As filed with the Securities and Exchange Commission on October 18, 2000
Securities Act File No. 333-35832
Investment Company Act File No. 811-09917
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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/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 1 |X|
(Check Appropriate Box or Boxes)
SENTINEL VARIABLE PRODUCTS TRUST
(Exact Name of Registrant as Specified in Charter)
National Life Drive
Montpelier, Vermont 05604
(Address of Principal Executive Offices) (Zip Code)
(802) 229-3113
(Registrant's Telephone Number, including Area Code)
Copy to:
D. Russell Morgan, Esq. John A. MacKinnon, Esq.
c/o Sentinel Variable Products Trust Brown & Wood LLP
National Life Drive One World Trade Center
Montpelier, Vermont 05604 New York, New York 10048-0557
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
Title of securities being registered: common shares of beneficial
interest, par value $.01 per share.
<PAGE>
Sentinel Variable Products Trust
P R O S P E C T U S
Dated October 18, 2000
Sentinel Variable Products Common Stock Fund
Sentinel Variable Products Mid Cap Growth Fund
Sentinel Variable Products Small Company Fund
Sentinel Variable Products Growth Index Fund
Sentinel Variable Products Money Market Fund
This prospectus contains information you should know before
investing, including information about risks. Please read it
before you invest and keep it for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
Sentinel Variable Products Trust o National Life Drive o Montpelier, VT 05604
<PAGE>
Table of Contents
Key Facts About the
Sentinel Variable Products Trust...................... 3
Risk/Return Bar Chart and Table........................ 5
Fees and Expenses...................................... 5
Details About the Funds' Investment
Objectives, Principal Investment Strategies
and Related Risks..................................... 7
Offer, Purchase and Redemption of Shares............... 10
How the Funds are Priced............................... 11
Dividends, Capital Gains and Taxes..................... 11
Management of the Funds................................ 11
Description of Sentinel Variable Products
Trust's Shares.........................................13
<PAGE>
Key Facts about the Sentinel Variable Products Trust
What are the main goals and investment strategies of each Fund of the Sentinel
Variable Products Trust?
This prospectus contains information about the five mutual funds that are
series of Sentinel Variable Products Trust.
In this prospectus, each Sentinel Variable Products Fund is referred to
individually as a "Fund" and collectively as the "Funds" . National Life
Investment Management Company, Inc. is the investment advisor for each Fund.
We cannot guarantee that any Fund will achieve its goals.
A brief description of each Fund follows:
Sentinel Variable Products Common Stock Fund
seeks a combination of growth of capital, current income, growth of income and
relatively low risk as compared with the stock market as a whole, by investing
in a diverse group of common stocks of well-established companies.
Sentinel Variable Products Mid Cap Growth Fund seeks growth of capital, by
focusing its investments on common stocks of mid-sized growing companies.
Income is not a factor in selecting stocks.
Sentinel Variable Products Small Company Fund seeks growth of capital, by
investing mainly in common stocks of small companies that National Life
Investment Management believes have attractive growth potential and are
attractively valued. Income is not a factor in selecting stocks.Sentinel
Variable Products Growth Index Fund seeks to match, as closely as possible
before expenses, the performance of the S&P 500/BARRA Growth Index, by
investing in common stocks of the companies comprising the Index in
approximately the same weightings as the Index.
Sentinel Variable Products Money Market Fund seeks as high a level of current
income as is consistent with stable principal values and liquidity by
investing exclusively in dollar-denominated money market instruments,
including U.S. government securities, bank obligations, repurchase agreements,
commercial paper, and other corporate debt obligations.
What are the main risks of investing in the Funds?
Investment in each Fund is subject to certain risks. Some of the risk factors
described below affect more than one Fund; others are specific to certain
Funds.
More information on each Fund's risk factors is provided under "Details About
the Funds' Investment Objectives, Principal Investment Strategies, and Related
Risks". We cannot guarantee that any of the Funds will achieve its goals.
Equity Fund Risks
The value of all equity funds, including the Common Stock Fund, the Mid Cap
Growth Fund, the Small Company Fund and the Growth Index Fund, may go up or
down as the prices of the stocks held by these Funds go up or down. Changes in
value may occur because the U.S. stock markets are rising or falling or due to
business developments or other factors that affect the value of particular
companies. Stock markets tend to move in cycles, with periods of rising prices
and periods of falling prices. Stocks could decline generally or underperform
other types of investment assets. If the value of the stocks held in these
Funds goes down, you may lose money. The stocks of smaller companies may be
subject to greater changes in value than stocks of larger, more established
companies, because they generally have more limited financial resources,
narrower product lines, and may have less seasoned managers. In addition,
small company stocks may trade less frequently and in lower share volumes,
which could contribute to wider price fluctuations.
The equity Funds are also subject to investment style risk, which is
the chance that returns from the portion of the stock market on which they
focus, for example large capitalization value stocks for the Common Stock
Fund, or large capitalization growth stocks for the Growth Index Fund, will
trail returns from other asset classes or the overall stock market. Growth
stocks and value stocks, and large company stocks and smaller company stocks,
tend to go through cycles of doing better, or worse, than the stock market in
general. These periods have, in the past, lasted for as long as several years.
Growth stocks, and funds that focus on them, also have a tendency to be more
volatile than other investments.
In the case of the Growth Index Fund, there is the risk that the Fund will not
track closely the performance of the S&P 500/BARRA Growth Index for a number
of reasons, including the Fund's costs of buying and selling securities and
the flow of money into and out of the Fund.
Money Market Fund
Short term instruments issued by banks and other corporate issuers are subject
to the risk that the issuer will default on its obligation, in which case the
Fund may suffer a loss. Repurchase agreements may also subject the Fund to
risk of loss if the other party to the repurchase agreement defaults on its
obligation, and the proceeds from the sale of the securities held as
collateral turn out to be less than the repurchase price stated in the
agreement. An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Money Market Fund.
<PAGE>
Risk/Return Bar Chart and Table
This Prospectus does not include a Risk/Return Bar Chart or Table
because as of the date of this Prospectus, the Funds have not yet commenced
operations.
Fees and Expenses
These tables describe the fees and expenses that you pay if you buy and hold
shares of the Funds:
Shareholder Fees (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases........... None
Maximum Deferred Sales Charge (Load)....................... None
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends................................... None
Redemption Fees............................................ None
Exchange Fees.............................................. None
Annual Fund Operating Expenses(a)
(as a percentage of average net assets)
Common Mid Cap Small Growth Money
Stock Growth Company Index Market
Management Fees 0.47% 0.49% 0.50% 0.30% 0.25%
Other Expenses:
Accounting and
Administrative Costs 0.12 0.12 0.12 0.12 0.12
Other 0.40 0.40 0.40 0.44 0.40
Total Other Expenses 0.52 0.52 0.52 0.56 0.52
---- ---- ---- ---- ----
Total Fund Operating
Expense 0.99%(a) 1.01%(a) 1.02%(a) 0.86%(a) 0.77%(a)
======== ======== ======== ======== ========
(a) The above fees and expenses do not include fees and expenses charged or
incurred by the separate accounts of National Life Insurance Company which
purchase shares of the Funds to serve as investment vehicles under variable
life insurance policies or variable annuity contracts issued by National Life
Insurance Company. For information on these fees and expenses, please refer to
the prospectus for the variable life insurance policy or variable annuity
contract in which you are interested.
(b) Current Expense Ratios
The above expense ratios do not reflect waivers or reimbursements of expenses
by National Life Investment Management.
Currently, National Life Investment Management voluntarily waives or
reimburses expenses of the Funds shown below to the extent necessary to cap
expense ratios at the amounts shown below. These waivers or reimbursements
will continue at least until December 31, 2002.
Common Stock 0.48%
Mid Cap Growth 0.71%
Small Company 0.57%
Growth Index 0.60%
Money Market 0.40%
These arrangements may be changed or terminated at any time after December 31,
2002.
Examples:
These examples are intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in each Fund for the
time periods indicated, that the Fund's operating expenses remain the same,
and that your investment has a 5% return each year. This assumption is not
meant to indicate that you will receive a 5% annual rate of return.
Your annual return may be more or less than the 5% used in these examples.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be as shown below.
Note that the amounts shown do not reflect any of the waivers or
reimbursements that limit expense ratios to the levels shown in footnote (a)
on page __.
1 year 3 years
--------- --------
Common Stock $101 $ 315
Mid Cap Growth 103 322
Small Company 104 325
Growth Index 88 278
Money Market 79 246
<PAGE>
Details About the Funds' Investment Objectives,
Principal Investment Strategies, and Related Risks
Each Fund has distinct investment objectives and policies. Investment
objectives are fundamental policies of each Fund that may only be changed by a
majority vote of the outstanding shares of that Fund. We cannot guarantee that
these objectives will be achieved.
Each Fund's investment objectives and policies are described in this section.
A general discussion of the Funds' investment policies and associated risks
follows.
The Common Stock Fund
invests in common stocks
of well-established companies
The Common Stock Fund seeks a combination of growth of capital, current
income, growth of income, and relatively low risk as compared with the stock
market as a whole. It seeks this goal by investing mainly in a diverse group
of common stocks of well-established companies, most of which pay regular
dividends. National Life Investment Management tries to select stocks of
leading companies that are financially strong and are selling at attractive
prices in relation to their values. When appropriate, the Fund also may invest
in preferred stocks or debentures convertible into common stocks.
The Mid Cap Growth Fund
invests in stocks of mid-sized
companies
The Mid Cap Growth Fund seeks growth of capital by focusing its investments on
common stocks of mid-sized growing companies. National Life Investment
Management tries to invest in companies with favorable growth potential with
attractive pricing in relation to this growth potential, and experienced and
capable managements. The Fund will invest at least 65% of its assets in stocks
whose market capitalizations are within the range of the stocks comprising the
Standard & Poor's MidCap 400 Index. Income is not a factor in selecting
investments.
National Life Investment Management emphasizes stocks it believes to
have superior potential for growth, rather than wide diversification. The Fund
may invest up to 25% of its assets in stocks of companies within a single
industry. The Fund is actively managed. It is possible that the Fund's
turnover rate may exceed 100% annually. High turnover would cause the Fund to
incur higher trading costs, including more brokerage commissions. It may also
cause the Fund to recognize capital gains and capital losses for tax purposes
earlier than it would if its turnover rate was lower.
The Small Company Fund
invests in stocks of small
and medium-sized companies
The Small Company Fund seeks growth of capital, by investing mainly in common
stocks of small companies that National Life Investment Management believes
have attractive growth potential and are attractively valued. Income is not a
factor in selecting stocks. The Fund invests at least 75% of its assets in
stocks of small companies. The Fund considers small companies to be companies
with market capitalizations of less than 2.5 times the median market
capitalization of the Standard & Poor's SmallCap 600 Index. Market
capitalization is the total value of all the outstanding shares of common
stock of a company. Up to 25% of the Fund's assets may be invested in
securities within a single industry.
The Small Company Fund's policy is to avoid short-term trading.
However, the Fund may sell a security without regard to its holding period if
National Life Investment Management believes it is in the Fund's best interest
to do so. The Fund's turnover rate is not expected to exceed 100% annually.
The Fund is intended for long-term investors willing to accept more risk in
order to seek above-average gains.
The Growth Index Fund
invests in stocks comprising
the S&P 500/BARRA Growth Index
The Growth Index Fund seeks to match, as closely as possible before expenses,
the performance of the S&P 500/BARRA Growth Index. The S&P 500/BARRA Growth
Index includes those stocks of the S&P 500 Index with higher than average
price to book value ratios. The S&P 500 is an unmanaged index and typically
includes companies that are the largest and most dominant in their industries.
There can be no assurance that the Fund will achieve its objective.
The Fund will invest at all times at least 80% of its total assets in
the common stocks of the companies that comprise the S&P 500/BARRA Growth
Index. It normally intends to invest substantially all its total assets in
these common stocks, in approximately the same weightings as the S&P 500/BARRA
Growth Index. The Fund also may hold up to 20% of its assets in money market
instruments and stock index options and futures. Futures and options are
considered "derivatives" because they "derive" their value from a traditional
security (like a stock or bond) or index. The Fund intends to buy index
options or futures, if at all, only in anticipation of buying stocks.
The Growth Index Fund is not "actively managed," which would involve
the investment advisor buying and selling securities based on research and
analysis. Rather, the Growth Index Fund tries to match, as closely as
possible, before expenses, the performance of its target index, the S&P
500/BARRA Growth Index. It does this by holding, under normal circumstances,
all of the common stocks included in the target index, in approximately the
same weightings as in the index.
The Growth Index Fund by itself is not a balanced investment program.
The Growth Index Fund will generally hold exclusively the stocks of companies
among the 500 largest U.S. publicly owned corporations. Of these stocks, the
stocks included in the S&P 500/BARRA Growth Index have been valued in the
stock market at levels which indicate that the market expects their issuers to
have better than average prospects for growth of revenue and earnings. These
stocks are sometimes referred to as "large capitalization growth stocks". The
Growth Index Fund will not invest in other types of stocks, including the
stocks of small companies, or so-called "value stocks", from which the market
does not expect as much growth in revenue and earnings, but which can be
purchased at lower valuations. Diversifying your investments beyond "large
capitalization growth stocks" may lower the volatility of your overall
investment portfolio, and could improve your long-term investment return.
It is anticipated that the Growth Index Fund will have relatively low
portfolio turnover. However, it may have to sell securities from time to time
to meet redemption requests, and adjustments will be made in the portfolio
from time to time because of changes in the composition of the S&P 500/BARRA
Growth Index.
The Money Market Fund
invests primarily in
high quality money market instruments
The Money Market Fund seeks as high a level of current income as is consistent
with stable principal values and liquidity by investing exclusively in
dollar-denominated money market instruments, including U.S. government
securities, bank obligations, repurchase agreements, commercial paper, and
other corporate debt obligations. All such investments will have remaining
maturities of 397 days or less. The Fund may also invest up to 10% of its
total assets in shares of institutional money market funds which invest
primarily in securities in which the Fund could invest directly. The Fund may
earn less income than funds owning longer term securities or lower quality
securities that have less liquidity, greater market risk and greater market
value fluctuations.
The Fund seeks to maintain a net asset value of $1.00 per share, by using the
amortized cost method of valuing its securities. The Fund is required to
maintain a dollar-weighted average portfolio maturity of 90 days or less.
<PAGE>
General Information Relevant to the Investment Practices of the Funds, and
Associated Risks
We cannot guarantee that any Fund's investment objective will be achieved.
You can find additional information about the securities and investment
techniques used by the Funds in the Funds' Statement of Additional
Information, which is incorporated by reference into (is legally made a part
of) this Prospectus. You can get a free copy of the Statement of Additional
Information by calling 1-800-537-7003, or by writing to Sentinel Variable
Products Trust at National Life Drive, Montpelier, VT 0560.
Information Relevant to the Equity Funds
Stock Market and Selection Risk. The Common Stock, Mid Cap Growth and Small
Company Funds are subject to stock market and selection risk. The Growth Index
Fund is subject to stock market risk. Stock market risk is the risk that the
stock market will go down in value, including the possibility that the market
will go down sharply and unpredictably. Selection risk is the risk that that
the investments that National Life Investment Management selects will
underperform that stock market or other funds with similar investment
objectives and investment strategies.
Risks of Stocks of Smaller Companies. The stocks of smaller companies
typically involve more risk than the stocks of larger companies. These smaller
companies may have more limited financial resources, narrower product lines,
and may have less seasoned managers. In addition, these stocks may trade less
frequently and in lower share volumes, making them subject to wider price
fluctuations.
Risks of Growth Stocks. Prices of growth stocks tend to be higher in relation
to their companies' earnings, and may be more sensitive to market, political
and economic developments than other stocks, making their prices more
volatile.
Investment Style Risk. The Common Stock Fund has a focus on "large
capitalization value stocks", although it may also invest in growth stocks.
The Mid Cap Growth Fund focuses on "mid capitalization growth stocks", while
the Small Company Fund focuses on the stocks of smaller companies. The Growth
Index Fund focuses on "large capitalization growth stocks". Changes in
investment style may cause any of these groups to underperform the stock
market in general, or other asset classes.
Tracking Error Risk. There are several reasons why the Growth Index Fund's
performance may not match the S&P 500/BARRA Growth Index. First, the Fund
incurs administrative expenses and transaction costs in trading stocks.
Second, the composition of the S&P 500/BARRA Growth Index and the stocks held
in the Fund may diverge, due to cash flows into or out of the Fund and changes
in the composition of the index. Third, the timing and magnitude of cash flows
into and out of the Fund may result in temporarily uninvested cash, or may
lead to weightings of stocks held by the Fund which are not precisely the same
as in the S&P 500/BARRA Growth Index.
Futures and Options. If the Growth Index Fund invests in stock index futures
or options contracts, the Fund will be subject to the risks that:
o the future or option will not fully offset the underlying positions,
o the Fund cannot sell the future or option because of
an illiquid secondary market, and
o the intended risk management purpose of the future
or option may not be achieved, and may produce losses or missed
opportunities.
Temporary Defensive Positions. Each of the equity Funds may be less than fully
invested in securities called for by its principal investment strategies at
any time. If National Life Investment Management feels that it is necessary
under adverse market conditions to take a temporary defensive position, these
Funds may depart significantly or completely from their principal investment
strategies. The use of temporary defensive positions could prevent the Funds
from achieving their investment objectives.
Information Regarding the S&P 500/BARRA Growth Index
The Growth Index Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Growth
Index Fund or any member of the public regarding the advisability of investing
in securities generally or in the Growth Index Fund particularly or the
ability of the S&P 500/BARRA Growth Index to track general stock market
performance. S&P's only relationship to the Trust is the licensing of certain
trademarks and trade names of S&P and the S&P 500/BARRA Growth Index, which is
determined, composed, and calculated without regard to the Growth Index Fund.
S&P has no obligation to take the needs of the Trust or the owners of the
Growth Index Fund into consideration in determining, composing or calculating
the S&P 500/BARRA Growth Index. S&P is not responsible for and has not
participated in the determination of the prices at which the Growth Index Fund
shares are sold, the timing of the offering of Growth Index Fund shares, or
the determination of the prices at which Growth Index Fund shares may be
redeemed. S&P has no obligation or liability in connection with the
administration or marketing of the Growth Index Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500/BARRA GROWTH INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY THE GROWTH
INDEX FUND, OWNERS OF THE GROWTH INDEX FUND, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE S&P 500/BARRA GROWTH INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500/BARRA GROWTH INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Information Relevant to the Money Market Fund
The Money Market Fund faces very little interest rate risk, or the risk that
the value of the Fund's investments will decline due to increases in interest
rates, because the time until these investments mature is relatively short.
The Money Market Fund does face the risk that an issuer of a money market
instrument in which it invests will default in the repayment of the
instrument, and if this occurs the Fund will incur a loss. The Fund seeks to
control this risk by investing only in high quality instruments issued by
banks or corporations believed to be highly creditworthy by National Life
Investment Management.
Information Relevant to All Funds
Repurchase Agreements. All of the Funds may invest in repurchase agreements,
provided the counterparty maintains the value of the underlying securities at
a value not less than 102% of the repurchase price stated in the agreement.
Under a repurchase agreement, a Fund purchases bonds and simultaneously agrees
to resell these bonds to a counterparty at a prearranged time and specific
price. If the counterparty defaults on its repurchase obligation, the Fund
would have the bonds and be able to sell them to another party, but it could
suffer a loss if the proceeds from a sale of the bonds turns out to be less
than the repurchase price stated in the agreement. If the counterparty becomes
insolvent or goes bankrupt, a Fund may be delayed in being able to sell bonds
that were subject to the repurchase agreement. For more information about
repurchase agreements, please refer to the Statement of Additional
Information.
Offer, Purchase and Redemption of Shares
Shares of the Funds are not available directly to the public.
Currently, shares of the Funds are sold, without sales charge, at each Fund's
net asset value per share, only to variable life insurance and variable
annuity separate accounts of National Life Insurance Company. In the future,
the Funds may offer shares of one or more of the Funds (including new Funds
that might be added to Sentinel Variable Products Trust) to other separate
accounts of National Life, to support variable life insurance policies or
variable annuity contracts, or shares may be sold to other insurance company
separate accounts to fund variable life insurance policies and variable
annuity contracts. The price per share is based on the next daily calculation
of net asset value after an order is placed.
Shares of the Funds are sold in a continuous offering and are
authorized to be offered to National Life Insurance Company separate accounts
to support variable life insurance contracts and variable annuity contracts.
Net premiums or net purchase payments under such contracts are placed in one
or more subaccounts of a separate account and the assets of each such separate
account are invested in the shares of the Fund corresponding to that
subaccount. A separate account purchases and redeems shares of the Funds for
its subaccounts at net asset value without sales charges or redemption
charges.
On each day that a Fund's net asset value is calculated, a separate
account transmits to the Fund any orders to purchase or redeem shares based on
the premiums, purchase payments, redemption (surrender) requests, and transfer
requests from contract owners or payees that have been processed on that day.
A separate account purchases and redeems shares of each Fund at that Fund's
net asset value per share calculated as of the same day, although such
purchases and redemptions may be executed the next morning.
Please refer to the separate prospectus for each separate account and
its related contract for a more detailed description of the procedures under
which a contract owner or payee may allocate his or her interest in a separate
account to a subaccount using the shares of one of the Funds as an underlying
investment medium.
How the Funds Are Priced
Net asset value for each Fund is calculated at 4:00 p.m., Eastern Time, on
each business day on which the New York Stock Exchange is open, and becomes
effective immediately upon its determination. The net asset value per share is
computed by dividing the total value of the assets of each Fund, less its
liabilities, by the total number of each Fund's outstanding shares. The Funds'
investments are valued as shown below:
o Equity securities are valued at the latest transaction prices on the
principal stock exchanges on which they are traded.
o Unlisted and listed securities for which there were no sales during the
day are valued at the mean between the latest available bid and asked prices.
The Money Market Fund's assets are valued on the basis of amortized cost,
which involves valuing a portfolio instrument at its cost initially and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
Dividends, Capital Gains and Taxes
Each Fund intends to qualify as a regulated investment company ("RIC") under
the Internal Revenue Code of 1986, as amended (the "Code"), and to meet
certain diversification requirements applicable to mutual funds underlying
variable insurance products. As long as it so qualifies, a Fund will not be
subject to federal income tax on the part of its net ordinary income and net
realized capital gains which it distributes to shareholders. Each Fund intends
to distribute substantially all of such income, once per year in December,
except for the Money Market Fund, which will declare daily dividends.
Shares of the Funds are offered only to separate accounts of National Life
Insurance Company. Under the Code, no tax is imposed on an insurance company
with respect to income of a qualifying separate account properly allocable to
the value of eligible variable life insurance or variable annuity contracts.
Accordingly, no gain or loss should be recognized on ordinary income or
capital gain distributions to the Funds' insurance company shareholders or
upon the sale or redemption of shares of the Funds. Please refer to the
appropriate tax disclosure in the prospectus for a separate account and its
related contract for more information on the taxation of life insurance
companies, separate accounts, and the tax treatment of variable life insurance
and variable annuity contracts and the holders thereof.
Management of the Funds
National Life Investment Management Company, Inc. manages the Funds'
investments and their business operations under the overall supervision of the
Board of Trustees of Sentinel Variable Products Trust. National Life
Investment Management has the responsibility for making all investment
decisions for the Funds. National Life Investment Management is a wholly owned
subsidiary of National Life Insurance Company. Its principal business address
is National Life Drive, Montpelier, Vermont 05604.
The Funds' investment advisory contracts call for the Funds to pay
National Life Investment Management fees, which are anticipated for the year
ending December 31, 2000, to be equal to the following percentages of the
Funds' average daily net assets:
Common Stock Fund 0.47%
Mid Cap Growth Fund 0.49%
Small Company Fund 0.50%
Growth Index Fund 0.30%
Money Market Fund 0.25%
National Life Investment Management currently waives all or a portion of its
advisory fees for some of the Funds. The effective advisory fee rates (as a
percentage of each Fund's average daily net assets) that these Funds are
anticipated to pay in the year ending December 31, 2000, after taking these
waivers into account, are as follows:
Common Stock Fund 0.00%
Mid Cap Growth Fund 0.19%
Small Company Fund 0.05%
Growth Index Fund 0.04%
Money Market Fund 0.00%
Portfolio Managers
National Life Investment Management employs a team approach in managing the
Funds. The management teams are comprised of a lead portfolio manager, other
portfolio managers and research analysts. Each team includes members with one
or more areas of expertise and shares the responsibility for providing ideas,
information and knowledge in managing the Funds. Rodney A. Buck, the Chief
Executive Officer of National Life Investment Management Company, Inc., is
also Executive Vice President and Chief Investment Officer of National Life
Insurance Company. Mr. Buck has been employed by National Life Investment
Management or its affiliates since 1972. There are three investment management
teams: an Equity Value Team, headed by Van Harissis, Vice President of
National Life Investment Management; an Equity Growth Team, headed by Robert
L. Lee, Vice President of National Life Investment Management; and a Fixed
Income Team, headed by David M. Brownlee, Vice President of National Life
Investment Management.
Each of Messrs. Buck, Lee, Brownlee and Harissis is a Chartered Financial
Analyst. Mr. Lee and Mr. Brownlee have each been associated with National Life
Investment Management since 1993. Mr. Harissis joined National Life Investment
Management in June 1999.
The Common Stock Fund is managed by the Equity Value Team, led by Mr.
Harissis. Mr. Harissis was a managing director and portfolio manager at
Phoenix Investment Partners from 1995 to 1999, and previously was a portfolio
manager at Howe & Rusling. Mr. Lee is the portfolio manager for the Mid Cap
Growth Fund and the Growth Index Fund. The Small Company Fund is managed by
Scott T. Brayman, Vice President of National Life Investment Management, and
Mr. Lee. Mr. Brayman is a Chartered Financial Analyst, and has been with
National Life Investment Management since 1995. Prior to joining National Life
Investment Management, he was associated with Argyle Capital Management, Inc.
The portfolio manager of the Money Market Fund is Darlene Coppola, Money
Market Trader of National Life Investment Management. Ms. Coppola has been
employed by National Life Investment Management or its affiliates since 1974.
She is supervised by Mr. Brownlee as head of the Fixed Income Team.
Monitoring For Possible Conflicts
The Trust sells its shares to fund variable life insurance contracts
and variable annuity contracts. Because of differences in tax treatment and
other considerations, it is possible that the interest of variable life
insurance contract owners and variable annuity contract owners could conflict.
The Trust will monitor the situation and in the event that a material conflict
did develop, the Trust would determine what action, if any, to take in
response.
Performance Data
The Funds may from time to time include average annual total return figures in
advertisements or other material the Funds send to existing or prospective
shareholders. The Funds calculate these figures by determining the average
annual compounded rates of return that would produce the redeemable value of
the Fund being shown at the end of each period for a given initial investment.
All recurring and nonrecurring expenses are included in the calculation. It is
assumed that all dividends and distributions are reinvested. In addition, to
better illustrate the performance of money already invested in the Funds, the
Funds may also periodically advertise total return without subtracting sales
charges.
The Funds also may refer to rankings and ratings published by
independent tracking services and publications of general interest including
Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's;
magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine,
Financial World, Consumer Reports, Business Week, Time, Newsweek, U.S. News &
World Report; and other publications such as The Wall Street Journal,
Barron's, Investor's Daily, and Standard & Poor's Outlook. These ranking
services and publications may rank the performance of the Funds against all
other mutual funds or against funds in specified categories. The rankings may
or may not include the effects of sales or other charges.
Description of Sentinel Variable Products Trust's Shares
Sentinel Variable Products Trust issues a separate class of shares of common
stock for each Fund. It may establish additional funds in the future and
additional classes of shares for such new funds.
Based on current federal securities law requirements, the Funds
expect that National Life Insurance Company will offer owners of its variable
life insurance contracts and its variable annuity contracts the opportunity to
instruct such shareholders as to how to vote shares allocable to their
contracts regarding certain matters, such as the approval of investment
advisory agreements. Fund shares not attributable to variable life insurance
and annuity contracts, or for which no timely instructions are received by
National Life, are voted by National Life in the same proportion as the voting
instructions that are received for all contracts participating in each Fund.
The voting instructions received from contract holders may be disregarded in
certain circumstances that are described in the prospectuses for the variable
contracts.
<PAGE>
Sentinel Variable Products Trust
Shareholder Reports
Additional information about the Funds' investments will be available in the
Funds' annual and semi-annual reports to shareholders. In the Funds' annual
report you will find a discussion of the market conditions and investment
strategies that significantly affected investment performance of each of the
Funds during its last fiscal year. You may obtain copies of these reports at
no cost from the Funds by calling 1-800-537-7003.
The Funds will send you one copy of each shareholder report and certain other
mailings, regardless of the number of Funds to which you have allocated value
under your variable life insurance or annuity contract. To receive additional
shareholder reports at no cost, call the Funds at 1-800-537-7003.
Statement of Additional Information
The Funds' Statement of Additional Information contains further information
about the Funds and is incorporated by reference (legally considered to be
part of this Prospectus). You may request a free copy by writing the Funds at
the address shown below or by calling 1-800-537-7003. Please contact your
registered representative or the Funds if you have any questions.
Information about the Funds (including the Statement of Additional
Information) can also be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Call 1-202-942-8090 for information on the operation
of the public reference room. This information is also available on the SEC's
Internet site at http://www.sec.gov and copies may be obtained upon payment of
a duplicating fee by electronic request at the following e-mail address:
[email protected], or by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-0102.
You should rely only on the information contained in this prospectus. No one
is authorized to provide you with information that is different.
Sentinel Variable Products Trust
National Life Drive
Montpelier, VT 05604
Investment Advisor Counsel
National Life Investment Brown & Wood LLP
Management Company, Inc. One World Trade Center
National Life Drive New York, NY 10048
Montpelier, VT 05604
Principal Independent
Underwriter Accountants
Equity Services, Inc. PricewaterhouseCoopers LLP
National Life Drive 1177 Avenue of the Americas
Montpelier, VT 05604 New York, NY 10036
Custodian
and Dividend
Paying Agent
State Street Bank and Trust
Company - Kansas City
801 Pennsylvania Avenue
Kansas City, MO 64105
Investment Company Act file #811 - 09917.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
October 18, 2000
SENTINEL VARIABLE PRODUCTS TRUST
National Life Drive
Montpelier, Vermont 05604
(800) 537-7003
Sentinel Variable Products Common Stock Fund (the "Common Stock Fund")
Sentinel Variable Products Mid Cap Growth Fund (the "Growth Fund") Sentinel
Variable Products Small Company Fund (the "Small Company Fund") Sentinel
Variable Products Growth Index Fund (the "Growth Index Fund") Sentinel
Variable Products Money Market Fund (the "Money Market Fund")
SENTINEL VARIABLE PRODUCTS TRUST (the "Trust") is a managed, open-end
investment company, which continuously offers its shares, to separate accounts
of life insurance companies to serve as the investment vehicle for variable
life insurance and annuity contracts. The Trust consists of five separate and
distinct funds, four of which are diversified (the Growth Index Fund being
non-diversified). The five funds of the Trust are referred to hereinafter
collectively as the "Funds", and individually as a "Fund". The Funds are
described in a Prospectus of the Trust dated October 18, 2000 (the
"Prospectus"). Each of the Funds has different investment objectives and risk
characteristics.
National Life Investment Management Company, Inc. (the "Advisor")
acts as the investment advisor to the Funds. Shares of the Funds are
distributed by Equity Services, Inc. ("ESI"). Both the Advisor and ESI are
wholly owned subsidiaries of National Life Insurance Company ("National
Life").
This Statement of Additional Information is not a Prospectus and
should be read in conjunction with the Prospectus. The Prospectus, which has
been filed with the Securities and Exchange Commission (the "SEC"), can be
obtained upon request and without charge by writing to the Funds at the above
address, or by calling 1-800-537-7003. This Statement of Additional
Information has been incorporated by reference into the Prospectus.
TABLE OF CONTENTS
Page
----
The Trust.....................................................................3
Investment Objectives and Policies............................................3
Investment Restrictions.......................................................3
Management of the Trust.......................................................4
Principal Shareholder and Voting Rights.......................................6
The Investment Advisor........................................................7
Principal Underwriter.........................................................8
The Fund Services Agreement...................................................9
Portfolio Transactions and Brokerage Commissions..............................9
Portfolio Turnover...........................................................10
Capitalization...............................................................10
Purchase and Redemption of Shares............................................11
Determination of Net Asset Value.............................................11
Total Return and Yield.......................................................13
General Information..........................................................14
Independent Auditors' Report.................................................15
Statement of Assets and Liabilities..........................................16
THE TRUST
The Trust was formed as a Delaware business trust on March 14, 2000.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and certain fundamental policies of each of
the Funds are set forth in the Prospectus.
General Considerations
Each Fund is an open-end, management investment company. All Funds are
diversified investment companies except the Growth Index Fund, which is a
non-diversified investment company.
Each Fund's fundamental policies and investment objectives as they
affect each such Fund cannot be changed without the approval of the lesser of
(i) 67 percent or more of the voting securities of each such Fund present at a
meeting if the holders of more than 50 percent of the outstanding voting
securities of each such Fund are present or represented by proxy, or (ii) more
than 50 percent of the outstanding voting securities of each such Fund. With
respect to the submission of a change in fundamental policy or investment
objective of each such Fund, such matter shall be deemed to have been
effectively acted upon with respect to any such Fund if a majority of the
outstanding voting securities of such Fund vote for the approval of such
matters, notwithstanding (1) that such matter has not been approved by a
majority of the outstanding voting securities of any other Fund affected by
such matter and (2) that such matter has not been approved by a majority of
the outstanding voting securities of the Company. Fundamental policies adopted
with respect to each Fund, except the Growth Index Fund, provide that no Fund
shall concentrate its investments in a particular industry, nor will it
purchase a security if, as a result of such purchase, more than 25% of its
assets will be invested in a particular industry.
Repurchase Agreements. Each of the Funds to a limited extent may enter
into repurchase agreements with selected banks and broker-dealers under which
the Fund purchases bonds and agrees to resell the securities at an agreed upon
time and at an agreed upon price. The difference between the amount a Fund
pays for securities and the amount it receives upon resale is interest income
to a Fund. Failure of the seller to repurchase the securities as agreed may
result in a loss to a Fund if the market value of the securities has fallen to
less than the repurchase price. In the event of such a default, a Fund may
also experience certain costs and be delayed or prevented from recovering or
liquidating the collateral securities, which could result in further loss to a
Fund. The Funds will use repurchase agreements as a means of making short-term
investments of seven days or less and in aggregate amounts of not more than
25% of the net assets of that Fund. All repurchase agreements used by the
Funds will provide that the value of the collateral underlying the repurchase
agreement always will be at least equal to 102% of the repurchase price. The
Advisor will monitor on a continuing basis the creditworthiness of all parties
with which it might enter into repurchase agreements and will enter into
repurchase agreements only if it determines that the credit risk of such a
transaction is minimal.
INVESTMENT RESTRICTIONS
The Trust's Board of Trustees has adopted a number of investment
policies for the Trust. One such policy, which is a fundamental policy, is
that each of the Common Stock Fund, Mid Cap Growth Fund and Small Company Fund
cannot purchase securities of any one issuer if the market value of such
securities exceeds 5% of the total market value of each such Fund's securities
and cash. These three Funds also may not invest more than 25% of their total
assets in a particular industry, although these Funds may from time to time
invest more than 25% of their assets in broad industrial sectors. The Growth
Index Fund may concentrate in a particular industry to the extent necessary to
match its target index.
It is also a fundamental policy of the Trust that it may not borrow
money, except from banks in an amount up to 5% of a Fund's total assets for
temporary or emergency purposes or to meet redemption requests which might
otherwise require the untimely disposition of securities. None of the Funds
may purchase securities on margin. The Trust may not issue senior securities.
The Trust may not loan money, but may lend its securities. Loans of securities
are not a principal investment strategy of any of the Funds, however. Also,
the Trust may not deal in real estate, may not act as underwriter of
securities issued by others, and may not purchase from or sell to any officer,
director or employee of the Trust, the Advisor or underwriter, or any of their
officers or directors, any securities other than shares of beneficial interest
of the Trust. None of the Funds may deal in commodities or commodities
contracts. None of the Funds may invest in oil, gas or other mineral
exploration or development programs or leases. None of the Funds are able to
invest more than 5% of its net assets in warrants valued at the lower of cost
or market, or more than 2% of its net assets in warrants which are not listed
on either the New York Stock Exchange or the American Stock Exchange.
The Trust may not purchase more than 10% of the voting securities of
any issuer. The Trust may not invest in companies for purposes of exercising
control or management.
The Trust's investment policies will be affected by the insurance laws
of certain states, which may impose certain limitations on the permissible
investments of the Funds.
Each Fund may at any time assume a temporary defensive position, if
prudent in the opinion of the Advisor. In the event that any Fund assumes a
temporary defensive position, it may invest without limitation in securities
of the U.S. Treasury or U.S. government agencies or instrumentalities, or high
quality money market instruments which are eligible investments for money
market funds.
Restrictions and policies established by resolution of the Board of
Trustees, unless specifically identified as fundamental policies, may be
changed by the Board, with any material changes to be reported to
shareholders. Among those presently in effect is a policy which provides that
assets of all Funds may be invested entirely or in part in U.S. Government
Securities or an agency thereof, or held as cash deposits in a bank or trust
company having assets of not less than $2,000,000,000. The securities of
foreign issuers may be selected as being suitable for one or more of the
Funds.
MANAGEMENT OF THE TRUST
Management is made up of (i) the Trust's Board of Trustees, which is
responsible for the Trust's operations; (ii) the officers of the Trust, who
are responsible to the Board; and (iii) the Advisor, which under agreements
with the Trust, supervises and assists in the management of the Funds and the
purchase and sale of securities. See "The Investment Advisor", below. Set
forth below is information regarding the trustees and officers of the Trust,
their ages and their principal occupations during the past five years. In the
case of those persons who also hold positions with affiliated persons of the
Trust, such positions are also indicated.
THOMAS H. MACLEAY* - CHAIRMAN AND TRUSTEE
National Life Drive
Montpelier, VT 05604
Age 50
National Life - President and Chief Operating Officer, 1996 to present;
Executive Vice President and Chief Financial Officer, 1993 to 1996; National
Life Investment Management Company, Inc.- Director - 1996 to present; Equity
Services, Inc. - Director - 1996 to present; and National Retirement Plan
Advisors, Inc.- Director - 1996 to present.
WILLIAM D. MCMEEKIN - TRUSTEE
36 North Main Street
Barre, Vermont 05641
Age 55
The Howard Bank, N.A. - Community President, July 2000 to present; Granite
Savings Bank and Trust Co. - President and Chief Executive Officer, 1993 to
June 2000; Vermont Granite Museum of Barre - Director; Central Vermont
Economic Development Corporation - Director; Green Mountain United Way -
Allocation Committee Member.
WILLIAM G. RICKER - TRUSTEE
17 State Street
Montpelier, Vermont 05602
Age 60
Denis, Ricker & Brown (insurance and financial services) - President, for more
than five years; Jeffersonville Insurance Agency, President, for more than
five years; Central Vermont Economic Development Corporation - President;
Winooski East Riverfront Council - Vice Chairman; Kemper Insurance Agents
Advisory Board - Chairman.
JOSEPH M. ROB* - PRESIDENT
National Life Drive
Montpelier, Vermont 05604
Age 57
Sentinel Management Company - Chief Executive Officer, 1993 to present;
Sentinel Financial Services Company - Chief Executive Officer, 1993 to
present; Sentinel Administrative Services Company - Chief Executive Officer,
1993 to present; ESI - Chairman, Chief Executive Officer, and Director, 1985
to present, President, 1997 to present; American Guaranty & Trust Company -
Director, 1993 to present; LSW National Holdings, Inc. - Director, 1996 to
present; Life Insurance Company of the Southwest - Director, 1996 to present.
THOMAS P. MALONE* - VICE PRESIDENT & TREASURER
National Life Drive
Montpelier, Vermont 05604
Age 44
Sentinel Administrative Service Company - Vice President, 1997 to present;
Assistant Vice President, 1990 to 1997; Sentinel Group Funds, Inc. - Vice
President & Treasurer, 1997 to present; Assistant Vice President, 1990 to
1997.
D. RUSSELL MORGAN* - SECRETARY
National Life Drive
Montpelier, Vermont 05604
Age 44
National Life - Senior Counsel, 2000 to present; Counsel, 1994 to present; ESI
- Counsel, 1986 to present; National Life Investment Management Company, Inc.
- Counsel, 1986 to present; Sentinel Advisors Company - Sentinel Financial
Services Company - Sentinel Administrative Service Company - Counsel, 1993 to
present; LSW National Holdings, Inc. - Secretary, 1996 to present.
*"Interested Persons" (as defined in the 1940 Act).
The officers and trustees of the Trust who are employees of National
Life or its subsidiaries do not receive any compensation from the Trust. The
Trust pays to each trustee who is not an affiliate of the Advisor a fee of
$1,500 for each meeting of the Board of Trustees attended by the trustee. It
is expected that the Board of Trustees will meet four times per year. The
Trust also reimburses trustees for travel and other out-of-pocket expenses
incurred by them in connection with attending such meetings.
The following table sets forth estimated compensation for the first
year of operations of the Trust to Messrs. McMeekin and Ricker:
Aggregate Pension or Retirement
Name of Compensation Benefits Accrued as Part Total
Trustee from the Trust of Fund Expense Compensation
------- -------------- --------------- ------------
William D. McMeekin $6,000 None $6,000
William G. Ricker $6,000 None $6,000
Code of Ethics
The Trust's Board of Trustees has adopted a Code of Ethics pursuant
to Rule 17j-1 under the 1940 Act and the Advisor has adopted a similar Code of
Ethics. These Codes of Ethics significantly restrict the personal investing
activities of all employees of the Advisor.
The Trust's and the Advisor's Codes of Ethics require that all
employees preclear any personal securities transaction (with limited
exceptions, such as mutual funds and government securities). The preclearance
requirement and associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed transaction. The
substantive restrictions include a ban on acquiring any securities in an
initial public offering, and a prohibition on profiting from short-term
trading in securities (with certain exceptions). In addition, no employee may
purchase or sell any security which at the time is being purchased or sold by
any mutual fund advised by the Advisor or its affiliates, except for stocks
with a market capitalization in excess of $25 billion. Furthermore, these
Codes of Ethics provide for seven day trading "blackout periods" which
prohibit trading by employees of the Advisor in proximity to periods of
trading by mutual funds managed by the Advisor in the same (or equivalent)
security, unless certain conditions exist. Subject to the above restrictions,
the Advisors' employees may invest in securities, including securities that
may be purchased or held by the Trust.
ESI, the Trust's primary underwriter, has also adopted a Code of
Ethics pursuant to Rule 17j-1 under the 1940 Act. ESI's Code of Ethics permits
the personnel subject to it to invest in securities, including securities that
may be purchased or held by the Trust.
PRINCIPAL SHAREHOLDER AND VOTING RIGHTS
It is expected that all of the shares of the Trust will be legally
owned by various separate accounts of National Life which serve as investment
vehicles for National Life's variable life insurance and variable annuity
contracts, or by National Life in its general account.
As the legal owner of the Trust shares, National Life has the right to
vote upon any matter that may be voted upon at a shareholders' meeting.
However, in accordance with the SEC's view of present applicable law, National
Life will vote Trust shares at meetings of the shareholders of the Trust or
Fund in accordance with instructions of policyowners. National Life will vote
Fund shares held in each account for which policyowners do not send timely
instructions in the same proportion as those shares in that account for which
instructions are received.
If there is a shareholder vote, National Life will send policyowners
proxy material and a form for giving voting instructions. Policyowners may
vote, by proxy or in person, only as to the Funds that correspond to the
accounts in which his or her policy values are allocated. The Trust will
determine the number of shares held in each account attributable to a policy
for which the policyowner may provide voting instructions by dividing the
policy's value in that account by the net asset value per share of the
corresponding Fund as of the record date for the shareholder meeting. For each
share of a Fund for which policyowners have no interest, including any shares
held in National Life's general account, National Life will cast votes, for or
against any matter, in the same proportion as policyowners provide voting
instructions.
If required by state insurance officials, National Life may disregard
voting instructions if they would require shares to be voted so as to cause a
change in the investment objectives or policies of one or more of the Funds,
or to approve or disapprove an investment policy or investment adviser of one
or more of the Funds. In addition, National Life may disregard voting
instructions in favor of certain changes initiated by a policyowner or the
Fund's Board of Trustees if its disapproval of the change is reasonable and is
based on a good faith determination that the change would be contrary to state
law or otherwise inappropriate, considering the Fund's objectives and
purposes, and the effect the change would have on National Life. If National
Life disregards voting instructions, it will advise policyowners of that
action and National Life's reasons for it in the next report to policyowners.
None of the Trustees or officers of the Trust own any shares
of the Trust, as they are available only to the separate accounts of National
Life to serve as investment vehicles for its variable life insurance and
variable annuity contracts.
THE INVESTMENT ADVISOR
The Advisor provides general supervision of the Funds' investments as
well as certain administrative and related services. The Advisor is a Vermont
corporation which is a wholly owned subsidiary of National Life. Thomas H.
MacLeay, the Chairman of the Trust, is also President and Chief Operating
Officer of National Life. As such, he may be deemed to control the Advisor.
Joseph M. Rob, the President of the Trust, is also Chairman and Chief
Executive Officer of ESI, the Funds' distributor, and a wholly owned
subsidiary of National Life, and the Chief Executive Officer of Sentinel
Financial Services Company, Sentinel Administrative Service Company, and
Sentinel Management Company. Sentinel Financial Services Company, Sentinel
Administrative Service Company and Sentinel Management Company are all Vermont
general partnerships of which the general partners are affiliates of National
Life. Thomas P. Malone and D. Russell Morgan, the Vice President and
Treasurer, and Secretary of the Trust, respectively, also hold the positions
with the affiliates of the Advisor shown on pages 5-6.
As compensation in full for services rendered under its advisory
agreement applicable to the Funds, the Trust will pay to the Advisor a monthly
fee determined as follows:
(1) With respect to the Common Stock, Mid Cap Growth and Small Company
Funds: 0.50% per annum on the first $20 million of average daily net assets of
each such Fund; 0.40% per annum on the next $20 million of such assets of each
such Fund; and 0.30% per annum on such assets of each such Fund in excess of
$40 million.
(2) With respect to the Growth Index Fund: 0.30% per annum on the
average daily net assets of the Fund.
(3) With respect to the Money Market Fund: 0.25% per annum on the
average daily net assets of the Fund.
The Advisor has voluntarily agreed for a period at least until
December 31, 2002, to waive the following Funds' advisory fees or other
expenses necessary to limit these Funds' overall expense ratios to the amounts
shown below:
Common Stock Fund............................................0.48%
Mid Cap Growth Fund..........................................0.71%
Small Company Fund...........................................0.57%
Growth Index Fund............................................0.60%
Money Market Fund............................................0.40%
These arrangements may be changed or terminated at any time after
December 31, 2002.
The Trust's advisory agreement, which was approved by the Trust's
sole shareholder on October , 2000, and by the Trust's Board of Trustees on
October , 2000, must each be approved annually by vote of the Board of
Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of the applicable Fund, but in either event it must also be
approved by a vote of a majority of the Trustees who are not parties to the
contract, or "interested persons", as defined in the 1940 Act, of any such
party cast in person at a meeting called for the purpose of voting on such
approval. With respect to the submission of the Trust's advisory agreement for
approval by the shareholders, such matters shall be deemed to be acted upon
effectively with respect to any Fund if a majority of the outstanding voting
securities of such Fund vote for approval of such matter, notwithstanding (A)
that such matter has not been approved by a majority of the outstanding voting
securities of any other class affected by such matter, and (B) that such
matter has not been approved by a vote of a majority of the outstanding voting
securities of the Fund.
The advisory agreement will terminate automatically in the event of
its assignment and is terminable at any time without penalty by the Board, or,
with respect to a particular Fund, by a majority of the Fund's outstanding
voting securities, on not more than 60 days' written notice to the Advisor and
by the Advisor on 60 days' written notice to the Fund.
PRINCIPAL UNDERWRITER
ESI acts as the principal underwriter of shares of the Funds. Its
principal business address is National Life Drive, Montpelier, Vermont 05604.
ESI receives no compensation from the Trust for acting as principal
underwriter. The distribution contract of the Trust provides that ESI shall
use its best efforts to continuously offer the Funds' shares. This contract
may be terminated by either party thereto on 60 days' written notice, without
penalty, and it terminates automatically in the event of its assignment. The
distribution contract of the Trust must be approved annually in one of the
same ways as described above for the advisory agreement.
THE FUND SERVICES AGREEMENT
Sentinel Administrative Service Corporation ("Sentinel Service"), in
accordance with its Fund Services Agreement with the Trust, provides the Funds
with certain transfer agency, fund accounting and financial administration
services.
For these services, the Fund Services Agreement provides for the Trust
to pay to Sentinel Service a fixed fee totaling $20,000 per year for transfer
agency services, and a fee of 0.10% of average daily net assets of the Funds
for fund accounting and financial administration services. The fixed fee is
subject to increase under inflation clauses for fiscal years beginning on or
after January 1, 2003, to the extent approved by the Board of Trustees. Fees
are payable monthly in arrears.
Sentinel Service is a Vermont corporation which is a wholly owned
subsidiary of National Life.
The Trust's Fund Services Agreement was approved by the Trust's sole
shareholder on October , 2000. The Agreement was approved by the Trust's Board
of Trustees on July 27, 2000. Each agreement must be approved annually by vote
of the Board or by the vote of a majority of the outstanding voting securities
of each Fund, but in either event it must also be approved by a vote of a
majority of the trustees who are not parties to the contract, or interested
persons, as defined in the 1940 Act, of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Fund Services
Agreement will terminate automatically in the event of its assignment and is
terminable at any time without penalty by the Board or, as to a particular
Fund, by a majority of the applicable Fund's outstanding voting securities on
not more than 60 days' written notice to Sentinel Service and by Sentinel
Service on 60 days' notice to the Fund.
PORTFOLIO TRANSACTIONS
AND BROKERAGE COMMISSIONS
The Funds' policy, in the case of listed securities, is to place its
orders with firms that are members of a stock exchange on which such
securities are listed or traded and in the case of securities traded in the
over-the-counter market to deal directly with dealers who are primary market
makers in such securities, without the use of a broker unless the Funds can
obtain better price or execution through the use of a broker. Purchases are
generally made for investment and not for trading purposes. Subject to the
direction and control of the Board of Trustees and in accordance with its
advisory agreement, the Advisor supervises the investments of the Funds and,
as an essential feature thereof, places orders for the purchase and sale of
portfolio securities and supervises their execution, including negotiating the
amount of the commission rate paid, in each case at prices it believes to be
the best then available, taking into consideration such factors as price,
commission, size of order, difficulty of execution and skill required of the
executing broker-dealer as well as the extent to which a broker capable of
satisfactory execution may provide research information and statistical and
other services to the Advisor.
In making such purchases and sales, the brokerage commissions are
paid by the Funds. The Funds may also buy or sell securities from, or to,
dealers acting as principals.
Section 28(e) of the 1934 Act, which was enacted by Congress in
connection with the elimination of fixed commission rates on May 1, 1975,
provides that, except as agreements such as investment advisory contracts
otherwise provide, money managers such as the Advisor will not be deemed to
have acted unlawfully or to have breached a fiduciary duty if, subject to
certain conditions, a broker-dealer is paid in return for brokerage and
research services an amount of commission for effecting transactions for
accounts, such as the Funds, in excess of the amount of commission another
broker-dealer would charge for effecting the transaction. In order to cause
the Funds to pay such greater commissions, the Advisor has to determine in
good faith that the greater commission is reasonable in relation to the value
of the brokerage and research services provided by the broker-dealer viewed in
terms of either a particular transaction or the Advisor's overall
responsibilities to the Funds and to its other clients.
Brokerage and research services, as provided in Section 28(e) of the
1934 Act, include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, the availability of securities
or purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and effecting securities
transactions and performing functions incidental thereto (such as clearance,
settlement and custody).
Although research and market and statistical information from brokers
and dealers can be useful to the Funds, and to the Advisor, it is the opinion
of the management of the Funds that such information is only supplementary to
the Advisor's own research effort since the information must still be
analyzed, weighed and reviewed by the Advisor's staff.
The Advisor obtains several research services specifically in exchange
for commissions paid by the Funds and its other clients. These services
primarily consist of electronic research services from Bloomberg, ILX,
Factset, and First Call. The Trust also obtains Lipper Directors' Analytical
Data from Lipper Analytical Distributors, Inc., in exchange for Fund brokerage
commissions. This service is available only for brokerage commissions.
The research services provided by brokers through which the Funds
effect securities transactions may be used by the Advisor or its affiliates in
managing their other client accounts, as well as the Funds. However, the
Advisor and its affiliates use the commissions paid by most of their other
client accounts to obtain research services as well, and this research is also
useful in managing the Funds' accounts, as well those of other clients.
Except for implementing the policies stated above, there is no
commitment to place portfolio transactions with brokers or dealers who provide
investment research. The Advisor has advised the Funds that it is not feasible
to assign any precise value to services provided by such brokers and dealers
to it, nor does the use of such services reduce its expense by any measurable
or significant amount. Such commissions were allocated on the basis of
research and statistical or other services provided by the dealer.
PORTFOLIO TURNOVER
Purchases for the Small Company, Common Stock and Growth Index Funds
are made for long-term investment, and not for short-term trading profits.
However, during rapidly changing conditions, there necessarily may be more
portfolio changes than in a more stable period and these may result in
short-term gains or short-term losses.
The Mid Cap Growth Fund anticipates that it may have a higher level of
portfolio turnover. This Fund may engage in relatively short-term trading in
some stocks. This activity may create higher transaction costs due to
commissions and other expenses.
CAPITALIZATION
The Trust's shares of beneficial interest are fully paid and
non-assessable. Each share of the Trust is entitled to one vote per dollar of
net asset value per share, on matters on which all Funds of the Trust vote as
a single class.
The proceeds from the sale of shares of each Fund of the Trust and all
income, earnings and profits therefrom irrevocably appertain to that Fund.
Each such Fund records all liabilities (including accrued expenses) in respect
of such Fund, as well as a share of such liabilities (including general
liabilities of the Trust) in respect to two or more Funds, in proportion to
their average net assets. If any reasonable doubt exists as to the Fund to
which any asset or liability appertains, the Board may resolve such doubt by
resolution.
In the case of dissolution or liquidation of the Trust, the
shareholders of each Fund of the Trust are entitled to receive ratably per
share the net assets of such Fund, with any general assets of the Trust
distributed ratably per share, regardless of the Fund.
Voting rights are non-cumulative, meaning that the holders of more
than 50% of the net asset value of the shares voting for the election of
trustees can elect 100% of the trustees being voted upon if they choose to do
so, and, in such event the holders of the remaining minority of the shares
voting for the election of trustees will not be able to elect any person or
persons to the Board.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Funds are not available directly to the public.
Currently, shares of the Funds are sold, without sales charge, at each Fund's
net asset value per share, only to variable life insurance and variable
annuity separate accounts of National Life Insurance Company. In the future,
the Funds may offer shares of one or more of the Funds (including new Funds
that might be added to the Trust) to other separate accounts of National Life,
to support variable life insurance policies or variable annuity contracts, or
shares may be sold to other insurance company separate accounts to fund
variable life insurance policies and variable annuity contracts. The price per
share is based on the next daily calculation of net asset value after an order
is placed.
Shares of the Funds are sold in a continuous offering and are
authorized to be offered to National Life Insurance Company separate accounts
to support variable life insurance contracts and variable annuity contracts.
Net premiums or net purchase payments under such contracts are placed in one
or more subaccounts of a separate account and the assets of each such separate
account are invested in the shares of the Fund corresponding to that
subaccount. A separate account purchases and redeems shares of the Funds for
its subaccounts at net asset value without sales or redemption charges.
On each day that a Fund's net asset value is calculated, a separate
account transmits to the Fund any orders to purchase or redeem shares based on
the premiums, purchase payments, redemption (surrender) requests, and transfer
requests from contract owners or payees that have been processed on that day.
A separate account purchases and redeems shares of each Fund at that Fund's
net asset value per share calculated as of the same day, although such
purchases and redemptions may be executed the next morning.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is computed by dividing the
total value of the assets of that Fund, less its liabilities, by the total
number of such Fund's outstanding shares. Equity securities which are traded
on a national securities exchange are valued at the last reported sale price
each business day at the regular close of trading, currently 4:00 p.m. Eastern
time. Equity securities for which there were no sales during the day are
valued at the mean between the latest available bid and asked prices. Net
asset value is calculated once each business day, at 4:00 p.m. Eastern time,
and becomes effective immediately upon its determination. Orders to purchase
shares of the Funds received by the Trust prior to 10:00 a.m. Eastern time
will be confirmed on the basis of the closing price on the preceding day,
provided they represent instructions provided by policyholders of variable
life insurance or annuity policies for which the Trust serves as an investment
vehicle before 4:00 p.m. Eastern time on the preceding day, or effect
transactions with respect to such policies as of such preceding day. "Business
day" means a day on which the New York Stock Exchange is open. The New York
Stock Exchange is not open on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Money Market Fund values its portfolio securities based on their
amortized cost in accordance with SEC regulations. The amortized cost method
of valuation involves valuing a security at its cost at the time of purchase
and thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. During such periods the yield to investors in the
Money Market Fund may differ somewhat from that obtained in a similar
investment company which uses mark-to-market value for all of its portfolio
securities. For example, if the use of amortized cost resulted in a lower
(higher) aggregate portfolio value on a particular day, a prospective investor
in the Money Market Fund would be able to obtain a somewhat higher (lower)
yield than would result from investment in such a similar company which
utilizes mark-to-market values and existing investors would receive less
(more) investment income. The purpose of this method of calculation is to
attempt to maintain a constant net asset value per share of $1.00.
In accordance with the SEC rule permitting the use of the amortized
cost method of valuation, the Money Market Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less, and must
purchase instruments having remaining maturities of 397 days (13 months) or
less. In addition, the Board of Trustees has established procedures designed
to stabilize, to the extent reasonably possible, the Money Market Fund's price
per share as computed for the purpose of sales and redemptions at $1.00. The
Board will review periodically the Money Market Fund's portfolio holdings to
determine whether a deviation exists between the net asset value calculated
using market quotations and that calculated on an amortized cost basis. In the
event the Trustees determine that a deviation exists which may result in
material dilution or other unfair results to existing shareholders, the Money
Market Fund will take such corrective action as it regards as necessary and
appropriate, including (i) the reduction of the number of outstanding shares
of the Money Market Fund by having each shareholder proportionately contribute
shares to the Money Market Fund's capital, (ii) the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity, (iii) the withholding of dividends or (iv) the
establishment of a net asset value per share by using available market
quotations. If the number of outstanding shares is reduced in order to
maintain a constant net asset value of $1.00 per share, the shareholders will
contribute proportionately to the Money Market Fund's capital the number of
shares which represent the difference between the amortized cost valuation and
the market valuation of the portfolio. Each shareholder will be deemed to have
agreed to such contribution by such shareholder's investment in the Money
Market Fund.
Since the net income of the Money Market Fund is determined and
declared as a dividend immediately prior to each time the asset value of the
Money Market Fund is determined, the net asset value per share of the Money
Market Fund normally remains at $1.00 per share immediately after each such
dividend declaration. Any increase in the value of a shareholder's investment
in the Money Market Fund, representing the reinvestment of dividend income, is
reflected by an increase in the number of shares of the Money Market Fund in
that shareholder's account and any decrease in the value of a shareholder's
investment may be reflected by a reduction in the number of shares in the
account.
TOTAL RETURN AND YIELD INFORMATION
Each of the Funds (except the Money Market Fund) from time to time
may include its average annual total return in advertisements or information
furnished to present or prospective shareholders.
The Trust will compute these total returns by assuming a hypothetical
initial payment of $1,000. It will then be assumed that all of the dividends
and distributions by each of the Funds over the relevant time period are
reinvested. It will then assume that at the end of the one-, five- or ten-year
period, after taking into account all applicable recurring and nonrecurring
expenses, the entire amount is redeemed. The average annual total return then
will be calculated by calculating the annual rate required for the initial
payment to grow to the amount which would have been received upon redemption
(i.e., the average annual compound rate of return). Since the Trust had not
begun operations as of the date of this Statement of Additional Information,
no average annual total return calculations are shown here.
These average annual total returns will not include fees and charges
that apply to National Life separate accounts which purchase shares of the
Funds as investment vehicles for variable life insurance policies and variable
annuity contracts issued by National Life. These fees and charges will reduce
the returns realized by variable life insurance policyowners and variable
annuity contract owners. For information on the fees and charges incurred by
the separate accounts, please refer to the prospectus for the applicable
variable life insurance policy or variable annuity contract.
Each Fund's average annual total return will vary depending upon
market conditions, the securities comprising such Fund's portfolio, such
Fund's operating expenses and the amount of net capital gains or losses
realized by such Fund during the period. An investment in any of the Funds
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
On occasion, the Funds may compare their average annual total return
figures to mutual fund averages such as those compiled by Lipper Analytical
Services, Inc., and to market indices such as the Dow Jones Industrial
Average, the S&P 500, the S&P 500/BARRA Growth Index, the S&P 500/BARRA Value
Index, the S&P MidCap 400 Index and the Russell 2000(R) Index.
The Money Market Fund normally computes its annualized yield by
determining the net income for a seven-day base period for a hypothetical
pre-existing account having a balance of one share at the beginning of the
base period, dividing the net income by the net asset value of the account at
the beginning of the base period to obtain the base period return, multiplying
the result by 365 and then dividing by seven. In accordance with regulations
adopted by the SEC, the Money Market Fund is required to disclose its
annualized yield for certain seven-day base periods in a standardized manner
which does not take into consideration any realized or unrealized gains or
losses on portfolio securities. The SEC also permits the calculation of a
standardized effective or compounded yield. This is computed by compounding
the unannualized base period return which is done by adding one to the base
period return, raising the sum to a power equal to 365 divided by seven and
subtracting one from the result.
The yield quoted should not be considered a representation of the
yield of the Money Market Fund in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Fund and changes in interest rates on
such investments, but also on changes in the Money Market Fund's expenses
during the period.
Yield information may be useful in reviewing the performance of the
Money Market Fund and for providing a basis for comparison with other
investment alternatives. However, the Money Market Fund's yield fluctuates,
unlike bank deposits or other investments which typically pay a fixed yield
for a stated period of time.
GENERAL INFORMATION
Copies of the Trust's Declaration of Trust, and various agreements
referred to in the Prospectus and this Statement of Additional Information are
filed with the registration statement at the SEC, to which reference is made
for their full terms. Such documents and other information filed with the SEC
may be obtained from the SEC upon payment of the fees prescribed by the Rules
of the SEC and are also now available at the SEC's Internet Web site at
http://www.sec.gov. All cash and securities of the Funds, except for U.S.
Government Securities which are represented only in book entry form at the
Federal Reserve Bank, are held by State Street Bank and Trust Company or in a
central depository system in the name of State Street Bank & Trust - Kansas
City, 801 Pennsylvania Avenue, Kansas City, Missouri 64105 as the Funds'
Custodian. State Street is also Dividend Disbursing Agent for the Funds'
shares. Sentinel Service is Transfer Agent and Registrar for the Funds'
shares. All correspondence regarding the Trust should be mailed to National
Life Insurance Company, National Life Drive, Montpelier, Vermont 05604, Attn:
Registered Insurance Contracts.
The independent accountants for the Trust are PricewaterhouseCoopers
LLP, located at 1177 Avenue of the Americas, New York, New York 10036. The
independent accountants are responsible for auditing the annual financial
statements of the Trust.
Counsel for the Funds is Brown & Wood LLP, One World Trade Center, New
York, New York 10048-0557.
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder
of Sentinel Variable Products Trust:
In our opinion, the accompanying statements of assets and liabilities present
fairly, in all material respects, the financial position of Sentinel Variable
Products Common Stock Fund, Sentinel Variable Products Mid Cap Growth Fund,
Sentinel Variable Products Small Company Fund, Sentinel Variable Products
Growth Index Fund and Sentinel Variable Products Money Market Fund (the
"Funds") at October 18, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Funds' management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of the financial statements in accordance with auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
October 18, 2000
<PAGE>
Statement of Assets and Liabilities
Sentinel Variable Products Common Stock Fund
of Sentinel Variable Products Trust (1)
October 18, 2000
Assets:
Cash in Bank...................................................... $20,000
-------
Total Assets (Net Assets attributable to 2,000 shares
of beneficial interest issued and outstanding;
par value $.001 per share)...................................... $20,000
=======
Net Asset Value per Share......................................... $ 10.00
=======
---------------
(1) Sentinel Variable Products Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2000. The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment
company. Sentinel Variable Products Common Stock Fund (the "Fund") is a
series of the Trust. To date, the Fund has not had any transactions other
than those relating to organizational matters and the sale of 2,000 shares
of beneficial interest, par value $.001 per share, to National Life
Insurance Company.
(2) The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the National Life Investment Management
Company, Inc. (the "Advisor"), and a participation agreement (the
"Participation Agreement") with Equity Services, Inc. (the
"Distributor"). Certain officers and/or trustees of the Fund are officers
and/or director/trustees of the Advisor and the Distributor.
(3) The Advisor, on behalf of the Fund, will incur and pay organization and
initial offering costs estimated at $10,000.
Statement of Assets and Liabilities
Sentinel Variable Products Mid Cap Growth Fund
of Sentinel Variable Products Trust (1)
October 18, 2000
Assets:
Cash in Bank...................................................... $20,000
-------
Total Assets (Net Assets attributable to 2,000 shares
of beneficial interest issued and outstanding;
par value $.001 per share)...................................... $20,000
=======
Net Asset Value per Share......................................... $ 10.00
=======
---------------
(1) Sentinel Variable Products Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2000. The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment
company. Sentinel Variable Products Mid Cap Growth Fund (the "Fund") is a
series of the Trust. To date, the Fund has not had any transactions other
than those relating to organizational matters and the sale of 2,000 shares
of beneficial interest, par value $.001 per share, to National Life
Insurance Company.
(2) The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the Advisor, and a participation agreement
(the "Participation Agreement") with Equity Services, Inc. (the
"Distributor"). Certain officers and/or trustees of the Fund are officers
and/or director/trustees of the Advisor and the Distributor.
(3) The Advisor, on behalf of the Fund, will incur and pay organization and
initial offering costs estimated at $10,000.
Statement of Assets and Liabilities
Sentinel Variable Products Small Company Fund
of Sentinel Variable Products Trust (1)
October 18, 2000
Assets:
Cash in Bank...................................................... $20,000
-------
Total Assets (Net Assets attributable to 2,000 shares
of beneficial interest issued and outstanding;
par value $.001 per share)...................................... $20,000
=======
Net Asset Value per Share......................................... $ 10.00
=======
---------------
(1) Sentinel Variable Products Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2000. The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment
company. Sentinel Variable Products Small Company Fund (the "Fund") is a
series of the Trust. To date, the Fund has not had any transactions other
than those relating to organizational matters and the sale of 2,000 shares
of beneficial interest, par value $.001 per share, to National Life
Insurance Company.
(2) The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the Advisor, and a participation agreement
(the "Participation Agreement") with Equity Services, Inc. (the
"Distributor"). Certain officers and/or trustees of the Fund are officers
and/or director/trustees of the Advisor and the Distributor.
(3) The Advisor, on behalf of the Fund, will incur and pay organization and
inital offering costs estimated at $10,000.
Statement of Assets and Liabilities
Sentinel Variable Products Growth Index Fund
of Sentinel Variable Products Trust (1)
October 18, 2000
Assets:
Cash in Bank...................................................... $20,000
-------
Total Assets (Net Assets attributable to 2,000 shares
of beneficial interest issued and outstanding;
par value $.001 per share)...................................... $20,000
=======
Net Asset Value per Share......................................... $ 10.00
=======
---------------
(1) Sentinel Variable Products Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2000. The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment
company. Sentinel Variable Products Growth Index Fund (the "Fund") is a
series of the Trust. To date, the Fund has not had any transactions other
than those relating to organizational matters and the sale of 2,000 shares
of beneficial interest, par value $.001 per share, to National Life
Insurance Company.
(2) The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the Advisor, and a participation agreement
(the "Participation Agreements") with Equity Services, Inc. (the
"Distributor"). Certain officers and/or trustees of the Fund are officers
and/or director/trustees of the Advisor and the Distributor.
(3) The Advisor, on behalf of the Fund, will incur and pay organization and
initial offering costs estimated at $10,000.
Statement of Assets and Liabilities
Sentinel Variable Products Money Market Fund
of Sentinel Variable Products Trust (1)
October 18, 2000
Assets:
Cash in Bank...................................................... $20,000
-------
Total Assets (Net Assets attributable to 20,000 shares
of beneficial interest issued and outstanding;
par value $.001 per share)...................................... $20,000
=======
Net Asset Value per Share......................................... $ 1.00
=======
---------------
(1) Sentinel Variable Products Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2000. The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment
company. Sentinel Variable Products Money Market Fund (the "Fund") is a
series of the Trust. To date, the Fund has not had any transactions other
than those relating to organizational matters and the sale of 20,000
shares of beneficial interest to National Life Insurance Company.
(2) The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the Advisor, and a participation agreement
(the "Participation Agreement") with Equity Services, Inc. (the
"Distributor"). Certain officers and/or trustees of the Fund are officers
and/or director/trustees of the Advisor and the Distributor.
(3) The Advisor, on behalf of the Fund, will incur and pay organization and
initial offering costs estimated at $10,000.
<PAGE>
Part C
Other Information
Item 23. Exhibits
(a) Declaration of Trust of the Registrant.(1)
(b) None.
(c) Portions of the Declaration of Trust of the Registrant defining
the rights of holders of shares of the Registrant.(2)
(d) Investment Advisory Agreement between the Registrant and
National Life Investment Management Company, Inc. (the
"Advisor").
(e) Participation Agreement between the Registrant, National Life
Insurance Company and Equity Services, Inc. ("ESI").
(f) None.
(g) Custody Contract between the Registrant and State Street Bank
and Trust Company.
(h) Fund Services Agreement between the Registrant and Sentinel
Administrative Service Corporation.
(i) Opinion and consent of Brown and Wood LLP.
(j) Consent of PricewaterhouseCoopers LLP, independent accountants
for the Registrant.
(k) No financial statements are included because the Registrant has
not yet commenced operations.
(l) None.
(m) Certificate of Sole Shareholder.
(n) None.
(o) Reserved.
(p) (1) Code of Ethics of the Trust.
(2) Code of Ethics of National Life Investment Management
Company, Inc.(1)
(3) Code of Ethics of Equity Services, Inc.
------------------------
(1) Filed on April 28, 2000 as an Exhibit to the Registrant's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended (File
333-35832 (the "Registration Statement")).
(2) Reference is made to Article 1, Article 4 (Sections 4.2, 4.3, 4.8, 4.9.3,
4.9.5, 4.9.5.5, 4.9.5.6), Article 5 (Sections 5.4, 5.6, 5.8, 5.10,
5.10.1, 5.11, 5.11.1, 5.11.7), Article 8 (Sections 8.1, 8.5, 8.6),
Article 9 (Sections 9.1, 9.2.2), Article 10 (Sections 10.1, 10.1.1, 10.2,
10.5, 10.5.1, 10.5.2), Article 11(Section 11.3), Article 12.
Item 24. Persons Controlled by or under Common Control with the Registrant
-----------------------------------------------------------------
<PAGE>
None.
Item 25. Indemnification
Article 10.5 of the Registrant's Declaration of Trust, incorporated
by reference to Exhibit (a) hereto, provides for the indemnification
of the Registrant's trustees and officers.
In no event will the Registrant indemnify any of its trustees,
officers, employees or agents against any liability to which such
person would otherwise be subject by reason of his or her bad faith,
willful misfeasance, or reckless disregard of the duties involved in
the conduct of his or her office. The Registrant will comply with
Rule 484 under the Securities Act of 1933, as amended (the "1933
Act"), and Release No. 11330 under the 1940 Act in connection with
any indemnification.
Insofar as indemnification for liability arising under the 1933 Act
may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.
Trustees and officers of the Registrant are also covered by a
directors and officers liability insurance policy that became
effective as to it on March 14, 2000, with a total coverage of
$30,000,000.
Item 26. Business and Other Connections of the Investment Adviser
Information on the Advisor is incorporated by reference to the
Prospectus included in this Registration Statement. The Advisor also
provides investment management services with respect to the general
accounts of National Life Insurance Company and its wholly owned
subsidiary, Life Insurance Company of the Southwest, and other
National Life affiliates.
Officers of the Advisor
Rodney A. Buck, Chairman, President & Chief Executive Officer
(1)(2)(3)
Erick R. Grinde, Senior Vice President
Bruce R. Bottamini, Vice President & Director of Fixed Income
Research (1)
Allan R. Bradley, Vice President-Mortgages
Scott T. Brayman, Vice President (1)
Thomas H. Brownell, Vice President & Portfolio Manager (1)
David M. Brownlee, Vice President & Portfolio Manager (1)(2)
Kay L. Edson, Vice President & Head Equity Trader (1)
Stephen P. Flynn, Vice President & Fixed Income Credit Analyst (1)
Daniel E. Gass, Vice President & Portfolio Manager (1)
Van Harissis, Vice President & Portfolio Manager (1)(2)
Kenneth J. Hart, Vice President & Portfolio Manager (1)
R. Scott Higgins, Vice President & Director of Private Placements
Dean R. Howe, Vice President & Treasurer (1)(2)
William C. Kane, Vice President & Portfolio Manager (1)
Robert L. Lee, Vice President & Portfolio Manager (1)
Daniel J. Manion, Vice President (1)
Stephen S. Rauh, Vice President (1)(2)
Henry J. Restaino, Vice President & Trader (1)
John A. Skypeck, Vice President - Mortgages
D. Russell Morgan, Counsel (1)(3)
Lisa A. Pettrey, Secretary (3)
The principal business address of each such person is National Life
Drive, Montpelier, Vermont 05604.
------------------------
(1) Also an officer or employee of Sentinel Advisors Company, an
affiliated investment advisor which provides investment management
services to the Sentinel Funds, a family of mutual funds offered to
the public.
(2) Also an officer or employee of NL Capital Management, Inc.,
which provides investment management services to individuals and
institutions, primarily in northern New England.
(3) Also an officer or employee of National Life Insurance Company.
Item 27. Principal Underwriters
(a) The Registrant's principal underwriter, ESI, also serves as
principal underwriter for National Life's various variable life
insurance and variable annuity contracts.
(b) As to each officer of ESI:
Positions and
Name and Principal Positions and Offices Offices with
Business Address with ESI the Registrant
------------------------ -------------------------- -----------------
Joseph M. Rob Chairman & Chief Executive President
Officer
Kenneth R. Ehinger President & Chief Operating None
Officer
John M. Grab, Jr. Senior Vice President & Chief None
Financial Officer
Sharon E. Bernard Treasurer & Controller None
The principal business address of all such persons is National Life
Drive, Montpelier, Vermont 05604.
(c) Not applicable.
Item 28. Location of Accounts and Records
The following maintain physical possession of each account book or
other documents required by Section 31(a) of the 1940 Act and the
Rules promulgated thereunder:
a) Sentinel Administrative Service Corporation
National Life Drive
Montpelier, Vermont 05604
Rule 31a-1(a)
Rule 31a-1(b)(1)(2)(3)(4)(5)(6)(7)(8)
Rule 31a-2(a)(b)(c)(f)
(b) National Life Investment Management Company, Inc.
National Life Drive
Montpelier, Vermont 05604
Rule 31a-1(a)(9)(10)(11)
Rule 31a-1(d)(f)
Rule 31a-2(a)(c)(f)
(c) Equity Services, Inc.
National Life Drive
Montpelier, Vermont 05604
Rule 31a-1(d)
Rule 31a-2(c)
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Montpelier and State of Vermont, on the 18th day of October, 2000.
SENTINEL VARIABLE PRODUCTS TRUST
(Registrant)
By: /s/Thomas H. MacLeay
---------------------------------
Thomas H. MacLeay, Chairman
As required by the Securities Act of 1933, this post-effective
amendment to the Registration Statement has been signed by the following
persons in the capacities on the dates indicated.
Signature Title Date
---------- ----- ----
/s/Thomas H. MacLeay Chairman October 18, 2000
---------------------------- Chief Executive
Thomas H. MacLeay Officer)
/s/William D. McMeekin Trustee October 18, 2000
----------------------------
William D. McMeekin
/s/William G. Ricker Trustee October 18, 2000
----------------------------
William G. Ricker
/s/Thomas P. Malone Vice President and Treasurer
---------------------------- (Chief Accounting and October 18, 2000
Thomas P. Malone Financial Officer)
<PAGE>
Exhibit Index
Exhibit
Number
--------
(d) Investment Advisory Agreement between the Registrant and National Life
Investment Management Company, Inc.
(e) Participation Agreement between the Registrant, National Life
Insurance Company and Equity Services, Inc.
(g) Custody Contract between the Registrant and State Street Bank and Trust
Company.
(h) Fund Services Agreement between the Registrant and Sentinel
Administrative Service Corporation.
(i) Opinion and consent of Brown and Wood LLP.
(j) Consent of PricewaterhouseCoopers LLP, independent accountants for the
Registrant.
(m) Certificate of Sole Shareholder.
(p)(1) Code of Ethics of the Trust.
(2) Code of Ethics of National Life Investment Management Company, Inc.
(3) Code of Ethics of Equity Services, Inc.
<PAGE>
Exhibit (d)
INVESTMENT ADVISORY AGREEMENT
Agreement made as of this day of , 2000,
by and between Sentinel Variable Products Trust, a Delaware business trust and
a series investment company whose registration is pending under the Investment
Company Act of 1940 (hereinafter called the "Trust"), and National Life
Investment Management Company, Inc., a Vermont corporation, a registered
investment adviser under the Investment Advisers Act of 1940 (hereinafter
called "Advisor").
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable considerations, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as
follows:
1. Management of Securities Portfolios
Advisor agrees to act as investment adviser to the Trust with respect
to the investment of its assets and in general to supervise the investments of
several portfolios of the Trust, subject at all times to the direction and
control of the Board of Trustees of The Trust, all as more fully set forth
herein. In connection therewith, Advisor shall regularly provide investment
advice to the Trust, and shall, subject to the succeeding provisions of this
section, continuously supervise the investment and reinvestment of cash,
securities or other property comprising the assets of the several investment
portfolios of the Trust, and Advisor shall accordingly:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic or
foreign, affecting the economy generally, the several portfolios of the Trust,
the individual companies whose securities are included in the Trust's
portfolios, the industries in which they engage, and securities which Advisor
considers may be suitable for inclusion in any of the Trust's portfolios, and
regularly report thereon to the Board of Trustees of the Trust; and
(b) provide continuously an investment program for each portfolio of
the Trust consistent, in its opinion, with the investment policy and
objectives for which such portfolio is designed; and
(c) determine what securities shall be purchased or sold by the
Trust, and regularly report thereon to the Board of Trustees of the Trust; and
(d) take, on behalf of the Trust, all actions which appear to Advisor
necessary to carry into effect such investment programs and supervisory
functions as aforesaid including the placing of purchase and sale orders.
Any investment program provided by Advisor under this section, or any
supervisory functions taken hereunder by it shall at all times conform to, and
be in accordance with, any requirements imposed by the provisions of the
Investment Company Act of 1940 (the "1940 Act"), and any rules or regulations
in force thereunder, any other applicable provision of law, the provisions of
the Declaration of Trust of the Trust as amended from time to time,
resolutions as adopted and/or amended from time to time by the Board of
Trustees of the Trust, and the terms of the registration statement of the
Trust, as amended from time to time, under the Securities Act of 1933 and the
1940 Act.
In furtherance of these duties, Advisor will make its principal
executive officers available as principal executive officers of the Trust at
no expense to the Trust.
2. The Trust to Bear Other Expenses
It is understood and agreed that the Trust, in addition to the
advisory fee paid to Advisors set forth in Article 3 below, will bear and pay
for its expenses of operation including its (i) rent and office equipment, if
any; (ii) salaries and employee benefits including applicable employment and
payroll taxes, of its own administrative and executive personnel who are not
affiliated with Advisor, if any; (iii) brokerage commissions and other costs
in connection with the purchase or sale of securities; (iv) all taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (v) fees and costs of its transfer agent, fund accounting and
financial administration service provider, custodian, registrar, independent
legal counsel and auditors; (vi) expenses of printing and mailing stock
certificates, dividends, reports, notices and proxy materials to its
shareholders; (vii) fees and expenses incident to the registration and
maintenance of registration under the Securities Act of 1933 of shares of the
Trust for public sale (other than costs of printing prospectuses for
prospective new shareholders) and the qualification of its shares for offering
and sale under state or other securities laws; (viii) fees and expenses
imposed on the Trust under the 1940 Act; (ix) insurance premiums for fidelity
bonds and other coverage relating to its operations; (x) all expenses incident
to holding of meetings of its shareholders; (xi) fees and expenses of Trustees
who are not affiliated with Advisor; (xii) its pro rata share of fees and dues
of the Investment Company Institute; and(xiii) such non-recurring expenses as
may arise, including actions, suits or proceedings, affecting the Trust and
the legal obligation which the Trust may have to indemnify its officers and
Trustees with respect thereto.
3. Compensation of Advisors
As compensation in full for services rendered under this Agreement,
the Trust will pay to Advisor a monthly fee determined as follows:
(1) With respect to the Common Stock, Mid Cap Growth and Small Company
Funds: 0.50% per annum on the first $20 million of average daily net assets of
each such Fund; 0.40% per annum on the next $20 million of average daily net
assets of each such Fund; and 0.30% per annum on such assets in excess of $40
million.
(2) With respect to the Growth Index Fund: 0.30% per annum on the
average daily net assets of the Fund.
(3) With respect to the Money Market Fund: 0.25% per annum on the
average daily net assets of the Fund.
The amounts payable to Advisor shall be based upon the value of the
net assets as of the close of business each day, computed in accordance with
the Declaration of Trust of the Trust and the then current registration
statement of the Trust under the Securities Act of 1933 and the 1940 Act. Such
amounts shall be prorated among the several Funds of the Trust in proportion
to their respective daily net asset values and shall be paid monthly.
4. Guarantee of Expense Limitation
If, for any fiscal year of the Trust, expenses (including management
fee and costs incident to its regular and executive personnel, but excluding
interest, taxes, brokerage fees and, where permitted, extraordinary expense)
borne by any Fund of the Trust exceed expense limitations applicable to such
Fund which are imposed by state securities regulators as such limitations may
be lowered or raised from time to time, Advisor guarantees that it will
reimburse the Trust for any excess. The portion of any such reduction to be
borne by Advisor shall be deducted from the monthly investment advisory fee
otherwise payable to Advisor and, if such amount should exceed such monthly
investment advisory fees, Advisor agrees to repay to the appropriate Fund
annually before publication of the Trust's annual report to shareholders such
sum as may be required to make up the deficiency. For the purpose of this
article, the term "fiscal year" shall include the portion of the then current
fiscal year which shall have elapsed at the date of termination of this
Investment Advisory Agreement.
5. Placing of Purchase and Sale Orders
Advisor shall not deal as principal with the Trust in the purchase
and sale of portfolio securities nor shall it receive any commissions or other
remuneration on the purchase or sale of portfolio securities by the Trust
(however, this provision shall not prevent Advisor from obtaining from brokers
or dealers, subject to applicable law, research or trade execution services in
connection with such purchases or sales of portfolio securities).
Advisor is authorized and directed to place the orders for the
purchase and sale of portfolio securities by the Trust and to supervise the
executions thereof. With respect to such transactions, whether through a
broker as agent or with a dealer as principal, Advisor's primary objective is
to obtain the best overall price and execution of each transaction, but
Advisor is permitted to cause the Trust to pay higher than the lowest
available commissions if it makes the required determinations under applicable
law. Such orders may be placed with qualified brokers and/or dealers who also
provide investment information or other services to the Trust. Management
shall report to the Trustees of the Trust at least quarterly on said
allocations of order and on the brokerage commissions and/or dealer
concessions involved, indicating to whom such allocations are made and the
basis thereof.
6. Nonexclusivity
Advisor's services to the Trust hereunder are not to be deemed
exclusive and Advisor shall be free to render similar services to others, so
long as its services hereunder are not impaired thereby.
7. National Life Services
National Life Insurance Company and its subsidiaries may furnish to
Advisor, in order to better enable it to fulfill its obligations hereunder,
office space, personnel and other services as are requested by Advisor, in all
cases for a reasonable charge. Advisor will present the details of any such
arrangements to the Board of Trustees of the Trust.
8. Affiliations of Advisor
It is understood that the Trustees and officers of the Trust may be
directors or officers of Advisor or an entity under common control, including
National Life Insurance Company, or any affiliate thereof, or otherwise be
interested in Advisor, and that the existence of such dual interest shall not
affect the validity of this Agreement or any transactions hereunder.
9. Liability of Advisor
In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of
Advisor, it shall not be subject to liability to the Trust or to any
stockholder of the Trust for any act or omission in the course of, or in
connection with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
10. Duration of this Agreement
This Agreement shall become effective upon the date set forth above
and shall continue in force and effect, unless terminated as hereinafter
provided, until December 31, 2001, and from year to year thereafter, provided
such continuance is specifically approved at least annually by the Board of
Trustees of the Trust, including specific approval (i) by a majority of the
Trustees who are not interested persons of a party to this Agreement (other
than as Trustees of the Trust) by votes cast in person at a meeting
specifically called for such purpose (Trustee vote) or (ii) as to each class
of the issued and outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act) of the Trust by a vote of a majority of such class
and a Trustee vote.
11. Termination
This Agreement may be terminated by Advisor at any time without
penalty upon giving the Trust sixty (60) days' written notice (which notice
may be waived by the Trust) and may be terminated by the Trust, in its
entirety or as to a specific Fund of the Trust, at any time without penalty
upon giving Advisors sixty (60) days' written notice (which notice may be
waived by Advisor), provided that such termination by the Trust shall be
approved by the vote of a majority of the Board of Trustees of the Trust in
office at the time or by the vote of a majority of the outstanding voting
securities of the Trust, if such termination relates to the investment
advisory arrangements for all Funds of the Trust, or by the vote of a majority
of the outstanding voting securities of a specific Fund of The Trust, if such
termination relates to that Fund only. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
12. Notification of Changes in Advisor
Advisor will notify the Trust of any change in the identities of the
shareholders of Advisor within a reasonable time after such change.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their
corporate seals to be hereunder affixed, all as of the day and year first
above written.
Attest: SENTINEL VARIABLE PRODUCTS TRUST
__________________________ BY:___________________________
D. Russell Morgan Thomas H. MacLeay
Secretary Chairman
Attest: NATIONAL LIFE INVESTMENT MANAGEMENT COMPANY, INC.
__________________________ By:___________________________
Rodney A. Buck
Chairman and Chief
Executive Officer
<PAGE>
Exhibit (e)
PARTICIPATION AGREEMENT
By and Among
SENTINEL VARIABLE PRODUCTS TRUST
And
NATIONAL LIFE INSURANCE COMPANY
And
EQUITY SERVICES, INC.
THIS AGREEMENT, made and entered into this 27th day of July, 2000, by
and among NATIONAL LIFE INSURANCE COMPANY, a Vermont insurance company
(hereinafter the "Company"), on its own behalf and on behalf of NATIONAL
VARIABLE LIFE INSURANCE ACCOUNT, NATIONAL VARIABLE ANNUITY ACCOUNT II, and
various separate accounts now existing or to be created in the future to fund
certain private placement variable life insurance or annuity products
(hereinafter, the "Accounts"), each a segregated asset account of the Company,
the SENTINEL VARIABLE PRODUCTS TRUST, an open-end diversified management
investment company organized as a business trust under the laws of the State
of Delaware (hereinafter the "Trust") and EQUITY SERVICES, INC., a Vermont
corporation (hereinafter the "Underwriter").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and is available to act as the investment
vehicle for separate accounts established for variable life insurance
contracts and variable annuity contracts to be offered by the Company; and
WHEREAS, beneficial interests in the Trust are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Funds"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Company has offered and sold, and will offer and sell
certain variable life insurance contracts and variable annuity contracts (the
"Contracts") pursuant to registration statements under the 1933 Act, or in
transactions exempt from registration under the 1933 Act; and
WHEREAS, each of the Accounts is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors
of the Company under the insurance laws of Vermont, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, the Company has registered each of the Accounts as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
the Accounts to fund the Contracts and the Underwriter is authorized to sell
such shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Trust and the Underwriter agree as follows:
ARTICLE I. Sale of Trust Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Trust which the Company orders on behalf of the Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt and
acceptance by the Trust or its agent of the order for the shares of the Trust.
1.2. The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC; provided, however, that the Board of Trustees of
the Trust (hereinafter the "Trustees") may refuse to sell shares of any Fund
to any person, or suspend or terminate the offering of shares of any Fund if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees, acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of any Fund.
1.3. The Trust and the Underwriter agree that shares of the Trust
will be sold only to the Company and the Accounts. No shares of any Fund will
be sold to the general public.
1.4. The Trust agrees to redeem for cash, upon the Company's request,
any full or fractional shares of the Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
and acceptance by the Trust or its agent of the request for redemption.
1.5. The Company agrees to purchase and redeem the shares of each
Fund offered by the then current prospectus of the Trust in accordance with
the provisions of such prospectus. Net amounts available under the Contracts
may be invested in the Trust, in shares of investment companies other than the
Trust, or in the Company's general account.
1.6. The Company shall pay for Trust shares on the same day that it
places an order to purchase Trust shares. Payment shall be in federal funds
transmitted by wire.
1.7. Issuance and transfer of the Trust's shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Shares ordered from the Trust will be recorded in an appropriate
title for the applicable Account or the appropriate subaccount of such
Account.
1.8. The Trust shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the Trust's shares. The Company hereby
elects to receive all such dividends and distributions as are payable on the
Fund shares in additional shares of that Fund. The Company reserves the right
to revoke this election and to receive all such dividends and distributions in
cash. The Trust shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9. The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act, or will be sold in transactions exempt
from registration under the 1933 Act, and that the Contracts will be issued
and sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established each of the Accounts as a segregated asset account under Section
3855 of the Vermont Insurance Law and has registered each Account that is
required to be so registered as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as segregated investment accounts for the
Contracts, and that it will maintain such registration for so long as any
Contracts utilizing such Account are outstanding. The Company shall amend the
registration statements under the 1933 Act for the Contracts and the
registration statements under the 1940 Act for the Accounts from time to time
as required in order to effect the continuous offering of the Contracts or as
may otherwise be required by applicable law. The Company shall register and
qualify the Contracts for sale in accordance with the securities laws of the
various states only if and to the extent deemed necessary by the Company.
2.2. The Company represents that it believes, in good faith, that the
Contracts are currently and at the time of issuance will be treated as life
insurance policies or annuity contracts under applicable provisions of the
Internal Revenue Code of 1986, and that it will make every effort to maintain
such treatment and that it will notify the Trust and the Underwriter
immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.3. The Trust represents and warrants that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Trust
is and shall remain registered under the 1940 Act for as long as the Trust
shares are sold. The Trust shall amend the registration statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Trust or the
Underwriter.
2.4. The Trust represents that it believes, in good faith, that it is
currently qualified as a Regulated Investment Company under Subchapter M of
the Internal Revenue Code of 1986, and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.5. The Trust represents that its investment objectives, policies
and restrictions comply with the Vermont Insurance Law as it applies to the
Trust. To the extent feasible and consistent with market conditions, the Trust
will adjust its investments to comply with requirements of the Company's
domiciliary state upon written notice from the Company of such requirements
and proposed adjustments, it being agreed and understood that in any such case
the Trust shall be allowed a reasonable period of time under the circumstances
after receipt of such notice to make any such adjustment.
2.6. The Trust currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Trust undertakes to have a board of trustees, a majority of whom are not
interested persons of the Trust, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Trust
shares in accordance with the 1933 Act, the 1934 Act, and the 1940 Act.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the Company's
expense, with as many copies of the Trust's current prospectus as the Company
may reasonably request for use with prospective Contract owners and
applicants. The Underwriter shall print and distribute, at the Trust's
expense, as many copies as necessary for distribution to existing Contract
owners or participants. If requested by the Company in lieu thereof, the Trust
shall provide such documentation and other assistance as is reasonably
necessary in order for the Company to have the new prospectus for the
Contracts and the Trust's new prospectus printed together in one document, in
such case the Trust shall bear its share of expenses as described above.
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust is available from the Underwriter (or, in
the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust) shall provide
such Statement, at its expense, to the Company and to any owner of or
participant under a Contract who requests such Statement or, at the Company's
expense, to any prospective Contract owner and applicant who requests such
statement.
3.3. The Trust, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and
shall bear the costs of distributing them to existing Contract owners or
participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners or
participants;
(ii) vote the Trust shares held in the Accounts in accordance
with instructions received from Contract owners or
participants; and
(iii) vote Trust shares held in the Accounts for which no
timely instructions have been received, and any Trust
shares held in the Company's general account, in the same
proportion as Trust shares of such Fund for which
instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require passthrough voting privileges for variable policy owners. The
Company reserves the right to vote Trust shares held in any segregated asset
account or in its general account in its own right, to the extent permitted by
law.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Trust will act in accordance with the SEC interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees
and with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Trust or the Underwriter, each piece of sales literature or other
promotional material in which the Trust or the Underwriter is named, at least
five business days prior to its use. No such material shall be used if the
Trust or the Underwriter objects to such use within five business days after
receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Trust, or in sales literature or other promotional material approved by the
Trust or by the Underwriter, except with the permission of the Trust or the
Underwriter. The Trust and the Underwriter agree to respond to any request for
approval on a prompt and timely basis.
4.3. The Trust or the Underwriter shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account(s) is
named, at least five business days prior to its use. No such material shall be
used if the Company objects to such use within five business days after
receipt of such material.
4.4. The Trust and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
the Accounts, or the Contracts other than the information or representations
contained in a registration statement, prospectus or private placement
memorandum for the Contracts, as such registration statement, prospectus or
private placement memorandum may be amended or supplemented from time to time,
or in published reports for the Accounts which are in the public domain or
approved by the Company for distribution to Contract owners or participants,
or in sales literature or other promotional material approved by the Company,
except with the permission of the Company. The Company agrees to respond to
any request for approval on a prompt and timely basis.
4.5. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. Fees and Expenses
5.1. The Trust and Underwriter shall pay no fee or other compensation
to the Company under this Agreement, except that if the Trust or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then, subject to obtaining any required exemptive orders or other
regulatory approvals, the Underwriter may make payments to the Company or to
the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Trust of this
Agreement shall be paid by the Trust to the extent permitted by law. The Trust
shall bear the expenses for the cost of registration and qualification of the
Trust's shares under federal law, and, if applicable, under any state
securities law, preparation and filing of the Trust's prospectus and
registration statement, proxy materials and reports, setting in type, printing
and distributing the prospectuses, the proxy materials and reports to existing
shareholders and Contract owners, the preparation of all statements and
notices required by any federal or state law, all taxes on the issuance or
transfer of the Trust's shares, and any expenses permitted to be paid or
assumed by the Trust pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act.
ARTICLE VI. Diversification
6.1. The Trust will comply with Section 817(h) of the Internal
Revenue Code of 1986, and all regulations issued thereunder, relating to the
diversification requirements for variable annuity, endowment, and life
insurance policies.
ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Trust (the "Board") will monitor
the Trust for the existence of any material irreconcilable conflict between
the interests of the Contract owners of all Accounts investing in the Trust.
An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Fund are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance Contract owners; or (f) a
decision by the Company to disregard the voting instructions of Contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof. A
majority of the Board shall consist of persons who are not "interested"
persons of the Trust.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company agrees to provide the Board with
all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever Contract owner voting instructions are disregarded.
The Board shall record in its minutes or other appropriate records, all
reports received by it and all action with regard to a conflict.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested Trustees, that an irreconcilable material conflict exists,
the Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take whatever steps
are necessary to remedy or eliminate the irreconcilable material conflict, up
to and including withdrawing the assets allocable to some or all of the
Accounts from the Trust or any Fund and reinvesting such assets in a different
investment medium, including (but not limited to) another Fund of the Trust,
or submitting the question whether such segregation should be implemented to a
vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., variable annuity contract owners or
variable life insurance contract owners) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change.
7.4. If the Company's disregard of voting instructions could conflict
with the majority of Contract owner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company is permitted to withdraw each affected Account's investment in the
Trust. The Underwriter and Trust shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Trust until
the Company notifies the Underwriter and the Trust that it is withdrawing the
Account's investment in the Trust pursuant to this Section 7.4.
7.5. If a particular state insurance regulator's decision applicable
to the Company conflicts with the majority of other state insurance
regulators, then the Company is permitted to withdraw each affected Account's
investment in the Trust. The Underwriter and Trust shall continue to accept
and implement orders by the Company for the purchase (and redemption) of
shares of the Trust for such Account until the Company notifies the
Underwriter and the Trust that it is withdrawing an affected Account's
investment in the Trust pursuant to this Section 7.5.
7.6. For purposes of Section 7.3 of this Agreement, the Board shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Trust be required to establish a
new funding medium for the Contracts.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless
the Trust, the Underwriter, and each of the Trust's or the Underwriter's
current and former directors, officers, employees or agents and each person,
if any, who controls, or has controlled, or is or was associated with the
Trust or the Underwriter within the meaning of such terms under the federal
securities laws (collectively, the "indemnified parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including legal and other expenses), to which the indemnified
parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the sale or
acquisition of the Trust's shares and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus or private
placement memorandum for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify shall
not apply as to any indemnified party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished
to the Company by or on behalf of the Trust for use in the
registration statement or prospectus or private placement
memorandum for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Trust shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than
statements or representations contained in a Contract or
Trust registration statement, private placement memorandum
or the Contract or Trust prospectus or sales literature
for the Contracts or the Trust not supplied by the Company
or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the
sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or
any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances in which they were made, if such a statement
or omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf of
the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any
payments under the terms of this Agreement; or
(v) arise out of any material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his or her duties or by reason of his or her reckless
disregard of obligations or duties under this Agreement or to the Trust.
8.1(c). The indemnified parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the Contracts or
the operation of the Trust.
8.2. Indemnification By the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold
harmless the Company and each of its current and former directors, officers,
employees or agents and each person, if any, who controls or has controlled or
is or was associated with the Company within the meaning of such terms under
the federal securities laws (collectively, the "indemnified parties" for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including legal and other expenses) to which
the indemnified parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Trust's shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales
literature of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading in light of
the circumstances in which they were made; provided that
this agreement to indemnify shall not apply as to any
indemnified party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Underwriter or Trust by or on behalf of the Company for
use in the registration statement or prospectus for the
Trust or in sales literature for the Trust (or any
amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Trust shares;
or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Contracts or in the Contract or Trust
registration statement, the Contract or Trust prospectus,
private placement memoranda for the Contracts or sales
literature for the Contracts or the Trust not supplied by
the Underwriter or persons under its control) or wrongful
conduct of the Underwriter or persons under its control,
with respect to the sale or distribution of the Contracts
or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, private placement memorandum or
sales literature covering the Contracts (or any amendment
thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statement or
statements therein not misleading in light of the
circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity
with information furnished to the Company by or on behalf
of the Underwriter; or
(iv) arise out of any material breach by the Underwriter of
this Agreement;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Underwriter
may otherwise have.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his or her duties or by reason of his or her reckless
disregard of obligations and duties under this Agreement or to the Company or
the Accounts.
8.2(c). The Company agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of
the Contracts or the operation of the Accounts.
8.3. Indemnification by the Trust
8.3(a). The Trust agrees to indemnify and hold harmless the
Company and each of its current and former directors, officers, employees or
agents and each person, if any, who controls or has controlled or is or was
associated with the Company within the meaning of such terms under the federal
securities laws (collectively, the "indemnified parties" for the purpose of
this Section 8.3) against any and all losses, claims, damages or liabilities
(including amounts paid in settlement with the written consent of the Trust)
or litigation (including legal and other expenses) to which they or any of
them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the sale or
acquisition of the Trust's shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus for the Trust or
sales literature of the Trust (or any amendment or
supplement thereto), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading in light of
the circumstances in which they were made; provided that
this agreement to indemnify shall not apply if such
statement or omission or alleged statement or alleged
omission was made in reliance upon and in conformity with
information furnished to the Trust by or on behalf of the
Company for use in the registration statement or
prospectus for the Trust or sales literature for the Trust
(or any amendment or supplement thereto) or otherwise for
use in connection with the sale or distribution of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Contracts, a private placement memorandum
for the Contracts, or a Contract or Trust registration
statement or a Contract or Trust prospectus or sales
literature for a Contract or the Trust not supplied by the
Trust or persons under its control) or wrongful conduct of
the Trust or the Trust's investment adviser or persons
under their control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement or prospectus or private placement memorandum or
sales literature covering the Contracts (or any amendment
or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made, if such statement or omission was made in
reliance upon and in conformity with information furnished
by or on behalf of the Trust to the Company; or
(iv) arise as a result of any failure by the Trust to provide
the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of
this Agreement); or
(v) arise out of any material breach by the Trust of this
Agreement;
except to the extent provided in Section 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Trust may
otherwise have.
8.3(b). The Trust shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his or her duties or by reason of his or her reckless
disregard of obligations or duties under this Agreement or to the Company or
the Accounts.
8.3(c). The indemnified parties will promptly notify the
Trust of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust Shares or the Contracts or
the operation of the Trust.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article
VIII ("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article VIII with respect
to any claim made against a party entitled to indemnification under this
Article VIII ("indemnified party" for the purpose of this Section 8.4) unless
such indemnified party shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result
of failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the
indemnified party of the indemnifying party's election to assume the defense
thereof, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation, unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article
VIII. The indemnification provisions contained in this Article VIII shall
survive any termination of this Agreement.
ARTICLE IX. Applicable Law.
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Vermont.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder, and
the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon ninety days advance written
notice to the other parties; or
(b) at the option of the Company if shares of all Funds are not
reasonably available to meet the requirements of the Contracts as determined
by the Company. Prompt notice of the election to terminate for such cause
shall be furnished by the Company; or
(c) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the SEC, the Vermont Insurance
Commissioner or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of the
Accounts, or the purchase of the Trust shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners having
an interest in the Accounts (or any subaccount) to substitute the shares of
another investment company for the corresponding Fund shares of the Trust in
accordance with the terms of the Contracts for which those Fund shares had
been selected to serve as the underlying investment media. The Company will
give 30 days prior written notice to the Trust of the date of any proposed
vote or other action taken to replace the Trust's shares; or
(f) at the option of the Company or the Trust upon a
determination by a majority of the Trustees of the Trust, or a majority of its
disinterested Trustees, that an irreconcilable material conflict exists among
the interests of the Contract owners of the various variable insurance
products of all Accounts; or
(g) at the option of the Company if the Company has withdrawn an
Account's investment in the Trust because the Company's disregard of voting
instructions could conflict with the majority of Contract owner voting
instructions and if the Company's judgment represents a minority position or
would preclude a majority vote; or
(h) at the option of the Company if the Company has withdrawn an
Account's investment in the Trust because a particular state insurance
regulator's decision applicable to the Company conflicts with the majority of
other state insurance regulators;
(i) at the option of the Company if the Trust ceases to qualify
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, or under any successor or similar provision, or if the Company
reasonably believes that the Trust may fail to so qualify; or
(j) at the option of the Company if the Trust fails to meet the
diversification requirements specified in Article VI hereof; or (k) at the
option of any party to this Agreement, upon another party's material breach of
any provision of this Agreement.
10.2. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.3. Except as necessary to implement Contract owner initiated
transactions, or as required by state insurance laws or regulations, the
Company shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to the Company's assets held in the
Accounts), and the Company shall not prevent Contract owners from allocating
payments to a Fund that was otherwise available under the Contracts, until 60
days after the Company shall have notified the Trust or Underwriter of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other party.
If to the Trust:
Joseph M. Rob
President
Sentinel Variable Products Trust
National Life Drive
Montpelier, VT 05604
If to the Company:
D. Russell Morgan, Esq.
Senior Counsel
National Life Insurance Company
One National Life Drive
Montpelier, VT 05604
If to the Underwriter:
Kenneth R. Ehinger
President
Equity Services, Inc.
National Life Drive
Montpelier, VT 05604
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Trust must look solely to the
property of the Trust for the enforcement of any claims against the Trust as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust.
12.2. Subject to law and regulatory authority, each party hereto
shall treat as confidential all information reasonably identified as such in
writing by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as it may come into the public domain without the
express prior written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit 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.
12.8. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action, as applicable, by such
party and when so executed and delivered this Agreement will be the valid and
binding obligation of such party enforceable in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
NATIONAL LIFE INSURANCE COMPANY
SEAL By: ______________________________
Date:_____________________________
Trust:
SENTINEL VARIABLE PRODUCTS TRUST
SEAL By: ______________________________
Date:_____________________________
Underwriter:
EQUITY SERVICES, INC.
SEAL By: ______________________________
Date:_____________________________
<PAGE>
Exhibit (g)
CUSTODY AGREEMENT
THIS AGREEMENT is made effective the __ day of _________, 2000, by and
between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company,
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 ("State Street"), and SENTINEL GROUP FUNDS, INC.,
SENTINEL PENNSYLVANIA TAX-FREE TRUST, and SENTINEL VARIABLE PRODUCTS TRUST,
each having its principal office and place of business at National Life Drive,
Montpelier, Vermont 05604 (each a "Fund").
WHEREAS, Fund desires to appoint State Street as custodian of the assets
of the Fund's investment portfolio or portfolios (each a "Portfolio", and
collectively the "Portfolios"); and
WHEREAS, State Street is willing to accept such appointment on the terms
and conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN AND AGENT. Fund hereby constitutes and
appoints State Street as custodian of the investment securities,
interests in loans and other non-cash investment property, and monies at
any time owned by each of the Portfolios and delivered to State Street as
custodian hereunder ("Assets").
2. REPRESENTATIONS AND WARRANTIES.
A. Each Fund hereby represents, warrants and acknowledges to State
Street:
1. That it is a corporation or trust duly organized and existing
and in good standing under the laws of its state of
organization, and that it is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
2. That it has the requisite power and authority under applicable
law, its articles of incorporation and bylaws or its
declaration of trust, to enter into this Agreement; it has
taken all requisite action necessary to appoint State Street as
custodian for the Portfolios; this Agreement has been duly
executed and delivered by Fund; and this Agreement constitutes
a legal, valid and binding obligation of Fund, enforceable in
accordance with its terms.
B. State Street hereby represents, warrants and acknowledges to each
Fund:
1. That it is a trust company duly organized and existing and in
good standing under the laws of the Commonwealth of
Massachusetts; and
2. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into and perform this
Agreement; this Agreement has been duly executed and delivered
by State Street; and this Agreement constitutes a legal, valid
and binding obligation of State Street, enforceable in
accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
A. Delivery of Assets. Except as permitted by the 1940 Act, Fund will
deliver or cause to be delivered to State Street on the effective
date hereof, or as soon thereafter as practicable, and from time to
time thereafter, all Assets acquired by, owned by or from time to
time coming into the possession of each of the Portfolios during the
term hereof. State Street has no responsibility or liability
whatsoever for or on account of assets not so delivered.
B. Delivery of Accounts and Records. Fund will turn over or
cause to be turned over to State Street all of each Portfolio's
relevant accounts and records needed by State Street to perform its
duties and responsibilities hereunder fully and properly. State
Street may rely conclusively on the completeness and correctness of
such accounts and records.
C. Delivery of Assets to Third Parties. State Street will receive
delivery of and keep safely the Assets of each Portfolio segregated
in a separate account. Upon delivery of any such Assets to a
subcustodian appointed pursuant hereto (hereinafter referred to as
"Subcustodian"), State Street will create and maintain records
identifying such Assets as belonging to the applicable Portfolio.
State Street is responsible for the safekeeping of the Assets only
until they have been transmitted to and received by other persons as
permitted under the terms hereof, except for Assets transmitted to
Subcustodians, for which State Street remains responsible to the
extent provided herein. State Street may participate directly or
indirectly through a subcustodian in the Depository Trust Company
(DTC), Treasury/Federal Reserve Book Entry System (Fed System),
Participant Trust Company (PTC) or other depository approved by Fund
(as such entities are defined at 17 CFR Section 270.17f-4(b)) (each
a "Depository" and collectively the "Depositories"). State Street
will be responsible to Fund for any loss, damage or expense suffered
or incurred by Fund resulting from the actions or omissions of any
Depository only to the same extent such Depository is responsible to
State Street.
D. Registration. State Street will at all times hold registered Assets
in the name of State Street as custodian, the applicable Portfolio,
or a nominee of either of them, unless specifically directed by
Instructions, as hereinafter defined, to hold such registered Assets
in so-called "street name;" provided that, in any event, State
Street will hold all such Assets in an account of State Street as
custodian containing only Assets of the applicable Portfolio, or
only assets held by State Street as a fiduciary or custodian for
customers; and provided further, that State Street's records at all
times will indicate the Portfolio or other customer for which such
Assets are held and the respective interests therein. If, however,
Fund directs State Street to maintain Assets in "street name",
notwithstanding anything contained herein to the contrary, State
Street will be obligated only to utilize its best efforts to timely
collect income due the Portfolio on such Assets and to notify the
Portfolio of relevant information, such as maturities and pendency
of calls, and corporate actions including, without limitation, calls
for redemption, tender or exchange offers, declaration, record and
payment dates and amounts of any dividends or income,
reorganization, recapitalization, merger, consolidation, split-up of
shares, change of par value, or conversion ("Corporate Actions").
All Assets and the ownership thereof by Portfolio will at all times
be identifiable on the records of State Street. Fund agrees to hold
State Street and its nominee harmless for any liability as a
shareholder of record of securities held in custody.
E. Exchange. Upon receipt of Instructions, State Street will exchange,
or cause to be exchanged, Assets held for the account of a Portfolio
for other Assets issued or paid in connection with any Corporate
Action or otherwise, and will deposit any such Assets in accordance
with the terms of any such Corporate Action. Without Instructions,
State Street is authorized to exchange Assets in temporary form for
Assets in definitive form, to effect an exchange of shares when the
par value of stock is changed, and, upon receiving payment therefor,
to surrender bonds or other Assets at maturity or when advised of
earlier call for redemption, except that State Street will receive
Instruction prior to surrendering any convertible security.
F. Purchases of Investments -- Other Than Options and Futures. On each
business day on which a Portfolio makes a purchase of Assets other
than options and futures, Fund will deliver to State Street
Instructions specifying with respect to each such purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the Asset;
3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes
and other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer
through whom the purchase was made; and
9. Whether the Asset is to be received in certificated form or via
a specified Depository.
In accordance with such Instructions, State Street will pay for out
of monies held for the purchasing Portfolio, but only insofar as
such monies are available for such purpose, and receive the Assets
so purchased by or for the account of such Portfolio, except that
State Street, or a Subcustodian, may in its sole discretion advance
funds to such Portfolio which may result in an overdraft because the
monies held on behalf of such Portfolio are insufficient to pay the
total amount payable upon such purchase. Except as otherwise
instructed by Fund, State Street will make such payment only upon
receipt of Assets: (a) by State Street; (b) by a clearing
corporation of a national exchange of which State Street is a
member; or (c) by a Depository. Notwithstanding the foregoing, (i)
State Street may release funds to a Depository prior to the receipt
of advice from the Depository that the Assets underlying a
repurchase agreement have been transferred by book-entry into the
account maintained with such Depository by State Street on behalf of
its customers; provided that State Street's instructions to the
Depository require that the Depository make payment of such funds
only upon transfer by book-entry of the Assets underlying the
repurchase agreement in such account; (ii) State Street may make
payment for time deposits, call account deposits, currency deposits
and other deposits, foreign exchange transactions, futures contracts
or options, before receipt of an advice or confirmation evidencing
said deposit or entry into such transaction; and (iii) State Street
may make, or cause a Subcustodian to make, payment for the purchase
of Assets the settlement of which occurs outside of the United
States of America in accordance with generally accepted local custom
and market practice.
G. Sales and Deliveries of Investments -- Other Than Options and
Futures. On each business day on which a Portfolio makes a sale of
Assets other than options and futures, Fund will deliver to State
Street Instructions specifying with respect to each such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the Asset;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the Assets sold were purchased or other
information identifying the Assets sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by the Portfolio upon such
sale; and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
State Street will deliver or cause to be delivered the Assets thus
designated as sold for the account of the selling Portfolio as
specified in the Instructions. Except as otherwise instructed by
Fund, State Street will make such delivery upon receipt of: (a)
payment therefor in such form as is satisfactory to State Street;
(b) credit to the account of State Street with a clearing
corporation of a national securities exchange of which State Street
is a member; or (c) credit to the account maintained by State Street
on behalf of its customers with a Depository. Notwithstanding the
foregoing: (i) State Street will deliver Assets held in physical
form in accordance with "street delivery custom" to a broker or its
clearing agent; or (ii) State Street may make, or cause a
Subcustodian to make, delivery of Assets the settlement of which
occurs outside of the United States of America upon payment therefor
in accordance with generally accepted local custom and market
practice.
H. Purchases or Sales of Options and Futures. On each business day on
which a Portfolio makes a purchase or sale of the options and/or
futures listed below, Fund will deliver to State Street Instructions
specifying with respect to each such purchase or sale:
1. If applicable, the name of the Portfolio making such purchase
or sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the
sale or purchase was made.
3. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.
4. In the case of security index futures contracts:
a. The last trading date specified in the contract and, when
available, the closing level, thereof; .
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
Instructions, and if not already in the possession of
State Street, Fund will deliver a substantially complete
and executed custodial safekeeping account and procedural
agreement, incorporated herein by reference); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. In the case of options on index future contracts:
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Assets Pledged or Loaned. If specifically allowed for in the
prospectus of a Portfolio, and subject to such additional terms and
conditions as State Street may require:
1. Upon receipt of Instructions, State Street will release or
cause to be released Assets to the designated pledgee by way of
pledge or hypothecation to secure any loan incurred by a
Portfolio; provided, however, that State Street will release
Assets only upon payment to State Street of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further Assets may
be released or caused to be released for that purpose. Upon
receipt of Instructions, State Street will pay, but only from
funds available for such purpose, any such loan upon redelivery
to it of the Assets pledged or hypothecated therefor and upon
surrender of the note or notes evidencing such loan.
2. Upon receipt of Instructions, State Street will release
Assets to the designated borrower; provided, however, that the
Assets will be released only upon deposit with State Street of
full cash collateral as specified in such Instructions, and
that the lending Portfolio will retain the right to any
dividends, interest or distribution on such loaned Assets. Upon
receipt of Instructions and the loaned Assets, State Street
will release the cash collateral to the borrower.
J. Routine Matters. State Street will, in general, attend to all
routine and mechanical matters in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with
the Assets except as may be otherwise provided herein or upon
Instruction from Fund.
K. Deposit Accounts. State Street will open and maintain one or
more special purpose deposit accounts for each Portfolio in the name
of State Street in such banks or trust companies (including, without
limitation, affiliates of State Street) as may be designated by it
or Fund in writing ("Accounts"), subject only to draft or order by
State Street upon receipt of Instructions. State Street will deposit
all monies received by State Street from or for the account of a
Portfolio in an Account maintained for such Portfolio. Subject to
Section 5.L hereof, State Street agrees:
1. To make Fed Funds available to the applicable Portfolio at 9:00
a.m., Kansas City time, on the second business day after
deposit of any check into an Account, in the amount of the
check;
2. To make funds available immediately upon a deposit made by
Federal Reserve wire; and
3. To make funds available on the next business day after deposit
of ACH wires.
L. Income and Other Payments. State Street will:
1. Collect, claim and receive and deposit for the account of the
applicable Portfolio all income (including income from the
Accounts) and other payments which become due and payable on or
after the effective date hereof with respect to the Assets, and
credit the account of such Portfolio in accordance with the
schedule attached hereto as Exhibit A. If, for any reason, a
Portfolio is credited with income that is not subsequently
collected, State Street may reverse that credited amount. If
monies are collected after such reversal, State Street will
credit the Portfolio in that amount;
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with (a) the collection, receipt and deposit of such
income and other payments, including but not limited to the
presentation for payment of all coupons and other income items
requiring presentation; and all other Assets which may mature
or be called, redeemed, retired or otherwise become payable and
regarding which State Street has actual knowledge, or should
reasonably be expected to have knowledge; and (b) the
endorsement for collection, in the name of Fund or a Portfolio,
of all checks, drafts or other negotiable instruments.
State Street, however, will not be required to institute suit or
take other extraordinary action to enforce collection except upon
receipt of Instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or other
actions. State Street will receive, claim and collect all stock
dividends, rights and other similar items and will deal with the
same pursuant to Instructions.
M. Proxies and Notices. State Street will promptly deliver or mail (or
have delivered or mailed) to Fund all proxies properly signed, all
notices of meetings, all proxy statements and other notices,
requests or announcements affecting or relating to Assets and will,
upon receipt of Instructions, execute and deliver or mail (or cause
its nominee to execute and deliver or mail) such proxies or other
authorizations as may be required. Except as provided herein or
pursuant to Instructions hereafter received by State Street, neither
it nor its nominee will exercise any power inherent in any such
Assets, including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of such
Assets, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
N. Disbursements. State Street will pay or cause to be paid, insofar as
funds are available for the purpose, bills, statements and other
obligations of each Portfolio (including but not limited to
obligations in connection with the conversion, exchange or surrender
of Assets, interest charges, dividend disbursements, taxes,
management fees, custodian fees, legal fees, auditors' fees,
transfer agents' fees, brokerage commissions, compensation to
personnel, and other operating expenses of such Portfolio) pursuant
to Instructions setting forth the name of the person to whom payment
is to be made, and the amount and purpose of the payment.
O. Daily Statement of Accounts. State Street will, within a reasonable
time, render to Fund a detailed statement of the amounts received or
paid and of Assets received or delivered for the account of each
Portfolio during each business day. State Street will maintain such
books and records as are necessary to enable it to render, from time
to time upon request by Fund, a detailed statement of the Assets.
State Street will permit, and upon Instruction will cause any
Subcustodian to permit, such persons as are authorized by Fund,
including Fund's independent public accountants, reasonable access
to such records or will provide reasonable confirmation of the
contents of such records, and if demanded, State Street will permit,
and will cause any Subcustodian to permit, federal and state
regulatory agencies to examine the Assets, books and records of the
Portfolios.
P. Appointment of Subcustodians. Notwithstanding any other provisions
hereof:
1. All or any of the Assets may be held in State Street's own
custody or in the custody of one or more other banks or trust
companies (including, without limitation, affiliates of State
Street) acting as Subcustodians as may be selected by State
Street. Any such Subcustodian selected by State Street must
have the qualifications required for a custodian under the 1940
Act. State Street will be responsible to the applicable
Portfolio for any loss, damage or expense suffered or incurred
by such Portfolio resulting from the actions or omissions of
any Subcustodians selected and appointed by State Street
(except Subcustodians appointed at the request of Fund and as
provided in Subsection 2 below) to the same extent State Street
would be responsible to Fund hereunder if it committed the act
or omission itself.
2. Upon request of Fund, State Street will contract with other
Subcustodians reasonably acceptable to State Street for
purposes of (a) effecting third-party repurchase transactions
with banks, brokers, dealers, or other entities through the use
of a common custodian or subcustodian, or (b) providing
depository and clearing agency services with respect to certain
variable rate demand note securities, or (c) for other
reasonable purposes specified by Fund; provided, however, that
State Street will be responsible to Fund for any loss, damage
or expense suffered or incurred by Fund resulting from the
actions or omissions of any such Subcustodian only to the same
extent such Subcustodian is responsible to State Street. Fund
may review State Street's contracts with such Subcustodians.
3. Each Portfolio's foreign securities and cash or cash
equivalents, in amounts deemed by Fund to be reasonably
necessary to effect such Portfolio's foreign securities
transactions, may be held in the custody of one or more banks
or trust companies acting as Subcustodians ("Global
Subcustodian"), and thereafter, pursuant to a written contract
or contracts as approved by Fund, may be transferred to
accounts maintained by any such Global Subcustodian with
foreign custodians ("Foreign Custodian"). State Street will be
responsible to Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or omissions of any
Foreign Custodian only to the same extent such subcustodian is
liable to the Global Subcustodian.
Q. Accounts and Records Property of Fund. State Street acknowledges
that all of the accounts and records maintained by State Street
pursuant hereto are the property of Fund, and will be made available
to Fund for inspection or reproduction within a reasonable period of
time, upon demand. State Street will assist Fund's independent
auditors, or upon the prior written approval of Fund, or upon
demand, any regulatory body, in any requested review of Fund's
accounts and records, provided that Fund will reimburse State Street
for all expenses and employee time invested in any such review
outside of routine and normal periodic reviews. Upon receipt from
Fund of the necessary information or instructions, State Street will
supply information from the books and records it maintains for Fund
that Fund may reasonably request for tax returns, questionnaires,
periodic reports to shareholders and such other reports and
information requests as Fund and State Street may agree upon from
time to time.
R. Adoption of Procedures. State Street and Fund hereby adopt the Funds
Transfer Operating Guidelines attached hereto as Exhibit B. State
Street and Fund may from time to time adopt such additional
procedures as they agree upon, and State Street may conclusively
assume that no procedure approved or directed by Fund, Fund's or
Portfolio's accountants or other advisors conflicts with or violates
any requirements of the prospectus, articles of incorporation and
bylaws or declaration of trust, any applicable law, rule or
regulation, or any order, decree or agreement by which Fund may be
bound. Fund will be responsible for notifying State Street of any
changes in statutes, regulations, rules, requirements or policies
which may impact State Street's responsibilities or procedures under
this Agreement.
S. Advances. Fund will pay on demand any advance of cash or securities
made by State Street or any Subcustodian, in its sole discretion,
for any purpose (including but not limited to securities
settlements, purchase or sale of foreign exchange. or foreign
exchange contracts and assumed settlement) for the benefit of any
Portfolio. Any such cash advance will be subject to an overdraft
charge at the rate set forth in the then-current fee schedule from
the date advanced until the date repaid. As security for each such
advance, Fund hereby grants State Street and such Subcustodian a
lien on and security interest in all Assets at any time held for the
account of the applicable Portfolio, including without limitation
all Assets acquired with the amount advanced. Should Fund fail to
promptly repay the advance, State Street and such Subcustodian may
utilize available cash and dispose of such Portfolio's Assets
pursuant to applicable law to the extent necessary to obtain
reimbursement of the amount advanced and any related overdraft
charges.
T. Exercise of Rights; Tender Offers. Upon receipt of Instructions,
State Street will: (1) deliver warrants, puts, calls, rights or
similar securities to the issuer or trustee thereof, or to the agent
of such issuer or trustee, for the purpose of exercise or sale,
provided that the new Assets, if any, are to be delivered to State
Street; and (2) deposit securities upon invitations for tenders
thereof, provided that the consideration for such securities is to
be paid or delivered to State Street or the tendered securities are
to be returned to State Street.
U. Fund Shares.
1. Fund will deliver to State Street Instructions with respect to
the declaration and payment of any dividend or other
distribution on the shares of capital stock of a Portfolio
("Fund Shares") by a Portfolio. On the date specified in such
Instruction, State Street will pay out of the monies held for
the account of the Portfolio, insofar as it is available for
such purposes, and credit to the account of the Dividend
Disbursing Agent for the Portfolio, the amount specified in
such Instructions.
2. Whenever Fund Shares are repurchased or redeemed by a
Portfolio, Portfolio or its agent will give State Street
Instructions regarding the aggregate dollar amount to be paid
for such shares. Upon receipt of such Instruction, State Street
will charge such aggregate dollar amount to the account of the
Portfolio and either deposit the same in the account maintained
for the purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with such
Instruction. State Street has no duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder accounts or that the proper number of Fund Shares
have been canceled and removed from the shareholder records.
3. Whenever Fund Shares are purchased from Fund, Fund will deposit
or cause to be deposited with State Street the amount received
for such shares. State Street has no duty or responsibility to
determine that Fund Shares purchased from Fund have been added
to the proper shareholder account or that the proper number of
such shares have been added to the shareholder records.
4. INSTRUCTIONS.
A. The term "Instructions", as used herein, means written (including
telecopied, telexed, or electronically transmitted) or oral
instructions which State Street reasonably believes were given by a
designated representative of Fund. Fund will deliver to State
Street, prior to delivery of any Assets to State Street and
thereafter from time to time as changes therein are necessary,
written Instructions naming one or more designated representatives
to give Instructions in the name and on behalf of Fund, which
Instructions may be received and accepted by State Street as
conclusive evidence of the authority of any designated
representative to act for Fund and may be considered to be in full
force and effect until receipt by State Street of notice to the
contrary. Unless such written Instructions delegating authority to
any person to give Instructions specifically limit such authority to
specific matters or require that the approval of anyone else will
first have been obtained, State Street will be under no obligation
to inquire into the right of such person, acting alone, to give any
Instructions whatsoever. If Fund fails to provide State Street any
such Instructions naming designated representatives, any
Instructions received by State Street from a person reasonably
believed to be an appropriate representative of Fund will constitute
valid and proper Instructions hereunder. The term "designated
representative" may include Fund's or a Portfolio's employees and
agents, including investment managers and their employees.
B. No later than the next business day immediately following each oral
Instruction, Fund will send State Street written confirmation of
such oral Instruction. At State Street's sole discretion, State
Street may record on tape, or otherwise, any oral Instruction
whether given in person or via telephone, each such recording
identifying the date and the time of the beginning and ending of
such oral Instruction.
C. Fund will provide, upon State Street's request a certificate signed
by an officer or designated representative of Fund, as conclusive
proof of any fact or matter required to be ascertained from Fund
hereunder. Fund will also provide State Street Instructions with
respect to any matter concerning this Agreement requested by State
Street. If State Street reasonably believes that it could not
prudently act according to the Instructions, or the instruction or
advice of Fund's or a Portfolio's accountants or counsel, it may in
its discretion, with notice to Fund, not act according to such
Instructions.
5. LIMITATION OF LIABILITY OF STATE STREET. State Street is not responsible
or liable for, and Fund will indemnify and hold State Street harmless
from and against, any and all costs, expenses, losses, damages, charges,
counsel fees (including, without limitation, disbursements and the
allocable cost of in-house counsel), payments and liabilities which may
be asserted against or incurred by State Street or for which State Street
may be held to be liable, arising out of or attributable to:
A. State Street's action or failure to act pursuant hereto; provided
that State Street has acted in good faith and with reasonable care;
and provided further, that, in no event is State Street liable for
consequential, special, or punitive damages;
B. State Street's payment of money as requested by Fund, or the taking
of any action which might make it or its nominee liable for payment
of monies or in any other way; provided, however, that nothing
herein obligates State Street to take any such action or expend its
own monies except in its sole discretion;
C. State Street's action or failure to act hereunder upon any
Instructions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed, including any Instruction, communications, data
or other information received by State Street by means of the
Systems, as hereinafter defined, or any electronic system of
communication;
D. State Street's action or failure to act in good faith reliance on
the advice or opinion of counsel for Fund or of its own counsel with
respect to questions or matters of law, which advice or opinion may
be obtained by State Street at the expense of Fund, or on the
Instruction, advice or statements of any officer or employee of
Fund, or Fund's accountants or other authorized individuals, and
other persons believed by it in good faith to be expert in matters
upon which they are consulted;
E. The purchase or sale of any securities or foreign currency
positions. Without limiting the generality of the foregoing, State
Street is under no duty or obligation to inquire into:
1. The validity of the issue of any securities purchased
by or for any Portfolio, or the legality of the purchase
thereof or of foreign currency positions, or evidence of
ownership required by Fund to be received by State Street, or
the propriety of the decision to purchase or the amount paid
therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for any Portfolio, or the propriety of the
amount for which the same are sold; or
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor, the legality
of the repurchase or redemption of any Fund Shares, or the
propriety of the amount to be paid therefor, or the legality of
the declaration of any dividend by Fund, or the legality of the
issue of any Fund Shares in payment of any stock dividend.
F. Any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information provided to
State Street by or on behalf of a Portfolio, or the failure of Fund
to provide, or provide in a timely manner, any accounts, records, or
information needed by State Street to perform its duties hereunder;
G. Fund's refusal or failure to comply with the terms hereof (including
without limitation Fund's failure to pay or reimburse State Street
under Section 5 hereof), Fund's negligence or willful misconduct, or
the failure of any representation or warranty of Fund hereunder to
be and remain true and correct in all respects at all times;
H. The use or misuse, whether authorized or unauthorized, of the
Systems or any electronic system of communication used hereunder, by
Fund or by any person who acquires access to the Systems or such
other systems through the terminal device, passwords, access
instructions or other means of access to such Systems or such other
system which are utilized by, assigned to or otherwise made
available to Fund, except to the extent attributable to any
negligence or willful misconduct by State Street;
I. Any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the
payment of money to be received by State Street on behalf of a
Portfolio until actually received; provided, however, that State
Street will advise Fund promptly if it fails to receive any such
money in the ordinary course of business and will cooperate with
Fund toward the end that such money is received;
J. Except as provided in Section 3.P hereof, loss occasioned by the
acts, omissions, defaults or insolvency of any broker, bank, trust
company, securities system or any other person with whom State
Street may deal; and
K. The failure or delay in performance of its obligations hereunder, or
those of any entity for which it is responsible hereunder, arising
out of or caused, directly or indirectly, by circumstances beyond
the affected entity's reasonable control, including, without
limitation: any interruption, loss or malfunction of any utility,
transportation, computer (hardware or software) or communication
service; inability to obtain labor, material, equipment or
transportation, or a delay in mails; governmental or exchange
action, statute, ordinance, rulings, regulations or direction; war,
strike, riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornadoes, acts
of God or public enemy, revolutions, or insurrection.
6. COMPENSATION. In consideration for its services hereunder, Fund will pay
to State Street the compensation set forth in a separate fee schedule,
incorporated herein by reference, to be agreed to by Fund and State
Street from time to time, and, upon demand, reimbursement for State
Street's cash disbursements and reasonable out-of-pocket costs and
expenses, including attorney's fees and disbursements, incurred by State
Street in connection with the performance of services hereunder. State
Street may charge such compensation against monies held by it for the
account of the Portfolios. State Street will also be entitled to charge
against any monies held by it for the account of the Portfolios the
amount of any loss, damage, liability, advance, overdraft or expense for
which it is entitled to reimbursement from Fund, including but not
limited to fees and expenses due to State Street for other services
provided to Fund by State Street. State Street will be entitled to
reimbursement by Fund for the losses, damages, liabilities, advances,
overdrafts and expenses of Subcustodians only to the extent that (a)
State Street would have been entitled to reimbursement hereunder if it
had incurred the same itself directly, and (b) State Street is obligated
to reimburse the Subcustodian therefor.
7. TERM AND TERMINATION. Either Fund or State Street may terminate this
Agreement by notice in writing, delivered or mailed, postage prepaid, to
the other party and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination
hereof:
A. Fund will pay State Street its fees and compensation due hereunder
and its reimbursable disbursements, costs and expenses paid or
incurred to such date;
B. Fund will designate a successor custodian by Instruction to State
Street by the termination date. In the event no such Instruction has
been delivered to State Street on or before the date when such
termination becomes effective, then State Street may, at its option,
(i) choose as successor custodian a bank or trust company meeting
the qualifications for custodian set forth in the 1940 Act and
having not less than Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits, as shown by its last
published report, or (ii) apply to a court of competent jurisdiction
for the appointment of a successor or other proper relief, or take
any other lawful action under the circumstances; provided, however,
that Fund will reimburse State Street for its costs and expenses,
including reasonable attorney's fees, incurred in connection
therewith; and
C. State Street will, upon payment of all sums due to State Street from
Fund hereunder or otherwise, deliver all Assets, duly endorsed and
in form for transfer, to the successor custodian, or as specified by
the court, at State Street's office. State Street will co-operate in
effecting changes in book-entries at all Depositories. Upon delivery
to a successor or as specified by the court, State Street will have
no further obligations or liabilities hereunder. Thereafter such
successor will be the successor hereunder and will be entitled to
reasonable compensation for its services.
In the event that Assets remain in the possession of State Street after
the date of termination hereof for any reason other than State Street's
failure to deliver the same, State Street is entitled to compensation as
provided in the then-current fee schedule for its services during such
period, and the provisions hereof relating to the duties and obligations
of State Street will remain in full force and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at the address set forth above, or at such other address as Fund may
have designated to State Street in writing, will be deemed to have been
properly given to Fund hereunder. Notices, requests, Instructions and
other writings addressed to State Street at 801 Pennsylvania Avenue,
Kansas City, Missouri 64105, Attention: Custody Department, or to such
other address as it may have designated to Fund in writing, will be
deemed to have been properly given to State Street hereunder.
9. THE SYSTEMS; CONFIDENTIALITY.
A. If State Street provides Fund and its designated investment
advisors, consultants or other third parties authorized by State
Street who agree to abide by the terms of this Agreement
("Authorized Designees") with access to the computerized investment
portfolio custody systems used by State Street ("Systems") on a
remote basis for the purpose of obtaining and analyzing reports and
information (the "Remote Access Services") or if State Street and
Fund agree to utilize any electronic system of communication, Fund
agrees to comply, and to cause its Authorized Designees to comply,
with remote access operating standards and procedures and with user
identification or other password control requirements and other
security procedures as may be issued from time to time by State
Street for use of the System and access to the Remote Access
Services. Fund agrees to advise State Street immediately in the
event that it learns or has reason to believe that any person to
whom Fund has given access to the System or the Remote Access
Services has violated or intends to violate the terms of this
Agreement and will cooperate with State Street in seeking injunctive
or other equitable relief.
B. State Street may from time to time agree to make available to Fund
additional Systems. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include,
and this Agreement shall govern, the Fund's access to and use of any
additional System made available by State Street and/or accessed by
the Fund.
C. The System and Remote Access Services described herein and the
databases, computer programs, screen formats, report formats,
interactive design techniques, formulae, processes, systems,
software, know-how, algorithms, programs, training aids, printed
materials, methods, books, records, files, documentation and other
information made available to Fund by State Street as part of the
Remote Access Services and through the use of the System and all
copyrights, patents, trade secrets and other proprietary rights of
State Street related thereto are the exclusive, valuable and
confidential property of State Street and its relevant licensors
(the "Proprietary Information"). Fund agrees on its behalf and on
behalf of its Authorized Designees to keep the Proprietary
Information confidential and to limit access to its employees and
Authorized Designees (under a similar duty of confidentiality) who
require access to the System for the purposes intended. In the event
of termination of this Agreement, Fund will return to State Street
all copies of documentation and other Proprietary Information in its
possession or in the possession of its Authorized Designees. The
foregoing shall not apply to Proprietary Information in the public
domain or required by law to be made public.
D. Fund agrees to use the Remote Access Services only in connection
with the proper purposes of this Agreement. Fund will not, and will
cause its employees and Authorized Designees not to, (i) permit any
third party to use the System or the Remote Access Services, (ii)
sell, rent, license or otherwise use the System or the Remote Access
Services in the operation of a service bureau or for any purpose
other than as expressly authorized under this Agreement, (iii) use
the System or the Remote Access Services for any fund, trust or
other investment vehicle without the prior written consent of State
Street, or (iv) allow or cause any information transmitted from
State Street's databases, including data from third party sources,
available through use of the System or the Remote Access Services,
to be redistributed or retransmitted for other than use for or on
behalf of Fund, as State Street's Customer.
E. Fund will not, and will cause its employees and Authorized Designees
not to, modify the System in any way, enhance or otherwise create
derivative works based upon the System, nor will Fund or its
Authorized Designees reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the System.
F. Fund acknowledges that the disclosure of any Proprietary
Information, or of any information which at law or equity ought to
remain confidential, will immediately give rise to continuing
irreparable injury to State Street inadequately compensable in
damages at law and that State Street shall be entitled to obtain
immediate injunctive relief against the breach or threatened breach
of any of the foregoing undertakings, in addition to any other legal
remedies which may be available.
G. State Street represents and warrants that it is the owner of and has
the right to grant access to the System and to provide the Remote
Access Services contemplated herein. Because of the nature of
computer information technology and the necessity of relying upon
third party sources, and data and pricing information obtained from
third parties, the System and Remote Access Services are provided
"AS IS", and Fund and its Authorized Designees shall be solely
responsible for the investment decisions, regulatory reports and
statements produced using the Remote Access Services. State Street
and its relevant licensors will not be liable to Fund or its
Authorized Designees for any direct or indirect, special,
incidental, punitive or consequential damages arising out of or in
any way connected with the System or the Remote Access Services, nor
shall either party be responsible for delays or nonperformance under
this Agreement arising out of any cause or event beyond such party's
control.
H. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, STATE STREET FOR
ITSELF AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED
HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
I. State Street will defend or, at its option, settle any claim or
action brought against Fund to the extent that it is based upon an
assertion that access to the System or use of the Remote Access
Services by Fund under this Agreement constitutes direct
infringement of any United States patent or copyright or
misappropriation of a trade secret, provided that Fund notifies
State Street promptly in writing of any such claim or proceeding and
cooperates with State Street in the defense of such claim or
proceeding. Should the System or the Remote Access Services or any
part thereof become, or in State Street's opinion be likely to
become, the subject of a claim of infringement or the like under the
patent or copyright or trade secret laws of the United States, State
Street shall have the right, at State Street's sole option, to (i)
procure for Fund the right to continue using the System or the
Remote Access Services, (ii) replace or modify the System or the
Remote Access Services so that the System or the Remote Access
Services becomes noninfringing, or (iii) terminate the Remote Access
Services without further obligation.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio, the
following provisions apply:
A. Each Portfolio will be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered
hereby, every reference herein to Fund is deemed to relate solely to
the particular Portfolio to which such transaction relates. Under no
circumstances will the rights, obligations or remedies with respect
to a particular Portfolio constitute a right, obligation or remedy
applicable to any other Portfolio. The use of this single document
to memorialize the separate agreement as to each Portfolio is
understood to be for clerical convenience only and will not
constitute any basis for joining the Portfolios for any reason.
B. Fund may appoint State Street as its custodian for additional
Portfolios from time to time by written notice, provided that State
Street consents to such addition. Rates or charges for each
additional Portfolio will be as agreed upon by State Street and Fund
in writing.
11. MISCELLANEOUS.
A. This Agreement will be construed according to, and the rights and
liabilities of the parties hereto will be governed by, the laws of
the Commonwealth of Massachusetts, without reference to the choice
of laws principles thereof.
B. All terms and provisions hereof will be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended
hereunder, and the provisions of Section 9 hereof are intended to
and will continue after and survive the expiration, termination or
cancellation hereof.
D. No provisions hereof may be amended or modified in any manner except
by a written agreement properly authorized and executed by each
party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions hereof or to enforce any rights resulting from
any breach of any of the terms or conditions hereof, including the
payment of damages, will not be construed as a continuing or
permanent waiver of any such terms, conditions, rights or
privileges, but the same will continue and remain in full force and
effect as if no such forbearance or waiver had occurred. No waiver,
release or discharge of any party's rights hereunder will be
effective unless contained in a written instrument signed by the
party sought to be charged.
F. The captions herein are included for convenience of reference only,
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which is deemed an original but all of which together constitute one
and the same instrument.
H. If any provision hereof is determined to be invalid, illegal, in
conflict with any law or otherwise unenforceable, the remaining
provisions hereof will be considered severable and will not be
affected thereby, and every remaining provision hereof will remain
in full force and effect and will remain enforceable to the fullest
extent permitted by applicable law.
I. The benefits of this Agreement may not be assigned by either party
nor may either party delegate all or a portion of its duties
hereunder without the prior written consent of the other party.
Notwithstanding the foregoing, Fund agrees that State Street may
delegate all or a portion of its duties to an affiliate of State
Street, provided that such delegation will not reduce the
obligations of State Street under this Agreement.
J. Neither the execution nor performance hereof will be deemed to
create a partnership or joint venture by and between State Street
and Fund or any Portfolio.
K. This Agreement shall supercede and replace the Custody Agreement by
and between Investors Fiduciary Trust Company and Sentinel Group
Funds, Inc. dated December 1, 1989 and the Custody Agreement by and
between Investors Fiduciary Trust Company and Sentinel Pennsylvania
Tax-Free Trust dated December 1, 1989. Investors Fiduciary Trust
Company assigned each of these agreements to State Street Bank and
Trust Company effective January 1, 2000. Except as specifically
provided herein, this Agreement does not in any way affect any other
agreements entered into among the parties hereto and any actions
taken or omitted by either party hereunder will not affect any
rights or obligations of the other party hereunder.
L. If Fund is a Trust, notice is hereby given that a copy of Fund's
Trust Agreement and all amendments thereto is on file with the
Secretary of State of the state of its organization; that this
Agreement has been executed on behalf of Fund by the undersigned
duly authorized representative of Fund in his/her capacity as such
and not individually; and that the obligations of this Agreement are
binding only upon the assets and property of Fund and not upon any
trustee, officer of shareholder of Fund individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
STATE STREET BANK AND TRUST COMPANY SENTINEL GROUP FUNDS, INC.
By:_______________________________ By:_________________________________
Title:____________________________ Title:______________________________
SENTINEL PENNSYLVANIA TAX-FREE TRUST
By:_________________________________
Title:______________________________
SENTINEL VARIABLE PRODUCTS TRUST
By:_________________________________
Title:______________________________
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
Foreign--Income will be credited contractually on pay day in the markets
noted with Contractual Income Policy. The markets noted with Actual
income policy will be credited income when it is received.
<TABLE>
Market Income Policy Market Income Policy Market Income-Policy
<S> <C> <C> <C> <C> <C>
Argentina Actual Hong Kong Contractual Poland Actual
Australia Contractual Hungary Actual Portugal Contractual
Austria Contractual India Actual Russia Actual
Bahrain Actual Indonesia Actual Singapore Contractual
Bangladesh Actual Ireland Actual Slovak Republic Actual
Belgium Contractual Israel Actual South Africa Actual
Bermuda Actual Italy Contractual South Korea Actual
* Bolivia Actual Ivory Coast Actual Spain Contractual
Botswana Actual * Jamaica Actual Sri Lanka Actual
Brazil Actual Japan Contractual Swaziland Actual
Canada Contractual Jordan Actual Sweden Contractual
Chile Actual Kenya Actual Switzerland Contractual
China Actual Lebanon Actual Taiwan Actual
Colombia Actual Luxembourg Actual Thailand Actual
Cyprus Actual Malaysia Actual * Trinidad & Actual
Tobago
Czech Republic Actual Mauritius Actual * Tunisia Actual
Denmark Contractual Mexico Actual Turkey Actual
Ecuador Actual Morocco Actual United Kingdom Contractual
Egypt Actual Namibia Actual United States See Attached
**Euroclear Contractual/ Netherlands Contractual Uruguay Actual
Actual
Euro CDs Actual New Zealand Contractual Venezuela Actual
Finland Contractual Norway Contractual Zambia Actual
France Contractual Oman Actual Zimbabwe Actual
Germany Contractual Pakistan Actual
Ghana Actual Peru Actual
Greece Actual Philippines Actual
* Market is not 17F-5 eligible
** For Euroclear, contractual income paid only in markets listed with
Income Policy of Contractual.
United States--
Income Type DTC FED PTC Physical
Dividends Contractual N/A N/A Actual
Fixed Rate Interest Contractual Contractual N/A Actual
Variable Rate Interest Contractual Contractual N/A Actual
GNMA I N/A N/A Contractual PD +1 N/A
GNMA II N/A N/A Contractual PD * * * N/A
Mortgages Actual Contractual Contractual Actual
Maturities Actual Contractual N/A Actual
</TABLE>
Exceptions to the above Contractual Income Policy include securities
that are:
< Involved in a trade whose settlement either failed, or is
pending over the record date, (excluding the United States);
< On loan under a self directed securities lending program
other than State Street's own vendor lending program; Known to
be in a condition of default, or suspected to present a risk of
default or payment delay;
< In the asset categories, without limitation, of Private
Placements, Derivatives, Options, Futures, CMOs, and Zero Coupon
Bonds.
< Securities whose amount of income and redemption cannot
be calculated in advance of payable date, or determined in
advance of actual collection, examples include ADRs;
< Payments received as the result of a corporate action,
not limited to, bond calls, mandatory or optional puts, and
tender offers.
*** For GNMA II securities, if the 19th day of the month is a
business day, Payable/Distribution Date is the next business
day. If the 19th is not a business day, but the 20th is a
business day, Payable/Distribution date is the first business
day after the 20th. If both the 19th and 20th are not business
days, Payable/Distribution will be the next business day
thereafter.
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: State Street Bank and Trust Company and
affiliates ("SSB") is authorized to promptly debit Client's account(s) upon
the receipt of a payment order in compliance with any of the Security
Procedures chosen by the Client, from those offered on the attached selection
form (and any updated selection forms hereafter executed by the Client), for
funds transfers and in the amount of money that SSB has been instructed to
transfer. SSB is hereby instructed to accept funds transfer instructions only
via the delivery methods and Security Procedures indicated on the attached
selection form (and any updated selection forms hereafter executed by the
Client). The Client agrees that the Security Procedures are reasonable and
adequate for its wire transfer transactions and agrees to be bound by any
payment orders, amendments and cancellations, whether or not authorized,
issued in its name and accepted by SSB after being confirmed by any of the
selected Security Procedures. The Client also agrees to be bound by any other
valid and authorized payment order accepted by SSB. SSB shall execute payment
orders in compliance with the selected Security Procedures and with the
Client's/Investment Manager's instructions on the execution date provided that
such payment order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. SSB will use
reasonable efforts to execute on the execution date payment orders received
after the customary deadline, but if it is unable to execute any such payment
order on the execution date, such payment order will be deemed to have been
received on the next business day.
2. SECURITY PROCEDURES: The Client acknowledges that the selected
Security Procedures were selected by the Client from Security Procedures
offered by SSB. The Client shall restrict access to confidential information
relating to the Security Procedures to authorized persons as communicated in
writing to SSB. The Client must notify SSB immediately if it has reason to
believe unauthorized persons may have obtained access to such information or
of any change in the Client's authorized personnel. SSB shall verify the
authenticity of all instructions according to the selected Security
Procedures.
3. ACCOUNT NUMBERS: SSB shall process all payment orders on the basis of
the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern. Financial
institutions that receive payment orders initiated by SSB at the instruction
of the Client may also process payment orders on the basis of account numbers,
regardless of any name included in the payment order. SSB will also rely on
any financial institution identification numbers included in any payment
order, regardless of any financial institution name included in the payment
order.
4. REJECTION: SSB reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance
in the account to be charged at the time of SSB's receipt of such payment
order; (b) if initiating such payment order would cause SSB, in SSB's sole
judgment, to exceed any applicable volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers; or (c) if SSB, in good faith, is
unable to satisfy itself that the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: SSB shall use reasonable efforts to act on
all authorized requests to cancel or amend payment orders received in
compliance with the selected Security Procedures provided that such requests
are received in sufficient time to afford SSB a reasonable opportunity to act
prior to executing the payment order. However, SSB assumes no liability if the
request for amendment or cancellation cannot be satisfied by SSB's reasonable
efforts.
6. ERRORS: SSB shall assume no responsibility for failure to detect any
erroneous payment order provided that SSB complies with the payment order
instructions as received and SSB complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: SSB shall assume no responsibility for
lost interest with respect to the refundable amount of any unauthorized
payment order, unless SSB is notified of the unauthorized payment order within
thirty (30) days of notification by SSB of the acceptance of such payment
order. In no event (including but not limited to failure to execute a payment
order) shall SSB be liable for special, indirect or consequential damages,
even if advised of the possibility of such damages.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS:
When the Client initiates or receives ACH credit and debit entries pursuant to
these Guidelines and the rules of the National Automated Clearing House
Association and the Mid-America Payment Exchange or other similar body, SSB or
its agent will act as an Originating Depository Financial Institution and/or
Receiving Depository Financial Institution, as the case may be, with respect
to such entries. Credits given with respect to an ACH credit entry are
provisional until final settlement for such entry is received from the Federal
Reserve Bank. If such final settlement is not received, the Client agrees to
promptly refund the amount credited Procedures to the Client in connection
with such entry, and the party making payment to the Client via such entry
shall not be deemed to have paid the amount of the entry.
9. CONFIRMATIONS: Confirmation of SSB's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through SSB's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order
within 30 days.
10. MISCELLANEOUS: SSB may use the Federal Reserve System Fedwire to
execute payment orders, and any payment order carried in whole or in part
through Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. SSB and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of SSB or the
Client, but the party responsible for the erroneous payment shall bear all
costs and expenses incurred in trying to effect such recovery. These
Guidelines may not be amended except by a written agreement signed by the
parties.
SECURITY PROCEDURES SELECTION FORM
Please select at least two of the funds transfer security procedures indicated
below.
\ \ SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions
that provides telecommunication services for its membership.
Participation is limited to securities brokers and dealers, clearing and
depository institutions, recognized exchanges for securities, and
investment management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages, transmission
errors, loss of confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for
existing SWIFT members.
\ \ REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer
(CPU-CPU) data communications between the Client and/or its agent and SSB
and/or its agent. Security procedures include encryption and/or the use
of a test key by those individuals authorized as Automated Batch
Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing CPU-CPU transmissions. This delivery mechanism is typically
used for high-volume business such as shareholder redemptions and
dividend payments.
\ \ AUTOMATED CLEARING HOUSE (ACH) SSB or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The transactions
contained on each transmission or tape must be authenticated by the
Client. The transmission is sent from the Client's or its agent's system
to SSB's or its agent's system with encryption.
\ \ REPETITIVE WIRES
For situations where funds are transferred periodically from an existing
authorized account to the same payee (destination bank and account
number) and only the date and currency amount are variable, a repetitive
wire may be implemented. Repetitive will be subject to a $10 million
limit. If the payment order exceeds the $10 million limit, the
instructions must be reconfirmed annually. Clients may establish
Repetitive Wires by following the agreed upon security procedures as
described by Telephone Confirmation (Call Back) or Test Key. This
alternative is recommended whenever funds are Type or Print Name
frequently transferred between the same two accounts. If this option is
selected, choose either Telephone Confirmation or Test Key to be used as
a secondary Title procedure when over $10 million.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts. If this option is selected, choose either
Telephone Confirmation or Test Key to be used as a secondary procedure
when over $10 million.
\ \ STANDING INSTRUCTIONS Funds are transferred by SSB to a counter party
on the Client's established list of authorized counter parties. Only the
date and the dollar amount are variable. Clients may establish Standby
Instructions by following the agreed upon security procedures as
described by Telephone Confirmation (Call Back) or Test Key. Additional
paperwork will be required from insurance Clients using 1031 drawdowns.
This option is used for transactions that include but are not limited to
Foreign Exchange Contracts, Time Deposits and Tri-Party Repurchase
Agreements. If this option is selected, choose either Telephone
Confirmation or Test Key to be used as a secondary procedure when over
$10 million.
\ \ TELEPHONE CONFIRMATION (CALL BACK)
This procedure requires Clients to designate individuals as authorized
initiators and authorized verifiers. SSB will verify that the instruction
contains the signature of an authorized person and prior to execution of
the payment order, will contact someone other than the originator at the
Client's location to authenticate the instruction.
Selection of this alternative is appropriate for Clients who do not have
the capability to use other security procedures. Please complete the
Telephone Confirmation Instructions attached as a Schedule hereto.
\ \ TEST KEY
Test Key confirmation will be used to verify all non-repetitive funds
transfer instructions received via facsimile or phone. SSB will provide
test keys if this option is chosen. SSB will verify that the instruction
contains the signature of an authorized person and prior to execution of
the payment order, will authenticate the test key provided with the
corresponding test key at SSB.
Selection of this alternative is appropriate for Clients who do not hvae
the capability to use other security procedures.
The individual signing below must be authorized to sign contract on behalf of
the client. The execution of payment orders under the selected Security
Procedures is governed by the Funds Transfer Operating Guidelines, which are
incorporated by reference.
CLIENT
By:___________________________
Authorized Signature
______________________________
Type or Print Name
______________________________
Title
______________________________
Date
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT/INVESTMENT MANAGER: ____________________________________________________
Company Name
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
Name Name
Address Address
City/State/Zip Code City/State/Zip Code
Telephone Number Telephone Number
Facsimile Number Facsimile Number
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please Type or Print) - Please provide a listing of
your staff members who are currently authorized to INITIATE wire transfer
instructions:
NAME TITLE SPECIMEN SIGNATURE
--------------------- -------------------------- ---------------------
--------------------- -------------------------- ---------------------
-
--------------------- -------------------------- ---------------------
--------------------- -------------------------- ---------------------
--------------------- -------------------------- ---------------------
Authorized Verifiers (Please Type or Print) - Please provide a listing of your
staff members who will be CALLED BACK to verify the initiation of repetitive
wires of $10 million or more and all non-repetitive wire instructions:
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
-------------------- -------------------------- ----------------------
-------------------- -------------------------- ----------------------
-------------------- -------------------------- ----------------------
-------------------- -------------------------- ----------------------
-------------------- -------------------------- ----------------------
SECURITY PROCEDURES SELECTION FORM 1998
Please select one or more of the funds transfer security procedures indicated
below.
\ \ SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions
that provides telecommunication services for its membership.
Participation is limited to securities brokers and dealers, clearing and
depository institutions, recognized exchanges for securities, and
investment management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages, transmission
errors, loss of confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for
existing SWIFT members.
\ \ REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer
(CPU-CPU) data communications between the Client and/or its agent and
IFTC and/or its agent. Security procedures include encryption and/or the
use of a test key by those individuals authorized as Automated Batch
Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing CPU-CPU transmissions. This delivery mechanism is typically
used for high-volume business such as shareholder redemptions and dividend
payments.
\ \ TELEPHONE CONFIRMATION (CALL BACK)
This procedure requires Clients to designate individuals as authorized
initiators and authorized verifiers. IFTC will verify that the
instruction contains the signature of an authorized person and prior to
execution of the payment order, will contact someone other than the
originator at the Client's location to authenticate the instruction.
Selection of this alternative is appropriate for Clients who do not have
the capability to use other security procedures.
\ \ TEST KEY
Test Key confirmation will be used to verify all non-repetitive funds
transfer instructions received via facsimile or phone. IFTC will provide
test keys if this option is chosen. IFTC will verify that the instruction
contains the signature of an authorized person and prior to execution of
the payment order, will authenticate the test key provided with the
corresponding test key at IFTC.
Selection of this alternative is appropriate for Clients who do not have
the capability to use other security procedures.
\ \ REPETITIVE WIRES
For situations where funds are transferred periodically from an existing
authorized account to the same payee (destination bank and account
number) and only the date and currency amount are variable, a repetitive
wire may be implemented. Repetitive wires will be subject to a $10
million limit. If the payment order exceeds the $10 million limit, the
instruction will be confirmed by telephone or test key prior to
execution. Repetitive wire instructions must be reconfirmed annually.
Clients may establish Repetitive Wires by following the agreed upon
security procedures as described by Telephone Confirmation (Call Back) or
Test Key.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts.
\ \ STANDING INSTRUCTIONS
Funds are transferred by IFTC to a counter party on the Client's
established list of authorized counter parties. Only the date and the
dollar amount are variable. Clients may establish Standby Instructions by
following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key.
This option is used for transactions that include but are not limited to
Foreign Exchange Contracts, Time Deposits and TriParty Repurchase
Agreements.
SECURITY PROCEDURES SELECTION FORM 1998
\ \ AUTOMATED CLEARING HOSE (ACH)
IFTC or its agent receives an automated transmission from a Client for
the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission
or tape must be authenticated by the Client. The transmission is sent
from the Client's or its agent's system to IFTC's or its agent's system
with encryption.
The individual signing below must be authorized to sign contract on behalf of
each of the clients named in Schedule A attached. The execution of payment
orders under the selected Security Procedures is governed by IFTC's Funds
Transfer Operating Guidelines, which are incorporated by reference.
EACH OF THE CLIENTS NAMED ON SCHEDULE A ATTACHED HERETO
By:__________________ ___________________ _______________ _______________
Type or Print Name Authorized Signature Title Date
CONTACT INFORMATION Whom shall we contact to Implement your selection(s)?
_____NT OPERATIONS CONTACT ALTERNATE CONTACT
------------------------------------ -----------------------------------
Name Name
------------------------------------ -----------------------------------
Address Address
------------------------------------ -----------------------------------
City/State/Zip Code City/State/Zip Code
------------------------------------ -----------------------------------
Telephone Number Telephone Number
------------------------------------ -----------------------------------
Facsimile Number Facsimile Number
-----------------------------------
_________ Number
callback
To: Bonnie Johnson -- IFTC
From: Thomas P. Malone -- Sentinel Group Funds
Date: March 3, 1998
Telephone Confirmation Phone #'s
Tom Malone -- V.P. and Treasurer 802.229.7330
Scott Wheeler -- A.V.P. and Asst Treasurer 802.229.3587
Christie Keene -- Senior Portfolio Acct 802.229.7052
Authorized Signatures
Thomas P. Malone
Scott G. Wheeler
Christie Keene
<PAGE>
Exhibit (h)
FUND SERVICES AGREEMENT
AGREEMENT, dated as of the 27th day of July, 2000, made by and
between SENTINEL VARIABLE PRODUCTS TRUST, a Delaware business trust and a
registered open-end investment company (the "Trust"), and SENTINEL
ADMINISTRATIVE SERVICE CORPORATION, a Vermont corporation ("SASC").
WITNESSETH:
WHEREAS, the Trust desires to engage SASC to provide it with various
fund accounting and financial administration services, and transfer agent
services; and
WHEREAS, SASC is willing to perform such functions upon terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Engagement; Effective Date. The Trust hereby engages SASC to
provide the services described in sections 2 and 3 below, subject to the
supervision and control of the Board of Trustees of the Trust. SASC hereby
accepts such engagement and agrees, at its own expense, to render such
services and assume the obligations herein set forth, for the compensation
described in section 6 below. This Agreement will be effective as of the date
the trust begins investment operations.
2. Fund Accounting and Financial Administration Services.
(a) SASC shall maintain and keep current all books, records, accounts
and other documents required by Rule 31a-1 and Rule 31a-2 under the Investment
Company Act of 1940, as amended (the "Act"), or otherwise necessary or
advisable for compliance with applicable regulations, with respect to all
funds of the Trust, including but not limited to the following:
(1) Cash Receipts Journal
(2) Cash Disbursements Journal
(3) Dividend Record
(4) Purchase and Sales - Portfolio Securities Journal
(5) Subscription and Redemption Journals
(6) Security Ledgers
(7) Broker Ledger
(8) General Ledger
(9) Daily Expense Accruals
(10) Daily Income Accruals
(11) Securities and Monies borrowed or loaned and collateral
therefor
(12) Trial Balances
(b) With respect to all funds of the Trust, SASC will make the proper
accounting entries and notify the Trust's Custodian of all cash and portfolio
items. The Trust or its investment advisor shall see that confirmations of all
transactions are sent to SASC, which will verify the confirmations against
information supplied by the Trust or its investment advisor and forward them
to the Custodian. SASC shall notify the Trust and its investment advisor of
any discrepancy but shall incur no responsibility or liability for such
discrepancy, and the Trust or its investment advisor shall cause any necessary
corrections to be made.
(c) SASC shall calculate the net asset values of each fund of the
Trust, in accordance with the Trust's then current prospectus, once daily.
SASC shall have no responsibility or liability for prices quoted by recognized
financial information services or broker-dealers, or for prices developed from
information supplied by the Trust or its investment advisor or upon the
instructions of the Trust or its investment advisor.
(d) At the end of each month, the Trust or its investment advisor
will require the Custodian to forward to SASC a monthly statement of cash and
portfolio transactions, which will be reconciled with the Trust's books and
records maintained by SASC. SASC will report any discrepancies to the
Custodian, and report any unreconciled items to the Trust and its investment
advisor.
(e) SASC shall supply daily and periodic reports to the Trust and its
investment advisor, with respect to all funds, as required by regulation for
the Trust to maintain, or as reasonably requested by the Trust or its
investment advisor.
(f) With respect to all funds of the Trust, SASC shall reconcile
periodically its records of share purchases, redemptions and total shares
outstanding with those of the transfer agent (which may be SASC acting
pursuant to section 3 below), and certify at least monthly to the Trust the
reconciled share balance outstanding.
(g) SASC shall supervise relations between the Trust and the
Custodian generally.
(h) SASC shall maintain the qualification of the Trust's shares under
the so-called "blue sky" laws of each state, unless the Trust informs it of
its decision not to qualify under the laws of a specified state or states.
(i) SASC shall make its personnel available to attend all meetings of
the Board of Trustees of the Trust, to provide financial information to the
Board, and to develop and present recommended dividends and capital gains
distributions for each series of the Trust to the Board.
(j) SASC shall participate at its own expense in investment company
industry activities on behalf of the Trust.
(k) SASC shall monitor legal and other developments applicable to
investment companies, consulting with outside counsel and independent
accountants when necessary.
(l) SASC shall participate, with the assistance of the Trust's
investment advisor, in the preparation of the Trust's registration statement
amendments, prospectuses, annual and semi-annual reports to shareholders, and
proxy statements, including without limitation preparation of annual and
semi-annual financial statements and other financial information relating to
the Trust for inclusion in such documents.
(m) SASC shall monitor and facilitate auditing and other services
provided by independent accountants, and review with them any recommendations
or changes in accounting records or controls, and monitor and facilitate
regulatory examinations.
3. Transfer Agency Services.
(a) SASC shall serve as the transfer agent for the Trust. Its duties
as transfer agent shall include all the services listed in paragraphs (b) and
(c) below. SASC shall report regularly to the Board of Trustees of the Trust
with respect to the services provided under this section.
(b) SASC shall service the Trust's shareholder accounts in accordance
with the Trust's prospectus and statement of additional information, including
all the following functions:
(1) Open, maintain and close shareholder accounts, including
accounts for the various subaccounts of the National Life Insurance
Company separate accounts investing in the Trust's funds, and where
applicable, accounts for National Life Insurance Company's general
account.
(2) Purchase shares for shareholders (including purchases
pursuant to automatic investment plans).
(3) Pay to the Trust's custodian the net asset value per share
for shares purchased, out of the funds received from shareholders
for such purchases.
(4) Maintain records showing the name, address, taxpayer
identification number, and number of shares held for each
shareholder.
(5) Reinvest or disburse in cash, as directed by the
shareholder, dividends and other distributions.
(6) Establish the proper registration of ownership of shares.
(7) Make transfers from time to time upon the books of the
Trust in accordance with properly executed transfer instructions
furnished to SASC.
(8) Maintain and furnish to the Trust such shareholder
information as the Trust may reasonably request for the purpose of
compliance with the applicable tax and securities laws of various
jurisdictions.
(9) Maintain continuous proof of the outstanding shares of the
Trust.
(c) In accordance with the provisions of the Trust's Prospectus and
Statement of Additional Information, SASC will provide the redemption service
for the Trust, which will include the following functions:
(1) Where applicable, establish accounts payable based on
information furnished to SASC on behalf of the Trust: for example,
copies of trade confirmations and other documents deemed necessary
or desirable by SASC on the first business day following the trade
date.
(2) Receive for redemption and process either (a) written
authorizations, or (b) telephone authorizations, in each case from
authorized personnel of National Life Insurance Company.
(3) Verify that (a) there are sufficient shares in an account
to cover redemption requests, and (b) payment of the purchase price
of shares being redeemed has been received.
(4) Transfer the redeemed shares to the Trust's treasury stock
account, or if applicable, cancel such shares for retirement.
(5) Pay the applicable redemption price to the shareholder
account in accordance with the Trust's Prospectus on or before the
seventh calendar day succeeding any receipt of valid requests for
redemption.
(6) Notify the Trust and the Distributor for the Trust of the
total number of shares presented and covered by such requests within
one business day following receipt.
(7) Produce periodic reports of unsettled items, if any .
(8) Adjust unsettled items, if any, for dividends and
distributions.
(9) Report to the Trust any information requested by the Trust
which must be included in the Trust's N-SAR.
4. Nonexclusivity. SASC's services to the Trust hereunder are not to
be deemed exclusive and SASC shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.
5. National Life Services. National Life Insurance Company and its
subsidiaries may furnish to SASC, in order to better enable it to fulfill its
obligations hereunder, office space, personnel and other servcies as are
requested by SASC, in all cases for a reasonable charge. SASC will present the
details of any such arrangements to the Board of Trustees of the Trust.
6. Compensation.
(a) As compensation for the services to be rendered under section 2
hereunder, the Trust will pay to SASC, in twelve monthly installments due on
the first day of each month for the preceding month, a fee at an annual rate
of 0.10% of the average daily net assets of the Trust for the applicable
month. In addition to the fee provided for in this paragraph, the Trust shall
be responsible for all charges of outside pricing services used by SASC in
connection with the performance of its duties hereunder.
(b) SASC's annual fee for the services provided under section 3 above
shall be $20,000. Such fee shall be paid in twelve monthly installments due on
the first day of each month for the preceding month. For the calendar year
beginning January 1, 2003, and subsequent years, the base fee of $20,000 shall
be subject to increase by an amount not in excess of the percentage increase
in the Consumer Price Index, All Urban Consumers, Boston region, as published
by the United States Department of Labor for the most recent twelve months for
which data are available at the time of the last Board of Trustees meeting in
a calendar year, or if such figure is not available, a similar measure of
general inflation as may be agreed upon by SASC and the Board of Trustees of
the Trust. The amounts of any increases pursuant to the immediately preceding
sentence shall be subject to specific approval of the disinterested members of
the Board of Trustees of the Trust. In addition, for all periods the Trust
shall reimburse SASC for all out-of-pocket expenses incurred by SASC.
7. Indemnities. SASC, in performing its obligations under this
Agreement, shall incur no liability for any actions taken or omitted in good
faith and without negligence and the Trust shall indemnify and hold harmless
SASC and its officers, directors and employees from any and all loss,
liability and expense, including any legal expenses, arising out of SASC's
performance under this Agreement other than that resulting from SASC's
negligence. SASC shall indemnify and hold harmless the Trust and its
directors, officers and employees from any and all loss liability and expense,
including any legal expenses, arising out of SASC's negligence or willful
misconduct in the performance of its duties under this Agreement.
8. Ownership of Records. SASC acknowledges that all records
maintained for the Trust hereunder are the sole and exclusive property of the
Trust, and upon termination of this Agreement for any reason SASC will
promptly segregate such records and deliver them to the Trust.
9. Affiliations of SASC. It is understood that the directors and
officers of the Trust may be directors or officers of SASC or an entity under
common control, including National Life Insurance Company, or any affiliate
thereof, or otherwise be interested in SASC, and that the existence of such
dual interest shall not affect the validity of this Agreement or any
transactions hereunder.
10. Renewal or Termination. This agreement shall be in effect until
December 31, 2001, and shall continue thereafter from year to year, subject to
prior termination as provided herein, but only so long as its continuance
shall be approved specifically at least annually by the Board of Trustees of
the Trust, including specific approval (i) by a majority of the Trustees who
are not interested persons of a party to this Agreement (other than as
Trustees of the Trust) by votes cast in person at a meeting specifically
called for such purpose (a "Trustee Vote") or (ii) as to each class of the
issued and outstanding voting securities of the Trust by a majority of such
class and a Trustee Vote. This Agreement may at any time be terminated as to
all funds of the Trust or as to any one or more funds of the Trust on sixty
days' written notice to SASC either by vote of the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of
affected funds of the Trust. This Agreement shall terminate automatically in
the event of its assignment. SASC may terminate this Agreement on sixty days'
written notice to the Trust. Any termination hereunder shall be without the
payment of any penalty.
11. Miscellaneous. This Agreement shall be subject to all applicable
provisions of law, including in particular, but without limitation, the Act.
To the extent that any provisions herein conflict with any applicable
provision of law, the latter shall control. This Agreement shall be construed
in accordance with, and governed by, the laws of the state of Vermont. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument. This Agreement may be amended only by an instrument in writing
duly executed and delivered by each party hereto, and such instrument must be
approved by (i) an affirmative vote of a majority of each class of the
outstanding voting securities of the Trust and (ii) by a Trustee Vote.
IN WITNESS WHEREOF, the Trust and SASC have executed this Agreement
as of the day and year first above written.
SENTINEL VARIABLE PRODUCTS TRUST
By ____________________________
Thomas H. MacLeay
Chairman
SENTINEL ADMINISTRATIVE SERVICE
CORPORATION
By_____________________________
Joseph M. Rob
Chairman
<PAGE>
Exhibit (i)
BROWN & WOOD LLP
One World Trade Center
New York, NY 10048-0557
Telephone: 212-839-5300
Facsimile: 212-839-5599
October 18, 2000
Sentinel Variable Products Trust
National Life Drive
Montpelier, VT 05604
Ladies and Gentlemen:
We have acted as counsel for Sentinel Variable Products Trust, a Delaware
business trust (the "Trust"), in connection with the organization of the Trust
and its registration as an open-end investment company under the Investment
Company Act of 1940, as amended. This opinion is being furnished in connection
with the registration of an indefinite number of shares of beneficial
interest, consisting of five series designated Sentinel Variable Products
Common Stock Fund, Sentinel Variable Products Mid Cap Growth Fund, Sentinel
Variable Products Small Company Fund, Sentinel Variable Products Growth Index
Fund, and Sentinel Variable Products Money Market Fund, par value $0.001 per
share, of the Trust (the "Shares"), under the Securities Act of 1933, as
amended, which registration is being effected pursuant to a registration
statement on Form N-1A (File No. 333-35832), as amended (the "Registration
Statement").
As counsel for the Trust, we are familiar with the proceedings taken by
it in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Declaration of Trust of
the Trust and such other documents as we have deemed relevant to the matters
referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued,
fully paid and non-assessable shares of beneficial interest of the Trust.
In rendering the foregoing opinion, we have relied, without independent
investigation or verification, as to all matters involving the laws of the
State of Delaware, upon the opinion of Sutherland Asbill & Brennan LLP.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
Exhibit (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A of
our report dated October 18, 2000 relating to the statements of assets and
liabilities of Sentinel Variable Products Common Stock Fund, Sentinel Variable
Products Mid Cap Growth Fund, Sentinel Variable Products Small Company Fund,
Sentinel Variable Products Growth Index Fund and Sentinel Variable Products
Money Market Fund, which appear in such Registration Statement. We also
consent to the references to us under the heading "General Information" in the
Statement of Additional Information constituting part of this registration
statement on Form N-1A.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
October 18, 2000
<PAGE>
Exhibit (m)
CERTIFICATE OF HOLDER OF BENEFICIAL INTERESTS
National Life Investment Management Company, Inc., the holder of
beneficial interests in the amount of $100,000, of Sentinel Variable Products
Trust (the "Trust"), does hereby confirm to the Trust its representations that
it purchased such shares for investment purposes, with no present intention of
redeeming or reselling any portion thereof.
Sentinel Variable Products Trust
By: D. Russell Morgan
--------------------------------
Name: D. Russell Morgan
Title: Secretary
Dated: October 18, 2000
<PAGE>
Exhibit (p)(1)
SENTINEL GROUP FUNDS, INC.
SENTINEL PENNSYLVANIA TAX-FREE TRUST
SENTINEL VARIABLE PRODUCTS TRUST
CODE OF ETHICS
--------------
As Amended Through October 13, 2000
Policy Statement
----------------
No director, trustee, officer or employee of Sentinel Group Funds, Inc.,
Sentinel Pennsylvania Tax-Free Trust, or Sentinel Variable Products Trust
(each, the "Company") shall have any position with, or a substantial interest
in, any other business enterprise operated for a profit, the existence of
which would conflict, or might conflict, with the proper performance of
his/her duties or responsibilities to the Company or which might tend to
affect his/her independence of judgment with respect to transactions between
the Company or its investment adviser (Sentinel Advisors, Inc.) and such other
business enterprise, without prior full and complete disclosure thereof. Each
director, trustee, officer or employee who has such a conflicting, or possibly
conflicting, interest with respect to any transaction which he/she knows is
under consideration by the Company, or its investment adviser, or any
affiliate thereof, is required to make timely disclosure thereof so that it
may be part of the Company's consideration of the transaction.
Rules of Conduct
----------------
In order to implement the foregoing Policy Statement but without
limiting its intent, the following Rules are adopted:
1. No director, trustee, officer or employee should accept gifts,
gratuities or favors of any kind from any person, firm or
corporation doing business, or having the potential to do
business, with the Company or its investment advisor under any
circumstances from which it could be reasonably inferred that
the purpose of the gift, gratuity or favor could be to
influence the director, trustee, officer or employee in the
conduct of the Company or affiliated transactions with the
donor; provided, however, that this section shall not be
interpreted to prohibit (I) allowing business contacts to pay
for meals which an officer or employee attends, or (ii) gifts
of items with a value not exceeding $100.
2. Bribes, kickbacks, and other illegal payments to or from any
individual with whom the Company does business or hopes to do
business, in any form, for any purpose, are absolutely
prohibited.
3. The accuracy and completeness of account entries and
classifications are to be strictly maintained at all times.
Entries must be made in such a manner that their nature is
clearly discernible to management and to the Company's
independent auditors.
4. No officer or employee of the Company shall be a director,
trustee, officer, associate, partner, agent or employee of any
other business enterprise, or shall have any financial interest
in any other financial institution, or in any firm with whom
the Company or any affiliate does business, without first
having secured written permission from the President or the
Chairman of the Board.
5. Any officer or employee of the Company concerned with
investment activities, who has any investment, either directly
indirectly, in any corporation or business enterprise which has
a direct placement with the Company, or is under consideration
for a direct placement by the Company, or which is under
consideration for acquisition by the Company or any affiliate,
must make full disclosure of the circumstances of any
investment held in such corporation or enterprise to the
President or the Chairman of the Board.
6. Directors, trustees, officers and employees of the Company
shall treat information which they receive about the financial
condition and business activities of enterprises being
considered for investment as confidential.
7. No director, trustee, officer or employee of the Company shall
knowingly or intentionally trade, directly or indirectly,
against the Company, or against any similar fund or funds
managed by the Company's investment adviser in any of their
respective securities or in any securities which they each may
respectively purchase, hold or sell, or, knowingly or
intentionally, enter into, advise or permit any security
transaction inconsistent with the best interests of the Company
or of any other fund or funds managed by the Company's
investment adviser.
8. (a) Each officer or employee of the Company or its investment
adviser, and each director and trustee of the Company, unless
exempted by paragraph (b) below, shall file within ten days
after the close of each calendar quarter, with counsel to the
Company's investment advisor, a complete and accurate report of
all transactions in Covered Securities of which he/she has
knowledge, made by or for his/her account or any immediate
member of his/her family or any trust, partnership,
corporation, syndicate or account as to which he/she directly
or indirectly, has control or has participation in investment
policies; provided however, any such report may contain a
statement that it shall not be construed as an admission that
the person making such report has any direct or indirect
beneficial ownership in the Covered Securities to which the
report relates. Every such report shall be dated the date of
its submission and shall contain the following information:
(A) With respect to any transaction during the quarter in a
Covered Security in which the reporting person had any direct
or indirect ownership:
(1) The date of the transaction and the title and amount of
the security involved;
(2) The nature of the transaction (i.e., purchase, sale or
other acquisition or disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through
whom the transaction was effected.
(B) With respect to any account established by a reporting
person during the quarter for the direct or indirect benefit of
such person:
(1) The name of the broker, dealer or bank with whom such
person established the account; and
(2) The date the account was established.
In order to help ensure that all such reports are timely filed,
the designated individual will distribute the report forms at
least five business days prior to the end of a quarter, with a
reminder that the forms are required by law to be submitted to
him/her within 10 days after the end of the quarter. In
addition, the designated individual shall, on a date not later
than seven days after the end of a quarter, determine whether
any reports have not yet been submitted, and shall follow up
orally with any such person to ensure that his or her report is
timely filed. All such reports shall be reviewed by the
Chairman who shall indicate in writing on each form that it has
been reviewed by him.
(b) Directors and trustees of the Company who are not
"interested persons" of the Company under the Investment
Company Act shall be exempt from the requirement to file the
quarterly transaction report described in (a) above, unless
such person knew or, in the ordinary course of fulfilling his
or her offical duties as a director or trustee of the Company,
should have known that during the 15-day period immediately
before or after such person's transaction in a Covered
Security, the Company purchased or sold the Covered Security,
or the Company or its investment advisor considered purchasing
or selling the Covered Security (except that directors or
trustees shall not be considered to have known or should have
known of purchases or sales executed or considered for an index
fund of the Company). Directors and trustees of the Company who
are not "interested persons" of the Company under the
Investment Company Act shall also be exempt from the
requirement to file the initial and annual holdings reports
required by paragraph (c) below.
(c) Each officer or employee of the Company or its
investment adviser, and each director and trustee of the
Company, unless exempted by paragraph (b) above, shall file,
within ten days of first becoming an officer, employee,
director or trustee, and once per year, the following
information (which information, in the case of the annual
holdings report, must be current as of a date no more than 30
days before the report is submitted, and in the case of the
initial holdings report, must be current as of the date on
which the person became an officer, director, trustee or
employee of the Company), in a report dated the date of its
submission:
(A) The title, number of shares and principal amount of
each Covered Security in which the reporting person had any
direct or indirect beneficial ownership;
(B) The name of any broker, dealer or bank with whom the
person maintains an account in which any securities are (or in
the case of the initial holdings report, were at the time such
person became an officer, director, trustee or employee) held
for the direct or indirect benefit of the person.
(d) A person need not make a report under paragraph (a) or
(c) above with respect to transactions effected for, and
Covered Securities held in, any account over which the person
has no direct or indirect influence or control.
9. Officers and employees of the Company shall not under any
circumstances acquire securities in an initial public offering.
10. Officers and employees of the Company shall not invest in
private placements except after having obtained the prior
approval of the CEO of Sentinel Advisors Company, which
approval will be granted only in exceptional circumstances in
which it is clear that the investment opportunity is not
appropriate for the Company's Funds or will not interfere with
a Fund's participation in the investment, and is not being
offered to the individual as a result of his or her position
with the Company.
11. Officers and employees of the Company shall not trade in any
security on any day that the Company has a pending buy or sell
order in the same security, or for seven days thereafter,
unless the applicable Fund's portfolio manager has
affirmatively advised the keeper of the restricted list that
the Fund has completed its trading and that the security should
be removed from the restricted list, except that Company orders
to buy or sell on behalf of an index fund, or actual trades on
behalf of an index fund, shall not be considered for purposes
of this paragraph. Furthermore, the period during which trading
in a security is prohibited hereunder will extend to a period
seven days before a trade in such security by a Fund, if at the
time of the personal trade the subsequent trade by a Fund has
been identified as reasonably expected by that Fund's portfolio
manager.
12. Officers and employees of the Company shall not be permitted to
take a profit from a purchase and sale, or sale and purchase,
of the same securities within 60 calendar days. Any profits
realized in violation of this restriction shall be disgorged to
the Company.
13. Transactions by officers and employees of the Company in
securities which have total market capitalizations of at least
$25 billion, in options on such securities, or in options or
futures on equity indexes, and which are, in the case
individual stocks and options, in amounts of either 1000 shares
or less or $50,000 or less, shall be exempt from the
requirements of paragraphs 11 and 12 above. However, such
transactions must still be pre-cleared as provided in paragraph
15, so as to ensure that the Company is not in possession of
material non-public information about the issuer of the
security, before the transaction may be effected.
14. Officers and employees of the Company shall not serve on boards
of directors of publicly held companies, in the absence of
prior approval from the Chairman based on a finding that the
board service is in the best interests of the Company.
15. The Company's investment advisor should have in place at all
times procedures under which (a) all securities transactions by
its personnel are pre-cleared, (b) the advisor's personnel are
required to direct their broker to send duplicate copies of
confirmations of securities trades to a designated compliance
official of the advisor; (c) trades executed after
pre-clearance is given are monitored, and (d) its personnel
annually certify compliance with the advisor's procedures
listed above and its Code of Ethics.
Definitions
-----------
As used herein, the following definitions shall apply:
1. "Substantial interest" shall mean (a) beneficial ownership of
1% or more of the voting stock of any public corporation; (b)
an interest valued at more than $5,000 or an ownership of more
than 10% in a closely held corporation; or (c) any interest for
gain or profit in any other business or profession which to his
knowledge the Company invests in, purchases from or sells to,
other than in marketable securities.
2. "Purchase of sale of a security" includes the writing of an
option to purchase or sell a security.
3. "Security held or to be acquired" by the Company means any
securitywhich is being, or within the past thirty days has been
(a) held by the Company; or (b) considered by the Company or
its investment adviser for purchase by the Company.
4. "Covered Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any
put, call, straddle, option, or privilege on any security
(including a certificate of deposit) or on any group or index
of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange
relating to foreign currency, or, in general, any interest or
instrument commonly known as a "security," or any certificate
of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right
to subscribe to or purchase, any of the foregoing, except that
it does not include:
(i) direct obligations of the Government of the United
States;
(ii) bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments,
including repurchase agreements; and
(iii) shares issued by open-end mutual funds.
If you should at any time have any questions as to the application of
the above, please consult with independent counsel to the Company or Counsel
to Sentinel Advisors Company.
<PAGE>
Exhibit (p)(2)
NATIONAL LIFE INVESTMENT MANAGEMENT COMPANY, INC.
SENTINEL ADVISORS COMPANY
NL CAPITAL MANAGEMENT, INC.
CODE OF ETHICS
--------------
As Amended Through August 15, 2000
----------------------------------
Policy Statement
----------------
No director, officer or employee of National Life Investment Management
Company, Inc., Sentinel Advisors Company, or NL Capital Management, Inc.
(collectively, the "Company") shall have any position with, or a "substantial
interest" in, any other business enterprise operated for a profit, the
existence of which would conflict, or might conflict, with the proper
performance of his/her duties, or responsibilities to the Company or which
might tend to affect his/her independence of judgment with respect to
transactions between the Company or its investment clients, and such other
business enterprise, without prior full and complete disclosure thereof. Each
officer or employee who has such a conflicting, or possibly conflicting,
interest with respect to any transaction which he/she knows is under
consideration by the Company, any affiliate thereof, or its investment
clients, is required to make timely disclosure thereof so that it may be part
of the Company's consideration of the transaction.
Rules of Conduct
----------------
In order to implement the foregoing Policy Statement but without limiting
its intent, the following Rules are adopted:
1. No officer or employee should accept gifts, gratuities or favors of
any kind from any person, firm or corporation doing business, or
having the potential to do business with the Company or its
investment clients, under any circumstances from which it could be
reasonably inferred that the purpose of the gift, gratuity or favor
could be to influence the officer or employee in the conduct of
Company or affiliated transactions with the donor; provided,
however, that this section shall not be interpreted to prohibit (i)
allowing business contacts to pay for meals which a officer or
employee attends, or (ii) gifts of items with a value not exceeding
$100.
2. Bribes, kickbacks, and other illegal payments to or from any
individual with whom the Company does business or hopes to do
business, in any form, for any purpose, are absolutely prohibited.
3. The accuracy and completeness of account entries and classifications
are to be strictly maintained at all times. Entries must be made in
such a manner that their nature is clearly discernible to management
and to the Company's independent auditors.
4. No officer or employee of the Company shall be a director, officer,
associate, partner, agent or employee of any other business
enterprise, or shall have any financial interest in any other
financial institution, or in any firm with whom the Company or any
affiliate does business, without first having secured written
permission from the Chief Executive Officer.
5. Any officer or employee of the Company concerned with investment
activities, who has any investment, either directly or indirectly,
in any corporation or business enterprise which has a direct
placement with the Company or any affiliate, or is under
consideration for a direct placement by the Company or any
affiliate, or which is under consideration for acquisition by the
Company, any affiliate, or any investment client, must make full
disclosure of the circumstances of any investment held in such
corporation or enterprise to the Chief Executive Officer.
6. Officers and employees of the Company shall treat information which
they receive about the financial condition and business activities
of enterprises being considered for investment as confidential.
7. No officer or employee of the Company shall knowingly or
intentionally trade, directly or indirectly, against the Company's
investment clients in any of their respective securities or in any
securities which they each may respectively purchase, hold or sell,
or, knowingly or intentionally, enter into, advise or permit any
security transaction inconsistent with the best interests of the
Company's investment clients.
8. (a) Each director, officer or employee of the Company shall file
within ten days after the close of each calendar quarter, with
counsel to the Company, a complete and accurate report of all
transactions in Covered Securities of which he/she has knowledge,
made by or for his/her account or any immediate member of his/her
family or any trust, partnership, corporation, syndicate or account
as to which he/she, directly or indirectly has control or has
participation in investment policies; provided however, any such
report may contain a statement that it shall not be construed as an
admission that the person making such report has any direct or
indirect beneficial ownership in the securities to which the report
relates. Every such report shall be dated the date of its submission
and shall contain the following information:
(A) With respect to any transaction during the quarter in a Covered
Security in which the reporting person had any direct or indirect
ownership:
(1) The date of the transaction and the title and amount of the
security involved;
(2) The nature. of the transaction (i.e., purchase, sale or other
acquisition or disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through whom
the transaction was effected.
(B) With respect to any account established by a reporting person
during the quarter for the direct or indirect benefit of such
person:
(1) The name of the broker, dealer or bank with whom such person
established the account; and
(2) The date the account was established.
In order to help ensure that all such reports are timely filed, the
designated individual will distribute the report forms at least five
business days prior to the end of a quarter, with a reminder that
the forms are required by law to be submitted to him/her within 10
days after the end of the quarter. In addition, the designated
individual shall, on a date not later than seven days after the end
of a quarter, determine whether any reports have not yet been
submitted, and shall follow up orally with any such person to ensure
that his or her report is timely filed. All such reports shall be
reviewed by counsel who shall indicate in writing on each form that
it has been reviewed by him or her.
(b) Each director, officer or employee of the Company shall
file, within ten days of first becoming an officer, employee,
director or trustee, and once per year, the following information
(which information, in the case of the annual holdings report, must
be current as of a date no more than 30 days before the report is
submitted, and in the case of the initial holdings report, must be
current as of the date on which the person became an officer,
director, trustee or employee of the Company), in a report dated the
date of its submission:
(A) The title, number of shares and principal amount of each
Covered Security in which the reporting person had any direct or
indirect beneficial ownership;
(B) The name of any broker, dealer or bank with whom the person
maintains an account in which any securities are (or in the case of
the initial holdings report, were at the time such person became an
officer, director, trustee or employee) held for the direct or
indirect benefit of the person.
(c) A person need not make a report under paragraph (a) or (b)
above with respect to transactions effected for, and Covered
Securities held in, any account over which the person has no direct
or indirect influence or control.
Each officer or employee of the Company who is required to make such
reports in connection with his or her affiliation with Sentinel
Group Funds, Inc., shall be excused from making these reports.
9. Officers and employees of the Company shall not under any
circumstances acquire securities in an initial public offering.
10. Officers and employees of the Company shall not invest in private
placements except after having obtained the prior approval of the
CEO, which approval will be granted only in exceptional
circumstances in which it is clear that the investment opportunity
is not appropriate for the Company's Fund clients or will not
interfere with a Fund's participation in the investment, and is not
being offered to the individual as a result of his or her position
with the Company.
11. Officers and employees of the Company shall not trade in any
security on any day that the Company's Fund clients have a pending
buy or sell order in the same security, or for seven days
thereafter, unless the applicable Fund's portfolio manager has
affirmatively advised the keeper of the restricted list that the
Fund has completed its trading and that the security should be
removed from the restricted list, except that orders to buy or sell
on behalf of an index fund client, or actual trades on behalf of an
index fund client, shall not be considered for purposes of this
paragraph. Furthermore, the period during which trading in a
security is prohibited hereunder will extend to a period seven days
before a trade in such security by a Fund, if at the time of the
personal trade the subsequent trade by a Fund has been identified as
reasonably expected by that Fund's portfolio manager.
12. Officers and employees of the Company shall not be permitted to take
a profit from a purchase and sale, or sale and purchase, of the same
securities within 60 calendar days. Any profits realized in
violation of this restriction shall be disgorged to the Company.
13. Transactions by officers and employees of the Company in securities
which have total market capitalizations of at least $25 billion, in
options on such securities, or in options or futures on equity
indexes, and which are, in the case of individual stocks and
options, in amounts of either 1000 shares or less or $50,000 or
less, shall be exempt from the requirements of paragraphs 11 and 12
above. However, such transactions must be pre-cleared as provided in
paragraph 15, so as to ensure that the Company is not in possession
of material non-public information about the issuer of the security,
before the transaction may be effected.
14. Officers and employees of the Company shall not serve on boards of
directors of publicly held companies, in the absence of prior
approval from the Chairman and CEO based on a finding that the board
service is in the best interests of the Company.
15. The Company shall have in place at all times procedures under which
(a) all securities transactions by its personnel are pre-cleared,
(b) its personnel are required to direct their broker to send
duplicate copies of confirmations of securities trades to a
designated compliance official of the advisor, (c) trades executed
after pre-clearance is given are monitored, (d) personal holdings of
personnel, not including mutual funds and government securities, are
reported annually by all its personnel (such reports may be kept
sealed and opened only where there is good reason to investigate an
individual's trading activity), and (e) its personnel annually
certify compliance with the Company's procedures listed above and
its Code of Ethics.
Definitions
-----------
As used herein, the following definitions shall apply:
1. "Substantial interest" shall mean (a) beneficial ownership of 1% or
more of the voting stock of any public corporation; (b) an interest
valued at more than $5,000 or an ownership of more than 10% in a closely
held corporation; or (c) any interest for gain or profit in any other
business or profession with which to his knowledge the Company's
investment clients invest in, purchase from or sell to, other than in
marketable securities.
2. "Purchase or sale of a security" includes the writing of an option to
purchase or sell a security.
3. "Security held or to be acquired" by the Company means any security as
defined above which is being, or within the past thirty days has been;
(a) held by the Company; or (b) considered by the Company or its
investment clients for purchase by the Company or by its investment
clients.
4. "Covered Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable
share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege on
any security (including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into
on a national securities exchange relating to foreign currency, or, in
general, any interest or instrument commonly known as a "security," or
any certificate of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to
subscribe to or purchase, any of the foregoing, except that it does not
include:
(i) direct obligations of the Government of the United States;
(ii) bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments,
including repurchase agreements; and
(iii) shares issued by open-end mutual funds.
If you should at any time have any question as to the application of the
above, please consult with Counsel to the Company.
R:CODEETH
<PAGE>
Exhibit (p)(3)
SENTINEL FINANCIAL SERVICES COMPANY
EQUITY SERVICES, INC.
CODE OF ETHICS
As amended Through October 13, 2000
Policy Statement
----------------
No director, officer or employee of Sentinel Financial Services Company
or Equity Services, Inc. (each, the "Company") shall have any position with,
or a "substantial interest" in, any other business enterprise operated for a
profit, the existence of which would conflict, or might conflict, with the
proper performance of his/her duties or responsibilities to the Company or
which might tend to affect his/her independence of judgment with respect to
transactions between the Company or the issuers of securities distributed by
the Company, and such other business enterprise, without prior full and
complete disclosure thereof. Each director, officer or employee who has such a
conflicting, or possible conflicting, interest with respect to any
transactions which he/she knows is under consideration by the Company, or the
issuers of securities distributed by the Company, or any affiliate thereof, is
required to make timely disclosure thereof so that it may be part of the
Company's consideration of the transaction.
Rules of Conduct
----------------
In order to implement the foregoing Policy Statement but without limiting
its intent, the following Rules are adopted:
1. No director, officer or employee should accept gifts, gratuities or favors
of any kind from any person, firm or corporation doing business, or having the
potential to do business, with the Company or the issuers of securities
distributed by the Company, under any circumstances from which it could be
reasonably inferred that the purpose of the gift, gratuity or favor could be
to influence the officer or employee in the conduct of Company or affiliated
transactions with the donor; provided, however, that this section shall not be
interpreted to prohibit (i) allowing business contacts to pay for meals which
a officer or employee attends, or (ii) gifts of items with a value not
exceeding $50.
2. Bribes, kickbacks, and other illegal payments to or from any individual
with whom the Company does business or hopes to do business, in any form, for
any purpose, are absolutely prohibited.
3. The accuracy and completeness of account entries and classifications are to
be strictly maintained at all times. Entries must be made in such a manner
that their nature is clearly discernible to management and to the Company's
independent auditors.
4. No director, officer or employee of the Company shall be a director,
officer, associate, partner, agent or employee of any other business
enterprise, or shall have any financial interest in any other financial
institution, or in any firm with whom the Company or any affiliate does
business, without first having secured written permission from the Chief
Executive Officer.
5. No director, officer or employee of the Company who receives information on
investment matters shall, either directly or indirectly (a) purchase or sell
securities where any such purchase or sale is based on information obtained by
reason of his/her official position in the Company, unless he/she shall have
first secured written permission to make such purchase or sale from the Chief
Executive Officer, or (b) invest in any real property in which he/she knows
that the Company or any affiliate has, or is considering any investment or a
tenancy, or in any real property the value of which may be affected by any
action of the Company of which he/she has special knowledge. Notwithstanding
the foregoing provisions of 5(a) above, purchases or sales of 1,000 or less
share orders of companies whose securities are listed on a registered exchange
or quoted daily on NASDAQ shall not be deemed prohibited hereunder.
6. Directors, officers and employees of the Company shall treat information
which they receive about the financial condition and business activities of
enterprises being considered for investment as confidential.
7. No director, officer or employee of the Company shall knowingly or
intentionally trade, directly or indirectly, against the Company or against
any of the issuers of securities distributed by the Company, in any securities
which they each may respectively purchase, hold or sell, or, knowingly or
intentionally, enter into, advise or permit any security transaction
inconsistent with the best interests of the Company or of any issuers of
securities distributed by the Company.
8. (a) Each officer or employee (or director, in the case of Equity Services,
Inc., if he or she is an Access Person as defined in Rule 17j-1 under the
Investment Company Act of 1940) of the Company shall file within ten days
after the close of each calendar quarter, with counsel to the Company, a
complete and accurate report of all transactions in Covered Securities of
which he/she has knowledge, made by or for his/her account or any immediate
member of his/her family or any trust, partnership, corporation, syndicate or
account as to which he/she, directly or indirectly, has control or has
participation in investment policies; provided however, any such report may
contain a statement that it shall not be construed as an admission that the
person making such report has any direct or indirect beneficial ownership in
the Covered Securities to which the report relates. Every such report shall be
dated on the date on which it is submitted and shall contain the following
information:
(A) With respect to any transaction during the quarter in a Covered Security
in which the reporting person had any direct or indirect ownership:
(1) The date of the transaction and the title and amount of the security
involved;
(2) The nature of the transaction (i.e., purchase, sale or other acquisition
or disposition;
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through whom the
transaction was effected.
(B) With respect to any account established by a reporting person during
the quarter for the direct or indirect benefit of such person:
(1) The name of the broker, dealer or bank with whom such person
established the account; and
(2) The date the account was established.
(b) Each officer or employee (or director, in the case of Equity
Services, Inc., if he or she is an Access Person as defined in Rule 17j-1
under the Investment Company Act of 1940) of the Company shall file,
within ten days of first becoming an officer or employee, and once per
year, the following information (which information, in the case of the
annual holdings report, must be current as of a date no more than 30 days
before the report is submitted, and in the case of the initial holdings
report, must be current as of the date on which the person became an
officer, director, trustee or employee of the Company), in a report dated
the date of its submission:
(A) The title, number of shares and principal amount of each Covered
Security in which the reporting person had any direct or indirect
beneficial ownership;
(B) The name of any broker, dealer or bank with whom the person maintains
an account in which any securities are (or in the case of the initial
holdings report, were at the time such person became an officer,
director, trustee or employee) held for the direct or indirect benefit of
the person.
(c) A person need not make a report under paragraph (a) or (b) above with
respect to transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence or control.
Each officer or employee (or director, in the case of Equity Services,
Inc.) of the Company who is required to make such reports in connection with
his or her affiliation with Sentinel Group Funds, Inc., shall be excused from
making these reports.
Definitions
-----------
As used herein, the following definitions shall apply:
1. "Substantial interest" shall mean (a) beneficial ownership of 1% or more of
the voting stock of any public corporation; (b) an interest valued at more
than $5,000 or an ownership of more than 10% in a closely held corporation; or
(c) any interest for gain or profit in any other business or profession with
which to his knowledge the Company or the issuers of securities distributed by
the Company, invest in, purchase from or sell to, other than in marketable
securities.
2. "Purchase or sale of a security" includes the writing of an option to
purchase or sell a security.
3. "Security held or to be acquired" by the Company means any security which is
being, or within the past thirty days has been; (a) held by the Company or by
the issuers of securities distributed by the Company; or (b) considered by the
Company or by the issuers of securities distributed by the Company, for
purchase.
4. "Covered Security" means any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest
in oil, gas, or other mineral rights, any put, call, straddle,
option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any
interest therein or based on the value thereof), or any put, call,
straddle, option, or privilege entered into on a national securities
exchange relating to foreign currency, or, in general, any interest
or instrument commonly known as a "security," or any certificate of
interest or participation in, temporary or interim certificate for,
receipt for, guarantee of, or warrant or right to subscribe to or
purchase, any of the foregoing, except that it does not include:
(i) direct obligations of the Government of the United
States;
(ii) bankers' acceptances, bank certificates of
deposit, commercial paper and high quality
short-term debt instruments, including repurchase
agreements; and
(iii) shares issued by open-end mutual funds.
If you should at any time have any question as to the application of the
above, please consult with counsel to the Company.
