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File Nos. 333-61759, 811-08961
As filed with the Securities and Exchange Commission on December 9, 1998
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No. 1 [X]
(Check appropriate box or boxes)
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TIAA-CREF LIFE FUNDS
730 Third Avenue
New York, New York 10017
(800) 842-2733
(Registrant's Exact Name, Address and Telephone Number)
Peter C. Clapman, Esq.
TIAA-CREF Life Funds
730 Third Avenue
New York, New York 10017
(Name and Address of Agent for Service)
Copy to:
Steven B. Boehm, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D. C. 20004-2415
Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness 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 THIS 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
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PROSPECTUS
DATED JANUARY 4, 1999
TIAA-CREF LIFE FUNDS
STOCK INDEX FUND
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE TIAA-CREF LIFE
FUNDS, MUTUAL FUNDS AVAILABLE ONLY THROUGH THE PURCHASE OF A VARIABLE ANNUITY OR
OTHER VARIABLE INSURANCE CONTRACT ISSUED BY TIAA-CREF LIFE INSURANCE COMPANY
(TIAA-CREF LIFE). PLEASE READ THIS PROSPECTUS, ALONG WITH THE PROSPECTUS
DESCRIBING THE CONTRACT, BEFORE INVESTING AND KEEP BOTH PROSPECTUSES FOR FUTURE
REFERENCE.
The TIAA-CREF Life Funds currently offers the investment portfolio (fund)
listed below.
The STOCK INDEX FUND seeks to increase the value of your investment over
the long-term by investing in a diversified portfolio of common stocks
selected to track the overall U.S. stock market, as represented by a broad
stock market index.
TIAA-CREF Life Insurance Company and the TIAA-CREF Life Funds are part of
the TIAA-CREF group of companies.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
The Stock Index Fund -- In Brief........................................... 3
Investment Objective and Principal Investment Strategies................... 4
Investment Objective........................................... 4
Principal Investment Strategies................................ 4
The Russell 3000 Index......................................... 5
Other Investments.............................................. 5
Fund Management............................................................ 6
Related Fund Performance Information....................................... 6
Pricing of Fund Shares..................................................... 7
Offering, Purchasing and Redeeming Shares.................................. 7
Dividends, Distributions and Taxes......................................... 8
Financial Highlights Information........................................... 8
General Matters............................................................ 9
</TABLE>
This prospectus outlines the terms of the fund. It doesn't constitute an
offering in any jurisdiction where such an offering can't lawfully be made. No
dealer, salesman, or anyone else is authorized to give any information or to
make any representation in connection with this offering other than those
contained in this prospectus. If anyone does offer you such information or
representations, you shouldn't rely on them.
An investment in the Fund is not a deposit of the TIAA-CREF Trust Company,
FSB, and is not insured or guaranteed by the Federal Deposit Insurance
Corporation (FDIC) or any other government agency.
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The TIAA-CREF Life Funds are mutual funds available only to separate
accounts of TIAA-CREF Life Insurance Company (TIAA-CREF Life) to fund individual
variable annuity or other variable insurance contracts (the contract). This
prospectus describes the Stock Index Fund, the only investment portfolio (fund)
currently offered by the TIAA-CREF Life Funds. Throughout this prospectus, "we"
and "our" refer to the TIAA-CREF Life Funds or the Stock Index Fund. "You" and
"your" means any contractowner or any prospective contractowner.
THE STOCK INDEX FUND - IN BRIEF
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Stock Index Fund seeks to increase the value of your investment over
the long-term by investing in a diversified portfolio of common stocks selected
to track the overall U.S. stock market, as represented by a broad stock market
index.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Stock Index Fund attempts to track the U.S. stock market as a whole by
investing substantially all of its assets in stocks included in the Russell
3000(R) index, an index consisting of the 3,000 largest publicly-traded U.S.
corporations. The fund doesn't try to match the Russell 3000 precisely by
holding all 3,000 stocks. Rather, we use sampling to try to emulate the index's
overall investment characteristics. The portfolio won't be managed in the
traditional sense of picking individual securities based on economic, financial,
and market analysis, which means that a company may remain in the portfolio even
if it performs poorly. We will, however, use certain techniques to attempt to
slightly outperform the Russell 3000.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The Stock Index Fund's returns will fluctuate, so you could lose money on
your investment. Normally, we expect that when the overall U.S. stock market is
rising, the fund's value will rise, and when the stock market is falling, the
fund's value will fall. Stock values will rise and fall in response to changes
in overall market and economic conditions, and the financial condition of
individual companies. Stocks in general are subject to the following types of
risks:
- Market risk -- price volatility due to changing conditions in the
financial markets and, in some cases, changes in overall interest rates.
- Financial risk -- the possibility that a company's current earnings will
fall or that overall financial soundness will decline, reducing the
stock's value.
We also can't guarantee that the fund will be able to match the returns of
the Russell 3000 or the stock market in general.
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HOW HAS THE FUND PERFORMED?
Because the fund has been operating only for a short time, we have not
included past performance information for the fund. For a discussion of the
performance of the TIAA Stock Index Account, an investment company managed by
the same adviser as the fund, see the "Related Fund Performance Information"
section of this prospectus.
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
This section describes the Stock Index Fund's investment objective and the
principal investment policies and techniques it uses to accomplish its
objective. For a complete listing of the fund's policies and restrictions, see
the SAI.
INVESTMENT OBJECTIVE
The Stock Index Fund seeks to increase the value of your investment over
the long-term by investing in a diversified portfolio of common stocks selected
to track the overall U.S. stock market, as represented by a broad stock market
index. There's no guarantee that the fund will meet this investment objective.
We can change the fund's investment objective without a shareholder vote,
although we'll notify you of any change if it is material.
PRINCIPAL INVESTMENT STRATEGIES
The fund attempts to track the U.S. stock market as a whole by investing
substantially all of its assets in stocks included in the Russell 3000 Index(R)
(See "The Russell 3000 Index," below). The fund doesn't try to match the Russell
3000 precisely by holding all 3,000 stocks. Rather, we use sampling to try to
emulate the index's overall investment characteristics. The portfolio won't be
managed in the traditional sense of picking individual securities based on
economic, financial, and market analysis. This means that a company can remain
in the portfolio even if it performs poorly, unless the company is removed from
the Russell 3000. We will, however, use proprietary quantitative scoring and
trading techniques to attempt to slightly outperform the Russell 3000.
We expect that in periods when the overall U.S. stock market is rising,
the fund's net asset value will also rise, while in market declines, the fund's
net asset value will likewise decline. We won't match the index precisely.
However, we expect the fund to closely track the index. The fund seeks to track
the index by calculating daily a correlation coefficient using the fund's
returns from the most recent 30 trading days and the index's returns for the
same period. We expect the correlation coefficient usually to be above 0.99 and,
in any case, never to fall below 0.98. If it approaches 0.98, we'll rebalance
the portfolio--a process which involves realigning portfolio weights and/or
adding more stocks to the fund's portfolio. Since the index's returns aren't
reduced by operating or investment expenses, the fund may not be able to match
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the index because of the costs of buying and selling stocks and other expenses.
However, we expect investment expenses to be low compared to an actively
managed stock portfolio.
THE RUSSELL 3000 INDEX
The Russell 3000 is an index of the 3,000 largest publicly traded U.S.
corporations, based on the value of their outstanding stock. According to the
Frank Russell Company, Russell 3000 companies account for about 98% of the total
market capitalization of the publicly-traded U.S. equity market. The market
capitalization of individual companies in the Russell 3000 ranged from $10
million to $304.22 billion, with an average of $3.96 billion as of November
30, 1998.
The Frank Russell Company includes stocks in the index solely on their
market capitalization and weights them by relative market value. The Frank
Russell Company can change stocks and their weightings in the index. We'll
adjust the fund's portfolio to reflect the changes as appropriate.
The Russell 3000 is a trademark and service mark of the Frank Russell
Company. The fund isn't promoted, endorsed, sponsored or sold by and isn't
affiliated with the Frank Russell Company. A stock's presence in the Russell
3000 doesn't mean that the Frank Russell Company believes that it's an
attractive investment. The Frank Russell Company isn't responsible for any
literature about the fund and makes no representations or warranties about its
content.
Using the Russell 3000 as the measure of the U.S. equity market isn't a
fundamental investment policy, so we can substitute other indices without
shareholder approval. We'll notify you, however, before making any change in the
target index.
OTHER INVESTMENTS
The fund can hold other investments in seeking to achieve its investment
objective. These include:
- investments whose return depends on stock market prices, such as
stock index futures contracts, stock options and options (puts and
calls) on futures contracts, and debt securities whose prices or
interest rates are linked to the return of a recognized stock market
index;
- investments with equity characteristics, such as bonds convertible
into common stock, warrants, preferred stock, and depository
receipts for such securities; and
- short-term debt securities and other money market instruments,
including those denominated in foreign currencies, for cash
management purposes; and
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- options, futures contracts, options on futures, and other financial
contracts. The fund will make these types of investments for cash
management or hedging purposes, rather than for speculation.
For more information about these and other permitted fund investments and their
risks, see the SAI.
FUND MANAGEMENT
Teachers Advisors, Inc. (Advisors) manages the Stock Index Fund's assets,
under the supervision of the Board of Trustees of TIAA-CREF Life Funds, and is a
wholly-owned indirect subsidiary of Teachers Insurance and Annuity Association
of America (TIAA). Advisors is registered with the Securities and Exchange
Commission (SEC) under the Investment Advisers Act of 1940. The personnel of
Advisors who manage the fund also manage the investments of TIAA Separate
Account VA-1 and TIAA-CREF Mutual Funds and, through an affiliated investment
adviser, TIAA-CREF Investment Management, LLC, the investment accounts of the
College Retirement Equities Fund (CREF). Advisors is located at 730 Third
Avenue, New York, New York 10017.
Under its investment management agreement with TIAA-CREF Life Funds,
Advisors is entitled to an annual fee of 0.30% of the average daily net assets
of the Stock Index Fund for managing that fund. Advisors has voluntarily agreed
to waive a portion of its fee, so that the current investment advisory charge is
0.07% of fund's average daily net assets.
Advisors duties include conducting research, recommending investments, and
placing orders to buy and sell securities. Advisors is also responsible for
providing or obtaining at its own expense the services necessary to operate the
TIAA-CREF Life Funds on a day-to-day basis. These include custodial,
administrative, portfolio accounting, dividend disbursing, auditing, and
ordinary legal services.
RELATED FUND PERFORMANCE INFORMATION
The following table contains information about the historical performance
of the TIAA Separate Account VA-1 Stock Index Account (the "TIAA Stock Index
Account"), the only other existing stock index portfolio managed by Advisors, as
of September 30, 1998. The TIAA Stock Index Account is not a mutual fund; rather
it funds a variable annuity contract. It has an investment objective, policies,
strategies and risks substantially the same as those of the TIAA-CREF Life
Funds' Stock Index Fund. The data is provided to illustrate the experience of
Advisors' personnel in managing a substantially similar investment portfolio. It
doesn't represent the performance of the Stock Index Fund described in this
prospectus.
These investment results are unaudited. They aren't intended to predict or
suggest the returns that either the Stock Index Fund or TIAA Stock Index Account
might experience in the future. The results are net of investment management and
other operating expenses (including
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separate account charges of 0.30%) for the TIAA Stock Index Account and reflect
the waiver by Advisors of 0.23% of its 0.30% investment management fee. The
Stock Index Fund has been designed to have similar investment management expense
charges and waivers. Note that no separate account charges are deducted at the
fund level for the Stock Index Fund, although comparable charges will be
deducted at the separate account contract level.
<TABLE>
<CAPTION>
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TIAA Stock Index Account Average Annual Rates of Cumulative Rates of
(as of September 30, 1998) Total Return Total Return
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<S> <C> <C>
1 year 4.34% 4.34%
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3 years 19.64% 71.26%
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Since inception (11/1/94) 21.84% 116.76%
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</TABLE>
PRICING OF FUND SHARES
We determine the net asset value (NAV) per share (share price) of a fund
on each day the New York Stock Exchange is open for business, when trading
closes on all U.S. national exchanges where securities or other investments of
the fund are principally traded. We will not price fund shares on days that the
New York Stock Exchange is closed. We compute the fund's NAV by dividing the
value of a fund's assets, less its liabilities, by the number of outstanding
shares of that fund.
Except as noted below, we use market quotations or independent pricing
services to value securities and other instruments. If market quotations or
independent pricing services aren't readily available, we'll use a security's
"fair value", as determined in good faith by or under the direction of the
TIAA-CREF Life Funds' Board of Trustees. We also may use fair value if events
materially affecting the value of an investment (as determined in our sole
discretion) occur between the time when its price is determined and the time the
fund's net asset value is calculated.
OFFERING, PURCHASING AND REDEEMING SHARES
Shares of the Stock Index Fund are not sold directly to you, but rather
are sold in a continuous offering to TIAA-CREF Life separate accounts to fund
variable annuity or other insurance contracts. Your premiums under the contracts
are placed in the appropriate investment account of the separate account, and
the assets of the investment account are invested in the shares of the Stock
Index Fund. The separate account purchases and redeems shares of the fund for
net asset value without sales or redemption charges.
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For each day on which the fund's net asset value is calculated, the
separate account transmits to the fund any orders to purchase or redeem shares
of the fund based on the purchase payments, redemption requests, death benefits,
contract charges, and transfer requests from contractowners and beneficiaries
that have been processed on that day. The separate account purchases and redeems
shares of the fund at the fund's net asset value per share calculated as of that
same day.
For more information about investing in the fund, see the prospectus
describing the contract, which can be obtained by calling us toll-free at 800
842-2733, extension 5509.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The tax status of your investment in the fund depends upon your contract.
For a complete discussion of the tax status of your contract, please refer to
the prospectus describing the contract.
Shares in the Stock Index Fund may only be held through a variable annuity
or other variable insurance contract. Under current tax law, any dividend or
capital gains distributions from the fund will be exempt from current taxation
if left to accumulate within your variable contract. Withdrawals from your
contract may be taxed as ordinary income. You may also be subject to a 10%
penalty tax if a withdrawal is made before age 59 1/2.
The fund expects to declare and distribute to its shareholders (i.e.,
separate accounts) substantially all of its net investment income and net
realized capital gains. Normally, the fund will distribute dividends and capital
gains annually. In addition, the fund may occasionally be required to make
supplemental dividend or capital gains distributions at some other time during
the year.
All dividend and capital gains distributions from a fund will be
automatically reinvested by the separate account in additional shares of the
fund.
The fund intends to qualify for taxation as a "regulated investment
company" under the Internal Revenue Code so that it will not be subject to
federal income tax to the extent its income is distributed to shareholders. In
addition, the fund intends to qualify under the Internal Revenue Code with
respect to the diversification requirements related to the tax-deferred status
of insurance company separate accounts.
FINANCIAL HIGHLIGHTS INFORMATION
Because the fund has limited operating history, no financial highlights
information is included in this prospectus. Financial statements for the fund
are in the SAI, which is available free upon request.
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GENERAL MATTERS
VOTING RIGHTS
We don't plan to hold annual shareholder meetings. However, we may hold
special meetings to elect trustees, change fundamental policies, approve a
management agreement, or for other purposes. Each share (including fractional
shares) is entitled to one vote for each dollar of net asset value represented
by that share on all matters to which shareholders are entitled to vote. You
should refer to the SAI, as well as the separate prospectus describing your
contract and the separate account, which accompanies this prospectus, for more
information on your voting rights.
YEAR 2000 ISSUES
Many computer software systems in use today cannot recognize the year 2000
and may revert to 1900 or some other date because of the way in which dates were
encoded and calculated. The TIAA-CREF Life Funds could be adversely affected if
its computer systems or those of its external service providers do not properly
process and calculate date-related information and data on and after January 1,
2000. TIAA-CREF Life Funds, along with Advisors, have been actively working on
necessary changes to its computer systems to prepare for the Year 2000 and have
also obtained reasonable assurances from our service providers that they are
taking comparable steps for their computer systems. However, the steps we are
taking do not guarantee complete success or eliminate the possibility that
interaction with outside computer systems may have an adverse impact on the
TIAA-CREF Life Funds.
ELECTRONIC PROSPECTUSES
If you received this or the contract prospectus electronically and would
like a paper copies, please call 800 842-2733, extension 5509, and we will send
paper copies to you.
HOUSEHOLDING
To lower costs and eliminate duplicate documents sent to your home, we
may, if the SEC allows, begin mailing only one copy of this and the contract
prospectus, prospectus supplements, annual and semi-annual reports, or any other
required documents, to your household, even if more than one participant lives
there. If you would prefer to continue receiving your own copy of any of these
documents, you may call us toll-free at 800 842-2733, extension 5509, or write
us.
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[back cover]
IF YOU HAVE ANY QUESTIONS ABOUT THE TIAA-CREF LIFE FUND'S STOCK INDEX FUND OR
THE VARIABLE CONTRACT, PLEASE CALL US AT 800 223-1200.
More information about TIAA-CREF Life Funds can be found in the Statement of
Additional Information (SAI) for the funds dated January 4, 1999. When
available, the TIAA-CREF Life Funds will also provide more information about its
investments in its annual and semi-annual reports to shareholders. You can get
copies of the SAI and annual and semi-annual reports without charge by calling
800-842-2733, extension 5509 or writing us at TIAA-CREF Life Funds, 730 Third
Avenue, New York, New York 10017-3206. The SAI is "incorporated by reference"
into this prospectus - - that means it's legally part of the prospectus.
Information about TIAA-CREF Life Funds (including the SAI) can be reviewed and
copied at the Securities and Exchange Commission's (SEC) public reference room
(1-800-SEC-0330) in Washington, D.C. The information is also available through
the SEC's internet website at www.sec.gov. Copies of the information can also be
obtained, upon payment of a duplicating fee, by writing the SEC's Public
Reference Section , Washington, DC 20549-6009.
January 4, 1999
SEC File Nos. 333-61759, 811-08961
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STATEMENT OF ADDITIONAL INFORMATION
TIAA-CREF LIFE FUNDS
STOCK INDEX FUND
This Statement of Additional Information (SAI) is not a prospectus,
although it should be read carefully in conjunction with the TIAA-CREF Life
Funds' prospectus dated January 4, 1999 (the prospectus). A copy of the
prospectus may be obtained by writing us at TIAA-CREF Life Funds, 730 Third
Avenue, New York, New York 10017-3206 or by calling 800 842-2733, extension
5509. Terms used in the prospectus are incorporated in this SAI.
The date of this SAI is January 4, 1999.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Policies, Strategies and Restrictions..........................
Management of the Fund....................................................
Control Persons...........................................................
Investment Advisory and Other Services....................................
Fund History and Description of the Fund..................................
Valuation of Assets.......................................................
Brokerage Allocation......................................................
Performance Information...................................................
Tax Status................................................................
Underwriters..............................................................
Legal Matters.............................................................
Experts...................................................................
Financial Statements......................................................
</TABLE>
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For purposes of this SAI, the term "fund" shall refer to the TIAA-CREF
Life Funds' Stock Index Fund.
INVESTMENT POLICIES, STRATEGIES AND RESTRICTIONS
The following information is intended to supplement the description of the
investment objective and policies of the fund in the prospectus. Under the
Investment Company Act of 1940, as amended (the 1940 Act), any of the fund's
fundamental policies may not be changed without the vote of a majority of the
fund's outstanding voting securities (as defined in the 1940 Act). The
non-fundamental investment restrictions contained in "Non-Principal Investment
Strategies and Risk Considerations" below, may be changed by the TIAA-CREF Life
Funds' Board of Trustees at any time.
FUNDAMENTAL POLICIES
The following restrictions are fundamental policies of the fund:
1. The fund will not issue senior securities except as SEC regulations
permit;
2. The fund will not borrow money, except: (a) it may purchase
securities on margin, as described in restriction 9 below; and (b)
from banks (only in amounts not in excess of 33-1/3% of the market
value of the fund's assets at the time of borrowing), and, from
other sources, for temporary purposes (only in amounts not exceeding
5% of the fund's total assets taken at market value at the time of
borrowing);
3. The fund will not underwrite the securities of other companies,
except to the extent that it may be deemed an underwriter in
connection with the disposition of securities from its portfolio;
4. The fund will not, with respect to at least 75% of the value of its
total assets, invest more than 5% of its total assets in the
securities of any one issuer, other than securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities;
5. The fund will not invest in an industry if after giving effect to
that investment the fund's holding in that industry would exceed 25%
of its total assets; however, this restriction does not apply to
investments in obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities;
6. The fund will not purchase real estate or mortgages directly;
7. The fund will not purchase commodities or commodities contracts,
except to the extent financial contracts (such as futures) are
purchased as described herein;
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8. The fund will not make loans, except: (a) that the fund may make
loans of portfolio securities not exceeding 33-1/3% of the value of
its total assets, which are collateralized by either cash, United
States Government securities, or other means permitted by applicable
law, equal to at least the market value of the loaned securities, as
reviewed daily; (b) loans through entry into repurchase agreements;
(c) privately-placed debt securities may be purchased; (d)
participation interests in loans, and similar investments, may be
purchased; or (e) through an interfund loan program with affiliated
investment companies, to the extent permitted by applicable SEC
regulations; and
9. The fund will not purchase any security on margin except that the
fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities).
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change of values of portfolio securities will not be considered a
violation.
NON-PRINCIPAL INVESTMENT STRATEGIES AND RISKS
General
Besides equities, the fund can hold stock index futures contracts, options
(puts and calls) on futures contracts, and debt securities whose prices or
interest rates are linked to the return of a recognized stock market index, or
swap arrangements where the return is linked to a recognized stock market index.
The fund would make such investments in order to seek to match the total return
of Russell 3000. However, they might not track the return of the Russell 3000 in
all cases and can involve additional credit risks. Investing in options or
futures contracts and entering into equity swaps involve special risks. These
are discussed below. Such investing by the fund is subject to any necessary
regulatory approvals.
The fund can hold other types of securities with equity characteristics,
such as bonds convertible into common stock, warrants, preferred stock, and
depository receipts for such securities. These securities are generally subject
to the same types of market and financial risks that are described under "What
are the Principal Risks of Investing in the Fund?" in the Prospectus.
The fund can hold fixed-income securities that it acquires because of
mergers, recapitalizations, or otherwise. For liquidity, the fund can also
invest in short-term debt securities and other money-market instruments,
including those denominated in foreign currencies. Fixed-income securities,
including short-term debt securities and other money market instruments, are
subject to interest rate risks and financial risks. Interest rate risks are the
risks that the instrument's value will decline if interest rates change. A rise
in interest rates usually causes the market value of fixed-rate securities to go
down, while rate deductions usually result in a market
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value increase. Financial risks come from the possibility the issuer won't be
able to pay principal and interest when due.
The fund also can invest in options and futures, as well as newly
developed financial instruments, such as equity swaps and equity-linked
fixed-income securities, so long as these are consistent with its investment
objective and regulatory requirements.
These investments and other fund investment strategies are discussed in
detail below.
Options and Futures
The fund can buy and sell options (puts and calls) and futures to the
extent permitted by the New York State Insurance Department, the SEC, and the
Commodity Futures Trading Commission ("CFTC"). We do not intend to use options
and futures strategies in a speculative manner but rather we would use them
primarily as hedging techniques or for cash management purposes.
Options and futures transactions may increase the fund's transaction costs
and portfolio turnover rate and will be initiated only when consistent with its
investment objectives.
Options. Option-related activities could include: (1) the sale of covered
call option contracts, and the purchase of call option contracts for the purpose
of a closing purchase transaction; (2) buying covered put option contracts, and
selling put option contracts to close out a position acquired through the
purchase of such options; and (3) selling call option contracts or buying put
option contracts on groups of securities and on futures on groups of securities
and buying similar call option contracts or selling put option contracts to
close out a position acquired through a sale of such options. This list of
options-related activities is not intended to be exclusive, and the fund may
engage in other types of options transactions consistent with its investment
objective and policies and applicable law.
A call option is a short-term contract (generally for nine months or less)
which gives the purchaser of the option the right to purchase the underlying
security at a fixed exercise price at any time prior to the expiration of the
option regardless of the market price of the security during the option period.
As consideration for the call option, the purchaser pays the seller a premium,
which the seller retains whether or not the option is exercised. The seller of a
call option has the obligation, upon the exercise of the option by the
purchaser, to sell the underlying security at the exercise price at any time
during the option period. Selling a call option would benefit the seller if,
over the option period, the underlying security declines in value or does not
appreciate above the aggregate of the exercise price and the premium. However,
the seller risks an "opportunity loss" of profits if the underlying security
appreciates above the aggregate value of the exercise price and the premium.
The fund may close out a position acquired through selling a call option
by buying a call option on the same security with the same exercise price and
expiration date as the call option that
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it had previously sold on that security. Depending on the premium for the call
option purchased by the fund, the fund will realize a profit or loss on the
transaction.
A put option is a similar short-term contract that gives the purchaser of
the option the right to sell the underlying security at a fixed exercise price
at any time prior to the expiration of the option regardless of the market price
of the security during the option period. As consideration for the put option
the purchaser pays the seller a premium, which the seller retains whether or not
the option is exercised. The seller of a put option has the obligation, upon the
exercise of the option by the purchaser, to purchase the underlying security at
the exercise price at any time during the option period. The buying of a covered
put contract limits the downside exposure for the investment in the underlying
security to the combination of the exercise price less the premium paid. The
risk of purchasing a put is that the market price of the underlying stock
prevailing on the expiration date may be above the option's exercise price. In
that case the option would expire worthless and the entire premium would be
lost.
The fund may close out a position acquired through buying a put option by
selling a put option on the same security with the same exercise price and
expiration date as the put option which it had previously bought on the
security. Depending on the premium of the put option sold by the fund, the fund
would realize a profit or loss on the transaction.
In addition to options (both calls and puts) on individual securities,
there are also options on groups of securities, such as the Standard & Poor's
100 Index traded on the Chicago Board Options Exchange. There are also options
on the futures of groups of securities such as the Standard & Poor's 500 Stock
Index and the New York Stock Exchange Composite Index. The selling of such calls
can be used in anticipation of, or in, a general market or market sector decline
that may adversely affect the market value of the fund's portfolio of
securities. To the extent that the fund's portfolio of securities changes in
value in correlation with a given stock index, the sale of call options on the
futures of that index would substantially reduce the risk to the portfolio of a
market decline, and, by so doing, provides an alternative to the liquidation of
securities positions in the portfolio with resultant transaction costs. A risk
in all options, particularly the relatively new options on groups of securities
and on the futures on groups of securities, is a possible lack of liquidity.
This will be a major consideration before the fund deals in any option.
There is another risk in connection with selling a call option on a group
of securities or on the futures of groups of securities. This arises because of
the imperfect correlation between movements in the price of the call option on a
particular group of securities and the price of the underlying securities held
in the portfolio. Unlike a covered call on an individual security, where a large
movement on the upside for the call option will be offset by a similar move on
the underlying stock, a move in the price of a call option on a group of
securities may not be offset by a similar move in the price of securities held
due to the difference in the composition of the particular group and the
portfolio itself.
Futures. To the extent permitted by applicable regulatory authorities, the
fund may purchase and sell futures contracts on securities or other instruments,
or on groups or indexes of
- 4 -
<PAGE> 18
securities or other instruments. The purpose of hedging techniques using
financial futures is to protect the principal value of the fund against adverse
changes in the market value of securities or instruments in its portfolio, and
to obtain better returns on future investments than actually may be available at
the future time. Since these are hedging techniques, the gains or losses on the
futures contract normally will be offset by losses or gains respectively on the
hedged investment. Futures contracts also may be offset prior to the future date
by executing an opposite futures contract transaction.
A futures contract on an investment is a binding contractual commitment
which, if held to maturity, will result in an obligation to make or accept
delivery, during a particular future month, of the securities or instrument
underlying the contract. By purchasing a futures contract --assuming a "long"
position -- the fund legally will obligate itself to accept the future delivery
of the underlying security or instrument and pay the agreed price. By selling a
futures contract --assuming a "short" position -- it legally will obligate
itself to make the future delivery of the security or instrument against payment
of the agreed price.
Positions taken in the futures markets are not normally held to maturity,
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While futures positions taken by the fund usually will be
liquidated in this manner, the fund may instead make or take delivery of the
underlying securities or instruments whenever it appears economically
advantageous to the fund to do so. A clearing corporation associated with the
exchange on which futures are traded assumes responsibility for closing out
positions and guarantees that the sale and purchase obligations will be
performed with regard to all positions that remain open at the termination of
the contract.
A stock index futures contract, unlike a contract on a specific security,
does not provide for the physical delivery of securities, but merely provides
for profits and losses resulting from changes in the market value of the
contract to be credited or debited at the close of each trading day to the
respective accounts of the parties to the contract. On the contract's expiration
date, a final cash settlement occurs and the futures positions are closed out.
Changes in the market value of a particular stock index futures contract reflect
changes in the specified index of equity securities on which the future is
based.
Stock index futures may be used to hedge the equity investments of the
fund with regard to market (systematic) risk (involving the market's assessment
of overall economic prospects), as distinguished from stock specific risk
(involving the market's evaluation of the merits of the issuer of a particular
security). By establishing an appropriate "short" position in stock index
futures, the fund may seek to protect the value of its securities portfolio
against an overall decline in the market for equity securities. Alternatively,
in anticipation of a generally rising market, the fund can seek to avoid losing
the benefit of apparently low current prices by establishing a "long" position
in stock index futures and later liquidating that position as particular equity
securities are in fact acquired. To the extent that these hedging strategies are
successful, the fund will be affected to a lesser degree by adverse overall
market price movements, unrelated to the merits of specific portfolio equity
securities, than would otherwise be the case.
- 5 -
<PAGE> 19
Unlike the purchase or sale of a security, no price is paid or received by
the fund upon the purchase or sale of a futures contract. Initially, the fund
will be required to deposit in a custodial account an amount of cash, United
States Treasury securities, or other permissible assets equal to approximately
5% of the contract amount. This amount is known as "initial margin." The nature
of initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments to and from the broker, called "variation margin," will be made on a
daily basis as the price of the underlying stock index fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as "marking to the market." For example, when the fund has
purchased a stock index futures contract and the price of the underlying stock
index has risen, that position will have increased in value, and the fund will
receive from the broker a variation margin payment equal to that increase in
value. Conversely, where the fund has purchased a stock index futures contract
and the price of the underlying stock index has declined, the position would be
less valuable and the fund would be required to make a variation margin payment
to the broker. At any time prior to expiration of the futures contract, the fund
may elect to close the position by taking an opposite position which will
operate to terminate the fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the fund, and the fund realizes a loss or a gain.
There are several risks in connection with the use of a futures contract
as a hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the futures contracts and movements in the
securities or instruments which are the subject of the hedge. The fund will
attempt to reduce this risk by engaging in futures transactions, to the extent
possible, where, in our judgment, there is a significant correlation between
changes in the prices of the futures contracts and the prices of the fund's
portfolio securities or instruments sought to be hedged.
Successful use of futures contracts for hedging purposes also is subject
to the user's ability to predict correctly movements in the direction of the
market. For example, it is possible that, where the fund has sold futures to
hedge its portfolio against declines in the market, the index on which the
futures are written may advance and the values of securities or instruments held
in the fund's portfolio may decline. If this occurred, the fund would lose money
on the futures and also experience a decline in value in its portfolio
investments. However, we believe that over time the value of the fund's
portfolio will tend to move in the same direction as the market indices which
are intended to correlate to the price movements of the portfolio securities or
instruments sought to be hedged. It also is possible that, for example, if the
fund has hedged against the possibility of the decline in the market adversely
affecting stocks held in its portfolio and stock prices increased instead, the
fund will lose part or all of the benefit of increased value of those stocks
that it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the fund has insufficient cash,
it may have to sell securities or instruments to meet daily variation margin
requirements. Such sales may be, but will not necessarily be, at
- 6 -
<PAGE> 20
increased prices which reflect the rising market. The fund may have to sell
securities or instruments at a time when it may be disadvantageous to do so.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures contracts and the
portion of the portfolio being hedged, the prices of futures contracts may not
correlate perfectly with movements in the underlying security or instrument due
to certain market distortions. First, all transactions in the futures market are
subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the index and futures markets. Second, the margin requirements in the
futures market are less onerous than margin requirements in the securities
market, and as a result the futures market may attract more speculators than the
securities market does. Increased participation by speculators in the futures
market also may cause temporary price distortions. Due to the possibility of
price distortion in the futures market and also because of the imperfect
correlation between movements in the futures contracts arid the portion of the
portfolio being hedged, even a correct forecast of general market trends by
Advisors, the investment advisor for the fund, still may not result in a
successful hedging transaction over a very short time period.
The fund may also use futures contracts and options on futures contracts
to manage its cash flow more effectively. To the extent that the fund enters
into non-hedging positions, it will do so only in accordance with certain CFTC
exemptive provisions. Thus, pursuant to CFTC Rule 4.5, the aggregate initial
margin and premiums required to establish non-hedging positions in commodity
futures or commodity options contracts may not exceed 5% of the liquidation
value of the fund's portfolio, after-taking into account unrealized profits and
unrealized losses on any such contracts it has entered into (provided that the
in-the-money amount of an option that is in-the-money when purchased may be
excluded in computing such 5%).
Firm Commitment Agreements and Purchase of "When-Issued" Securities
The fund can enter into firm commitment agreements for the purchase of
securities on a specified future date. We expect that these transactions will be
relatively infrequent. When the fund enters into a firm commitment agreement,
liability for the purchase price -- and the rights and risks of ownership of the
securities -- accrues to the fund at the time it becomes obligated to purchase
such securities, although delivery and payment occur at a later date.
Accordingly, if the market price of the security should decline, the effect of
the agreement would be to obligate the fund to purchase the security at a price
above the current market price on the date of delivery and payment. During the
time the fund is obligated to purchase such securities, it will be required to
segregate assets. See "Segregated Accounts," below.
Securities Lending
Subject to investment restriction 8(a) (relating to loans of portfolio
securities) set forth above, the fund may lend its securities to brokers and
dealers that are not affiliated with TIAA-CREF Life Insurance Company, are
registered with the SEC and are members of the NASD, and
- 7 -
<PAGE> 21
also to certain other financial institutions. All loans will be fully
collateralized. In connection with the lending of its securities, the fund will
receive as collateral cash, securities issued or guaranteed by the United States
Government (i.e., Treasury securities), or other collateral permitted by
applicable law, which at all times while the loan is outstanding will be
maintained in amounts equal to at least 102% of the current market value of the
loaned securities, or such lesser percentage as may be permitted by the
Securities and Exchange Commission (SEC) (not to fall below 100% of the market
value of the loaned securities), as reviewed daily. By lending its securities,
the fund will receive amounts equal to the interest or dividends paid on the
securities loaned and in addition will expect to receive a portion of the income
generated by the short-term investment of cash received as collateral or,
alternatively, where securities or a letter of credit are used as collateral, a
lending fee paid directly to the fund by the borrower of the securities. Such
loans will be terminable by the fund at any time and will not be made to
affiliates of TIAA. The fund may terminate a loan of securities in order to
regain record ownership of, and to exercise beneficial rights related to, the
loaned securities, including but not necessarily limited to voting or
subscription rights, and may, in the exercise of its fiduciary duties, terminate
a loan in the event that a vote of holders of those securities is required on a
material matter. The fund may pay reasonable fees to persons unaffiliated with
the fund for services or for arranging such loans. Loans of securities will be
made only to firms deemed creditworthy. As with any extension of credit,
however, there are risks of delay in recovering the loaned securities, or in
liquidating collateral, should the borrower of securities default, become the
subject of bankruptcy proceedings, or otherwise be unable to fulfill its
obligations or fail financially.
Illiquid Securities
The fund can invest up to 15 percent of its assets in investments that may
not be readily marketable. It may be difficult to sell these investments for
their fair market value.
Repurchase Agreements
Repurchase agreements are one of several short-term vehicles the fund can
use to manage cash balances effectively. In a repurchase agreement, we buy an
underlying debt instrument on condition that the seller agrees to buy it back at
a fixed time (usually a relatively short period) and price. The period from
purchase to repurchase is usually no more than a week and never more than a
year. Repurchase agreements have the characteristics of loans, and will be fully
collateralized (either with physical securities or evidence of book entry
transfer to the account of the custodian bank) at all times. During the term of
the repurchase agreement, the fund retains the security subject to the
repurchase agreement as collateral securing the seller's repurchase obligation,
continually monitors the market value of the security subject to the agreement,
and requires the fund's seller to deposit with the fund additional collateral
equal to any amount by which the market value of the security subject to the
repurchase agreement falls below the resale amount provided under the repurchase
agreement. The fund will enter into repurchase agreements only with member banks
of the Federal Reserve System, and with primary dealers in United States
Government securities or their wholly-owned subsidiaries whose creditworthiness
has been reviewed and found satisfactory by Advisors and who have, therefore,
been determined to present minimal credit risk.
- 8 -
<PAGE> 22
Securities underlying repurchase agreements will be limited to
certificates of deposit, commercial paper, bankers' acceptances, or obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities, in which the fund entering into the agreement may otherwise
invest.
If a seller of a repurchase agreement defaults and does not repurchase the
security subject to the agreement, the fund entering into the agreement would
look to the collateral security underlying the seller's repurchase agreement,
including the securities subject to the repurchase agreement, for satisfaction
of the seller's obligation to the fund; in such event the fund might incur
disposition costs in liquidating the collateral and might suffer a loss if the
value of the collateral declines. In addition, if bankruptcy proceedings are
instituted against a seller of a repurchase agreement, realization upon the
collateral may be delayed or limited.
Swap Transactions
The fund may, to the extent permitted by the SEC, enter into privately
negotiated "swap" transactions with other financial institutions in order to
take advantage of investment opportunities generally not available in public
markets. In general, these transactions involve "swapping" a return based on
certain securities, instruments, or financial indices with another party, such
as a commercial bank, in exchange for a return based on different securities,
instruments, or financial indices.
By entering into a swap transaction, the fund may be able to protect the
value of a portion of its portfolio against declines in market value. The fund
may also enter into swap transactions to facilitate implementation of allocation
strategies between different market segments or countries or to take advantage
of market opportunities which may arise from time to time. The fund may be able
to enhance its overall performance if the return offered by the other party to
the swap transaction exceeds the return swapped by the fund. However, there can
be no assurance that the return the fund receives from the counterparty to the
swap transaction will exceed the return it swaps to that party.
While the fund will only enter into swap transactions with counterparties
it considers creditworthy (and will monitor the creditworthiness of parties with
which it enters into swap transactions), a risk inherent in swap transactions is
that the other party to the transaction may default on its obligations under the
swap agreement. If the other party to the swap transaction defaults on its
obligations, the fund entering into the agreement would be limited to the
agreement's contractual remedies. There can be no assurance that the fund will
succeed when pursuing its contractual remedies. To minimize the fund's exposure
in the event of default, it will usually enter into swap transactions on a net
basis (i.e., the parties to the transaction will net the payments payable to
each other before such payments are made). When the fund enters into swap
transactions on a net basis, the net amount of the excess, if any, of the fund's
obligations over its entitlements with respect to each such swap agreement will
be accrued on a daily basis and an amount of liquid assets having an aggregate
market value at least equal to the accrued excess will be segregated by the
fund's custodian. To the extent the fund enters into swap transactions other
than on a net basis, the amount segregated will be the full amount of the fund's
obligations, if any,
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<PAGE> 23
with respect to each such swap agreement, accrued on a daily basis. See
"Segregated Accounts," below.
Swap agreements may be considered illiquid by the SEC staff and subject to
the limitations on illiquid investments. See "Illiquid Securities" above.
To the extent that there is an imperfect correlation between the return
the fund is obligated to swap and the securities or instruments representing
such return, the value of the swap transaction may be adversely affected. No
fund therefore will enter into a swap transaction unless it owns or has the
right to acquire the securities or instruments representative of the return it
is obligated to swap with the counterparty to the swap transaction. It is not
the intention of any fund to engage in swap transactions in a speculative manner
but rather primarily to hedge or manage the risks associated with assets held
in, or to facilitate the implementation of portfolio strategies of purchasing
and selling assets for, the fund.
Segregated Accounts
In connection with when-issued securities, firm commitment agreements, and
certain other transactions in which the fund incurs an obligation to make
payments in the future, the fund may be required to segregate assets with its
custodian bank in amounts sufficient to settle the transaction. To the extent
required, such segregated assets can consist of liquid assets, including equity
or other securities, or other instruments such as cash, United States Government
securities or other obligations as may be permitted by law.
Investment Companies
The fund can invest up to 10 percent of its assets in other investment
companies.
Borrowing
The fund can borrow money from banks (no more than 33-1/3 percent of the
market value of its assets at the time of borrowing), rather than through the
sale of portfolio securities, when such borrowing appears more attractive for
the fund. It can also borrow money from other sources temporarily (no more than
5 percent of the total market value of its assets at the time of borrowing),
when, for example, the fund needs to meet liquidity requirements caused by
greater than anticipated redemptions. See "Fundamental Policies" above.
Other Investment Techniques and Opportunities
The fund may take certain actions with respect to merger proposals, tender
offers, conversion of equity-related securities and other investment
opportunities with the objective of enhancing the portfolio's overall return,
regardless of how these actions may affect the weight of the particular
securities in the fund's portfolio. It is not our policy to select investments
based primarily on the possibility of one or more of these investment techniques
and opportunities being presented.
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<PAGE> 24
PORTFOLIO TURNOVER
The transactions the fund engages in are reflected in its portfolio
turnover rate. The rate of portfolio turnover is calculated by dividing the
lesser of the amount of purchases or sales of portfolio securities during the
fiscal year by the monthly average of the value of the fund's portfolio
securities (excluding from the computation all securities, including options,
with maturities at the time of acquisition of one year or less). A high rate of
portfolio turnover generally involves correspondingly greater brokerage
commission expenses, which must be borne directly by the fund and ultimately by
the fund's shareholders. However, because portfolio turnover is not a limiting
factor in determining whether or not to sell portfolio securities, a particular
investment may be sold at any time, if investment judgment or account operations
make a sale advisable.
The fund does not have a fixed policy on portfolio turnover although,
because a higher portfolio turnover rate will increase brokerage costs, Advisors
will carefully weigh the added costs of short term investment against the gains
anticipated from such transactions.
MANAGEMENT OF THE FUND
THE BOARD
A Board of Trustees (the Board) oversees the TIAA-CREF Life Funds'
business affairs and is responsible for major decisions about its investment
objective and policies. The Board delegates the day-to-day management of the
fund to Advisors and its officers (see below). The Board meets periodically to
review the fund's activities, contractual arrangements with companies that
provide services to the fund, and the performance of the investment portfolio.
TRUSTEES AND OFFICERS OF THE TIAA-CREF LIFE FUNDS
<TABLE>
<CAPTION>
POSITION(S) HELD
NAME AND ADDRESS* AGE WITH REGISTRANT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- ----------------- ------------------------------------------
<S> <C> <C> <C>
Laurence W. Franz 58 Trustee Vice President, Business and Finance, and
Canisius College Treasurer, Canisius College
2001 Main Street
Buffalo, New York 14208
Jeanmarie C. Grisi 39 Trustee Treasurer, Carnegie Corporation of New York
Carnegie Corporation of New York (a philanthropic grantmaking foundation)
437 Madison Avenue
New York, New York 10022
Richard M. Norman 53 Trustee Vice President for Administration and
Rutgers University Associate Treasurer, Rutgers, The State
Old Queens Building, Room 101 University of New Jersey
Somerset-George Street
New Brunswick, New Jersey 08903
</TABLE>
- 11 -
<PAGE> 25
<TABLE>
<S> <C> <C> <C>
Thomas G. Walsh** 56 Chairman of the President, Teachers Personal Investors
Board and Services, Inc. ("TPIS"), since February 1994,
President and Executive Vice President, TIAA and
CREF
John J. McCormack** 54 Trustee and Executive Vice President, TIAA and CREF,
Executive Vice since November 1983 and President, TIAA-
President CREF Enterprises, since June 1998
Richard L. Gibbs 51 Executive Vice Executive Vice President, TIAA, CREF,
President TIAA-CREF Investment Management, LLC
("Investment Management") and TIAA-CREF
Individual & Institutional Services, Inc.
("Services"), since 1993
Peter C. Clapman 62 Senior Vice Senior Vice President and Chief Counsel,
President, Investments, TIAA and CREF
Secretary and
Chief Counsel,
Investments
Richard J. Adamski 56 Vice President Vice President and Treasurer, Investment
and Treasurer Management and Services, since January 1992
and TPIS, since 1994, and Vice President and
Treasurer, TIAA and CREF
</TABLE>
* The address for all officers of the TIAA-CREF Life Funds is 730 Third
Avenue, New York, New York 10017-3206.
** This Trustee is or may be an "interested person" within the meaning of the
Investment Company Act of 1940.
COMPENSATION OF TRUSTEES
Trustees who are not active officers of Teachers Insurance and Annuity
Association (TIAA) each receive a total of $5,000 per year, plus $1,000 for each
meeting of the Board of Trustees attended, for their service to both the
TIAA-CREF Life Funds and TIAA Separate Account VA-1 (the "Fund Complex").
Compensation is allocated between the companies in the Fund Complex based on
assets. Trustees who are active officers of TIAA do not receive any additional
compensation for their services as trustees. (See "Advisors and TIAA" below).
The following table sets forth the expected compensation to be paid to the
TIAA-CREF Life Funds' trustees for the year ended December 31, 1998:
- 12 -
<PAGE> 26
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Aggregate Estimated
Compensation Pension or Retirement Annual Total
NAME OF PERSON, From TIAA-CREF Benefits Accrued As Benefits Upon Compensation From
POSITION Life Funds Part of Fund Expenses Retirement Fund Complex**
-------- ---------- --------------------- ---------- --------------
<S> <C> <C> <C> <C>
Laurence W. Franz, $ 20 $-0- $-0- $5,500
Trustee
Jeanmarie C. Grisi, $-0-* $-0- $-0-* $ -0-
Trustee
Richard M. Norman, $ 20 $-0- $-0- $5,500
Trustee
</TABLE>
* Ms. Grisi has declined to accept compensation for her services.
** For purposes of this information, the Fund Complex consists of the
TIAA-CREF Life Funds and TIAA Separate Account VA-1.
CONTROL PERSONS
Teachers Insurance and Annuity Association (TIAA), as the contributor of
the initial capital for the TIAA-CREF Life Funds, owned 99.6% of the shares of
the fund as of December 31, 1998.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY SERVICES
As explained in the prospectus, investment advisory services and related
services for the TIAA-CREF Life Funds are provided by personnel of Advisors,
which is registered under the Investment Advisers Act of 1940. Advisors manages
the investment and reinvestment of the assets of the TIAA-CREF Life Funds,
subject to the direction and control of the TIAA-CREF Life Funds' Board of
Trustees. Advisors' will perform all research, make recommendations, and place
orders for the purchase and sale of securities. Advisors also provides for
portfolio accounting, custodial, and related services for the assets of the
TIAA-CREF Life Funds.
As described in the prospectus, the investment management agreement
between Advisors and the TIAA-CREF Life Funds provides for payment of an
investment advisory fee of 0.30% of net assets annually for managing the Stock
Index Fund. Currently, with Advisors waiving a portion of that fee, a daily
deduction from the net assets of the Stock Index Fund is made at an annual rate
of 0.07% for expenses related to the management of the assets of the Stock
Index Fund.
- 13 -
<PAGE> 27
ADVISORS AND TIAA
Advisors is a wholly-owned indirect subsidiary of TIAA. The main offices
of both TIAA and Advisors are at 730 Third Avenue, New York, New York
10017-3206. TIAA is a stock life insurance company, organized under the laws of
New York State. It was founded on March 4, 1918, by the Carnegie Foundation for
the Advancement of Teaching. TIAA is the companion organization of the College
Retirement Equities Fund (CREF), the first company in the United States to issue
a variable annuity. Together, TIAA and CREF form the principal retirement system
for the nation's education and research communities and the largest retirement
system in the world, based on assets under management. TIAA-CREF serves
approximately two million people. As of September 30, 1998, TIAA's assets were
approximately $100.3 billion; the combined assets for TIAA and CREF totalled
approximately $222.1 billion.
TIAA holds all of the shares of TIAA-CREF Enterprises, Inc., which in turn
holds all the shares of Advisors, TIAA-CREF Life Insurance Company, and Teachers
Personal Investors Services, Inc., the principal underwriter for the TIAA-CREF
Life Funds and the TIAA-CREF Life Insurance Company variable annuity contracts
funded by the TIAA-CREF Life Funds. TIAA also holds all the shares of TIAA-CREF
Investment Management, LLC ("Investment Management"). Investment Management
provides investment advisory services to the College Retirement Equities Fund,
TIAA's companion organization. All of the foregoing are affiliates of the
TIAA-CREF Life Funds and Advisors.
CUSTODIAN
The custodian for the assets of the fund is State Street Bank & Trust
Company ("State Street"), 225 Franklin Street, Boston, Massachusetts 02209.
ADMINISTRATIVE SERVICES
Teachers Advisors has retained State Street to provide the TIAA-CREF Life
Funds with certain administrative services, including preparation of each fund's
federal, state and local tax returns, preparation of fund financial information,
and various other administrative services. Advisors, not the TIAA-CREF Life
Funds, has agreed to pay State Street a fee for such services.
AUDITORS
The financial statements of TIAA-CREF Life Funds are audited by Ernst &
Young LLP. The principal business address of Ernst & Young LLP is 787 Seventh
Avenue, New York, New York 10019.
- 14 -
<PAGE> 28
FUND HISTORY AND DESCRIPTION OF THE FUND
TIAA-CREF Life Funds is a Delaware business trust organized on August 13,
1998, and is registered with the U.S. Securities and Exchange Commission (SEC)
as a diversified "open-end" management investment company. It currently has only
one investment portfolio, the Stock Index Fund (fund). As a Delaware business
trust, the fund's operations are governed by its Declaration of Trust dated
August 13, 1998, as amended (the Declaration). A copy of the fund's Certificate
of Trust, dated August 13, 1998, is on file with the Office of the Secretary of
State of the State of Delaware.
SHAREHOLDERS MEETINGS AND VOTING RIGHTS
Under the Declaration, the TIAA-CREF Life Funds are not required to hold
annual meetings to elect Trustees or for other purposes, and therefore, we do
not anticipate that the fund will hold shareholders' meetings unless required by
law. The TIAA-CREF Life Funds 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
TIAA-CREF Life Funds.
With regard to matters for which the Investment Company Act of 1940
requires a shareholder vote, the separate account which issues the variable
contracts funded by the TIAA-CREF Life Funds, as the legal owner of the
TIAA-CREF Life Funds shares, typically votes fund shares in accordance with
instructions received from contractowners (or annuitants or beneficiaries
thereunder) having a voting interest in the separate account. Shares held by the
separate account for which no instructions are received are generally voted by
the separate account for or against any proposition, or in abstention, in the
same proportion as the shares for which instructions have been received. You
should refer to the separate prospectus, which accompanies this prospectus,
describing your contract and the separate account, for more information on your
voting rights.
SHARES
The fund is authorized to issue an unlimited number of shares of
beneficial interest in the fund, all without par value. Shares are divided into
and may be issued in a designated series representing beneficial interests in
one of the fund's investment portfolios. There is currently one series of shares
and one investment portfolio.
Each share of a series issued and outstanding is entitled to participate
equally in dividends and distributions declared by such series and, upon
liquidation or dissolution, in net assets allocated to such series remaining
after satisfaction of outstanding liabilities. The shares of each series, when
issued, will be fully paid and non-assessable and have no preemptive or
conversion rights.
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<PAGE> 29
Each share (including fractional shares) is entitled to one vote for each
dollar of net asset value represented by the share on all matters to which the
holder of that share is entitled to vote. The shares do not have cumulative
voting rights.
Teachers Insurance and Annuity Association of America (TIAA) provided the
initial capital for the fund by purchasing $25 million of shares of the Stock
Index Fund. A separate account of TIAA-CREF Life Insurance Company invested an
additional $100,000 in the fund. Such shares were acquired for investment and
can only be disposed of by redemption.
ADDITIONAL PORTFOLIOS
The TIAA-CREF Life Funds currently consists of a single investment
portfolio, or fund. Pursuant to the Declaration, the Trustees may establish
additional investment funds (technically "series" of shares).
VALUATION OF ASSETS
The assets of the TIAA-CREF Life Funds are valued as of the close of each
valuation day in the following manner:
EQUITY SECURITIES
Investments for which market quotations are readily available are valued
at the market value of such investments, determined as follows:
Equity securities listed or traded on the New York Stock Exchange or the
American Stock Exchange are valued based on their last sale price on such
exchange on the date of valuation, or at the mean of the closing bid and asked
prices if no sale is reported. Equity securities which are listed or traded on
any other exchange are valued in a comparable manner on the principal exchange
where traded.
Equity securities traded in the United States over-the-counter market are
valued based on the last sale price on the date of valuation for NASDAQ National
Market System securities, or at the mean of the closing bid and asked prices if
no sale is reported. Other U.S. over-the-counter equity securities are valued at
the mean of the closing bid and asked prices.
Equity securities may be valued at fair value as determined in good faith
under the direction of the Board of Trustees if events materially affecting the
value of an investment (as determined in our sole discretion) occur between the
time when its price is determined and the time the fund's net asset value is
calculated.
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<PAGE> 30
MONEY MARKET INSTRUMENTS
Money market instruments for which market quotations are readily available
are valued based on the most recent bid price or the equivalent quoted yield for
such securities (or those of comparable maturity, quality, and type). Values for
money market instruments will be obtained either from one or more of the major
market makers or from one or more of the financial information services for the
securities to be valued.
OPTIONS
Portfolio investments underlying options are valued as described above.
Stock options written by the fund are valued at the last quoted sale price, or
at the closing bid price if no sale is reported for the day of valuation as
determined on the principal exchange on which the option is traded. The value of
the fund's net assets will be increased or decreased by the difference between
the premiums received on writing options and the costs of liquidating such
positions measured by the closing price of the options on the date of valuation.
For example, when the fund writes a call option, the amount of the premium
is included in the fund's assets and an equal amount is included in its
liabilities. The liability thereafter is adjusted to the current market value of
the call. Thus, if the current market value of the call exceeds the premium
received, the excess would be unrealized depreciation; conversely, if the
premium exceeds the current market value, such excess would be unrealized
appreciation. If a call expires or if the fund enters into a closing purchase
transaction it realizes a gain (or a loss if the cost of the transaction exceeds
the premium received when the call was written) without regard to any unrealized
appreciation or depreciation in the underlying securities, and the liability
related to such call is extinguished. If a call is exercised, the fund realizes
a gain or loss from the sale of the underlying securities and the proceeds of
the sale increased by the premium originally received.
A premium paid on the purchase of a put will be deducted from the fund's
assets and an equal amount will be included as an investment and subsequently
adjusted to the current market value of the put. For example, if the current
market value of the put exceeds the premium paid, the excess would be unrealized
appreciation; conversely, if the premium exceeds the current market value, such
excess would be unrealized depreciation.
Stock and bond index futures, and options thereon, which are traded on
commodities exchanges, are valued at their last sale prices as of the close of
such commodities exchanges.
INVESTMENTS FOR WHICH MARKET QUOTATIONS ARE NOT READILY AVAILABLE
Portfolio securities or other assets for which market quotations are not
readily available will be valued at fair value as determined in good faith under
the direction of the Board of Trustees.
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<PAGE> 31
BROKERAGE ALLOCATION
Advisors is responsible for decisions to buy and sell securities for the
fund as well as for selecting brokers and, where applicable, negotiating the
amount of the commission rate paid. It is the intention of Advisors to place
brokerage orders with the objective of obtaining the best execution, which
includes such factors as best price, research and available data. When
purchasing or selling securities traded on the over-the-counter market, Advisors
generally will execute the transactions with a broker engaged in making a market
for such securities. When Advisors deems the purchase or sale of a security to
be in the best interests of the fund, its personnel may, consistent with their
fiduciary obligations, decide either to buy or to sell a particular security for
the fund at the same time as for TIAA Separate Account VA-1, TIAA-CREF Mutual
Funds or any other investment account that it may be managing, or at the same
time as for a CREF account or other account that it may also be managing on
behalf of Investment Management, the other investment adviser affiliated with
TIAA. In that event, allocation of the securities purchased or sold, as well as
the expenses incurred in the transaction, will be made in an equitable manner.
Domestic brokerage commissions are negotiated, as there are no standard
rates. All brokerage firms provide the service of execution of the order made;
some brokerage firms also provide research and statistical data, and research
reports on particular companies and industries are customarily provided by
brokerage firms to large investors. In negotiating commissions, consideration is
given by Advisors to the quality of execution provided and to the use and value
of the data. The valuation of such data may be judged with reference to a
particular order or, alternatively, may be judged in terms of its value to the
overall management of the portfolio.
Advisors will place orders with brokers providing useful research and
statistical data services if reasonable commissions can be negotiated for the
total services furnished even though lower commissions may be available from
brokers not providing such services. Advisors follows guidelines established by
the Board for the placing of orders with the brokers providing such services.
Research or services obtained for the fund may be used by personnel of
Advisors in managing other investment company accounts, or the CREF accounts for
Investment Management. In such circumstances, the expenses incurred will be
allocated in an equitable manner consistent with the fiduciary obligations of
personnel of Advisors to the fund.
PERFORMANCE INFORMATION
From time to time, we will advertise the total return and average annual
total return of the fund. Total return is computed on a per share basis and
assumes the reinvestment of dividends and distributions. Total return generally
is expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset value
per share at the beginning of the period. Advertisements may include
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<PAGE> 32
the percentage rate of total return or may include the value of a hypothetical
investment at the end of the period, which assumes the application of the
percentage rate of total return.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of a
stated period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of the fund's
performance will include the fund's average annual total return for one-, five-
and ten-year periods (and occasionally other periods as well).
All performance figures are based on past investment results. They aren't
a guarantee that the fund will perform equally or similarly in the future. Write
or call us for current performance figures for the fund.
CALCULATION OF PERFORMANCE DATA
We may quote the fund's performance in various ways. All performance
information in advertising is historical and is not intended to indicate future
returns. The fund's share price, yield, and total return fluctuate in response
to market conditions and other factors, and the value of fund shares when
redeemed may be more or less than their original cost. Performance of the fund
will be presented net of any separate account fees and charges.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the fund's
returns, including the effect of reinvesting dividends and capital gain
distributions, and any change in the fund's NAV over a stated period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the fund over a stated period, and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period according to the following formula:
n
P (1 + T) = ERV
where: P = the hypothetical initial payment
T = average annual total return
n = number of years in the period
ERV = ending redeemable value of the hypothetical
payment made at the beginning of the one-, five-,
or 10-year period at the end of the one-, five-,
or 10-year period (or fractional portion thereof).
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<PAGE> 33
For example, a cumulative return of 100% over ten years would produce an average
annual return of 7.18%, which is the steady annual rate that would equal 100%
growth on a compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that the fund's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as opposed to
the actual year-to-year performance of the fund.
In addition to average annual returns, we may quote the fund's unaveraged
or cumulative total returns reflecting the actual change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, or a series of redemptions, over any
time period. Total returns may be broken down into their components of income
and capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted on a before or after tax basis. Total
returns, yields, and other performance information may be quoted numerically or
in a table, graph, or similar illustration.
PERFORMANCE COMPARISONS
Performance information for the fund may be compared in advertisements,
sales literature, and reports to Shareholders, to the performance information
reported by other investments and to various indices and averages. Such
comparisons may be made with, but are not limited to (1) Frank Russell Co. Inc.
indices, (2) the S&P 500, (3) the Dow Jones Industrial Average ("DJIA"), (4)
Lipper Analytical Services, Inc. Mutual Fund Performance Analysis Reports and
the Lipper General Equity Funds Average, (5) Money Magazine Fund Watch, (6)
Business Week's Mutual Fund Scoreboard, (7) SEI Funds Evaluation Services Equity
Fund Report, (8) CDA Mutual Funds Performance Review and CDA Growth Mutual Fund
Performance Index, (9) Value Line Composite Average (geometric), (10) Wilshire
Associates indices, (11) the Consumer Price Index, published by the U.S. Bureau
of Labor Statistics (measurement of inflation), (12) Morningstar, Inc., and (13)
VARDS. We may also discuss ratings or rankings received from these entities,
accompanied in some cases by an explanation of those ratings or rankings, when
applicable. In addition, advertisements may discuss the performance of the
indices listed above.
The performance of the fund also may be compared to other indices or
averages that measure performance of a pertinent group of securities. You should
keep in mind that the composition of the investments in the reported averages
will not be identical to that of the fund and that certain formula calculations
(e.g., yield) may differ from index to index. In addition, there can be no
assurance that any of the funds will continue its performance as compared to
such indices.
We may also advertise ratings or rankings the fund receives from various
rating services and organizations, including but not limited to any organization
listed above.
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<PAGE> 34
The fund is not promoted, sponsored, endorsed, or sold by, nor affiliated
with, Frank Russell Company. Frank Russell Company is not responsible for and
has not reviewed the fund literature or publications and makes no representation
or warranty, express or implied, as to their accuracy, completeness, or
otherwise. Frank Russell Company reserves the right, at any time and without
notice, to change or terminate the Russell 3000 Index. Frank Russell Company has
no obligation to take the needs of the fund or the separate account
contractowners into consideration in determining the index. Frank Russell
Company's publication of the Russell 3000 Index in no way suggests or implies an
opinion by Frank Russell Company as to the attractiveness or appropriateness of
investment in any or all of the securities upon which the Index is based. Frank
Russell Company makes no representation, warranty, or guarantee as to the
accuracy, completeness or reliability of the Index or any data included in the
Index. Frank Russell Company makes no representation or warranty regarding the
use, or the results of use, of the Index or any securities comprising the Index.
FRANK RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND OR NATURE,
INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA OR SECURITIES INCLUDED
THEREIN.
ILLUSTRATING COMPOUNDING, TAX DEFERRAL, AND EXPENSE DEDUCTIONS
We may illustrate in advertisements, sales literature, and reports to
contractowners or annuitants the effects of tax deferral and/or compounding of
earnings on an investment in the TIAA-CREF Life Funds. We may do this using a
hypothetical investment earning a specified rate of return. To illustrate the
effects of compounding, we would show how the total return from an investment of
the same dollar amount, earning the same or different interest rate, varies
depending on when the investment was made. To illustrate the effects of tax
deferral, we will show how the total return from an investment of the same
dollar amount, earning the same or different interest rates, for individuals in
the same tax bracket, would vary between tax-deferred and taxable investments.
We may also illustrate in advertisements, sales literature, and reports to
contractowners or annuitants the effect of an investment fund's expenses on
total return over time. We may do this using a hypothetical investment earning a
specified rate of return. We would show how the total return, net of expenses,
from an investment of the same dollar amount in funds with the same investment
results but different expense deductions varies increasingly over time. In the
alternative, we would show the difference in the dollar amount of total expense
charges paid over time by an investor in two or more different funds that have
the same annual total return but different asset-based expense charges. We may
also compare the TIAA-CREF Life Funds' expense charges to those of other
investment products.
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<PAGE> 35
NET ASSET VALUE
Charts and graphs using the fund's NAVs, adjusted NAVs, and benchmark
indices may be used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its return.
MOVING AVERAGES
We may illustrate the fund's performance using moving averages. A
long-term moving average is the average of each week's adjusted closing NAV for
a specified period. A short-term moving average is the average of each day's
adjusted closing NAV for a specified period. "Moving Average Activity
Indicators" combine adjusted closing NAVs from the last business day of each
week with moving averages for a specified period to produce indicators showing
when an NAV has crossed, stayed above, or stayed below its moving average.
TAX STATUS
Although the TIAA-CREF Life Funds are organized as a Delaware business
trust, neither the TIAA-CREF Life Funds nor the fund will be subject to any
corporate excise or franchise tax in the State of Delaware, nor will it be
liable for Delaware income taxes provided that the fund and any additional fund
added qualifies as a "regulated investment company" ("RIC") for federal income
tax purposes and satisfies certain income source requirements of Delaware law.
If the fund or any additional fund so qualifies and distributes all of its
income and capital gains, it will also be exempt from the New York State
franchise tax and the New York City general corporation tax, except for small
minimum taxes.
The fund intends to qualify as a RIC under Subchapter M of the Code. In
general, to qualify as a RIC: (a) at least 90% of the gross income of the fund
for the taxable year must be derived from dividends, interest, payments with
respect to loans of securities, gains from the sale or other disposition of
securities, or other income derived with respect to its business of investing in
securities; (b) the fund must distribute to its shareholders 90% of its ordinary
income and net short-term capital gains. Moreover, undistributed net income may
be subject to tax at the RIC level; and (c) the fund must diversify its assets
so that, at the close of each quarter of its taxable year, (i) at least 50% of
the fair market value of its total (gross) assets is comprised of cash, cash
items, U.S. Government securities, securities of other regulated investment
companies and other securities limited in respect of any one issuer to no more
than 5% of the fair market value of the fund's total assets and 10% of the
outstanding voting securities of such issuer and (ii) no more than 25% of the
fair market value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies) or of two or more issuers controlled by the fund and
engaged in the same, similar, or related trades or businesses.
If, in any taxable year, the fund should not qualify as a RIC under the
Code: (1) the fund would be taxed at normal corporate rates on the entire amount
of its taxable income without deduction for dividends or other distributions to
its shareholders, and (2) the fund's distributions to the extent made out of the
fund's current or accumulated earnings and profits
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<PAGE> 36
would be taxable to its shareholders (other than shareholders in tax deferred
accounts) as ordinary dividends (regardless of whether they would otherwise have
been considered capital gains dividends), and may qualify for the deduction for
dividends received by corporations.
The fund must declare and distribute dividends equal to at least 98% of
its ordinary income (as of the twelve months ended December 31) and
distributions of at least 98% of its net capital gains (as of the twelve months
ended October 31), in order to avoid a federal excise tax. The fund intends to
make the required distributions, but they cannot guarantee that they will do so.
Dividends attributable to the funds's ordinary income and capital gains
distributions are taxable as such to shareholders in the year in which they are
received except dividends declared in October, November or December and paid in
January. Dividends in the latter category are treated as paid on December 31.
A distribution of net capital gains reflects the fund's excess of net
long-term gains over its net short-term losses. The fund must designate income
dividends and distributions of net capital gains and must notify shareholders of
these designations within sixty days after the close of the fund's taxable year.
At the time of a share purchase, the fund's net asset value may reflect
undistributed income or net capital gains. A subsequent distribution to
shareholders of such amounts, although constituting a return of their
investment, would be taxable either as dividends or capital gain distributions.
For federal income tax purposes, the fund is permitted to carry forward its net
realized capital losses, if any, for eight years, and realize net capital gains
up to the amount of such losses without being required to pay taxes on, or
distribute such gains. If a shareholder held shares for six months or less and
during that period received a distribution taxable to such shareholder as a long
term capital gain, any loss realized on the sale of such shares during the six
month period would be a long term loss to the extent of such distribution.
This discussion of the tax treatment of the funds and their distributions
is based on the federal, Delaware and New York tax laws in effect as of the date
of this SAI. Shareholders should consult their tax advisers to determine the tax
treatment of an investment by him or her in any fund.
UNDERWRITERS
The shares of the TIAA-CREF Life Funds are offered continuously by
Teachers Personal Investors Services, Inc. (TPIS), which is registered with the
SEC as a broker-dealer and is a member of the NASD. TPIS may be considered the
"principal underwriter" for the shares of the fund. No commissions are paid in
connection with the distribution of the shares of the TIAA-CREF Life Funds. The
principal business address of TPIS is 730 Third Avenue, New York, New York
10017.
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<PAGE> 37
LEGAL MATTERS
All matters of applicable state law have been passed upon by Charles H.
Stamm, Executive Vice President and General Counsel of TIAA and CREF. Legal
matters relating to the federal securities laws have been passed upon by
Sutherland, Asbill & Brennan LLP, Washington, D.C.
EXPERTS
The financial statements of the TIAA-CREF Life Funds included in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
OTHER INFORMATION
This Statement of Additional Information and the Prospectus for the fund
do not contain all the information set forth in the registration statement and
exhibits relating thereto (including the Declaration of Trust), which the fund
has filed with the SEC, to which reference is hereby made.
FINANCIAL STATEMENTS
[TO BE FILED BY AMENDMENT]
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<PAGE> 38
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Amended and Restated Declaration of Trust
(b) N/A
(c) N/A
(d) Investment advisory contract
(e) Participation/Distribution Agreement between Registrant, TIAA-CREF
Life Insurance Company and TPIS
(f) N/A
(g) Custodian agreement
(h) (1) Administration Agreement with State Street
(2) Participation/Distribution Agreement (see Exhibit (e) above)
(i) Opinion and Consent of Charles H. Stamm, Esq.*
(j) (1) Consent of Sutherland, Asbill & Brennan LLP*
(2) Consent of Ernst & Young LLP*
(k) N/A
(l) Seed Money Agreement
(m) N/A
(n) Financial Data Schedule*
(o) N/A
- -------------------
* - To be filed by Amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Teachers Insurance and Annuity Association (TIAA)
College Retirement Equities Fund
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<PAGE> 39
The following companies are subsidiaries of Teachers Insurance and Annuity
Association (TIAA) and are included in the consolidated financial statements of
TIAA. All TIAA subsidiary companies are Delaware corporations, except as
indicated. All Trusts are Pennsylvania business trusts.
AIC Properties, Inc.
BT Properties, Inc.
College Credit Trust
Country Commons Doylestown Trust
Country Commons Joint Venture Trust
DAN Properties, Inc.
ETC Repackaging, Inc.
Illinois Teachers Properties, LLC
JV California Two, Inc.
JV California Three, Inc.
JV Florida One, Inc.
JV Florida Four, Inc.
JV Georgia One, Inc.
JV Maryland One, Inc.
JV Michigan One, Inc.
JV Michigan Two, Inc.
JV Michigan Three, Inc.
JV Minnesota One, Inc.
JV Missouri One, Inc.
JV North Carolina One, Inc.
JWL Properties, Inc.
Liberty Place Retail, Inc.
Light Street Partners, LLP - Maryland
Macallister Holdings, Inc.
Minnesota Teachers Realty Corp. - Minnesota
MN Properties, Inc.
M.O.A. Enterprises, Inc.
MRC Properties, Inc.
ND Properties, Inc.
New York State College Choice Tuition LLC - New York
Rouse-Teachers Holding Company - Nevada
Rouse-Teachers Land Holding, Inc. - Maryland
Savannah Teachers Properties, Inc.
T-Investment Properties Corp.
T-Land Corp.
T-Las Colinas Towers Corp.
TCT Holdings, Inc.
Teachers Advisors, Inc.
Teachers Boca Properties II, Inc.
Teachers Pennsylvania Realty, Inc. - Pennsylvania
Teachers Personal Investors Services, Inc.
Teachers Properties, Inc.
Teachers REA, Inc.
Teachers REA II, LLC
Teachers REA II, Inc. - Pennsylvania
Teachers REA III, LLC
Teachers Realty Corporation - Pennsylvania
TEO-NP, LLC - Pennsylvania
Tethys Slu, Inc.
TIAA-CREF Individual & Institutional Services, Inc.
TIAA-CREF Investment Management, LLC
TIAA-CREF Life Insurance Company
TIAA-CREF Tuition Financing, Inc.
TIAA Timberlands I, LLC
TIAA-Fund Equities, Inc.
TIAA Holdings, Inc.
TIAA Realty, Inc.
TPI Housing, Inc.
Washington Teachers Properties I, Inc.
Washington Teachers Properties II, Inc.
Windermere Goshen Trust
Windermere Place Joint Venture Trust
WRC Properties, Inc.
730 Properties, Inc.
730 Cal Hotel Properties I, Inc.
730 Cal Hotel Properties II, Inc.
730 Georgia Hotel Properties I, Inc.
730 Mass. Holding I, Inc.
730 Mass. Hotel Properties I, Inc.
730 Minn. Holding I, Inc.
730 Minn. Hotel Properties I, Inc.
730 MO Hotel Properties I, Inc.
730 Penn. Hotel Properties I, Inc.
TEO-NP, LLC
485 Properties, LLC
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<PAGE> 40
(1) All subsidiaries are 100%-owned directly by TIAA, except as follows:
A) TCT Holdings, Inc., Teachers Personal Investors Services,
Inc., Teachers Advisors, Inc., TIAA-CREF Life Insurance
Company and TIAA-CREF Tuition Financing, Inc. are 100%-owned
by TIAA-CREF Enterprises, Inc.
B) TIAA-CREF Trust Company, FSB is 100% owned by TCT Holdings,
Inc.
C) T-Investment Properties Corp. and T-Land Corp. are 100% owned
by Macallister Holdings, Inc.
D) RTHC is 95%-owned by Teachers Properties, Inc. and 5%-owned by
The Rouse Company. RTLH is 100%-owned by RTHC.
E) TPI Housing, Inc. is 100%-owned by Teachers Properties, Inc.
F) 730 Cal Hotel Properties I, Inc., 730 Cal Hotel Properties II,
Inc., 730 Georgia Hotel Properties I, Inc., 730 Mass Holding
I, Inc., 730 Minn. Holding I, Inc., 730 MO Hotel Properties I,
Inc., 730 Penn Hotel Properties I, Inc. are 100%-owned by 730
Properties, Inc.
G) 730 Minn. Hotel Properties I, Inc. is 100% owned by 730 Minn.
Holding I, Inc.
H) 730 Mass. Hotel Properties I, Inc. is 100% owned by 730 Mass.
Holding I, Inc.
(2) All subsidiaries have as their sole purpose the ownership of
investments which could, pursuant to New York State Insurance Law, be owned by
TIAA itself, except the following:
A) Teachers Advisors, Inc., which provides investment advice for
the Registrant.
B) Teachers Personal Investors Services, Inc., which provides
broker- dealer services for the Registrant.
C) TIAA-CREF Investment Management, LLC, which provides
investment advice for College Retirement Equities Fund.
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<PAGE> 41
D) TIAA-CREF Individual & Institutional Services, Inc., which
provides broker-dealer and administrative services for College
Retirement Equities Fund.
E) TCT Holdings, Inc., which is a unitary thrift holding company,
was formed for the sole purpose of holding stock of a federal
chartered savings bank.
F) TIAA-CREF Life Insurance Company, which is a subsidiary life
insurance company of TIAA, is licensed under the State of New
York to market certain life insurance products not currently
offered by TIAA.
G) TIAA-CREF Trust Company, FSB which is a federal chartered
savings bank.
H) TIAA-CREF Tuition Financing, LLC, which services various state
tuition savings plans.
ITEM 25. INDEMNIFICATION
As a Delaware business trust, Registrant's operations are governed by its
Declaration of Trust dated August 13, 1998, as amended (the Declaration of
Trust). Generally, Delaware business trust shareholders are not personally
liable for obligations of the Delaware business trust under Delaware law. The
Delaware Business Trust Act (the DBTA) provides that a shareholder of a trust
shall be entitled to the same limitation of liability extended to shareholders
of private for-profit Delaware corporations. Registrant's Declaration of Trust
expressly provides that it has been organized under the DBTA and that the
Declaration of Trust is to be governed by Delaware law. It is nevertheless
possible that a Delaware business trust, such as Registrant, might become a
party to an action in another state whose courts refuse to apply Delaware law,
in which case Registrant's shareholders could be subject to personal liability.
To protect Registrant's shareholders against the risk of personal
liability, the Declaration of Trust: (i) contains an express disclaimer of
shareholder liability for acts or obligations of Registrant and provides that
notice of such disclaimer may be given in each agreement, obligation and
instrument entered into or executed by Registrant or its Trustees; (ii) provides
for the indemnification out of Trust property of any shareholders held
personally liable for any obligations of Registrant or any series of Registrant;
and (iii) provides that Registrant shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of Registrant
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (i)
a court refuses to apply Delaware law; (ii) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (iii)
Registrant itself would be unable to
- 4 -
<PAGE> 42
meet its obligations. In the light of Delaware law, the nature of Registrant's
business and the nature of its assets, the risk of personal liability to a
shareholder is remote.
The Declaration of Trust further provides that Registrant shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of Registrant. The Declaration of Trust does not authorize Registrant to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of 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, 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 Act and will be governed by the final adjudication of
such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Teachers Advisors, Inc. (Advisors) also provides investment management
service to TIAA-CREF Mutual Funds and TIAA Separate Account VA-1. All officers
of Advisors are also officers of TIAA-CREF Investment Management, LLC
(Investment Management) and are employees of TIAA. John Biggs is also a trustee
of TIAA, CREF, TIAA-CREF Individual & Institutional Services, Inc. (Services)
and Investment Management, and a director of Teachers Personal Investor
Services, Inc. (TPIS). He is Chief Executive Officer of TIAA and CREF. Martin L.
Leibowitz is a trustee of TIAA, CREF and Investment Management. He is Vice
Chairman and Chief Investment Officer of CREF and TIAA. Charles Stamm is a
trustee of Investment Management and Services, and a director of TPIS. He is
General Counsel of CREF and TIAA. Richard Adamski is also Treasurer of TPIS and
Services. Richard Gibbs is also Executive Vice President of TPIS and Services.
The principal business address of Investment Management, Services and TPIS is
730 Third Avenue, New York, NY 10017-3206.
- 5 -
<PAGE> 43
ITEM 27. PRINCIPAL UNDERWRITER
Teachers Personal Investors Services, Inc. ("TPIS") may be considered the
principal underwriter for the Registrant. The officers of TPIS and their
positions and offices with TPIS and the Registrant are listed in Schedule A of
Form BD as currently on file with the Commission (File No. 8-47051), the text of
which is hereby incorporated by reference.
ITEM 28. LOCATION OF TIAA-CREF LIFE FUNDS' ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder will be
maintained at the Registrant's home office, 730 Third Avenue, New York, NY
10017-3206, at other offices of the Registrant located at 750 Third Avenue and
485 Lexington Avenue, both in New York, NY 10017-3206, and at the offices of the
Registrant's custodian, Bankers Trust Company, 16 Wall Street, New York, New
York 10015. In addition, certain duplicated records are maintained at Pierce
Leahy Archives, 64 Leone Lane, Chester, NY 10918.
ITEM 29. MANAGEMENT SERVICES
State Street Bank and Trust Company, a Massachusetts trust company ("State
Street") will provide certain management-related services to the Registrant
pursuant to an agreement between the Registrant, State Street and Advisors, the
investment advisor to the Registrant. Under the agreement, State Street will,
among other things, keep the Registrant's books of account and compute the net
asset value per share of the outstanding shares of each of the Registrant's
portfolio. These services will be rendered pursuant to instructions received by
State Street from Advisors or the Registrant in the ordinary course of business.
ITEM 30. UNDERTAKINGS
Not applicable.
- 6 -
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant, TIAA-CREF Life Funds, has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York, and State of New
York, on the 9th day of December, 1998.
TIAA-CREF LIFE FUNDS
By: /s/ Thomas G. Walsh
--------------------------------------
Name: Thomas G. Walsh
Title: Chairman of the Board
and President
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Thomas G. Walsh Chairman of the Board and 12/9/98
- ------------------------ President (Principal
Thomas G. Walsh Executive Officer) and
Trustee
/s/ Richard L. Gibbs Executive Vice President 12/9/98
- ------------------------ (Principal Financial and
Richard L. Gibbs Accounting Officer)
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
Signature of Trustee Date
- -------------------- ----
<S> <C>
/s/ John J. McCormack 12/9/98
- ------------------------
John J. McCormack
/s/ Laurence W. Franz 12/9/98
- ------------------------
Laurence W. Franz
/s/ Jeanmarie C. Grisi 12/9/98
- ------------------------
Jeanmarie C. Grisi
/s/ Richard M. Norman 12/9/98
- ------------------------
Richard M. Norman
</TABLE>
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
(a) Amended and Restated Declaration of Trust
(d) Investment advisory contract
(e) Participation/Distribution Agreement between Registrant,
TIAA-CREF Life Insurance Company and TPIS
(g) Custodian agreement
(h) Administration Agreement with State Street
(l) Seed Money Agreement
</TABLE>
<PAGE> 1
Exhibit 99.a
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TIAA-CREF LIFE FUNDS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1
Name and Definitions.....................................................................................1
1.1. Name...............................................................................................1
1.2. Definitions........................................................................................1
ARTICLE 2
Nature and Purpose of Trust..............................................................................2
2.1. Nature of Trust....................................................................................2
2.2. Purpose of Trust...................................................................................3
2.3. Interpretation of Declaration of Trust.............................................................3
2.3.1. Governing Instrument....................................................................3
2.3.2. No Waiver of Compliance with Applicable Law.............................................3
2.3.3. Power of the Trustees Generally.........................................................3
ARTICLE 3
Registered Agent; Offices................................................................................3
3.1. Registered Agent...................................................................................3
ARTICLE 4
Shares of Beneficial Interest............................................................................3
4.1. Shares of Beneficial Interest......................................................................3
4.2. Number of Authorized Shares........................................................................4
4.3. Ownership and Certification of Shares..............................................................4
4.4. Status of Shares...................................................................................4
4.4.1. Fully Paid and Non-Assessable...........................................................4
4.4.2. Personal Property.......................................................................4
4.4.3. Party to Declaration of Trust...........................................................4
4.4.4. Death of Shareholder....................................................................4
4.4.5. Title to Trust; Right to Accounting.....................................................4
4.5. Determination of Shareholders......................................................................4
4.6. Shares Held by Trust...............................................................................5
4.7. Shares Held by Persons Related to Trust............................................................5
4.8. Preemptive and Appraisal Rights....................................................................5
4.9. Series and Classes of Shares.......................................................................5
4.9.1. Generally...............................................................................5
4.9.2. Establishment and Designation...........................................................5
4.9.3. Conversion Rights.......................................................................6
4.9.4. Separate and Distinct Nature............................................................6
4.9.5. Rights and Preferences of Series........................................................6
4.9.5.1. Assets and Liabilities "Belonging" to a Series...............................6
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
4.9.5.2. Treatment of Particular Items................................................7
4.9.5.3. Limitation on Interseries Liabilities........................................7
4.9.5.4. Dividends....................................................................7
4.9.5.5. Redemption by Shareholder....................................................7
4.9.5.6. Redemption by Trust..........................................................8
4.9.5.7. Prevention of Personal Holding Company Status................................8
4.9.5.8. Net Asset Value..............................................................8
4.9.5.9. Maintenance of Stable Net Asset Value........................................8
4.9.5.10. Transfer of Shares..........................................................9
4.9.5.11. Equality of Shares..........................................................9
4.9.5.12. Fractional Shares...........................................................9
4.9.6. Rights and Preferences of Classes.......................................................9
ARTICLE 5
Trustees................................................................................................10
5.1. Management of the Trust...........................................................................10
5.2. Qualification.....................................................................................10
5.3. Number............................................................................................10
5.4. Term and Election.................................................................................10
5.5. Composition of the Board of Trustees..............................................................11
5.6. Resignation and Retirement........................................................................11
5.7. Removal...........................................................................................11
5.8. Vacancies.........................................................................................11
5.9. Ownership of Assets of the Trust..................................................................11
5.10. Powers...........................................................................................12
5.10.1. By-Laws...............................................................................12
5.10.2. Officers, Agents, and Employees.......................................................12
5.10.3. Committees............................................................................12
5.10.3.1. Generally..................................................................12
5.10.3.2. Executive Committee........................................................12
5.10.4. Advisers, Administrators, Depositories, and Custodians................................13
5.10.5. Compensation..........................................................................13
5.10.6. Delegation of Authority...............................................................13
5.10.7. Suspension of Sales...................................................................13
5.11. Certain Additional Powers........................................................................13
5.11.1. Investments...........................................................................13
5.11.2. Disposition of Assets.................................................................13
5.11.3. Ownership.............................................................................14
5.11.4. Subscription..........................................................................14
5.11.5. Payment of Expenses...................................................................14
5.11.6. Form of Holding.......................................................................14
5.11.7. Reorganization, Consolidation, or Merger..............................................14
5.11.8. Compromise............................................................................14
</TABLE>
iii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
5.11.9. Partnerships..........................................................................14
5.11.10. Borrowing............................................................................14
5.11.11. Guarantees...........................................................................15
5.11.12. Insurance............................................................................15
5.11.13. Pensions.............................................................................15
5.12. Meetings and Vote of Trustees....................................................................15
5.12.1. Regular Meetings......................................................................15
5.12.2. Special Meetings......................................................................15
5.12.3. Telephonic Meetings...................................................................15
5.12.4. Quorum................................................................................16
5.12.5. Required Vote.........................................................................16
5.12.6. Consent in Lieu of a Meeting..........................................................16
ARTICLE 6
Service Providers.......................................................................................16
6.1. Investment Adviser................................................................................16
6.2. Underwriter and Transfer Agent....................................................................16
6.3. Custodians........................................................................................16
6.4. Administrator.....................................................................................17
6.5. Other Contracts...................................................................................17
6.6. Parties to Contracts..............................................................................17
ARTICLE 7
Shareholders' Voting Powers and Meetings................................................................17
7.1. Voting Powers.....................................................................................17
7.1.2. Separate Voting by Series and Class....................................................18
7.1.3. Number of Votes........................................................................18
7.1.4. Cumulative Voting......................................................................18
7.1.5. Voting of Shares; Proxies..............................................................18
7.1.6. Actions Prior to the Issuance of Shares................................................18
7.2. Meetings of Shareholders..........................................................................19
7.2.1. Annual or Regular Meetings.............................................................19
7.2.2. Special Meetings.......................................................................19
7.2.3. Notice of Meetings.....................................................................19
7.2.4. Call of Meetings.......................................................................19
7.3. Record Dates.............................................................................19
7.4. Quorum...................................................................................19
7.5. Required Vote.....................................................................................20
7.6. Adjournments......................................................................................20
7.7. Actions by Written Consent........................................................................20
7.8. Inspection of Records.............................................................................20
7.9. Additional Provisions.............................................................................20
</TABLE>
iv
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 8
Limitation of Liability and Indemnification.............................................................20
8.1. General Provisions................................................................................20
8.1.1. General Limitation of Liability........................................................20
8.1.2. Notice of Limited Liability............................................................21
8.1.3. Liability Limited to Assets of the Trust...............................................21
8.2. Liability of Trustees.............................................................................21
8.2.1. Liability for Own Actions..............................................................21
8.2.2. Liability for Actions of Others........................................................21
8.2.3. Advice of Experts and Reports of Others................................................21
8.2.4. Bond...................................................................................22
8.2.5. Declaration of Trust Governs Issues of Liability.......................................22
8.3. Liability of Third Persons Dealing with Trustees..................................................22
8.4. Liability of Shareholders.........................................................................22
8.4.1. Limitation of Liability................................................................22
8.4.2. Indemnification of Shareholders........................................................22
8.5. Indemnification...................................................................................23
8.5.1. Indemnification of Covered Persons.....................................................23
8.5.2. Exceptions.............................................................................23
8.5.3. Rights of Indemnification..............................................................23
8.5.4. Expenses of Indemnification............................................................24
8.5.5. Certain Defined Terms Relating to Indemnification......................................24
ARTICLE 9
Termination or Reorganization...........................................................................24
9.1. Termination of Trust or Series....................................................................24
9.1.1. Termination............................................................................25
9.1.2. Distribution of Assets.................................................................25
9.1.3. Certificate of Cancellation............................................................25
9.2. Reorganization....................................................................................25
9.3. Merger or Consolidation...........................................................................25
9.3.1. Authority to Merge or Consolidate......................................................25
9.3.2. No Shareholder Approval Required.......................................................26
9.3.3. Subsequent Amendments..................................................................26
9.4.4. Certificate of Merger or Consolidation.................................................26
ARTICLE 10.......................................................................................................26
Amendments..............................................................................................26
10.1. Generally........................................................................................26
10.2. Certificate of Amendment.........................................................................26
10.3. Prohibited Retrospective Amendments..............................................................26
</TABLE>
v
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 11
Miscellaneous Provisions................................................................................27
11.1. Certified Copies.................................................................................27
11.2. Certain Internal References......................................................................27
11.3. Headings.........................................................................................27
11.4. Resolution of Ambiguities........................................................................27
11.5. Signatures.......................................................................................27
11.6. Governing Law....................................................................................27
11.7. Severability.....................................................................................28
</TABLE>
vi
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TIAA-CREF LIFE FUNDS
This AMENDED AND RESTATED DECLARATION OF TRUST is made as of this day,
August 13, 1998, by the Trustees hereunder.
WHEREAS, the Trustees desire to establish a trust for the purpose of
carrying on the business of an open-end management investment company; and
WHEREAS, in furtherance of such purpose, the Trustees and any successor
Trustees elected in accordance with Article 5 hereof are acquiring and may
hereafter acquire assets which they will hold and manage as trustees of a
Delaware business trust in accordance with the provisions hereinafter set forth;
and
WHEREAS, this Trust is authorized to issue its shares of beneficial
interest in one or more separate series and classes of series, in accordance
with the provisions set forth in this Declaration of Trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all cash, securities, and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and that they will manage and
dispose of the same upon the following terms and conditions for the benefit of
the holders of shares of beneficial interest in this Trust as hereinafter set
forth.
ARTICLE 1
NAME AND DEFINITIONS
SECTION 1.1. NAME. This Trust shall be known as the "TIAA-CREF LIFE
FUNDS" and the Trustees shall conduct the business of the Trust under that name
or any other name or names as they may from time to time determine.
SECTION 1.2. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided below:
(a) The "Trust" shall mean the Delaware business trust established by
this Declaration of Trust, as amended from time to time;
(b) "Trustee" and "Trustees" shall mean each signatory to this
Declaration of Trust so long as such signatory shall continue in office in
accordance with the terms hereof, and all other individuals who at the time in
question have been duly elected or appointed and qualified in accordance with
Article 5 hereof and are then in office;
<PAGE> 8
(c) "Shares" shall mean the shares of beneficial interest in the Trust
described in Article 4 hereof and shall include fractional and whole Shares;
(d) "Shareholder" shall mean a beneficial owner of Shares, except that
with regard to Shares owned by insurance company separate accounts or trusts
established in connection with employee benefit plans, "Shareholder" shall mean
the separate account or trust;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and
any successor statute) and the rules and regulations thereunder, all as amended
from time to time;
(f) "Person," "Interested Person," and "Principal Underwriter" shall
have the meanings given them in the 1940 Act;
(g) "Commission" shall mean the United States Securities and Exchange
Commission (or any successor agency thereto);
(h) "Declaration of Trust" or "Declaration" shall mean this Declaration
of Trust as amended or restated from time to time;
(i) "By-Laws" shall mean the By-Laws of the Trust, if any, as amended
from time to time;
(j) "Series" shall mean any of the separate series of Shares
established and designated under or in accordance with the provisions of Article
4 and to which the Trustees have allocated assets and liabilities of the Trust
in accordance with Article 4;
(k) "DBTA" refers to the Delaware Business Trust Act, Chapter 38 of
Title 12 of the Delaware Code (and any successor statute), as amended from time
to time; and
(l) "Code" refers to the Internal Revenue Code of 1986 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time.
ARTICLE 2
NATURE AND PURPOSE OF TRUST
SECTION 2.1. NATURE OF TRUST. The Trust is a business trust of the type
referred to in the DBTA. The Trustees shall file a certificate of trust in
accordance with Sections 3810-3812 of the DBTA. The Trust is not intended to be,
shall not be deemed to be, and shall not be treated as, a general or a limited
partnership, joint venture, corporation or joint stock company, nor shall the
Trustees or Shareholders or any of them for any purpose be deemed to be, or be
treated in any way whatsoever as though they were, liable or responsible
hereunder as partners or joint venturers.
2
<PAGE> 9
SECTION 2.2. PURPOSE OF TRUST. The purpose of the Trust is to engage
in, operate and carry on the business of an open-end management investment
company and to do any and all acts or things as are necessary, convenient,
appropriate, incidental or customary in connection therewith.
SECTION 2.3. INTERPRETATION OF DECLARATION OF TRUST.
SECTION 2.3.1. GOVERNING INSTRUMENT. This Declaration of Trust
shall be the governing instrument of the Trust and shall be governed by and
construed according to the laws of the State of Delaware.
SECTION 2.3.2. NO WAIVER OF COMPLIANCE WITH APPLICABLE LAW. No
provision of this Declaration shall be effective if it is deemed to require a
waiver of compliance with any provision of the Securities Act of 1933, as
amended, or the 1940 Act, or of any valid rule, regulation or order of the
Commission thereunder.
SECTION 2.3.3. POWER OF THE TRUSTEES GENERALLY. Except as
otherwise set forth herein, the Trustees may exercise all powers of trustees
under the DBTA on behalf of the Trust.
ARTICLE 3
REGISTERED AGENT; OFFICES
SECTION 3.1. REGISTERED AGENT. The name of the registered agent of the
Trust is The Corporation Trust Company and the registered agent's business
address in Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
SECTION 3.2. OFFICES. The Trust shall maintain an office within the
State of Delaware which shall be identical to the business office of the
registered agent of the Trust as set forth in Section 3.1. The Trustees may, at
any time, establish branch or subordinate offices at any place or places where
the Trust intends to do business.
ARTICLE 4
SHARES OF BENEFICIAL INTEREST
SECTION 4.1. SHARES OF BENEFICIAL INTEREST. The beneficial interests in
the Trust shall be divided into Shares, each of which shall have a par value of
One-Ten Thousandth of a Dollar ($0.0001). The Trustees shall have the authority
from time to time to divide the Shares into two (2) or more separate and
distinct series of Shares ("Series") as provided in Section 4.9 of this Article
4 and to divide each such Series of Shares into two (2) or more classes of
Shares ("Classes").
3
<PAGE> 10
SECTION 4.2. NUMBER OF AUTHORIZED SHARES. The Trustees are authorized
to issue an unlimited number of Shares. The Trustees may issue Shares for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split), all without action or approval of the
Shareholders.
SECTION 4.3. OWNERSHIP AND CERTIFICATION OF SHARES. The Secretary of
the Trust, or the Trust's transfer or similar agent, shall record the ownership
and transfer of Shares of each Series and Class separately on the record books
of the Trust. The record books of the Trust, as kept by the Secretary of the
Trust or any transfer or similar agent, shall contain the name and address of
and the number of Shares held by each Shareholder, and such record books shall
be conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by such Shareholders. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of share certificates, transfer of Shares, and
similar matters for the Trust or any Series.
SECTION 4.4. STATUS OF SHARES.
SECTION 4.4.1. FULLY PAID AND NON-ASSESSABLE. All Shares when
issued on the terms determined by the Trustees shall be fully paid and
non-assessable.
SECTION 4.4.2. PERSONAL PROPERTY. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration of Trust.
SECTION 4.4.3. PARTY TO DECLARATION OF TRUST. Every Person by
virtue of having become registered as a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and to
have become a party thereto.
SECTION 4.4.4. DEATH OF SHAREHOLDER. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the Trust nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees. The representative shall be entitled to the same rights as the
decedent under this Trust.
SECTION 4.4.5. TITLE TO TRUST; RIGHT TO ACCOUNTING. Ownership
of Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust property or right to call for a partition or division of
the same or for an accounting.
SECTION 4.5. DETERMINATION OF SHAREHOLDERS. The Trustees may from time
to time close the transfer books or establish record dates and times for the
purposes of determining the Shareholders entitled to be treated as such, to the
extent provided or referred to in Section 7.3.
4
<PAGE> 11
SECTION 4.6. SHARES HELD BY TRUST. The Trustees may hold as treasury
shares, reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series or
Class reacquired by the Trust.
SECTION 4.7. SHARES HELD BY PERSONS RELATED TO TRUST. Any Trustee,
officer or other agent of the Trust, and any organization in which any such
person is interested may acquire, own, hold and dispose of Shares of the Trust
to the same extent as if such person were not a Trustee, officer or other agent
of the Trust; and the Trust may issue and sell or cause to be issued and sold
and may purchase Shares from any such person or any such organization subject
only to the general limitations, restrictions or other provisions applicable to
the sale or purchase of such Shares generally.
SECTION 4.8. PREEMPTIVE AND APPRAISAL RIGHTS. Shareholders shall not,
as Shareholders, have any right to acquire, purchase or subscribe for any Shares
or other securities of the Trust which it may hereafter issue or sell, other
than such right, if any, as the Trustees in their discretion may determine.
Shareholders shall have no appraisal rights with respect to their Shares and,
except as otherwise determined by resolution of the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares. No action may be brought by a Shareholder on behalf of the Trust unless
Shareholders owning no less than a majority of the then outstanding Shares, or
Series or Class thereof, join in the bringing of such action. A Shareholder
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other Series or any other Class on behalf of the Shareholders in
any other Series or any other Class of the Trust than the Series or Class owned
by such Shareholder.
SECTION 4.9. SERIES AND CLASSES OF SHARES.
SECTION 4.9.1. GENERALLY. In addition to the Series and Class
established and designated in Section 4.9.2, the Shares of the Trust shall be
divided into one or more separate and distinct Series or Classes of a Series as
the Trustees shall from time to time establish and designate.
SECTION 4.9.2. ESTABLISHMENT AND DESIGNATION. The Trustees
shall have exclusive power without the requirement of Shareholder approval to
establish and designate separate and distinct Series of Shares and with respect
to any Series of Shares, to establish and designate separate and distinct
Classes of Shares. The establishment and designation of any Series (in addition
to those established and designated in this Section below) or Class shall be
effective upon the execution by a majority of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series or Class, or as otherwise provided in
such instrument. Each such instrument shall have
5
<PAGE> 12
the status of an amendment to this Declaration of Trust. Without limiting the
authority of the Trustees to establish and designate any further Series or
Classes, the Trustees hereby establish and designate the following initial
Series, the Shares of which shall all be of one Class:
Stock Index Fund.
SECTION 4.9.3. CONVERSION RIGHTS. Subject to compliance with
the requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series or Class within a Series shall have
the right to convert such Shares into Shares of one or more other Series or
Classes in accordance with such requirements and procedures as may be
established by the Trustees.
SECTION 4.9.4. SEPARATE AND DISTINCT NATURE. Each Series,
including without limitation Series specifically established in Section 4.9.2,
shall be separate and distinct from any other Series and shall maintain separate
and distinct records on the books of the Trust, and the assets belonging to any
such Series shall be held and accounted for separately from the assets of the
Trust or any other Series.
SECTION 4.9.5. RIGHTS AND PREFERENCES OF SERIES. The Trustees
shall have exclusive power without the requirement of Shareholder approval to
fix and determine the relative rights and preferences as between the Shares of
the separate Series. The initial Series and any further Series that may from
time to time be established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Series at the time of
establishing and designating the same) have relative rights and preferences as
set forth in this Section 4.9.5.
SECTION 4.9.5.1. ASSETS AND LIABILITIES "BELONGING"
TO A SERIES. All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be held
and accounted for separately from the other assets of the Trust and of every
other Series and may be referred to herein as "assets belonging to" that Series.
The assets belonging to a particular Series shall belong to that Series for all
purposes, and to no other Series, subject only to the rights of creditors of
that Series. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the Trustees
shall allocate to and among any one or more of the Series in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Any
General Items so allocated to a particular Series shall belong to that Series.
Each such allocation by the Trustees shall be conclusive and binding upon all
Shareholders for all purposes. The assets belonging to each particular Series
shall be charged with the liabilities
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in respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular Series shall be allocated and charged by the Trustees to and
among any one or more of the Series established and designated from time to time
in such manner and on such basis as the Trustees in their sole discretion deem
fair and equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon all Shareholders
for all purposes.
SECTION 4.9.5.2. TREATMENT OF PARTICULAR ITEMS. The
Trustees shall have full discretion, to the extent consistent with the 1940 Act
and consistent with generally accepted accounting principles, to determine which
items shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
SECTION 4.9.5.3. LIMITATION ON INTERSERIES
LIABILITIES. Subject to the right of the Trustees in their discretion to
allocate general liabilities, expenses, costs, charges or reserves as provided
in Section 4.9.5.1, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets of such Series only, and not against the
assets of any other Series. Notice of this limitation on liabilities between and
among Series shall be set forth in the certificate of trust of the Trust
(whether originally or by amendment) as filed or to be filed in the Office of
the Secretary of State of the State of Delaware pursuant to the DBTA, and upon
the giving of such notice in the certificate of trust, the statutory provisions
of Section 3804 of the DBTA relating to limitations on liabilities between and
among series (and the statutory effect under Section 3804 of setting forth such
notice in the certificate of trust) shall become applicable to the Trust and
each Series.
SECTION 4.9.5.4. DIVIDENDS. Dividends and capital
gains distributions on Shares of a particular Series may be paid with such
frequency, in such form, and in such amount as the Trustees may determine by
resolution adopted from time to time, or pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. All dividends and distributions on Shares of a particular Series
shall be distributed pro rata to the holders of Shares of that Series in
proportion to the number of Shares of that Series held by such holders at the
date and time of record established for the payment of such dividends or
distributions. Such dividends and distributions may be paid in cash, property or
additional Shares of that Series, or a combination thereof, as determined by the
Trustees or pursuant to any program that the Trustees may have in effect at the
time for the election by each Shareholder of the form in which dividends or
distributions are to be paid to that Shareholder. Any such dividend or
distribution paid in Shares shall be paid at the net asset value thereof as
determined in accordance with Section 4.9.5.8.
SECTION 4.9.5.5. REDEMPTION BY SHAREHOLDER. Each
Shareholder shall have the right at such times as may be permitted by the Trust
and as otherwise required by the
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1940 Act to require the Trust to redeem all or any part of such Shareholder's
Shares of a Series at a redemption price per Share equal to the net asset value
per Share of such Series next determined in accordance with Section 4.9.5.8
after the Shares are properly tendered for redemption, less any charge which may
be imposed by the Trust in connection with such redemption as may be established
by the Trustees in their sole discretion and as described in the Trust's then
current prospectus. Payment of the redemption price shall be in cash; provided,
however, that the Trust may, subject to the requirements of the 1940 Act, make
payment wholly or partly in securities or other assets belonging to the Series
of which the Shares being redeemed are part at the value of such securities or
assets used in such determination of net asset value. Notwithstanding the
foregoing, the Trust may postpone payment of the redemption price and may
suspend the right of the holders of Shares of any Series to require the Trust to
redeem Shares of that Series during any period or at any time when and to the
extent permissible under any applicable provision of the 1940 Act.
SECTION 4.9.5.6. REDEMPTION BY TRUST. The Trustees
may cause the Trust to redeem at net asset value the Shares of any Series held
by a Shareholder upon such conditions as may from time to time be determined by
the Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the
Trust shall promptly cause payment of the full redemption price to be made to
such Shareholder for Shares so redeemed.
SECTION 4.9.5.7. PREVENTION OF PERSONAL HOLDING
COMPANY STATUS. The Trust may reject any purchase order, refuse to transfer any
Shares, and compel the redemption of Shares if, in its opinion, any such
rejection, refusal, or redemption would prevent the Trust from becoming a
personal holding company as defined by the Code.
SECTION 4.9.5.8. NET ASSET VALUE. The net asset value
per Share of any Series shall be determined in accordance with the methods and
procedures established by the Trustees from time to time and, to the extent
required by applicable law, as disclosed in the then current prospectus or
statement of additional information for the Series.
SECTION 4.9.5.9. MAINTENANCE OF STABLE NET ASSET
VALUE. The Trustees may determine to maintain the net asset value per Share of
any Series at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Series as dividends payable in
additional Shares of that Series at the designated constant dollar amount and
for the handling of any losses attributable to that Series. Such procedures may
provide that in the event of any loss each Shareholder shall be deemed to have
contributed to the capital of the Trust attributable to that Series his or her
pro rata portion of the total number of Shares required to be canceled in order
to permit the net asset value per Share of that Series to be maintained, after
reflecting such loss, at the designated constant dollar amount. Each Shareholder
of the Trust shall be deemed to have agreed, by his investment in any Series
with respect to which the Trustees shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the event of any
such loss. The Trustees may delegate
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any of their powers and duties under this Section 4.9.5.9 with respect to
appraisal of assets and liabilities in the determination of net asset value or
with respect to a suspension of the determination of net asset value to an
officer or officers or agent or agents of the Trust designated from time to time
by the Trustees.
SECTION 4.9.5.10. TRANSFER OF SHARES. Except to the
extent that transferability is limited by applicable law or such procedures as
may be developed from time to time by the Trustees or the appropriate officers
of the Trust, Shares shall be transferable on the records of the Trust only by
the record holder thereof or by his agent thereunto duly authorized in writing,
upon delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate, if one is
outstanding, and such evidence of the genuineness of each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust.
SECTION 4.9.5.11. EQUALITY OF SHARES. All Shares of
each particular Series shall represent an equal proportionate interest in the
assets belonging to that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be equal in this respect
to each other Share of that Series. This Section 4.9.5.11. Shall not restrict
any distributions otherwise permissible under this Declaration of Trust with
respect to any Classes within a Series.
SECTION 4.9.5.12. FRACTIONAL SHARES. Any fractional
Share of any Series, if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of that Series,
including rights and obligations with respect to voting, receipt of dividends
and distributions, redemption of Shares, and liquidation of the Trust or any
Series.
SECTION 4.9.6. RIGHTS AND PREFERENCES OF CLASSES. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to fix and determine the relative rights and preferences as between the
separate Classes within any Series. The initial Class and any further Classes
that may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further Class at
the time of establishing and designating the same) have relative rights and
preferences as set forth in this Section 4.9.6. If a Series is divided into
multiple Classes, the Classes may be invested with one or more other Classes in
the common investment portfolio comprising the Series. Notwithstanding the
provisions of Section 4.9.5, if two or more Classes are invested in a common
investment portfolio, the shares of each such Class shall be subject to the
following preferences, conversion and other rights, voting powers, restrictions,
conditions of redemption, and, if there are other Classes invested in a
different investment portfolio comprising a different Series, shall also be
subject to the provisions of Section 4.9.5 at the Series level as if the Classes
invested in the common investment portfolio were one Class:
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(a) The income and expenses of the Series shall be allocated among the
Classes comprising the Series in such manner as may be determined by the
Trustees in accordance with applicable law;
(b) As more fully set forth in this Section 4.9.6, the liabilities and
expenses of the Classes comprising the Series shall be determined separately
from those of each other and, accordingly, the net asset values, the dividends
and distributions payable to Shareholders, and the amounts distributable in the
event of liquidation of the Trust or termination of a Series to Shareholders may
vary within the classes comprising the Series. Except for these differences and
certain other differences set forth in this Section 4.9.6 or elsewhere in this
Declaration of Trust, the Classes comprising a Series shall have the same
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption; and
(c) The dividends and distributions of investment income and capital
gains with respect to the Classes comprising a Series shall be in such amounts
as may be declared from time to time by the Trustees, and such dividends and
distributions may vary among the Classes comprising the Series to reflect
differing allocations of the expenses and liabilities of the Trust among the
Classes and any resultant differences between the net asset values per Share of
the Classes, to such extent and for such purposes as the Trustees may deem
appropriate. The allocation of investment income, capital gains, expenses, and
liabilities of the Trust among the Classes comprising a Series shall be
determined by the Trustees in a manner that is consistent with applicable law.
ARTICLE 5
TRUSTEES
SECTION 5.1. MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by the Trustees, and they shall have all powers necessary
and desirable to carry out that responsibility, including those specifically set
forth in Sections 5.10 and 5.11 herein.
SECTION 5.2. QUALIFICATION. Each Trustee shall be a natural person. A
Trustee need not be a Shareholder, a citizen of the United States, or a resident
of the State of Delaware.
SECTION 5.3. NUMBER. By the vote or consent of a majority of the
Trustees then in office, the Trustees may fix the number of Trustees at a number
not less than two (2) nor more than twenty-five (25). No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of his or her term, but the number of Trustees may be decreased
in conjunction with the removal of a Trustee pursuant to Section 5.7.
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SECTION 5.4. TERM AND ELECTION. Each Trustee shall hold office until
the next meeting of Shareholders called for the purpose of considering the
election or re-election of such Trustee or of a successor to such Trustee, and
until his or her successor is elected and qualified, and any Trustee who is
appointed by the Trustees in the interim to fill a vacancy as provided hereunder
shall have the same remaining term as that of his or her predecessor, if any, or
such term as the Trustees may determine.
SECTION 5.5. COMPOSITION OF THE BOARD OF TRUSTEES. No election or
appointment of any Trustee shall take effect if such election or appointment
would cause the number of Trustees who are Interested Persons to exceed the
number permitted by Section 10 of the 1940 Act.
SECTION 5.6. RESIGNATION AND RETIREMENT. Any Trustee may resign or
retire as a Trustee (without need for prior or subsequent accounting) by an
instrument in writing signed by such Trustee and delivered or mailed to the
Chairman, if any, the President, or the Secretary of the Trust. Such resignation
or retirement shall be effective upon such delivery, or at a later date
according to the terms of the instrument.
SECTION 5.7. REMOVAL. Any Trustee may be removed with or without cause
at any time: (1) by written instrument signed by two-thirds (2/3) of the number
of Trustees in office prior to such removal, specifying the date upon which such
removal shall become effective, or (2) by the affirmative vote of Shareholders
holding not less than two-thirds (2/3) of Shares outstanding, cast in person or
by proxy at any meeting called for that purpose.
SECTION 5.8. VACANCIES. Any vacancy or anticipated vacancy resulting
for any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees may (but need not unless required by the 1940 Act) be
filled by a majority of the Trustees then in office, subject to the provisions
of Section 16 of the 1940 Act, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine. The
appointment shall be effective upon the written acceptance of the person named
therein to serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such appointment in
anticipation of a vacancy occurring by reason of the resignation, retirement, or
increase in number of Trustees to be effective at a later date shall become
effective only at or after the effective date of such resignation, retirement,
or increase in number of Trustees.
SECTION 5.9. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. Legal title to all the Trust property shall be vested in the Trust as
a separate legal entity under the DBTA, except that the Trustees shall have the
power to cause legal title to any Trust property to be held by or in the name of
one or more of the Trustees or in the name of any other Person on behalf of the
Trust on such terms
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as the Trustees may determine. In the event that title to any part of the Trust
property is vested in one or more Trustees, the right, title and interest of the
Trustees in the Trust property shall vest automatically in each person who may
hereafter become a Trustee upon his or her due election and qualification. Upon
the resignation, removal or death of a Trustee he or she shall automatically
cease to have any right, title or interest in any of the Trust property, and the
right, title and interest of such Trustee in the Trust property shall vest
automatically in the remaining Trustees. To the extent permitted by law, such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered. No Shareholder shall be deemed to
have a severable ownership in any individual asset of the Trust or any right of
partition or possession thereof.
SECTION 5.10. POWERS. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust including, but not limited to,
those enumerated in this Section 5.10.
SECTION 5.10.1. BY-LAWS. The Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders.
SECTION 5.10.2. OFFICERS, AGENTS, AND EMPLOYEES. The Trustees
may, as they consider appropriate, elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing.
SECTION 5.10.3. COMMITTEES.
SECTION 5.10.3.1. GENERALLY. The Trustees, by a vote
of a majority of the Trustees then in office, may elect from their number, an
Audit Committee, Executive Committee, Nominating Committee, or any other
committee and may delegate thereto some or all of their powers except those
which by law, by this Declaration of Trust, or by the By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by this Declaration of Trust or the
By-Laws of the Trust for the Trustees themselves. All members of such committees
shall hold such offices at the pleasure of the Trustees. The Trustees may
abolish any committee at any time. Any committee to which the Trustees delegate
any of their powers or duties shall keep records of its meetings and shall
report its actions to the Trustees. The Trustees shall have power to rescind any
action of any committee, but no such rescission shall have retroactive effect.
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SECTION 5.10.3.2. EXECUTIVE COMMITTEE. The Executive
Committee, if there shall be one, shall have all of the powers and authority of
the Trustees that may lawfully be exercised by an executive committee, except
the power to: (i) declare dividends or distributions on Shares; (ii) issue
Shares; (iii) recommend to the Shareholders any action which requires the
Shareholders' approval; or (iv) approve any merger, reorganization, or share
exchange which does not require Shareholder approval. Notwithstanding the
foregoing, the Trustees may limit the powers and authority of the Executive
Committee at any time.
SECTION 5.10.4. ADVISERS, ADMINISTRATORS, DEPOSITORIES, AND
CUSTODIANS. The Trustees may, in accordance with Article 6, employ one or more
advisers, administrators, depositories, custodians, and other persons and may
authorize any depository or custodian to employ subcustodians or agents and to
deposit all or any part of such assets in a system or systems for the central
handling of securities and debt instruments, retain transfer, dividend,
accounting or Shareholder servicing agents or any of the foregoing, provide for
the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, and set record dates or times for the
determination of Shareholders.
SECTION 5.10.5. COMPENSATION. The Trustees may compensate or
provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate.
SECTION 5.10.6. DELEGATION OF AUTHORITY. In general, the
Trustees may delegate to any officer of the Trust, to any committee of the
Trustees and to any employee, adviser, administrator, distributor, depository,
custodian, transfer and dividend disbursing agent, or any other agent or
consultant of the Trust such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs of
the Trust, including without implied limitation, the power and authority to act
in the name of the Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees.
SECTION 5.10.7. SUSPENSION OF SALES. The Trustees shall have
the authority to suspend or terminate the sales of Shares of any Series or Class
at any time or for such periods as the Trustees may from time to time decide.
SECTION 5.11. CERTAIN ADDITIONAL POWERS. Without limiting the
foregoing and to the extent not inconsistent with the 1940 Act, other applicable
law, and the fundamental policies and limitations of the applicable Series or
Class, the Trustees shall have power and authority for and on behalf of the
Trust and each separate Series or Class as enumerated in this Section 5.11.
SECTION 5.11.1. INVESTMENTS. The Trustees shall have the power
to invest and reinvest cash and other property, and to hold cash or other
property uninvested without in any
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event being bound or limited by any present or future law or custom in regard to
investments by trustees.
SECTION 5.11.2. DISPOSITION OF ASSETS. The Trustees shall have
the power to sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust.
SECTION 5.11.3. OWNERSHIP. The Trustees shall have the power
to vote, give assent, or exercise any rights of ownership with respect to
securities or other property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with relation to securities
or other property as the Trustees shall deem proper.
SECTION 5.11.4. SUBSCRIPTION. The Trustees shall have the
power to exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities.
SECTION 5.11.5. PAYMENT OF EXPENSES. The Trustees shall have
the power to pay or cause to be paid all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust or any Series or
Class thereof, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
Trust's officers, employees, investment advisers, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
SECTION 5.11.6. FORM OF HOLDING. The Trustees shall have the
power to hold any securities or other property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or of any Series or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise.
SECTION 5.11.7. REORGANIZATION, CONSOLIDATION, OR MERGER. The
Trustees shall have the power to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security of which is or was held in the Trust, and to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer, and
to pay calls or subscriptions with respect to any security held in the Trust.
SECTION 5.11.8. COMPROMISE. The Trustees shall have the power
to arbitrate or otherwise adjust claims in favor of or against the Trust, any
Series, or Class on any matter in controversy, including but not limited to
claims for taxes.
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SECTION 5.11.9. PARTNERSHIPS. The Trustees shall have the
power to enter into joint ventures, general or limited partnerships and any
other combinations or associations.
SECTION 5.11.10. BORROWING. The Trustees shall have the power
to borrow funds and to mortgage and pledge the assets of the Trust or any Series
or any part thereof to secure obligations arising in connection with such
borrowing, consistent with the provisions of the 1940 Act.
SECTION 5.11.11. GUARANTEES. The Trustees shall have the power
to endorse or guarantee the payment of any notes or other obligations of any
person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property (or
Series property) or any part thereof to secure any of or all such obligations.
SECTION 5.11.12. INSURANCE. The Trustees shall have the power
to purchase and pay for entirely out of Trust property such insurance as they
may deem necessary or appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent contractors, or any thereof
(or any person connected therewith), of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in any such capacity, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability.
SECTION 5.11.13. PENSIONS. The Trustees shall have the power
to pay pensions for faithful service, as deemed appropriate by the Trustees, and
to adopt, establish and carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive and benefit plans,
including the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
SECTION 5.12. MEETINGS AND VOTE OF TRUSTEES.
SECTION 5.12.1. REGULAR MEETINGS. The Trustees from time to
time may provide for the holding of regular meetings of the Trustees and fix
their time and place.
SECTION 5.12.2. SPECIAL MEETINGS. Special meetings of the
Trustees may be called by the President of the Trust on twenty-four (24) hours
notice to each Trustee, either personally, by mail, by telegram, or by facsimile
transmission. Special meetings shall be called by the President or Secretary in
like manner and on like notice on the written request of
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a majority of the Trustees then in office or a majority of the members of any
executive (or comparable) committee of the Trustees.
SECTION 5.12.3. TELEPHONIC MEETINGS. Trustees may participate
in a meeting of the Trustees by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Except to the extent that the 1940
Act has been interpreted otherwise, participation by such means shall constitute
presence in person at the meeting.
SECTION 5.12.4. QUORUM. A majority of the Trustees then in
office being present in person or by proxy shall constitute a quorum.
SECTION 5.12.5. REQUIRED VOTE. Except as otherwise provided by
the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws,
any action to be taken by the Trustees on behalf of the Trust or any Series or
Class may be taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum is present.
SECTION 5.12.6. CONSENT IN LIEU OF A MEETING. Except as
otherwise provided by the 1940 Act or other applicable law, the Trustees may, by
unanimous written consent of the Trustees then in office, take any action which
may have been taken at a meeting of the Trustees or any committee thereof.
ARTICLE 6
SERVICE PROVIDERS
SECTION 6.1. INVESTMENT ADVISER. The Trust may enter into written
contracts with one or more persons to act as investment adviser or investment
subadviser to each of the Series, and as such, to perform such functions as the
Trustees may deem reasonable and proper, including, without limitation,
investment advisory, management, research, valuation of assets, clerical and
administrative functions, under such terms and conditions, and for such
compensation, as the Trustees may in their discretion deem advisable.
SECTION 6.2. UNDERWRITER AND TRANSFER AGENT. The Trust may enter into
written contracts with one or more persons to act as principal underwriter or
underwriter or distributor whereby the Trust may either agree to sell Shares to
the other party or parties to the contract or appoint such other party or
parties its sales agent or agents for such Shares and with such other provisions
as the Trustees may deem reasonable and proper, and the Trustees may in their
discretion from time to time enter into transfer agency, dividend disbursement,
and/or shareholder service contract(s), in each case with such terms and
conditions, and providing for such compensation, as the Trustees may in their
discretion deem advisable.
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SECTION 6.3. CUSTODIANS. The Trust may enter into written contracts
with one or more persons to act as custodian to perform such functions as the
Trustees may deem reasonable and proper, under such terms and conditions, and
for such compensation, as the Trustees may in their discretion deem advisable.
Each such custodian shall be a bank or trust company having an aggregate
capital, surplus, and undivided profits of at least one million dollars
($1,000,000).
SECTION 6.4. ADMINISTRATOR. The Trust may enter into written contracts
with one or more persons to act as an administrator to perform such functions,
including accounting functions, as the Trustees may deem reasonable and proper,
under such terms and conditions, and for such compensation, as the Trustees may
in their discretion deem advisable.
SECTION 6.5. OTHER CONTRACTS. The Trust may enter into such other
written contracts as the Trustees deem necessary and desirable, including
contracts with one or more persons for the coordination or supervision of
persons providing services to the Trust under one or more of the contracts
described in Sections 6.1, 6.2, 6.3 and 6.4.
SECTION 6.6. PARTIES TO CONTRACTS. Any contract of the character
described in Sections 6.1, 6.2, 6.3, and 6.4 or in Article 8 hereof may be
entered into with any corporation, firm, partnership, trust or association,
including, without limitation, the investment adviser, any investment
subadviser, or any affiliated person of the investment adviser or investment
subadviser, although one or more of the Trustees or officers of the Trust may be
an officer, director, trustee, shareholder, or member of such other party to the
contract, or may otherwise be interested in such contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or be accountable for any profit realized directly or
indirectly therefrom; provided, however, that the contract when entered into was
not inconsistent with the provisions of this Article 6, Article 8, or the
ByLaws. The same person (including a firm, corporation, partnership, trust or
association) may provide more than one of the services identified in this
Article 6.
ARTICLE 7
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.1. VOTING POWERS. The Shareholders shall have power to vote
only with respect to matters expressly enumerated in Section 7.1.1, with respect
to such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws, any registration of the Trust with
the Commission or any state, or as the Trustees may otherwise deem necessary or
desirable.
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SECTION 7.1.1. MATTERS REQUIRING SHAREHOLDERS ACTION. Action
by the Shareholders shall be required as to the following matters:
(a) The election or removal of Trustees as provided in Sections 5.4 and
5.7;
(b) The approval to a contract with a third party provider of services
as to which Shareholder approval is required by the 1940 Act;
(c) The termination or reorganization of the Trust to the extent and as
provided in Sections 9.1 and 9.2;
(d) The amendment of this Declaration of Trust to the extent and as may
be provided by this Declaration of Trust or applicable law; and
(e) Any court action, proceeding or claim brought or maintained
derivatively or as a class action on behalf of the Trust, any Series or Class
thereof or the Shareholders of the Trust; provided, however, that a shareholder
of a particular Series or Class shall not be entitled to vote upon a derivative
or class action on behalf of any other Series or Class or shareholder of any
other Series or Class.
SECTION 7.1.2. SEPARATE VOTING BY SERIES AND CLASS. On any
matter submitted to a vote of the Shareholders, all Shares shall be voted
separately by individual Series, except: (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series or Class;
and (ii) when the Trustees have determined that the matter affects the interests
of more than one Series, then the Shareholders of all such Series shall be
entitled to vote thereon. The Trustees may also determine that a matter affects
only the interests of one or more Classes within a Series, in which case any
such matter shall only be voted on by such Class or Classes.
SECTION 7.1.3. NUMBER OF VOTES. On any matter submitted to a
vote of the Shareholders, each Shareholder shall be entitled to one vote for
each dollar of net asset value standing in such Shareholder's name on the books
of each Series and Class in which such Shareholder owns Shares which are
entitled to vote on the matter.
SECTION 7.1.4. CUMULATIVE VOTING. There shall be no cumulative
voting in the election of Trustees.
SECTION 7.1.5. VOTING OF SHARES; PROXIES. Votes may be cast in
person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving the invalidity of a proxy shall rest on the
challenger.
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No proxy shall be valid more than eleven months after its date, unless it
provides for a longer period.
SECTION 7.1.6. ACTIONS PRIOR TO THE ISSUANCE OF SHARES. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or the By-Laws to be
taken by Shareholders.
SECTION 7.2. MEETINGS OF SHAREHOLDERS.
SECTION 7.2.1. ANNUAL OR REGULAR MEETINGS. No annual or
regular meetings of Shareholders are required to be held.
SECTION 7.2.2. SPECIAL MEETINGS. Special meetings of
Shareholders may be called by the President of the Trust or the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
upon which Shareholder approval is deemed by the Trustees to be necessary or
desirable. A special meeting shall be called by the Secretary of the Trust upon
(i) the request of a majority of the Trustees then in office, or (ii) as may be
required under the 1940 Act.
SECTION 7.2.3. NOTICE OF MEETINGS. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing or transmitting such notice not less than ten (10) nor more than ninety
(90) days before such meeting, postage prepaid, stating the time, place and
purpose of the meeting, to each Shareholder at the Shareholder's address as it
appears on the records of the Trust.
SECTION 7.2.4. CALL OF MEETINGS. The Trustees shall promptly
call and give notice of a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so in writing by
Shareholders holding not less than ten percent (10%) of the Shares of the Trust
then outstanding. For all other matters, the Trustees shall call or give notice
of a meeting within thirty (30) days after written application by Shareholders
entitled to cast at least ten percent (10%) of all of the votes entitled to be
cast on the matter requesting a meeting be called.
SECTION 7.3. RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding thirty (30) days (except at or
in connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than one hundred twenty (120) days prior to the date of any meeting of
Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
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such other action. Any Shareholder who was a Shareholder at the date and time so
fixed shall be entitled to vote at such meeting or any adjournment thereof or to
be treated as a Shareholder of record for purposes of such other action, even
though such Shareholder has since that date and time disposed of its Shares, and
no Shareholder becoming such after that date and time shall be so entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.
SECTION 7.4. QUORUM. Except as otherwise required by the 1940 Act or
other applicable law, this Declaration of Trust, or the By-Laws, one-tenth
(1/10) of the Shares entitled to vote in person or by proxy shall be a quorum as
to any particular matter; provided, however, that any lesser number shall be
sufficient for matters upon which the Shareholders vote at any meeting called in
accordance with Section 7.6. Any matter upon which the Shareholders vote shall
be approved by a majority of the votes cast on such matter at a meeting of the
Shareholders at which a quorum is present, except that Trustees shall be elected
by a plurality of the votes cast at such a meeting.
SECTION 7.5. REQUIRED VOTE. Notwithstanding any provision of the law
requiring the authorization of any matter by a greater proportion, any matter
upon which the Shareholders vote shall be approved by the affirmative vote of a
majority of the votes cast on such matter at a meeting of the shareholders at
which a quorum is present, except that Trustees shall be elected by the
affirmative vote of a plurality of the votes cast at such a meeting.
SECTION 7.6. ADJOURNMENTS. Adjourned meetings may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.
SECTION 7.7. ACTIONS BY WRITTEN CONSENT. Except as otherwise required
by the 1940 Act or other applicable law, this Declaration of Trust, or the
By-Laws, any action taken by Shareholders may be taken without a meeting if
Shareholders entitled to cast at least a majority of all of the votes entitled
to be cast on the matter (or such larger proportion thereof as shall be required
by the 1940 Act or by any express provision of this Declaration of Trust or the
By-Laws) consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
SECTION 7.8. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is required for
stockholders of a Delaware business corporation under the Delaware General
Corporation Law.
SECTION 7.9. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
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ARTICLE 8
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 8.1. GENERAL PROVISIONS.
SECTION 8.1.1. GENERAL LIMITATION OF LIABILITY. No personal
liability for any debt or obligation of the Trust shall attach to any Trustee of
the Trust. Without limiting the foregoing, a Trustee shall not be responsible
for or liable in any event for any neglect or wrongdoing of any officer, agent,
employee, investment adviser, subadviser, principal underwriter or custodian of
the Trust, nor shall any Trustee be responsible or liable for the act or
omission of any other Trustee. Every note, bond, contract, instrument,
certificate, Share or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any Trustee in
connection with the Trust shall be conclusively deemed to have been executed or
done only in or with respect to their or his or her capacity as Trustees or
Trustee and neither such Trustees or Trustee nor the Shareholders shall be
personally liable thereon.
SECTION 8.1.2. NOTICE OF LIMITED LIABILITY. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall recite that the same was executed or made by
or on behalf of the Trust by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust or belonging to a Series thereof, and
may contain such further recitals as they or he may deem appropriate, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.
SECTION 8.1.3. LIABILITY LIMITED TO ASSETS OF THE TRUST. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Trust or belonging to a Series
thereof, as appropriate, for payment under such credit, contract or claim, and
neither the Shareholders nor the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor.
SECTION 8.2. LIABILITY OF TRUSTEES. The exercise by the Trustees of
their powers and discretion hereunder shall be binding upon the Trust, the
Shareholders, and any other person dealing with the Trust. The liability of the
Trustees, however, shall be limited by this Section 8.2.
SECTION 8.2.1. LIABILITY FOR OWN ACTIONS. A Trustee shall be
liable to the Trust or the Shareholders only for his own willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law.
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SECTION 8.2.2. LIABILITY FOR ACTIONS OF OTHERS. The Trustees
shall not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, adviser, administrative distributor,
principal underwriter, custodian, transfer agent, dividend disbursing agent,
Shareholder servicing agent, or accounting agent of the Trust, nor shall any
Trustee be responsible for any act or omission of any other Trustee.
SECTION 8.2.3. ADVICE OF EXPERTS AND REPORTS OF OTHERS. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. In discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of any other party to any contract entered into hereunder.
SECTION 8.2.4. BOND. The Trustees shall not be required to
give any bond as such, nor any surety if a bond is required.
SECTION 8.2.5. DECLARATION OF TRUST GOVERNS ISSUES OF
LIABILITY. The provisions of this Declaration of Trust, to the extent that they
restrict the duties and liabilities of the Trustees otherwise existing at law or
in equity, are agreed by the Shareholders and all other Persons bound by this
Declaration of Trust to replace such other duties and liabilities of the
Trustees.
SECTION 8.3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES.
No person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees or
to see to the application of any payments made or property transferred to the
Trust or upon its order.
SECTION 8.4. LIABILITY OF SHAREHOLDERS. Without limiting the
provisions of this Section 8.4 or the DBTA, the Shareholders shall be entitled
to the same limitation of personal liability extended to stockholders of private
corporations organized for profit under the General Corporation Law of the State
of Delaware.
SECTION 8.4.1. LIMITATION OF LIABILITY. No personal liability
for any debt or obligation of the Trust shall attach to any Shareholder or
former Shareholder of the Trust, and neither the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or otherwise.
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SECTION 8.4.2. INDEMNIFICATION OF SHAREHOLDERS. In case any
Shareholder or former Shareholder of the Trust shall be held to be personally
liable solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, the Shareholder
or former Shareholder (or, in the case of a natural person, his or her heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the Trust to be held harmless from and indemnified
against all loss and expense arising from such liability; provided, however,
there shall be no liability or obligation of the Trust arising hereunder to
reimburse any Shareholder for taxes paid by reason of such Shareholder's
ownership of any Shares or for losses suffered by reason of any changes in value
of any Trust assets. The Trust shall, upon request by the Shareholder or former
Shareholder, assume the defense of any claim made against the Shareholder for
any act or obligation of the Trust and satisfy any judgment thereon.
SECTION 8.5. INDEMNIFICATION.
SECTION 8.5.1. INDEMNIFICATION OF COVERED PERSONS. Subject to
the exceptions and limitations contained in Section 8.5.2, every person who is,
or has been, a Trustee, officer, employee or agent of the Trust, including
persons who serve at the request of the Trust as directors, trustees, officers,
employees or agents of another organization in which the Trust has an interest
as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person"), shall be indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been such a
Trustee, director, officer, employee or agent and against amounts paid or
incurred by him in settlement thereof.
SECTION 8.5.2. EXCEPTIONS. No indemnification shall be
provided hereunder to a Covered Person:
(a) For any liability to the Trust or its Shareholders arising out of a
final adjudication by the court or other body before which the proceeding was
brought that the Covered Person engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office;
(b) With respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the Trust; or
(c) In the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2)
and resulting in a payment by a Covered Person, unless there has been either a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
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involved in the conduct of his office by the court or other body approving the
settlement or other disposition, or a reasonable determination, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that he or she did not engage in such conduct, such determination being made by:
(i) a vote of a majority of the Disinterested Trustees (as such term is defined
in Section 8.5.5) acting on the matter (provided that a majority of
Disinterested Trustees then in office act on the matter); or (ii) a written
opinion of independent legal counsel.
SECTION 8.5.3. RIGHTS OF INDEMNIFICATION. The rights of
indemnification herein provided may be insured against by policies maintained by
the Trust, and shall be severable, shall not affect any other rights to which
any Covered Person may now or hereafter be entitled, shall continue as to a
person who has ceased to be a Covered Person, and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing contained
herein shall affect any rights to indemnification to which Trust personnel other
than Covered Persons may be entitled by contract or otherwise under law.
SECTION 8.5.4. EXPENSES OF INDEMNIFICATION. Expenses of
preparation and presentation of a defense to any claim, action, suit or
proceeding subject to a claim for indemnification under this Section 8.5 shall
be advanced by the Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he or she is not entitled to indemnification under
this Section 8.5, provided that either:
(a) Such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(b) A majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to the facts
available upon a full trial), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
SECTION 8.5.5. CERTAIN DEFINED TERMS RELATING TO
INDEMNIFICATION. As used in this Section 8.5, the following words shall have the
meanings set forth below:
(a) A "Disinterested Trustee" is one (i) who is not an Interested
Person of the Trust (including anyone, as such Disinterested Trustee, who has
been exempted from being an Interested Person by any rule, regulation or order
of the Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending;
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(b) "Claim," "action," "suit" or "proceeding" shall apply to all
claims, actions, suits, proceedings (civil, criminal, administrative or other,
including appeals), actual or threatened; and
(c) "Liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
ARTICLE 9
TERMINATION OR REORGANIZATION
SECTION 9.1. TERMINATION OF TRUST OR SERIES. Unless terminated as
provided herein, the Trust and each Series designated and established pursuant
to this Declaration of Trust shall continue without limitation of time.
SECTION 9.1.1. TERMINATION. Subject to approval by the
affected Shareholders, the Trust, any Series, or any Class (and the
establishment and designation thereof) may be terminated by an instrument
executed by a majority of the Trustees then in office; provided, however, that
no approval of affected Shareholders is necessary if a majority of the trustees
then in office determines that the continuation of the Trust, Series, or Class
is not in the best interests of the Trust, such Series, such Class, or the
affected Shareholders as a result of factors or events adversely affecting the
ability of the Trust, Series, or Class to conduct its business and operations in
an economically viable manner.
SECTION 9.1.2. DISTRIBUTION OF ASSETS. Upon termination of the
Trust or any Series or Class, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated,
as may be determined by the Trustees, the Trust shall, in accordance with such
procedures as the Trustees consider appropriate, reduce the remaining assets of
the Trust to distributable form in cash or other securities, or any combination
thereof, and distribute the proceeds to the affected Shareholders in the manner
set forth by resolution of the Trustees. To the extent permitted by the 1940 Act
or other applicable law, the Trustees may require affected Shareholders to
receive Shares of any remaining Series or Class in lieu of such proceeds.
SECTION 9.1.3. CERTIFICATE OF CANCELLATION. Upon termination
of the Trust, the Trustees shall file a certificate of cancellation in
accordance with Section 3810 of the DBTA.
SECTION 9.2. REORGANIZATION. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Series, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Series of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Series of the
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Trust, Shares corresponding to such other Series) with such transfer either (i)
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so transferred, or
(ii) not being made subject to, or not with the assumption of, such liabilities.
Following such transfer, the Trustees shall distribute such cash, Shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series corresponding to
the Series the assets belonging to which have been so transferred. If all of the
assets of the Trust have been so transferred, the Trust shall be terminated.
SECTION 9.3. MERGER OR CONSOLIDATION.
SECTION 9.3.1. AUTHORITY TO MERGE OR CONSOLIDATE. The Trust,
or any one or more Series, may, either as the successor, survivor, or
non-survivor, (i) consolidate with one or more other trusts, partnerships,
associations or corporations organized under the laws of the State of Delaware
or any other state of the United States to form a new consolidated trust,
partnership, association or corporation under the laws of the State of Delaware
or any other sate of the United States, or have one or more such trusts,
partnerships, associations or corporations merged into it, any such
consolidation or merger to be upon such terms and conditions as are specified in
an agreement and plan of reorganization entered into by the Trust, or one or
more Series as the case may be, in connection therewith. The terms "merge" or
"merger" as used herein shall also include the purchase or acquisition of any
assets of any other trust, partnership, association or corporation which is an
investment company organized under the laws of the State of Delaware or any
other state of the United States.
SECTION 9.3.2. NO SHAREHOLDER APPROVAL REQUIRED. Any such
consolidation or merger shall not require the vote of the Shareholders affected
thereby, unless such vote is required by the 1940 Act or other applicable laws,
or unless such merger or consolidation would result in an amendment of this
Declaration of Trust which would otherwise require the approval of such
Shareholders.
SECTION 9.3.3. SUBSEQUENT AMENDMENTS. In accordance with
Section 3815(f) of DBTA, an agreement of merger or consolidation may effect any
amendment to this Declaration of Trust or the By-Laws or effect the adoption of
a new declaration of trust or By-Laws of the Trust if the Trust is the surviving
or resulting business trust.
SECTION 9.4.4. CERTIFICATE OF MERGER OR CONSOLIDATION. Upon
completion of the merger or consolidation, the Trustees shall file a certificate
of merger or consolidation in accordance with Section 3810 of the DBTA.
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ARTICLE 10
AMENDMENTS
SECTION 10.1. GENERALLY. Except as otherwise specifically provided
herein or as required by the 1940 Act or other applicable law, this Declaration
of Trust may be amended at any time by an instrument in writing signed by a
majority of the Trustees then in office.
SECTION 10.2. CERTIFICATE OF AMENDMENT. In the event any of the
amendment to this Declaration of Trust which affects the certificate of trust
filed by the Trust in accordance with Section 2.1, the Trustees shall file a
certificate of amendment in accordance with Section 3810 of the DBTA.
SECTION 10.3. PROHIBITED RETROSPECTIVE AMENDMENTS. No amendment of this
Declaration of Trust or repeal of any of its provisions shall limit or eliminate
the limitation of liability provided to Trustees and officers hereunder with
respect to any act or omission occurring prior to such amendment or repeal.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1. CERTIFIED COPIES. The original or a copy of this
Declaration of Trust and of each amendment hereto shall be kept in the office of
the Trust where it may be inspected by any Shareholder. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such amendments have been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer or Trustee of the Trust to
be a copy of this Declaration of Trust or of any such amendments.
SECTION 11.2. CERTAIN INTERNAL REFERENCES. In this Declaration of Trust
or in any such amendment, references to this Declaration of Trust, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this Declaration of Trust as a whole and as amended or affected by any such
amendment.
SECTION 11.3. HEADINGS. Headings are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts, each of which shall be deemed an original.
SECTION 11.4. RESOLUTION OF AMBIGUITIES. The Trustees may construe any
of the provisions of this Declaration insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any such
construction hereof by the Trustees in good
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faith shall be conclusive as to the meaning to be given to such provisions. In
construing this Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
SECTION 11.5. SIGNATURES. To the extent permitted by applicable law,
any instrument signed pursuant to a validly executed power of attorney shall be
deemed to have been signed by the Trustee or officer executing the power of
attorney.
SECTION 11.6. GOVERNING LAW. This Declaration of Trust is executed and
delivered with reference to DBTA and the laws of the State of Delaware by all of
the Trustees whose signatures appear below, and the rights of all parties and
the validity and construction of every provision hereof shall be subject to and
construed according to DBTA and the laws of the State of Delaware (unless and to
the extent otherwise provided for and/or preempted by the 1940 Act or other
applicable federal securities laws); provided, however, that there shall not be
applicable to the Trust, the Trustees, or this Declaration of Trust (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the DBTA) pertaining to trusts which are inconsistent with the rights,
duties, powers, limitations or liabilities of the Trustees set forth or
referenced in this Declaration of Trust. All references to sections of the DBTA
or the 1940 Act, or any rules or regulations thereunder, refer to such sections,
rules, or regulations in effect as of the date of this Declaration of Trust, or
any successor sections, rules, or regulations thereto.
SECTION 11.7. SEVERABILITY. The provisions of this Declaration of Trust
are severable, and if the Trustees shall determine, with the advice of counsel,
that any of such provision is in conflict with the 1940 Act, the DBTA, or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Declaration of Trust; provided,
however, that such determination shall not affect any of the remaining
provisions of this Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination. If any provision of this
Declaration of Trust shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.
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IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust,
have executed this Amended and Restated Declaration of Trust as of the date
first written above.
/s/ Peter C. Clapman
--------------------------
Peter C. Clapman, Trustee
/s/ Lisa Snow
--------------------------
Lisa Snow, Trustee
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Exhibit 99.d
INVESTMENT MANAGEMENT AGREEMENT
FOR TIAA-CREF LIFE FUNDS
THIS AGREEMENT is made this 30th day of November, 1998, by and between
TIAA-CREF Life Funds (the "Fund"), a Delaware business trust, and Teachers
Advisors, Inc. ("Advisors"), a Delaware corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and currently consists of one series (known as the Stock Index Fund) (the
"Current Fund"), and may consist of additional series in the future
(collectively, with the Current Fund, the "Funds");
WHEREAS, Advisors is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Fund desires to retain Advisors to provide or to arrange
to provide overall management of the Fund and the Funds, including, but not
limited to, investment management, custody, transfer agency, dividend
disbursing, legal, accounting, and administrative services, in the manner and on
the terms and conditions set forth in this Agreement; and
WHEREAS, Advisors is willing to provide or to arrange to provide
overall management of the Fund and the Funds, including, but not limited to,
investment management, custody, transfer agency, dividend disbursing, legal,
accounting, and administrative services, in the manner and on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Fund and Advisors hereby agree as follows:
1. Duties of Advisors.
(a) Generally.
(i) The Fund hereby engages Advisors to act as the
Fund's general manager to provide or to arrange to provide directly or through
third parties, investment management, custody, transfer agency, dividend
disbursing, legal, accounting, and administrative services to each Fund; and to
provide or to arrange to provide the above services subject to the supervision
of the board of trustees of the Fund (the "Board"), for the period and on the
terms and conditions set forth in this Agreement. Advisors hereby accepts such
engagement and agrees during such period, at its own expense, to provide or to
arrange to provide such investment advisory and general management services and
to assume the obligations set forth in this Agreement for the compensation
provided for herein.
(ii) Subject to the provisions of the 1940 Act and
the Advisers Act, Advisors may retain any affiliated or unaffiliated parties
including, but not limited to, investment
<PAGE> 2
adviser(s) and/or investment sub-adviser(s), custodian(s), transfer agent(s),
dividend-disbursing agent(s), attorney(s), and accountant(s) to perform any or
all of the services set forth in this Agreement (any such party is hereafter
referred to as a "Service Provider"). Advisors shall provide the Fund with
reasonable notice of its intention to retain each such Service Provider and
shall not retain a Service Provider if, within 10 days after Advisors provides
such notice to the Fund with respect to such Service Provider, the Fund notifies
Advisors of its disapproval of such Service Provider.
(iii) Advisors and each Service Provider shall, for
all purposes herein, be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund or a Fund in any way or otherwise be deemed an agent of the
Fund or a Fund.
(iv) Advisors shall, for purposes of this Agreement,
have and exercise full investment discretion and authority to act as agent for
the Fund in buying, selling or otherwise disposing of or managing the Fund's
investments, directly or through sub-advisers, subject to supervision by the
Board.
(v) Advisors and each Service Provider shall be
subject to: (1) the restrictions of the Declaration of Trust Fund, as amended
from time to time; (2) the provisions of the 1940 Act and the Advisers Act; (3)
the statements relating to the Funds' investment objectives, investment policies
and investment restrictions as set forth in the currently effective (and as
amended from time to time) registration statement of the Fund (the "registration
statement") under the Securities Act of 1933, as amended (the "1933 Act") and
the 1940 Act; and (4) any applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code").
(b) Investment Advisory Services.
(i) Advisors shall provide the Fund directly or
through sub-advisers with such investment research, advice and supervision as
the Fund 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 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.
(ii) The Fund has furnished or will furnish Advisors
(who is authorized to furnish any Service Provider) with copies of the Fund's
registration statement, and Declaration of Trust, as currently in effect and
agrees during the continuance of this Agreement to furnish Advisors with copies
of any amendments or supplements thereto before or at the time
-2-
<PAGE> 3
the amendments or supplements become effective. Advisors and each Service
Provider will be entitled to rely on all documents furnished by the Fund.
(iii) Advisors 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 Advisors. Advisors also is
authorized as the agent of the Fund to give instructions to any Service Provider
serving as custodian of the Fund 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 a Fund, Advisors 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 (the "1934 Act"),
and other applicable provisions of law, Advisors may select brokers or dealers
that are affiliated with Advisors or the Fund.
(iv) In addition to seeking the best price and
execution, Advisors may also take into consideration research and statistical
information, wire, quotation and other services provided by brokers and dealers
to Advisors. Advisors is also authorized to effect individual securities
transactions at commission rates in excess of the minimum commission rates
available, if Advisors 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 Advisors'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. Advisors will periodically evaluate the statistical data, research
and other investment services provided to it by brokers and dealers. Such
services may be used by Advisors 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.
(v) 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, Advisors shall:
(1) Perform research and obtain and
analyze pertinent economic,
statistical, and financial data
relevant to the investment policies
of each Fund as set forth in the
Fund's registration statement;
(2) Consult with the Board and furnish
to the Board recommendations with
respect to an overall investment
-3-
<PAGE> 4
strategy for each Fund for approval,
modification, or rejection by the
Board;
(3) Seek out and implement specific
investment opportunities, consistent
with any investment strategies
approved by the Board;
(4) Take such steps as are necessary to
implement any overall investment
strategies approved by the Board for
each Fund, including making and
carrying out day-to-day decisions to
acquire or dispose of permissible
investments, managing investments
and any other property of the Fund,
and providing or obtaining such
services as may be necessary in
managing, acquiring or disposing of
investments;
(5) Regularly report to the Board with
respect to the implementation of any
approved overall investment strategy
and any other activities in
connection with management of the
assets of each Fund;
(6) Maintain all required accounts,
records, memoranda, instructions or
authorizations relating to the
acquisition or disposition of
investments for each Fund and the
Fund;
(7) Furnish any personnel, office space,
equipment and other facilities
necessary for the operation of each
Fund as contemplated in this
Agreement;
(8) Provide the Fund with such
accounting or other data concerning
the Fund's investment activities as
shall be necessary or required to
prepare and to file all periodic
financial reports or other documents
required to be filed with the
Securities and Exchange Commission
and any other regulatory entity;
(9) Assist in determining each business
day the net asset value of the
shares of each Fund in accordance
with applicable law; and
(10) Enter into any written investment
advisory or investment sub-advisory
contract with another affiliated or
unaffiliated party, subject to any
approvals required by Section 15 of
the 1940 Act, pursuant to which such
party will carry out some or all of
Advisors's responsibilities (as
specified in
-4-
<PAGE> 5
such investment advisory or
investment sub-advisory contract)
listed above.
(c) General Management Services. Advisors shall provide or
arrange to provide all custody, transfer agency, dividend disbursing, legal,
accounting, and administrative services necessary for the operation of the Fund,
including, without limitation, the following services:
(i) Custody services including, but not limited to:
(1) placing and maintaining each Fund's
securities, cash or other
investments pursuant to the
requirements of Section 17(f) of the
1940 Act and the rules thereunder;
(2) holding and segregating for the
Fund's account, all of the Fund's
assets, including securities that
the Fund desires to be held in
places within the United States
("domestic securities") or in places
outside the United States ("foreign
securities");
(3) releasing and delivering domestic
securities owned by the Fund only
upon receipt of instructions from
persons and by means authorized by
the Board;
(4) assuring that all domestic
securities held are registered in
the name of the Fund or in the name
of any nominee of the Fund or of any
nominee of Advisors or any Service
Provider acting as custodian which
nominee shall be assigned
exclusively to the Fund, unless the
Fund has provided written
authorization to use a nominee not
meeting the above requirement;
(5) maintaining a separate bank
account(s) in the United States in
the name of the Fund, and holding
all cash received by it from or for
the account of the Fund in such
account;
(6) collecting on a timely basis all
income and other payments with
respect to securities to which the
Fund shall be entitled either by law
or pursuant to custom in the
securities business;
(7) paying out monies of the Fund upon
receipt of instructions from persons
and by means authorized by the
Board;
-5-
<PAGE> 6
(8) appointing or removing, in its
discretion, any other entity
qualified under the 1940 Act to act
as a custodian, as its agent to
carry out any custody duties so long
as such other entity is approved by
the Board;
(9) employing, in the discretion of
Advisors or a Service Provider
employed by Advisors, other parties
as sub-close custodians for the
Fund's domestic securities or
foreign securities. With respect to
the Fund's foreign securities, if
any, such employment shall be
effected and such foreign securities
shall be maintained in accordance
with the provisions of Rule 17f-5
under the 1940 Act, as such
provisions may be amended from time
to time, provided that Advisors or a
Service Provider employed by
Advisors shall furnish annually to
the Fund, information concerning the
Service Provider or sub-custodians
employed by Advisors or other
Service Provider;
(10) creating and maintaining all records
relating to its activities and
obligations under any contract
relating to the Fund or a Fund
thereof in accordance with the
provisions of Section 31 of the 1940
Act and Rules 31a-1 and 31a-2 under
the 1940 Act. Such records shall be
the property of the Fund and shall
at all times during the regular
business hours of Advisors (or
separate Service Provider acting as
custodian) be open for inspection by
duly authorized officers, employees
or agents of the Fund and employees
and agents of the Securities and
Exchange Commission; and
(11) performing or arranging for the
performance of any other usual
duties and functions of a custodian
for a registered investment company;
(ii) Transfer agency services, including, but not
limited to:
(1) receiving for acceptance, orders for
the purchase of Fund shares, and
promptly delivering payment and
appropriate documentation thereof to
Advisors or any Service Provider
acting as custodian;
(2) issuing, pursuant to purchase
orders, the appropriate number of
the Fund's shares and holding such
shares in the appropriate account;
-6-
<PAGE> 7
(3) receiving for acceptance redemption
requests and redemption directions
and delivering the appropriate
documentation to Advisors or any
Service Provider acting as
custodian;
(4) effecting transfers of Fund shares
by the registered owners thereof
upon receipt of appropriate
instructions;
(5) preparing and transmitting payments
for dividends and distributions
declared by the Fund;
(6) maintaining records of accounts for
shareholders and advising the Fund
and its shareholders as to the
foregoing;
(7) recording the issuance of shares of
the Fund and maintaining pursuant to
Rule 17Ad-10(e) under the 1934 Act a
record of the total number of shares
of the Fund that are authorized,
based upon data provided by the
Fund, and issued and outstanding;
and
(8) performing or arranging for the
performance of any other customary
services of a transfer agent or
dividend-disbursing agent for a
registered investment company;
(iii) The calculation of the net asset value of each
Fund and the net asset value per share of each class of shares at such times and
in such manner as specified in the Fund's current registration statement and at
such other times upon which the parties hereto may from time to time agree;
(iv) The creation and maintenance of such records
relating to the business of the Fund as the Fund may from time to time
reasonably request;
(v) Portfolio accounting services to maintain the
portfolio accounting records for each Fund;
(vi) The preparation of all federal, state, and local
tax returns and reports relating to each Fund;
(vii) The preparation, filing and arranging for the
distribution of proxy materials and periodic reports to shareholders of each
Fund;
(viii) The preparation and filing of the Fund's
registration statements and other documents with the Securities and Exchange
Commission and other federal and state regulatory authorities as may be required
by applicable law;
-7-
<PAGE> 8
(xiv) The preparation and filing of state
registrations of the Fund's shares; and
(x) Other services for the ordinary operation of the
Fund.
Advisors may contract with qualified Service Providers for the provision of any
of the services necessary for the operation of the Fund as described in this
Section (c). Where Advisors engages separate Service Providers, Advisors shall
also, on behalf of the Fund, coordinate the activities of such Service
Providers, as well as other agents, attorneys, brokers and dealers, insurers,
sub-advisers and such other persons in any such other capacity deemed to be
necessary or desirable. Advisors shall make reports to the Board of its
performance hereunder and shall furnish advice and recommendations with respect
to such other aspects of the business and affairs of the Fund as the Board or
Advisors shall consider desirable.
2. Allocation of Charges and Expenses.
(a) Advisors.
(i) Advisors assumes the expense of and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Agreement, and shall at its own expense provide the office space, equipment
and facilities that it is obligated to provide under this Agreement, and shall
pay all compensation of officers of the Fund and all trustees of the Fund who
are affiliated persons of Advisors, except as otherwise specified in this
Agreement.
(ii) Except for those expenses assumed by the Fund as
provided in Section 2(b) below, Advisors shall bear all of the Fund's expenses
including, but not limited to: custodian fees; transfer agent fees; pricing
costs (including the daily calculation of net asset value); portfolio accounting
service fees; ordinary legal fees (except extraordinary litigation expenses);
expenses of shareholders' and/or trustees' meetings; bookkeeping expenses
related to shareholder accounts; cost of printing and mailing shareholder
reports and proxy statements; costs of printing and mailing registration
statements and updated prospectuses to current shareholders; costs in connection
with the registration of the Fund's shares with federal and state securities
authorities and the continued qualification of the Fund's shares for sale;
expenses of all audits by the Fund's independent accountants, costs of filing
reports with regulatory bodies; costs of the maintenance of the Fund's fidelity
bond required by Section 17(g) of the 1940 Act, or other insurance premiums; and
the fees of any trade association of which the Fund is a member.
(iii) Advisors agrees that neither it nor any Service
Provider will make any separate charge to any shareholder or his individual
account for any services rendered to
said shareholder or the Fund unless such charge for special services is
specifically approved by the Board including a majority of the directors who are
not "interested persons" (as such term is defined in the 1940 Act) of Advisors.
No special charge will be levied retroactively or without appropriate notice to
affected shareholders.
-8-
<PAGE> 9
(b) The Fund. The Fund assumes and shall pay or cause to be
paid the following expenses of the Fund, including, without limitation:
compensation of Advisors under this Agreement; fees and expenses of trustees who
are not "interested persons" (as such term is defined in the 1940 Act) of the
Fund (the "disinterested trustees"); brokerage commissions, dealer markups and
other expenses incurred in the acquisition or disposition of any securities or
other investments; costs, including the interest expense, of borrowing money;
taxes; and extraordinary expenses (including extraordinary litigation expenses
and extraordinary consulting expenses).
3. Compensation of Advisors.
(a) For the services rendered, the facilities furnished and
expenses assumed by Advisors, the Fund shall pay to Advisors at the end of each
calendar month a fee calculated as a percentage of the average value of the net
assets each day for each Fund during that month at the following annual rates:
Stock Index Fund...........................................0.30%
(b) Advisors's fee shall be accrued daily proportionately at
1/365th (1/366th for a leap year) of the applicable annual rate set forth above.
For the purpose of accruing compensation, the net assets of each Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of the Fund 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.
(c) In the event of termination of this Agreement, all
compensation due through the date of termination will be calculated on a
pro-rated basis through the date of termination and paid within fifteen business
days of the date of termination.
(d) During any period when the determination of net asset
value is suspended, the net asset value of a Fund as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again determined.
4. Limitation of Liability of Advisors. Advisors shall not be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the management of the Fund, except for
(i) willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
hereunder, and (ii) to the extent specified in section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation.
-9-
<PAGE> 10
5. Activities of Advisors.
(a) The services of Advisors are not deemed to be exclusive,
and Advisors is free to render services to others, so long as Advisors's
services under this Agreement are not impaired. It is understood that trustees,
officers, employees and shareholders of the Fund are or may become interested
persons of Advisors, as directors, officers, employees and shareholders or
otherwise, and that directors, officers, employees and shareholders of Advisors
are or may become similarly interested persons of the Fund, and that Advisors
may become interested in the Fund as a shareholder or otherwise.
(b) It is agreed that Advisors may use any supplemental
investment research obtained for the benefit of the Fund in providing investment
advice to its other investment advisory accounts. Advisors or its affiliates may
use such information in managing their own accounts. Conversely, such
supplemental information obtained by the placement of business for Advisors or
other entities advised by Advisors will be considered by and may be useful to
Advisors in carrying out its obligations to the Fund.
(c) Nothing in this Agreement shall preclude the aggregation
of orders for the sale or purchase of securities or other investments by two or
more Funds of the Fund or by the Fund and other mutual funds, separate accounts,
or other accounts (collectively, "Advisory Clients") managed by Advisors,
provided that:
(i) Advisors' actions with respect to the aggregation
of orders for multiple Advisory Clients, including the Fund, are consistent with
the then-current positions in this regard taken by the Securities and Exchange
Commission or its staff through releases, "no-action" letters, or otherwise; and
(ii) Advisors' policies with respect to the
aggregation of orders for multiple Advisory Clients have been previously
submitted and approved by the Board of Trustees of the Fund.
Neither Advisors, nor any of its directors, officers, or personnel, nor any
person, firm, or corporation controlling, controlled by, or under common control
with it shall act as a principal or receive any commission as agent in
connection with the purchase or sale of assets for a Fund, except as may be
permitted under applicable law.
6. Books and Records.
(a) Advisors hereby undertakes and agrees to maintain, in the
form and for the period required by Rule 31a-2 and, if the Fund adds a money
market account, Rule 2a-7 under the 1940 Act, all records relating to the Fund's
investments that are required to be maintained by the Fund pursuant to the
requirements of Rule 31a-1 and Rule 2a-7 of the 1940 Act.
-10-
<PAGE> 11
(b) Advisors agrees that all books and records which it or any
other Service Provider maintains for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any such books, records or
information upon the Fund's request. All such books and records shall be made
available, within five business days of a written request, to the Fund's
accountants or auditors during regular business hours at Advisors's offices. The
Fund or its authorized representative shall have the right to copy any records
in the possession of Advisors or a Service Provider that pertain to the Fund.
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 Fund free from any
claim or assertion of rights by Advisors.
(c) Advisors 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 Fund has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
7. Duration and Termination of this Agreement.
(a) This Agreement shall not become effective unless and until
it is approved by the Board, including a majority of trustees who are not
parties to this Agreement or interested persons of any such party, and by the
vote of a majority of the outstanding voting shares of each Fund. This Agreement
shall come into full force and effect on the date which it is so approved,
provided that it shall not become effective as to any subsequently created Fund
until it has been approved by the Board specifically for such Fund. As to each
Fund, the Agreement shall continue in effect for two years from the date on
which it becomes effective and shall thereafter continue in effect from year to
year so long as such continuance is specifically approved for such Fund at least
annually by: (i) the Board, or by the vote of a majority of the outstanding
votes attributable to the shares of such Fund; and (ii) a majority of those
trustees who are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated at any time as to any
Fund or to all Funds, without the payment of any penalty, by the Board or by
vote of a majority of the outstanding votes attributable to the shares of the
applicable Fund, or by Advisors, on 60 days written notice to the other party.
If this Agreement is terminated only with respect to one or more, but less than
all, of the Funds, or if a different adviser is appointed with respect to a new
Fund, the Agreement shall remain in effect with respect to the remaining
Fund(s).
(c) This Agreement shall automatically terminate in the event
of its assignment.
-11-
<PAGE> 12
8. Amendments of this Agreement. This Agreement may be amended as to
each Fund by the parties only if such amendment is specifically approved by (i)
the vote of a majority of outstanding votes attributable to the shares of the
Fund, and (ii) a majority of those trustees who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
9. Definitions of Certain Terms. The terms "assignment," "affiliated
person," and "interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act. The term "majority of the
outstanding votes" attributable to the shares of a Fund means the lesser of (a)
67% or more of the votes attributable to such Fund present at a meeting if the
holders of more than 50% of such votes are present or represented by proxy, or
(b) more than 50% of the votes attributable to shares of the Fund.
10. Governing Law. This Agreement shall be construed in accordance with
laws of the State of New York, and applicable provisions of the 1940 Act, the
Advisers Act, and the 1934 Act.
11. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
-12-
<PAGE> 13
13. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered by hand or mailed first
class, postage prepaid, addressed as follows:
(a) If to the Fund -
TIAA-CREF Life Funds
730 Third Avenue
New York, New York 10017-3206
Attention: Thomas G. Walsh
(b) If to Advisors -
Teachers Advisors, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Scott C. Evans
or to such other address as the Fund or Advisors shall designate by written
notice to the other.
14. No Liability of Shareholders. This Agreement is executed by the
Trustees of the Fund, not individually, but rather in their capacity as Trustees
under the Declaration of Trust made August 13, 1998, as amended. None of the
shareholders of the Fund, Trustees, officers, employees, or agents of the Fund
shall be personally bound or liable under this Agreement, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder but only to the property of the Fund and, if the obligation or claim
relates to the property held by the Fund for the benefit of one or more but
fewer than all Funds, then only to the property held for the benefit of the
affected Fund.
15. Miscellaneous. Captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the Fund and Advisors have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers on the day and year first above written.
TIAA-CREF LIFE FUNDS
By: /s/ Thomas G. Walsh Attest:/s/ Mark L. Serlen
------------------------------------ -----------------------
Thomas G. Walsh
Chairman of the Board and President Title: Assistant Secretary
-----------------------
TEACHERS ADVISORS, INC.
By: /s/ Scott C. Evans Attest:/s/ Mark L. Serlen
------------------------------------ -----------------------
Scott C. Evans
Executive Vice President Title: Assistant Secretary
-----------------------
-14-
<PAGE> 15
[TIAA CREF LOGO]
WAIVER
Continuation of Exhibit 99.d
November 30, 1998
The Board of Trustees
TIAA-CREF Life Funds
730 Third Avenue
New York, New York 10071-3206
Ladies and Gentlemen:
This is to inform you that Teachers Advisors, Inc.
("Advisors") has voluntarily chosen to waive a portion of the fee it is
otherwise entitled to receive for managing the assets of TIAA-CREF Life Funds
(the "Fund") under the Investment Management Agreement dated November 30, 1998,
by and between the Fund and Advisors. The waiver shall operate from the date of
this letter until we notify you otherwise in writing. The waiver will be based
on an effective annual rate of twenty-three one-hundredths of one percent
(0.23%) of the net assets of The Stock Index Fund portfolio with the result that
the fee due to Advisors during the covered period shall be based on an effective
annual rate of .07%
We will provide you with not less than 30 days written notice
if we determine to modify or terminate this waiver, unless it is otherwise
agreed by you and us.
Sincerely,
TEACHERS ADVISORS, INC.
By:/s/ Scott C. Evans
-------------------------------------
Scott C. Evans
Executive Vice President
TEACHERS ADVISORS, INC.
<PAGE> 1
Exhibit 99.e
PARTICIPATION/DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into on this 20th day of November,
1998, between TIAA-CREF Life Insurance Company ("TCL"), a life insurance company
organized under the laws of the State of New York, for itself and on behalf of
TIAA-CREF Life Separate Account VA-1 (the "Account"), a separate account
established by TCL in accordance with the laws of the State of New York;
TIAA-CREF Life Funds (the "Company"), an open-end management investment company
organized under the laws of the State of Delaware, and Teachers Personal
Investors Services, Inc. ("TPIS"), a Delaware corporation operating as a
broker-dealer.
WITNESSETH:
WHEREAS, the Account has been established by TCL pursuant to
the insurance laws of the State of New York in connection with certain variable
annuity contracts ("Contracts") proposed to be issued to the public by TCL;
WHEREAS, the Account has been registered as a unit investment
trust under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the income, if any, and gains and losses, realized
and unrealized, from assets allocated to the Account are, in accordance with the
applicable contracts, to be credited to or charged against the Account without
regard to other income, gains or losses of TCL or any other separate account
thereof;
WHEREAS, the Account currently consists of a single investment
account and may in the future be subdivided into various investment accounts
(each a "subaccount") as to which income, if any, and gains and losses, realized
and unrealized, from assets allocated to each such subaccount would be credited
to or charged against such subaccounts without regard to other income, gains or
losses of other subaccounts;
WHEREAS, the Company is registered with the Securities and
Exchange Commission under the 1940 Act as an open-end management investment
company;
WHEREAS, the Company currently consists of a single investment
portfolio and may in the future be subdivided into various investment portfolios
(each a "Fund"), each of which may be subject to certain investment policies and
restrictions that may not be changed without a majority vote of the shareholders
of such Fund; and
1
<PAGE> 2
WHEREAS, the shares of each Fund will be offered to a
corresponding subaccount; and
WHEREAS, TPIS is the principal underwriter for the Contracts
and is a broker-dealer registered as such under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers ("NASD");
NOW THEREFORE, in consideration of the foregoing and of the
mutual covenants and conditions set forth herein TCL, the Account, TPIS and the
Company hereby agree as follows:
1. The Contracts funded through the Account will provide for
the allocation of purchase payments among certain subaccounts for investment in
such shares of the Funds as may be offered from time to time in the prospectus
for the Contracts. The selection of the particular subaccount is to be made by
the contract owner and such selection may be changed or the cash value may be
transferred among or between subaccounts in accordance with the terms of the
Contracts.
2. The Company hereby appoints TPIS as its principal
underwriter and exclusive distributor to sell its shares to the Account, and
TPIS accepts such appointment. TPIS shall offer shares of the Company only on
the terms set forth in the Company's currently effective registration statement.
The Company reserves the right to sell its shares to other persons and to
appoint additional underwriters and distributors.
3. The Company agrees to sell to TCL, on behalf of the
Account, those shares of the Funds of the Company which the Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Company or its designated agent of the order for the shares
of the Company. For purposes of this Section, TCL or its designated agent shall
be the designated agent of the Company for receipt of such orders from contract
owners and receipt by such designated agent shall constitute receipt by the
Company; provided that the Company's transfer agent receives notice of such
order by 9:30 a.m. New York time on the next following business day. "Business
day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Company calculates the net asset value of the Funds as
described in its registration statement.
The Company agrees to make shares of each Fund available
indefinitely for purchase at the applicable net asset value per share by the
Account on those days on which the Company calculates its net asset value as
described in its registration statement and the Company shall use reasonable
efforts to calculate such net asset value on each business day as defined above.
Notwithstanding the foregoing, the Board of Trustees of the Company (hereinafter
the "Board") may refuse to sell shares of any Fund to TCL, or suspend or
terminate the offering of shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the Board acting in good faith and in light of their fiduciary duties
2
<PAGE> 3
under federal and any applicable state laws, necessary in the best interests of
the shareholders of such Fund or contract owners indirectly invested in such
Fund.
TCL shall pay for such shares by 9:30 a.m. New York time on
the next business day after an order to purchase shares is made in accordance
with the provisions of this Section 5. Payment shall be in federal funds
transmitted by wire to the Company's transfer agent or by a credit for any
shares redeemed.
4. The Company agrees to redeem for cash, on TCL's request,
any full or fractional shares of the Company held by TCL, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Company or its designated agents of the request for redemption by Contract
owners. For purposes of this Section, TCL or or its designated agent shall be
the designated agent of the Company for receipt of requests for redemption from
Contract owners and receipt by such designated agent shall constitute receipt by
the Company; provided that the Company receives notice of such request for
redemption by 9:30 a.m. New York time on the next following business day.
The Company ordinarily shall make payment to TCL for shares
redeemed on the day the Company receives notice from TCL or its designated
agent, but the Company may delay payment for up to seven calendar days after the
request is received. Payment shall be in federal funds transmitted by wire or by
a credit for any shares purchased.
5. Transfer of shares shall be by book entry. No stock
certificates will be issued to the Account. Shares of each Fund will be recorded
with an appropriate identifier for the corresponding subaccount on the books of
TCL. If, however, state law requires transfer other than by book entry, then the
Company agrees to provide the required form of transfer.
6. The Company shall make the net asset value per share for
each Fund available to TCL or its designated agent on a daily basis as soon as
reasonably practicable after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available to
TCL or its designated agent by 7 p.m. New York time.
7. The Company or its transfer agent shall furnish notice on
the ex-dividend date to TCL or its designated agent of any dividend or
distribution payable on any shares to the Account. All of such dividends and
distributions as are payable on shares of a Fund shall be automatically
reinvested in additional shares of that Fund. The Company shall notify TCL or
its designated agent of the number of shares so issued.
8. The Company shall pay all of its expenses incidental to its
performance under this Agreement. The Company shall take all reasonable steps to
ensure that all of its shares are registered and authorized for issue in
accordance with applicable federal and state laws prior to their purchase by TCL
for the Account. The Company shall bear the expenses for the cost of
registration of its shares, preparation of its prospectus, proxy materials and
reports, the printing
3
<PAGE> 4
and distribution of such items to each Contract owner who has allocated net
amounts to any subaccount, the preparation of all statements and notices
required by any federal or state law, and taxes imposed upon the Company on the
issue or transfer of the Company's shares subject to this Agreement. The parties
shall cooperate in the printing of the prospectuses of the Contracts and the
Company. The Company shall provide TCL with a reasonable quantity of Company
prospectuses and reports to be sent to existing Contract owners.
9. The Company does not charge a load or redemption fee in
connection with the sale or redemption of its shares and TPIS will not charge
any load or redemption fee in connection with the sale of shares to or
redemption of shares from the Account. Notwithstanding this, TPIS assumes and
will pay, from its own resources, all expenses related to distribution of the
Company's shares and will bear other costs and expenses attributable to any
activity primarily intended to result in the sale of shares. Such expenses
include, but are not limited to:
a. printing and distribution of the Company's prospectus
to prospective investors;
b. preparation, printing and distribution of advertising
and sales literature for use in the offering of the
Company's shares (in connection with the offering of
the Contracts or otherwise) and printing and
distribution of reports to shareholders used as sales
literature; and
c. the qualification of TPIS as a distributor or broker
or dealer under any applicable federal or state
securities laws;
10. In selling shares of the Company, TPIS shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws and regulations and the rules of the NASD, relating to the sales of
the Company's shares or the Contracts.
11. TPIS shall act as an independent contractor and nothing
contained herein shall be construed to make it, its agents or representatives,
or any employees, employees of the Company. In addition, TPIS shall remain fully
responsible for its own conduct and that of its agents, representatives and
employees under applicable law.
12. TCL and TPIS shall make no representations concerning the
Company or its shares except those contained in the then-current prospectus of
the Company and in printed information subsequently issued on behalf of the
Company and approved by the Company as supplemental to such prospectus, or
otherwise approved by the Company.
13. The Company represents that each Fund of the Company shall
comply with Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations issued thereunder (Reg. Section 1.817-5), relating
to the diversification requirements
4
<PAGE> 5
for variable annuity contracts and any amendments or other modifications to such
Section or regulations.
The Company represents that each Fund of the Company is
currently qualified or will be qualified as a Regulated Investment Company under
Subchapter M of the Code and that every effort will be made to maintain such
qualification under Subchapter M or under any successor or similar provision,
and that the Company will notify TCL orally (followed by written notice) or by
wire immediately upon having a reasonable basis for believing that any Series
might not so qualify in the future.
14. It is understood among the parties to this Agreement that,
subject to obtaining any applicable regulatory approvals that may be conditioned
on the parties complying with certain requirements, shares of each Fund may be
offered in the future to the separate accounts of various insurance companies in
addition to TCL and in connection with variable life insurance contracts or
variable annuity contracts other than the Contracts. It is also understood among
the parties that shares of each Fund only may be offered to the other persons
identified in paragraph (f) of Regulation Section 1.817-5.
15. The Company represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
having access to the assets of the Company are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Company in an amount not less than the minimal coverage as required
currently by Section 17(g) of the 1940 Act and Rule 17g-1 or related provisions
as may be promulgated from time to time.
16. This Agreement shall terminate:
(a) at any time on six months written notice by
the Company to TCL and TPIS or on six months' written notice by TCL to the
Company and TPIS or on six months' written notice by TPIS to TCL and the Company
without the payment of any penalty (provided, however, that if TCL is not able,
acting in good faith, to obtain suitable substitute investment media within six
months, this Agreement shall terminate one year from the date of the notice of
termination); or
(b) at the option of any party hereto upon
institution of formal enforcement proceedings against the Company, the Company's
investment manager, TCL or TPIS by the Securities and Exchange Commission, or if
TCL or the Company is determined by the other to have failed to perform its
obligations under this Agreement in a satisfactory manner; or
(c) upon a vote of the holders of a majority of
the votes attributable to the shares supporting the Contracts having an interest
in a particular subaccount to substitute the shares of another investment
company or Fund for the Company shares then being held by that
5
<PAGE> 6
subaccount in accordance with the terms of the Contracts. TCL will give 60 days'
prior written notice to the Company upon becoming aware of a proposed Contract
owner vote; or
(d) in the event the shares of the Company are
not registered, issued, or sold in accordance with applicable state and/or
federal law or such law prohibits the use of such shares as an underlying
investment for the Contracts issued or to be issued by TCL. Prompt notice of
such an event shall be given by each party to the other in the event the
conditions of this provision occur; or
(e) upon assignment of this Agreement, at the
option of any party not assigning this Agreement.
17. Each notice required by this Agreement shall be given in
writing to:
Attn: Thomas G. Walsh
TIAA-CREF Life Insurance Company
730 Third Avenue
New York, New York 10017-3206
Attn: Thomas G. Walsh
TIAA-CREF Life Funds
730 Third Avenue
New York, New York 10017-3206
Attn: Lisa Snow
Teachers Personal Investors Services, Inc.
730 Third Avenue
New York, New York 10017-3206
18. Each party hereto shall cooperate with each other party
and all appropriate government authorities and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
The Company agrees that all records and other data pertaining
to the Contracts are the exclusive property of TCL and that any such records and
other data shall be furnished to TCL by the Company upon termination of this
Agreement for any reason whatsoever. TCL shall have the right to inspect, audit
and copy all pertinent records pertaining to the Contracts. This shall not
preclude the Company from keeping copies of such data or records for its own
files subject to the provisions of this section.
19. TCL, the Account and TPIS agree to look solely to the
assets of the Company for the satisfaction of any liability of the Company, with
respect to this agreement and
6
<PAGE> 7
will not seek recourse against the members of the Board or its officers,
employees, agents, or shareholders, or any of them, or any of their personal
assets for such satisfaction.
20. The Company agrees to indemnify and hold harmless TCL,
each member of its Board of Directors, each of its officers, and any person that
controls TCL within the meaning of Section 15 of the Securities Act of 1933, as
amended (the "1933 Act") against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses) to which TCL may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements arise as a result of TCL's reliance on any information contained
in a then current prospectus, statement of additional information, or report of
the Company; or any current information communicated to TCL in writing by the
Company.
The Company shall, at all times, have the right, but not the
obligation, to take over and conduct, in the name of TCL, the Account and/or
TPIS, the investigation and defense of any claim by a third party for which
indemnification may be sought, and in such event, TCL, the Account and/or TPIS
shall cooperate in every way with the Company.
21. The Company agrees to indemnify and hold harmless TPIS,
each member of its Board of Directors, each of its officers, and any person that
controls TPIS within the meaning of Section 15 of the 1933 Act against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company) or litigation (including legal and
other expenses) to which TPIS may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements arise as a result of
TPIS's reliance on any information contained in a then current prospectus,
statement of additional information, or report of the Company; or any current
information communicated to TPIS in writing by the Company.
The Company shall, at all times, have the right, but not the
obligation, to take over and conduct, in the name of TPIS, or any controlling
person of TPIS, the investigation and defense of any claim by a third party for
which indemnification may be sought, and in such event, TPIS shall cooperate in
every way with the Company.
22. TCL agrees to indemnify and hold harmless the Company,
each member of its Board, each of its officers, and each person that controls
the Company within the meaning of Section 15 of the 1933 Act against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of TCL) or litigation (including legal and other expenses)
to which the Company may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of the Company's
reliance on any information contained in the then current prospectus, statement
of additional information, or contract of the Account; or any information
communicated to the Company in writing by TCL.
7
<PAGE> 8
TCL shall, at all times, have the right, but not the
obligation, to take over and conduct, in the name of the Company, the
investigation and defense of any claim by a third party for which
indemnification may be sought, and in such event, the Company shall cooperate in
every way with TCL.
23. TPIS agrees to indemnify and hold harmless the Company,
each member of its Board, each of its officers, and each person that controls
the Company within the meaning of Section 15 of the 1933 Act against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of TPIS) or litigation (including legal and other expenses)
to which the Company may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of the Company's
reliance on any information communicated to the Company in writing by TPIS (for
inclusion in the Company's registration statement or otherwise), as a result of
any misrepresentation or omission to state a material fact by TPIS (or any agent
or employee of TPIS) unless such misrepresentation or omission was made in
reliance on written information furnished by the Company or as a result of
TPIS's wilful misconduct or failure to exercise reasonable care and diligence
(including supervision of its agents representatives and employees) in providing
the services the Company specified herein.
TPIS shall, at all times, have the right, but not the
obligation, to take over and conduct, in the name of the Company, the
investigation and defense of any claim by a third party for which
indemnification may be sought, and in such event, the Company shall cooperate in
every way with TPIS.
24. This Agreement shall be construed in accordance with the
laws of the State of New York.
25. This Agreement shall be subject to the provisions of the
1933 Act, the 1940 Act and the Securities Exchange Act of 1934, as amended, and
the rules and regulations and rulings thereunder, including such exemptions form
those statutes, rules and regulations as the Securities and Exchange Commission
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested as of the date shown on the First
page.
TIAA-CREF LIFE INSURANCE
COMPANY ON BEHALF OF ITSELF
AND TIAA-CREF LIFE SEPARATE
ACCOUNT VA-1
Attest:
/s/ Mark L. Serlen By: /s/ Thomas G. Walsh
- ----------------------------------- ---------------------------------------
Thomas G. Walsh
Assistant Secretary President
TIAA-CREF LIFE FUNDS
Attest:
/s/ Mark L. Serlen By: /s/ Scott C. Evans
- ----------------------------------- -------------------------------------
Scott C. Evans
Assistant Secretary Executive Vice President
TEACHERS PERSONAL
INVESTORS SERVICES, INC.
Attest:
/s/ Mark L. Serlen By: /s/ Lisa Snow
- ----------------------------------- -------------------------------------
Lisa Snow
Assistant Secretary Vice President, Chief Counsel
and Secretary
9
<PAGE> 1
Exhibit 99.g
CUSTODIAN CONTRACT
Between
TIAA-CREF LIFE FUNDS,
TEACHERS ADVISORS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By
It....................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States................2
2.1 Holding Securities...........................................2
2.2 Delivery of Securities.......................................2
2.3 Registration of Securities...................................4
2.4 Bank Accounts................................................4
2.5 Availability of Federal Funds................................4
2.6 Collection of Income and Dividends...........................5
2.7 Payment of Fund Monies.......................................5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased..............................6
2.9 Appointment of Agents........................................6
2.10 Deposit of Fund Assets in U.S. Securities System.............6
2.11 Fund Assets Held in the Custodian's Direct
Paper System.................................................7
2.12 Segregated Account...........................................8
2.13 Ownership Certificates for Tax Purposes......................9
2.14 Proxies......................................................9
2.15 Communications Relating to Portfolio Securities..............9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States............................9
3.1 Appointment of Foreign Sub-Custodians........................9
3.2 Assets to be Held............................................9
3.3 Foreign Securities Systems...................................9
3.4 Holding Securities..........................................10
3.5 Agreements with Foreign Banking Institutions................10
3.6 Access of Independent Accountants of the Fund...............10
3.7 Reports by Custodian........................................10
3.8 Transactions in Foreign Custody Account.....................10
3.9 Liability of Foreign Sub-Custodians.........................11
3.10 Liability of Custodian......................................12
3.11 Monitoring Responsibilities.................................12
3.12 Branches of U.S. Banks......................................12
3.13 Tax Law.....................................................12
3.14 Proxies.....................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund................................................13
<PAGE> 3
5. Proper Instructions..................................................13
6. Actions Permitted Without Express Authority..........................14
7. Evidence of Authority................................................14
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income........................14
9. Records ............................................................15
10. Opinion of Fund's Independent Accountants............................15
11. Reports to Fund by Independent Public Accountants....................15
12. Compensation of Custodian............................................15
13. Responsibility of Custodian, Indemnification.........................16
13.1 Standard of Care............................................16
13.2 Liability of Custodian for Actions of Other Persons.........17
13.3 Indemnification.............................................18
13.4 Fund's Right to Proceed.....................................20
14. Effective Period, Termination and Assignment.........................20
15. Successor Custodian..................................................21
16. Amendments...........................................................22
17. Interpretive and Additional Provisions...............................22
18. Additional Funds.....................................................22
19. Massachusetts Law to Apply...........................................22
20. Prior Contracts......................................................22
21. Reproduction of Documents............................................22
22. Shareholder Communications...........................................23
23. No Liability of Shareholders.........................................23
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between TIAA-CREF Life Funds, a business trust organized
and existing under the laws of Delaware, having its principal place of business
at 730 Third Avenue, New York, New York 10017 hereinafter called the "Fund",
Teachers Advisors, Inc., a corporation organized under the laws of Delaware,
having its principal place of business at 730 Third Avenue, New York, New York
10017 hereinafter called "Advisors" and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the
Stock Index Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
Article 18, being herein referred to as the "Portfolio(s)");
WHEREAS, Advisors and the Fund have entered into an investment
management agreement pursuant to which Advisors will provide or arrange to
provide overall management to the Fund, including investment management and
custody; and
WHEREAS, the Fund and Advisors desire to appoint the Custodian as
custodian on behalf of each of its Portfolios in accordance with the provisions
of the Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations thereunder, under the terms and conditions set forth in
this Contract, and the Custodian has agreed so to act as custodian.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's governing
documents. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall be responsible for all
securities, cash and other property owned or held by the fund which is received
by the Custodian in accordance with the provisions of Article 13. The Custodian
shall not be responsible for any property of a Portfolio held or received by the
Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have not more or less
<PAGE> 5
responsibility to the Fund on account of any actions or omissions of any
sub-custodian so employed than any sub-custodian has to the Custodian, and
further provided that the Custodian shall not release the sub-custodian from any
responsibility or liability unless mutually agreed upon by the parties in
writing. The Custodian may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each, a "U.S. Securities
System") and (b) commercial paper of an issuer for which State Street
Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System
of the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any
5
<PAGE> 6
sub-custodian appointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number
of units; provided that, in any such case, the new securities
are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's
failure to act in accordance with its duties as set forth in
Section 13;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities or such other
property as mutually agreed upon by the parties.
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures
6
<PAGE> 7
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other corporate purpose, but only upon receipt of,
Proper Instructions from the Fund on behalf of the applicable
Portfolio.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the
Board of Trustees of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions
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from the Fund on behalf of a Portfolio, make federal funds available to
such Portfolio as of specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into the Portfolio's
account.
2.6 Collection of Income and Dividends. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely basis all income
and other payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. Unless
otherwise agreed to in writing, the Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions
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from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For repayment of a loan upon redelivery of pledged securities
and upon surrender of the loan note(s), if any, evidencing the
loan;
8) For any other corporate purpose, but only upon receipt of
Proper Instructions from the Fund on behalf of the Portfolio.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance
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with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
U.S. Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
(i) receipt of advice from the U.S. Securities System that
payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund
at its request. Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation of each transfer
to or from the account of the Portfolio in the form of a
written advice or notice and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transactions in the U.S. Securities
System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the U.S.
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for
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any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the U.S. Securities System for the
account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other
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arrangements in connection with transactions by the Portfolio, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio or commodity
futures contracts or options thereon purchased or sold by the
Portfolio, (iii) for the purposes of compliance by the Portfolio with
the procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other corporate purposes,
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio.
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2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the Custodian to
take such action prior to the time agreed to by the Custodian and the
Fund.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities, cash and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Article 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in Rule 17f-5 under the Investment
Company Act of 1940, (b) cash and cash equivalents in such amounts as the
Fund may determine; and (c) other assets as are mutually agreed by the
parties. The Custodian shall identify on its books as belonging to the
Fund, the foreign securities, cash and other assets of the Fund held by
each foreign sub-custodian.
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3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside of the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are collectively referred to herein as
the "Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
the Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities,
cash and other assets of the Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of entities having
possession of the Portfolio(s) securities, cash and other assets and
advices or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the
Custodian on behalf of each applicable Portfolio indicating, as to
securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
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3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians.
(b) In the case of the purchase of securities, the settlement of
which occurs outside of the United States of America: (i) the Custodian
may make payment therefor and receive delivery of such securities in
accordance with local custom and practice generally accepted by
Institutional Clients (as hereinafter defined) in the country in which the
settlement occurs, but in all events subject to the standard of care set
forth in Section 13 hereof; (ii) in the case of the purchase of securities
in which, in accordance with standard industry custom and practice
generally accepted by Institutional Clients with respect to such
securities, the receipt of such securities and the payment therefor take
place in different countries, the Custodian may receive delivery of such
securities and make payment therefor in accordance with standard industry
custom and practice for such securities generally accepted by
Institutional Clients, but in all events subject to the standard of Care
set forth in Section 13 hereof.
In the case of the sale of securities, the settlement of which
occurs outside of the United States of America: (i) such securities shall
be delivered and paid for in accordance with local custom and practice
generally accepted by Institutional Clients in the country in which the
settlement occurs, but in all events subject to the standard of care set
forth in Section 13 hereof; (ii) in the case of the sale of securities in
which, in accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the
delivery of such securities and receipt of payment therefor take place in
different countries, the Custodian may deliver such securities and receive
payment therefor in accordance with standard industry custom and practice
for such securities generally accepted by Institutional Clients, but in
all events subject to the standard of care set forth in Section 13 hereof;
and (iii) in the case of securities held in physical form, such securities
shall be delivered and paid for in accordance with "street delivery
custom" to a broker or its clearing agent, against delivery to the
Custodian of a receipt for such securities, prompt collection of the
payment for, or the return of, such securities by the broker or its
clearing agent, and provided further that the Custodian shall not be
responsible for the selection of or the failure or inability to perform of
such broker or its clearing agent.
For purposes of this Contract , an "Institutional Client" shall mean
a major commercial bank, corporation, insurance company or substantially
similar institution, which, as a substantial part of its business
operations, purchases or sells securities and makes use of custodial
services.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same extent
as set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a
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foreign banking institution as a foreign sub-custodian, other than a
branch or subsidiary of the Custodian, shall require the institution to
exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Custodian and each Fund from and against
any loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At the
election of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim. A
foreign sub-custodian which is a branch or subsidiary of the Custodian
shall be held to the standard of care set forth in Section 13 for the
Custodian.
3.10 Liability of Custodian. Except as provided in paragraph 3.9 hereof with
respect to a branch or subsidiary of the Custodian, the Custodian shall be
liable for the acts or omissions of a foreign banking institution to the
same extent as set forth with respect to sub-custodians generally in this
Contract and, regardless of whether assets are maintained in the custody
of a foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating custody duties
to State Street London Ltd., or other branches or subsidiaries of the
Custodian, the Custodian shall not be relieved of any responsibility to
the Fund for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street London
Ltd. have exercised the standard of care set forth in Article 13 hereof.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, or such other periods as the parties may
agree, information concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of this
Contract. In addition, the Custodian will promptly inform the Fund in the
event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange Commission
is notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will not meet the
requirements of Rule 17f-5 under the Investment Company Act of 1940 for
custodians of an investment company.
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any
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such branch as a sub-custodian shall be governed by paragraph 1 of this
Contract. (b) Cash held for each Portfolio of the Fund in the United
Kingdom shall be maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental
charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
3.14 Proxies. The Custodian will generally, with respect to foreign securities
held under this Article 3, use best efforts accepted by Institutional
Clients to facilitate the exercise of voting and other shareholder proxy
rights, subject always to the laws, regulations and practical constraints
that may obtain in the jurisdiction where such securities are issued. The
Fund acknowledges that local conditions may have the effect of severely
limiting the ability of the Fund to exercise shareholder rights.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
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<PAGE> 18
Proper Instructions as used throughout this Contract means (a) with
respect to the purchase and sale of short-term debt securities with a maturity
of less than one year when value is exchanged, written instructions from the
Fund by any one individual authorized by the Board of Trustees and specified in
a separate list for this purpose which will be furnished to the Custodian from
time to time signed by the treasurer or any associate treasurer or any assistant
treasurer and by the secretary or any assistant secretary as certified under the
corporate seal of the Fund (an "Authorized Person"); (b) with respect to other
transaction, written instructions from the Fund signed by any two Authorized
Persons; and (c) notwithstanding (a) and (b) above of this Article 5, with
respect to "Free of Payment" deliveries, a writing manually signed by any two
Authorized Persons who are officers of the Fund with the title Chairman,
President, Executive Vice President, or Treasurer. Upon receipt of a writing
manually signed by any two Authorized Persons who are officers of the Fund with
the title Chairman, President, Executive Vice President, or Treasurer
accompanied by a detailed description of procedures approved by such writing,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Fund and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Fund's assets. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
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<PAGE> 19
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, unless otherwise directed in
writing to do so by the Fund on behalf of the Portfolio, shall itself keep such
books of account and/or compute such net asset value per share. Until otherwise
directed in writing, the Custodian shall also calculate daily the net income of
the Portfolio as described in the Fund's currently effective prospectus related
to such Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made in
accordance with and at the time or times described from time to time in the
Fund's currently effective prospectus related to such Portfolio and in
accordance with the procedures agreed to in writing between the Fund and the
Custodian and shall at all times comply with the standard of care set forth in
Section 13 hereof.
9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
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<PAGE> 20
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon in writing from time to time
between Advisors and the Custodian.
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<PAGE> 21
13. Responsibility of Custodian, Indemnification
13.1 Standard of Care
1) General Standard of Care. The Custodian shall exercise reasonable
care and diligence in carrying out all of its duties and obligations
under this Contract, and shall be liable to the Fund on behalf of
the applicable Portfolio(s), for all loss, damage and expense
suffered or incurred by such Portfolio resulting from the failure of
the Custodian to exercise such reasonable care and diligence.
2) Actions Prohibited by Applicable Law, etc. Except as may arise from
the Custodian's own negligence, misfeasance or willful misconduct or
the negligence, misfeasance or willful misconduct of a domestic
sub-custodian or foreign banking institution acting as foreign
sub-custodian or agent, the Custodian shall be without liability to
the Fund for any loss, liability, claim or expense resulting from or
caused by: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof
or of any court of competent jurisdiction; (ii) any act of God or
war or other similar circumstance beyond the control of the
Custodian, including, without limitation, nationalization or
expropriation, imposition of currency controls or restrictions, the
interruption, suspension or restriction of trading on or the closure
of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications
disruptions, acts of terrorism, riots, revolutions or work
stoppages; (iii) errors by the Fund or the Investment Advisor in
their instructions to the Custodian provided such instructions have
been in accordance with this Contract; (iv) the insolvency of or
acts or omissions by a Securities System; (v) any delay or failure
of any broker or agent selected by the Fund, or an intermediary or
agent of such broker, or any central bank or other commercially
prevalent payment or clearing system outside of the United States to
deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with
securities sold provided that the subcustodians or agents have acted
in accordance with the terms of this contract; (vi) any delay or
failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vii) delays or
inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities
System. In no event shall the Custodian be liable for indirect,
special or consequential damages.
3) Reliance on Instruments, etc. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property
or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon
any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the
proper
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<PAGE> 22
party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement.
4) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to any Portfolio (i)
the Custodian shall, (ii) the Custodian shall cause State Street
London Ltd. to and (iii) the Custodian shall use all reasonable
efforts to cause any applicable Subcustodian (other than State
Street London Ltd.) appointed to hold assets in the U.S. or Foreign
banking institutions acting as a foreign subcustodian to, use all
reasonable efforts and take all reasonable steps under the
circumstances to mitigate the efforts of such event and to avoid
continuing harm to the Fund and the Portfolios.
5) Advice of Counsel. The Custodian shall be entitled to rely on and
act upon advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action reasonably
taken or omitted in good faith pursuant to such advice; provided,
however, with respect to the performance of any action or omission
of any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth herein.
6) Expenses of Fund. In addition to the liability of the Custodian
under this Section 13, the Custodian shall be liable to the Fund and
each applicable Portfolio for all reasonable out-of-pocket costs and
expenses incurred by the Fund in connection with any claim by the
Fund against the Custodian arising from the obligations of the
Custodian hereunder, including, without limitation, all reasonable
attorneys' fees and expenses incurred by the Fund in asserting any
such claim, and out-of-pocket expenses incurred by the Fund in
connection with any lawsuits or proceedings relating to such claim;
provided, that the Fund has recovered from the Custodian for such
claim.
13.2 Liability of Custodian for Actions of Other Persons
1) Subcustodians located in the United States and Foreign banking
institutions acting as foreign subcustodians. The Custodian shall be
liable for the actions or omissions of any subcustodian located in
the United States or any foreign banking institution acting as a
foreign subcustodian to the same extent as if such action or
omission were performed by the Custodian itself taking into account
standards applicable to custodians in the relevant market.
2) Securities System. Notwithstanding the provisions of Section 13 to
the contrary, the Custodian shall not be liable to the Fund or any
applicable Portfolio for any loss, damage or expense suffered or
incurred by the Fund or any of its Portfolios resulting from the use
by the Custodian or a subcustodian located in the United States or
foreign banking institution acting as a foreign subcustodian, of a
Securities System including, without limitation, the insolvency of a
Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian or
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<PAGE> 23
a subcustodian located in the United States or foreign banking
institution acting as a foreign subcustodian; provided, however,
that in the event of any such loss, damage or expense, the Custodian
shall take all reasonable steps to enforce such rights as it or a
subcustodian located in the United States or foreign banking
institution acting as a foreign subcustodian may have against the
Securities System to protect the interests of the Fund and the
Portfolios.
3) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of such Fund in connection with the fulfillment
of its obligations under this Section 13; provided, however, that
such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the
Custodian.
13.3 Indemnification
1) Indemnification Obligations. Subject to the limitations set forth in
this Agreement, the Fund hereby indemnifies and holds harmless the
Custodian and its nominees from all loss, damage and expense
(including reasonable attorneys' fees) suffered or incurred by the
Custodian or its nominees caused by or arising from actions taken or
omitted by the Custodian on behalf of the Fund in the performance of
its duties and obligations under this Contract; provided, however,
that such indemnity shall not apply to loss, damage and expense
arising from the negligence, misfeasance or misconduct of the
Custodian or its nominee. In addition, the Fund hereby indemnifies
the Custodian, any subcustodian, Securities System, or their
respective nominees against any liability incurred by reason of
taxes assessed to such person, or other loss, damage or expenses
incurred by such person, resulting from the fact that securities and
other property of such Fund's Portfolios are registered in the name
of such person; provided, however, that in no event shall such
indemnification be applicable to income, franchise or similar taxes
which may be imposed or assessed against any person. Furthermore, if
the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment
of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund or the
Portfolio being liable for the payment of money or incurring
liability of some other form, the Fund on behalf of the Portfolio,
as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but
not limited to securities settlements, foreign exchange contracts
and assumed settlement) or in the event that the Custodian or its
nominees shall incur or be assessed any taxes, charges, expenses or
assessments in connection with the performance of this Contract or
from any actions taken or omitted by the Custodian or its nominees
on behalf of the Fund in the performance of its duties under this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act, misfeasance or willful
misconduct, any property at any time held
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<PAGE> 24
for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to
dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.
2) Notice of Litigation, Right to Prosecute, etc. If a person seeking
indemnification pursuant to Section 13.3(1) hereof fails to promptly
notify the Fund in writing of the commencement of any litigation or
any proceeding brought against such person (a "Proceeding"), the
Fund shall not be liable for indemnification under this Contract
with respect to such Proceeding to the extent that the Fund's
ability to defend is prejudiced by such failure.
With respect to claims in a Proceeding for which indemnity by the
Fund may be sought, the Fund shall be entitled to participate at its
own expense in the defense, or, if it so elects, to assume the
control of the defense of any Proceeding. In the event the Fund
elects to assume the control of the defense of any Proceeding, the
persons seeking indemnification pursuant to Section 13.3(1) hereof
involved in such Proceeding may retain additional counsel for
purposes of the Proceeding but shall bear all fees and expenses of
such retention of such counsel, unless (i) the Fund shall have
specifically authorized the retention of such counsel, or (ii) if
the Fund and such indemnified persons agree that the retention of
such counsel is required as a result of a conflict of interest. If
the Fund assumes control of any Proceeding hereunder, the Fund shall
keep the persons seeking indemnification pursuant to Section 13.3(1)
hereof notified of the progress of such Proceeding and, upon
request, consult with such persons and their counsel concerning such
Proceeding. The Fund will, upon request by the persons seeking
indemnification pursuant to Section 13.3(1) hereof, either pay in
the first instance or reimburse such persons for any expenses
subject to indemnity hereunder.
The Fund shall not settle or compromise any Proceeding without the
prior written consent of each person seeking indemnification
pursuant to Section 13.3(1) hereof involved in such Proceeding,
which consent shall not be unreasonably upheld, unless (i) such
settlement or compromise involves no admission of guilt, wrongdoing,
or misconduct by any such person, (ii) such settlement or compromise
does not impose any obligations or restrictions on any such person
other than obligations to pay money that are subject to the
indemnity under this Contract, and (iii) the Fund shall have paid,
or made arrangements satisfactory to such person for payment of, all
amounts payable by each such person in connection with such
settlement.
Except as part of a settlement or compromise by the Fund in
accordance with the provisions of the immediately preceding
paragraph, no person seeking indemnification pursuant to Section
13.3(1) hereof may consent to the entry of any judgment or settle
any Proceeding subject to indemnity hereunder without providing the
Fund with at least 15 days prior written notice of any such judgment
or settlement and without the prior written consent of the Fund,
which consent will not be reasonably withheld (to the extent such
Proceeding relates to such person).
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<PAGE> 25
Each person seeking indemnification pursuant to Section 13.3(1)
hereof shall submit written evidence to the Fund with respect to any
cost or expense for which such person is seeking indemnification in
such form and detail as the Fund may reasonably request.
13.4 Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon
reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's right against any subcustodians, Securities System, or
other person for loss, damage or expense caused the Fund by such
subcustodian, Securities System, or other person, and shall be
entitled to enforce the rights of the Custodian with respect to any
claim against such subcustodian, Securities System, or other person,
which the Custodian may have as a consequence of any such loss,
damage or expense, if and to the extent that the Fund has not been
made whole for any such loss or damage. If the Custodian makes the
Fund whole for any such loss or damage, the Custodian shall retain
the ability to enforce its rights directly against such
subcustodian, Securities System or other person. Upon the Fund's
election to enforce any rights of the Custodian under this Section
13.4, the Fund shall reasonably prosecute all actions and
proceedings directly relating to the rights of the Custodian in
respect of the loss, damage or expense incurred by the Fund;
provided that, so long as the Fund has acknowledged in writing its
obligation to indemnify fully the Custodian under Section 13.3
hereof with respect to such claim, the Fund shall retain the right
to settle, compromise and/or terminate any action or proceeding in
respect of the loss, damage or expense incurred by the Fund without
the Custodian's consent and provided further, that if the Fund has
not made an acknowledgment of its obligation to indemnify, the Fund
shall not settle, compromise or terminate any such action or
proceeding without the written consent of the Custodian. The
Custodian agrees to cooperate with the Fund and take all actions
reasonably requested by such Fund in connection with the Fund's
enforcement of any rights of the Custodian. The Fund agrees to
reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of the Fund in connection with
the fulfillment of its obligations under this Section 13.4;
provided, however, that such reimbursement shall not apply to
expenses occasioned by or resulting from the negligence, misfeasance
or misconduct of the Custodian.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Assignment
This Contract shall become effective as of its execution and shall
continue in full force and effect until terminated by either party by an
instrument in writing, hand delivered or sent by certified mail, such
termination to take effect not sooner than sixty (60) days after the date of
such delivery or mailing; provided, however that the Custodian shall not with
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Fund has approved the initial use of a particular
Securities System by such Portfolio, as
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<PAGE> 26
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System by such Portfolio; provided further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
This Contract may not be assigned by either party without the consent of
the other party, which consent in the case of the Fund shall be authorized or
approved by a resolution of the Board of Trustees of the Fund.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
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<PAGE> 27
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
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<PAGE> 28
16. Amendments
This Contract may be amended at any time by mutual agreement of the
parties hereto; provided that no amendment or change to this Contract shall be
authorized by the Fund on behalf of its Accounts without the written consent
signed by an officer with the title of either Chairman, Vice Chairman or
President and any officer with the title of Executive Vice President or
Treasurer and accepted in writing by any Vice President or Managing Director of
the Bank.
17. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
18. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the Stock Index Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
19. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
21. Reproduction of Documents
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
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22. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or do not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
23. No Liability of Shareholders.
This Contract is executed by the Trustees of the Fund, not individually,
but rather in their capacity as Trustees under the Declaration of Trust made
August 12, 1998, as amended. None of the shareholders of the Fund, Trustees,
officers, employees, or agents of the Fund shall be personally bound or liable
under this Contract, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder but only to the property of
the Fund, and if the obligation or claim relates to the property held by the
Fund for the benefit of one or more but fewer than all Funds, then only to the
property held for the benefit of the affected Fund.
29
<PAGE> 30
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the nineteenth day of November, 1998.
ATTEST TIAA-CREF LIFE FUNDS
/s/ STEWART P. GREENE By: /s/ THOMAS G. WALSH
- --------------------------------- ----------------------------------
By: /s/ RICHARD J. ADAMSKI
----------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ MARC L. PARSONS By /s/ - - -
- --------------------------------- ----------------------------------
Executive Vice President
ATTEST TEACHERS ADVISORS, INC.
/s/ STEWART P. GREENE By: /s/ SCOTT C. EVANS
- --------------------------------- ----------------------------------
<PAGE> 31
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors/Board of Trustees of
for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-----------------------
<PAGE> 1
EXHIBIT 99.h
ADMINISTRATION AGREEMENT
Agreement dated as of November 30, 1998 by and between State Street
Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and
Teachers Advisors, Inc. ("Advisors").
WHEREAS, Advisors is the investment manager to TIAA-CREF Life Funds
(the "Funds"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Advisors and the Fund have entered into an investment
management agreement pursuant to which Advisors will provide or arrange to
provide overall management to the Fund, including investment management,
custody, transfer agency, dividend disbursing, legal, accounting and
administrative services; and
WHEREAS, Advisors desires to retain the Administrator to furnish
certain administrative services to the Fund on its behalf, and the Administrator
is willing to furnish such services, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
Advisors hereby appoints the Administrator to act as administrator with
respect to the Fund for purposes of providing certain administrative services
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to render the services stated herein.
The Fund will initially consist of the portfolios (each an "Investment
Fund") listed in Schedule A to this Agreement. In the event that the Fund
establishes one or more additional Investment Funds with respect to which
Advisors wishes to retain the Administrator to act as administrator hereunder,
Advisors shall notify the Administrator in writing and such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except with respect to compensation as otherwise
provided in the Fee Schedule.
2. DELIVERY OF DOCUMENTS
Advisors will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's Declaration of Trust;
<PAGE> 2
b. The Fund's registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act and the
Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all
amendments and supplements thereto as in effect from time to
time;
c. Certified copies of the resolutions of either the Board of
Trustees of the Fund (the "Board") or Advisors approving (1)
Advisors entering into this Agreement and (2) certain
individuals on behalf of the Fund to (a) give instructions to
the Administrator pursuant to this Agreement and (b) pay
expenses;
d. A copy of the investment management agreement between the Fund
and Advisors; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its
duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to Advisors that:
a. It is a Massachusetts trust company, duly organized, existing
and in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement;
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it;
f. It has and will continue to have and maintain to the
reasonable satisfaction of Advisors the necessary facilities,
equipment and personnel to perform its duties and obligations
under this Agreement; and
g. Prior to the initial offering of the Fund's shares to the
public, the Administrator
2
<PAGE> 3
will have made all the necessary Notice and any other state
securities law filings to offer the Fund's shares in the
states in which the Administrator was instructed to do so by
Advisors pursuant to Schedules B and C of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF ADVISORS
Advisors represents and warrants to the Administrator that:
a. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
b. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
c. The Fund is a business trust, duly organized and existing and
in good standing under the laws of the State of Delaware;
d. The Fund is an investment company properly registered under
the 1940 Act;
e. A registration statement under the 1933 Act and the 1940 Act
has been filed by the Fund and will be effective prior to the
initial offering of the Fund's shares to the public and will
remain effective while the Fund's shares are offered to the
public;
f. No legal or administrative proceedings have been instituted or
threatened which would impair Advisors' ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of Advisors or any law or regulation applicable to
it; and
h. As of the date of this Agreement, the Fund is authorized to
issue shares of beneficial interest, and it will initially
offer shares, in the authorized amounts as set forth in
Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control and direction of Advisors and the review and comment by
the Fund's independent accountants and legal counsel and in accordance with
procedures which may be established from time to time between Advisors and the
Administrator:
3
<PAGE> 4
a. Oversee the determination and publication of the Fund's net
asset value in accordance with the Fund's policy as adopted
from time to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain
books and records of the Fund as required under Rule 31a-1(b)
of the 1940 Act;
c. Prepare the Fund's federal, state and local income and excise
tax returns for review by Advisors and the Fund's independent
accountants and officers and filing by a Fund officer or
representative;
d. Review calculation and appropriateness, submit for approval by
officers of the Fund and arrange for payment of the Fund's
expenses;
e. Prepare for review and approval by Advisors and officers of
the Fund financial information for the Fund's semi-annual and
annual reports, proxy statements and other communications
required or otherwise to be sent to Fund shareholders, and
consult with Advisors regarding arrangements for the printing
and dissemination of such reports and communications to
shareholders;
f. Prepare for review by Advisors and officers of and legal
counsel for the Fund: (1) the Fund's periodic financial
reports required to be filed with the U.S. Securities and
Exchange Commission ("SEC") on Form N-SAR and file thereafter;
and (2) financial information required by Form N-1A and such
other reports, forms or filings as may be mutually agreed
upon;
g. Prepare and distribute reports to Advisors and officers of the
Fund relating to the business and affairs of the Fund as may
be mutually agreed upon;
h. Make such reports and recommendations to the Board concerning
the performance of the independent accountants as the Board
may reasonably request or deems appropriate;
i. Make such reports and recommendations to the Board concerning
the performance and fees of the Fund's custodian as the Board
may reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to and any
out-of-pocket expenses charged by the Fund's investment
manager and custodian;
k. Consult with the Fund's officers, independent accountants,
legal counsel, custodian and transfer and dividend disbursing
agent ("Transfer Agent") in establishing the accounting
policies of the Fund;
4
<PAGE> 5
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Provide periodic testing of portfolios as may be mutually
agreed upon, to assist the Fund's investment manager in
complying with Internal Revenue Code mandatory qualification
requirements, the requirements of the 1940 Act and Fund
prospectus limitations, prepare and disseminate to the
officers of the Fund and Advisors reports providing the
results of such testing, prepare and distribute to Advisors
and officers of the Fund for review, reports determining the
amount, if any, of the Fund's required annual distribution to
shareholders and prepare and disseminate to the officers of
the Fund and Advisors such other reports as may be agreed upon
from time to time and as are set forth in Schedule B to this
Agreement. Details of the scope of the services provided by
the Administrator hereunder shall be documented in the Fund
Profile as agreed to by Advisors and the Administrator from
time to time;
n. Arrange for the filing with the SEC by means of the electronic
data gathering and receiving system ("EDGAR") amendments to
the Fund's registration statement, including updates to the
Prospectus and Statement of Additional Information and proxy
material, where applicable. Unless otherwise agreed upon
between Advisors and the Administrator, the Administrator's
sole responsibility with respect to such filings will be to
deliver the documents to be filed to a financial printer or
other service provider selected or approved by Advisors and to
communicate to such financial printer or service provider
Advisors' instructions with respect to such filings. Any such
financial printer or service provider shall not be deemed to
be employed by or associated with the Administrator for
purposes of this Agreement and the Administrator shall have no
responsibility for the acts or omissions of such financial
printer or service provider;
Subject to review and comment by the Fund and the Fund's legal counsel:
o. Make Board presentations where appropriate;
p. Prepare for review by Advisors and officers of the Fund and
file or assist in filing thereafter Rule 24f-2 notices with
the SEC;
q. File by means of EDGAR or other appropriate means annual and
semi-annual shareholder reports with the appropriate
regulatory agencies; and
r. Assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters.
5
<PAGE> 6
The Administrator shall provide the office facilities and the personnel
required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from Advisors such compensation for the
Administrator's services provided pursuant to this Agreement as may be mutually
agreed to by the parties from time to time in a separate fee schedule (the "Fee
Schedule").
Advisors agrees to promptly reimburse the Administrator for any
equipment and supplies specially ordered by the Administrator upon Advisors'
written request or approval and for any other expenses not contemplated by this
Agreement that the Administrator may incur on the Fund's behalf at Advisors'
written request or approval.
The Administrator will bear all expenses that are incurred in the
performance of its duties under this Agreement and not specifically assumed by
Advisors. Except as noted herein, expenses to be borne by Advisors are: cost of
services of the Fund's independent accountants and outside legal and tax counsel
(including such counsel's review of the Fund's registration statement, proxy
materials, federal and state tax qualification as a regulated investment company
and other reports and materials prepared by the Administrator under this
Agreement); cost of any services contracted for by Advisors directly from
parties other than the Administrator; cost of trading operations and brokerage
fees, commissions and transfer taxes in connection with the purchase and sale of
securities for the Fund (which costs shall be borne by the Fund); investment
management fees (which costs shall be borne by the Fund); taxes (which shall be
borne by the Fund), insurance premiums and other fees and expenses applicable to
the Fund's operation; costs incidental to any meetings of the Fund's
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings (except for fees and expenses of
the Fund's Trustees who are not "interested persons" as such term is defined in
the 1940 Act, which fees and expenses shall be borne by the Fund); the salary
and expenses of any officer or employee of the Fund; costs incidental to the
preparation, filing, printing and distribution of the Fund's registration
statements and any amendments thereto and shareholder reports; cost of
typesetting and printing of prospectuses; cost of preparation and filing of the
Fund's tax returns, Forms N-1A and N-SAR, and all notices, registrations and
amendments associated with applicable federal and state tax and securities laws;
all applicable registration fees and filing fees required under federal and
state securities laws; and fidelity bond and directors' and officers' liability
insurance.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to Advisors or to the Fund
for the acts or omissions of any such person or persons as it is for its own
acts or omissions.
6
<PAGE> 7
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to authorized officers of the
Fund or Advisors for instructions and may consult with in-house legal counsel
for the Fund or the independent accountants for the Fund or at its own cost may
consult with its own legal counsel, with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
Advisors, for any action taken or omitted by it in good faith and with
reasonable care and without negligence in reliance upon any such instructions or
advice or upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons; provided however, with
respect to the performance of any action or omission of any action upon such
legal advice by its own counsel, the Administrator shall be required to conform
to the standard of care set forth herein and further provided that the
Administrator shall follow the advice of the Fund's in-house legal counsel in
instances where the advice of the Fund's in-house legal counsel and the
Administrator's legal counsel differ. The Administrator shall not be held to
have notice of any change of authority of any person until receipt of written
notice thereof from Advisors. Nothing in this paragraph shall be construed as
imposing upon the Administrator any obligation to seek such instructions or
advice, or to act in accordance with such advice when received.
8. STANDARD OF CARE, LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall exercise reasonable care and diligence in
carrying out the provisions of this Agreement. The Administrator shall be
responsible for the performance of only such duties as are set forth in this
Agreement and, except as otherwise provided under Section 6, shall have no
responsibility for the actions or activities of any other party, including other
service providers. The Administrator shall have no liability for any error of
judgment or mistake of law or for any loss or damage resulting from the
performance of or failure to perform its duties hereunder unless caused by or
resulting from the negligence, willful misconduct or bad faith of the
Administrator, its officers, employees or others provided under Section 6. The
Administrator shall not be liable for any special, indirect, incidental, or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, for any
liability or loss suffered by the Fund including, but not limited to, any
liability relating to qualification of the Fund as a regulated investment
company or any liability relating to the Fund's compliance with any federal or
state tax or securities statute, regulation or ruling, the Administrator's
liability under this Agreement shall be limited to its total annual compensation
earned by and fees paid to the Administrator hereunder during the twelve months
preceding the date of the agreement of settlement of the claim or date of entry
of final judgment, provided that in the event that such compensation is less
than two million dollars and liabilities or losses suffered by the Fund exceed
such compensation, the Administrator shall be liable for up to two million
dollars of such liabilities or losses, and further provided that in the event
that both such compensation and liabilities or losses exceed ten million
dollars, the Administrator's liability hereunder shall be limited to ten million
dollars.
The Administrator shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement caused by acts of
God, by equipment or transmission
7
<PAGE> 8
failure reasonably beyond its control or by other circumstances reasonably
beyond its control, except to the extent that the Administrator shall have
failed to use its best efforts to undertake commercially reasonable efforts to
minimize the likelihood of occurrence of such circumstances or to mitigate any
loss or damage caused to Advisors or the Fund by such circumstances.
Advisors shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by the Administrator in the performance of its duties
hereunder, or as a result of acting upon any instructions reasonably believed by
it to have been duly authorized by authorized officers of Advisors or the Fund,
provided that this indemnification shall not apply to actions or omissions of
the Administrator, its officers or employees in cases of its or their own
negligence, willful misconduct or bad faith.
Advisors will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event Advisors elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) Advisors shall have specifically
authorized the retaining of such counsel or (ii) Advisors and the Administrator
agree that the retention of such counsel is required as a result of a conflict
of interest. The Administrator shall not settle any action, suit, claim or
demand which indemnity may be sought hereunder without the prior written
approval of Advisors, which approval shall not be unreasonably withheld.
In addition to the liability of the Administrator under this Section 8,
the Administrator shall also be liable to Advisors for all reasonable
out-of-pocket costs and expenses incurred by Advisors in connection with any
claim by Advisors against the Administrator arising from the obligations of the
Administrator hereunder, including, without limitation, all reasonable
attorneys' fees and expenses incurred by Advisors in asserting any such claim,
and out-of-pocket expenses incurred by Advisors in connection with any lawsuits
or proceedings relating to such claim, provided that Advisors has recovered from
the Administrator for such claim.
The indemnification provisions contained herein shall survive the
termination of this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to Advisors and the Fund or its shareholders or shareholder
accounts and will not disclose the same to any person except at the request or
with the written consent of Advisors or the Fund. The Administrator further
agrees that it shall use such records and information solely for the purposes
authorized in this Agreement.
8
<PAGE> 9
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
Without derogating any of the Administrator's responsibilities under
this Agreement, Advisors assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
the Fund. In performing all services under this Agreement, the Administrator
shall act in conformity with the Fund's Declaration of Trust and any amendments
thereto, Board authorizations and determinations and the fundamental policies of
the Fund as reflected in the Fund's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form or such other
formats as reasonably requested by Advisors or the Fund.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to Advisors are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others; provided however that the Administrator shall equitably allocate its
resources in supplying services to Advisors and others. The Administrator shall
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by Advisors from time to time, have no authority
to act or represent Advisors or the Fund in any way or otherwise be deemed an
agent of either Advisors or of the Fund.
12. INSPECTION AND AUDITS
The Administrator shall permit Advisors or the Fund, during the term of
this Agreement, upon reasonable prior notice, to conduct periodic inspections of
any properties, documents, books, reports workpapers and other records of the
Fund or Advisors in the possession of the Administrator relating to any service,
product or work provided to Advisors or the Fund by the Administrator in
connection with this Agreement.
The Administrator agrees to provide reasonable notice to Advisors or
the Fund of any meeting between the Administrator and the Fund's independent
accountants and to allow representatives of Advisors or the Fund to attend any
such meeting.
The Administrator agrees to furnish to Advisors or the Fund annual
reports under SAS 70 prepared by an independent auditing firm.
9
<PAGE> 10
13. NOTIFICATION OF CONTACTS BY REGULATORS
The Administrator shall promptly notify Advisors or the Fund of any and
all legal notices received by or served on the Administrator with respect to the
Fund. The Administrator shall promptly notify Advisors or the Fund of all other
contacts received by the Administrator from any regulatory department or agency
or other governmental authority purporting to regulate Advisors or the Fund and
not the Administrator, regarding the Administrator's duties and activities under
this Agreement. The Administrator will cooperate with Advisors and the Fund in
responding to these contacts, with Advisors responsible for the costs and
expenses thereof.
14. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective as of the date first written
above. The Agreement shall remain in effect until July 16, 2002 provided,
however, that: (i) either party may terminate this Agreement without prejudice
to any other remedy it may have, upon the material breach of this Agreement
provided, however, that the non-breaching party shall have given the breaching
party written notice of such breach and that the breaching party cannot or shall
not have cured to the reasonable satisfaction of the non-breaching party any
such breach within thirty (30) days of such notice; and (ii) the Administrator
shall have the right to terminate this Agreement upon the termination by
Advisors or the Fund of the Custodian Contract between the Administrator,
Advisors and the Fund dated November 19, 1998 within the first five years of
effectiveness of the Custodian Contract. Termination shall become effective in
120 days after the end of the 30 day cure period in the case of (i) above and
concurrently with effective termination of the Custodian Contract in the case of
(ii) above. This Agreement shall automatically continue in effect after such
five year period unless terminated by Advisors on ninety (90) days' prior
written notice to the Administrator, or by the Administrator on one hundred
eighty (180) days' prior written notice to Advisors, with such termination to be
effective at the time specified in the written notice. Termination of this
Agreement with respect to any given Investment Fund shall in no way affect the
continued validity of this Agreement with respect to any other Investment Fund.
Administrator shall, at Advisors expense, transfer all records maintained by the
Administrator under this Agreement and shall cooperate in the transfer of its
duties and responsibilities under this Agreement. This Agreement may be modified
or amended from time to time by mutual written agreement of the parties hereto.
15. YEAR 2000
The Administrator will take reasonable steps to ensure that its
products (and those of its third-party suppliers) reflect the available state of
the art technology to offer products that are Year 2000 compliant, including,
but not limited to, century recognition of dates, calculations that correctly
compute same century and multi century formulas and date values, and interface
values that reflect the date issues arising between now and the next one-hundred
years, and if any changes are required, the Administrator will make the changes
to its products at no cost to Advisors and in a commercially reasonable time
frame and will require third-party suppliers to do likewise.
10
<PAGE> 11
16. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to
Advisors: Teachers Advisors, Inc., 730 Third Avenue, New York, New York 10017,
Attn: Peter C. Clapman, Esq., Senior Vice President, Secretary and Chief
Counsel, Investments, fax: (212) 916-5813; if to the Administrator: State Street
Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171,
Attn: Mutual Funds Legal Division, fax: (617) 985-2497.
17. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without the
prior consent in writing of the other party.
18. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
Advisors and the Administrator and their respective permitted assigns.
19. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
20. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
21. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
11
<PAGE> 12
22. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
23. REPRODUCTION OF DOCUMENTS
THIS AGREEMENT AND ALL SCHEDULES, EXHIBITS, ATTACHMENTS AND AMENDMENTS
HERETO MAY BE REPRODUCED BY ANY PHOTOGRAPHIC, PHOTOSTATIC, MICROFILM,
MICRO-CARD, MINIATURE PHOTOGRAPHIC OR OTHER SIMILAR PROCESS. THE PARTIES HERETO
ALL/EACH AGREE THAT ANY SUCH REPRODUCTION SHALL BE ADMISSIBLE IN EVIDENCE AS THE
ORIGINAL ITSELF IN ANY JUDICIAL OR ADMINISTRATIVE PROCEEDING, WHETHER OR NOT THE
ORIGINAL IS IN EXISTENCE AND WHETHER OR NOT SUCH REPRODUCTION WAS MADE BY A
PARTY IN THE REGULAR COURSE OF BUSINESS, AND THAT ANY ENLARGEMENT, FACSIMILE OR
FURTHER REPRODUCTION OF SUCH REPRODUCTION SHALL LIKEWISE BE ADMISSIBLE IN
EVIDENCE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
TEACHERS ADVISORS, INC.
By: /s/ Scott C. Evans
Name: Scott C. Evans
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathleen Cuowlo
Name: Kathleen Cuowlo
Title: Senior Vice President
12
<PAGE> 13
ADMINISTRATION AGREEMENT
TIAA-CREF LIFE FUNDS
SCHEDULE A
LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES
Investment Fund Authorized Shares
Stock Index Fund unlimited number of shares
authorized for all Investment
Funds
<PAGE> 14
SCHEDULE B
TIAA-CREF
LISTING OF REPORTS PREPARED BY
STATE STREET FUND ADMINISTRATION DEPARTMENT
REPORT NAME FREQUENCY
Reports on Compliance with SEC and IRS
Restrictions in accordance with the Fund Profile Monthly or more
frequently, if
requested and agreed
to by the parties.
Annual and Semi-Annual Financial Statements Bi-Annually
Form N-SAR Bi-Annually
24f-2 Filing Report Annually
Form 1099 Misc. Annually
Form 1096 Annually
Form 1042 and 1042S Annually
Form 1902-AP Annually
Form 1902-b Annually
Form 8613 Annually
Form 2758 As needed
Form 1120 RIC Annually
Form 7004 As needed
Form 6847 As needed
Sec. 852(b)(3)(C) Notification As needed
State and local income and excise tax filings As needed
<PAGE> 1
EXHIBIT 99.L
SEED MONEY AGREEMENT
SEED MONEY AGREEMENT (the "Agreement") made this 30th day of November,
1998 by and between Teachers Insurance and Annuity Association of America
("TIAA"), a nonprofit corporation existing under the laws of the State of New
York, and TIAA-CREF Life Funds (the "Fund"), a segregated investment account of
TIAA.
1. TIAA hereby agrees to invest in the Fund the sum of $25,000,000 on
December 1st or as soon thereafter as practicable.
2. In consideration for such investment and without deduction of any
charges, the Fund shall credit TIAA with such shares, of which TIAA shall be the
owner, of the Stock Index Fund of the Fund in such amounts as shall be mutually
agreed upon. Such shares will share pro rata in the investment performance of
the Stock Index Fund and shall be subject to the same valuation procedures and
the same periodic deductions as are other shares in that portfolio. The value of
such shares on the day the initial investment is made shall be $25.00.
3. TIAA represents that the shares acquired under this Agreement are
being, and will be, acquired for investment (and not with a view to distribution
or resale to the public) and can be disposed of only by redemption.
4. Shares acquired under this Agreement will be held by TIAA for its
own account until redeemed by TIAA. Amounts will be redeemed at prices equal to
the respective net asset value of shares of the applicable series of the Fund
next determined after
<PAGE> 2
the Fund receives TIAA's proper notice of redemption.
5. TIAA may purchase, and the Fund may issue, additional shares as the
parties may agree.
6. This Agreement will be construed and enforced in accordance with and
governed by the provisions of the Investment Company Act of 1940 and the laws of
the State of New York.
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
By: /s/ Peter C. Clapman
Peter C. Clapman
Senior Vice President and
Chief Counsel, Investments
TIAA-CREF LIFE FUNDS
By: /s/ Thomas G. Walsh
Thomas G. Walsh
Chairman of the Board
and President
