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and other similar securities.
These securities may not be denominated in the same currency as the securities
they represent. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying foreign securities. EDRs
are receipts issued by a European financial institution evidencing a similar
arrangement. Generally, ADRs, in registered form, are designed for use in the
United States securities markets, and EDRs, in bearer form, are designed for use
in the European securities markets. The EAFE Fund typically will only purchase
ADRs which are listed on a domestic securities exchange or included in the
NASDAQ National Market System. Certain such institutions issuing ADRs may not be
sponsored by the issuer. Issuers of ADRs in unsponsored programs may not provide
the same shareholder information in the U.S. that a sponsored depositary is
required to provide under its contractual arrangements with the issuer.
Ownership of unsponsored ADRs may not entitle the Fund to financial or other
reports from the issuer, to which it would be entitled as the owner of the
sponsored ADRs.
Income and gains on foreign securities may be subject to foreign
withholding taxes. Investors should consider carefully the substantial risks
involved in securities of companies and governments of foreign nations, which
are in addition to the usual risks inherent in domestic investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies. Commission rates
in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States.
Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These risks
include: (I) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
EAFE Fund's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interest; (iv) foreign
taxation; and (v) the absence of developed legal structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
State Street endeavors to buy and sell foreign currencies on as favorable a
basis as practicable. Some price spread on currency exchange (to cover service
charges) may be incurred, particularly when the EAFE Fund changes investments
from one country to another or when proceeds of the sale of Fund shares in U.S.
dollars are used for the purchase of securities in foreign countries. Also, some
countries may adopt policies which may prevent or restrict the EAFE Fund from
transferring cash out of the country or withhold portions of interest and
dividends at the source. There is the possibility of expropriation,
nationalization or confiscatory taxation, withholding and other foreign taxes on
income or other amounts, foreign exchange controls (which may include suspension
of the ability to transfer currency from a given country), default in foreign
government securities, political or social instability or diplomatic
developments that could affect investments in securities of issuers in foreign
nations.
The EAFE Fund may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange between the currencies of
different nations, by exchange control regulations and by indigenous economic
and political developments. Changes in foreign currency exchange rates will
influence values within the EAFE Fund from the perspective of U.S. investors,
and may also affect the value of dividends and interest earned, gains and losses
realized on the sale of securities, and net investment income and gains, if any,
to be distributed to shareholders by the EAFE Fund. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. These forces are affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. State Street will
attempt to avoid unfavorable consequences and to take advantage of favorable
developments in particular nations where, from time to time, in placing the EAFE
Fund's investments.
Guaranteed Investment Contracts. The Money Market Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S. insurance
companies. Pursuant to such contracts, a Fund makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits to the Fund on a monthly basis interest which is based on an index
that is guaranteed not to be less than a certain minimum rate. A GIC is normally
a general obligation of the issuing insurance company and not funded by a
separate account. The purchase price paid for a GIC becomes part of the general
assets of the insurance company, and the contract is paid from the company's
general assets. The Money Market Fund will only purchase GICs from insurance
companies which, at the time of purchase, have assets of $1 billion or more.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Therefore, GICs will normally be considered illiquid
investments, and will be acquired subject to the limitation on illiquid
investments.
Illiquid Securities. The Funds may invest in illiquid securities which,
historically, include illiquid securities that are subject to contractual or
legal restrictions on resale because they have not been registered under the
1933 Act, securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven (7) days. Securities which
have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or purchased in the secondary market. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying redemptions
within seven (7) days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional expense and
delay.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission (the "SEC") has adopted Rule 144A,
which allows a broader institutional trading market for securities otherwise
subject to restriction on their resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the 1933 Act
for resales of certain securities to qualified institutional buyers.
The Advisers will monitor the liquidity of Rule 144A securities in the
Funds' portfolios under the supervision of the Board of Trustees. In reaching
liquidity decisions, the Advisers will consider, among other things, the
following factors: (I) the frequency of trades and quotes for the security; (ii)
the number of dealers and other potential purchasers wishing to purchase or sell
the security; (iii) dealer undertakings to make a market in the security; and
(iv) the nature of the security and of the marketplace trades (i.e., the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).
Investment Company Securities. The Money Market Fund may invest in securities
issued by other investment companies. As a shareholder of another investment
company, the Money Market Fund would bear its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the expenses the Money Market Fund bears directly in connection
with its own operations. The Money Market Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (I) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Trust as a
whole.
Lending of Portfolio Securities. By lending its securities, a Fund can increase
its income by continuing to receive interest on the loaned securities as well as
by either investing the cash collateral in short-term securities or obtaining
yield in the form of interest paid by the borrower when U.S. Government
obligations are used as collateral. There may be risks of delay in receiving
additional collateral or risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially. A Fund will adhere to the following conditions whenever its
securities are loaned: (I) the Fund must receive at least 100 percent cash
collateral or equivalent securities from the borrower; (ii) the borrower must
increase this collateral whenever the market value of the securities including
accrued interest rises above the level of the collateral; (iii) the Fund must be
able to terminate the loan at any time; (iv) the Fund must receive reasonable
interest on the loan, as well as any dividends, interest or other distributions
on the loaned securities, and any increase in market value; (v) the Fund may pay
only reasonable custodian fees in connection with the loan; and (vi) voting
rights on the loaned securities may pass to the borrower; provided, however,
that if a material event adversely affecting the investment occurs, the Board of
Trustees must terminate the loan and regain the right to vote the securities.
Stock Index Futures, Options on Stock Index Futures Contracts and Stock Indices.
The Index Funds may purchase and sell stock index futures, options on stock
indices, and options on stock index futures contracts as a hedge against
movements in the equity markets.
o Stock Index Futures Contracts. A stock index futures contract is an
agreement in which one party agrees to deliver to the other an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. No physical delivery of securities is
made. These investments will be made by an Index Fund solely for cash management
purposes, and if they are economically appropriate to the reduction of risks
involved in the management of the Fund.
At the same time a futures contract is purchased or sold, the Fund must
allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1 1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of variation margin may be required, since each day the Fund must
maintain margin that reflects any decline or increase in the contract's value.
U.S. futures contracts have been designed by exchanges which have been
designated "contracts markets" by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant, or
brokerage firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.
There are several risks associated with the use of futures by the Index
Funds as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the stock indices
which are the subject of the hedge. The price of the future may move more than
or less than the stock index being hedged. If the price of the futures moves
less than the value of the stock indices which are the subject of the hedge, the
hedge will not be fully effective but, if the value of the stock indices being
hedged has moved in an unfavorable direction, the Fund would be in a better
position than if it had not hedged at all. If the value of the stock index being
hedged has moved in a favorable direction, this advantage will be partially
offset by the loss on the futures. If the price of the futures moves more than
the value of the stock index, the Fund involved will experience either a loss or
gain on the futures which will not be completely offset by movements in the
price of the instruments which are the subject of the hedge. To compensate for
the imperfect correlation of movements in the value of the stock index being
hedged and movements in the price of futures contracts, the Fund may buy or sell
futures contracts in a greater dollar amount than the value of the stock index
being hedged if the volatility over a particular time period of the prices of
such instruments has been greater than the volatility over such time period of
the futures, or if otherwise deemed to be appropriate by the Adviser.
Conversely, the Index Funds may buy or sell fewer futures contracts if the
volatility over a particular time period of the value of the stock index being
hedged is less than the volatility over such time period of the futures contract
being used, or if otherwise deemed to be appropriate by the Adviser.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the indices being
hedged, the price of futures may not correlate perfectly with movements in the
cash market due to certain market distortions. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
off-setting transactions which could distort the normal relationship between the
cash and futures markets. Second, with respect to financial futures contracts,
the liquidity of the futures market depends on participants entering into
off-setting transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced thus producing distortions. Third, from the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends by the Adviser may still not result in a successful hedging
transaction over a short time frame. Successful use of futures by the Funds is
also subject to the Adviser's ability to predict correctly movements in the
direction of the market.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Index
Funds intend to purchase or sell futures only on exchanges or boards of trade
where there appear to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. In such circumstances, an increase in the value of
the hedged index, if any, may partially or completely offset losses on the
futures contract. However, as described above, there is no guarantee that the
value of the hedged index will in fact correlate with the price movements in the
futures contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
o Options on Stock Index Futures Contracts. The Index Funds may purchase
and write call and put options on stock index futures contracts. The Index Funds
may use such options on futures contracts in connection with their hedging
strategies in lieu of purchasing and selling the underlying futures or
purchasing and writing options directly on the underlying indices. For example,
the Index Funds may purchase put options or write call options on stock index
futures.
Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above.
Investments in futures options involve some of the same considerations that
are involved in connection with investments in futures contracts (for example,
the existence of a liquid secondary market). In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not correspond to changes in the value of the option
purchased. Depending on the pricing of the option compared to either the futures
contract upon which it is based or value of the specific stock index, an option
may or may not be less risky than ownership of the futures contract. In general,
the market prices of options can be expected to be more volatile than the market
prices on the underlying futures contracts. Compared to the purchase or sale of
futures contracts, however, the purchase of call or put options on futures
contracts may frequently involve less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options (plus transaction
costs).
o Options on Stock Indices. An option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of that stock index is greater than, in the case of a call option, or less
than, in the case of a put option, the exercise price of the option. This amount
of cash is equal to such difference between the closing price of the index and
the exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. All settlements of options on stock
indices are in cash, and gain or loss depends on general movements in the stocks
included in the index rather than price movements in particular stocks.
Options on securities indices entail certain risks. The absence of a liquid
secondary market to close out options positions on securities indices may occur,
although an Index Fund generally will only purchase or write such an option if
the Adviser believes the option can be closed out.
Use of options on securities indices also entails the risk that trading in
such options may be interrupted if trading in certain securities included in the
index is interrupted. A Fund will not purchase such options unless the Adviser
believes the market is sufficiently developed such that the risk of trading in
such options is no greater than the risk of trading in options on securities.
Price movements in a Fund's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Adviser may be forced to liquidate an Index Fund's
portfolio securities to meet settlement obligations.
Stripped Securities. The Money Market Fund may acquire U.S. Government
obligations and their unmatured interest coupons that have been separated
("stripped") by their holder, typically a custodian bank or investment brokerage
firm. Having separated the interest coupons from the underlying principal of the
U.S. Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for federal tax
and securities purposes. The Trust is not aware of any binding legislative,
judicial or administrative authority on this issue.
Only instruments which are stripped by the issuing agency will be
considered U.S. Government obligations. Securities such as CATS and TIGRs which
are stripped by their holder do not qualify as U.S. Government obligations.
Within the past several years, the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments or
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
U.S. Government Obligations. Obligations issued or guaranteed by U.S. Government
agencies or instrumentalities may or may not be backed by the "full faith and
credit" of the United States. In the case of securities not backed by the full
faith and credit of the United States, a Fund must look principally to the
federal agency issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assert a claim against the United States itself in the
event the agency or instrumentality does not meet its commitments. U.S.
Government obligations that are not backed by the full faith and credit of the
United States include, but are not limited to, obligations of the Tennessee
Valley Authority, the Federal Home Loan Mortgage Corporation, the U.S. Postal
Service and the Export-Import Bank of the United States, each of which has the
right to borrow from the U.S. Treasury to meet its obligations and obligations
of the Federal Farm Credit System and the Federal Home Loan Banks, whose
obligations may be satisfied only by the individual credits of the issuing
agency. Securities which are backed by the full faith and credit of the United
States include obligations of the Government National Mortgage Association and
the Farmers Home Administration.
Variable and Floating Rate Instruments. Debt instruments may be structured to
have variable or floating interest rates. Variable and floating rate obligations
purchased by the Money Market Fund may have stated maturities in excess of the
Fund's maturity limitation if the Fund can demand payment of the principal of
the instrument at least once during such period on not more than 30 days' notice
(this demand feature is not required if the instrument is guaranteed by the U.S.
Government or an agency thereof). These instruments may include variable amount
master demand notes that permit the lender under the note to determine the
amount of the credit given (with predetermined ranges), in addition to providing
for periodic adjustments in the interest rates. The Adviser will consider the
earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instrument is subject to a demand
feature, will continuously monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent to the quality standards applicable to the Money Market Fund, the
issuer's obligation to pay the principal of the instrument will be backed by an
unconditional bank letter or line of credit, guarantee or commitment to lend.
The Money Market Fund will invest in variable and floating rate instruments only
when the Adviser deems the investment to involve minimal credit risk, pursuant
to standards adopted by the Board of Trustees.
When-Issued and Delayed Delivery Securities. The Funds may purchase securities
on a when-issued or delayed delivery basis. For example, delivery of and payment
for these securities can take place a month or more after the date of the
purchase commitment. The purchase price and the interest rate payable, if any,
on the securities are fixed on the purchase commitment date or at the time the
settlement date is fixed. The value of such securities is subject to market
fluctuation and no interest accrues to a Fund until settlement takes place. At
the time a Fund make a commitment to purchase securities on a when-issued or
delayed delivery basis, it will record the transaction, reflect the value each
day of such securities in determining its net asset value and, if applicable,
calculate the maturity for the purposes of average maturity from that date. At
the time of settlement a when-issued security may be valued at less than the
purchase price. To facilitate such acquisitions, a Fund will maintain with the
Fund's custodian a segregated account with liquid assets, consisting of cash,
U.S. Government securities or other appropriate securities, in an amount at
least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities or sales of the securities held
in the segregated account and/or from cash flows. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other Fund obligation, incur a gain or
loss due to market fluctuation.
Yields and Ratings. The yields on certain obligations, including the money
market instruments in which each Fund may invest (such as commercial paper and
bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of Standard & Poor's,
Moody's, Duff & Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other
NRSROs represent their respective opinions as to the quality of the obligations
they undertake to rate. Ratings, however, are general and are not absolute
standards of quality. Consequently, obligations with the same rating, maturity
and interest rate may have different market prices.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Advisers are responsible for decisions to buy and sell securities,
futures contracts and options on such securities and futures for the Funds, the
selection of brokers, dealers and futures commission merchants to effect
transactions and the negotiation of brokerage commissions, if any.
Broker-dealers may receive brokerage commissions on Fund transactions, including
options, futures, and options on futures transactions, and the purchase and sale
of underlying securities upon the exercise of options. Purchases and sales of
certain portfolio securities on behalf of a Fund are frequently placed by an
Adviser with the issuer or a primary or secondary market-maker for these
securities on a net basis, without any brokerage commission being paid by the
Fund. Trading does, however, involve transaction costs. Transactions with
dealers serving as market-makers reflect the spread between the bid and asked
prices. Transaction costs may also include fees paid to third parties for
information as to potential purchasers or sellers of securities. Purchases of
underwritten issues may be made which will include an underwriting fee paid to
the underwriter.
Each Adviser seeks to evaluate the overall reasonableness of the brokerage
commissions paid (to the extent applicable) in placing orders for the purchase
and sale of securities for the Fund or Funds it advises, taking into account
such factors as price, commission (negotiable in the case of national securities
exchange transactions), if any, size of order, difficulty of execution and skill
required of the executing broker-dealer through familiarity with commissions
charged on comparable transactions, as well as by comparing commissions paid by
the Fund to reported commissions paid by others. The Advisers review on a
routine basis commission rates, execution and settlement services performed,
making internal and external comparisons.
Each Adviser is authorized, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), when placing portfolio
transactions for a Fund with a broker to pay a brokerage commission (to the
extent applicable) in excess of that which another broker might have charged for
effecting the same transaction based on the receipt of research, market or
statistical information. The term "research, market or statistical information"
includes, but is not limited to, advice as to the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or purchasers or sellers of securities; and furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts.
Consistent with the policy stated above, and such other policies as the
Board of Trustees may determine, an Adviser may consider sales of shares of a
Fund or a Contract as a factor in the selection of broker-dealers to execute
portfolio transactions. An Adviser may make such allocations if commissions are
comparable to those charged by nonaffiliated, qualified broker-dealers for
similar services.
Higher commissions may be paid to firms that provide research services to
the extent permitted by law. An Adviser may use this research information in
managing a Fund's assets, as well as the assets of other clients.
Except for implementing the policies stated above, there is no intention to
place portfolio transactions with particular brokers or dealers or groups
thereof. In effecting transactions in over-the-counter securities, orders are
placed with the principal market-makers for the security being traded unless,
after exercising care, it appears that more favorable results are available
otherwise.
Although certain research, market and statistical information from brokers
and dealers can be useful to the Funds and to the Advisers, it is the opinion of
the Manager that such information is only supplementary to an Adviser's own
research efforts, since the information must still be analyzed, weighed and
reviewed by the Adviser's staff. Such information may be useful to an Adviser in
providing services to clients other than the Funds, and not all such information
is used by Advisers in connection with the Funds. Conversely, such information
provided to the Advisers by brokers and dealers through whom other clients of
the Advisers effect securities transactions may be useful to the Advisers in
providing services to the Funds.
In certain instances there may be securities which are suitable for a Fund
as well as for one or more of an Adviser's other clients. Investment decisions
for a Fund and for the relevant Adviser's other clients are made with a view to
achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as a Fund is concerned. However, it is believed that the
ability of a Fund to participate in volume transactions will produce better
executions for the Funds.
PERFORMANCE INFORMATION
Standard Performance Information
From time to time, quotations of the Funds' performances may be included in
advertisements, sales literature or shareholder reports. Fund performance does
not reflect Contract fees and expenses.
Yield of the Money Market Fund. The Money Market Fund will prepare a
current quotation of yield from time to time. The yield quoted will be the
simple annualized yield for an identified seven calendar day period. The yield
calculation will be based on a hypothetical account having a balance of exactly
one share at the beginning of the seven-day period. The base period return will
be the change in the value of the hypothetical account during the seven-day
period, including dividends declared on any shares purchased with dividends on
the shares but excluding any capital changes. The Fund may also prepare an
effective annual yield computed by compounding the unannualized seven-day period
return as follows: by adding 1 to the unannualized seven-day period return,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result.
EFFECTIVE YIELD = [(base period return + 1) 365/7] - 1
The Money Market Fund's yield will fluctuate, and annualized yield
quotations are not a representation by the Fund as to what an investment in the
Fund will actually yield for any given period. Actual yields will depend on
changes in interest rates generally during the period in which the investment in
the Money Market Fund is held, and on the quality, length of maturity and type
of instruments in the Fund's portfolio and its operating expenses.
Total Returns of the Index Funds. The Index Funds may quote their average
annual total return figures and/or aggregate total return figures. A Fund's
"average annual total return" figures are computed according to a formula
prescribed by the SEC. The formula can be expressed as follows:
P (1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a
1-, 5- or 10-year period at the end of a 1-,
5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions
A Fund's aggregate total return figures represent the cumulative change in
the value of an investment in the Fund for the specified period and are computed
according to the following formula:
AGGREGATE TOTAL RETURN = ERV - P
P
Where: P = a hypothetical initial payment of $10,000
ERV = Ending Redeemable Value of a hypothetical
$10,000 investment made at the beginning of
a 1-, 5- or 10-year period at the end of a
1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions
Each Fund's performance will vary from time to time depending upon market
conditions, the composition of its portfolio and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of a Fund's performance for any specified period in the future.
In addition, because the performance will fluctuate, it may not provide a basis
for comparing an investment in a Fund with certain bank deposits or other
investments that pay a fixed yield for a stated period of time.
Comparison of Fund Performance
Comparison of the quoted non-standardized performance of various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of the Funds with performance quoted with respect to other
investment companies or types of investments.
In connection with communicating its performance to current or prospective
shareholders, each Fund also may compare these figures to the performance of
other mutual funds tracked by mutual fund rating services or to unmanaged
indices which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Evaluations of the Funds' performance made by independent sources may also
be used in advertisements concerning the Funds. Sources for the Funds'
performance information could include the following: Barron's, Business Week,
Changing Times, Consumer Digest, Financial Times, Financial World, Forbes,
Fortune, Investor's Daily, Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis, Money, Morningstar Inc., New York Times, Personal
Investing News, Personal Investor, Success, The Kiplinger's Magazine, U.S. News
and World Report, Value Line, Wall Street Journal, Weisenberger Investment
Companies Services and Working Women.
DETERMINATION OF NET ASSET VALUE
A Fund's shares are purchased and redeemed at the net asset value per
share. The net asset value per share of each Fund is calculated on each day,
Monday through Friday, except days on which the NYSE is closed. The NYSE is
currently scheduled to be closed on the following holidays: New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day, and on the
preceding Friday or subsequent Monday when a holiday falls on a Saturday or
Sunday, respectively.
Each Funds' net asset value per share is determined as of the close of
regular trading on the NYSE, normally 4:00 p.m., Eastern Time, by taking the
value of all assets of each Fund, subtracting its liabilities, dividing by the
number of shares outstanding and adjusting to the nearest cent.
Index Funds. In the calculation of each Index Fund's net asset value: (1) a
portfolio security listed or traded on a stock exchange or quoted by NASDAQ is
valued at its last sale price on that exchange or market (if there were no sales
that day, the security is valued at the mean of the closing bid and asked
prices; if there were no asked prices quoted on that day, the security is valued
at the closing bid price); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the mean
of the current bid and asked prices (if there were no asked prices quoted on
that day, the security is valued at the closing bid price); (3) U.S. Government
obligations and other debt instruments having 60 days or less remaining until
maturity are valued at amortized cost; (4) debt instruments having more than 60
days remaining until maturity are valued at the highest bid price obtained from
a dealer maintaining an active market in that security or on the basis of prices
obtained from a pricing service approved as reliable by the Board of Trustees;
and (5) all other investment assets, including restricted and not readily
marketable securities, are valued by the Fund under procedures established by
and under the general supervision and responsibility of the Board of Trustees
designed to reflect in good faith the fair value of such securities.
MANAGEMENT OF THE TRUST
The Board of Trustees of the Trust meets throughout the year to oversee the
activities of the Funds. In addition, the Trustees review contractual
arrangements with companies that provide services to the Funds and review the
Funds' performance.
The Trustees and officers of the Trust and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. An asterisk (*) indicates those Trustees who are "interested
persons" (as defined in the 1940 Act) of the Trust.
Trustees and Officers
<TABLE>
<CAPTION>
<S><C> <C> <C>
Position Held Principal Occupations
Name, Address and Age with the Trust During Past 5 Years
- - - - --------------------- -------------- -------------------
Ronald S. Scowby, 59* Trustee and President (July 1997 - January 1998) and
Director (July 300 Atlantic Street, Suite 302 Chairman of 1997 - present), Sage
Insurance Group, Inc., financial Stamford, CT 06901 the Board services holding
company; President (January 1997 -
February 1998) and
Chairman (February
1998 - present), Sage
Life Assurance of
America, Inc.,
insurance company;
President and CEO,
Sage Management
Services USA, Inc.,
management services
company (June 1996 -
present); Principal,
Sheldon Scowby
Resources, management
consulting (July 1995
- June 1996);
Executive Vice
President, Mutual of
America Life
Insurance, insurance
company (June 1991 -
July 1995); President
and CEO, Mutual of
America Financial
Services, Inc.,
insurance company
(June 1991 - July
1995).
Robin I. Marsden, 33* Trustee and Director (since January 1997), President and
CEO (since 300 Atlantic Street, Suite 302 President February 1998), Sage
Insurance Group, Inc., financial Stamford, CT 06901 services holding company;
Director (since January 1997),
President and CEO
(since February 1998),
Sage Life Assurance of
America, Inc.,
insurance company;
Director, President
and CEO, Sage
Advisors, Inc.,
investment adviser
(January 1998 -
present); Investments
Director, Sage Life
Holdings Limited,
financial services
holding company
(November 1994 -
January 1998);
Partner, Deloitte &
Touche, management
consulting (January
1989 - October 1994).
James A. Amen, 38 Trustee Managing Director, Partner and Director, Philo Smith &
10 Field Road Co., investment management company (July 1988 - present).
Cos Cob, CT 06807
Rosemary L. Hendrickson, 59 Trustee Executive Vice
President, Independent Financial
3911 S.W. ViewPoint Terrace Marketing Group,
Inc., financial services company
Portland, OR 97201 (January 1989 -
April 1998).
Geoffrey A. Thompson, 57 Trustee Principal, Kohlberg & Co., investment
management company 279 Old Black Point Road (November 1996 - present); Partner,
Norman Broadbent, Niantic, CT 06357 executive recruiting firm (May 1995 -
February 1996);
President, Nordman
Grimm, executive
recruiting firm
(January 1994 - May
1995).
Mitchell R. Katcher, 45 Vice President Senior Executive Vice President, Sage Investment Group,
300 Atlantic Street, Suite 302 Inc., financial services holding company (December 1997
Stamford, CT 06901 - present); Director, Chief Actuary and CFO, Sage Life
Assurance of America,
Inc., insurance
company (February 1997
- present); Director,
Treasurer and CFO,
Sage Advisors, Inc.
(January 1998 -
present); Executive
Vice President, Golden
American, life
insurance company
(July 1993 - February
1997); Consultant,
Tillinghast, actuarial
consulting firm (June
1991 - July 1993).
Richard H. Rose, 43 Treasurer Vice President - Division Manager, First Data Investor
53 State Street Services Group, Inc. (May 1994 - present); Senior Vice
Boston, MA 02109 President, The Boston Company Advisors, Inc. (February
1988 - May 1994).
James F. Renz, 35 Assistant Vice President, Sage Life Assurance of America, Inc.,
300 Atlantic Street, Suite 301 Treasurer insurance company (September 1997 - present); Treasurer
Stamford, CT 06901 and CFO, Sage Distributors, Inc., broker-dealer (January
1998 - present);
Manager, Swiss Re Life
and Health Insurance
Company, reinsurance
company (October 1987
August 1997).
Julie A. Tedesco, 40 Secretary Counsel, First Data Investor Services Group, Inc. (May
53 State Street 1994 - present); Assistant Counsel, The Boston Company
Boston, MA 02109 Advisors Inc. (July 1992 - May 1994).
James F. Bronsdon, 42 Assistant Vice President Legal and Compliance, Sage Life Assurance
300 Atlantic Street, Suite 302 Secretary of America, Inc., insurance company (June 1997 -
Stamford, CT 06901 present); President and CEO, Sage Distributors, Inc.,
broker-dealer (January 1998 - present); Secretary, Sage
Advisors, Inc. (August 1998 - present); Associate
Counsel, Berkshire Life Insurance Company, insurance
company (July 1990 - June 1997).
</TABLE>
As of September 1, 1998, the Trustees and officers of the Trust owned in
the aggregate less than 1% of the shares of any Fund or of the Trust (all series
taken together).
The Trust pays each Trustee who is not an employee of the Manager or an
Adviser or one of their affiliates an annual retainer fee of $3,000 and $1,500
for each meeting of the Board of Trustees attended, and reimburses each Trustee
for certain travel and other out-of-pocket expenses incurred in connection with
attending such meetings. In addition, each Trustee who is a member of the Audit
Committee will receive a fee of $500 for each Audit Committee Meeting attended.
Trustees and officers of the Trust who are employed by the Manager, an Adviser,
Distributor, Investor Services Group or one of their affiliates receive no
compensation or expense reimbursement from the Trust.
Investment Manager
Sage Advisors, Inc., the manager of the Funds, has its principal business
offices located at 300 Atlantic Street, Suite 302, Stamford, Connecticut 06901.
Pursuant to a Management Agreement with the Trust, the Manager, subject to
the supervision of the Board of Trustees, and in conformity with the stated
policies of the Funds, will provide overall management to each Fund in
accordance with each Fund's investment objective, restrictions and policies as
stated in the Funds' Prospectus and SAI filed with the SEC, as the same may be
amended from time to time. The management services provided to the Funds are not
exclusive under the terms of the Management Agreement and the Manager is free to
render management or investment advisory services to others, but has no current
plans to do so.
The Manager bears all expenses in connection with the services it renders
under the Management Agreement including the costs and expenses payable to the
Advisers pursuant to the Investment Sub-Advisory Agreement between the Manager
and each Adviser.
The Management Agreement provides that absent willful misfeasance, bad
faith, gross negligence or reckless disregard of its duty ("Disabling Conduct"),
the Manager will not be liable for any error of judgment or mistake of law or
for losses sustained by a Fund in connection with the matters relating to the
Management Agreement. However, the Management Agreement provides that no Fund is
waiving any rights it may have which cannot be waived. The Management Agreement
also provides indemnification for the Manager and it directors, officers,
employees and controlling persons for any conduct that does not constitute
Disabling Conduct.
The Management Agreement is terminable without penalty on sixty (60) days'
written notice by the Manager or by the Trust when authorized by the Board of
Trustees, as to a Fund, or a majority, as defined in the 1940 Act, of the
outstanding shares of such Fund. The Management Agreement will automatically
terminate in the event of its assignment, as defined in the 1940 Act and rules
thereunder. The Management Agreement provides that, unless terminated, it will
remain in effect for two years following the date of the Agreement and
thereafter from year to year, so long as such continuance of the Management
Agreement is approved annually by the Board of Trustees or a vote by a majority
of the outstanding shares of the Trust and in either case, by a majority vote of
the Trustees who are not interested persons of the Trust within the meaning of
the 1940 Act ("Disinterested Trustees") cast in person at a meeting called
specifically for the purpose of voting on the continuance.
Investment Advisers
The investment adviser for the Index Funds is State Street Global Advisors,
a division of State Street Bank and Trust Company, with principal offices
located at Two International Place, Boston, Massachusetts 02110. State Street
Bank and Trust Company is a wholly-owned subsidiary of State Street Corporation.
The investment adviser for the Money Market Fund is Conning Asset Management
Company, with principal offices located at City Place II, 185 Asylum Street,
Hartford, Connecticut 06103-4105.
Under the terms of the Investment Sub-Advisory Agreements between Sage and
each Adviser (the "Sub-Advisory Agreements"), State Street Global Advisors
manages the Index Funds and Conning manages the Money Market Fund, subject to
the supervision and direction of Sage and the Board of Trustees. Each Adviser
will: (I) act in strict conformity with the Trust's Declaration of Trust, the
1940 Act and the Investment Advisers Act of 1940, as the same may from time to
time be amended; (ii) manage the relevant Fund or Funds in accordance with the
Funds' investment objectives, restrictions and policies; (iii) make investment
decisions for the relevant Fund or Funds; and (iv) place purchase and sales
orders for securities and other financial instruments on behalf of the Fund or
Funds it advises.
Sage and each Adviser bear all expenses in connection with the performance
of their services under the Management Agreement and the Advisory Agreements,
respectively. The Funds bear certain other expenses incurred in their operation,
including: interest, brokerage fees and commissions, if any; fees of the Board
of Trustees who are not officers, directors or employees of Sage, the
Distributor or any of their affiliates; certain insurance premiums; outside
auditing and certain legal expenses; and certain extraordinary expenses.
The Advisory Agreements provide indemnification for the Advisers and their
trustees, officers, employees and controlling persons for any conduct that does
not constitute Disabling Conduct. The Advisory Agreements permit the Advisers to
act as investment advisers to others, provided that whenever a Fund and one or
more other portfolios of or investment companies advised by the Advisers have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner believed to be equitable to each entity. In some
cases, this procedure may adversely affect the size of the position obtainable
for a Fund.
Each Advisory Agreement is terminable without penalty on sixty (60) days'
written notice by the Manager, the Adviser or the Board of Trustees, or by vote
of a majority, as defined in the 1940 Act, of the outstanding shares of the
applicable Fund. Each Advisory Agreement will automatically terminate in the
event of its assignment, as defined in the 1940 Act, and rules thereunder. Each
Advisory Agreement provides that, unless terminated, it will remain in effect
for two years following the date of the Agreement and thereafter from year to
year, so long as such continuance of the Advisory Agreement is approved annually
by the Board of Trustees or a vote by a majority of the outstanding shares of
the applicable Fund and in either case, by a majority vote of the Disinterested
Trustees cast in person at a meeting called specifically for the purpose of
voting on the continuance of the Advisory Agreements.
Distribution Plan
The shareholders of each Fund have approved Distribution Plans for each
Fund which authorize payments by each Fund in connection with the distribution
of its shares at an annual rate of up to 0.25% of each Fund's average daily net
assets. Under each Fund's Distribution Plan the Fund may pay the Distributor for
various costs actually incurred or paid in connection with the distribution of
each Fund's shares and/or servicing of shareholder accounts. Such costs include
the costs of financing activities primarily intended to result in the sale of
the Funds' shares, such as the costs (1) of printing and mailing the Funds'
prospectuses, SAIs and shareholder reports to prospective shareholders and
Contract Owners; (2) relating to the Funds' advertisements, sales literature and
other promotional materials; (3) of obtaining information and providing
explanations to shareholders and Contract Owners regarding the Funds; (4) of
training sales personnel and of personal service; and/or (5) maintenance of
shareholder and Contract Owner accounts with respect to each Fund's shares
attributable to such accounts. The Distributor, in turn, may compensate Insurers
or others for such activities.
The Distributor will not seek payment by the Funds for distribution
expenses incurred with respect to any Fund during the fiscal year ending
December 31, 1998 and December 31, 1999. The Distributor will provide advance
notice to Contract Owners, Retirement Plans and Insurance Companies, prior to
seeking reimbursement of future expenses.
Sub-Administrator
Investor Services Group, 53 State Street, Boston, Massachusetts 02109,
serves as the sub-administrator of the Funds. As the sub-administrator, Investor
Services Group is obligated on a continuous
basis to provide such administrative services as the Manager and the Board
of Trustees reasonably deems necessary for the proper administration of the
Funds. Investor Services Group will generally assist in all aspects of the
Funds' operations; supply and maintain office facilities (which may be in
Investor Services Group's own offices), statistical and research data, data
processing services, clerical, accounting, bookkeeping and recordkeeping
services (including without limitation the maintenance of such books and records
as are required under the 1940 Act and the rules thereunder, except as
maintained by other agents), internal auditing, executive and administrative
services, and stationery and office supplies; prepare reports to shareholders or
investors; prepare and file tax returns; supply financial information and
supporting data for reports to and filings with the SEC; supply supporting
documentation for meetings of the Board of Trustees; provide monitoring reports
and assistance regarding compliance with the Trust's Declaration of Trust and
By-laws, the Funds' investment objectives, restrictions and policies and with
federal securities laws; arrange for appropriate insurance coverage; calculate
net asset values, net income and realized capital gains or losses; and negotiate
arrangements with, and supervise and coordinate the activities of, agents and
others to supply services.
Custodian and Transfer Agent
The Bank of New York, One Wall Street, New York, New York 10286, serves as
custodian for the Funds. As custodian, The Bank of New York holds the Funds'
assets.
Investor Services Group, 53 State Street, Boston, Massachusetts 02109,
serves as transfer agent of the Trust. Under its transfer agency agreement with
the Trust, Investor Services Group maintains the shareholder account records for
the Funds, handles certain communications between shareholders and the Funds and
distributes any of the Funds' dividends and distributions.
Counsel and Independent Accountants
Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, N.W.,
Washington, DC 20004-2404, serves as Counsel to the Trust. Ernst & Young,
L.L.P., 787 Seventh Avenue, New York, New York 10019, acts as independent
accountants of the Trust and the Funds.
ORGANIZATION OF THE TRUST
The Trust is a Delaware business trust established under a Declaration of
Trust dated January 9, 1998, and currently consists of four separately managed
portfolios. The capitalization of the Trust consists solely of an unlimited
number of shares of beneficial interest with a par value of $0.001 per share of
each Fund. The Board of Trustees may establish additional funds (with different
investment objectives, restrictions and fundamental policies) at any time in the
future. The establishment and offering of additional funds will not alter the
rights of the Trust's shareholders. When issued, shares are fully paid,
non-assessable, redeemable and freely transferable. Shares do not have
preemptive rights or subscription rights. In any liquidation of a Fund, each
shareholder is entitled to receive his pro rata share of the net assets of that
Fund.
Under the Declaration of Trust, the Trust is not required to hold annual
meetings of each Fund's shareholders to elect Trustees or for other purposes. It
is not anticipated that the Trust will hold shareholder meetings unless required
by law or the Declaration of Trust. In this regard, the Trust will be required
to hold a meeting to elect Trustees to fill any existing vacancies on the Board
if, at any time, fewer than a majority of the Trustees have been elected by the
shareholders of the Trust. In addition, the Declaration of Trust provides that
the holders of not less than two-thirds of the outstanding shares of the Trust
may remove persons serving as Trustee either by declaration in writing or at a
meeting called for such purpose. The Trustees are required to call a meeting for
the purpose of considering the removal of persons serving as Trustee if
requested in writing to do so by the holders of not less than 10% of the
outstanding shares of the Trust. To the extent required by applicable law, the
Trustees shall assist shareholders who seek to remove any person serving as
Trustee.
The Trust's shares do not have cumulative voting rights, so that the
holders of more than 50% of the outstanding shares may elect the entire Board of
Trustees, in which case, the holders of the remaining shares would not be able
to elect any Trustees.
DISTRIBUTIONS AND TAXES
Distributions
All dividends and capital gains distributions paid by a Fund will be
automatically reinvested, at net asset value, in additional shares of the
respective Fund, unless otherwise indicated. There is no fixed dividend rate,
and there can be no assurance that any Fund will pay any dividends or realize
any capital gains. However, the Index Funds currently intend to pay dividends
and capital gains distribution, if any, on an annual basis. The Money Market
Fund currently intends to accrue dividends daily and to pay them monthly; and to
pay capital gains distributions, if any, on an annual basis.
As a regulated investment company, each Fund will not be subject to U.S.
Federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to its shareholders, that is, the Insurers'
separate accounts. Each Fund intends to distribute, at least annually,
substantially all of its investment company taxable income and net capital gains
and, therefore, does not anticipate incurring Federal income tax liability.
Taxation
Each Fund expects to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
qualified under Subchapter M, a Fund is not subject to Federal income tax on
that part of its investment company taxable income that it distributes to its
Contract Owners and Retirement Plans. Taxable income consists generally of net
investment income, net gains from certain foreign currency transactions, and net
short-term capital gain, if any, and any net capital gain (the excess of net
long-term capital gain over net short-term capital loss). It is each Fund's
intention to distribute all such income and gains to shareholders.
Shares of each Fund are offered to various insurance company separate
accounts and through various Retirement Plans. Under the Code, an insurance
company pays no tax with respect to income of a qualifying separate account when
the income is properly allocable to the value of eligible variable annuity or
variable life insurance contracts.
Section 817(h) of the Code and the regulations thereunder impose
"diversification" requirements on each Fund. Each Fund intends to comply with
the diversification requirements. These requirements are in addition to the
diversification requirements imposed on each Fund by Subchapter M and the 1940
Act. The 817(h) requirements place certain limitations on the assets of each
separate account that may be invested in securities of a single issuer. These
limitations apply to each Fund's assets that may be invested in securities of a
single issuer. Specifically, the regulations provide that, except as permitted
by a "safe harbor" described below, as of the end of each calendar quarter or
within 30 days thereafter, no more than 55% of a Fund's total assets 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.
Section 817(h) provides, as 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. For purposes of Section
817(h), all securities of the same issuer, all interests in the same real
property project, and all interests in the same commodity are treated as a
single investment. In addition, each U.S. Government agency or instrumentality
is treated as a separate issuer, while the securities of a particular foreign
government and its agencies, instrumentalities, and political subdivisions will
be considered securities issued by the same issuer. Failure of a Fund to satisfy
the Section 817(h) requirements would result in taxation of the applicable
separate accounts, the insurance companies variable life policies and variable
annuity contracts, and tax consequences to the holders thereof.
The foregoing is only a brief summary of important tax law provisions that
affect the Funds. Other Federal, state or local tax law provisions may also
affect the Funds and their operations. Anyone who is considering allocating,
transferring or withdrawing monies from a Retirement Plan or monies held under a
variable contract to or from a Fund should consult a qualified tax adviser.
Backup Withholding
Each Fund may be required to withhold U.S. Federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct TIN or to make required certifications, or who have
been notified by the Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other shareholders specified in
the Code generally are exempt from such backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.
<PAGE>
Investment Manager and Administrator of the Funds
SAGE ADVISORS, INC.
Investment Adviser to the Index Funds
STATE STREET GLOBAL ADVISERS
Investment Sub-Adviser of the Money Market Fund
CONNING ASSET MANAGEMENT COMPANY
Sub-Administrator and Transfer Agent
FIRST DATA INVESTOR SERVICES GROUP, INC.
Distributor
SAGE DISTRIBUTORS, INC.
Custodian
THE BANK OF NEW YORK
Independent Accountants
ERNST & YOUNG, L.L.P.
Counsel
SUTHERLAND ASBILL & BRENNAN LLP
No person has been authorized to give any information or to make any
representations other than those contained in the Funds' Prospectus, the SAI or
the Trust's approved sales literature in connection with the offering of the
Funds' shares and, if given or made, such other information or representations
must not be relied on as having been authorized by the Trust. Neither the
Prospectus nor this SAI constitutes an offer in any state in which, or to any
person to whom, such offer may not lawfully be made.
<PAGE>
SAGE LIFE INVESTMENT TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A.........Not Applicable
Included in Part B.........Not Applicable
(b) Exhibits:
Exhibit
Number Description
1.Declaration of Trust is hereby incorporated by reference to the initial
Registration Statement filed on January 30, 1998.
.The Registrant's By-laws are incorporated herein by reference to the
initial Registration Statement filed on January 30, 1998.
3. ................ Not Applicable
4. ................ Not Applicable
5 (a)....Form of Investment Management Agreement between the Funds
and Sage Advisors, Inc. is filed herein as Exhibit 5(a).
(b).....Form of Sub-Advisory Agreement between State Street Global
Advisors and Sage Advisors, Inc. is filed herein as Exhibit 5(b).
(c).Form of Sub-Advisory Agreement between Conning Asset Management Company
and Sage Advisors, Inc. is filed herein as Exhibit 5(c).
6(a)Form of Distribution Agreement between Registrant and Sage
Distributors, Inc. is filed herein as Exhibit 6(a)
(b)Participation Agreement by and among the Trust, Sage Life Assurance
of America, Inc. and the Distributor is filed herein as Exhibit 6(b).
7. ................... Not Applicable
8. Form of Custodian Agreement between Registrant and The Bank of New York
to be filed by subsequent amendment.
Exhibit
Number Description
9(a)Form of Transfer Agency Agreement between Registrant and First
Data Investor Services Group, Inc. is filed herein as Exhibit 9(a).
(b)Form of Sub-Administration Agreement between Registrant and First Data
Investor Services Group, Inc. is filed herein as Exhibit 9(b).
10.Opinion and Consent of Counsel is filed herein as Exhibit 10.
11. ................. Not Applicable
12. ................ Not Applicable
13. ................. Not Applicable
14. ................. Not Applicable
15. Form of 12b-1 Plan for the Funds is filed herein as Exhibit 15.
16. ................ Not Applicable
17. ................. Not Applicable
18. ................ Not Applicable
Item 25.Persons Controlled by or Under Common Control with Registrant
None. When the Registrant commences operations all of the outstanding
shares of each portfolio will be owned by Sage Life Assurance of America, Inc.
or an affiliate thereof.
Item 26. Number of Holders of Securities
None. When the Registrant commences operations all of the outstanding
shares of each portfolio will be held by Sage Life Assurance of America, Inc.
or an affiliate thereof.
Item 27. Indemnification
Reference is made to the following documents:
Registrant's Declaration of Trust and By-laws as filed on January
30, 1998, and the Participation Agreement by and among Sage Life
Assurance of America, Inc. and the Distributor as filed herein as
Exhibit 6(b).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act") may be permitted to Trustees,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant understands that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer, or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee, officer or
controlling person in connection with the securities 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 1933 Act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Sage Advisors, Inc. ("Sage") serves as investment manager to each Fund
of the Trust. Sage is a wholly-owned subsidiary of Sage Insurance
Group, Inc. State Street Global Advisors serves as the investment
adviser to the S&P 500 Equity Index Fund and the EAFE Equity Index Fund
(the "Index Funds"). State Street Global Advisors has been providing
institutional investment management services since 1987. Conning Asset
Management Company ("Conning") serves as the investment adviser to the
Money Market Fund and has been providing institutional investment
services since 1982.
To the knowledge of the Trust, none of the directors or officers of
State Street Global Advisors or Conning is or has been at any time in
the past two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature. Set forth below are the
names and principal businesses of the directors and officers of Conning
and State Street Global Advisors who are or during the past two fiscal
years have been engaged in any other business, profession, vocation or
employment of a substantial nature. The individuals from Conning may be
contacted at c/o City Place II, 185 Asylum Street, Hartford, CT
06103-1131 and the individuals from State Street Global Advisors may be
contacted at c/o State Street Corporation, 225 Franklin Street, Boston,
Massachusetts 02110.
NAME, PRINCIPAL OCCUPATION AND OTHER INFORMATION
STATE STREET CORPORATION:
The individuals listed below serve in a directorship and/or executive
capacity for the following entities with their respective address at
the location of the Adviser:
Tenley Albright, Director; Chairman of Western Resources, Inc.
Joseph Baute, Director; formerly Chairman of Markem Corporation.
I. MacAllister Booth, Director; retired Chairman, President and
Chief Executive Officer of the
Polaroid Corporation.
James Cash, Jr., Director; The James E. Robinson Professor of
Business Administration at Harvard
Business School.
Truman Casner, Director; Partner of Ropes & Gray.
Nader Dareshori, Director; Chairman, President and Chief Executive
Officer of Houghton Mifflin
Company.
David Gruber, Director; Chairman and chief Executive Officer of the
Wyman-Gordon Company.
Arthur Goldstein, Director; Chairman and Chief Executive Officer of
Ionics, Incorporated.
Charles Kaye, Director; Chairman of Transportation Investments,
Incorporated.
John Kuchaski, Director; Chairman and Chief Executive Officer of EG&G,
Inc.
Charles LaMantia, Director; President and Chief Executive Officer of
Arthur D. Little, Inc.
David Perini, Director; Chairman of Perini Corporation.
Dennis Picard, Director; Chairman and Chief Executive Officer of the
Rayrheon Company.
Alfred Poe, Director; Chief Executive Officer of Menu Direct.
Bernard Reznicek, Director; President, Premier Group; retired
Chairman and Chief Executive
Officer of Boston Edison.
Diana Walsh, Director; President of Wellesley College.
CONNING:
The individuals listed below serve in a directorship and/or
executive
capacity for the following
entities with their respective address at the location of the Adviser:
John Clinton, Senior Vice President; Anderson and Anderson Insurance
Brokers, Inc.; Connecticut Surety
Corporation; Environmental Warranty, Inc.; The Galtney Group Inc.;
Investors Insurance Holding Corporation; Paradigm Health Corporation;
and Paula Financial.
William Frields, Senior Vice President; General American Life Insurance
Company Employees Federal Credit Union.
Leonard Rubenstein, Chairman and Chief Executive Officer; BHIF America
Sequros de Vida S.A.; and Genral American Charitable Foundation.
Maurice Slayton, President; Cox Insurance Holdings, PLC; GAN
National Insurance Company; GAN North
America Insurance Company; Medspan Inc.; and PennCorp. Financial
Group, Inc.
David Vignolo, Vice President; BHIF America Sequros de Vida S.A.
Item 29. Principal Underwriters
(a) None.
(b) The following are the Directors and officers of Sage
Distributors, Inc. with the following business address of 300
Atlantic Street, Suite 302, Stamford, CT 06901: Robin Marsden
- Director; Trustee/President of Registrant Mitchell Katcher -
Director; Vice President of Registrant Ronald Scowby -
Director; Trustee/Chairman of Registrant James F. Bronsdon -
President; Assistant Treasurer of Registrant James Renz -
CFO/Treasurer/Assistant Secretary; Assistant
Treasurer of Registrant
(c) Not Applicable.
Item 30. Location of Accounts and Records
All accounts books and other documents required to be maintained by
Registrant by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of:
(1) State Street Global Advisors
Two International Place
Boston, Massachusetts 02110
(records relating to function as investment adviser to the I
ndex Funds)
(2) Conning Asset Management Company
City Place II
185 Asylum Street
Hartford, CT 06103-4105
(records relating to function as investment adviser to the Money
Market Fund)
(3) Sage Distributors, Inc.
300 Atlantic Street, Suite 302
Stamford, CT 06901
(records relating to function as distributor to the Funds)
(4) First Data Investor Services Group, Inc.
One Exchange Place
Boston, MA 02109
(records relating to function as Administrator and Transfer
Agent to the Funds)
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) The Registrant will furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(c) Registrant hereby undertakes to call a meeting of its
shareholders for the purpose of voting upon the question of removal of
a trustee or trustees of Registrant when requested in writing to do so
by the holders of at least 10% of Registrant's outstanding shares.
Registrant undertakes further, in connection with the meeting, to
comply with the provisions of Section 16(c) of the Investment Company
Act of 1940, as amended, relating to communications with the
shareholders of certain common-law trusts.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended and the
Investment Company Act of 1940, as amended, the Registrant, SAGE LIFE INVESTMENT
TRUST, has duly caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, all in the City of
Stamford, in the state of Connecticut, on the 13th day of November, 1998.
SAGE LIFE INVESTMENT TRUST
/s/ Robin I. Marsden
Robin I. Marsden
President
The undersigned hereby constitutes and appoints James Bronsdon, Kimberly J.
Smith, Stephen E. Roth, Gail A. Hanson and Julie A. Tedesco and each of them,
with full power to act without the other, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for her and in
her name, place and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments to the Registration Statement for Sage Life
Investment Trust (including post-effective amendments and amendments thereto),
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue of this
power of attorney.
WITNESS our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement and the above Power of Attorney has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S><C> <C> <C>
Signature Title Date
/s/Ronald S. Scowby Chairman and Trustee November 13, 1998 Ronald S. Scowby
-------------------
/s/Robin I. Marsden President and Trustee November 13, 1998 Robin I. Marsden
- - - - -------------------
/s/Richard H. Rose Treasurer November 13, 1998
Richard H. Rose
/s/ James A. Amen Trustee November 13, 1998 James A. Amen
- - - - -----------------
/s/Rosemary L. Hendrickson Trustee November 13, 1998
Rosemary L. Hendrickson
/s/ Geoffrey A. Thompson Trustee November 13, 1998
- - - - ------------------------
Geoffrey A. Thompson
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C> <C>
Exhibit Index
Exhibit No. Exhibit
5(a) Form of Investment Management Agreement
5(b) Form of Sub-Advisory Agreement between State Street Global Advisors and Sage Advisors,
Inc.
5(c) Form of Sub-Advisory Agreement between Conning Asset Management Company and Sage
Advisors, Inc.
6(a) Form of Distribution Agreement between Registrant and Sage Distributors, Inc.
6(b) Participation Agreement by and among the Trust, Sage Life Assurance of America, Inc.
and the Distributor.
9(a) Form of Transfer Agency Agreement between the Registrant and First Data Investor
Services Group, Inc.
9(b) Form of Sub-Administration Agreement between the Registrant and First Data Investor
Services Group, Inc.
10 Consent of Counsel
15 Form of 12b-1 Plan
</TABLE>
<PAGE>
Exhibit 5(a)
FORM OF
MANAGEMENT AGREEMENT
BETWEEN
SAGE LIFE INVESTMENT TRUST
AND
SAGE ADVISORS, INC.
THIS MANAGEMENT AGREEMENT ("Agreement") is made this ____ day of
____________, 199_ by and between Sage Life Investment Trust, a business trust
organized and existing under the laws of the state of Delaware (the "Trust"),
and Sage Advisors, Inc. (the "Manager"), a corporation organized and existing
under the laws of the state of Delaware.
RECITALS
1. The Trust is a series-type, open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of investment portfolios (each a "Fund" and together the "Funds"),
each Fund having its own investment objective and policies;
2. The Trust issues a separate series of shares of beneficial interest for each
Fund, which shares represent fractional undivided interests in the Fund;
3. The Manager is engaged principally in rendering investment advisory services
and is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act");
4. The Trust desires to retain the Manager to provide or to arrange for the
provision of overall management of the Trust and each Fund, including, but not
limited to, investment advisory, custody, transfer agency, dividend disbursing,
legal, accounting, and administrative services, in the manner and on the terms
and conditions set forth in this Agreement;
5. The Manager is willing to provide or to arrange for the provision of,
investment advisory, custody, transfer agency, dividend disbursing, legal,
accounting, and administrative services to the Trust and each Fund on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
<PAGE>
G:\shared\clients\sage\agreemen\mgmt.doc
65
ARTICLE I
Duties of the Manager
The Trust hereby engages the Manager to act as the Trust's general
manager to provide or to arrange for the provision of, directly or through third
parties, investment advisory, custody, transfer agency, dividend disbursing,
legal, accounting, and administrative services to each Fund of the Trust as set
forth on Schedule A hereto and to any additional investment portfolios that the
Trust may establish in the future; and to provide or to arrange to provide the
above services subject to the supervision of the board of trustees of the Trust
(the "Board"), for the period and on the terms and conditions set forth in this
Agreement. The Manager hereby accepts such engagement and agrees during such
period, at its own expense (with the exception of independent accounting
services, and independent legal counsel for the disinterested trustees of the
Board if such counsel is engaged, such services to be paid for by the Trust), to
provide or to arrange to provide, such investment advisory and general
management services, and to assume the obligations set forth in this Agreement
for the compensation provided for herein. Subject to the provisions of the 1940
Act and the Advisers Act, the Manager may retain any affiliated or unaffiliated
parties including, but not limited to, investment adviser(s) and/or investment
sub-adviser(s), custodian(s), transfer agent(s), dividend-disbursing agent(s),
attorney(s), and accountant(s) to perform any or all of the services set forth
in this Agreement.
The Manager, its affiliates and any investment adviser(s),
sub-adviser(s), custodian(s), transfer agent(s), dividend-disbursing agent(s),
attorney(s), accountant(s), or other parties performing services for the Manager
shall for all purposes herein be deemed to be independent contractors and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Trust or a Fund in any way or otherwise be deemed agents of the
Trust or a Fund.
The Manager shall, for purposes of this Agreement, have and exercise
full investment discretion and authority to act as agent for the Trust in
buying, selling or otherwise disposing of or managing the Trust's investments,
directly or through sub-advisers, subject to supervision by the Board.
The Manager and any other party performing services covered by this
Agreement (each such party is hereafter referred to as a "Service Provider")
shall be subject to: (1) the restrictions of the Declaration of Trust and Bylaws
of the Trust, as amended from time to time; (2) the provisions of the 1940 Act
and the Advisers Act; (3) the statements relating to the Funds' investment
objectives, investment policies and investment restrictions as set forth in the
currently effective (and as amended from time to time) registration statement of
the Trust (the "registration statement") under the Securities Act of 1933, as
amended (the "1933 Act"); (4) appropriate state insurance laws; and (5) any
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code").
<PAGE>
(a) Investment Advisory Services. The Manager shall provide the Trust
directly or through sub-advisers with such investment research, advice and
supervision as the Trust may from time to time consider necessary for the proper
management of the assets of each Fund, shall furnish continuously an investment
program for each Fund, shall determine from time to time which securities or
other investments shall be purchased, sold or exchanged and what portions of
each Fund shall be held in the various securities or other investments or cash,
and shall take such steps as are necessary to implement an overall investment
plan for each Fund, including providing or obtaining such services as may be
necessary in managing, acquiring or disposing of securities, cash or other
investments.
The Trust has furnished or will furnish the Manager (who is authorized
to furnish any Service Provider) with copies of the Trust's registration
statement, Declaration of Trust, and Bylaws as currently in effect and agrees
during the continuance of this Agreement to furnish the Manager with copies of
any amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Manager and any Service Providers will be
entitled to rely on all documents furnished by the Trust.
The Manager represents that in performing investment advisory services
for each Fund, the Manager shall make every effort to ensure that: (1) each Fund
shall comply with Section 817(h) of the Code and the regulations issued
thereunder, specifically Regulation Section 1.817-5, relating to the
diversification requirements for variable annuity, endowment, and life insurance
contracts, and any amendments or other modifications to such Section or
regulations; (2) each Fund continuously qualifies as a regulated investment
company under Subchapter M of the Code or any successor provision; and (3) any
and all applicable state insurance law restrictions on investments that operate
to limit or restrict the investments that a Fund may otherwise make are complied
with as well as any changes thereto. Except as instructed by the Board, the
Manager shall also make decisions for the Trust as to the manner in which voting
rights, rights to consent to corporate action, and any other rights pertaining
to the Trust's securities shall be exercised. If the Board at any time makes any
determination as to investment policy and notifies the Manager of such
determination, the Manager shall be bound by such determination for the period,
if any, specified in the notice or until similarly notified that such
determination has been revoked.
<PAGE>
The Manager shall take, on behalf of each Fund, all actions which it
deems necessary to implement the investment policies of such Fund, and in
particular, to place all orders for the purchase or sale of portfolio
investments for the account of each Fund with brokers, dealers, futures
commission merchants or banks selected by the Manager. The Manager also is
authorized as the agent of the Trust to give instructions to any Service
Provider serving as custodian of the Trust as to deliveries of securities and
payments of cash for the account of each Fund. In selecting brokers or dealers
and placing purchase and sale orders with respect to assets of the Funds, the
Manager is directed at all times to seek to obtain best execution and price
within the policy guidelines determined by the Board and set forth in the
current registration statement. Subject to this requirement and the provisions
of the Act, the Advisers Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and other applicable provisions of law, the Manager may select
brokers or dealers that are affiliated with the Manager or the Trust.
In addition to seeking the best execution and price, the Manager may
also take into consideration brokerage, research and statistical information,
wire, quotation and other services provided by brokers and dealers to the
Manager. The Manager is also authorized to effect individual securities
transactions at commission rates in excess of the minimum commission rates
available, if the Manager determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage, research and
other services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Manager's overall responsibilities with respect to
each Fund. The policies with respect to brokerage allocation, determined from
time to time by the Board are those disclosed in the currently effective
registration statement. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this Agreement or
otherwise. The Manager will periodically evaluate the statistical data, research
and other investment services provided to it by brokers and dealers. Such
services may be used by the Manager in connection with the performance of its
obligations under this Agreement or in connection with other advisory or
investment operations including using such information in managing its own
accounts.
As part of carrying out its obligations to manage the investment and
reinvestment of the assets of each Fund consistent with the requirements under
the 1940 Act, the Manager shall:
(1) Perform research and obtain and analyze pertinent
economic, statistical, and financial data relevant to
the investment policies of each Fund as set forth in
the Trust's registration statement;
(2) Consult with the Board and furnish to the Board
recommendations with respect to an overall investment
strategy for each Fund for approval, modification, or
rejection by the Board;
(3) Seek out and implement specific investment
opportunities, consistent with any
investment strategies approved by the Board;
(4) Take such steps as are necessary to implement any
overall investment strategies approved by the Board
for each Fund, including making and carrying out
day-to-day decisions to acquire or dispose of
permissible investments, managing investments and any
other property of the Fund, and providing or
obtaining such services as may be necessary in
managing, acquiring or disposing of investments;
<PAGE>
(5) Regularly report to the Board with respect to the
implementation of any approved overall investment
strategy and any other activities in connection with
management of the assets of each Fund including
furnishing, within 60 days after the end of each
calendar quarter, a statement of investment
performance for the period since the last report and
a schedule of investments and other assets of each
Fund as of the end of the quarter;
(6) Maintain all required accounts, records, memoranda,
instructions or authorizations relating to the
acquisition or disposition of investments for each
Fund and the Trust;
(7) Furnish any personnel, office space, equipment and
other facilities necessary for the operation of each
Fund as contemplated in this Agreement;
(8) Provide the Trust with such accounting or other data
concerning the Trust's investment activities as shall
be necessary or required to prepare and to file all
periodic financial reports or other documents
required to be filed with the Securities and Exchange
Commission and any other regulatory entity;
(9) Assist in determining each business day the net asset
value of the shares of each Fund in accordance with
applicable law; and
(10) Enter into any written investment advisory or
investment sub-advisory contract with another
affiliated or unaffiliated party, subject to any
approvals required by Section 15 of the 1940 Act,
pursuant to which such party will carry out some or
all of the Manager's responsibilities (as specified
in such investment advisory or investment
sub-advisory contract) listed above.
(b) General Management Services. The Manager shall provide or arrange
to provide all custody, transfer agency, dividend disbursing, legal, accounting,
and administrative services necessary for the operation of the Trust, including,
without limitation, the following services:
(1) Custody services including, but not limited to:
(i) placing and maintaining each Fund's
securities, cash or other
investments pursuant to the
requirements of Section 17(f) of the
1940 Act and the rules thereunder;
<PAGE>
(ii) holding and physically segregating
for the Trust's account, all of the
Trust's assets, including securities
that the Trust desires to be held in
places within the United States
("domestic securities") or in places
outside the United States ("foreign
securities");
(iii) releasing and delivering domestic
securities owned by the Trust only
upon receipt of instructions from
persons and by means authorized by
the Board;
(iv) assuring that all domestic
securities held are registered in
the name of the Trust or in the name
of any nominee of the Trust or of
any nominee of the Manager or any
Service Provider acting as custodian
which nominee shall be assigned
exclusively to the Trust, unless the
Trust has provided written
authorization to use a nominee not
meeting the above requirement;
(v) maintaining a separate bank
account(s) in the United States in
the name of the Trust, and holding
all cash received by it from or for
the account of the Trust in such
account;
(vi) collecting on a timely basis all
income and other payments with
respect to securities to which the
Trust shall be entitled either by
law or pursuant to custom in the
securities business;
(vii) paying out monies of the
Trust upon receipt of instructions
from persons and by means authorized
by the Board;
(viii) appointing or removing, in its
discretion, any other entity
qualified under the 1940 Act to act
as a custodian, as its agent to
carry out any custody duties;
(ix) employing, in the
discretion of the Manager or a Service
Provider employed by the Manager,
other parties as sub-custodians for
the Trust's domestic securities or
foreign securities. With respect
to the Trust's foreign securities,
such employment shall be effected
and such foreign securities shall
be maintained in accordance with
the provisions of Rule 17f-5 under
the 1940 Act, as such provisions
may be amended from time to time,
provided that the Manager or a
Service Provider employed by the
Manager shall furnish annually to
the Trust, information concerning
the Service Provider or
sub-custodians employed by the
Manager or other Service Provider;
<PAGE>
(x) creating and maintaining all records relating to its
activities and obligations under any contract relating to the Trust
or a Fund thereof in accordance with the provisions of Section 31 of
the 1940 Act and Rules 31a-1 and 31a-2 under the 1940 Act. Such
records shall be the property of the Trust and shall at all times
during the regular business hours of the Manager (or separate Service
Provider acting as custodian) be open for inspection by duly
authorized officers, employees or agents of the Trust and employees
and agents of the Securities and Exchange Commission; and
(xi) performing or arranging for the performance of any other
usual duties and functions of a custodian for a registered investment
company;
(2) Transfer agency services, including, but not limited to:
(i) receiving for acceptance, orders for
the purchase of Trust shares, and
promptly delivering payment and
appropriate documentation thereof to
any Service Provider acting as
custodian;
(ii) issuing, pursuant to purchase
orders, the appropriate number of
the Trust's shares and holding such
shares in the appropriate account;
(iii) receiving for acceptance redemption
requests and redemption directions
and delivering the appropriate
documentation to any Service
Provider acting as custodian;
(iv) effecting transfers of Trust shares by the registered owners
thereof upon receipt of appropriate instructions;
(v) preparing and transmitting payments for dividends and
distributions declared by the Trust;
(vi) maintaining records of accounts for shareholders and
advising the Trust and its shareholders as to the foregoing;
(vii) handling shareholder relations, and
providing reports and other
information and services related to
the maintenance of shareholder
accounts;
<PAGE>
(viii) recording the issuance of shares of
the Trust and maintaining pursuant
to Rule 17Ad-10(e) under the 1934
Act a record of the total number of
shares of the Trust that are
authorized, based upon data provided
by the Trust, and issued and
outstanding; and
(ix) performing or arranging for the
performance of any other customary
services of a transfer agent or
dividend-disbursing agent for a
registered investment company;
(3) The calculation of the net asset value of each Fund
and the net asset value per share of each class of
shares at such times and in such manner as specified
in the Trust's current registration statement and at
such other times upon which the parties hereto may
from time to time agree; and
(4) The creation and maintenance of such records relating
to the business of the Trust as the Trust may from
time to time reasonably request.
The Manager may contract with qualified Service Providers for the
provision of any of the services necessary for the operation of the Trust as
described in this Section (b). Where the Manager engages separate Service
Providers, the Manager shall also, on behalf of the Trust, coordinate the
activities of such Service Providers, as well as other agents, attorneys,
brokers and dealers, insurers, sub-advisers and such other persons in any such
other capacity deemed to be necessary or desirable. The Manager shall make
reports to the Board of its performance hereunder and shall furnish advice and
recommendations with respect to such other aspects of the business and affairs
of the Trust as the Board or the Manager shall consider desirable.
ARTICLE II
Allocation of Charges and Expenses
(a) The Manager. The Manager assumes the expense of and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Agreement, and shall at its own expense provide the office space, equipment
and facilities that it is obligated to provide under this Agreement, and shall
pay all compensation of officers of the Trust and all trustees of the Trust who
are affiliated persons of the Manager, except as otherwise specified in this
Agreement.
<PAGE>
Except for those expenses assumed by the Trust as provided in section
(b) below, the Manager shall bear all of the Trust's expenses including, but not
limited to: custodian fees; transfer agent fees; pricing costs (including the
daily calculation of net asset value); accounting fees; legal fees (except
extraordinary litigation expenses); expenses of shareholders' and/or trustees'
meetings; bookkeeping expenses related to shareholder accounts; insurance
charges; cost of printing and mailing shareholder reports and proxy statements;
costs of printing and mailing registration statements and updated prospectuses
to current shareholders; and the fees of any trade association of which the
Trust is a member.
The Manager agrees that neither it nor any Service Provider will make
any separate charge to any shareholder or his individual account for any
services rendered to said shareholder or the Trust unless such charge for
special services is specifically approved by the Board including a majority of
the trustees who are not "interested persons" (as such term is defined in the
1940 Act) of the Manager (the "disinterested trustees"). No special charge will
be levied retroactively or without appropriate notice to affected shareholders.
(b) The Trust. The Trust assumes and shall pay or cause to be paid the
following expenses of the Trust, including, without limitation: compensation of
the Manager; fees and expenses of disinterested trustees (including any
independent counsel thereto); brokerage commissions, dealer markups and other
expenses incurred in the acquisition or disposition of any securities or other
investments; costs, including the interest expense, of borrowing money; fees and
expenses for independent audits and auditors; taxes; and extraordinary expenses
(including extraordinary litigation expenses and extraordinary consulting
expenses) as approved by a majority of the disinterested trustees.
ARTICLE III
Compensation of the Manager
For the services rendered, the facilities furnished and expenses
assumed by the Manager, the Trust shall pay to the Manager a unitary fee
calculated as a percentage of the average value of the net assets each day for
each Fund during that month at the annual rates as set forth in Schedule A
hereto and payable monthly on the first business day of each month.
The Manager's fee shall be accrued daily at 1/365th of the applicable
annual rate set forth in Schedule A. For the purpose of accruing compensation,
the net assets of each Fund shall be determined in the manner and on the dates
set forth in the Declaration of Trust or the current registration statement of
the Trust and, on days on which the net assets are not so determined, the net
asset value computation to be used shall be as determined on the immediately
preceding day on which the net assets were determined.
In the event of termination of this Agreement, all compensation due
through the date of termination will be calculated on a pro-rated basis through
the date of termination and paid within fifteen business days of the date of
termination.
During any period when the determination of net asset value is
suspended, the net asset value of a Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
<PAGE>
ARTICLE IV
Limitation of Liability of the Manager
The Manager shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the management of the Trust, except for (i) willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties hereunder, and (ii) to the extent
specified in section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation.
ARTICLE V
Activities of the Manager
The services of the Manager are not deemed to be exclusive, and the
Manager is free to render services to others, so long as the Manager's services
under this Agreement are not impaired. It is understood that trustees, officers,
employees and shareholders of the Trust are or may become interested persons of
the Manager, as directors, officers, employees and shareholders or otherwise,
and that directors, officers, employees and shareholders of the Manager are or
may become similarly interested persons of the Trust, and that the Manager may
become interested in the Trust as a shareholder or otherwise.
It is agreed that the Manager may use any supplemental investment
research obtained for the benefit of the Trust in providing investment advice to
its other investment advisory accounts. The Manager or its affiliates may use
such information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for the Manager or other
entities advised by the Manager will be considered by and may be useful to the
Manager in carrying out its obligations to the Trust.
Securities or other investments held by a Fund of the Trust may also be
held by separate investment accounts or other mutual funds for which the Manager
may act as an investment adviser or by the Manager or its affiliates. Because of
different investment objectives or other factors, a particular security may be
bought by the Manager or its affiliates for one or more clients when one or more
clients are selling the same security. If purchases or sales of securities for a
Fund or other entities for which the Manager or its affiliates act as investment
adviser or for their advisory clients arise for consideration at or about the
same time, the Trust agrees that the Manager may make transactions in such
securities, insofar as feasible, for the respective entities and clients in a
manner deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Manager during the same period may increase the
demand for securities being purchased or the supply of securities being sold,
the Trust recognizes that there may be an adverse effect on price.
<PAGE>
It is agreed that, on occasions when the Manager deems the purchase or
sale of a security to be in the best interest of a Fund as well as other
accounts or companies, it may, to the extent permitted by applicable laws or
regulations, but will not be obligated to, aggregate the securities to be sold
or purchased for other accounts or companies in order to obtain favorable
execution and lower brokerage commissions or prices. In that event, allocation
of the securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in accordance with any written
procedures maintained by the Manager or, if there are no such written
procedures, in the manner it considers to be most equitable and consistent with
its fiduciary obligations to the Trust and to such other accounts or companies.
The Trust recognizes that in some cases this procedure may adversely affect the
size of the position obtainable for a Fund.
ARTICLE VI
Books and Records
The Manager hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 and Rule 2a-7 under the 1940 Act, all
records relating to the Trust's investments that are required to be maintained
by the Trust pursuant to the requirements of Rule 31a-1 and Rule 2a-7 of the
1940 Act.
The Manager agrees that all books and records which it or any other
Service Provider maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any such books, records or
information upon the Trust's request. All such books and records shall be made
available, within five business days of a written request, to the Trust's
accountants or auditors during regular business hours at the Manager's offices.
The Trust or its authorized representative shall have the right to copy any
records in the possession of the Manager or a Service Provider that pertain to
the Trust. Such books, records, information or reports shall be made available
to properly authorized government representatives consistent with state and
federal law and/or regulations. In the event of the termination of this
Agreement, all such books, records or other information shall be returned to the
Trust free from any claim or assertion of rights by the Manager.
The Manager further agrees that it will not disclose or use any records
or information obtained pursuant to this Agreement in any manner whatsoever
except as authorized in this Agreement and that it will keep confidential any
information obtained pursuant to this Agreement and disclose such information
only if the Trust has authorized such disclosure, or if such disclosure is
required by federal or state regulatory authorities.
ARTICLE VII
Duration and Termination of this Agreement
<PAGE>
This Agreement shall not become effective unless and until it is
approved by the Board, including a majority of trustees who are not parties to
this Agreement or interested persons of any such party, and by the vote of a
majority of the outstanding voting shares of each Fund of the Trust. This
Agreement shall come into full force and effect on the date which it is so
approved, provided that it shall not become effective as to any subsequently
created investment portfolio until it has been approved by the Board, and by the
vote of a majority of the outstanding voting shares of such Fund, specifically
for such portfolio. As to each Fund of the Trust, the Agreement shall continue
in effect for two years and shall thereafter continue in effect from year to
year so long as such continuance is specifically approved for each Fund at least
annually by (i) the Board, or by the vote of a majority of the outstanding votes
attributable to the shares of the class representing an interest in the Fund;
and (ii) a majority of those trustees who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time as to any Fund or to all
Funds, without the payment of any penalty, by the Board, or by vote of a
majority of the outstanding votes attributable to the shares of the applicable
Fund, or by the Manager, on 60 days written notice to the other party. If this
Agreement is terminated only with respect to one or more, but less than all, of
the Funds, or if a different adviser is appointed with respect to a new
portfolio, the Agreement shall remain in effect with respect to the remaining
Funds. This Agreement shall automatically terminate in the event of its
assignment.
ARTICLE VIII
Amendments of this Agreement
This Agreement may be amended as to a Fund by the parties only if such
amendment is specifically approved by (i) the vote of a majority of outstanding
votes attributable to the shares of the Fund, and (ii) a majority of those
trustees who are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting on such
approval.
ARTICLE IX
Definitions of Certain Terms
The terms "assignment," "affiliated person," and "interested person,"
when used in this Agreement, shall have the respective meanings specified in the
1940 Act. The term "majority of the outstanding votes" attributable to the
shares of a Fund means the lesser of (a) 67% or more of the votes attributable
to such Fund present at a meeting if the holders of more than 50% of such votes
are present or represented by proxy, or (b) more than 50% of the votes
attributable to shares of the Fund.
ARTICLE X
Governing Law
This Agreement shall be construed in accordance with laws of the State
of Delaware, without giving effect to conflicts of law provisions thereof, and
applicable provisions of the 1940 Act, the Advisers Act, and the 1934 Act.
<PAGE>
ARTICLE XI
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
ARTICLE XII
Limitation of Liability
The Agreement and Declaration of Trust, dated January 9, 1998, as
amended from time to time, establishing the Trust, which is hereby referred to
and a copy of which is on file with the Secretary of State of Delaware, provides
that the same name Sage Life Investment Trust means the Trustees from time to
time serving (as Trustees but not personally) under said Declaration of Trust.
It is expressly acknowledged and agreed that the obligations of the Trust shall
not be binding upon any of the shareholders, trustees, officers, employees or
agents of the Trust, personally, but shall bind only the trust property of the
Trust, as provided in its Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of the Trust and such
authorization by such Trustees shall not be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Declaration
of Trust.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
SAGE LIFE INVESTMENT TRUST
By: _______________________
Title: _______________________
ATTEST:
- - - - --------------------
SAGE ADVISORS, INC.
By: _______________________
Title: _______________________
ATTEST:
- - - - ---------------------
<PAGE>
SCHEDULE A
TO THE
MANAGEMENT AGREEMENT
BETWEEN
SAGE LIFE INVESTMENT TRUST
AND
SAGE ADVISORS, INC.
Funds Subject to this Agreement Annual Unitary Fee
EAFE Equity Index Fund 0.90%
Russell 2000 Equity Index Fund 0.75%
S&P 500 Equity Index Fund 0.55%
Money Market Fund 0.65%
<PAGE>
G:\shared\clients\sage\agreemen\statesub.doc
DOCUMENT INFORMATION SHEET
FILENAME AND PATH: H:\CS\CL14252\M004\NLSMNGMT.AG5
DESCRIPTION OF DOCUMENT: Sage Life Investment Trust and Sage Advisors, Inc.,
Management Agreement
REVISION HISTORY:
August 11, 1998 (2:51pm) OPERATOR: Avillalba
June 19, 1998 (11:15am) OPERATOR: jaf
June 9, 1998 (8:46am) OPERATOR: jaf
June 2, 1998 (12:15pm) OPERATOR: Linda C.
May 27, 1998 (8:18pm) OPERATOR: barbara
May 22, 1998 (11:19am) OPERATOR: jaf
May 22, 1998 (10:50am) OPERATOR: jaf
INSTRUCTIONS FOR DOCUMENT:
TIME NEEDED:
ATTORNEY'S NAME: NLS
EXTENSION: 0165
<PAGE>
EXHIBIT 5(b)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
SAGE ADVISORS, INC.
AND
STATE STREET BANK AND TRUST COMPANY
This Agreement is made as of [the effective date of the Funds' registration
statement] between Sage Advisors, Inc. (the "Manager") and State Street Bank and
Trust Company, a Massachusetts trust company (the "Sub-Adviser").
WHEREAS, Sage Life Investment Trust (the "Investment Company") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act") consisting of series, each having its own
investment objective and policies; and
WHEREAS, the Manager is a Delaware corporation and is in the business of
providing, among other things, investment services, including investment
management services to the Investment Company pursuant to a Management Agreement
by and between the Investment Company and the Manager effective [ ], 1998 (the
"Management Agreement"); and
WHEREAS, the Sub-Adviser is in the business of providing, among other things,
investment advisory services; and
WHEREAS, as permitted by the Management Agreement, the Manager desires to retain
the Sub-Adviser to render sub-investment advisory services to the Investment
Company with respect to the series set forth on Schedule A, as amended from time
to time (each a "Fund" and together the "Funds"), and the Sub-Adviser is willing
to render such services and pay all expenses incurred in connection with
rendering such services;
NOW THEREFORE, in consideration of the mutual agreements contained herein, the
Manager and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER
(a) Initial Funds: the Manager hereby appoints the Sub-Adviser to act
as investment Sub-Adviser to the Funds for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
<PAGE>
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- 71 -
(b) Additional Funds: In the event that the Investment Company
establishes one or more Funds, other than the initial Funds ("Additional
Funds"), with respect to which the Manager desires to retain the Sub-Adviser to
render sub-investment advisory services hereunder, the Manager shall so notify
the Sub-Adviser in writing, indicating the advisory fee to be payable with
respect to the additional Fund. If the Sub-Adviser is willing to render such
services, it shall so notify the Manager in writing, whereupon such Fund shall
become a Fund under this Agreement. In such event, a writing signed by both the
Manager and the Sub-Adviser shall evidence an amendment to Schedule A as a part
hereof indicating that such additional Fund has become a Fund hereunder and
reflecting the agreed-upon fee schedule for such Fund.
2. REPRESENTATIONS AND WARRANTIES. As of the effective date of this Agreement,
the Sub-Adviser is and shall remain registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), unless
exempt from registration thereunder.
3. SUB-ADVISORY DUTIES. Subject to the supervision of the Board of Trustees of
the Investment Company (the "Board") and of the Manager, the Sub-Adviser shall
provide the Investment Company with such investment research, advice and
supervision as the Investment Company may from time to time consider necessary
for the proper management of the assets of each Fund, shall furnish continuously
an investment program for each Fund, shall determine from time to time which
securities or other investments shall be purchased, sold or exchanged and what
portions of each Fund shall be held in the various securities or other
investments or cash, and shall take such steps as are necessary to implement an
overall investment plan for each Fund, including providing or obtaining such
services as may be necessary in managing, acquiring or disposing of securities,
cash or other investments.
The Manager has furnished or will furnish the Sub-Adviser with copies
of the Investment Company's registration statement, Declaration of Trust, and
Bylaws as currently in effect and agrees during the continuance of this
Agreement to furnish the Sub-Adviser with copies of any amendments or
supplements thereto before or at the time the amendments or supplements become
effective. The Sub-Adviser will be entitled to rely on all documents furnished
by the Manager.
<PAGE>
The Sub-Adviser represents that in performing sub-investment advisory
services for each Fund, the Sub-Adviser shall ensure that: (1) each Fund shall
comply with Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations issued thereunder, specifically Regulation Section
1.817-5, relating to the diversification requirements for variable annuity,
endowment, and life insurance contracts, and any amendments or other
modifications to such Section or regulations; (2) the Sub-Adviser's activities
do not disqualify any Fund as a regulated investment company under Subchapter M
of the Code or any successor provision; and (3) any and all applicable state
insurance law restrictions on investments that operate to limit or restrict the
investments that a Fund may otherwise make and which the Manager has provided to
the Sub-Adviser in writing are complied with as well as any changes thereto.
Except as instructed by the Board, the Sub-Adviser shall also make decisions for
the Investment Company as to the manner in which voting rights, rights to
consent to corporate action, and any other rights pertaining to the Investment
Company's securities shall be exercised. If the Board at any time makes any
determination as to investment policy and notifies the Sub-Adviser of such
determination, the Sub-Adviser shall be bound by such determination for the
period, if any, specified in the notice or until similarly notified that such
determination has been revoked.
The Sub-Adviser will take reasonable steps to ensure that its products
(and those of its third-party suppliers) reflect the available state of the art
technology to offer products that are Year 2000 compliant, including, but not
limited to, century recognition of dates, calculations that correctly compute
same century and multi century formulas and date values, and interface values
that reflect the date issues arising between now and the next one-hundred years,
and, if any changes are required, the Sub-Adviser will make the changes to its
products at no cost to the Manager or the Investment Company and in a
commercially reasonable time frame and will require third-party suppliers to do
likewise.
As part of carrying out its obligations to manage the investment and
reinvestment of the assets of each Fund consistent with the requirements under
the 1940 Act, the Sub-Adviser shall:
(a) Invest the Funds' assets in accordance with the
investment policies of each Fund as set forth in the
Investment Company's registration statement;
(b) Seek out and implement specific investment
opportunities, consistent with any investment
strategies approved by the Manager and Board;
(c) Take such steps as are necessary to implement any
overall investment strategies approved by the Manager
and the Board for each Fund, including making and
carrying out day-to-day decisions to acquire or
dispose of permissible investments, managing
investments and any other property of the Fund, and
providing or obtaining such services as may be
necessary in managing, acquiring or disposing of
investments;
(d) Regularly report to the Manager and the Board with
respect to the implementation of any approved overall
investment strategy and any other activities in
connection with management of the assets of each Fund
including furnishing, within 60 days after the end of
each calendar quarter, a statement of investment
performance for the period since the last report and
a schedule of investments and other assets of each
Fund as of the end of the quarter;
(e) Maintain all required accounts, records, memoranda,
instructions or authorizations relating to the
acquisition or disposition of investments for each
Fund and the Investment Company and provide copies of
such documents to the Manager upon request;
<PAGE>
(f) Furnish any personnel, office space, equipment and
other facilities necessary for the performance of its
obligations as contemplated in this Agreement;
(g) Provide upon request accounting or other data
concerning the Investment Company's investment
activities to the Investment Company or its custodian
or administrator, to assist the Investment Company in
preparing and filing all periodic financial reports
or other documents required to be filed with the
Securities and Exchange Commission and any other
regulatory entity; and
(h) Provide information upon request from a custodian
and/or administrator to assist in calculating, each
business day, the net asset value of the shares of
each Fund in accordance with applicable law.
4. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE. The Sub-Adviser shall take,
on behalf of each Fund, all actions which it deems necessary to implement the
investment policies of such Fund, and in particular, to place all orders for the
purchase or sale of portfolio investments for the account of each Fund with
brokers, dealers, futures commission merchants or banks selected by the
Sub-Adviser. The Sub-Adviser also is authorized as the agent of the Investment
Company to give instructions to any other party serving as custodian of the
Investment Company as to deliveries of securities and payments of cash for the
account of each Fund. In selecting brokers or dealers and placing purchase and
sale orders with respect to assets of the Funds, the Sub-Adviser is directed at
all times to seek to obtain best execution and price within the policy
guidelines determined by the Board and set forth in the current registration
statement. Subject to this requirement and the provisions of the 1940 Act, the
Advisers Act, the Securities Exchange Act of 1934, as amended, and other
applicable provisions of law, the Sub-Adviser may select brokers or dealers that
are affiliated with the Sub-Adviser or the Investment Company.
<PAGE>
In addition to seeking the best execution and price, the Sub-Adviser
may also take into consideration brokerage, research and statistical
information, wire, quotation and other services provided by brokers and dealers
to the Sub-Adviser. The Sub-Adviser is also authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, if the Sub-Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage, research and
other services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Sub-Adviser's overall responsibilities with
respect to each Fund. The policies with respect to brokerage allocation,
determined from time to time by the Board are those disclosed in the currently
effective registration statement. The execution of such transactions shall not
be deemed to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. The Sub-Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by the Sub-Adviser in connection
with the performance of its obligations under this Agreement or in connection
with other advisory or investment operations including using such information in
managing its own accounts.
5. ACTIVITIES OF THE SUB-ADVISER. The services of the Sub-Adviser are not deemed
to be exclusive, and the Sub-Adviser is free to render services to others, so
long as the Sub-Adviser's services under this Agreement are not impaired. It is
understood that trustees, officers, employees and shareholders of the Investment
Company are or may become interested persons of the Sub-Adviser, as directors,
officers, employees and shareholders or otherwise, and that directors, officers,
employees and shareholders of the Sub-Adviser are or may become similarly
interested persons of the Investment Company, and that the Sub-Adviser may
become interested in the Investment Company as a shareholder or otherwise.
It is agreed that the Sub-Adviser may use any supplemental investment
research obtained for the benefit of the Investment Company in providing
investment advice to its other investment advisory accounts. The Sub-Adviser or
its affiliates may use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of business
for the Sub-Adviser or other entities advised by the Sub-Adviser will be
considered by and may be useful to the Sub-Adviser in carrying out its
obligations to the Investment Company.
Securities or other investments held by a Fund of the Investment
Company may also be held by separate investment accounts or other mutual funds
for which the Sub-Adviser may act as an investment adviser or by the Sub-Adviser
or its affiliates. Because of different investment objectives or other factors,
a particular security may be bought by the Sub-Adviser or its affiliates for one
or more clients when one or more clients are selling the same security. If
purchases or sales of securities for a Fund or other entities for which the
Sub-Adviser or its affiliates act as investment adviser or for their advisory
clients arise for consideration at or about the same time, the Investment
Company agrees that the Sub-Adviser may make transactions in such securities,
insofar as feasible, for the respective entities and clients in a manner deemed
equitable to all. To the extent that transactions on behalf of more than one
client of the Sub-Adviser during the same period may increase the demand for
securities being purchased or the supply of securities being sold, the
Investment Company recognizes that there may be an adverse effect on price.
<PAGE>
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It is agreed that, on occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interest of a Fund as well as other
accounts or companies, it may, to the extent permitted by applicable laws or
regulations, but will not be obligated to, aggregate the securities to be sold
or purchased for other accounts or companies in order to obtain favorable
execution and lower brokerage commissions or prices. In that event, allocation
of the securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in accordance with any written
procedures maintained by the Sub-Adviser or, if there are no such written
procedures, in the manner it considers to be most equitable and consistent with
its fiduciary obligations to the Investment Company and to such other accounts
or companies. The Investment Company recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for a Fund.
6. BOOKS AND RECORDS. The Sub-Adviser hereby undertakes and agrees to maintain,
in the form and for the period required by Rule 31a-2 under the 1940 Act, all
records relating to the Investment Company's investments that are required to be
maintained by the Investment Company pursuant to the requirements of Rule 31a-1
of the 1940 Act.
The Sub-Adviser agrees that all books and records which it maintains
for the Investment Company are the property of the Investment Company and
further agrees to surrender promptly to the Investment Company any such books,
records or information upon the Investment Company's request; provided that the
Sub-Adviser may retain copies thereof. All such books and records shall be made
available, within five business days of a written request, to the Investment
Company's accountants or auditors during regular business hours at the
Sub-Adviser's offices. The Investment Company or its authorized representative
shall have the right to copy any records in the possession of the Sub-Adviser
that pertain to the Investment Company. Such books, records, information or
reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to the Investment Company free from any claim or
assertion of rights by the Sub-Adviser.
The Sub-Adviser further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if the Investment Company or Manager have authorized such
disclosure, or if such disclosure is required by federal or state regulatory
authorities.
<PAGE>
7. REPORTS TO SUB-ADVISER. The Manager agrees to furnish the Sub-Adviser at its
principal office all Fund prospectuses, proxy statements, reports to
stockholders, sales literature or other material prepared for distribution to
shareholders of the Investment Company or the public, which refer in any way to
the Sub-Adviser, five (5) days, or as reasonably practicable, prior to use
thereof and not to use such material if the Sub-Adviser should object thereto in
writing within five (5) days after receipt of such material; provided, however,
that the Sub-Adviser hereby approves all uses of its name which merely refer in
accurate terms to its appointment as investment Sub-Adviser hereunder, which
merely identifies the Investment Company, or which are required by the
Commission or a state securities commission. In the event of termination of this
Agreement, the Manager shall, on written request of the Sub-Adviser, forthwith
delete any references to the Sub-Adviser from any materials described in the
preceding sentence. The Manager shall furnish or otherwise make available to the
Sub-Adviser such other information relating to the business affairs of the
Investment Company as the Sub-Adviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
8. PROXIES. Unless the Manager or the Investment Company gives written
instructions to the contrary, the Sub-Adviser shall vote or not vote all proxies
solicited by or with respect to the issuers of securities in which assets of any
Fund may be invested. The Sub-Adviser shall use its best good faith judgment to
vote or not vote such proxies in a manner which best serves the interests of the
affected Fund's shareholders.
9. EXPENSES. During the term of this Agreement, the Sub-Adviser shall pay all of
its own expenses incurred by it in connection with its activities under this
Agreement and the Manager or the Funds of the Investment Company shall bear all
expenses that are incurred in the Investment Company's operations not
specifically assumed by the Sub-Adviser.
10. COMPENSATION OF THE SUB-ADVISER. For the services to be rendered by the
Sub-Adviser as provided in this Agreement, the Manager shall pay to the
Sub-Adviser such compensation as is designated in Schedule A to this Agreement,
so long as the Sub-Adviser has not waived in writing all or a portion of such
compensation.
11. DURATION, AMENDMENT AND TERMINATION. This Agreement shall become effective
with respect to each Fund on the date first above written. With respect to any
Additional Funds, provided the provisions of Section 1, Paragraph (b) have been
complied with, this Agreement will become effective on the date on which the
Agreement is approved in accordance with Section 15 of the 1940 Act. This
Agreement, unless sooner terminated as provided herein, shall continue for each
Fund for two (2) years following the effective date of this Agreement with
respect to that Fund, if approved in accordance with Section 15 of the 1940 Act,
and thereafter shall continue automatically for periods of one (1) year so long
as such continuance is specifically approved at least annually (a) by the vote
of a majority of those members of the Board of Trustees of the Investment
Company who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting such approval, and (b) by the Board of Trustees of the
Investment Company or by vote of a majority of the outstanding voting securities
of the Fund (as defined in the 1940 Act).
This Agreement may be amended as to a Fund by the parties only if such
amendment is specifically approved by (a) the vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), and (b)
a majority of those Trustees who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval; each as required by the 1940 Act.
<PAGE>
This Agreement may be terminated by the Manager, the Sub-Adviser, or
the Investment Company on behalf of a Fund, at any time on sixty (60) days'
written notice, without the payment of any penalty. Termination by the
Investment Company on behalf of a Fund may be effected by vote of a majority of
those members of the Board of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Manager or the Investment Company, or by the
vote of either the majority of the entire Board of Trustees of the Investment
Company, or by vote of a majority of the outstanding voting securities of a Fund
with respect to which the Agreement is being terminated. This Agreement will
automatically and immediately terminate in the event of its assignment (as
defined in the 1940 Act).
12. CHOICE OF LAW. This Agreement shall be construed in accordance with the laws
of the State of Delaware (without regard for conflict of law provisions) and any
applicable federal law.
13. LIMITATION OF LIABILITY.
(a)The Agreement and Declaration of Trust, dated January 9, 1998, as amended
from time to
time, establishing the Investment Company, which is hereby referred to and a
copy of which is on file with the Secretary of State of Delaware, provides
that the name Sage
Life Investment Trust means the Trustees from time
to time serving (as Trustees but
not personally) under said Declaration of Trust.
It is expressly acknowledged and
agreed that the obligations of the Investment Company
shall not be binding upon any of
the shareholders, trustees, officers, employees or
agents of the Investment Company,
personally, but shall bind only the trust property
of the Investment Company, as
provided in its Declaration of Trust. The execution
and delivery of this Agreement
have been authorized by the Trustees of the
Investment Company and such authorization
by such Trustees shall not be deemed to have been
made by any of them individually or
to impose any liability on any of them personally.
(b) In the absence of (1) willful misfeasance, bad faith
or gross negligence on the part
of the Sub-Adviser in performance of its obligations
and duties hereunder, (2)
reckless disregard by the Sub-Adviser of its
obligations and duties hereunder, or (3)
a loss resulting from a breach of fiduciary duty
with
respect to the receipt of
compensation for services (in which case, any award
of damages shall be limited to the
period and the amount set forth in section 36(b)(3)
of the 1940 Act), the Sub-Adviser
shall not be subject to any liability whatsoever to
the Manager or the Investment
Company, or any shareholder of the Investment
Company, for any error of judgement,
mistake of law or any other act or omission in the
course of, or connected with,
rendering services hereunder including, without
limitation, for any losses that may be
sustained in connection with the purchase, holding,
redemption or sale of any security
on behalf of the Investment Company.
<PAGE>
(c) In the absence of (1) willful misfeasance, bad faith
or gross negligence on the part
of the Manager in performance of its obligations and
duties hereunder, (2) reckless
disregard by the Manager of its obligations and
duties hereunder, or (3) a loss
resulting from a breach of fiduciary duty with
respect to the receipt of compensation
for services (in which case, any award of damages
shall be limited to the period and
the amount set forth in section 36(b)(3) of the 1940
Act), the Manager shall not be
subject to any liability whatsoever to the
Sub-Adviser or the Investment Company, or
any shareholder of the Investment Company, for any
error of judgement, mistake of law
or any other act or omission in the course of, or
connected with, rendering services
hereunder including, without limitation, for any
losses that may be sustained in
connection with the purchase, holding, redemption
or sale of any security on behalf of
the Investment Company.
<PAGE>
IN WITNESS WHEREOF, the due execution hereof as of the date first above written.
SAGE ADVISORS, INC.
Attest:
By:
Name: Name:
Title: Title:
STATE STREET BANK AND TRUST COMPANY
Attest:
By:
Name: Name:
Title: Title:
<PAGE>
SCHEDULE A
Funds Subject to this Agreement
EAFE Equity Index Fund
Russell 2000 Equity Index Fund
S&P 500 Equity Index Fund
As consideration for the Sub-Adviser's services to the above Funds, the
Sub-Adviser shall receive from each Fund an annual advisory fee, accrued daily
at the rate of 1/365th of the applicable fee rate and payable monthly on the
first business day of each month, of the following percentages of the Fund's
average daily net assets during the month:
EAFE Equity Index Fund
0.15% of the first $50,000,000 0.10% of the next
$50,000,000 0.08% thereafter Minimum Annual Fee =
$65,000
Russell 2000 Equity Index Fund
0.08% of the first $50,000,000 0.06% of the next
$50,000,000 0.04% thereafter Minimum Annual Fee =
$50,000
S&P 500 Equity Index Fund
0.05% of the first $50,000,000 0.04% of the next
$50,000,000 0.02% thereafter Minimum Annual Fee =
$50,000
For the purpose of accruing compensation, the net assets of each Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of the Trust and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined.
<PAGE>
G:\shared\clients\sage\agreemen\connsub.doc
DOCUMENT INFORMATION SHEET
FILENAME AND PATH: H:\CS\CL14252\M004\STATESUB.IA9
DESCRIPTION OF DOCUMENT:Sub-Advisory Agreement between Sage Advisors, Inc. and
State
Street Bank and Trust Company
REVISION HISTORY:
July 2, 1998 (4:10pm) OPERATOR: Avillalba
June 19, 1998 (11:26am) OPERATOR: jaf
June 15, 1998 (5:08pm) OPERATOR: jaf
June 2, 1998 (7:19pm) OPERATOR: Tee/Barbara
May 27, 1998 (12:55pm) OPERATOR: Michelle Hickson (WP)
INSTRUCTIONS FOR DOCUMENT: Scan and Clean Up
TIME NEEDED: Thursday-5/28 (12:00noon)
ATTORNEY'S NAME: Nora L. Sheehan
EXTENSION: x0165
***NOTE***
THIS DOCUMENT IS IN AUTOMATIC PARAGRAPH NUMBERING. PLEASE FOLLOW WHEN ADDING
NEW PARAGRAPHS.
<PAGE>
EXHIBIT 5(c)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
SAGE ADVISORS, INC.
AND
CONNING ASSET MANAGEMENT COMPANY
This Agreement is made as of [the effective date of the Fund's registration
statement] between Sage Advisors, Inc. (the "Manager") and Conning Asset
Management Company, a Missouri corporation (the "Sub-Adviser").
WHEREAS, Sage Life Investment Trust (the "Investment Company") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act") consisting of series, each having its own
investment objective and policies; and
WHEREAS, the Manager is a Delaware corporation and is in the business of
providing, among other things, investment services, including investment
management services to the Investment Company pursuant to a Management Agreement
by and between the Investment Company and the Manager effective [ ], 1998 (the
"Management Agreement"); and
WHEREAS, the Sub-Adviser is in the business of providing, among other things,
investment advisory services; and
WHEREAS, as permitted by the Management Agreement, the Manager desires to retain
the Sub-Adviser to render sub-investment advisory services to the Investment
Company with respect to the series set forth on Schedule A, as amended from time
to time (each a "Fund" and together the "Funds"), and the Sub-Adviser is willing
to render such services and pay all expenses incurred in connection with
rendering such services;
NOW THEREFORE, in consideration of the mutual agreements contained herein, the
Manager and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER
(a) Initial Funds: the Manager hereby appoints the Sub-Adviser to act
as investment Sub-Adviser to the Funds for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
<PAGE>
G:\shared\clients\sage\agreemen\connsub.doc
- 83 -
(b) Additional Funds: In the event that the Investment Company
establishes one or more Funds, other than the initial Funds ("Additional
Funds"), with respect to which the Manager desires to retain the Sub-Adviser to
render sub-investment advisory services hereunder, the Manager shall so notify
the Sub-Adviser in writing, indicating the advisory fee to be payable with
respect to the additional Fund. If the Sub-Adviser is willing to render such
services, it shall so notify the Manager in writing, whereupon such Fund shall
become a Fund under this Agreement. In such event, a writing signed by both the
Manager and the Sub-Adviser shall evidence an amendment to Schedule A as a part
hereof indicating that such additional Fund has become a Fund hereunder and
reflecting the agreed-upon fee schedule for such Fund.
2. REPRESENTATIONS AND WARRANTIES. As of the effective date of this Agreement,
the Sub-Adviser is and shall remain registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), unless
exempt from registration thereunder.
3. SUB-ADVISORY DUTIES. Subject to the supervision of the Board of Trustees of
the Investment Company (the "Board") and of the Manager, the Sub-Adviser shall
provide the Investment Company with such investment research, advice and
supervision as the Investment Company may from time to time consider necessary
for the proper management of the assets of each Fund, shall furnish continuously
an investment program for each Fund, shall determine from time to time which
securities or other investments shall be purchased, sold or exchanged and what
portions of each Fund shall be held in the various securities or other
investments or cash, and shall take such steps as are necessary to implement an
overall investment plan for each Fund, including providing or obtaining such
services as may be necessary in managing, acquiring or disposing of securities,
cash or other investments.
The Manager has furnished or will furnish the Sub-Adviser with copies
of the Investment Company's registration statement, Declaration of Trust, and
Bylaws as currently in effect and agrees during the continuance of this
Agreement to furnish the Sub-Adviser with copies of any amendments or
supplements thereto before or at the time the amendments or supplements become
effective. The Sub-Adviser will be entitled to rely on all documents furnished
by the Manager.
<PAGE>
The Sub-Adviser represents that in performing sub-investment advisory
services for each Fund, the Sub-Adviser shall make every effort to ensure that:
(1) each Fund shall comply with Section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code") and the regulations issued thereunder,
specifically Regulation Section 1.817-5, relating to the diversification
requirements for variable annuity, endowment, and life insurance contracts, and
any amendments or other modifications to such Section or regulations; (2) each
Fund continuously qualifies as a regulated investment company under Subchapter M
of the Code or any successor provision; and (3) any and all applicable state
insurance law restrictions on investments that operate to limit or restrict the
investments that a Fund may otherwise make are complied with as well as any
changes thereto. Except as instructed by the Board, the Sub-Adviser shall also
make decisions for the Investment Company as to the manner in which voting
rights, rights to consent to corporate action, and any other rights pertaining
to the Investment Company's securities shall be exercised. If the Board at any
time makes any determination as to investment policy and notifies the
Sub-Adviser of such determination, the Sub-Adviser shall be bound by such
determination for the period, if any, specified in the notice or until similarly
notified that such determination has been revoked.
The Sub-Adviser further represents and warrants that it has taken all
necessary steps to ensure that it has fully addressed all Year 2000 transition
issues, and that none of the Manager nor its affiliates, the Investment Company,
nor owners of variable contracts funded by the Funds, will experience any
material negative effect from the Sub-Adviser's Year 2000 transition.
As part of carrying out its obligations to manage the investment and
reinvestment of the assets of each Fund consistent with the requirements under
the 1940 Act, the Sub-Adviser shall:
(a) Perform research and obtain and analyze pertinent
economic, statistical, and financial data relevant to
the investment policies of each Fund as set forth in
the Investment Company's registration statement;
(b) Consult with the Manager and the Board and furnish to
the Board recommendations with respect to an overall
investment strategy for each Fund for approval,
modification, or rejection by the Board;
(c) Seek out and implement specific investment
opportunities, consistent with any investment
strategies approved by the Manager and Board;
(d) Take such steps as are necessary to implement any
overall investment strategies approved by the Manager
and the Board for each Fund, including making and
carrying out day-to-day decisions to acquire or
dispose of permissible investments, managing
investments and any other property of the Fund, and
providing or obtaining such services as may be
necessary in managing, acquiring or disposing of
investments;
(e) Regularly report to the Manager and the Board with
respect to the implementation of any approved overall
investment strategy and any other activities in
connection with management of the assets of each Fund
including furnishing, within 60 days after the end of
each calendar quarter, a statement of investment
performance for the period since the last report and
a schedule of investments and other assets of each
Fund as of the end of the quarter;
(f) Maintain all required accounts, records, memoranda,
instructions or authorizations relating to the
acquisition or disposition of investments for each
Fund and the Investment Company and provide copies of
such documents to the Manager upon request;
<PAGE>
(g) Furnish any personnel, office space, equipment and
other facilities necessary for the operation of each
Fund as contemplated in this Agreement;
(h) Provide upon request accounting or other data
concerning the Investment Company's investment
activities to the Investment Company or its custodian
or administrator, to assist the Investment Company in
preparing and filing all periodic financial reports
or other documents required to be filed with the
Securities and Exchange Commission and any other
regulatory entity; and
(i) Provide information upon request from a custodian
and/or administrator to assist in calculating, each
business day, the net asset value of the shares of
each Fund in accordance with applicable law.
4. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE. The Sub-Adviser shall take,
on behalf of each Fund, all actions which it deems necessary to implement the
investment policies of such Fund, and in particular, to place all orders for the
purchase or sale of portfolio investments for the account of each Fund with
brokers, dealers, futures commission merchants or banks selected by the
Sub-Adviser. The Sub-Adviser also is authorized as the agent of the Investment
Company to give instructions to any other party serving as custodian of the
Investment Company as to deliveries of securities and payments of cash for the
account of each Fund. In selecting brokers or dealers and placing purchase and
sale orders with respect to assets of the Funds, the Sub-Adviser is directed at
all times to seek to obtain best execution and price within the policy
guidelines determined by the Board and set forth in the current registration
statement. Subject to this requirement and the provisions of the 1940 Act, the
Advisers Act, the Securities Exchange Act of 1934, as amended, and other
applicable provisions of law, the Sub-Adviser may select brokers or dealers that
are affiliated with the Sub-Adviser or the Investment Company.
<PAGE>
In addition to seeking the best execution and price, the Sub-Adviser
may also take into consideration brokerage, research and statistical
information, wire, quotation and other services provided by brokers and dealers
to the Sub-Adviser. The Sub-Adviser is also authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, if the Sub-Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage, research and
other services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Sub-Adviser's overall responsibilities with
respect to each Fund. The policies with respect to brokerage allocation,
determined from time to time by the Board are those disclosed in the currently
effective registration statement. The execution of such transactions shall not
be deemed to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. The Sub-Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by the Sub-Adviser in connection
with the performance of its obligations under this Agreement or in connection
with other advisory or investment operations including using such information in
managing its own accounts.
5. ACTIVITIES OF THE SUB-ADVISER. The services of the Sub-Adviser are not deemed
to be exclusive, and the Sub-Adviser is free to render services to others, so
long as the Sub-Adviser's services under this Agreement are not impaired. It is
understood that trustees, officers, employees and shareholders of the Investment
Company are or may become interested persons of the Sub-Adviser, as directors,
officers, employees and shareholders or otherwise, and that directors, officers,
employees and shareholders of the Sub-Adviser are or may become similarly
interested persons of the Investment Company, and that the Sub-Adviser may
become interested in the Investment Company as a shareholder or otherwise.
It is agreed that the Sub-Adviser may use any supplemental investment
research obtained for the benefit of the Investment Company in providing
investment advice to its other investment advisory accounts. The Sub-Adviser or
its affiliates may use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of business
for the Sub-Adviser or other entities advised by the Sub-Adviser will be
considered by and may be useful to the Sub-Adviser in carrying out its
obligations to the Investment Company.
Securities or other investments held by a Fund of the Investment
Company may also be held by separate investment accounts or other mutual funds
for which the Sub-Adviser may act as an investment adviser or by the Sub-Adviser
or its affiliates. Because of different investment objectives or other factors,
a particular security may be bought by the Sub-Adviser or its affiliates for one
or more clients when one or more clients are selling the same security. If
purchases or sales of securities for a Fund or other entities for which the
Sub-Adviser or its affiliates act as investment adviser or for their advisory
clients arise for consideration at or about the same time, the Investment
Company agrees that the Sub-Adviser may make transactions in such securities,
insofar as feasible, for the respective entities and clients in a manner deemed
equitable to all. To the extent that transactions on behalf of more than one
client of the Sub-Adviser during the same period may increase the demand for
securities being purchased or the supply of securities being sold, the
Investment Company recognizes that there may be an adverse effect on price.
<PAGE>
It is agreed that, on occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interest of a Fund as well as other
accounts or companies, it may, to the extent permitted by applicable laws or
regulations, but will not be obligated to, aggregate the securities to be sold
or purchased for other accounts or companies in order to obtain favorable
execution and lower brokerage commissions or prices. In that event, allocation
of the securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in accordance with any written
procedures maintained by the Sub-Adviser or, if there are no such written
procedures, in the manner it considers to be most equitable and consistent with
its fiduciary obligations to the Investment Company and to such other accounts
or companies. The Investment Company recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for a Fund.
6. BOOKS AND RECORDS. The Sub-Adviser hereby undertakes and agrees to maintain,
in the form and for the period required by Rule 31a-2 and Rule 2a-7 under the
1940 Act, all records relating to the Investment Company's investments that are
required to be maintained by the Investment Company pursuant to the requirements
of Rule 31a-1 and Rule 2a-7 of the 1940 Act.
The Sub-Adviser agrees that all books and records which it maintains
for the Investment Company are the property of the Investment Company and
further agrees to surrender promptly to the Investment Company any such books,
records or information upon the Investment Company's request. All such books and
records shall be made available, within five business days of a written request,
to the Investment Company's accountants or auditors during regular business
hours at the Sub-Adviser's offices. The Investment Company or its authorized
representative shall have the right to copy any records in the possession of the
Sub-Adviser that pertain to the Investment Company. Such books, records,
information or reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to the Investment Company free from any claim or
assertion of rights by the Sub-Adviser.
The Sub-Adviser further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if the Investment Company or Manager have authorized such
disclosure, or if such disclosure is required by federal or state regulatory
authorities.
<PAGE>
7. REPORTS TO SUB-ADVISER. The Manager agrees to furnish the Sub-Adviser at its
principal office all Fund prospectuses, proxy statements, reports to
stockholders, sales literature or other material prepared for distribution to
shareholders of the Investment Company or the public, which refer in any way to
the Sub-Adviser, five (5) days, or as reasonably practicable, prior to use
thereof and not to use such material if the Sub-Adviser should object thereto in
writing within five (5) days after receipt of such material; provided, however,
that the Sub-Adviser hereby approves all uses of its name which merely refer in
accurate terms to its appointment as investment Sub-Adviser hereunder, which
merely identifies the Investment Company, or which are required by the
Commission or a state securities commission. In the event of termination of this
Agreement, the Manager shall, on written request of the Sub-Adviser, forthwith
delete any references to the Sub-Adviser from any materials described in the
preceding sentence. The Manager shall furnish or otherwise make available to the
Sub-Adviser such other information relating to the business affairs of the
Investment Company as the Sub-Adviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
8. PROXIES. Unless the Manager or the Investment Company gives written
instructions to the contrary, the Sub-Adviser shall vote or not vote all proxies
solicited by or with respect to the issuers of securities in which assets of any
Fund may be invested. The Sub-Adviser shall use its best good faith judgment to
vote or not vote such proxies in a manner which best serves the interests of the
affected Fund's shareholders.
9. EXPENSES. During the term of this Agreement, the Sub-Adviser shall pay all of
its own expenses incurred by it in connection with its activities under this
Agreement and the Manager or the Funds of the Investment Company shall bear all
expenses that are incurred in the Investment Company's operations not
specifically assumed by the Sub-Adviser.
10. COMPENSATION OF THE SUB-ADVISER. For the services to be rendered by the
Sub-Adviser as provided in this Agreement, the Manager shall pay to the
Sub-Adviser such compensation as is designated in Schedule A to this Agreement,
so long as the Sub-Adviser has not waived all or a portion of such compensation.
11. DURATION, AMENDMENT AND TERMINATION. This Agreement shall become effective
with respect to each Fund on the date first above written. With respect to any
Additional Funds, provided the provisions of Section 1, Paragraph (b) have been
complied with, this Agreement will become effective on the date on which the
Agreement is approved in accordance with Section 15 of the 1940 Act. This
Agreement, unless sooner terminated as provided herein, shall continue for each
Fund for two (2) years following the effective date of this Agreement with
respect to that Fund, if approved in accordance with Section 15 of the 1940 Act,
and thereafter shall continue automatically for periods of one (1) year so long
as such continuance is specifically approved at least annually (a) by the vote
of a majority of those members of the Board of Trustees of the Investment
Company who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting such approval, and (b) by the Board of Trustees of the
Investment Company or by vote of a majority of the outstanding voting securities
of the Fund (as defined in the 1940 Act).
This Agreement may be amended as to a Fund by the parties only if such
amendment is specifically approved by (a) the vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), and (b)
a majority of those Trustees who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval, each as required by the 1940 Act.
<PAGE>
This Agreement may be terminated by the Manager, the Sub-Adviser, or
the Investment Company on behalf of a Fund, at any time on sixty (60) days'
written notice, without the payment of any penalty. Termination by the
Investment Company on behalf of a Fund may be effected by vote of a majority of
those members of the Board of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Manager or the Investment Company, or by the
vote of either the majority of the entire Board of Trustees of the Investment
Company, or by vote of a majority of the outstanding voting securities of a Fund
with respect to which the Agreement is being terminated. This Agreement will
automatically and immediately terminate in the event of its assignment (as
defined in the 1940 Act).
12. CHOICE OF LAW. This Agreement shall be construed in accordance with the laws
of the State of Delaware (without regard for conflict of law provisions) and any
applicable federal law.
13. LIMITATION OF LIABILITY. The Agreement and Declaration of Trust, dated
January 9, 1998, as amended from time to time, establishing the Investment
Company, which is hereby referred to and a copy of which is on file with the
Secretary of State of Delaware, provides that the name Sage Life Investment
Trust means the Trustees from time to time serving (as Trustees but not
personally) under said Declaration of Trust. It is expressly acknowledged and
agreed that the obligations of the Investment Company shall not be binding upon
any of the shareholders, trustees, officers, employees or agents of the
Investment Company, personally, but shall bind only the trust property of the
Investment Company, as provided in its Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the
Investment Company and such authorization by such Trustees shall not be deemed
to have been made by any of them individually or to impose any liability on any
of them personally.
<PAGE>
IN WITNESS WHEREOF, the due execution hereof as of the date first above written.
SAGE ADVISORS, INC.
Attest:
By:
Name: Name:
Title: Title:
CONNING ASSET MANAGEMENT COMPANY
Attest:
By:
Name: Name:
Title: Title:
<PAGE>
SCHEDULE A
Funds Subject to this Agreement
Money Market Fund
As consideration for the Sub-Adviser's services to the above Fund, the
Sub-Adviser shall receive from the Fund an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable fee rate and payable quarterly in arrears
on the first business day of each quarter, of the following percentages of the
Fund's average daily net assets during the month:
Money Market Fund
0.15% of the first $100,000,000
0.10% of the next $200,000,000
0.075% thereafter
For the purpose of accruing compensation, the net assets of the Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of the Trust and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined.
<PAGE>
G:\shared\clients\sage\agreemen\distrib\dist.doc
DOCUMENT INFORMATION SHEET
FILENAME AND PATH: H:\CS\CL14252\M004\CONNSUB.IA7
DESCRIPTION OF DOCUMENT Sub-Advisory Agreement between Sage Advisors, Inc. and
Conning Asset Management Company
REVISION HISTORY:
June 19, 1998 (11:20am) OPERATOR: jaf
June 15, 1998 (5:10pm) OPERATOR: jaf
June 11, 1998 (10:19am) OPERATOR: jaf
June 2, 1998 (6:30pm) OPERATOR: barbara
May 27, 1998 (12:55pm) OPERATOR: Michelle Hickson (WP)
INSTRUCTIONS FOR DOCUMENT: Scan and Clean Up
TIME NEEDED: Thursday-5/28 (12:00noon)
ATTORNEY'S NAME: Nora L. Sheehan
EXTENSION: x0165
***NOTE***
THIS DOCUMENT IS IN AUTOMATIC PARAGRAPH NUMBERING. PLEASE FOLLOW WHEN ADDING
NEW PARAGRAPHS.
<PAGE>
Exhibit 6(a)
FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT effective this ___ day of _______, 1998, between Sage Life
Investment Trust, a Delaware business trust (the "Trust"), and Sage
Distributors, Inc., a Delaware corporation (the "Distributor"), each with
offices at 300 Atlantic Street, Stamford, Connecticut 06901.
WHEREAS, the Trust is a registered open-end management investment
company, which currently offers shares of its common stock in several series,
each as set forth on Schedule A hereto (the "Current Funds"), and the Trust may
offer shares of one or more additional funds in the future;
WHEREAS, the Trust was originally organized to act as the funding
vehicle for certain individual and group variable life insurance policies and
individual and group variable annuity contracts offered by Sage Life Assurance
of America, Inc. ("Sage Life") or life insurance companies affiliated with Sage
Life through separate accounts of such life insurance companies; and
WHEREAS, in the future, the Trust may also offer its shares to life
insurance companies unaffiliated with Sage Life (together with Sage Life and its
affiliated life insurance companies, the "Life Companies") as a funding vehicle
for variable life insurance policies and variable annuity contracts (together
with the variable life insurance policies and variable annuity contracts offered
by Sage Life and its affiliated life insurance companies, the "Variable
Contracts"), and/or to qualified pension and retirement plans (the "Qualified
Plans"); and
WHEREAS, from time to time, the Trust may enter into sales agreements
with Life Companies that have or will establish one or more separate accounts to
offer Variable Contracts, pursuant to which one or more Funds of the Trust
serves as the underlying funding vehicle for such Variable Contracts; and, under
certain circumstances, may enter into sales agreements with the Qualified Plans;
and
WHEREAS, it is contemplated that, in addition to entering into sales
agreements with Life Companies and/or Qualified Plans and/or their affiliates,
the Distributor shall engage in certain promotional and sales efforts on behalf
of the Trust, as described in the Distribution Plan pursuant to Rule 12b-1
adopted by the Trust concurrent with the effective date of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
<PAGE>
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- 90 -
1. (a) The Trust proposes to issue and sell shares of common stock of
the Trust (the "Shares") to separate accounts of Life Companies and to the
Qualified Plans as may be permitted by applicable law and subject to the Trust's
obtaining any necessary regulatory approvals. The Trust hereby appoints the
Distributor as agent to sell the Shares and the Distributor hereby accepts such
appointment. The Shares will be distributed under such terms as are set by the
Trust and will be sold to the separate accounts and the Qualified Plans
permitted to buy the Shares as specified by the Trust's Board of Trustees.
(b) In the event that the Trust from time to time designates
one or more funds in addition to the Current Funds ("Additional Funds"), it
shall notify the Distributor. If the Distributor is willing to perform services
hereunder to the Additional Funds, it shall so notify the Trust. Thereafter, the
Trust and the Distributor shall mutually agree to amend Schedule A to this
Agreement in writing to add the Additional Funds and the Additional Funds shall
be subject to this Agreement, subject to the approval of the Board of Trustees
as set forth in Section 7.(a) below.
2. (a) The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in the
Trust's prospectus, and (ii) the Trust shall receive 100% of such net asset
value.
(b) The Shares will be sold in accordance with any sales
agreements between the Trust and Life Companies and, where applicable, the Trust
and Qualified Plans. The Current Funds and all Additional Funds subject to this
Agreement are referred to collectively as "Funds."
3. (a) All sales literature and advertisements used by the Distributor
in connection with sales of Shares shall be subject to approval by the Trust.
The Trust authorizes the Distributor, in connection with the sales or arranging
for the sale of Shares, to provide only such information and to make only such
statements or representations as are contained in the Trust's then-current
prospectus or in sales literature or advertisements approved by the Trust or in
such financial and other statements which are furnished to the Distributor
pursuant to the next paragraph. The Trust shall not be responsible in any way
for any information provided or statements or representations made by the
Distributor or its representatives or agents other than the information,
statements and representations described in the preceding sentence. The
Distributor shall review all materials submitted to it by Life Companies and
Qualified Plans that describe the Trust, the Shares or the Trust's investment
adviser. The Distributor shall not be responsible for any information provided
or statements or representations made by Life Companies or Qualified Plans,
representatives or agents of Life Companies or Qualified Plans, or any other
persons or entities other than the Distributor's representatives or agents.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs, shall furnish the Distributor with a certified copy of
all financial statements and a signed copy of each report prepared by its
independent certified public accountants, and shall cooperate fully in the
efforts of the Distributor to sell the Shares and in the performance by the
Distributor of all its duties under this Agreement.
<PAGE>
4. (a) The Trust will pay or cause to be paid:
(i) registration fees for registering its shares
under the Securities Act of 1933
(the "1933 Act");
(ii) the expenses, including counsel fees, of
preparing registration statements and such other documents as
the Trust believes are necessary for registering the Shares
with the Securities and Exchange Commission (the "SEC") and
such states as are deemed necessary or appropriate;
(iii) expenses incident to preparing amendments to
registration statements of the Trust under the 1933 Act and
the Investment Company Act of 1940, as amended (the "1940
Act");
(iv) expenses for preparing and setting in type all
prospectuses and the expense of supplying them to the then
existing shareholders or beneficial owners of Shares
(including owners of Variable Contracts whose contracts use
one or more Funds as their funding vehicle); and
(v) expenses incident to the issuance of its Shares
such as the cost of stock certificates, if any, taxes and fees
of the transfer agent for establishing shareholder record
accounts and confirmations.
(b) The Distributor shall pay all of its own costs and
expenses connected with the offer and sale of Shares ("Distribution Expenses"),
except that certain Distribution Expenses may be reimbursed to the Distributor
as provided in Section 5 hereof.
5. (a) Pursuant to a Distribution Plan (the "Plan") adopted by the
Board of Trustees of the Trust in accordance with Section 12(b) of the 1940 Act,
Rule 12b-1 and the other rules and regulations promulgated thereunder, as the
same may be, from time to time, issued or amended, the Trust, on behalf of a
Fund that has approved the Plan pursuant to Section 4 thereof, may reimburse the
Distributor, as direct payment for expenses incurred in connection with the
distribution of a Fund's shares, amounts equal to actual expenses associated
with distributing such Fund's shares, up to a maximum rate of 0.25%, on an
annualized basis of a Fund's average daily net assets. Reimbursements shall be
measured and accrued daily, and remitted to the Distributor quarterly. Such
reimbursement may be made only for the period commencing on the date hereof and
ending one year later, and for each twelve month period (or portion thereof)
thereafter, in which the Plan is in effect for that Fund.
(b) Distribution Expenses reimbursable hereunder shall
include, but not necessarily be limited to, the following:
<PAGE>
(i) the cost for printing and mailing of Trust
prospectuses, statements of additional information, and any
supplements thereto, and shareholder reports for prospective
Variable Contract owners;
(ii) the costs relating to the development,
preparation, printing and mailing of Trust advertisements,
sales literature and other promotional materials describing
and/or relating to the Trust and including materials intended
for use within the Life Companies, or for broker-dealer only
use or retail use;
(iii) expenses incurred in connection with the
presentation of seminars and sales meetings designed to
promote the distribution of Trust Shares;
(iv) the cost of obtaining information and providing
explanations to Variable Contact owners regarding the Funds'
investment objectives and policies and other information about
the Trust and the Funds, including the performance of the
Funds;
(v) the cost of training sales personnel
regarding the Trust;
(vi) compensation of sales personnel in connection
with the allocation of cash values and premiums of the
Variable Contracts to the Trust;
(vii) the cost of personal service and/or maintenance
of Variable Contract owner accounts with respect to Trust
shares attributable to such accounts; and
(viii) the cost of financing any other activity that
the Trust's Board of Trustees determines is primarily intended
to result in the sale of the Funds' shares.
(c) The Distributor shall submit annual reimbursable
Distribution Expense budgets to the Board of Trustees of the Trust. As soon as
practicable after the end of each calendar quarter, the Distributor shall submit
to the Board of Trustees reports requesting ratification of reimbursement of
Distribution Expenses as to each Fund for that quarter. The Distributor will
allocate to each Fund reimbursable Distribution Expenses not specifically
attributable to the distribution of shares of a particular Fund, based upon the
ratio of the net asset value of each Fund at the end of each calendar month to
the net asset value of all Funds on that same date. The Board of Trustees will
consider each request at its next regular meeting after such request is
submitted, and the Distributor shall only retain reimbursements by the Trust on
behalf of a Fund for those reimbursable Distribution Expenses that are approved
by the Board of Trustees, including a majority of the "Disinterested Trustees"
(as that term is defined in Section 7 hereof).
<PAGE>
6. (a) The Trust shall maintain a currently effective Registration
Statement on Form N-1A and shall file with the SEC such reports and other
documents as may be required under the 1933 Act and the 1940 Act or by the rule
and regulations of the SEC thereunder.
(b) The Trust represents and warrants that its Registration
Statement, post-effective amendments, Prospectus and Statement of Additional
Information (excluding statements based upon written information furnished by
the Distributor expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to the Distributor, pursuant to
Section 3(b) hereof, shall be true and correct in all material respects.
7. (a) This Agreement shall take effect on the date hereof after it has
been approved by a vote of the majority of Trustees of the Trust and those
Trustees of the Trust who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or this
Agreement (the "Disinterested Trustees"), cast in person at a meeting called for
the purpose of voting on this Agreement. This Agreement shall remain in full
force and effect until one year from the effective date hereof, and may be
continued for twelve month periods (or portions thereof) thereafter; provided
that such continuance shall be specifically approved annually by the Board of
Trustees of the Trust or by a majority of the outstanding voting securities of
each Fund of the Trust as it applies to that Fund, and in either case, also by a
majority of the Disinterested Trustees. This Agreement may be amended, with
respect to any Fund, with the approval of the Board of Trustees or of a majority
of the outstanding voting securities of each Fund of the Trust as it applies to
that Fund, provided, that in either case, such amendment shall also be approved
by a majority of the Disinterested Trustees.
(b) This Agreement, with respect to any Fund, may be
terminated, at any time without payment of any penalty, by vote of a majority of
the Disinterested Trustees or by vote of a majority of the outstanding voting
securities of that Fund, or may be terminated by the Distributor, in either case
on not more than 60 days' written notice delivered personally or mailed by
registered mail, postage prepaid, to the other party.
(c) This Agreement shall automatically terminate in the event
of its assignment.
(d) The terms "interested persons," "assignment" and "vote of
a majority of the outstanding voting securities" as used herein shall have the
meanings given to them in the 1940 Act.
<PAGE>
8. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties ("disabling conduct") hereunder
on the part of the Distributor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Distributor or retained by it to perform or assist in the performance of its
obligations under this Agreement) the Distributor shall not be subject to
liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder, of
law or for any loss suffered by any of them in connection with the matters to
which this Agreement relates.
9. The Agreement and Declaration of Trust, dated January 9, 1998, as
amended from time to time, establishing the Trust, which is hereby referred to
and a copy of which is on file with the Secretary of State of Delaware, provides
that the same name Sage Life Investment Trust means the Trustees from time to
time serving (as Trustees but not personally) under said Declaration of Trust.
It is expressly acknowledged and agreed that the obligations of the Trust shall
not be binding upon any of the shareholders, trustees, officers, employees or
agents of the Trust, personally, but shall bind only the trust property of the
Trust, as provided in its Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of the Trust and such
authorization by such Trustees shall not be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Declaration
of Trust.
10. This Agreement is made by the Trust, on behalf of each Fund,
pursuant to authority granted by the Board of Trustees, and the obligations
created hereby are not binding on any of the Trustees or shareholders of the
Trust individually, but bind only the property of the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their duly authorized officers and under their respective
seals on the day and year first above written.
Attest: SAGE LIFE INVESTMENT TRUST
By:
Secretary Ronald S. Scowby
Chairman
Attest: SAGE DISTRIBUTORS, INC.
By:
Secretary James F. Bronsdon
President and Chief
Executive Officer
<PAGE>
SCHEDULE A
As of _________, 1998, the Distributor shall act as distributor for shares of
the following Funds of Sage Life Investment Trust
EAFE Equity Index Fund
Russell 2000 Equity Index Fund
S&P 500 Equity Index Fund
Money Market Fund
<PAGE>
G:\shared\clients\sage\agreemen\partic.doc
DOCUMENT INFORMATION SHEET
FILENAME AND PATH: H:\CS\CL14252\M004\NLSDIST3.AGR
DESCRIPTION OF DOCUMENT: Distribution Agreement
REVISION HISTORY:July 1, 1998 (3:45pm) OPERATOR: jaf
June 19, 1998 (2:02pm) OPERATOR: jaf
June 19, 1998 (12:28pm) OPERATOR: jaf
June 10, 1998 (10:00am) OPERATOR: jaf
June 8, 1998 (7:10pm) OPERATOR: Lori
June 5, 1998 (4:26pm) OPERATOR: Michelle Hickson (WP)
INSTRUCTIONS FOR DOCUMENT:
TIME NEEDED:
ATTORNEY'S NAME: Nora L. Sheehan
EXTENSION: x0165
***NOTE***
THIS DOCUMENT IS IN AUTOMATIC PARAGRAPH NUMBERING. PLEASE FOLLOW WHEN ADDING
NEW PARAGRAPHS.
<PAGE>
Exhibit 6(b)
FORM OF
PARTICIPATION AGREEMENT
By and Among
SAGE LIFE INVESTMENT TRUST
And
SAGE LIFE ASSURANCE OF AMERICA, INC.
And
SAGE DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this __th day of _______, 1998,
by and among Sage Life Assurance of America, Inc., a Delaware corporation (the
"Company"), on its own behalf and on behalf of each separate account of the
Company named in Exhibit A to this Agreement, as may be amended from time to
time (each separate account, a "Separate Account"), and Sage Life Investment
Trust, an open-end diversified management investment company organized under the
laws of the State of Delaware (the "Trust"), and Sage Distributors, Inc., a
Delaware Corporation (the "Underwriter").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially
identical to this Agreement ("Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Fund"); and
<PAGE>
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-127-
WHEREAS, the Trust has obtained an order from the U.S. Securities and
Exchange Commission (the "SEC" or "Commission"), dated June 2, 1998 (File No.
812-11062), granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company
Act of 1940, as amended (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
to be sold to and held by variable annuity separate accounts and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans ("Mixed and
Shared Funding Order"), and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable
annuity and variable life insurance contracts under the 1933 Act and named in
Exhibit A to this Agreement, as it may be amended from time to time (the
"Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company under the insurance laws of the State of Delaware, to set aside
and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered the Separate Accounts as unit
investment trusts under the 1940 Act;
and
<PAGE>
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds named in
Exhibit B on behalf of the Separate Accounts to fund the Contracts, and the
Underwriter is authorized to sell such shares to unit investment trusts such as
the Separate Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust, and the Underwriter agree as follows: ARTICLE 1 Sale of Trust Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Trust
which the Company orders on
behalf of the Separate Accounts, executing such orders on a daily basis
at the net asset value next computed after receipt and acceptance by
the Trust or its designee of the order for the shares of the Trust. For
purposes of this Section 1.1, the Company shall be the designee of the
Trust for receipt of such orders from each Separate Account and receipt
by such designee shall constitute receipt by the Trust; provided that
the Trust receives notice of such order by 9:30 a.m. Eastern Time on
the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Trust calculates its net asset value pursuant to the rules of the SEC.
1.1.
<PAGE>
1.2. The Trust agrees to make its shares available indefinitely
for purchase
at the applicable net asset
value per share by Participating Insurance Companies and their
separate
accounts on those days on which
the Trust calculates its net asset value pursuant to rules of the SEC;
provided, however, that the Board
of Trustees of the Trust (hereinafter the "Trustees") may refuse to
sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Fund, if
such action is required by law or
by regulatory authorities having jurisdiction, or is, in the sole
discretion of the Trustees, acting in
good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary
in the best interests of the shareholders of any Fund.
1.3. The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts, and to
qualified pension and retirement plans. No shares of the Trust will be sold to
the general public. 1.4. The Trust and the Underwriter will not sell Trust
shares to any insurance company or separate account unless an agreement
containing provisions substantially the same as Article VII and Sections 2.9,
3.5, 3.6 and 5.1 of this Agreement are in effect to govern such sales. 1.5. The
Trust will not accept a purchase order from qualified pension or retirement plan
if such purchase would make the plan shareholder an owner of 10 percent or more
of the assets of a Fund unless such plan executes an agreement with the Trust
governing participation in such Fund that includes the conditions set forth
herein to the extent applicable. A qualified pension or retirement plan will
execute an application containing an acknowledgment of this condition at the
time of its initial purchase of shares of any Fund. 1.1.
<PAGE>
1.6. The Trust agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the
Trust held by the Company, executing such requests on a daily basis at
the net asset value next computed
after receipt and acceptance by the Trust or its designee of the
request for redemption. For purposes
of this Section 1.6, the Company shall be the designee of the Trust
for receipt of requests for
redemption from each Separate Account and receipt by such designee
shall constitute receipt by the
Trust; provided the Trust receives notice of request for redemption
by 9:30 a.m. Eastern Time on the
next following Business Day. Payment shall be in federal funds
transmitted by wire to the Company's
account as designated by the Company in writing from time to time.
1.7. Each purchase, redemption, and exchange order placed by the Company shall
be placed separately for each Fund and shall not be netted with respect to any
Fund. However, with respect to payment of the purchase price by the Company and
of redemption proceeds by the Trust, the Company and the Trust shall net
purchase and redemption orders with respect to each Fund and shall transmit one
net payment for all Funds in accordance with Section 1.8. 1.8. In the event of
net purchase, the Company shall pay for shares by 2:00 p.m. Eastern Time on the
next Business Day after an order to purchase the Shares is deemed to be received
in accordance with the provisions of Section 1.1 hereof. In the event of net
redemptions, the Trust shall pay the redemption proceeds by 2:00 p.m. Eastern
Time on the next Business Day after an order to redeem the shares is deemed to
be received in accordance with the provision of Section 1.6 hereof. All such
payments shall be in federal funds transmitted by wire.
1.1.
<PAGE>
1.9. Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Separate
Account. Purchase and redemption orders for Trust shares will be
recorded in an appropriate title for each Separate Account or the
appropriate subaccount of each Separate Account.
1.10. The Trust shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends, or capital gain distributions payable on the
Trust's shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Fund shares in the form of additional shares
of that Fund. The Company reserves the right to revoke this election and to
receive all such dividends and distributions in cash. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions. 1.11. The Trust shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best efforts
to make such net asset value per share available by 6:30 p.m. Eastern Time, each
business day. ARTICLE 2 Representations and Warranties ARTICLE 1
<PAGE>
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, unless exempt therefrom, and that the Contracts
will be issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it has
legally and validly established each Separate Account as a segregated asset
account under applicable state law and has registered each Separate Account as a
unit investment trust in accordance with the provisions of the 1940 Act, unless
exempt therefrom, to serve as segregated investment accounts for the Contracts;
and (iii) it will maintain such registration, if required, for so long as any
Contracts are outstanding. The Company shall amend any registration statement
under the 1933 Act for the Contracts and any registration statement under the
1940 Act for the Separate Accounts from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be required
by applicable law. The Company shall register and qualify the Contracts for sale
in accordance with the securities laws of the various states only if, and to the
extent, deemed necessary by the Company.
2.2. Subject to Article VI hereof, the Company represents that it believes that
the Contracts are currently and at the time of issuance will be treated as life
insurance, endowment, or annuity contracts under applicable provisions of the
Internal Revenue Code and that it will make every effort to maintain such
treatment and that it will notify the Trust and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future. 2.3. The Company
represents that any prospectus offering a Contract that is a life insurance
contract where it is reasonably probable that such Contract would be a "modified
endowment contract," as that term is defined in Section 7702A of the Internal
Revenue Code will identify such Contract as a modified endowment contract (or
policy). 1.1.
<PAGE>
2.4. The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with the
money and/or securities of the Trust are covered by a blanket fidelity bond or
similar coverage in an amount not less than $5 million. The aforesaid includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company. The Company agrees that any amounts received under such bond in
connection with claims that derive from arrangements described in this Agreement
will be held by the Company for the benefit of the Trust. The Company agrees to
make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Trust and the
Underwriter in the event that such coverage no longer applies.
2.5. The Company represents and warrants that it has taken all necessary steps
to ensure that it has addressed all Year 2000 transition issues, and that
neither the Trust nor the Underwriter and their affiliates, nor the owners of
the Contracts will experience any material negative effect as a result of the
Company's Year 2000 transition. 2.6. The Trust represents and warrants that
Trust shares sold pursuant to this Agreement shall be registered under the 1933
Act and duly authorized for issuance in accordance with applicable law, and that
the Trust is and shall remain registered under the 1940 Act for as long as the
Trust shares are sold. The Trust shall amend the registration statement for its
shares under the 1933 and the 1940 Acts from time to time as required in order
to effect the continuous offering of its shares. The Trust shall register and
qualify the shares for sale in accordance with the laws of the various states
only if, and to the extent, deemed advisable by the Trust or the Underwriter.
2.7. The Trust represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and that it
will make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision). 1.1.
<PAGE>
2.8. The Trust makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Trust represents that it is and shall at all times
remain in compliance with the laws of the state of Delaware to the extent
required to perform this Agreement and shall comply with applicable insurance
laws of all states to the extent that the Company advises the Trust, in writing,
of such laws or any changes in such laws, including the furnishing of
information not otherwise available to the Company which is required by state
insurance law to enable the Company to obtain the authority needed to issue the
Contracts in any applicable state.
2.9. The Trust represents and warrants that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the
Trust undertakes to have its Board of Trustees, a majority of whom are not
interested persons of the Trust, formulate and approve any plan under Rule 12b-1
("Rule 12b-1 Plan") to finance distribution expenses. The Trust shall notify the
Company immediately upon determining to finance distribution expenses pursuant
to Rule 12b-1. 2.10. The Trust represents that it is lawfully organized and
validly existing under the laws of Delaware and that it does and will comply
with applicable provisions of the 1940 Act. 1.1.
<PAGE>
2.11. The Trust represents and warrants that it and all of its trustees,
officers, employees and other individuals/entities having access to the
funds and/or securities of the Trust are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the minimal coverage as
required currently by Rule 17g-1 of the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable
bonding company.
2.12. The Trust represents and warrants that it has taken all necessary steps to
ensure that it has addressed all Year 2000 transition issues, and that none of
the Company, the Underwriter and their affiliates, nor the owners of the
Contracts will experience any material negative effect as a result of the
Trust's Year 2000 transition. 2.13. The Underwriter represents and warrants that
it is a member in good standing of the NASD and is registered as a broker-dealer
with the SEC. The Underwriter further represents that it will sell and
distribute the Trust's shares in accordance with all applicable federal and
state securities laws, including without limitation the 1933 Act, the 1934 Act,
and the 1940 Act. 2.14. The Underwriter represents and warrants that the Trust's
investment manager, Sage Advisors, Inc., is and shall remain duly registered as
an investment adviser under all applicable federal and state securities laws and
that the investment manager will perform its obligations to the Trust in
accordance with any applicable state and federal securities laws. 2.15. The
Underwriter represents and warrants that it has taken all necessary steps to
ensure that it has addressed all Year 2000 transition issues, and that none of
the Company and its affiliates, the Trust, nor the owners of the Contracts will
experience any material negative effect as a result of the Underwriter's Year
2000 transition. 1.1.
<PAGE>
ARTICLE 3 Prospectuses and Proxy Statements; Voting 3.1. The Underwriter shall
provide the Company, at the Company's expense, with as many copies of the
Trust's current prospectus as the Company may reasonably request for use with
prospective contract owners and applicants. The Underwriter shall print and
distribute, at the Trust's or Underwriter's expense, as many copies of said
prospectus as necessary for distribution to existing Contract owners or
participants. If requested by the Company in lieu thereof, the Trust shall
provide such documentation including a final copy of a current prospectus set in
type at the Trust's expense and other assistance as is reasonably necessary in
order for the Company at least annually (or more frequently if the Trust's
prospectus is amended more frequently) to have the new prospectus for the
Contracts and the Trust's new prospectus printed together in one document; in
such case the Trust shall bear its share of expenses as described above. 3.2.
The Trust's prospectus shall state that the statement of additional information
for the Trust is available from the Underwriter or alternatively from the
Company (or, in the Trust's discretion, the Prospectus shall state that such
statement is available from the Trust), and the Underwriter (or the Trust) shall
provide such statement, at its expense, to the Company and to any owner of or
participant under a Contract who requests such statement or, at the Company's
expense, to any prospective Contract owner and applicant who requests such
statement. 1.1.
<PAGE>
3.3. The Trust, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other
communications to shareholders in such quantity as the Company shall
reasonably require and the Company shall bear the costs of distributing
them to existing Contract owners or participants.
3.4. The Trust hereby notifies the Company that it is appropriate to include in
the prospectuses pursuant to which the Contracts are offered disclosure
regarding the potential risks of mixed and shared funding.
3.5. To the extent required by law the Company shall:
(1) solicit voting instructions from Contract
owners or participants;
(2) vote the Trust shares held in each Separate
Account in accordance with instructions
received from Contract owners or
participants; and
(3) vote Trust shares held in each Separate
Account for which no timely instructions
have been received, in the same proportion
as Trust shares of such Fund for which
instructions have been received from the
Company's Contract owners or participants;
for so long as and to the extent that the 1940 Act requires
pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in the Trust
calculates voting privileges in a manner consistent with other
Participating Insurance Companies and as required by the Mixed and
Shared Funding Order. The Trust will notify the Company of any changes
of interpretation or amendment to the Mixed and Shared Funding Order.
<PAGE>
3.6. The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Trust will either provide for annual
meetings (except to the extent that the Commission may interpret Section 16 of
the 1940 Act not to require such meetings) or comply with Section 16(c) of the
1940 Act (although the Trust is not one of the trusts described in Section 16(c)
of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b)
of the 1940 Act. Further, the Trust will act in accordance with the Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of Trustees and with whatever rules the Commission may promulgate with
respect thereto. ARTICLE 4 Sales Material and Information 4.1. The Company shall
furnish, or shall cause to be furnished, to the Trust or the Underwriter, each
piece of sales literature or other promotional material in which the Trust or
the Trust's investment manager, sub-advisers or Underwriter is named, at least
fifteen business days prior to its use. No such material shall be used if the
Trust or the Underwriter reasonably objects in writing to such use within
fifteen business days after receipt of such material. 4.2. The Company
represents and agrees that sales literature for the Contracts prepared by the
Company or its affiliates will be consistent with every law, rule, and
regulation of any regulatory agency or self-regulatory agency that applies to
the Contracts or to the sale of the Contracts, including, but not limited to,
NASD Conduct Rule 2210 and IM-2210-2 thereunder. 1.1.
<PAGE>
4.3. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales literature
or other promotional material approved by the Trust or by the Underwriter,
except with the permission of the Trust or the Underwriter. The Trust and the
Underwriter agree to respond to any request for approval on a prompt and timely
basis. The Company shall adopt and implement procedures reasonably designed to
ensure that information concerning the Trust, the Underwriter, or any of their
affiliates which is intended for use by brokers or agents selling the Contracts
(i.e., information that is not intended for distribution to Contract owners or
prospective Contract owners) is so used, and neither the Trust, the Underwriter,
nor any of their affiliates shall be liable for any losses, damages, or expenses
relating to the improper use of such broker only materials by agents of the
Company or its affiliates who are unaffiliated with the Company or the
Underwriter. The parties hereto agree that this Section 4.3 is not intended to
designate nor otherwise imply that the Company is an underwriter or distributor
of the Trust's shares.
4.4. The Trust or the Underwriter shall furnish, or shall cause to be furnished,
to the Company or its designee, each piece of sales literature or other
promotional material in which the Company, its Separate Account, or the
Contracts are named, at least fifteen business days prior to its use. No such
material shall be used if the Company reasonably objects in writing to such use
within fifteen business days after receipt of such material. 1.1.
<PAGE>
4.5. The Trust represents and agrees that sales literature for the Trust
prepared by the Trust or its affiliates will be consistent with every
law, rule, and Regulation of any regulatory agency or self regulatory
agency that applies to the Trust or to the sale of Trust shares,
including, but not limited to, NASD Conduct Rule 2210 and IM-2210-2
thereunder.
4.6. The Trust and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Separate Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Separate Account which are in the
public domain or approved by the Company for distribution to Contract owners or
participants, or in sales literature or other promotional material approved by
the Company, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis. The Trust and
the Underwriter shall mark information produced by or on behalf of the Trust
"FOR BROKER USE ONLY" which is intended for use by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to Contract
owners or prospective Contract owners) is so used, and neither the Company nor
any of its affiliates shall be liable for any losses, damages, or expenses
arising on account of the use by brokers of such information with third parties
in the event that is not so marked.
1.1.
<PAGE>
4.7. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Trust or its shares, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
4.8. The Company will provide to the Trust at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Separate Account, contemporaneously with the filing of such document with
the SEC or other regulatory authorities. The Company shall promptly inform the
Trust of the results of any examination by the SEC (or other regulatory
authorities) that relates to the Contracts, and the Company shall provide the
Trust with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination. 1.1.
<PAGE>
4.9. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under NASD
Conduct Rules, the 1940 Act or the 1933 Act.
ARTICLE 5 Fees and Expenses 5.1. The Trust and Underwriter shall pay no fee or
other compensation to the Company under this Agreement, except subject a Rule
12b-1 Plan to finance distribution expenses, then, subject to obtaining any
required exemptive orders or other regulatory approvals, the Underwriter may
make payments to the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Underwriter in writing. Each party, however, shall, in
accordance with the allocation of expenses specified in this Agreement,
reimburse other parties for expenses initially paid by one party but allocated
to another party. In addition, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and arranging for appropriate compensation
for, other services relating to the Trust and/or to the Separate Accounts. 1.1.
<PAGE>
5.2. All expenses incident to performance by the Trust of this Agreement shall
be paid by the Trust to the extent permitted by law. All Trust shares will be
duly authorized for issuance and registered in accordance with applicable
federal law and to the extent deemed advisable by the Trust, in accordance with
applicable state law, prior to sale. The Trust shall bear the expenses for the
cost of registration and qualification of the Trust's shares, preparation and
filing of the Trust's prospectus and registration statement, Trust proxy
materials and reports, setting in type the Trust's prospectuses, and printing
the Trust prospectuses, proxy materials and reports for existing shareholders
and Contract owners, the preparation of all statements and notices required by
any federal or state law, all taxes on the issuance or transfer of the Trust's
shares, and any expenses permitted to be paid or assumed by the Trust pursuant
to any Rule 12b-1 Plan under the 1940 Act duly adopted by the Trust. 5.3. The
Company shall bear the expenses of printing and distributing the Trust
prospectuses for prospective shareholders and Contract owners, and distributing
the Trust prospectuses and of distributing the Trust's proxy statements and
shareholder reports to existing Contract owners. The Company shall bear all
expenses associated with the registration, qualification, and filing of the
Contracts under applicable federal securities and state insurance laws; the cost
of preparing, printing, and distributing the Contracts' prospectuses and
statements of additional information; and the cost of printing and distributing
annual individual account statements for Contract owners as required by state
insurance laws. ARTICLE 6 Diversification ARTICLE 1
<PAGE>
6.1. The Trust will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Internal Revenue Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Trust will comply with Section 817(h)
of the Internal Revenue Code and Treasury Regulation 1. 817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations or successors thereto. In the event of a breach of this Article VI
by the Trust, it will take all reasonable steps (a) to notify the Company of
such breach, and (b) to adequately diversify the Trust so as to achieve
compliance within the grace period afforded by Treasury Regulation 1. 817-5.
ARTICLE 7 Potential Conflicts 7.1. The Board of Trustees of the Trust (the
"Trust Board") will monitor the Trust for the existence of any material
irreconcilable conflict among the interests of the Contract owners of all
separate accounts investing in the Trust. A material irreconcilable conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Fund are being managed; (e) a difference in voting instructions given by
variable annuity contract owners, variable life insurance contract owners, and
trustees of qualified pension or retirement plans; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of Contract
owners; or (g) if applicable, a decision by a qualified pension or retirement
plan to disregard the voting instructions of plan participants. The Trust Board
shall promptly inform the Company if it determines that a material
irreconcilable conflict exists and the implications thereof. A majority of the
Trust Board shall consist of Trustees who are not "interested" persons of the
Trust. 1.1.
<PAGE>
7.2. The Company has reviewed a copy of the Mixed and Shared Funding Order,
and in particular, has reviewed the conditions to the requested relief
set forth therein. The Company agrees to assist the Trust Board in
carrying out its responsibilities under the Mixed and Shared Funding
Order, by providing the Trust Board with all information reasonably
necessary for the Trust Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform
the Trust Board whenever Contract owner voting instructions are
disregarded. The Trust Board shall record in its minutes or other
appropriate records, all reports received by it and all action with
regard to a conflict.
1.1.
<PAGE>
7.3. If it is determined by a majority of the Trust Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the Separate
Accounts from the relevant Fund and reinvesting such assets in a different
investment medium, including another Fund, or in the case of insurance company
participants submitting the question as to whether such segregation should be
implemented by a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity Contract owners
or life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict with the
majority of Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the Separate Account's
investment in the Trust and terminate this Agreement with respect to such
Separate Account, and no charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination shall take place within 30 days
after written notice is given that this provision is being implemented, subject
to applicable law but in any event consistent with the terms of the Mixed and
Shared Funding Order. Until such withdrawal and termination is implemented, the
Underwriter and the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust. Such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of disinterested
Trustees.
1.1.
<PAGE>
7.5. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators, then
the Company will withdraw the Separate Account's investment in the Trust and
terminate this Agreement with respect to such Separate Account within 30 days
after the Trust informs the Company of a material irreconcilable conflict,
subject to applicable law but in any event consistent with the terms of the
Mixed and Shared Funding Order. Until such withdrawal and termination is
implemented, the Underwriter and the Trust shall continue to accept and
implement orders by this Company for the purchase and redemption of shares of
the Trust. Such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of disinterested Trustees.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Trust Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict, but in
no event will the Trust or the Underwriter be required to establish a new
funding medium for the Contracts. The Company shall not be required by Section
7.3 to establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the material irreconcilable conflict. 7.7. The Trust Board's
determination of the existence of a material irreconcilable conflict and its
implication will be made known in writing to the Company. 7.8. The Company shall
at least annually submit to the Trust Board such reports, materials, or data as
the Trust Board may reasonably request so that the Trustees may fully carry out
the duties imposed upon the Trust Board by the Mixed and Shared Funding Order,
and said reports, materials and data shall be submitted more frequently if
deemed appropriate by the Trust Board. 1.1.
<PAGE>
7.9. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3(T) is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Mixed and Shared Funding
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Order, the Trust and/or the
Company, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable.
ARTICLE 8 Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless
the Trust, the Underwriter, and each of the Trust's or the
Underwriter's directors, officers, employees, or agents and each
person, if any, who controls the Trust or the Underwriter within the
meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8.1) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company), or litigation
(including reasonable legal and other expenses), to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the
Contracts and:
<PAGE>
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of
any material fact contained in the
registration statements, prospectuses or
statements of additional information for the
Contracts or contained in the Contracts, or
sales literature or other promotional
material for the Contracts (or any amendment
or supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading in light of the circumstances
in which they were made; provided that this
agreement to indemnify shall not apply as to
any indemnified party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Company by or on behalf of the Trust for use
in the registration statement, prospectus or
statement of information for the Contracts,
or in the Contracts or sales literature (or
any amendment or supplement) or otherwise
for use in connection with the sale of the
Contracts or Trust shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the
Company (other than statements or
representations contained in the Trust
registration statement, Trust prospectus or
sales literature or other promotional
material of the Trust not supplied by the
Company or persons under its control) or
wrongful conduct of the Company or persons
under its control, with respect to the sale
or distribution of the Contracts or Trust
shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in the Trust's registration
statement, prospectus, statement of
additional information, or sales literature
or other promotional material of the Trust
or any amendment thereof, or supplement
thereto or the omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein not misleading in light
of the circumstances in which they were
made, if such a statement or omission was
made in reliance upon and in conformity with
information furnished to the Trust by or on
behalf of the Company or persons under its
control; or
(4) arise as a result of any failure by the
Company to provide the services and furnish
the materials or to make any payments under
the terms of this Agreement; or
(5) arise out of any material breach of any
representation and/or warranty made by the
Company in this Agreement or arise out of or
result from any other material breach by the
Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company
may otherwise have.
<PAGE>
(b) No party shall be entitled to indemnification by
the Company if such loss, claim, damage, liability or litigation is due
to the willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the
Company of the commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Trust shares or the
Contracts or the operation of the Trust.
8.2. Indemnification By the Underwriter
(a) The Underwriter agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees, or
agents and each person, if any, who controls the Company within the
meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Underwriter), or litigation
(including reasonable legal and other expenses) to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Trust's shares or the
Contracts and:
<PAGE>
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus, or statement of
additional information for the Trust, or
sales literature or other promotional
material of the Trust (or any amendment or
supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading in light of the circumstances
in which they were made; provided that this
agreement to indemnify shall not apply as to
any indemnified party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Underwriter by or on behalf of the Company
for use in the registration statement,
prospectus, or statement of additional
information for the Trust or in sales
literature of the Trust (or any amendment or
supplement thereto) or otherwise for use in
connection with the sale of the Contracts or
Trust shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts
or in the Contract or Trust registration
statement, the Contract or Trust prospectus,
statement of additional information, or
sales literature or other promotional
material for the Contracts or of the Trust
not supplied by the Underwriter or persons
under the control of the Underwriter) or
wrongful conduct of the Underwriter or
persons under the control of the
Underwriter, with respect to the sale or
distribution of the Contracts or Trust
shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, statement of additional
information, or sales literature or other
promotional material covering the Contracts
(or any amendment thereof or supplement
thereto), or the omission or alleged
omission to state therein a material fact
required to be stated therein or necessary
to make the statement or statements therein
not misleading in light of the circumstances
in which they were made, if such statement
or omission was made in reliance upon and in
conformity with information furnished to the
Company by or on behalf of the Underwriter
or persons under the control of the
Underwriter; or
(4) arise as a result of any failure by the
Underwriter or the Trust to provide the
services and furnish the materials under the
terms of this Agreement (including a
failure, whether unintentional or in good
faith or otherwise, to comply with the
diversification requirements and procedures
related thereto specified in Article VI of
this Agreement); or
<PAGE>
(5) arise out of or result from any material
breach of any representation and/or warranty
made by the Underwriter or the Trust in this
Agreement or arise out of or result from any
other material breach of this Agreement by
the Underwriter;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the
Underwriter may otherwise have.
(b) No party shall be entitled to indemnification by
the Underwriter if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, gross negligence, or
reckless disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the
Underwriter of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Contracts
or the operation of each Separate Account.
8.3. Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless
the Company and each of its directors, officers, employees, or agents
and each person, if any, who controls the Company within the meaning of
such terms under the federal securities laws (collectively, the
"indemnified parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust), or litigation
(including reasonable legal and other expenses) to which the
indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the operations of the Trust and:
<PAGE>
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus, or statement of
additional information for the Trust, or
sales literature or other promotional
material of the Trust (or any amendment or
supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading in light of the circumstances
in which they were made; provided that this
agreement to indemnify shall not apply as to
any indemnified party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Trust by or on behalf of the Company for use
in the registration statement, prospectus,
or statement of additional information for
the Trust or in sales literature of the
Trust (or any amendment or supplement
thereto) or otherwise for use in connection
with the sale of the Contracts or Trust
shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts
or in the Contract or Trust registration
statement, the Contract or Trust prospectus,
statement of additional information, or
sales literature or other promotional
material for the Contracts or of the Trust
not supplied by the Trust or persons under
the control of the Trust) or wrongful
conduct of the Trust or persons under the
control of the Trust, with respect to the
sale or distribution of the Contracts or
Trust shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, statement of additional
information, or sales literature or other
promotional material covering the Contracts
(or any amendment thereof or supplement
thereto), or the omission or alleged
omission to state therein a material fact
required to be stated therein or necessary
to make the statement or statements therein
not misleading in light of the circumstances
in which they were made, if such statement
or omission was made in reliance upon and in
conformity with information furnished to the
Company by or on behalf of the Trust or
persons under the control of the Trust; or
(4) arise as a result of any failure by the
Trust to provide the services and furnish
the materials under the terms of this
Agreement (including a failure, whether
unintentional or in good faith or otherwise,
to comply with the diversification
requirements and procedures related thereto
specified in Article VI of this Agreement);
or
<PAGE>
(5) arise out of or result from any material
breach of any representation and/or warranty
made by the Trust in this Agreement or arise
out of or result from any other material
breach of this Agreement by the Trust;
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Trust
may otherwise have.
(b) No party shall be entitled to indemnification by
the Trust if such loss, claim, damage, liability or litigation is due
to the willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the
Trust of the commencement of any litigation or proceedings against it
in connection with the issuance or sale of the Contracts or the
operation of each Separate Account.
8.4. Indemnification Procedure
1.1.
<PAGE>
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("indemnified party" for the purpose of this
Section 8.4) unless such indemnified party shall have notified the
indemnifying party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim shall have been served upon such indemnified party (or
after such party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any
such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is
brought under the indemnification provision of this Article VIII,
except to the extent that the failure to notify results in the failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of failure to give such notice. In case
any such action is brought against the indemnified party, the
indemnifying party will be entitled to participate, at its own expense,
in the defense thereof. The indemnifying party also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the
indemnified party of the indemnifying party's election to assume the
defense thereof, the indemnified party shall bear the fees and expenses
of any additional counsel retained by it, and the indemnifying party
will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
<PAGE>
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this Article
VIII shall survive any termination of this Agreement.
ARTICLE 9 Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware without
giving effect to conflicts of laws provisions thereof.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules, regulations, and rulings thereunder,
including such exemptions from those statutes, rules and regulations as
the SEC may grant (including, but not limited to, the Mixed and Shared
Funding Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE 10 Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon six months
advance written notice to the other
parties; or
(b) at the option of the Company if shares of the
Funds delineated in Exhibit B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
<PAGE>
(c) at the option of the Trust upon institution of
formal proceedings against the Company by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to the
sale of the Contracts, the administration of the Contracts, the
operation of each Separate Account, or the purchase of the Trust
shares, which would have a material adverse effect on the Company's
ability to perform its obligations under this Agreement; or
(d) at the option of the Company upon institution of
formal proceedings against the Trust or the Underwriter by the NASD,
the SEC, or any state securities or insurance department or any other
regulatory body, which would have a material adverse effect on the
Underwriter's or the Trust's ability to perform its obligations under
this Agreement; or
(e) at the option of the Company or the Trust upon
receipt of any necessary regulatory approvals or the vote of the
Contract owners having an interest in each Separate Account (or any
subaccount) to substitute the shares of another investment company for
the corresponding Fund shares of the Trust in accordance with the terms
of the Contracts for which those Fund shares had been selected to serve
as the underlying investment media. The Company will give 30 days prior
written notice to the Trust of the date of any proposed vote or other
action taken to replace the Trust's shares; or
(f) at the option of the Company or the Trust upon a
determination by a majority of the Trust Board, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
among the interests of (i) all contract owners of variable insurance
products of all separate accounts, or (ii) the interests of the
Participating Insurance Companies investing in the Trust as delineated
in Article VII of this Agreement; or
<PAGE>
(g) at the option of the Company if the Trust ceases
to qualify as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, or under any successor or similar provision, or
if the Company reasonably believes that the Trust may fail to so
qualify; or
(h) at the option of the Company if the Trust fails
to meet the diversification requirements specified in Article VI hereof
or if the Company reasonably believes that the Trust will fail to meet
such requirements; or
(i) at the option of any party to this
Agreement, upon another party's material
breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company
determines in its sole judgment exercised in good faith, that either
the Trust or the Underwriter has suffered a material adverse change in
its business, operations, or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Company or the Contracts (including the sale
thereof); or
(k) at the option of the Trust or Underwriter, if the
Trust or Underwriter respectively, shall determine in its sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, or financial condition
since the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the
business and operations of the Trust or Underwriter; or
<PAGE>
(l) subject to the Trust's compliance with Article VI
hereof, at the option of the Trust in the event any of the Contracts
are not issued or sold in accordance with applicable requirements of
federal and/or state law. Termination shall be effective immediately
upon such occurrence without notice.
10.2. Notice Requirement
(a) In the event that any termination of this
Agreement is based upon the provisions of Article VII, such prior
written notice shall be given in advance of the effective date of
termination as required by such provisions.
(b) In the event that any termination of this
Agreement is based upon the provisions of Sections 10.l(b) - (d) or
10.1(g) - (i), prompt written notice of the election to terminate this
Agreement for cause shall be furnished by the party terminating the
Agreement to the non-terminating parties, with said termination to be
effective upon receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this
Agreement is based upon the provisions of Sections 10.1(j) or 10. l(k),
prior written notice of the election to terminate this Agreement for
cause shall be furnished by the party terminating this Agreement to the
nonterminating parties. Such prior written notice shall be given by the
party terminating this Agreement to the non-terminating parties at
least 30 days before the effective date of termination.
10.3. It is understood and agreed that the right to terminate this Agreement
pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
1.1.
<PAGE>
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement and subject to Section 1.3
of this Agreement, the Company may require the Trust and the
Underwriter to continue to make available additional shares of the
Trust for so long after the termination of this Agreement as the
Company desires pursuant to the terms and conditions of this Agreement
as provided in paragraph (b) below, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred
to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Trust, redeem investments in the Trust and/or invest
in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not
apply to any terminations under Article VII and the effect of such
Article VII terminations shall be governed by Article VII of this
Agreement.
(b) If shares of the Trust continue to be made
available after termination of this Agreement pursuant to this Section
10.4, the provisions of this Agreement shall remain in effect except
for Section 10.l(a) and thereafter the Trust, the Underwriter, or the
Company may terminate the Agreement, as so continued pursuant to this
Section 10.4, upon written notice to the other party, such notice to be
for a period that is reasonable under the circumstances but need not be
for more than 90 days.
<PAGE>
10.5 Except as necessary to implement Contract owner initiated or approved
transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to the Company's assets held
in each Separate Account), and the Company shall not prevent Contract
owners from allocating payments to a Fund that was otherwise available
under the Contracts, until 30 days after the Company shall have
notified the Trust or Underwriter of its intention to do so.
ARTICLE 11 Notices
Any notice shall be deemed duly given only if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, to
the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to
the other party. All notices shall be deemed given three business days
after the date received or rejected by the addressee.
If to the Trust: Sage Life Investment Trust
c/o Sage Advisors, Inc.
300 Atlantic Street, Suite 302
Stamford, CT 06901
Attention: Ronald S. Scowby, Chairman
If to the Company: Sage Life Assurance of America, Inc.
300 Atlantic Street, Suite 302
Stamford, CT 06901
Attention: Robin I. Marsden, President
If to the Underwriter: Sage Distributors, Inc.
300 Atlantic Street
Stamford, CT 06901
Attention: James F. Bronsdon,
President
<PAGE>
ARTICLE XII Miscellaneous
11.1. All persons dealing with the Trust must look solely to the property of
the Trust for the enforcement of any claims against the Trust as
neither the Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Trust.
11.2. Subject to law and regulatory authority, each party hereto shall treat as
confidential all information reasonably identified as such in writing by any
other party hereto (including without limitation the names and addresses of the
owners of the Contracts) and, except as contemplated by this Agreement, shall
not disclose, disseminate, or utilize such confidential information until such
time as it may come into the public domain without the express prior written
consent of the affected party. 11.3. The captions in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect. 11.4. This
Agreement may be executed simultaneously in two or more counterparts, each of
which taken together shall constitute one and the same instrument. 11.5. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. 11.6. This Agreement shall not be assigned by any party hereto without
the prior written consent of all the parties. 1.1.
<PAGE>
11.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
SEC, the NASD, and state insurance regulators) and shall permit each
other and such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
11.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or trust action, as applicable, by such
party and when so executed and delivered this Agreement will be the valid and
binding obligation of such party enforceable in accordance with its terms. 11.9.
The parties to this Agreement may amend the schedules to this Agreement from
time to time to reflect changes in or relating to the Contracts, the Separate
Accounts or the Funds of the Trust. 11.10. The Trust has filed a Certificate of
Trust with the Secretary of State of The State of Delaware. The Company
acknowledges that the obligations of or arising out of the Trust's Declaration
of Trust are not binding upon any of the Trust's Trustees, officers, employees,
agents or shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest hereunder.
The Company further acknowledges that the assets and liabilities of each Fund
are separate and distinct and that the obligations of or arising out of this
instrument are binding solely upon the assets or property of the Fund on whose
behalf the Trust has executed this instrument. The Company also agrees that the
obligations of each Fund hereunder shall be several and not joint, in accordance
with its proportionate interest hereunder, and the Company agrees not to proceed
against any Fund for the obligations of another Fund. 1.1.
<PAGE>
11.11. Except as otherwise expressly provided in this Agreement, neither the
Trust nor the underwriter nor any affiliate thereof shall use any trademark,
trade name, service mark or logo of the Company or any of its affiliates, or any
variation of any such trademark, trade name service mark or logo, without the
Company's prior consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided in this Agreement, neither the
Company nor any affiliate thereof shall use any trademark, trade name, service
mark or logo of the Trust or of the Underwriter , or any variation of any such
trademark, trade name, service mark or logo, without the prior consent of either
the Trust or of the Underwriter, as appropriate, the granting of which shall be
at the sole option of the Trust or of the Underwriter, as applicable. 1.1.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written. Sage Life Assurance of America, Inc.
By:
Name: Robin I. Marsden
Title: President
Sage Life Investment Trust
By:
Name: Ronald S. Scowby
Title: Chairman
Sage Distributors, Inc.
By:
Name: James F. Bronsdon
Title: President
<PAGE>
-129-
EXHIBIT A
Separate Accounts and Contracts
Subject to the Participation Agreement
<PAGE>
EXHIBIT B
Funds Subject to the Participation Agreement
EAFE Equity Index Fund
Russell 2000 Equity Index Fund
S&P 500 Equity Index Fund
Money Market Fund
<PAGE>
contract/ta/openend/sage/trans4.doc
DOCUMENT INFORMATION SHEET
FILENAME AND PATH: H:\CS\CL14252\M004\NLSPART.AG5
DESCRIPTION OF DOCUMENT:
REVISION HISTORY:
June 19, 1998 (11:02am) OPERATOR: jaf
June 15, 1998 (5:15pm) OPERATOR: jaf
June 9, 1998 (9:11am) OPERATOR: jaf
June 2, 1998 (7:17pm) OPERATOR: Michelle Hickson (WP)
June 1, 1998 (8:07pm) OPERATOR: Tee L.
May 18, 1998 (1:42pm) OPERATOR: jaf
May 13, 1998 (5:23pm) OPERATOR: Lori
INSTRUCTIONS FOR DOCUMENT: Revise
TIME NEEDED: June 2, 1998 (8:00 a.m.)
ATTORNEY'S NAME: Nora Sheehan
EXTENSION: Ext. 0165
<PAGE>
Exhibit 9(a)
FORM OF
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this day of November, 1998 (the "Effective Date")
between SAGE ADVISORS, INC. (the "Company"), a Delaware corporation having its
principal place of business at 300 Atlantic Street, Stanford, Connecticut and
FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services Group"), a
Massachusetts corporation with principal offices at 4400 Computer Drive,
Westboro, Massachusetts 01581.
WITNESSETH
WHEREAS, Sage Life Investment Trust (the "Trust") and the Company have
entered into a management agreement pursuant to which the Company has agreed to
provide certain services for the Trust.
WHEREAS, the Trust is authorized to issue Shares in separate series,
with each such series representing interests in a separate portfolio of
securities or other assets.
WHEREAS, the Trust initially intends to offer Shares in those
Portfolios identified in the attached Exhibit 1, each such Portfolio, together
with all other Portfolios subsequently established by the Trust shall be subject
to this Agreement in accordance with Article 14;
WHEREAS, the Company desires to appoint Investor Services Group as the
Trust's transfer agent, dividend disbursing agent and agent in connection with
certain other activities and Investor Services Group desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Company and Investor Services Group agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Trust as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Company; or (ii) any person, whether or not
such person is an officer or employee of the Company, duly authorized
to give Oral Instructions or Written Instructions on behalf of the
Company as indicated in writing to Investor Services Group from time to
time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Trust, as the case may be.
(d) "Commencement Date" shall mean the date on which Investor
Services Group commences providing services to the Trust under this
Agreement.
(e) "Commission" shall mean the Securities and Exchange
Commission.
(f) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Trust may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(g) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(i) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by Investor Services Group from
a person reasonably believed by Investor Services Group to be an
Authorized Person;
(j) "Portfolio" shall mean each separate series of shares
offered by the Trust representing interests in a separate portfolio of
securities and other assets;
(k) "Prospectus" shall mean the most recently dated Trust
Prospectus and Statement of Additional Information, including any
amendments and supplements thereto if any, which has become effective
under the Securities Act of 1933 and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Trust as may be issued from time to
time.
(m) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Trust.
(n) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by Investor Services Group to be
an Authorized Person and actually received by Investor Services Group.
Written Instructions shall include manually executed originals and
authorized electronic transmissions, including telefacsimile of a
manually executed original or other process.
Article 2 Appointment of Investor Services Group.
The Company, on behalf of the Trust and its Portfolios, hereby appoints
and constitutes Investor Services Group as the sole and exclusive transfer agent
and dividend disbursing agent for Shares of each respective Portfolio of the
Trust and as shareholder servicing agent for the Trust and Investor Services
Group hereby accepts such appointments and agrees to perform the duties
hereinafter set forth. The terms of this Agreement and the appointment shall be
effective as of the Effective Date.
Article 3 Duties of Investor Services Group.
3.1 Investor Services Group shall be responsible for:
(a) Administering and/or performing the customary services of
a transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of each Portfolio, as more fully described in the
written schedule of Duties of Investor Services Group annexed hereto as
Schedule A and incorporated herein, and in accordance with the terms of
the Prospectus of the Trust on behalf of the applicable Portfolio,
applicable law and the procedures established from time to time between
Investor Services Group and the Company.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of each Portfolio which are authorized, based upon data provided
to it by the Company, and issued and outstanding. Investor Services
Group shall provide the Company on a regular basis with the total
number of Shares of each Portfolio which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance
of Shares, to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Company.
(c) In addition to providing the foregoing services, the
Company hereby engages Investor Services Group as its exclusive service
provider with respect to the Print/Mail Services as set forth in
Schedule B for the fees also identified in Schedule B. Investor
Services Group agrees to perform the services and its obligations
subject to the terms and conditions of this Agreement.
(d) Notwithstanding any of the foregoing provisions of this
Agreement, Investor Services Group shall be under no duty or obligation
to inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares,
or the propriety of the amount to be paid therefor; (iii) the legality
of the declaration of any dividend by the Board of Directors, or the
legality of the issuance of any Shares in payment of any dividend; or
(iv) the legality of any recapitalization or readjustment of the
Shares.
3.2 In addition, the Company shall (i) identify to Investor Services
Group in writing those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment of transactions
for each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of Investor Services Group for
the Trust's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Trust and
the reporting of such transactions to the Company as provided above.
3.3 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Company
and Investor Services Group.
Article 4 Recordkeeping and Other Information.
4.1 Investor Services Group shall create and maintain all records
required of it pursuant to its duties hereunder and as set forth in Schedule A
in accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Such records shall be maintained by
Investor Services Group for the periods and in the places required by Rule 31a-2
under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor
Services Group agrees that all such records prepared or maintained by Investor
Services Group relating to the services to be performed by Investor Services
Group hereunder are the property of the Trust and will be preserved, maintained
and made available in accordance with Section 31 and rules promulgated by the
SEC thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Company's request.
4.3 In case of any requests or demands for the inspection of Shareholder records
of the Trust, Investor Services Group will endeavor to notify the Company of
such request and secure Written Instructions as to the handling of such request.
Investor Services Group 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 comply with such request.
Article 5 Instructions.
5.1 Investor Services Group will have no liability when acting upon
Written or Oral Instructions reasonably believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Company. Investor Services Group will also have no liability
when processing Share certificates which it reasonably believes to bear the
proper manual or facsimile signatures of the officers of the Trust and the
proper countersignature of Investor Services Group.
5.2 At any time, Investor Services Group may request Written
Instructions from the Company and may seek advice from legal counsel for the
Trust, or its own legal counsel, with respect to any matter arising in
connection with this Agreement; provided, however, that Investor Services Group
shall not incur any legal expenses on behalf of the Trust without the Company's
consent. Investor Services Group shall not be liable for any action taken or not
taken or suffered by it in good faith in accordance with such Written
Instructions or in accordance with the opinion of counsel for the Trust or for
Investor Services Group. Written Instructions requested by Investor Services
Group will be provided by the Company within a reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Company only if said representative is
an Authorized Person. The Company agrees that all Oral Instructions shall be
followed within one business day by confirming Written Instructions, and that
the Company's failure to so confirm shall not impair in any respect Investor
Services Group's right to rely on Oral Instructions.
Article 6 Compensation.
6.1 The Company will compensate Investor Services Group for the
performance of its obligations hereunder in accordance with the fees set forth
in the written Fee Schedule annexed hereto as Schedule B and incorporated
herein.
6.2 In addition to those fees set forth in Section 6.1 above, the
Company agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by Investor Services Group in the performance of its duties hereunder.
Out-of-pocket expenses shall include, but shall not be limited to, the items
specified in the written schedule of out-of-pocket charges annexed hereto as
Schedule C and incorporated herein. Schedule C may be modified by written
agreement between the parties. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by Investor Services
Group in the performance of its obligations hereunder.
6.3 The Company agrees to pay all fees and out-of-pocket expenses to
Investor Services Group by Federal Funds Wire or such other method of payment as
the parties shall mutually agree upon within fifteen (15) business days
following the receipt of the respective invoice. In addition, with respect to
all fees under this Agreement, Investor Services Group may charge a service fee
equal to the lesser of (i) one and one half percent (1 1/2%) per month or (ii)
the highest interest rate legally permitted on any past due invoiced amounts.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule B, a revised Fee Schedule executed and dated by
the parties hereto.
6.5 The Company acknowledges that the fees that Investor Services Group
charges the Company under this Agreement reflect the allocation of risk between
the parties, including the limitations on liability and exclusion of remedies in
Section 11.2 and Article 12. Modifying the allocation of risk from what is
stated here would affect the fees that Investor Services Group charges, and in
consideration of those fees, the Company agrees to the stated allocation of
risk.
Article 7 Documents.
In connection with the appointment of Investor Services Group, the
Company shall, on or before the date this Agreement goes into effect, but in any
case within a reasonable period of time for Investor Services Group to prepare
to perform its duties hereunder, deliver or caused to be delivered to Investor
Services Group the documents set forth in the written schedule of Trust
Documents annexed hereto as Schedule D.
Article 8 Transfer Agent System.
8.1 Investor Services Group shall retain title to and ownership of any
and all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions, discoveries,
patentable or copyrightable matters, concepts, expertise, patents, copyrights,
trade secrets, and other related legal rights utilized by Investor Services
Group in connection with the services provided by Investor Services Group to the
Company herein (the "Investor Services Group System").
8.2 Investor Services Group hereby grants to the Company a limited
license to the Investor Services Group System for the sole and limited purpose
of having Investor Services Group provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or interpreted
otherwise and such license shall immediately terminate with the termination of
this Agreement.
8.3 In the event that the Company, including any affiliate or agent of
the Company or any third party acting on behalf of the Company is provided with
direct access to the Investor Services Group System for either account inquiry
or to transmit transaction information, including but not limited to
maintenance, exchanges, purchases and redemptions, such direct access capability
shall be limited to direct entry to the Investor Services Group System by means
of on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
Investor Services Group System is strictly prohibited without the prior written
consent of Investor Services Group.
Article 9 Representations and Warranties.
9.1 Investor Services Group represents and warrants to the Company
that:
(a) it is a corporation duly organized, existing and
in good standing under the laws of
the Commonwealth of Massachusetts;
(b) it is empowered, licensed and registered under all
applicable federal and state laws and is empowered by its Articles of
Incorporation and By-Laws to enter into and perform under this
Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement;
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(f) all equipment and software provided or used by Investor
Services Group or any of its subsidiaries or divisions in connection
with rendering services to the Company under the terms of this
Agreement, include or shall include design and performance capabilities
so that prior to, during, and after December 31, 1999 (the "Millennium
Date Change") they will not malfunction, produce invalid or incorrect
results, cause an interruption in or diminish the quality of the
services provided to the Company, or abnormally cease to function due
to the Millennium Date Change. Such design and performance capabilities
shall include without limitation the ability to recognize and process
the year 2000 and thereafter and to manage and manipulate data
involving dates, including without limitation, (i) single century and
multi-century formulas and date values without resulting in the
generation of incorrect values involving such dates or causing an
abnormal ending, (ii) date data interfaces with functionalities and
data fields that indicate the century, and (iii) date-related functions
that indicate the century; and
(g) all equipment and software provided by Investor Services
Group in connection with the services rendered to the Company under the
terms of this Agreement, as amended include or shall include design and
performance capabilities so that prior to, during, and after the
calendar year 2000, they will not malfunction, produce invalid or
incorrect results, or abnormally cease to function due solely to the
year 2000 date change. Such design and performance capabilities shall
include without limitation the ability to recognize the century and to
manage ad manipulate data involving dates, including single century and
multi-century formulas and date values, without resulting in the
generation of incorrect values involving such dates or causing an
abnormal ending; date data interfaces with functionalities and data
fields that indicate the century; and date-related functions that
indicate the century.
9.2 The Company represents and warrants to Investor Services Group
that:
(a) it is duly organized, existing and in good standing
under the laws of the jurisdiction
in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize
it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Portfolios will
be effective and remain effective when the Trust commences offering its
Shares to the public, and all appropriate state securities law filings
have been made and will continue to be made, with respect to all Shares
of the Trust being offered for sale; and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Trust's Articles of Incorporation and its Prospectus
with respect to each Portfolio, such Shares shall be validly issued,
fully paid and non-assessable.
Article 10 Indemnification.
10.1 Investor Services Group shall not be responsible for and the
Company shall indemnify and hold Investor Services Group harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against Investor Services Group or for which Investor
Services Group may be held to be liable (a "Claim") arising out of or
attributable to any of the following:
(a) any actions of Investor Services Group required to be
taken pursuant to this Agreement unless such Claim resulted from a
negligent act or omission to act or bad faith by Investor Services
Group in the performance of its duties hereunder;
(b) Investor Services Group's reasonable reliance on, or
reasonable use of information, data, records and documents (including
but not limited to magnetic tapes, computer printouts, hard copies and
microfilm copies) received by Investor Services Group from the Company,
or any authorized third party acting on behalf of the Company,
including but not limited to the prior transfer agent for the Trust, in
the performance of Investor Services Group's duties and obligations
hereunder;
(c) the reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Company
on behalf of the applicable Portfolio;
(d) the offer or sales of shares in violation of any
requirement under 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 state with respect to the
offer or sale of such shares in such state; and
(e) the Company's refusal or failure to comply with the terms
of this Agreement, or any Claim which arises out of the Company's
negligence or misconduct or the breach of any representation or
warranty of the Company made herein.
10.2 Investor Services Group shall indemnify and hold the Company
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against the Company or for which the
Company may be held to be liable in connection with the improper or unauthorized
use of the Investor Services Group System (a "Claim") unless such Claim resulted
from a negligent act or omission to act or bad faith by the Trust in the
performance of its duties hereunder.
10.3 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made
prior to the earlier of:
(a) one year after the Indemnifying Party
becomes
aware of the event for which
indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
the Indemnified Party's sole and exclusive remedy for claims or other actions or
proceedings to which the Indemnifying Party's indemnification obligations
pursuant to this Article 10 may apply.
Article 11 Standard of Care.
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Company or the Trust unless said errors
are caused by Investor Services Group's own negligence, bad faith or willful
misconduct or that of its employees.
11.2 Notwithstanding any provision in this Agreement to the contrary,
each party's cumulative liability (to the other party) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $500,000 or (ii) the fees received by Investor Services Group for services
provided under this Agreement during the twelve months immediately prior to the
date of such loss or damage, plus any amounts that are recovered from any
liability insurance on which such party makes a claim. Each party understands
the limitation on the other party's damages to be a reasonable allocation of
risk and each party expressly consents with respect to such allocation of risk.
In allocating risk under the Agreement, the parties agree that the damage
limitation set forth above shall apply to any alternative remedy ordered by a
court in the event such court determines that sole and exclusive remedy provided
for in the Agreement fails of its essential purpose.
11.3 Neither party may assert any cause of action against the other
party under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging such
cause of action.
11.4 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR LOST PROFITS, EXEMPLARY,
PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES.
Article 13 Term and Termination.
13.1 Subject to the provisions of Sections 13.4 and 13.5, this
Agreement shall be effective on the date first written above and shall continue
for a period of five (5) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of three (3) years ("Renewal Terms")
each, unless the Company or Investor Services Group provides written notice to
the other of its intent not to renew. Such notice must be received not less than
ninety (90) days and not more than one-hundred eighty (180) days prior to the
expiration of the Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Company, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Company.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Notwithstanding anything contained in this Agreement to the
contrary, should the Company desire to move any of the services provided by
Investor Services Group hereunder to a successor service provider prior to the
expiration of the then current Initial or Renewal Term, or should the Company or
the Trust or any of its or their affiliates take any action which results in
Investor Services Group ceasing to provide administration services to the
Company or the Trust prior to the expiration of the then current Initial or
Renewal Term, Investor Services Group shall make a good faith effort to
facilitate the conversion on such prior date, however, there can be no guarantee
that Investor Services Group will be able to facilitate a conversion of services
on such prior date. In connection with the foregoing and except as provided in
Sections 13.4 and 13.5 of this Agreement, should services be converted to a
successor service provider, or should the Company or the Trust or any of its or
their affiliates take any action which results in Investor Services Group
ceasing to provide administration services to the Company or the Trust prior to
the expiration of the then current Initial or Renewal Term, the Trust shall be
required to pay to Investor Services Group an amount equal to three (3) months
fees due to Investor Services Group and calculated at the asset and/or
Shareholder account levels, as the case may be, on the date notice of
termination was given to Investor Services Group, plus any fee waivers granted
to the Trust by Investor Services Group.
Article 14 Additional Portfolios
14.1 In the event that the Trust establishes one or more Portfolios in
addition to those identified in Exhibit 1, with respect to which the Company
desires to have Investor Services Group render services as transfer agent under
the terms hereof, the Company shall so notify Investor Services Group in
writing, and if Investor Services Group agrees in writing to provide such
services, Exhibit 1 shall be amended to include such additional Portfolios.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The
Company and Investor Services Group shall exercise at least the same degree of
care, but not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Company and Investor Services
Group shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Company and Investor Services Group may,
however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Company and Investor Services Group may also
disclose the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Company or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Company or
Investor Services Group, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or
Investor Services Group a competitive advantage over its competitors;
and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein
shall not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no fault
of such party; or
(b) Was lawfully received by the party from a third party free
of any obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to
receipt thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for
maintaining such information in confidence have been exhausted
including, but not limited to, giving the other party as much advance
notice of the possibility of such disclosure as practical so the other
party may attempt to stop such disclosure or obtain a protective order
concerning such disclosure; or
(f) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the
Confidential Information disclosed under this Agreement.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to satisfy); or
(v) nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld. Investor Services Group may,
in its sole discretion, engage subcontractors to perform any of the obligations
contained in this Agreement to be performed by Investor Services Group.
Article 18 Arbitration.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
Article 19 Notice.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Company or Investor Services Group, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Company:
Sage Advisors, Inc.
300 Atlantic Street, Third Floor
Stanford, Connecticut 06901
Attention: President
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this Agreement. The terms of this Agreement shall be subject to, and interpreted
in accordance with, the provisions of the 1940 Act to the extent applicable. All
actions arising from or related to this Agreement shall be brought in the state
and federal courts sitting in the City of Boston, and Investor Services Group
and Client hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 21 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.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither Investor Services Group nor the Company shall release or
publish news releases, public announcements, advertising or other publicity
relating to this Agreement or to the transactions contemplated by it without the
prior review and written approval of the other party; provided, however, that
either party may make such disclosures as are required by legal, accounting or
regulatory requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
Article 24 Relationship of Parties/Non-Solicitation.
24.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
24.2 During the term of this Agreement and for one (1) year afterward,
the Company shall not recruit, solicit, employ or engage, for the Company or
others, Investor Services Group's employees.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
SAGE ADVISORS, INC.
By:
Title: President
FIRST DATA INVESTOR SERVICES GROUP,
INC.
By:
Title:
<PAGE>
Exhibit 1
LIST OF PORTFOLIOS
S & P 500 Equity Index Fund
EAFE Equity Index
Russell 2000 Equity Index Fund
Money Market Fund
<PAGE>
Schedule A
DUTIES OF INVESTOR SERVICES GROUP
1. Shareholder Information. Investor Services Group shall maintain a
record of the number of Shares held by each Shareholder of record which shall
include name, address, taxpayer identification and which shall indicate whether
such Shares are held in certificates or uncertificated form.
2. Shareholder Services. Investor Services Group shall respond as
appropriate to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as may be from
time to time mutually agreed upon between Investor Services Group and the
Company.
3. Share Certificates.
(a) At the expense of the Company, the Company shall supply
Investor Services Group with an adequate supply of blank share certificates to
meet Investor Services Group requirements therefor. Such Share certificates
shall be properly signed by facsimile. The Company agrees that, notwithstanding
the death, resignation, or removal of any officer of the Trust whose signature
appears on such certificates, Investor Services Group or its agent may continue
to countersign certificates which bear such signatures until otherwise directed
by Written Instructions.
(b) Investor Services Group shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or destroyed,
upon receipt by Investor Services Group of properly executed affidavits and lost
certificate bonds, in form satisfactory to Investor Services Group, with the
Company and Investor Services Group as obligees under the bond.
(c) Investor Services Group shall also maintain a record of
each certificate issued, the number of Shares represented thereby and the
Shareholder of record. With respect to Shares held in open accounts or
uncertificated form (i.e., no certificate being issued with respect thereto)
Investor Services Group shall maintain comparable records of the Shareholders
thereof, including their names, addresses and taxpayer identification. Investor
Services Group shall further maintain a stop transfer record on lost and/or
replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. Investor
Services Group will address and mail to Shareholders of the Trust, all reports
to Shareholders, dividend and distribution notices and proxy material for the
Trust's meetings of Shareholders. In connection with meetings of Shareholders,
Investor Services Group will prepare Shareholder lists, mail and certify as to
the mailing of proxy materials, process and tabulate returned proxy cards,
report on proxies voted prior to meetings, act as inspector of election at
meetings and certify Shares voted at meetings.
5. Sales of Shares.
(a) Investor Services Group shall not be required to issue any
Shares of the Trust where it has received a Written Instruction from the Company
or official notice from any appropriate authority that the sale of the Shares of
the Trust has been suspended or discontinued. The existence of such Written
Instructions or such official notice shall be conclusive evidence of the right
of Investor Services Group to rely on such Written Instructions or official
notice.
(b) In the event that any check or other order for the payment
of money is returned unpaid for any reason, Investor Services Group will
endeavor to: (i) give prompt notice of such return to the Company or its
designee; (ii) place a stop transfer order against all Shares issued as a result
of such check or order; and (iii) take such actions as Investor Services Group
may from time to time deem appropriate.
6. Transfer and Repurchase.
(a) Investor Services Group shall process all requests to
transfer or redeem Shares in accordance with the transfer or repurchase
procedures set forth in the Trust's Prospectus.
(b) Investor Services Group will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as Investor Services Group reasonably
may deem necessary.
(c) Investor Services Group reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. Investor Services Group also reserves the
right to refuse to transfer or repurchase Shares until it is satisfied that the
requested transfer or repurchase is legally authorized, and it shall incur no
liability for the refusal, in good faith, to make transfers or repurchases which
Investor Services Group, in its good judgment, deems improper or unauthorized,
or until it is reasonably satisfied that there is no basis to any claims adverse
to such transfer or repurchase.
(d) When Shares are redeemed, Investor Services Group shall,
upon receipt of the instructions and documents in proper form, deliver to the
Custodian and the Company or its designee a notification setting forth the
number of Shares to be repurchased. Such repurchased shares shall be reflected
on appropriate accounts maintained by Investor Services Group reflecting
outstanding Shares of the Trust and Shares attributed to individual accounts.
(e) Investor Services Group shall upon receipt of the monies
provided to it by the Custodian for the repurchase of Shares, pay such monies as
are received from the Custodian, all in accordance with the procedures described
in the written instruction received by Investor Services Group from the Company.
(f) Investor Services Group shall not process or effect any
repurchase with respect to Shares of the Trust after receipt by Investor
Services Group or its agent of notification of the suspension of the
determination of the net asset value of the Trust.
7. Dividends.
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Trust with respect to Shares
of the Trust, the Company shall furnish or cause to be furnished to Investor
Services Group Written Instructions setting forth the date of the declaration of
such dividend or distribution, the ex-dividend date, the date of payment
thereof, the record date as of which Shareholders entitled to payment shall be
determined, the amount payable per Share to the Shareholders of record as of
that date, the total amount payable on the payment date and whether such
dividend or distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution
of the Board of Directors, the Company will provide Investor Services Group with
sufficient cash to make payment to the Shareholders of record as of such payment
date.
(c) If Investor Services Group does not receive sufficient
cash from the Company to make total dividend and/or distribution payments to all
Shareholders of the Trust as of the record date, Investor Services Group will,
upon notifying the Company, withhold payment to all Shareholders of record as of
the record date until sufficient cash is provided to Investor Services Group.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, Investor Services Group shall: (i) perform all the
customary services of a transfer agent, registrar and dividend disbursing agent
as described herein consistent with those requirements in effect as at the date
of this Agreement. The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, tabulating proxies, mailing Shareholder reports
to current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts where applicable, 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.
9. Cash Management Services. Funds received by Investor Services Group
in the course of performing its services hereunder will be held in bank or money
market fund accounts in the name of Investor Services Group as agent for the
benefit of its clients. Such accounts may include funds held by Investor
Services Group as agent for the benefit of clients other than the Fund. Investor
Services Group shall be entitled to retain any interest, dividends, balance
credits or fee reductions or other concessions or benefits earned or generated
by or associated with such accounts or made available by the institution with
which such accounts are maintained.
<PAGE>
Schedule B
FEE SCHEDULE
1. Standard Fees
$4,000 per Portfolio per annum
After the one year anniversary of the effective date of this Agreement, Investor
Services Group may, subject to the approval of the Company, adjust the above
fees once per calendar year, upon thirty (30) days prior written notice in an
amount not to exceed the cumulative percentage increase in the Consumer Price
Index for All Urban Consumers (CPI-U) U.S. City Average, All items (unadjusted)
- - - - - (1982-84=100), published by the U.S. Department of Labor since the last such
adjustment in the Client's monthly fees (or the Effective Date absent a prior
such adjustment).
2. Programming Costs
(a) Dedicated Team:
Programmer $100,000 per annum
BSA $ 85,000 per annum
Tester $ 65,000 per annum
(b) System Enhancements (Non Dedicated Team):
Programmer $135.00 per hour
The above rates are subject to an annual 5% increase after the one year
anniversary of the effective date of this Agreement, subject to the approval of
the Company.
3. Print/Mail Fees.
<PAGE>
Schedule C
OUT-OF-POCKET EXPENSES
The Company shall reimburse Investor Services Group monthly for
applicable out-of-pocket expenses, including, but not limited to the following
items:
Microfiche/microfilm production Magnetic media tapes and freight Printing costs,
including certificates, envelopes, checks and stationery Postage (bulk,
pre-sort, ZIP+4, barcoding, first class) direct pass through to the Trust Due
diligence mailings Telephone and telecommunication costs, including all lease,
maintenance and line costs Ad hoc reports Proxy solicitations, mailings and
tabulations Daily & Distribution advice mailings Shipping, Certified and
Overnight mail and insurance Year-end form production and mailings Terminals,
communication lines, printers and other equipment and any expenses incurred in
connection with such terminals and lines Duplicating services Courier services
Incoming and outgoing wire charges Federal Reserve charges for check clearance
Overtime, as approved by the Company Temporary staff, as approved by the Company
Travel and entertainment, as approved by the Company Record retention, retrieval
and destruction costs, including, but not limited to exit fees charged by third
party record keeping vendors Third party audit reviews Ad hoc SQL time Insurance
Such other miscellaneous expenses reasonably incurred by Investor Services Group
in performing its duties and responsibilities under this Agreement.
The Company agrees that postage and mailing expenses will be paid on
the day of or prior to mailing as agreed with Investor Services Group. In
addition, the Company will promptly reimburse Investor Services Group for any
other unscheduled expenses incurred by Investor Services Group whenever the
Company and Investor Services Group mutually agree that such expenses are not
otherwise properly borne by Investor Services Group as part of its duties and
obligations under the Agreement.
<PAGE>
Schedule D
TRUST DOCUMENTS
Certified copy of the Declaration of Trust of the Trust
Certified copy of the By-laws of the Trust
Copy of the resolution of the Board of Directors authorizing the execution and
delivery of this Agreement
Specimens of the certificates for Shares of the Trust, if
applicable, in the form approved by the Board of Directors of the
Trust, with a certificate of the Secretary of the Trust as to such
approval
All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by
the Trust
Certified list of Shareholders of the Trust with the name,
address and taxpayer identification number of each Shareholder,
and the number of Shares of the Trust held by each, certificate
numbers and denominations (if any certificates have been issued),
lists of any accounts against which stop transfer orders have been
placed, together with the reasons therefore, and the number of
Shares redeemed by the Trust
All notices issued by the Trust with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Trust or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
<PAGE>
Exhibit 9(b)
FORM OF
SUB-ADMINISTRATION AGREEMENT
THIS SUB-ADMINISTRATION AGREEMENT, dated as of this day of , 1998, the
"Agreement"), between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts
corporation ("Investor Services Group"), and SAGE ADVISORS, INC., a Delaware
corporation (the "Company").
WHEREAS, Sage Life Investment Trust (the "Trust") and the Company have
entered into a management agreement pursuant to which the Company has agreed to
provide certain administrative services to the Trust; and
WHEREAS, the Company desires to retain Investor Services Group to
render certain sub-administrative services with respect to each investment
portfolio of the Trust managed by the Company listed in Schedule A hereto, as
the same may be amended from time to time by the parties hereto (collectively,
the "Portfolios"), and Investor Services Group is willing to render such
services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Trust as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
officer of the Company; or (ii) any person, whether or not such person
is an officer or employee of the Company, duly authorized to give Oral
Instructions or Written Instructions on behalf of the Company as
indicated in writing to Investor Services Group from time to time.
(c) "Board Members" shall mean the Directors or Trustees of
the governing body of the Trust, as the case may be.
(d) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Trust, as the case may be.
(e) "Commission" shall mean the Securities and Exchange
Commission.
(f) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Trust may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custody Agreement.
(g) "1933 Act" shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, all as amended from time to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(i) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by Investor Services Group from
a person reasonably believed by Investor Services Group to be an
Authorized Person.
(j) "Portfolio" shall mean each separate series of shares
offered by the Trust representing interests in a separate portfolio of
securities and other assets.
(k) "Prospectus" shall mean the most recently dated Trust
Prospectus and Statement of Additional Information, including any
amendments and supplements thereto if any, which has become effective
under the 1933 Act and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Trust as may be issued from time to
time.
(m) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Trust.
(n) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by Investor Services Group to be
an Authorized Person and actually received by Investor Services Group.
Written Instructions shall include manually executed originals and
authorized electronic transmissions, including telefacsimile of a
manually executed original or other process.
Article 2 Appointment of Investor Services Group.
The Company hereby appoints Investor Services Group to act as
Sub-Administrator of the Trust on the terms set forth in this Agreement.
Investor Services Group accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
Article 3 Duties of Investor Services Group.
3.1 Investor Services Group shall be responsible for the following:
performing the customary services of a sub-administrator, including corporate
secretarial, treasury and blue sky services, and fund accounting agent for the
Trust, as more fully described in the written schedule of Duties of Investor
Services Group annexed hereto as Schedule B and incorporated herein, and subject
to the supervision and direction of the Company.
3.2 In performing its duties under this Agreement, Investor Services
Group: (a) will act in accordance with the Articles of Incorporation, By-Laws,
Prospectuses and with the Oral Instructions and Written Instructions of the
Company and will conform to and comply with the requirements of the 1940 Act and
all other applicable federal or state laws and regulations; and (b) will consult
with legal counsel to the Trust, as necessary and appropriate. Furthermore,
Investor Services Group shall not have or be required to have any authority to
supervise the investment or reinvestment of the securities or other properties
which comprise the assets of the Trust or any of its Portfolios and shall not
provide any investment advisory services to the Trust or any of its Portfolios.
3.3 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Company
and Investor Services Group.
Article 4 Recordkeeping and Other Information.
4.1 Investor Services Group shall create and maintain all records
required of it pursuant to its duties hereunder and as set forth in Schedule B
in accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Such records shall be maintained by
Investor Services Group for the periods and in the places required by Rule 31a-2
under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor
Services Group agrees that all such records prepared or maintained by Investor
Services Group relating to the services to be performed by Investor Services
Group hereunder are the property of the Trust and will be preserved, maintained
and made available in accordance with Section 31 and rules promulgated by the
SEC thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Company's request.
Article 5 Instructions.
5.1 Investor Services Group will have no liability when acting upon
Written or Oral Instructions reasonably believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Company.
5.2 At any time, Investor Services Group may request Written
Instructions from the Company and may seek advice from legal counsel for the
Trust, or its own legal counsel, with respect to any matter arising in
connection with this Agreement; provided, however, that Investor Services Group
shall not incur any legal expenses on behalf of the Trust without the Company's
consent. Investor Services Group shall not be liable for any action taken or not
taken or suffered by it in good faith in accordance with such Written
Instructions or in accordance with the opinion of counsel for the Trust or for
Investor Services Group. Written Instructions requested by Investor Services
Group will be provided by the Company within a reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Company only if said representative is
an Authorized Person. The Company agrees that all Oral Instructions shall be
followed within one business day by confirming Written Instructions, and that
the Company's failure to so confirm shall not impair in any respect Investor
Services Group's right to rely on Oral Instructions.
Article 6 Compensation.
6.1 Investor Services Group will from time to time employ or associate
with itself such person or persons as Investor Services Group may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Investor Services Group and the Company. The compensation of such person or
persons shall be paid by Investor Services Group and no obligation shall be
incurred on behalf of the Company in such respect.
6.2 Investor Services Group shall not be required to pay any of the
following expenses incurred by the Company or the Trust: membership dues in the
Investment Company Institute or any similar organization; investment advisory
expenses; costs of printing and mailing stock certificates, prospectuses,
reports and notices; interest on borrowed money; brokerage commissions; stock
exchange listing fees; taxes and fees payable to Federal, state and other
governmental agencies; fees of Board Members of the Trust who are not affiliated
with Investor Services Group; outside auditing expenses; outside legal expenses;
Blue Sky registration or filing fees; or other expenses not specified in this
Section 6.2 which may be properly payable by the Company or the Trust. Investor
Services Group shall not be required to pay any Blue Sky registration or filing
fees unless and until it has received the amount of such fees from the Company.
6.3 The Company will compensate Investor Services Group for the
performance of its obligations hereunder in accordance with the fees set forth
in the written Fee Schedule annexed hereto as Schedule C and incorporated
herein.
6.4 In addition to those fees set forth in Section 6.3 above, the
Company agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by Investor Services Group in the performance of its duties hereunder.
Out-of-pocket expenses shall include, but shall not be limited to, the items
specified in the written schedule of out-of-pocket charges annexed hereto as
Schedule D and incorporated herein. Schedule D may be modified by written
agreement between the parties. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by Investor Services
Group in the performance of its obligations hereunder.
6.5 Investor Services Group will bill the Company as soon as
practicable after the end of each calendar month, and said billings will be
detailed in accordance with the out-of-pocket schedule. The Company will pay to
Investor Services Group the amount of such billing by Federal Funds Wire within
fifteen (15) business days after the Company's receipt of said bill. In
addition, Investor Services Group may charge a service fee equal to the lesser
of (a) one and one half percent (1-1/2%) per month or (b) the highest interest
rate legally permitted on any past due billed amount.
6.6 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C a revised Fee Schedule executed and dated by the
parties hereto.
6.7 The Company acknowledges that the fees that Investor Services Group
charges the Company under this Agreement reflect the allocation of risk between
the parties, including the disclaimer of warranties in Section 9.3 and the
limitations on liability and exclusion of remedies in Section 11.2 and Article
12. Modifying the allocation of risk from what is stated here would affect the
fees that Investor Services Group charges, and in consideration of those fees,
the Company agrees to the stated allocation of risk.
Article 7 Documents.
In connection with the appointment of Investor Services Group, the
Company shall, on or before the date this Agreement goes into effect, but in any
case within a reasonable period of time for Investor Services Group to prepare
to perform its duties hereunder, deliver or caused to be delivered to Investor
Services Group the documents set forth in the written schedule of Trust
Documents annexed hereto as Schedule E.
Article 8 Fund Accounting System.
8.1 Investor Services Group shall retain title to and ownership of any
and all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions, discoveries,
patentable or copyrightable matters, concepts, expertise, patents, copyrights,
trade secrets, and other related legal rights utilized by Investor Services
Group in connection with the services provided by Investor Services Group to the
Company herein (the "Investor Services Group System").
8.2 Investor Services Group hereby grants to the Company a limited
license to the Investor Services Group System for the sole and limited purpose
of having Investor Services Group provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or interpreted
otherwise and such license shall immediately terminate with the termination of
this Agreement.
8.3 In the event that the Company, including any affiliate or agent of
the Company or any third party acting on behalf of the Company is provided with
direct access to the Investor Services Group System, such direct access
capability shall be limited to direct entry to the Investor Services Group
System by means of on-line mainframe terminal entry or PC emulation of such
mainframe terminal entry and any other non-conforming method of transmission of
information to the Investor Services Group System is strictly prohibited without
the prior written consent of Investor Services Group.
Article 9 Representations and Warranties.
9.1 Investor Services Group represents and warrants to the Company
that:
(a) it is a corporation duly organized, existing and in good standing under the
laws of the Commonwealth of Massachusetts;
(b) it is empowered, licensed and registered under all
applicable federal and state laws and is empowered by its Articles of
Incorporation and By-Laws to enter into and perform under this
Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(f) all equipment and software provided or used by Investor
Services Group or any of its subsidiaries or divisions in connection
with rendering services to the Company under the terms of this
Agreement, include or shall include design and performance capabilities
so that prior to, during, and after December 31, 1999 (the "Millennium
Date Change") they will not malfunction, produce invalid or incorrect
results, cause an interruption in or diminish the quality of the
services provided to the Company, or abnormally cease to function due
to the Millennium Date Change. Such design and performance capabilities
shall include without limitation the ability to recognize and process
the year 2000 and thereafter and to manage and manipulate data
involving dates, including without limitation, (i) single century and
multi-century formulas and date values without resulting in the
generation of incorrect values involving such dates or causing an
abnormal ending, (ii) date data interfaces with functionalities and
data fields that indicate the century, and (iii) date-related functions
that indicate the century; and
(g) all equipment and software provided by Investor Services
Group in connection with the services rendered to the Company under the
terms of this Agreement, as amended include or shall include design and
performance capabilities so that prior to, during, and after the
calendar year 2000, they will not malfunction, produce invalid or
incorrect results, or abnormally cease to function due solely to the
year 2000 date change. Such design and performance capabilities shall
include without limitation the ability to recognize the century and to
manage ad manipulate data involving dates, including single century and
multi-century formulas and date values, without resulting in the
generation of incorrect values involving such dates or causing an
abnormal ending; date data interfaces with functionalitiies and data
fields that indicate the century; and date-related functions that
indicate the century.
9.2 The Company represents and warrants to Investor Services Group
that:
(a) it is duly organized, existing and in good
standing under the laws of the
jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize
it to enter into this Agreement; and
(d) a registration statement under the 1933 Act and the 1940
Act on behalf of each of the Portfolios will be effective and remain
effective when the Trust commences offering its shares to the public.
Article 10 Indemnification.
10.1 The Company shall indemnify and hold Investor Services Group
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against Investor Services Group or for
which Investor Services Group may be held to be liable in connection with this
Agreement or Investor Services Group's performance hereunder (a "Claim"), unless
such Claim resulted from a negligent act or omission to act or bad faith by
Investor Services Group in the performance of its duties hereunder.
10.2 Investor Services Group shall indemnify and hold the Company
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against the Company or for which the
Company may be held to be liable in connection with the improper or unauthorized
use of the Investor Services Group System (a "Claim") provided that such Claim
resulted from a negligent act or omission to act or bad faith by Investor
Services Group in the performance of its duties hereunder.
10.3 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made prior to
the earlier of:
(a) one year after the Indemnifying Party becomes aware of the event for which
indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
the Indemnified Party's sole and exclusive remedy for claims or other actions or
proceedings to which the Indemnifying Party's indemnification obligations
pursuant to this Article 10 may apply.
Article 11 Standard of Care.
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Company or the Trust unless said errors
are caused by Investor Services Group's own negligence, bad faith or willful
misconduct or that of its employees.
11.2 Notwithstanding any provision in this Agreement to the contrary,
each party's cumulative liability (to the other party) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $500,000 or (ii) the fees received by Investor Services Group for services
provided under this Agreement during the twelve months immediately prior to the
date of such loss or damage, plus any amounts that are recovered from any
liability insurance on which such party makes a claim. Each party understands
the limitation on the other party's damages to be a reasonable allocation of
risk and each party expressly consents with respect to such allocation of risk.
In allocating risk under the Agreement, the parties agree that the damage
limitation set forth above shall apply to any alternative remedy ordered by a
court in the event such court determines that sole and exclusive remedy provided
for in the Agreement fails of its essential purpose.
11.3 Neither party may assert any cause of action against the other
party under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging such
cause of action.
11.4 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
11.5 Without in any way limiting the foregoing, in the event Investor
Services Group shall provide Blue Sky services to the Company or the Trust,
Investor Services Group shall have no liability for failing to file on a timely
basis any material to be provided by the Company or its designee that it has not
received on a timely basis from the Company or its designee, nor shall Investor
Services Group have any responsibility to review the accuracy or adequacy of
materials it receives from the Company or its designee for filing or bear any
liability arising out of the timely filing of such materials; nor shall Investor
Services Group have any liability for monetary damages for the sale of
securities in jurisdictions where Shares are not properly registered, or in
jurisdictions where Shares are sold in excess of the lawfully registered amount
unless such failure of proper registration or excess sales is due to the willful
misfeasance, bad faith or negligence of Investor Services Group. Investor
Services Group shall not be liable for any errors which result from inaccurate
or inadequate information reported to Investor Services Group directly or
indirectly from the Trust's transfer agent. Investor Services Group shall be
under no obligation to investigate or confirm the accuracy or adequacy of any
information provided to Investor Services Group by the Trust's transfer agent.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR LOST PROFITS, EXEMPLARY,
PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of three (3) years ("Renewal Terms")
each, unless the Company or Investor Services Group provides written notice to
the other of its intent not to renew. Such notice must be received not less than
ninety (90) days and not more than one-hundred eighty (180) days prior to the
expiration of the Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Company, all
expenses associated with movement of records and materials and conversion
thereof to a successor sub-administrator will be borne by the Company.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Notwithstanding anything contained in this Agreement to the
contrary, should the Company desire to move any of the services provided by
Investor Services Group hereunder to a successor service provider prior to the
expiration of the then current Initial or Renewal Term, or should the Company or
the Trust or any of its or their affiliates take any action which results in
Investor Services Group ceasing to provide administration services to the
Company or the Trust prior to the expiration of the then current Initial or
Renewal Term, Investor Services Group shall make a good faith effort to
facilitate the conversion on such prior date, however, there can be no guarantee
that Investor Services Group will be able to facilitate a conversion of services
on such prior date. In connection with the foregoing, should services be
converted to a successor service provider, or should the Company or the Trust or
any of its or their affiliates take any action which results in Investor
Services Group ceasing to provide administration services to the Company or the
Trust prior to the expiration of the then current Initial or Renewal Term, the
payment of fees to Investor Services Group as set forth herein shall be
accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained with Investor Services Group until
the expiration of the then current Initial or Renewal Term and calculated at the
asset and/or Shareholder account levels, as the case may be, on the date notice
of termination was given to Investor Services Group.
Article 14 Additional Portfolios
14.1 In the event that the Trust establishes one or more Portfolios in
addition to those identified in Schedule A, with respect to which the Company
desires to have Investor Services Group render services as sub-administrator
under the terms hereof, the Company shall so notify Investor Services Group in
writing, and if Investor Services Group agrees in writing to provide such
services, Schedule A shall be amended to include such additional Portfolios.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The
Company and Investor Services Group shall exercise at least the same degree of
care, but not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Company and Investor Services
Group shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Company and Investor Services Group may,
however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Company and Investor Services Group may also
disclose the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Company or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Company or
Investor Services Group, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or
Investor Services Group a competitive advantage over its competitors;
and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein
shall not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no fault of such
party; or
(b) Was lawfully received by the party from a third party free
of any obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to
receipt thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for maintaining
such information in confidence have been exhausted including, but not limited
to, giving the other party as much advance notice of the possibility of such
disclosure as practical so the other party may attempt to stop such disclosure
or obtain a protective order concerning such disclosure; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Confidential
Information disclosed under this Agreement.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to satisfy); or
(v) nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
Investor Services Group may, in its sole discretion, assign all its right, title
and interest in this Agreement to an affiliate, parent or subsidiary, or to the
purchaser of substantially all of its business. Investor Services Group may, in
its sole discretion and subject to the supervision of the Company, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by Investor Services Group.
Article 18 Arbitration.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
Article 19 Notice.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Company or Investor Services Group, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Company:
Attention: __________________
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this Agreement. The terms of this Agreement shall be subject to and interpreted
in accordance with the 1940 Act to the extent applicable. All actions arising
from or related to this Agreement shall be brought in the state and federal
courts sitting in the City of Boston, and Investor Services Group and the
Company hereby submit themselves to the exclusive jurisdiction of those courts.
Article 21 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.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither Investor Services Group nor the Company shall release or
publish news releases, public announcements, advertising or other publicity
relating to this Agreement or to the transactions contemplated by it without the
prior review and written approval of the other party; provided, however, that
either party may make such disclosures as are required by legal, accounting or
regulatory requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
Article 24 Relationship of Parties/Non-Solicitation.
24.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
24.2 During the term of this Agreement and for one (1) year afterward,
the Company shall not recruit, solicit, employ or engage, for the Company or
others, Investor Services Group's employees.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
SAGE ADVISORS, INC.
By:
Name:
Title:
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
Name:
Title:
<PAGE>
SCHEDULE A
LIST OF PORTFOLIOS
<PAGE>
SCHEDULE B
DUTIES OF INVESTOR SERVICES GROUP
(a) Maintaining office facilities (which may be in the offices of
Investor Services Group or a corporate affiliate) and furnishing corporate
officers for the Trust;
(b) Furnishing data processing services, clerical services, and
executive and administrative services and standard stationery and office
supplies;
(c) Performing the following fund accounting and bookkeeping services
(including the maintenance of such accounts, books and records of the Trust as
may be required by Section 31(a) of the 1940 Act):
o Daily, Weekly, and Monthly Reporting
o Portfolio and General Ledger Accounting
o Daily Valuation of all Portfolio Securities
o Daily Valuation and NAV Calculation
o Comparison of NAV to market movement
o Review research of price tolerance/fluctuation report to
market movements and events
o Research of items appearing on the price exception report
o Weekly cost monitoring along with market-to-market
valuations in accordance with Rule
2a-7
o Security trade processing
o Daily cash and position reconciliation with the custodian bank
o Daily updating of price and distribution rate
information to the Transfer
Agent/Insurance Agent
o Daily support and report delivery to Portfolio Management
o Daily calculation of Portfolio adviser fees and waivers
o Daily calculation of distribution rates
o Daily investable cash call
o Monitor and research aged receivables
o Collect aged income items and perform reclaims
o Update NASDAQ reporting
o Daily maintenance of each Portfolio's general ledger
including expense accruals
o Daily NAV per share notification to other vendors as required
o Calculation of 30-day SEC yields and total returns
o Preparation of month-end reconciliation package
o Monthly reconciliation of Portfolio expense records
o Application of monthly pay down gain/loss
o Preparation of all annual and semi-annual audit work papers
(d) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, as follows:
o Expense Accrual Monitoring
o Determination of Dividends
o Preparation of all necessary compliance materials for review
by the Board, e.g., Rules
2a-7,10f-3, 17a-7, 17e-1 and 144A
o Tax and Financial Counsel
o Creation of expense pro formas for new Portfolios/classes
o Reporting to investment company reporting agencies
(i.e., Lipper)
o Compliance Testing including Section 817(h)
(daily, weekly or monthly)
(e) Preparing reports to the Trust's Shareholders and the SEC
including, but not necessarily limited to, Annual Reports and Semi-Annual
Reports on Form N-SAR;
(f) Preparing and filing the Trust's tax returns and providing
shareholder tax information to the Trust's transfer agent;
(g) Assisting the Adviser, at the Adviser's request, in monitoring and
developing compliance procedures for the Trust which will include, among other
matters, procedures to assist the Adviser in monitoring compliance with each
Portfolio's investment objective, policies, restrictions, tax matters and
applicable laws and regulations, including, but not limited to, Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") and Section 17(h) of
the Code and regulations thereunder;
(h) Performing "Blue Sky" compliance functions, as follows:
o Effecting and maintaining, as the case may be, the registration of Shares of
the Trust for sale under the securities laws of the jurisdictions listed in the
Written Instructions of the Company, which instructions will include the amount
of Shares to be registered as well as the warning threshold to be maintained.
Any Written Instructions not received at least 45 days prior to the date the
Trust intends to offer or sell its Shares cannot be guaranteed a timely
notification to the states. In addition, Investor Services Group shall not be
responsible for providing to any other service provider of the Trust a list of
the states in which the Trust may offer and sell its Shares.
o Filing with each appropriate jurisdiction the appropriate
materials relating to the Trust. The Company shall be
responsible for providing such materials to Investor Services
Group, and Investor Services Group shall make such filings
promptly after receiving such materials.
o Providing to the Company quarterly reports of sales activity
in each jurisdiction in accordance with the Written
Instructions of the Company. Sales will be reported by
shareholder residence. NSCC trades and order clearance will be
reported by the state provided by the dealer at the point of
sale. Trades by omnibus accounts will be reported by trustee
state of residence in accordance with the Written Instructions
of the Company outlining the entities which are permitted to
maintain omnibus positions with the Trust.
o In the event sales of Shares in a particular jurisdiction
reach or exceed the warning levels provided in the Written
Instructions of the Company, Investor Services Group will
promptly notify the Company with a recommendation of the
amount of Shares to be registered in such jurisdiction and the
fee for such registration. Investor Services Group will not
register additional Shares in such jurisdiction unless and
until Investor Services Group shall have received Written
Instructions from the Company to do so.
(i) Performing corporate secretarial services including the following:
o Assist in maintaining corporate records and good standing status
of Trust in its state of organization
o Develop and maintain calendar of annual and quarterly board
approvals and regulatory
filings
o Prepare notice, agenda, memoranda, resolutions and background
materials for legal approvals at quarterly board meetings and
committee meetings; attend meetings; make presentations where
appropriate; prepare minutes; follow up on issues
o Provide support for one special in person board meeting per year
and written consent votes where needed
(j) Performing the following legal services:
o Prepare and file annual Post-Effective Amendment
o Prepare and file Rule 24f-2 Notice
o Review and file Form N-SAR
o Review, Edgarize and file Annual and Semi-Annual Financial Reports
o Communicate significant regulatory or legislative developments to
Trust management and directors and provide related planning
assistance where needed
o Consult with Trust management regarding portfolio compliance and
Trust corporate and regulatory issues as needed
o Maintain effective communication with outside counsel and review
legal bills of outside counsel
o Coordinate the printing and mailing process with outside
printers for all shareholder
publications
o Arrange D&O/E&O insurance and fidelity bond coverage for Trust
o Assist in monitoring Trust Code of Ethics reporting and provide
such reports to the person designated under the Trust's Code
(k) Performing, in accordance with the Written Instructions of the
Company, the following Special Legal Services in accordance with the pricing
structure listed on the Fee Schedule attached to this Agreement as Schedule C:
o Assist in managing SEC audits of Trust
o Review sales material and advertising for SEC and NASD compliance
o Assist in conversion
Coordinate time and responsibility schedules
Draft notice, agenda, memoranda, resolutions and background
materials for board
approval
o Assist in new Portfolio start-up (to the extent requested)
Coordinate time and responsibility schedules Prepare Trust
corporate documents (by-laws)
Draft/file registration statement (including investment
objectives/policies and
prospectuses)
Respond to and negotiate SEC comments
Draft notice, agenda and resolutions for organizational
meeting; attend board meeting; make presentations where
appropriate; prepare minutes and follow up on issues
o Assist in developing compliance guidelines and procedures to
improve overall compliance by Trust and service providers
o Prepare notice, agenda, memoranda and background materials for
special board meetings, make presentations where appropriate,
prepare minutes and follow up on issues
o Prepare proxy material for special meetings
(including fund merger documents)
o Prepare Post-Effective Amendments for special purposes (e.g., new
funds or classes, changes in advisory relationships, mergers,
restructurings)
o Prepare special Prospectus supplements where needed
o Assist in extraordinary non-recurring projects,
including providing consultative legal
services, e.g.,
Arrange CDSC financial programs
Prospectus simplification
Profile prospectuses
Exemptive order applications
<PAGE>
SCHEDULE C
FEE SCHEDULE
For the services to be rendered, the facilities to be furnished and the
payments to be made by Investor Services Group, as provided for in this
Agreement, the Company will pay Investor Services Group on the first business
day of each month a fee for the previous month at the rates listed below.
Fund Administration and Legal Administration First $2,000,000 of
aggregate net assets 0.05% Next $2,000,000 to $4,000,000 0.04% Greater
than $4,000,000 0.03% Minimum of $75,000 per Portfolio per annum*
*Investor Services Group agrees to waive $20,000 of the first years'
minimum per Portfolio.
Fund Accounting Trust Assets First $50,000,000 $27,500 per Portfolio per annum
$50,000,000 to $100,000,000 $30,000 per Portfolio per annum Greater than
$100,000,000 $36,000 per Portfolio per annum
Investor Services Group shall be entitled to the following fee
for the performance of any Special Legal Services as described in
Schedule B in accordance with the Written Instructions of the
Company: $185 per hour subject to certain project caps as may be
agreed to by Investor Services Group and the Company. Services
and charges may vary based on volume.
Investor Services Group shall be entitled to collect all
out-of-pocket fees described in Schedule D.
<PAGE>
SCHEDULE D
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
Courier services
Delivery costs of Board meetings materials and other materials to
the Trust's Board members and service providers (including
overnight or other courier services)
Telecommunictions charges (including FAX) with respect to
communications with the Trust's Board Members, officers and
service providers
Duplicating charges with respect to filings with Federal and
state authorities and Board meeting materials
Travel to and from Board meetings and other meetings with Trust
management Pricing services (or services used to determine Trust
NAV) Forms and supplies for the preparation of Board meetings and
other materials for the Trust Vendor set-up charges for Blue Sky
services Customized programming requests Blue Sky filing or
registration fees SAS 70 Cold Storage Document Retrieval Vendor
pricing comparison Manual pricing Such other expenses as are
agreed to by Investor Services Group and the Company
<PAGE>
SCHEDULE E
TRUST DOCUMENTS
Certified copy of the Declaration of Trust of the Trust, as
amended
Certified copy of the By-laws of the Trust, as amended,
Copy of the resolution of the Board of Directors authorizing
the execution and delivery of
this Agreement
Copies of all agreements between the Trust and its service
providers.
All notices issued by the Trust with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Trust or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
<PAGE>
CONSENT OF SUTHERLAND ASBILL & BRENNAN
We consent to the reference to our firm under the heading "Counsel and
Independent Accountants" in the Statement of Additional Informational included
in Pre-Effective No. 1 to the Registration Statement on Form N-1A for Sage Life
Investment Trust (File No. 333-45293). In giving this consent, we do not admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933.
SUTHERLAND ASBILL & BRENNAN
By: /s/Kimberly J. Smith
Kimberly J. Smith
Washington, D.C.
November 13, 1998
<PAGE>
Exhibit 15
FORM OF
SAGE LIFE INVESTMENT TRUST
RULE 12b-1 DISTRIBUTION PLAN
(the "Plan")
- - - - ------------------------------------------------------------------------------
Section 1. Sage Life Investment Trust (the "Trust") is an open-end management
investment company formed under the laws of the state of Delaware. The shares of
beneficial interest of the Trust's investment portfolios (each, a "Fund") may
from time to time be offered to life insurance companies (each, a "Life
Company") for allocation to certain of their separate accounts established for
the purpose of funding variable annuity contracts and variable life policies
(collectively referred to herein as "Variable Contracts"), as well as to
qualified benefit plans ("Retirement Plans").
Section 2. This Plan will pertain to shares of each of the Funds set forth on
Exhibit A attached hereto. This Plan shall also apply to the shares of any other
Fund as shall be designated from time to time by the Board of Trustees in any
supplement to the Plan.
Section 3. The Trust has entered into a Distribution Agreement (the "Agreement")
with Sage Distributors, Inc. (the "Distributor"). Pursuant to the Agreement the
Distributor will serve as the distributor of the Trust's shares and each Fund
participating in this Plan may pay the Distributor for remittance to a Life
Company or any affiliate thereof for various costs incurred or paid by the Life
Company in connection with the distribution of shares of that Fund.
Section 4. Upon effectiveness of this Plan with respect to shares of a Fund, the
Trust, on behalf of such Fund, may make payments quarterly to the Distributor
for remittance to a Life Company, in order to pay or reimburse such Life Company
for Distribution Expenses (as defined below) incurred or paid (as the case may
be) by such Life Company, provided that no such payment shall be made with
respect to any quarterly period in excess of an amount determined for such
period at the annual rate of .25% of the average daily net asset value of the
shares of such Fund attributable to that Life Company's Variable Contract owners
during that quarterly period.
Section 5. Expenses payable pursuant to this Plan ("Distribution Expenses") may
include, but are not necessarily limited, to costs:
(a) of printing and mailing Trust prospectuses, statements of
additional information, any supplements thereto and reports
for prospective Variable Contract owners;
(b) relating to the development, preparation, printing and mailing
of Trust advertisements, sales literature and other
promotional materials describing and/or relating to the Trust
and including materials intended for use within the Life
Company, or for broker-dealer only use or retail use;
(c) of holding seminars and sales meetings designed to promote the
distribution of Trust shares;
(d) of obtaining information and providing explanations to
Variable Contract owners regarding the Funds' investment
objectives and policies and other information about the Trust
and the Funds, including the performance of the Funds;
(e) of training sales personnel regarding the Trust;
(f) of compensating sales personnel in connection with the
allocation of cash values and premiums of the Variable
Contracts to the Trust;
(g) of personal service and/or maintenance of Variable Contract
owner accounts with respect to Trust shares attributable to
such accounts; and
(h) of financing any other activity that the Trust's Board of
Trustees determines is primarily intended to result in the
sale of the Funds' shares.
Section 6. This Plan shall not take effect with respect to shares of a Fund
until it has been approved by a vote of at least a majority of the outstanding
shares of that Fund. For purposes of this Section 6, as well as Section 10 and
Section 11 of the Plan, the phrase "majority of the outstanding shares" shall
have the same meaning as the phrase "majority of the outstanding voting
securities" as defined in the Investment Company Act of 1940, as amended (the
"Act").
Section 7. This Plan shall not take effect with respect to shares of a Fund
until it has been approved by a vote of the majority of Trustees of the Trust
and of those Trustees of the Trust who are not "interested persons" of the Trust
(as that term is defined in the Act), and who have no direct or indirect
financial interest in the operation of this Plan or in the Agreement (the
"Independent Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan.
Section 8. This Plan shall continue in effect for as long as such continuance is
specifically approved by the Trustees of the Trust and the Independent Trustees
at least annually in the manner provided in Section 7. In connection with the
annual review and approval of such continuance, the Distributor shall furnish
the Board with such information as the Board may reasonably request in order to
enable the Board to make an informed determination of whether the Plan should be
continued.
Section 9. The Distributor shall, with respect to each Fund for which payments
of Distribution Expenses are made, submit to the Board, and the Board shall
review at least quarterly, written reports complying with Rule 12b-1 under the
Act describing the amount of the Distribution Expenses and the purposes of those
Distribution Expenses with respect to such Fund incurred or paid by each Life
Company since the later of the effective date of this Plan or the previous
period for which payments hereunder have been made by that Fund. In the event
that amounts of Distribution Expenses are not specifically attributable to the
distribution of shares of any particular Fund, the Distributor may allocate
Distribution Expenses to each Fund deemed by the Board to be reasonably likely
to benefit therefrom based upon the ratio of the average daily net assets of
each such Fund during the previous period to the aggregate average daily net
assets of all such Funds for such period; provided, however that any such
allocation may be subject to such adjustments as the Distributor shall deem
appropriate to render the allocation fair and equitable under the circumstances,
which adjustments shall be approved by the Board of Trustees.
Section 10. This Plan may be terminated as to a Fund at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding shares of that Fund.
Section 11. Any agreement related to this Plan shall be in writing and shall
provide in substance:
(a) that any such agreement, with respect to a Fund, may be
terminated at any time, without payment of any penalty, by
vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding shares of that Fund, on not more
than 60 days' written notice to the Distributor; and
(b) that such agreement shall terminate automatically in the event of
its assignment.
Section 12. This Plan may not be amended to increase materially the amount that
may be spent for distribution by a Fund without the approval of shareholders of
that Fund, and any material amendment to the Plan must be approved by the Board
of Trustees of the Trust, including the Independent Trustees, in the manner
provided in Section 7. Amendments to this Plan other than material amendments of
the kind referred to above may be adopted by a vote of the Board of Trustees of
the Trust, including the vote of a majority of Independent Trustees. The Board
of Trustees of the Trust, by such a vote, also may interpret this Plan and make
all determinations necessary or advisable for its administration.
Section 13. So long as this Plan is in effect, the selection and nomination of
persons to be Trustees of the Trust who are not interested persons (as defined
in the Act) of the Trust shall be committed to the discretion of such
disinterested Trustees then in office.
Section 14. Neither this Plan nor any other transaction between the parties
hereto pursuant to this Plan shall be invalidated or in any way affected by the
fact that any or all of the Trustees, officers, stockholders, or other
representatives of the Trust are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
Trustees, officers, partners, or other representatives of the Distributor are or
may be "interested persons" of the Trust, except as otherwise may be provided in
the Act.
Section 15. The Trust will preserve copies of this Plan, and any related
agreements and reports, for a period of not less than six years from the date of
those documents, the first two years in an easily accessible place, or for such
other periods as may be required by applicable law.
Section 16. When voting on the approval, termination or amendment of this Plan
pursuant to Sections 6, 10 and 12, respectively, above, or with respect to an
agreement related to this Plan pursuant to Section 11, above, shareholders of
the applicable Fund or Funds shall vote in accordance with instructions received
from the relevant owners of Variable Contracts funded by the separate accounts
of a Life Company.
Section 17. This Plan shall be interpreted in accordance with the Act and Rule
12b-1 thereunder. The provisions of this Plan are severable for each Fund.
Date approved by the Board: July 15, 1998
<PAGE>
EXHIBIT A
EAFE Equity Index Fund
S&P 500 Equity Index Fund
