<PAGE>
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
The Sierra Variable Trust
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
The Sierra Variable Trust
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] $125 PER EXCHANGE ACT RULES 0-11(C)(1)(II), 14A-6(I)(1), 14A-6(I)(2) OR
ITEM 22(A)(2) OF SCHEDULE 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Dated Filed:
<PAGE>
PRELIMINARY COPY
AMERICAN GENERAL LIFE INSURANCE COMPANY
----------
NOTICE TO CONTRACTOWNERS OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF THE INTERNATIONAL GROWTH
FUND OF THE SIERRA VARIABLE TRUST
----------
TO BE HELD ON JUNE 21, 1996
Dear Contractowner:
The Variable Account Value of your Sierra Advantage Variable Annuity has been
allocated at your direction to investment divisions of Separate Account D of
American General Life Insurance Company ("American General Life"). These
divisions invest in corresponding funds of The Sierra Variable Trust, a mutual
fund (the "Trust").
As a Contractowner of record at the close of business on April 23, 1996 (the
"Record Date"), you are hereby offered the opportunity to instruct American
General Life as to how it should vote on a proposal to be considered at a
Special Meeting of the Shareholders of the Trust's International Growth Fund
(the "International Fund"). American General Life's Separate Account D is, and
was on the Record Date, the sole shareholder of the International Fund.
The Special Meeting will be held at 9301 Corbin Avenue, Suite 333, Northridge,
California 91324, on Friday, June 21, 1996 at 9:00 a.m., Pacific Time, to
consider the approval of Warburg, Pincus Counsellors, Inc. ("Warburg") as
investment sub-adviser for the International Fund. Warburg is a professional
investment counselling firm that provides investment services to investment
companies, employee benefit plans, investment endowment funds, foundations and
other institutions and individuals. As of February 29, 1996, Warburg managed
approximately $14.0 billion of assets, including approximately $7.7 billion of
investment company assets.
Attached to this Notice are the Information Statement of American General Life
and the Proxy Statement of the Trust. You are urged to read both of these
statements prior to completing your Ballot.
American General Life with Sierra Investment Advisors Corporation, the Trust's
investment adviser, and Sierra Investment Services Corporation, the Trust's
principal underwriter, are committed to quality products and services and to
earning your trust and confidence. Please acknowledge this commitment by
completing your Ballot and returning it to American General Life.
Steven A. Glover
Assistant Secretary
Houston, Texas
May 10, 1995
IMPORTANT
IT IS IMPORTANT THAT YOUR CONTRACT BE REPRESENTED. PLEASE MARK YOUR PREFERENCE
ON THE BALLOT, SIGN AND DATE IT, AND MAIL IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOUR PROMPT
RESPONSE WILL HELP AVOID THE UNNECESSARY EXPENSE OF A FURTHER SOLICITATION OF
BALLOTS.
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
----------
NOTICE TO CONTRACTOWNERS OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF THE INTERNATIONAL GROWTH
FUND OF THE SIERRA VARIABLE TRUST
----------
MAY 10, 1995
GENERAL
This information statement is being furnished by American General Life Insurance
Company ("American General Life"), a Texas stock life insurance company, to
owners of Sierra Advantage Annuities ("Contractowners") whose Variable Account
Values were allocated to the International Growth Division of American General
Life's Separate Account D as of April 23, 1996 (the "Record Date"). American
General Life is an indirect, wholly-owned subsidiary of American General
Corporation.
American General Life is required to offer Contractowners the opportunity to
instruct American General Life as to how it should vote on a proposal to be
considered at a special meeting of the shareholders of the International Growth
Fund (the "International Fund") of The Sierra Variable Trust (the "Trust"),
referred to in the foregoing Notice and any adjournments thereof (the "Special
Meeting").
The only proposal scheduled to be considered at the Special Meeting is the
approval of a new investment sub-advisory agreement with respect to the
International Fund, by and among the Trust, Sierra Investment Advisors
Corporation (the "Adviser") and Warburg, Pincus Counsellors, Inc. ("Warburg")
currently effective as of April 8, 1996.
Separate Account D (the "Separate Account") is registered with the Securities
and Exchange Commission as an investment company in unit investment trust form.
A Contractowner's Variable Account Value can be, at the Contractowner's
direction, allocated to one or more of the investment divisions of the Separate
Account. The assets in each division are invested in shares of beneficial
interest in the corresponding funds of the Trust, a series-type mutual fund. The
following funds are available for investment by divisions of the Separate
Account:
Global Money Fund Growth and Income Fund
Emerging Growth Fund International Growth Fund
U.S. Government Fund Short Term High Quality Bond Fund
Corporate Income Fund Short Term Global Government Fund
Growth Fund
The principal executive offices of American General Life are located at 2727-A
Allen Parkway, Houston, Texas 77019-2191.
This Information Statement and the accompanying Ballot are first being mailed to
Contractowners on or about May 10, 1996.
<PAGE>
HOW TO INSTRUCT AMERICAN GENERAL LIFE INSURANCE COMPANY
To instruct American General Life as to how to vote the shares of beneficial
interest of the International Fund (the "Shares") held in the Separate Account
division, Contractowners are asked promptly to date, mark their preference on,
sign and mail the enclosed Ballot in the accompanying postage-paid envelope.
IF A PREFERENCE IS NOT MARKED ON A BALLOT, ITS RETURN WILL BE TREATED AS AN
INSTRUCTION TO VOTE THE SHARES IN FAVOR OF THE PROPOSAL.
The number of Shares of the International Fund for which Contractowners may
provide voting instructions (in aggregate "Shares Attributable to
Contractowners") was determined by dividing (i) the Contractowner's Variable
Account Value attributable to the International Fund by (ii) the net asset value
of one share of the International Fund as of the Record Date.
At any time prior to American General Life's voting, at the Special Meeting on
June 21, 1996 or any adjournment thereof, of the Shares held in the
International Growth Division, a person executing a Ballot with respect to such
Division may revoke it by written notice to the Assistant Secretary of American
General Life.
HOW AMERICAN GENERAL LIFE INSURANCE COMPANY WILL VOTE
Currently, American General Life's Separate Account D owns all of the shares of
the Trust and may be deemed to control the Trust. Accordingly, only
Contractowners of American General Life will have the opportunity to provide
voting instructions with respect to the proposal to be considered at the Special
Meeting.
4,273,099.002 Shares were held in the International Growth Division at the close
of business on the Record Date.
American General Life will vote the Shares attributable to Contractowners in the
International Growth Division, for or against approval of the proposal, or
withhold its vote, in the same proportion as the votes cast by Contractowners on
Ballots received by American General Life prior to the voting of Shares. Shares
attributable to amounts retained by American General Life in the International
Growth Division will be voted in the same proportion as votes cast by
Contractowners in respect of such Division.
OTHER MATTERS
American General Life is not aware of any matters, other than the aforementioned
proposal, to be acted on at the Special Meeting. If any other matters come
before the Special Meeting, American General Life will vote the Shares upon such
matters in its discretion.
In addition to solicitation by mail, ballots may be solicited in person or by
telephone by employees or agents of Sierra Investment Advisors Corporation, the
Trust's investment adviser, or Sierra Investment Services Corporation, the
Trust's principal underwriter. Instructions may be recorded pursuant to
telephonic or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized. All expenses incurred in connection with the solicitation of Ballots
will be borne by the International Fund. The solicitation will be by mail and
may also be by telephone, telegram or personal interview.
Steven A. Glover
Assistant Secretary
PLEASE MARK YOUR PREFERENCE ON THE BALLOT, SIGN AND DATE IT, AND MAIL IT IN THE
POSTAGE-PAID ENVELOPE PROVIDED. IT IS IMPORTANT THAT YOUR CONTRACT BE
REPRESENTED.
<PAGE>
PRELIMINARY COPY
------------------
THE SIERRA VARIABLE TRUST 9301
Corbin Avenue, Suite 333 Northridge,
California 91324
------------------
PROXY STATEMENT
------------------
May 10, 1996
GENERAL
This Proxy Statement is furnished by the Board of Trustees of The Sierra
Variable Trust (the "Trust") to the Shareholder of the International Growth Fund
(the "International Fund"), an investment portfolio of the Trust, in connection
with the Special Meeting of Shareholders to be held on Friday, June 21, 1996 at
9:00 a.m., Pacific Time, at 9301 Corbin Avenue, Suite 333, Northridge,
California 91324 and any adjourned session thereof (such meeting and any
adjournment thereof are hereinafter referred to as the "Special Meeting"). As
used herein, the term "Shareholder" refers to Separate Account D ("Separate
Account D") of American General Life Insurance Company ("American General Life")
that has invested in the Trust. The Trust's shares of beneficial interest are
sold only to separate accounts of insurance companies and currently Separate
Account D owns all of such shares.
The Trust is not required to hold annual shareholders meetings, but special
meetings may be called for purposes such as electing or removing trustees,
changing fundamental investment policies or approving an investment adviser or
investment sub-adviser agreement. The purpose of this Special Meeting is to
obtain Shareholder approval of adoption of a new investment sub-advisory
agreement by and among the Trust, Sierra Investment Advisors Corporation
("Sierra Advisors" or the "Adviser") and Warburg, Pincus Counsellors, Inc.
("Warburg") with respect to the International Fund, as described below in
"Proposal No. 1: Approval of the Warburg Investment Sub-Adviser Agreement."
J.P. Morgan Investment Management Inc. ("J.P. Morgan") located at 522 Fifth
Avenue, New York, New York 10036, acted as investment sub-adviser to the
International Fund from its inception. At a meeting held on February 27, 1996,
the Board of Trustees of the Trust voted to replace J.P. Morgan as the
investment sub-adviser to the International Fund, effective April 8, 1996. In
addition, the Board of Trustees, subject to the approval of the Shareholder of
the International Fund, approved the appointment of Warburg as the investment
sub-adviser to the International Fund, effective April 8, 1996, and approved the
related investment sub-advisory agreement among the Trust, Warburg and the
Adviser. The proposed investment sub-advisory agreement among the Trust, Warburg
and the Advisor (the "Warburg Sub-Adviser Agreement"), as discussed below under
"Comparison of the Warburg Sub-Advisory Agreement and the J.P. Morgan Agreement"
provides for, among other things, a decrease in investment sub-advisory fees and
reciprocal and expanded indemnification provisions between the Advisor and
Warburg in comparison to the former investment sub-advisory agreement among the
Trust, the Advisor and J.P. Morgan (the "J.P. Morgan Agreement"). For the
interim period between April 8, 1996 and the Special Meeting scheduled for June
21, 1996, Warburg has been acting as the investment sub-adviser to the Fund and
receives a fee at an annual rate of .50% of the average daily net assets of the
International Fund for its services during this period, which is less than the
fee that J.P. Morgan had been receiving for its services.
This Proxy Statement is first being mailed to the Shareholder of the
International Fund on or about May 10, 1996.
Because of current federal securities law requirements, the Trust expects that
its Shareholder will offer the owners of certain variable annuities
("Contractowners") issued by the Shareholder the opportunity of providing voting
instructions regarding the proposal to be considered at the Special Meeting and
any adjournments thereof. The Shareholder may use this proxy statement for that
purpose. At any time prior to American General Life's voting, at the Special
Meeting on June 21, 1996 or any adjournment thereof, of the Shares held in the
International Growth Division, a person executing a Ballot with respect to such
Division may revoke it by written notice to the Assistant Secretary of American
General Life. All expenses incurred in connection with the solicitation of
Ballots will be borne by the International Fund. The solicitation will be by
mail and may also be by telephone, telegram or personal interview.
The Annual Report to shareholders of the Trust (the "Annual Report"), containing
audited financial statements for the fiscal year ended December 31, 1995, was
mailed to the shareholders of the Trust. The Annual Report is not to be regarded
as proxy soliciting material. The International Fund will furnish upon request,
without charge, a copy of the Annual Report and the most recent semiannual
report succeeding the Annual Report. Contractowners may call toll-free at (800)
222-5852 or send a written request to Sierra Fund Administration Corporation at
9301 Corbin Avenue, Suite 333, Northridge, California 91324.
HISTORY OF THE TRUST
The Trust is a diversified, open-end management investment company. It was
organized on January 29, 1993 under the laws of the Commonwealth of
Massachusetts as a "Massachusetts business trust." The Trust offers shares of
beneficial interest, each without par value. The Trust has the power to issue
separate series of shares and has authorized nine separate series. Additional
series may be established.
Sierra Investment Services Corporation ("Sierra Services") serves without
compensation as the principal underwriter of the Trust. Under the terms of its
agreement with the Trust, Sierra Services is not obligated to sell any specific
number of shares of the Trust. Currently, the shares of the International Fund
are sold only to Separate Account D of American General Life to fund Sierra
Advantage Annuity contracts ("Contracts"). In addition, Sierra Services has
contracted with American General Securities Incorporated ("AGSI"), the principal
underwriter of the Contracts and a wholly-owned subsidiary of American General
Life, to distribute the Contracts. Sierra Services also provides certain
administrative services to American General Life in connection with the
processing of applications for Contracts. Sierra Services receives compensation
from American General Life for these distribution and administrative services.
In the future, the Trust may offer its shares to separate accounts funding
variable annuities of insurance companies affiliated or unaffiliated with
American General Life and to separate accounts which fund variable life
insurance or other variable funding arrangements.
THE TRUST'S SHARES
The Trust has authority to issue an unlimited number of shares of beneficial
interest, without par value (the "Shares"), in separate series. The Shares are
currently divided into the following nine series, one for each fund of the Trust
(each, a "Fund" and together, the "Funds"):
Global Money Fund Growth and Income Fund
Emerging Growth Fund International Growth Fund
U.S. Government Fund Short Term High Quality Bond Fund
Corporate Income Fund Short Term Global Government Fund
Growth Fund
The Trust may establish additional Funds and related series of shares.
All shares are entitled to one vote and fractional shares are entitled to
fractional votes. On matters where the interests of the Funds differ, the voting
is on a Fund-by-Fund basis. The approval of a new investment sub-adviser
agreement for the International Fund is such a matter requiring Fund-by-Fund
voting. Since shareholders in the Funds not affected by this matter have no
right to vote with respect to this matter, the shareholders of the Global Money,
Growth, Growth and Income, Emerging Growth, Corporate Income, Short Term Global
Government, U.S. Government and Short Term High Quality Bond Funds are not
entitled to notice of the Special Meeting, nor are they entitled to vote at the
Special Meeting.
At the close of business on April 23, 1996, the record date for shareholders
entitled to notice of and to vote at the Special Meeting, 4,273,099.002
International Fund shares had been issued. Separate Account D of American
General Life is, and was on the Record Date, the sole shareholder of the
International Fund. American General Life owned on the Record Date 100% of the
Trust's outstanding shares in all Funds and will likely continue to control the
Trust.
Because of current federal securities law requirements, the Trust expects its
Shareholder to offer its Contractowners the opportunity to provide instruction
as to how Shares allocable to their policies will be voted with respect to
certain matters, such as approval of investment sub-adviser agreements. Because
of this opportunity, Contractowners could be deemed to have beneficial ownership
of shares allocable to their Contracts. As of April 23, 1996, except for
Separate Account D, no shareholder or Contractowner owned, or beneficially
owned, more than 5% of the shares of the International Fund.
PROPOSAL NO. 1: APPROVAL OF THE WARBURG SUB-ADVISER AGREEMENT
The Board of Trustees of the Trust has determined that it is in the best
interest of the Trust to retain Warburg as investment sub-adviser to the
International Fund. Therefore, the Board of Trustees is recommending that the
Shareholder approve the Warburg Sub-Adviser Agreement. On February 27, 1996, the
Trustees and the Trustees who are not "interested persons" the ("Non-Interested
Trustees"), as such term(1) is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), by unanimous votes approved the new
sub-adviser agreement with Warburg. In accordance with the Investment Company
Act, this matter is being submitted to the Shareholder for its approval.
Approval by shareholders requires the affirmative vote of a majority of the
outstanding shares of the International Fund as defined in the Investment
Company Act.
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(1) The term "Non-Interested Trustees" as used herein means Trustees who are not
"interested persons" of the Trust within the meaning of the Investment
Company Act of 1940, as amended, and who have no direct or indirect interest
in the operation of any of the advisory agreements or sub-advisory
agreements of any Fund or any agreements relating thereto.
Information About the Adviser. The Adviser's principal business address is 9301
Corbin Avenue, Suite 333, Northridge, California 91324. Under a Management
Agreement between the Trust and the Adviser (the "Management Agreement") dated
April 8, 1993, the Adviser has, subject to the supervision and direction of the
Board of Trustees, general oversight responsibility for the investment advisory
services provided to the International Fund. In connection therewith, the
Adviser, among other things, participates in the formulation of the
International Fund's investment policies, analyzes economic trends, monitors
expenses, monitors the brokerage and research services, selects investment
sub-advisers and monitors and evaluates the services provided by the
International Fund's investment sub-advisers. In this instance, the Adviser has
selected Warburg as the new investment sub-adviser to the International Fund and
recommends that the Shareholder vote to approve the Warburg Sub-Adviser
Agreement. Warburg is located at 466 Lexington Avenue, New York, New York
10017-3147. Warburg is a professional investment counselling firm that provides
investment services to investment companies, employee benefit plans, investment
endowment funds, foundations and other institutions and individuals. As of
February 29, 1996, Warburg managed approximately $14.0 billion of assets,
including approximately $7.7 billion of investment company assets. The Directors
of Warburg are Mr. Lionel I. Pincus, Chief Executive Officer, Mr. John L. Furth,
Chairman of the Board of Directors, and Mr. John L. Vogelstein. Incorporated in
1970, Warburg is a wholly-owned subsidiary of Warburg, Pincus Counsellors G.P.
("Counsellors G.P."), a New York general partnership. E.M. Warburg Pincus & Co.,
Inc. ("EMW") controls Warburg through its ownership of a class of voting
preferred stock of Warburg. Counsellors G.P. has no business other than being a
holding company of Warburg and its subsidiaries. Each Director's address is the
same as Warburg's address, and his principal occupation is his position with
Warburg and its affiliates. Lionel I. Pincus may be deemed a controlling person
of EMW.
Neither the Management Agreement nor the fees to which the Adviser is entitled
under the Management Agreement will change or increase as a consequence of the
Warburg Sub-Adviser Agreement. Pursuant to the Management Agreement, the Adviser
pays any sub-adviser fees out of its advisory fees. For the services provided
and expenses assumed pursuant to the Management Agreement, the Adviser is paid a
monthly fee at the annual rate of 0.95% of the International Fund's average
daily net assets up to $50 million; .85% of the International Fund's average
daily net assets up to $125 million; and 0.75% of the International Fund's
average daily net assets in excess of $125 million. The Adviser retains only the
net amount of the foregoing investment management fees that remains after the
Adviser pays the International Fund's investment sub-adviser the investment
management fees to which the sub-adviser is entitled as described on the
following pages. During the fiscal year ended December 31, 1995, $259,788 in
advisory fees were paid by the Trust to Sierra Advisors.
Reason for Termination of J.P. Morgan Agreement. The J.P. Morgan Agreement is
dated October 14, 1994, and was last approved by the sole shareholder of the
International Fund at a shareholder meeting on October 14, 1994 held for the
purpose of approving a revised investment sub-advisory agreement with J.P.
Morgan, which increased J.P. Morgan's fees. The Board of Trustees terminated the
J.P. Morgan Agreement pursuant to J.P. Morgan's resignation on or about April 8,
1996. The Board of Trustees is recommending replacing J. P. Morgan Investment
Management with Warburg because the Board believes that Warburg's investment
process and style is more suitable for the Fund's Shareholders. Warburg began
serving as investment sub-adviser to the International Fund, replacing J.P.
Morgan, on April 8, 1996, but will not continue to serve beyond a certain period
unless the Warburg Sub-Adviser Agreement is approved by the Shareholder. For the
interim period between April 8, 1996 and the Shareholder Meeting scheduled for
June 21, 1996, Warburg receives a fee at an annual rate of .50% of the average
daily net assets of the International Fund for its services during this period,
which is less than the fee that J.P. Morgan had been receiving for its services
for the International Fund during the period advised.
After consideration of possible alternative investment sub-advisers, the Board
of Trustees selected Warburg in light of the experience and qualifications of
its personnel, the depth of its other resources, its investment philosophy and
process and its consistently strong investment performance.
Comparison of the Warburg Sub-Advisory Agreement and the J.P. Morgan Agreement.
A copy of the form of the Warburg Sub-Adviser Agreement is attached as Exhibit A
to this Proxy Statement. The following discussion of the Warburg Sub-Adviser
Agreement is qualified in its entirety by reference to Exhibit A.
The Warburg Sub-Adviser Agreement, which the Trust, the Advisor and Warburg
negotiated, contains several significant changes when compared to the J.P.
Morgan Agreement. Under the Warburg Sub-Adviser Agreement, Warburg will be
entitled to a fee of .50% of the average daily net assets of the Fund. In
contrast, J.P. Morgan was entitled to a fee of .60% of the average daily net
assets of the International Fund for the first $50 million of net assets and a
fee of .50% of the average daily net assets above $50 million. On April 23,
1996, the net assets of the International Fund were $54,732,321.40 million. In
any case, however, the revised fee paid to Warburg will not effect total annual
fund operating expenses of the International Fund at any asset size of the
International Fund because there will be no change in the investment adviser fee
paid to the Adviser, out of which Warburg, as investment sub-adviser is paid its
fee, just as J.P. Morgan was paid. See "Compensation" below. The Warburg
Sub-Adviser Agreement also explicitly directs Warburg to act as investment
sub-adviser with respect to all of the Fund's assets and Warburg is appointed as
attorney-in-fact and agent for the limited purposes of executing documents in
connection with its management of those assets. Another difference between the
Agreements is that the Warburg Sub-Adviser Agreement contemplates that Warburg
may consider brokerage and research services when it evaluates the best price
and execution available from brokers or dealers for particular securities
transactions. In addition, Warburg is permitted, when it deems it in the best
interest of the International Fund and as permitted by law, to aggregate
purchase or sale orders to obtain lower brokerage commissions and/or the most
favorable execution.
The Warburg Sub-Adviser Agreement also contains more extensive indemnification
provisions than the J.P. Morgan Agreement and these indemnification provisions
are reciprocal between the Advisor and Warburg. These indemnification provisions
provide, among other things, that the Adviser shall indemnify Warburg against
any loss arising from the Warburg Sub-Adviser Agreement that may be based on any
untrue statement (or omission) of a material fact contained in the Trust's
registration statement, unless such statement or omission was made in reliance
on written information furnished by Warburg; except to the extent such losses
result from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of Warburg. The Warburg Sub-Advisory Agreement provides
similar assurances to the Adviser for losses arising out of Warburg's failure to
perform its responsibilities to the Fund, the Trust or the Adviser.
Duties Under the Warburg Sub-Adviser Agreement. Under the Warburg Sub-Adviser
Agreement, Warburg will, subject to the supervision and direction of the Board
of Trustees and the Adviser, make investment decisions, place purchase and sell
orders and provide record-keeping services and statistical information to the
International Fund. In connection therewith, Warburg will, among other things,
supervise the International Fund's investments and conduct a continual program
of investment, evaluation and, if appropriate, sale and reinvestment of the
International Fund's assets. The Warburg Sub-Adviser Agreement provides that
Warburg shall not be protected against any liability to the International Fund
or its shareholders by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by the sub-adviser of its obligations or duties thereunder.
Compensation. Under the Warburg Sub-Adviser Agreement, the Adviser will pay
Warburg a fee, which is calculated daily and paid monthly, at an annual rate of
.50% of the average daily net assets of the International Fund.
As compensation for investment sub-advisory services to the International Fund,
for the fiscal year ended December 31, 1995, J.P. Morgan received compensation
of $259,788. If the monthly fee under the Warburg Sub-Adviser Agreement had been
in effect during the fiscal year ended December 31, 1995, the investment
sub-adviser would have received annual compensation of $216,490, or 16.66% less
than the fees actually received by the investment sub-adviser during that
period. Because the investment sub-adviser's fees are paid out of the Adviser's
management fees, the aggregate investment management fees paid by the
International Fund for the services of both the Adviser and the investment
sub-adviser would have been the same under the Warburg Sub-Adviser Agreement.
The table below sets forth information about the proposed level of fees payable
to Warburg as investment sub-adviser, assuming that the Shareholders of the Fund
approve the Warburg Sub-Advisory Agreement:
Comparison of Current and Proposed Fees and Expenses*
Total Fund
Management Fees Other Expenses Operating Expenses
International Fund with
J.P Morgan as Sub-Adviser 0.95% 0.40% 1.35%
International Fund with
Warburg as Sub-Adviser 0.95% 0.40% 1.35%
*This table does not reflect separate account expenses. Management Fees and
other expenses are derived from 1995 operating experience, which have been
restated to reflect current expenses.
Examples. Under the Original Sub-Adviser Agreement and the Warburg
Sub-Adviser Agreement, the following examples would apply. Assuming a
5% annual return on assets, a $1,000 investment would be subject to the
following expenses:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
If you surrender your Contract at the
end of the applicable time period $99 $142 $186 $318
If you commence a life Annuity Payment
Option following the end of the
applicable time period $83 $88(1),(2) $150(3) $318
If you do not surrender your Contract
or commence an Annuity Payment
Option $29 $88 $150 $318
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. Similarly,
the assumed 5% annual rate of return is not an estimate or a guarantee of future
investment performance. The examples and other fee information set forth above
are based on estimates of the International Fund's expenses for 1996.
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(1) If the Annuity Commencement Date under a life or non-life Annuity Payment
Option were the last day of the third Contract Year, this figure would be $83.
(2) If the Annuity Payment Option exercised following the third Contract Year is
not a life annuity, this figure would be $74 due to the decrease in the
surrender charges from Contract Year 3 to Contract Year 4.
(3) If the Annuity Payment Option exercised following the fifth Contract Year is
not a life annuity, this figure would be $81 due to the decrease in the
surrender charges from Contract Year 5 to Contract Year 6. If the non-life
annuity option had its Annuity Commencement Date on the last day of the fifth
Contract Year, this figure would be $89.
Duration and Termination. Unless earlier terminated, the Warburg Sub-Adviser
Agreement will or would, as the case may be, continue in effect until the second
anniversary of its effective date, and thereafter, for periods of one year for
so long as such continuance is specifically approved at least annually (i) by
vote of the Board of Trustees or by vote of a majority of the outstanding voting
securities of the International Fund, and (ii) by vote of a majority of the
Non-Interested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on such approval. The Warburg Sub-Adviser Agreement is
terminable at any time without penalty by the Trust on not more than 60 days'
written notice to Warburg. In addition, the Warburg Sub-Adviser Agreement is
terminable at any time without penalty by the Adviser upon not less than 60
days' written notice to Warburg and by Warburg upon not less than 90 days'
written notice to the Adviser. The Warburg Sub-Adviser Agreement will
automatically and immediately terminate in the event of its assignment as
defined in the Investment Company Act.
In the event the Shareholder does not approve the adoption of the Warburg
Sub-Adviser Agreement, the Board of Trustees will promptly consider what further
action to take, and Warburg may continue to serve as investment sub-adviser to
the International Fund in the manner and to the extent permitted by the
Investment Company Act and the rules and the exemptions adopted by the
Securities and Exchange Commission (the "Commission") thereunder.
Information about Warburg. Warburg is located at 466 Lexington Avenue, New York,
New York 10017-3147. Warburg is a professional investment counselling firm that
provides investment services to investment companies, employee benefit plans,
investment endowment funds, foundations and other institutions and individuals.
As of February 29, 1996, Warburg managed approximately $14.0 billion of assets,
including approximately $7.7 billion of investment company assets. The Directors
of Warburg are Mr. Lionel I. Pincus, Chief Executive Officer, Mr. John L. Furth,
Chairman of the Board of Directors, and Mr. John L. Vogelstein. Incorporated in
1970, Warburg is a wholly-owned subsidiary of Warburg, Pincus Counsellors G.P.
("Counsellors G.P."), a New York general partnership. E.M. Warburg Pincus & Co.,
Inc. ("EMW") controls Warburg through its ownership of a class of voting
preferred stock of Warburg. Counsellors G.P. has no business other than being a
holding company of Warburg and its subsidiaries. Each Director's address is the
same as Warburg's address, and his principal occupation is his position with
Warburg and its affiliates. Lionel I. Pincus may be deemed a controlling person
of EMW.
Warburg currently provides investment services to the following investment
companies having an investment objective similar to the International Fund's
investment objective. Warburg provides these services pursuant to the fee
arrangements described below as of March 29, 1996. Warburg was waiving, as of
the date of this Proxy Statement, some or all of the fees payable by certain of
the portfolios listed below. These waivers are not reflected in the table.
- --------------------------------------------------------------------------------
AMOUNT OF ASSETS RATE OF
NAME OF INVESTMENT COMPANY UNDER MANAGEMENT COMPENSATION
- -------------------------- ---------------- ------------
Warburg Pincus International
Equity Fund $3,007,657,096 1.00%
Warburg Pincus Institutional
Fund, Inc. -- International
Equity Portfolio $ 651,968,581 0.80%
Warburg Pincus Trust --
International Equity Portfolio $ 157,414,798 1.00%
The GCG Trust -- Global Account $ 76,858,025 0.60% of the first
$500 million; 0.50%
of the excess over
$500 million
The Sierra Trust Funds --
International Growth Fund* $ 148,387,994 0.50%
* Since April 8, 1996, subject to shareholder approval.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDER VOTE FOR PROPOSAL NO. 1.
ADDITIONAL INFORMATION
THE DISTRIBUTOR
Sierra Investment Services Corporation ("Sierra Services"), located at 9301
Corbin Avenue, Suite 333, Northridge, California 91324, acts as the Trust's
distributor. Sierra Services is a wholly-owned subsidiary of Sierra Capital
Management Corporation, which is located at the same address.
THE ADMINISTRATOR
Sierra Fund Administration Corporation ("Sierra Administration"), located at
9301 Corbin Avenue, Suite 333, Northridge, California 91324, provides
shareholder service and other administrative services. Sierra Administration is
under common control with the Adviser and Sierra Services.
PORTFOLIO TRANSACTIONS
For the fiscal year ended December 31, 1995, the Trust paid no brokerage
commissions to affiliated broker-dealers.
BENEFICIAL OWNERSHIP
As of April 23, 1996, none of the Trustees or executive officers of the Trust
owned, or beneficially owned, more than 1% of the shares of the Fund, and, as a
group, the Trustees and executive officers owned in the aggregate less than 1%
of the shares of the Fund.
REQUIRED VOTE
Approval of the proposal with respect to the International Fund requires the
affirmative vote of the lesser of (1) holders of at least a majority of the
outstanding shares of the International Fund or (2) at least 67% of the shares
of the International Fund represented in person or by proxy at the Special
Meeting if at least a majority of the outstanding shares of the International
Fund is so represented. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSAL NO.
1.
SUBMISSION OF SHAREHOLDER PROPOSALS
As a Massachusetts business trust, the Trust is not required to hold annual
shareholders' meetings, except in limited circumstances. Shareholders who wish
to present a proposal for action at the next shareholders' meeting should send
their written proposals to The Sierra Variable Trust, 9301 Corbin Avenue, Suite
333, Northridge, California 91324, c/o Keith B. Pipes, Secretary.
OTHER MATTERS
The Trust is not aware of any matters, other than the matters described above,
to be acted on at the Special Meeting.
<PAGE>
PRELIMINARY COPY
BALLOT
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF
THE TRUSTEES OF THE SIERRA VARIABLE TRUST
The undersigned hereby instructs American General Life Insurance Company
Separate Account D ("Separate Account D") to vote shares of the International
Growth Fund (the "International Fund") of The Sierra Variable Trust (the
"Trust") attributable to their variable annuity contract for which the
undersigned is entitled to give instructions at the special meeting of
shareholders of the International Fund to be held at 9:00 a.m., Pacific Time, on
June 21, 1996 and at any adjournment thereof, upon the proposal below and as set
forth in the notice of special meeting. The undersigned acknowledges receipt of
the Notice of Special Meeting of Shareholders, the American General Life
Information Statement and the Trust's Proxy Statement accompanying this Ballot
and revokes any instructions previously given.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST AND WILL
BE VOTED "FOR" THE PROPOSAL UNLESS OTHERWISE INDICATED.
With respect to those shares for which instructions have not been received by
Separate Account D before the special meeting, Separate Account D will vote
those shares in the affirmative, in the negative or in abstention, in the same
proportion as those shares for which instructions have been received.
1. Approval of a new investment sub-advisory agreement with respect to the
International Fund, by and among the Trust, Sierra Investment Advisors
Corporation and Warburg, Pincus Counsellors, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
______________________________________________________
<PAGE>
[Reverse side of Ballot]
THE SIERRA VARIABLE TRUST
INTERNATIONAL GROWTH FUND
This Ballot, when properly executed,
will be voted in the manner directed
herein by the undersigned. IF NO
DIRECTION IS MADE, THIS BALLOT WILL
BE VOTED IN FAVOR OF THE PROPOSAL.
By signing and dating below you instruct Separate Account D to vote
International Fund shares attributable to your contract at the special meeting
of shareholders of the International Fund and at any adjournment of the special
meeting. It shall vote as recommended by the Trustees, unless otherwise
indicated below, and in its discretion upon such other matters as may properly
come before the special meeting.
____________________________
Signature
_______________________, 1996
Date ____________________________
Signature
Please sign your name(s) as printed above to provide instructions for voting of
shares as indicated on the reverse.
PLEASE DATE, SIGN AND RETURN PROMPTLY
<PAGE>
EXHIBIT A
SUB-ADVISER AGREEMENT
Sub-Adviser Agreement executed as of April 8, 1996 between SIERRA
INVESTMENT ADVISORS CORPORATION, a California corporation (the "Manager"), and
WARBURG, PINCUS COUNSELLORS, INC., a Delaware corporation (the "Sub-Adviser").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE TRUST.
(a) Subject always to the control of the Trustees of The Sierra
Variable Trust, a Massachusetts business trust (the "Trust") and to the
overall supervision of the Manager, the Sub-Adviser, at its expense as
provided herein, will render the following services to the
International Growth Fund series (the "Fund") of the Trust. The
Sub-Adviser will furnish continuously an investment program for the
portfolio represented by shares of the Fund and will make investment
decisions on behalf of the Fund with respect to all of the assets of
the Fund, including cash and cash equivalents and will place all orders
for the purchase and sale of portfolio securities of the Fund and for
the investment, reinvestment and management of cash or cash equivalents
of the Fund. The Sub-Adviser is hereby appointed and shall serve as
attorney-in-fact and agent of the Fund for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Sub-Adviser may be requested by brokers, dealers,
counterparties and other persons in connection with the Sub-Adviser's
management of the assets of the Fund.
(i) In the performance of its duties, the Sub-Adviser will
comply with the provisions of the Agreement and Declaration of
Trust, the By-laws of the Trust and the stated investment
objectives, policies and restrictions of the Fund as set forth in
its registration statement on Form N-1A, File No. 33-57732, and
will use its best efforts to safeguard and promote the welfare of
the Fund, and to comply with other policies which the Trustees or
the Manager, as the case may be, may from time to time determine.
Copies of the Trust's Registration Statement, including exhibits,
Agreement and Declaration of Trust and By-laws, in each case as
amended to date, have been or will be provided to the Sub-Adviser,
and the Manager agrees promptly to provide the Sub-Adviser with all
amendments or supplements to the Registration Statement, Agreement
and Declaration of Trust and By-laws.
(ii) The Sub-Adviser shall make its officers and employees
available to the Manager at reasonable times to review investment
policies of the Fund and to consult with the Manager regarding the
investment affairs of the Fund.
(iii) The Trust and the Manager each agrees, on an ongoing
basis, to notify the Sub-Adviser expressly in writing of each
change in the fundamental and nonfundamental investment policies of
the Fund. The Manager desires to engage and hereby appoints the
Sub-Adviser to act as investment sub-adviser to the Fund to which
appointment the Trust agrees. The Sub-Adviser accepts the
appointment and agrees to furnish the services described herein for
the compensation set forth herein.
(b) The Sub-Adviser, at its expense, will furnish all necessary
office space and equipment, bookkeeping and clerical services
(excluding shareholder accounting and transfer agency services)
required for it to perform its duties hereunder and will pay all
salaries, fees and expenses of any officer of the Trust who is an
employee of, or otherwise affiliated with, the Sub-Adviser and is not
an employee of, or otherwise affiliated with, the Manager; PROVIDED
THAT no person who is an employee of, or otherwise affiliated with, the
Sub-Adviser shall serve as a Trustee of the Trust.
(c) The Manager agrees to provide the Sub-Adviser with such
assistance as may be reasonably requested by the Sub-Adviser in
connection with its activities pertaining to the Fund under this
Agreement, including, without limitation, information concerning the
Fund, its funds available, or to become available, for investment and
generally as to the conditions of the Fund's affairs.
(d) In fulfilling its obligations hereunder, the Sub-Adviser shall
be entitled to rely on and act in accordance with, and the Manager
agrees to hold the Sub-Adviser harmless for any act or omission taken
in good faith in reliance on, information and instructions, which may
be standing instructions, provided to the Sub-Adviser by the Manager,
the Trust's administrator, or other agent of the Manager designated by
the Manager. Such information and instructions shall be conveyed to the
Sub-Adviser in a timely manner so as to permit the Sub-Adviser to take
such action as may be required in an orderly fashion. The Manager
agrees to provide or cause to be provided to the Sub-Adviser on an
ongoing basis, such information as is reasonably requested by the
Sub-Adviser for performance by the Sub-Adviser of its obligations under
this Agreement, and the Sub-Adviser shall not be in breach of any term
of this Agreement or be deemed to have acted negligently if the Manager
fails to provide or cause to be provided such information and the
Sub-Adviser relies on the information most recently furnished to the
Sub-Adviser. The Manager will promptly provide the Sub-Adviser with any
procedures applicable to the Sub-Adviser adopted from time to time by
the Board of Trustees of the Trust and agrees to promptly provide the
Sub-Adviser copies of all amendments thereto.
(e) In the selection of brokers, dealers, futures commissions
merchants or any other sources of portfolio investments for the Fund
(hereafter, "brokers or dealers") and the placing of orders for the
purchase and sale of portfolio investments for the Fund, the
Sub-Adviser shall use its best efforts to obtain the most favorable
price and execution available, except to the extent it may be permitted
to pay higher brokerage commissions for brokerage and research services
as described below. In using its best efforts to obtain the most
favorable price and execution available, the Sub-Adviser, bearing in
mind the Fund's best interests at all times, shall consider all factors
it deems relevant, including by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount
of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service
rendered by the broker or dealer in other transactions. Subject to such
policies as the Trustees of the Trust may determine that are
communicated in writing to the Sub-Adviser as provided in Section
1(a)(iii) hereof, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay, on
behalf of the Fund, a broker or dealer that provides brokerage and
research services to the Sub-Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities over time with respect to the
Trust and to other clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. As provided in the
Management Contract referred to in Section 3 below, the Trust agrees
that any entity or person associated with the Manager or Sub-Adviser
that is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of the Fund
that is permitted by Section 11(a) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), or Rule 11a2-2(T) thereunder, and
the Trust has consented to the retention of compensation for such
transactions in accordance with Section 11(a) or Rule 11a2-2(T)(2)(iv)
under the 1934 Act.
(f) In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best price and execution available,
the Sub-Adviser is authorized to consider the brokerage and research
services (within the meaning of Section 28(e) of the 1934 Act) provided
to the Sub-Adviser or any affiliated person of the Sub-Adviser. Subject
to the requirements of Section 17(e) of the Investment Company Act of
1940, as amended (the "1940 Act"), the Sub-Adviser is specifically
authorized to select an affiliated person of the Sub-Adviser to execute
brokerage, but in no event principal, transactions for the Fund. On
occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the
Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold in order to obtain the most
favorable execution and/or lower brokerage commissions, if any, and
efficient execution. In such event, allocation of securities so sold or
purchased, as well as the expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner the Sub-Adviser considers to be
the most equitable and consistent with its fiduciary obligation over
time to the Fund and to such other clients. Furthermore, the Trust and
the Manager recognize that the Sub-Adviser may give advice, and take
action, with respect to its other clients that may differ from the
advice given, or the time or nature of action taken, with respect to
the Fund.
(g) The Sub-Adviser shall not be obligated to pay any expenses of
or for the Fund not expressly assumed by the Sub-Adviser pursuant to
this Section 1 other than as provided in Section 3.
(h) The Sub-Adviser shall maintain all books and records with
respect to the Fund's portfolio transactions required by subparagraphs
(b)(5) - (b)(11) and paragraph (f) of Rule 31a-1 under the 1940 Act,
and shall render to the Board of Trustees of the Trust such periodic
and special reports as the Board may reasonably request.
2. OTHER AGREEMENTS, ETC.
The Trust understands that the Sub-Adviser now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment adviser to one or more other investment
companies or series of investment companies, and the Trust has no objection to
the Sub-Adviser so acting, PROVIDED THAT whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures believed to be equitable to each entity over time.
Similarly, opportunities to sell securities will be allocated in an equitable
manner over time. The Trust recognizes that in some cases this procedure may
adversely affect the size of the position that may be acquired or disposed of
for the Fund. In addition, the Trust understands that the persons employed by
the Sub-Adviser to assist the performance of the Sub-Adviser's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the Sub-Adviser or any
affiliate of the Sub-Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER.
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered and for the expenses borne by the Sub-Adviser
pursuant to Section 1, a fee, computed and paid monthly at the annual rate of
0.50% of the Fund's average daily net assets. Such average daily net asset value
of the Fund shall be determined by taking an average of all of the
determinations of such net asset value during such month at the close of
business on each business day during such month while this contract is in
effect. For the purposes of determining fees payable to the Sub-Adviser, the
value of the net assets of the Fund shall be computed at the times and in the
manner specified in the Prospectus or Statement of Additional Information
relating to the Fund as from time to time in effect. Such fee shall be payable
for each month within 10 business days after the end of such month.
Notwithstanding the foregoing, in the event that any reduction in the
fees paid to the Manager under the Management Contract shall be required as a
result of any statutory or regulatory limitation on investment company expenses,
there shall be a proportionate reduction in the fee payable to the Sub-Adviser
hereunder; PROVIDED THAT the Sub-Adviser will never be required to pay more than
the amount of fees it receives.
If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS CONTRACT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract shall have terminated for any reason; and this Agreement shall not be
amended unless such amendment be approved at a meeting by the affirmative vote
of a majority of the outstanding shares of the Fund, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Sub-Adviser.
5. INDEMNIFICATIONS.
(a) The Manager shall indemnify the Sub-Adviser and its controlling
persons, officers, directors, employees, agents, legal representatives
and persons controlled by it (collectively, "Sub-Adviser Related
Persons") to the fullest extent permitted by law against any and all
loss, damage, judgements, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees (collectively "Losses"),
incurred by the Sub-Adviser or Sub-Adviser Related Persons arising from
or in connection with this Agreement or the performance by the
Sub-Adviser or Sub-Adviser Related Persons of its or their duties
hereunder, including, without limitation, such Losses arising under any
applicable law or that may be based upon any untrue statement of a
material fact contained in the Trust's registration statement, or any
amendment thereof or any supplement thereto, or the omission to state
therein a material fact known or which should have been known and was
required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in
reliance upon written information furnished to the Manager by the
Sub-Adviser or a Sub-Adviser Related Person; except to the extent any
such Losses result from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of the Sub-Adviser or a
Sub-Adviser Related Person in the performance of any of its duties
under, or in connection with, this Agreement.
(b) The Sub-Adviser shall indemnify the Manager and its controlling
persons, officers, directors, employees, agents, legal representatives
and persons controlled by it (collectively, "Manager Related Persons")
to the fullest extent permitted by law against any and all Losses
incurred by the Manager or Manager Related Persons arising from or in
connection with this Agreement or the performance by the Manager or
Manager Related Persons of its or their duties hereunder so long as
such Losses arise out of the Sub-Adviser's failure to perform its
responsibilities to the Manager, the Fund or the Trust hereunder,
including, without limitation, such Losses arising under any applicable
law or that may be based upon any untrue statement of a material fact
contained in the Trust's registration statement, or any amendment
thereof or any supplement thereto, or the omission to state therein a
material fact known or which should have been known and was required to
be stated therein or necessary to make the statements therein not
misleading, to the extent that such statement or omission was based on
information provided by the Sub-Adviser or a Sub-Adviser Related Person
unless such statement or omission was made in reliance upon written
information furnished to the Sub-Adviser or Sub-Adviser Related Person
by the Manager or a Manager Related Person; and except to the extent
any such Losses result from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of the Manager or a
Manager Related Person in the performance of any of its duties under,
or in connection with, this Agreement.
(c) The indemnifications provided in this Section 5 shall survive
the termination of this Agreement.
6. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust may at any time terminate this Agreement by not more
than sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager and the Sub-Adviser, or
(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund,
and (ii) a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager or of the Sub-Adviser, by vote
cast in person at a meeting called for the purpose of voting on such
approval, do not specifically approve at least annually the continuance
of this Agreement, then this Agreement shall automatically terminate as
at the close of business on the second anniversary of its execution, or
upon the expiration of one year from the effective date of the last
such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the
Fund for their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, the Sub-Adviser may
continue to serve hereunder in a manner consistent with the 1940 Act
and the Rules and Regulations thereunder, or
(c) The Manager may at any time terminate this Agreement by not
less than sixty (60) days' written notice delivered or mailed by
registered mail, postage prepaid, to the Sub-Adviser, and the
Sub-Adviser may at any time terminate this Agreement by not less than
ninety (90) days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 6 shall be
without the payment of any penalty.
7. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended from time to time, or under the laws of any jurisdiction in which the
Sub-Adviser is required to be registered as an investment adviser in order to
perform its obligations under this Agreement, (b) the Sub-Adviser shall have
been served or otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, involving the affairs of the Trust and (c) there shall be any change in
the control of the Sub-Adviser.
8. CERTAIN DEFINITIONS.
(a) For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding shares" of the Fund means the affirmative
vote, at a duly called and held meeting of shareholders, (a) of the
holders of 67% or more of the shares of the Fund present (in person or
by proxy) and entitled to vote at such meeting, if the holders of more
than 50% of the outstanding shares of or the Fund entitled to vote at
such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Fund entitled to vote
at such meeting, whichever is less.
(b) For the purposes of this Agreement, the terms "affiliated
person", "control", "interested person" and "assignment" shall have
their respective meanings defined in the 1940 Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under the 1940 Act;
the term "specifically approve at least annually" shall be construed in
a manner consistent with the 1940 Act and the Rules and Regulations
thereunder; and the term "brokerage and research services" shall have
the meaning given in the 1934 Act and the Rules and Regulations
thereunder.
9. NONLIABILITY OF SUB-ADVISER.
The Sub-Adviser shall exercise its best judgment in rendering its
services under this agreement. Except as may otherwise be provided by federal or
state securities laws and in Section 5 hereof, in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser, or
reckless disregard of its obligations and duties hereunder, the Sub-Adviser
shall not be subject to any liability to the Trust or the Fund, or to any
shareholder of the Fund, for any act or omission in the course of, or connected
with, rendering services hereunder.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
11. USE OF NAMES.
(a) It is understood that the name "Warburg, Pincus Counsellors,
Inc." or any derivative thereof or logo associated with that name is
the valuable property of the Sub-Adviser and its affiliates and that
the Trust and/or the Fund have the right to use such name (or
derivative or logo) in offering materials of the Trust and/or Fund only
with the prior written approval of the Sub-Adviser and for so long as
the Sub-Adviser is an investment sub-adviser to the Trust and/or the
Fund; PROVIDED THAT the Trust and the Fund may use such name (or
derivative or logo) without such prior written approval in offering
materials of the Trust to the extent that (i) such materials simply
list the Sub-Adviser as the Sub-Adviser to the Fund as part of a
listing of the investment sub-advisers to the series or portfolios of
the Trust with a brief description of the Sub-Adviser's experience and
duties hereunder; (ii) such materials include such name (or derivative
or logo) and any related information that has been previously approved
by the Sub-Adviser or that is required to be disclosed by applicable
law or regulation, such as information disclosed in the Trust's
registration statement; or (iii) such materials are intended for
broker-dealer use only, for use by the Trust's Trustees, or for
internal use by the Trust and the Manager. Such prior written approval
of the Sub-Adviser shall not be unreasonably withheld and shall be
deemed to be given if no written objection is received by the Trust,
the Fund or the Manager within three business days after the request is
made by the Trust, the Fund or the Manager for such use. Upon
termination of this Agreement, the Trust and the Fund shall forthwith
cease to use such name (or derivative or logo) as soon as reasonably
practicable.
(b) It is understood that the names "The Sierra Variable Trust,"
and "Sierra Investment Advisors Corporation" or any derivatives thereof
or logos associated with such names is the valuable property of the
Trust and/or the Manager and their affiliates and that the Sub-Adviser
or its affiliates have the right to use such names (or derivatives or
logos) in marketing materials of the Sub-Adviser or its affiliates only
with the prior written approval of the Manager or the Trust, as
applicable, and for so long as the Sub-Adviser is an investment
sub-adviser to the Trust and/or the Fund; PROVIDED THAT the Sub-Adviser
or its affiliates may use such names (or derivatives or logos) without
such prior written approval in marketing materials of the Sub-Adviser
or its affiliates to the extent that (i) such materials simply list the
Trust or the Fund as part of a listing of the investment companies
advised by the Sub-Adviser or its affiliates with a brief description
of the Trust or the Fund; or (ii) such materials include such names (or
derivatives or logos) and any related information that has been
previously approved by the Trust or the Manager, as applicable, or that
is required to be disclosed by applicable law or regulation, such as
information disclosed in the Form ADV or Form BD of the Sub-Adviser or
its affiliates; or (iii) such materials are intended for broker-dealer
use only or for internal use by the Sub-Adviser. Such prior written
approval of the Manager or the Trust, as applicable, shall not be
unreasonably withheld and shall be deemed to be given if no written
objection is received by the Sub-Adviser within three business days
after the request is made by the Sub-Adviser for such use. Upon
termination of this Agreement, the Sub-Adviser and its affiliates shall
forthwith cease to use such names (or derivatives or logos) as soon as
reasonably practicable.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have each caused
this instrument to be signed below in duplicate on its behalf by its duly
authorized representative, all as of the day and year first above written.
SIERRA INVESTMENT ADVISORS CORPORATION
By /s/ Michael D. Goth
-------------------------------
Name: Michael D. Goth
Title: Chief Operating Officer
WARBURG, PINCUS COUNSELLORS, INC.
By /s/ Eugene P. Grace
-------------------------------
Name: Eugene P. Grace
Title: Senior Vice President
Accepted and agreed to as of the day and year first above written:
THE SIERRA VARIABLE TRUST
By /s/ Keith Pipes
-------------------------------
Name: Keith Pipes
Title: Executive Vice President
