<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] 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):
[ ] $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:
[X] 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: $125.00
2) Form, Schedule or Registration Statement No.: PRES 14A
3) Filing Party:
4) Dated Filed: May 2, 1996
<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
----------------
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 14, 1996
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 14, 1996
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 14, 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>
THE SIERRA VARIABLE TRUST
9301 Corbin Avenue, Suite 333
Northridge, California 91324
----------------
PROXY STATEMENT
----------------
May 14, 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 Adviser (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 Adviser and Warburg in comparison to the former investment sub-
advisory agreement among the Trust, the Adviser 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. It should be noted that, since the investment
sub-adviser's fee is paid by Sierra Advisors, differences in the sub-adviser's
compensation will have no direct impact on the International Fund. Such
differences could, however, affect decisions by the Adviser about whether or
to what extent it is willing to waive its own fees. For further information
about the sub-advisory fees and the differences and similarities between the
sub-advisory agreements see the discussion below under "Comparison of the
Warburg Sub-Advisory Agreement and the J.P. Morgan Agreement."
This Proxy Statement is first being mailed to the Shareholder of the
International Fund on or about May 14, 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.
- ----------
(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.
<PAGE>
INFORMATION ABOUT THE ADVISER AND WARBURG. 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 recommends the selection of 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; 0.85% of
the International Fund's average daily net assets between $50 million and $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, $411,331 in advisory fees was paid by
the Fund to Sierra Advisors, of which $259,788 was paid by Sierra Advisors to
J.P. Morgan.
REASON FOR TERMINATION OF J.P. MORGAN AGREEMENT. The J.P. Morgan Agreement is
dated April 8, 1993, and was last approved by consent of the sole shareholder
of the International Fund on March 17, 1993 for the purpose of approving J.P.
Morgan as the International Fund's investment sub-adviser. 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. Pursuant to a
termination agreement between J.P. Morgan and the Adviser dated as of March
29, 1996, the J.P. Morgan Agreement was terminated effective as of 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. In particular, the Board gave significant weight to Warburg's
performance history and its practice of broadly diversifying its international
portfolios on a country basis.
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 Adviser 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. 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 contains a number of provisions
that are implicit in the J.P. Morgan Agreement or that are governed by
applicable law. The Warburg Sub-Adviser Agreement explicitly directs Warburg
to act as investment sub-adviser with respect to all of the Fund's 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. J.P. Morgan had
similar authority and responsibility despite the fact that the foregoing
matters were not explicitly covered by the J.P. Morgan Agreement.
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 Adviser and Warburg.
However, these provisions do not require the International Fund to provide
additional indemnification; nor do they provide more extensive indemnification
to the International Fund. 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 Sierra Advisors, which includes the fees payable by Sierra Advisors
to Warburg as investment sub-adviser, assuming that the Shareholders of the
Fund approve the Warburg Sub-Advisory Agreement:
<TABLE>
<CAPTION>
COMPARISON OF CURRENT AND PROPOSED FEES AND EXPENSES*
TOTAL FUND
MANAGEMENT FEES OTHER EXPENSES OPERATING EXPENSES
--------------- -------------- ------------------
<S> <C> <C> <C>
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%
</TABLE>
- ----------
*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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
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
</TABLE>
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.
- ----------
(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, 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.
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
NAME OF INVESTMENT COMPANY UNDER MANAGEMENT RATE OF COMPENSATION
- -------------------------- ---------------- --------------------
<S> <C> <C>
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
The Sierra Trust Funds -- International
Growth Fund* ......................................... $ 148,387,994 0.50%
- ----------
*Since April 8, 1996, subject to shareholder approval.
</TABLE>
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDER VOTE FOR THE PROPOSAL.
---
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 THE PROPOSAL.
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>
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.
Very truly yours,
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
<PAGE>
SIERRA VARIABLE TRUST
INTERNATIONAL GROWTH FUND
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.
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.
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.
<TABLE>
<S> <C>
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X] SVT-IG KEEP THIS PORTION FOR YOUR RECORDS
- ------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND DETACH AND RETURN THIS PORTION ONLY
</TABLE>
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
PLEASE SIGN YOUR NAME(S) AS PRINTED ABOVE TO PROVIDE INSTRUCTIONS FOR
VOTING OF SHARES AS INDICATED ON THE REVERSE.
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.
PLEASE DATE, SIGN AND RETURN PROMPTLY
- ----------------------------- ----------------------------- ----------------
Signature Signature (Joint Owners) Date
