SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 3 X
Post-Effective Amendment No.
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 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.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
SAGE LIFE INVESTMENT TRUST
FORM N-1A
Part A
CROSS REFERENCE SHEET
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
PROSPECTUS for SAGE LIFE INVESTMENT TRUST S&P 500 Equity Index Fund EAFE
Equity Index Fund Money Market Fund Dated February 1, 1999 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.
TABLE OF CONTENTS
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
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.
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%
12b-1 Fees** 0.25% 0.25% 0.25%
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%.
** 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 year ending December 31,
1999.
*** "Other Expenses" for the Funds are based on estimated amounts for the
Funds' fiscal year ending December 31, 1999. 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: S&P Money 500 EAFE Market Fund Fund
Fund
1 Year $ 6 $ 9 $ 7
3 Years $ 18 $ 29 $ 21
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.
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.
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.
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.
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.
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 year
ending 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 Fund' 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.
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.
...............................................................................
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.
SAGE LIFE INVESTMENT TRUST
FORM N-1A
Part B
CROSS REFERENCE SHEET
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 OfferDetermination 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
SAGE LIFE INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
for
S&P 500 Equity Index Fund
EAFE Equity Index Fund
Money Market Fund
Dated February 1, 1999
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 February 1, 1999. 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 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 14
Management of the Trust 15
Organization of the Trust 20
Distributions and Taxes 20
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:
(1) 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);
(5) 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:
(i) 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
(ii) 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.
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.
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).
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>
<S> <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>
The following table estimates the amount of
compensation to be paid by the Trust during its fiscal year
ending December 31, 1999 to the persons who are to serve as
Trustees during such period:
<TABLE>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
Pension Total
Estimated Retirement Estimated Compensation
Name of Compensation Benefits Accrued Annual Benefits from the Trust and
Person from the as Part of upon Fund Complex
and Position Trust* Fund Expenses Retirement Paid to Trustee**
Ronald S. Scowby $ 0 None None $ 0
Trustee and
Chairman of the Board
Robin I. Marsden $ 0 None None $ 0
Trustee and President
James A. Amen $ 9,500 None None $ 9,500
Trustee
Rosemary L. Hendrickson $ 9,500 None None $ 9,500
Trustee
Geoffrey A. Thompson $ 9,500 None None $ 9,500
Trustee
</TABLE>
* The estimated compensation information is furnished
for the fiscal year ended December 31, 1999 and assumes that
each Trustee attends all Board Meetings and an Audit
Committee Meeting.
** No Trustee receives any compensation from any mutual
fund affiliated with the Manager, other than the Trust.
As of December 31, 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, 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.
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.
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 incorporated herein by
reference to Exhibit 1 as filed in the
Initial Registration Statement on January 30, 1998.
2. ................. The Registrant's By-laws are incorporated herein by
reference to Exhibit 1 as filed in
the Initial Registration Statement 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
incorporated herein as Exhibit 5(a) to Pre-Effective
Amendment No. 1 as filed on November 16, 1998.
(b)................. Form of Sub-Advisory Agreement
between State Street Global Advisors and Sage Advisors, Inc.
is incorporated herein as Exhibit 5(b) to Pre-Effective
Amendment No. 1 as filed on November 16, 1998.
(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
incorporated herein as Exhibit 6(a) to Pre-Effective No. 1
as filed on November 16, 1998.
(b).................Participation Agreement by and among the
Trust, Sage Life Assurance of America, Inc. and the
Distributor is incorporated herein as Exhibit 6(b) to
Pre-Effective Amendment No. 1 as filed on November 16, 1998.
7. ................... Not Applicable
Exhibit Number Description 8. ................... Form
of Custodian Agreement between Registrant and The Bank of
New York is incorporated herein as Exhibit 8 to
Pre-Effective Amendment No. 2 as filed on January 25, 1999.
9(a)................. Form of Transfer Agency Agreement
between Registrant and First Data Investor Services Group,
Inc. is incorporated herein as Exhibit 9(a) to Pre-Effective
Amendment No. 1 as filed on November 16, 1998.
(b)................. Form of Sub-Administration Agreement
between Registrant and First Data Investor
Services Group, Inc. is incorporated herein as Exhibit
9(b) to Pre-Effective Amendment No. 1 as filed on November
16, 1998.
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 incorporated herein as Exhibit 15 to Pre-Effective
Amendment No. 1 as filed on November 16, 1998.
16. ................ Not Applicable 17.
................. Not Applicable 18. ................ Not
Applicable Item 25. Persons Controlled by or Under Common
Control with Registrant Not applicable. 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 Index 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.
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 29th day of
January, 1999. 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>
<S> <C> <C>
Signature Title Date
/s/Ronald S. Scowby Chairman and Trustee January 29, 1999 Ronald S. Scowby
/s/Robin I. Marsden President and Trustee January 29, 1999 Robin I. Marsden
/s/Richard H. Rose Treasurer January 29, 1999 Richard H. Rose
/s/ James A. Amen Trustee January 29, 1999 James A. Amen
/s/Rosemary L. Hendrickson Trustee January 29, 1999
Rosemary L. Hendrickson
/s/ Geoffrey A. Thompson Trustee January 29, 1999
Geoffrey A. Thompson
</TABLE>
power-of-attorney
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 as
of the 15th day of July, 1998.
/s/James A. Amen
James A. Amen
Trustee
/s/Rosemary L. Hendrickson
Rosemary L. Hendrickson
Trustee
/s/Geoffrey A. Thompson
Geoffrey A. Thompson
Trustee
/s/Robin I. Marsden
Robin I. Marsden
Trustee
/s/Ronald S. Scowby
Ronald S. Scowby
Trustee
Exhibit Index
Exhibit No. Exhibit
5 (c) Form of Sub-Advisory Agreement between Conning Asset Management Company
10 (a)(b) Opinion and Consent of Counsel
Exhibit 5(c)
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.
- 81 -
(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.
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;
(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.
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.
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.
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.
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.
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) In performing its services under this Agreement, the
Sub-Adviser agrees that it is a fiduciary of the Investment
Company and that it will perform its duties and
responsibilities with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims. The Sub-Adviser shall not be
liable for any loss, liability, or damage incurred by the
Investment Company or the Manager as a result of any
investment decision, recommendation, or other action taken
or omitted in what the Sub-Adviser, in good faith, believes
to be the proper performance of its duties under this
Agreement, except that the Sub-Adviser shall be liable and
indemnify the Investment Company and/or the Manager to the
extent that such loss, liability, or damage results from (i)
a failure of the Sub-Adviser to satisfy its standard of care
set forth above; (ii) the negligence or bad faith of the
Sub-Adviser or the reckless disregard by the Sub-Adviser of
its obligations and duties under this Agreement; or (iii) a
breach of the Sub-Adviser's fiduciary duty to the Investment
Company with respect to receipt of compensation as specified
in Section 36(b) of the 1940 Act. Notwithstanding the
foregoing, the Sub-Adviser shall not be liable for any
liability, loss or damage resulting from any investment made
by the Sub-Adviser consistent with its standard of care set
forth above or the reliance by the Sub-Adviser on
information provided by the Manager or the Investment
Company.
b) In the event the Manager or the Investment Company
seeks indemnification for a claim alleged by a person who is
not a party to this Agreement (a third party claim), the
Manager or the Investment Company, as applicable, shall, as
a condition to receiving any indemnification pursuant to
Subparagraph (a), above, give prompt written notice of such
third party claim to the Sub-Adviser. The Sub-Adviser shall
have the right to elect to investigate and/or defend such
third party claim and, if such election is made, the Company
shall have the right, at its own expense, to participate in
the defense of such third party claim through counsel of its
own choosing. The Sub-Adviser shall not settle any such
claims unless it obtains by a general release in favor of
the Manager or the Investment Company, as applicable, or
such settlement is consented to by the Manager or the
Investment Company, as applicable. The Sub-Adviser shall not
be required to indemnify the Manager or the Investment
Company with respect to any settlement of a third party
claim that the Sub-Adviser has not approved in writing in
advance.
c) 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.
dc) Nothing herein shall affect any rights or
obligations of the parties under the Advisers Act or
constitute a restriction or waiver of any rights under
applicable federal or state securities laws.
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:
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.
Exhibit 10(a)
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. 3 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.
January 28, 1999
Exhibit 10(b)
January 28, 1999
Board of Trustees
Sage Life Investment Trust
300 Atlantic Street, Suite 302
Stamford, CT 06901
Re: Sage Life Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Sage Life Investment Trust,
a Delaware business trust (the "Trust"), in connection with
Pre-Effective Amendment No. 3 to the Trust's Registration
Statement on Form N-1A filed with the Securities and
Exchange Commission on January 29, 1999 (the "Pre-Effective
Amendment"), and relating to the issuance by the Trust of an
indefinite number of shares of beneficial interest (the
"Shares") of one series of the Trust, the EAFE Equity Index
Fund (the "Fund").
In connection with this opinion, we have assumed the
authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all
signatures, the legal capacity of all natural persons, and
the conformity to the originals of all records, documents,
and instruments submitted to us as copies. We have based our
opinion on the following:
(a) the Trust's Trust Instrument dated January 9, 1998
(the "Trust Instrument"), the Trust's Certificate of Trust
(the "Certificate of Trust") as filed with the Secretary of
State of Delaware and the certificate of good standing of
the Trust issued by the Secretary of State of Delaware on
January 22, 1998;
(b) resolutions of the Trustees of the Trust adopted at
a meeting on July 15, 1998, authorizing the establishment of
the Fund and the issuance of the Shares; and
(c) the Pre-Effective Amendment.
Our opinion below is limited to the federal law of the
United States of America and the business trust law of the
State of Delaware. We are not licensed to practice law in
the State of Delaware, and we have based our opinion below
solely on our review of Chapter 38 of Title 12 of the
Delaware Code and the case law interpreting such Chapter as
reported in Delaware Code Annotated. We have not undertaken
a review of other Delaware law or of any administrative
decisions or other court decisions in connection with
rendering this opinion.
Based on the foregoing and our examination of such
questions of law as we have deemed necessary and appropriate
for the purpose of this opinion, and assuming that (i) all
of the Shares will be issued and sold for cash at the
per-share public offering price on the date of their
issuance in accordance with statements in the Trust's
Prospectus included in the Pre-Effective Amendment and in
accordance with the Trust Instrument, (ii) all consideration
for the Shares will be actually received by the Trust, and
(iii) all applicable securities laws will be complied with,
it is our opinion that, when issued and sold by the Trust,
the Shares will be legally issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the
Pre-Effective Amendment. This opinion may not be relied upon
by you for any other purpose or relied upon by any other
person, firm, corporation or other entity for any purpose,
without our prior written consent. This opinion is rendered
on the date hereof and we have no continuing obligation
hereunder to inform you of changes of law or fact subsequent
to the date hereof or facts of which we have become aware
after the date hereof.
We hereby consent to (i) the reference to our firm as
Legal Counsel in the Prospectus included in the
Pre-Effective Amendment, and (ii) the filing of this opinion
as an exhibit to the Pre-Effective Amendment.
Very truly yours,
First Data Investor Services Group, Inc.
By: /s/Julie A. Tedesco
Julie A. Tedesco
January 28, 1999
Board of Trustees
Sage Life Investment Trust
300 Atlantic Street, Suite 302
Stamford, CT 06901
Re: Sage Life Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Sage Life Investment Trust,
a Delaware business trust (the "Trust"), in connection with
Pre-Effective Amendment No. 3 to the Trust's Registration
Statement on Form N-1A filed with the Securities and
Exchange Commission on January 29, 1999 (the "Pre-Effective
Amendment"), and relating to the issuance by the Trust of an
indefinite number of shares of beneficial interest (the
"Shares") of one series of the Trust, the S&P 500 Equity
Index Fund (the "Fund").
In connection with this opinion, we have assumed the
authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all
signatures, the legal capacity of all natural persons, and
the conformity to the originals of all records, documents,
and instruments submitted to us as copies. We have based our
opinion on the following:
(a) the Trust's Trust Instrument dated January 9, 1998
(the "Trust Instrument"), the Trust's Certificate of Trust
(the "Certificate of Trust") as filed with the Secretary of
State of Delaware and the certificate of good standing of
the Trust issued by the Secretary of State of Delaware on
January 22, 1998;
(b) resolutions of the Trustees of the Trust adopted at
a meeting on July 15, 1998, authorizing the establishment of
the Fund and the issuance of the Shares; and
(c) the Pre-Effective Amendment.
Our opinion below is limited to the federal law of the
United States of America and the business trust law of the
State of Delaware. We are not licensed to practice law in
the State of Delaware, and we have based our opinion below
solely on our review of Chapter 38 of Title 12 of the
Delaware Code and the case law interpreting such Chapter as
reported in Delaware Code Annotated. We have not undertaken
a review of other Delaware law or of any administrative
decisions or other court decisions in connection with
rendering this opinion.
Based on the foregoing and our examination of such
questions of law as we have deemed necessary and appropriate
for the purpose of this opinion, and assuming that (i) all
of the Shares will be issued and sold for cash at the
per-share public offering price on the date of their
issuance in accordance with statements in the Trust's
Prospectus included in the Pre-Effective Amendment and in
accordance with the Trust Instrument, (ii) all consideration
for the Shares will be actually received by the Trust, and
(iii) all applicable securities laws will be complied with,
it is our opinion that, when issued and sold by the Trust,
the Shares will be legally issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the
Pre-Effective Amendment. This opinion may not be relied upon
by you for any other purpose or relied upon by any other
person, firm, corporation or other entity for any purpose,
without our prior written consent. This opinion is rendered
on the date hereof and we have no continuing obligation
hereunder to inform you of changes of law or fact subsequent
to the date hereof or facts of which we have become aware
after the date hereof.
We hereby consent to (i) the reference to our firm as
Legal Counsel in the Prospectus included in the
Pre-Effective Amendment, and (ii) the filing of this opinion
as an exhibit to the Pre-Effective Amendment.
Very truly yours,
First Data Investor Services Group, Inc.
By: /s/Julie A. Tedesco
Julie A. Tedesco
January 28, 1999
Board of Trustees
Sage Life Investment Trust
300 Atlantic Street, Suite 302
Stamford, CT 06901
Re: Sage Life Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Sage Life Investment Trust,
a Delaware business trust (the "Trust"), in connection with
Pre-Effective Amendment No. 3 to the Trust's Registration
Statement on Form N-1A filed with the Securities and
Exchange Commission on January 29, 1999 (the "Pre-Effective
Amendment"), and relating to the issuance by the Trust of an
indefinite number of shares of beneficial interest (the
"Shares") of one series of the Trust, the Money Market Fund
(the "Fund").
In connection with this opinion, we have assumed the
authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all
signatures, the legal capacity of all natural persons, and
the conformity to the originals of all records, documents,
and instruments submitted to us as copies. We have based our
opinion on the following:
(a) the Trust's Trust Instrument dated January 9, 1998
(the "Trust Instrument"), the Trust's Certificate of Trust
(the "Certificate of Trust") as filed with the Secretary of
State of Delaware and the certificate of good standing of
the Trust issued by the Secretary of State of Delaware on
January 22, 1998;
(b) resolutions of the Trustees of the Trust adopted at
a meeting on July 15, 1998, authorizing the establishment of
the Fund and the issuance of the Shares; and
(c) the Pre-Effective Amendment.
Our opinion below is limited to the federal law of the
United States of America and the business trust law of the
State of Delaware. We are not licensed to practice law in
the State of Delaware, and we have based our opinion below
solely on our review of Chapter 38 of Title 12 of the
Delaware Code and the case law interpreting such Chapter as
reported in Delaware Code Annotated. We have not undertaken
a review of other Delaware law or of any administrative
decisions or other court decisions in connection with
rendering this opinion.
Based on the foregoing and our examination of such
questions of law as we have deemed necessary and appropriate
for the purpose of this opinion, and assuming that (i) all
of the Shares will be issued and sold for cash at the
per-share public offering price on the date of their
issuance in accordance with statements in the Trust's
Prospectus included in the Pre-Effective Amendment and in
accordance with the Trust Instrument, (ii) all consideration
for the Shares will be actually received by the Trust, and
(iii) all applicable securities laws will be complied with,
it is our opinion that, when issued and sold by the Trust,
the Shares will be legally issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the
Pre-Effective Amendment. This opinion may not be relied upon
by you for any other purpose or relied upon by any other
person, firm, corporation or other entity for any purpose,
without our prior written consent. This opinion is rendered
on the date hereof and we have no continuing obligation
hereunder to inform you of changes of law or fact subsequent
to the date hereof or facts of which we have become aware
after the date hereof.
We hereby consent to (i) the reference to our firm as
Legal Counsel in the Prospectus included in the
Pre-Effective Amendment, and (ii) the filing of this opinion
as an exhibit to the Pre-Effective Amendment.
Very truly yours,
First Data Investor Services Group, Inc.
By: /s/Julie A. Tedesco
Julie A. Tedesco
