<PAGE> 1
AMERICAN GENERAL LIFE INSURANCE COMPANY
HOUSTON, TEXAS 77251-1401
------------------------
NOTICE TO CONTRACTOWNERS OF SPECIAL MEETING
OF SHAREHOLDERS OF THE SIERRA VARIABLE TRUST
TO BE HELD ON DECEMBER 23, 1997
Dear Contractowner:
The Variable Account Value of your Sierra Advantage variable annuity
contract or your Sierra Asset Manager variable annuity contract has been
allocated at your discretion to investment divisions of Separate Account D of
American General Life Insurance Company ("American General Life"). These
divisions invest in corresponding funds or portfolios of The Sierra Variable
Trust, a mutual fund (the "Trust").
As a Contractowner of record at the close of business on November 3, 1997
(the "Record Date"), you are hereby offered the opportunity to instruct American
General Life as to how it should vote on proposals to be considered at a Special
Meeting of Shareholders of the Trust, relating to the Global Money Fund, Short
Term High Quality Bond Fund, U.S. Government Fund, Corporate Income Fund, Growth
and Income Fund, Growth Fund, Emerging Growth Fund and International Growth Fund
(the "Funds"); and the Capital Growth Portfolio, Growth Portfolio, Balanced
Portfolio and Value Portfolio (the "Portfolios"). American General Life's
Separate Account D, is, and was on the Record Date, the sole shareholder of the
Portfolios and, along with the Portfolios, of the Funds.
The Special Meeting will be held at 9301 Corbin Avenue, Suite 333,
Northridge, California 91324, on December 23, 1997 at 11 a.m. Pacific Time, to
consider the approval of (1) a new Board of Trustees; (2) a new investment
management agreement between the Trust and Composite Research & Management Co.
("Composite") on behalf of each Fund and Portfolio; (3) implementation of a
structure for the Trust which would permit the Board of Trustees to replace or
appoint investment sub-advisers for each Fund without the necessity of seeking
Contractowner approval; (4) a new investment sub-advisory agreement for the
Growth Fund and Emerging Growth Fund between Composite and Janus Capital
Corporation; and (5) a new investment sub-advisory agreement for the
International Growth Fund between Composite and Warburg Pincus Asset Management,
Inc.
Attached to this Notice is the Information Statement of American General
Life, a Notice of Special Meeting of Shareholders and the Proxy Statement of the
Trust. You are urged to read both of these statements prior to completing your
Voting Instruction Card(s).
American General Life with Sierra Investment Advisors Corporation, the
Funds' investment adviser, and Sierra Investment Services Corporation, the
Portfolios' investment adviser and 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 voting
instructions and returning it to American General Life.
Timothy W. Still
Vice President
IMPORTANT
IT IS IMPORTANT THAT YOUR CONTRACT BE REPRESENTED. PLEASE MARK YOUR
PREFERENCE ON THE VOTING INSTRUCTIONS, 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 ENSURE THAT YOUR INTERESTS ARE
REPRESENTED.
<PAGE> 2
AMERICAN GENERAL LIFE INSURANCE COMPANY
HOUSTON, TEXAS 77251-1401
------------------------
INFORMATION STATEMENT ON THE SPECIAL MEETING
OF SHAREHOLDERS OF THE SIERRA VARIABLE TRUST
TO BE HELD ON DECEMBER 23, 1997
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 the Sierra Advantage variable annuity contract and the
Sierra Asset Manager variable annuity contract ("Contractowners") whose Variable
Account Values were allocated to American General Life's Separate Account D as
of November 3, 1997 (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 the proposals to
be considered at a Special Meeting of the Shareholders of The Sierra Variable
Trust ("the Trust"), relating to the Global Money Fund, Short Term High Quality
Bond Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income Fund,
Growth Fund, Emerging Growth Fund and International Growth Fund (the "Funds");
and the Capital Growth Portfolio, Growth Portfolio, Balanced Portfolio and Value
Portfolio (the "Portfolios"), referred to in the foregoing Notice and any
adjournments thereof (the "Special Meeting").
The proposals scheduled to be considered at the Special Meeting are the
approval of (1) a new Board of Trustees; (2) a new investment management
agreement between the Trust and Composite Research & Management Co.
("Composite") on behalf of each Fund and Portfolio; (3) implementation of a
structure for the Trust which would permit the Board of Trustees to replace or
appoint investment sub-advisers for each Fund without the necessity of seeking
Contractowner approval; (4) a new investment sub-advisory agreement for the
Growth Fund and Emerging Growth Fund between Composite and Janus Capital
Corporation ; and (5) a new investment sub-advisory agreement for the
International Growth Fund between Composite and Warburg Pincus Asset Management,
Inc.
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 or Portfolios of the Trust, a
series-type mutual fund. The following Funds and Portfolios are available for
investment divisions of the Separate Account:
<TABLE>
<CAPTION>
FUNDS PORTFOLIOS
--------------------------------------------------- -------------------------
<S> <C>
Global Money Fund Capital Growth Portfolio
Short Term High Quality Bond Fund Growth Portfolio
U.S. Government Fund Balanced Portfolio
Corporate Income Fund Value Portfolio
Growth and Income Fund
Growth Fund
Emerging Growth Fund
International Growth Fund
Short Term Global Government Fund*
</TABLE>
- ---------------
* Information regarding this fund will be included in a separate proxy statement
<PAGE> 3
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 Proxy Statement and Voting
Instruction Card(s) are first being mailed to Contractowners on or about
November 25, 1997.
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 Global Money Fund, Short Term High Quality Bond Fund,
U.S. Government Fund, Corporate Income Fund, Growth and Income Fund, Growth
Fund, Emerging Growth Fund, International Growth Fund, Capital Growth Portfolio,
Growth Portfolio, Balanced Portfolio and Value Portfolio (the "Shares") held in
the Separate Account division, Contractowners are asked promptly to date, mark
their preference on, sign and mail the enclosed Voting Instruction Card(s) in
the accompanying postage-paid envelope.
IF A PREFERENCE IS NOT MARKED ON A VOTING INSTRUCTION CARD, ITS RETURN WILL
BE TREATED AS AN INSTRUCTION TO VOTE THE SHARES IN FAVOR OF THE PROPOSALS.
The number of Shares of the Funds and Portfolios for which Contractowners
may provide voting instructions (in aggregate, "Shares Attributable to
Contractowners") was determined by dividing (i) the Contractowners Variable
Account Value attributable to each Fund and Portfolio by (ii) the net asset
value of one share of each Fund and Portfolio as of the Record Date.
At any time prior to American General Life's voting at the Special Meeting
on December 23, 1997, or any adjournment thereof, of the Shares held in each
division of Separate Account D, a person executing a Voting Instruction Card
with respect to such division may revoke it by giving written notice to Timothy
W. Still, Vice President of Annuity Administration, American General Life.
HOW AMERICAN GENERAL LIFE INSURANCE COMPANY WILL VOTE
Currently, American General Life's Separate Account D, either directly or
indirectly, owns all 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 proposals to be
considered at the Special Meeting. As of the Record Date, there were 76,600,105
Shares of the Trust outstanding, including the following number of Shares of the
Funds and Portfolios:
<TABLE>
<CAPTION>
DIVISION SHARES AS OF RECORD DATE
- ------------------------------------------------------------------------ ------------------------
<S> <C>
Global Money Fund....................................................... 31,449,815
Short Term High Quality Bond Fund....................................... 4,944,132
U.S. Government Fund.................................................... 6,127,345
Corporate Income Fund................................................... 5,053,151
Growth and Income Fund.................................................. 5,799,161
Growth Fund............................................................. 7,782,722
Emerging Growth Fund.................................................... 3,183,116
International Growth Fund............................................... 4,404,893
Capital Growth Portfolio................................................ 49,466
Growth Portfolio........................................................ 104,060
Balanced Portfolio...................................................... 198,762
Value Portfolio......................................................... 9,807
</TABLE>
American General Life will vote all Shares attributable to Contractowners
in each division of Separate Account D, for or against approval of the
proposals, or withhold its vote, in the same proportion as the votes cast by
American General Life in accordance with voting instructions it has received.
Shares attributable to
<PAGE> 4
amounts retained by American General Life in each Division or shares of the
Funds held by the Portfolios will be voted in the same proportion as Shares held
in the Division are voted pursuant to voting instructions.
OTHER MATTERS
American General Life is not aware of any matters, other than the
aforementioned proposals, 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. American General Life reserves the
right to vote for adjournment of the Special Meeting for the purpose of further
solicitation of instructions.
In addition to solicitation by mail, voting instructions may be solicited
in person or by telephone by employees or agents of American General Life.
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 voting instructions will be borne by
Composite and its affiliates. Solicitation will be primarily by mail, but may
also be by telephone, telegram or personal interview.
PLEASE MARK YOUR PREFERENCE ON THE VOTING INSTRUCTION CARD(S), THEN SIGN,
DATE AND MAIL IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. IT IS IMPORTANT THAT
YOUR CONTRACT BE REPRESENTED.
<PAGE> 5
THE SIERRA VARIABLE TRUST
9301 CORBIN AVENUE, SUITE 333
NORTHRIDGE, CALIFORNIA 91324
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 23, 1997
TO THE SHAREHOLDERS OF THE SIERRA VARIABLE TRUST:
You are cordially invited to attend a special meeting of the shareholders
of The Sierra Variable Trust (the "Trust"), a Massachusetts business trust, on
December 23, 1997 at 11:00 a.m. Pacific Time or at any adjournment thereof (the
"Special Meeting"), at the offices of Sierra Fund Administration Corporation,
9301 Corbin Avenue, Suite 333, Northridge, California 91324. Shareholders of the
Global Money Fund, Short Term High Quality Bond Fund, U.S. Government Fund,
Corporate Income Fund, Growth and Income Fund, Growth Fund, Emerging Growth Fund
and International Growth Fund (each a "Fund," and collectively the "Funds"); and
the Capital Growth Portfolio, Growth Portfolio, Balanced Portfolio and Value
Portfolio (each a "Portfolio," and collectively the "Portfolios"), will be asked
to consider the proposals set forth below and to transact such other business as
may be properly brought before the Special Meeting:
PROPOSAL 1: To consider and act upon a proposal to elect a Board of
Trustees of the Trust (voted on by the shareholders of the
Trust as a whole).
PROPOSAL 2: To approve a new Investment Management Agreement between the
Trust, on behalf of each Fund and Portfolio, and Composite
Research & Management Co. ("Composite") (voted on separately
by shareholders of each Fund and Portfolio).
PROPOSAL 3: To approve a proposal which would authorize the Board of
Trustees to replace or appoint investment sub-advisers for
each Fund without the necessity of seeking shareholder
approval (voted on separately by shareholders of each Fund).
PROPOSAL 4: To approve a new Investment Sub-Advisory Agreement for the
Growth Fund between Composite and Janus Capital Corporation
("Janus") (voted on by shareholders of the Growth Fund only).
PROPOSAL 5: To approve a new Investment Sub-Advisory Agreement for the
Emerging Growth Fund between Composite and Janus (voted on by
shareholders of the Emerging Growth Fund only).
PROPOSAL 6: To approve a new Investment Sub-Advisory Agreement for the
International Growth Fund between Composite and Warburg Pincus
Asset Management, Inc. (voted on by shareholders of the
International Growth Fund only).
Only shareholders of the Trust at the close of business on November 3, 1997
are entitled to notice of, and to vote at, the Special Meeting. Shareholders of
the Short Term Global Government Fund will receive a separate proxy statement
regarding the election of Trustees, as well as certain issues related solely to
that fund of the Trust.
1
<PAGE> 6
Whether or not you expect to be present at the Special Meeting, please
complete and promptly return the enclosed proxy card(s). A postage paid envelope
is enclosed for your convenience so that you may return your proxy card(s) as
soon as possible. It is most important and in your interest for you to sign and
date your proxy card(s) and return it so that a quorum will be present and a
maximum number of shares may be voted. The proxy is revocable at any time prior
to its use.
By Order of the Board of Trustees
Keith B. Pipes
President
Dated: November 25, 1997
2
<PAGE> 7
THE SIERRA VARIABLE TRUST
9301 CORBIN AVENUE, SUITE 333
NORTHRIDGE, CALIFORNIA 91324
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished by the Board of Trustees (the "Board") of
The Sierra Variable Trust (the "Trust") on behalf of Global Money Fund, Short
Term High Quality Bond Fund, U.S. Government Fund, Corporate Income Fund, Growth
Fund, Emerging Growth Fund, Growth and Income Fund and International Growth Fund
(each a "Fund," and collectively the "Funds"); and the Capital Growth Portfolio,
Growth Portfolio, Balanced Portfolio and Value Portfolio (each a "Portfolio,"
and collectively "Portfolios"), in connection with the solicitation of proxies
for use at the special meeting of shareholders of the Trust to be held on
December 23, 1997, at 11:00 a.m. Pacific Time, or at any adjournment thereof
(the "Special Meeting"), at the offices of Sierra Fund Administration
Corporation ("Sierra Administration"), 9301 Corbin Avenue, Suite 333,
Northridge, California 91324. It is expected that the Notice of Special Meeting,
the Proxy Statement and proxy cards will be mailed to shareholders on or about
November 25, 1997.
The primary purpose of the Special Meeting is to (1) ask shareholders to
elect a Board of Trustees, (2) permit shareholders of each Fund and Portfolio to
consider a new Investment Management Agreement (the "New Management Agreement")
between the Trust and Composite Research & Management Co. ("Composite"), (3)
seek approval of a proposal which would authorize the Board to replace or
appoint investment sub-advisers for each Fund without the necessity of seeking
shareholder approval, and (4) permit shareholders of each of the Growth,
Emerging Growth and International Growth Funds to consider new Investment
Sub-Advisory Agreements (each a "New Sub-Advisory Agreement") to take effect
following the effectiveness of the New Management Agreement. The Trust's New
Management Agreement is similar in substance to the Trust's current Investment
Advisory Agreements (the "Current Advisory Agreements") for the Funds and the
Portfolios although in the case of the Global Money, Short Term High Quality
Bond, U.S. Government, Corporate Income and the Growth and Income Funds,
Composite, rather than a sub-adviser, will retain investment discretion for such
Funds. The New Sub-Advisory Agreements are substantially identical to each
applicable Fund's current Investment Sub-Advisory Agreement (each a "Current
Sub-Advisory Agreement"), except for the parties, dates of execution,
effectiveness and initial term.
If you do not expect to be present at the Special Meeting and wish your
shares to be voted, please date and sign the enclosed Proxy Card ("Proxy") and
mail it in the enclosed reply envelope, allowing sufficient time for the Proxy
to be received on or before 11:00 a.m. Pacific Time on December 23, 1997. No
postage is required if the Proxy is mailed in the United States. If the
accompanying Proxy is executed properly and returned, shares represented by it
will be voted at the Special Meeting in accordance with the instructions on the
Proxy. However, if the Proxy is returned and no instructions are specified,
shares will be voted FOR each proposal described above (each a "Proposal" and,
together, the "Proposals"). All shareholders of the Trust are entitled to vote
on Proposals 1 and 2. Only shareholders of the Funds may vote on Proposal 3,
which would permit the Board of Trustees to appoint sub-advisers without
shareholder approval. With respect to Proposals 4, 5 and 6, shareholders of the
Growth Fund, Emerging Growth Fund and International Growth Fund, respectively,
may vote on the applicable Sub-Advisory Agreements. Shareholders may revoke
their Proxies at any time prior to the time they are voted by giving written
notice to the Secretary of the Trust, by delivering a subsequently dated Proxy
or by attending and voting at the Special Meeting. This Proxy Statement solicits
votes on Proposals affecting more than one Fund and Portfolio as set forth
below.
<PAGE> 8
Shareholders are requested to vote only on those Proposals affecting the Fund(s)
or Portfolio(s) of which they are shareholders.
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS ENTITLED TO VOTE
- --------------------------------------------- ---------------------------------------------
<S> <C>
Proposal 1 (Election of Trustees) Shareholders of the Trust as a whole
Proposal 2 (Approval of New Management Shareholders of each Fund and Portfolio vote
Agreement) separately
Proposal 3 (Permitting the Trust to Appoint Shareholders of each Fund vote separately
Sub-Advisers without Shareholder Approval)
Proposal 4 (Approval of New Sub-Advisory Shareholders of the Growth Fund only
Agreement)
Proposal 5 (Approval of New Sub-Advisory Shareholders of the Emerging Growth Fund only
Agreement)
Proposal 6 (Approval of New Sub-Advisory Shareholders of the International Growth Fund
Agreement) only
</TABLE>
The close of business on November 3, 1997 has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to notice of,
and to vote at, the Special Meeting and at any adjournment thereof. As of the
Record Date there were 76,600,105 shares of Trust outstanding, including the
following number of shares of each Fund and Portfolio:
<TABLE>
<CAPTION>
SHARES
OUTSTANDING
----------
<S> <C>
FUND
Global Money Fund................................................ 31,449,815
Short Term High Quality Bond Fund................................ 4,944,132
U.S. Government Fund............................................. 6,127,345
Corporate Income Fund............................................ 5,053,151
Growth and Income Fund........................................... 5,799,161
Growth Fund...................................................... 7,782,731
Emerging Growth Fund............................................. 3,183,116
International Growth Fund........................................ 4,404,893
PORTFOLIO
Capital Growth Portfolio......................................... 49,466
Growth Portfolio................................................. 104,060
Balanced Portfolio............................................... 198,762
Value Portfolio.................................................. 9,807
</TABLE>
Each full share will be entitled to one vote at the Special Meeting and
each fraction of a share will be entitled to the fraction of a vote equal to the
proportion of a full share represented by the fractional share.
The expenses of the Special Meeting will be borne by Composite and its
affiliates. The solicitation of Proxies will be largely by mail, but may include
telephonic, telegraphic or oral communication by employees and officers of
Composite, Sierra Administration and their affiliates.
THE TRUST WILL FURNISH TO SHAREHOLDERS, WITHOUT CHARGE, A COPY OF THE
ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND THE SEMI-ANNUAL
REPORT FOR THE PERIOD ENDED JUNE 30, 1997, UPON REQUEST. THE ANNUAL AND
SEMI-ANNUAL REPORTS OF THE TRUST MAY BE OBTAINED BY WRITTEN REQUEST TO THE
TRUST, 9301 CORBIN AVENUE, SUITE 333, NORTHRIDGE, CALIFORNIA 91324 OR BY CALLING
1-800-247-6584.
The Trust is registered as an open-end management investment company under
the Investment Company Act of 1940 (the "1940 Act") and its shares are
registered under the Securities Act of 1933.
2
<PAGE> 9
INTRODUCTION
On July 1, 1997, Great Western Financial Corporation ("GWFC"), the indirect
parent of Sierra Investment Advisors Corporation ("Sierra Advisors") and Sierra
Investment Services Corporation ("Sierra Services"), the Funds' and Portfolios'
current investment advisers, respectively, and Washington Mutual, Inc.
("Washington Mutual"), a publicly held financial services company, consummated a
previously announced Agreement and Plan of Merger resulting in the merger of
GWFC with and into a wholly owned subsidiary of Washington Mutual (the
"Merger"). As a result of the Merger, Sierra Advisors, Sierra Services and their
affiliates are now indirect subsidiaries of Washington Mutual.
The Special Meeting is being called in preparation for the planned
consolidation of the funds managed by Sierra Advisors and Sierra Services (the
"Sierra Funds") and those managed by Composite, which also is an indirect
subsidiary of Washington Mutual. The planned consolidation will result in a
common Board of Trustees and a single investment adviser, as well as several
reorganizations of funds managed by Sierra Advisors with and into funds managed
in accordance with similar or compatible investment objectives and policies
managed by Composite or Sierra Advisors. This Proxy Statement relates only to
the Proposals and the relevant Funds and Portfolios listed above, none of which
is being reorganized, and does not address the proposed reorganizations of other
funds managed by Sierra Advisors or Composite.
PROPOSAL 1: TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT A BOARD OF TRUSTEES OF
THE TRUST.
At the Special Meeting, it is proposed that thirteen Trustees be elected to
hold office until their successors are duly elected and qualified. The persons
named in the accompanying Proxy intend, in the absence of contrary instructions,
to vote all Proxies on behalf of the shareholders for the election of David E.
Anderson, Wayne L. Attwood, M.D., Arthur H. Bernstein, Esq., Kristianne Blake,
Edmond R. Davis, Esq., John W. English, Anne V. Farrell, Michael K. Murphy,
Alfred E. Osborne, Jr., Ph.D., William G. Papesh, Daniel L. Pavelich, Jay Rockey
and Richard C. Yancey (each a "Nominee" and collectively, the "Nominees").
Messrs. Anderson, Bernstein, Davis, English and Osborne are currently members of
the Board. Messrs. Attwood, Murphy, Papesh, Pavelich, Rockey and Yancey and
Mmes. Blake and Farrell currently serve on the Board of Directors of the mutual
funds managed by Composite (the "Composite Funds"), but have not previously
served on the Board of Trustees of the Trust. Approval of this Proposal will
provide a single Board combining the current Trustees of the Trust and the
current Directors of the Composite Funds. It is also currently anticipated that
the various Composite Funds will be reorganized into a single trust (the
"Composite Trust") with a number of funds and that, at that time, each of the
current Trustees will be nominated to serve on the board of trustees of the
Composite Trust.
Each of the Nominees has consented to being named in this Proxy Statement
and to serving as a Trustee if elected. The Trust knows of no reason why any
Nominee would be unable or unwilling to serve if elected. If any or all of the
Nominees should become unavailable for election due to events not now known or
anticipated, the persons named as proxies will have discretion to vote for or
against such other nominee or nominees as the Board of Trustees may recommend.
The Trust is organized as a business trust under the laws of The
Commonwealth of Massachusetts. Under Massachusetts law, the Trust is not
required to hold annual meetings. The Trust has availed itself of this provision
and achieves cost savings by eliminating printing costs, mailing charges and
other expenses involved in routine annual meetings. Because the Trust does not
hold regular annual shareholder meetings, each Nominee, if elected, will hold
office until his or her successor is elected and qualified.
Even with the elimination of routine annual meetings, the Board may call
special meetings of shareholders for action by shareholder vote as may be
required by the 1940 Act, or as required or permitted by the Trust's Agreement
and Declaration of Trust. Shareholder meetings will be held, in compliance with
the 1940 Act, to elect Trustees under certain circumstances. Shareholder
meetings also may be held by the Trust for other purposes, including to approve
investment policy changes, a new investment advisory agreement or other matters
requiring shareholder action under the 1940 Act.
3
<PAGE> 10
A meeting also may be called by shareholders holding at least 10% of the
shares entitled to vote at the meeting for the purpose of voting upon the
removal of Trustees, in which case shareholders may receive assistance in
communicating with other shareholders as if the provisions contained in Section
16(c) of the 1940 Act applied.
INFORMATION REGARDING NOMINEES
The following information is provided for each Nominee. It includes his or
her name, position with the Trust, if any, tenure in office, age, principal
occupations or employment during the past five years, trusteeships/directorships
with other companies which file reports periodically with the Securities and
Exchange Commission ("SEC"), number of trustee positions with the registered
investment companies which hold themselves out to investors as related companies
for purposes of investment and investor services or to which Sierra Advisors and
Sierra Services or an affiliated person of Sierra Advisors and Sierra Services
provides investment advisory or administration services (the "Sierra Fund
Complex," consisting of the Trust, Sierra Trust Funds, Sierra Prime Income Fund
and Sierra Asset Management Portfolios, and the "Composite Funds," consisting of
Composite Bond and Stock Fund, Inc. Composite Growth and Income Fund, Inc.,
Composite Northwest Fund, Inc., Composite U.S. Government Securities, Inc.,
Composite Income Fund, Inc., Composite Tax-Exempt Bond Fund, Inc. and Composite
Cash Management Company) and number of shares of the Funds and Portfolios of the
Trust beneficially owned. As of November 3, 1997, the Nominees as a group
beneficially owned an aggregate of less than 1% of the shares of each Fund and
Portfolio of the Trust and the Trustees and officers of the Trust as a group
beneficially owned an aggregate of less than 1% of the shares of each Fund and
Portfolio of the Trust.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE ADDRESS AND BUSINESS EXPERIENCE DURING SHARES BENEFICIALLY OWNED AS OF
TRUST THE PAST FIVE YEARS (INCLUDING DIRECTORSHIPS) NOVEMBER 3, 1997**
- ----------------------------------- ----------------------------------------------- -----------------------------------
<S> <C> <C>
ARTHUR H. BERNSTEIN, ESQ. (72) 11661 San Vicente Blvd., Suite 701, None
Chairman of the Board of Trustees Los Angeles, CA 90049.
and Trustee since 1989. President, Bancorp Capital Group, Inc., 1988 to
present; President, Bancorp Venture Capital,
Inc., 1988 to present. Trustee of 4 trusts in
the Sierra Fund Complex.
DAVID E. ANDERSON (70) 17960 Seabreeze Drive, None
Trustee since 1989. Pacific Palisades, CA 90272.
Retired. Formerly, President and Chief
Executive Officer, GTE California, Inc., 1979
to 1988. Trustee of 4 trusts in the Sierra Fund
Complex.
EDMOND R. DAVIS, ESQ. (69) 550 South Hope Street, 21st Floor, None
Trustee since 1989. Los Angeles, CA 90071.
Partner, Brobeck, Phleger & Harrison (law firm)
1987 to present. Trustee of 4 trusts in the
Sierra Fund Complex.
JOHN W. ENGLISH (64) 50-H New England Ave., P.O. Box 640, None
Trustee since 1994. Summit, NJ 07902-0640.
Retired. Formerly, Vice President and Chief
Investment Officer, Ford Foundation, 1981 to
1993. Chairman of Board and Director, The China
Fund, Inc. (a closed-end mutual fund), 1993 to
present; Director, The Northern Trust Company's
Benchmark Funds (open-end mutual funds), 1994
to present. Trustee of 4 trusts in the Sierra
Fund Complex.
</TABLE>
4
<PAGE> 11
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE ADDRESS AND BUSINESS EXPERIENCE DURING SHARES BENEFICIALLY OWNED AS OF
TRUST THE PAST FIVE YEARS (INCLUDING DIRECTORSHIPS) NOVEMBER 3, 1997**
- ----------------------------------- ----------------------------------------------- -----------------------------------
<S> <C> <C>
ALFRED E. OSBORNE, JR., PH.D. (52) 110 Westwood Plaza, Suite C305, None
Trustee since 1996. Los Angeles, CA 90095-1481.
Professor, The Anderson School and Director,
The Harold Price Center for Entrepreneurial
Studies at University of California at Los
Angeles, 1972 to present; Independent general
partner, Technology Funding Venture Partners V,
1990 to present. Director, Times Mirror
Company, 1980 to present; Director, United
States Filter Corporation, 1991 to present;
Director, Nordstrom, Inc., 1987 to present;
Director, Greyhound Lines, Inc., 1994 to
present. Trustee of 4 trusts in the Sierra Fund
Complex, 1989 to 1993 and 1996 to present.
WAYNE L. ATTWOOD, M.D. (68) 2931 S. Howard, Spokane, WA 99203. None
Nominee Retired. Formerly, Doctor of internal medicine
and gastroenterology. Director of all of the
Composite Funds.
KRISTIANNE BLAKE (43) 705 W. 7th, Suite D, Spokane, WA 99203. None
Nominee President, Kristianne Gates Blake, PS
(accounting services). Director of all of the
Composite Funds.
ANNE V. FARRELL* (62) 425 Pike Street, Suite 510, Seattle, WA 98101. None
Nominee President and Chief Executive Officer, The
Seattle Foundation. Director, Washington
Mutual, Inc. Director of all of the Composite
Funds.
MICHAEL K. MURPHY* (60) P.O. Box 3366, Spokane, WA 99220. None
Nominee Chairman and Chief Executive Officer, CPM
Development Corporation (holding company).
Director, Washington Mutual, Inc. Director of
all of the Composite Funds.
WILLIAM G. PAPESH* (54) 601 W. Main Avenue, Suite 801, None
Nominee Spokane, WA 99201.
President and Director, Composite Research &
Management Co., 1995 to present; President and
Director, Composite Funds Distributor, Inc.,
1997 to present; President and Director,
Murphey Favre Securities Services, Inc., 1987
to present. President and Director of all of
the Composite Funds, 1989 to present.
DANIEL L. PAVELICH (53) Two Prudential Plaza, 180 North Stetson Ave., None
Nominee Suite 4300, Chicago, Il 60601.
Chairman and Chief Executive Officer, BDO
Seidman (accounting and consulting). Director
of all of the Composite Funds.
JAY ROCKEY (69) 2121 Fifth Avenue, Seattle, WA 98121. None
Nominee Chairman and Chief Executive Officer, The
Rockey Company (public relations). Director of
all of the Composite Funds.
RICHARD C. YANCEY (71) 535 Madison Avenue, New York, NY 10022. None
Nominee Senior Advisor, Dillon, Read & Co., Inc.
(broker/dealer and investment bank). Director
of all of the Composite Funds.
</TABLE>
- ---------------
* Denotes an individual who, because of their position with Washington Mutual
or its affiliates, as described above, is an "interested person" of the
Trust or Sierra Advisors, Sierra Services and their affiliates as defined in
the 1940 Act.
** This information has been provided by each Nominee. As of the Record Date,
the Nominees as a group beneficially owned an aggregate of less than 1% of
each Fund and Portfolio of the Trust.
5
<PAGE> 12
COMPENSATION OF TRUSTEES
Each Trustee who is not an "interested person" of the Trust or Sierra
Advisors, Sierra Services and their affiliates within the meaning of the 1940
Act ("Disinterested Trustee") receives an aggregate annual fee (plus
reimbursement for reasonable out-of-pocket expenses incurred in connection with
his or her attendance at Board and committee meetings) from the Trust and all of
the trusts in the Sierra Fund Complex for which he or she serves. The Trust pays
each Disinterested Trustee $5,000 per annum plus $1,250 per board meeting
attended, $1,000 per Audit and/or Nominating Committee meeting attended and
reimbursement for travel and out-of-pocket expenses. Since December 1996, the
Chairman has received one and a half times the normal Trustee's compensation.
The Chairman of the Audit Committee receives $1,500 per Audit Committee meeting
attended. Officers of the Trust receive no direct remuneration from the Trust
for serving in such capacity. Officers of the Trust who are employees of Sierra
Advisors, Sierra Services or their affiliates may be considered to have received
remuneration indirectly.
Pursuant to an exemptive order granted by the SEC, the Trust's eligible
Trustees may participate in a deferred compensation plan (the "Plan") which may
be terminated at any time. Under the Plan, Trustees may elect to defer receipt
of all or a portion of their fees which, in accordance with the Plan, may be
invested in shares of funds in the Sierra Fund Complex. Upon termination of the
Plan, Trustees that have deferred amounts under the Plan will be paid benefits
no later than the time the payments would otherwise have been made without
regard to such termination. All benefits provided under the Plan are funded and
any payments to Plan participants are paid solely out of the Trust's assets.
The aggregate compensation payable by the Trust to each of the Trustees
serving during the fiscal year ended December 31, 1996, is set forth in the
compensation table below. The aggregate compensation payable to such Trustees
during the fiscal year ended December 31, 1996, by the Sierra Fund Complex is
also set forth in the compensation table below. The Trustees do not receive any
pension or retirement benefits from the Trust.
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
PAYABLE TOTAL COMPENSATION FROM THE SIERRA FUND COMPLEX
NAME AND POSITION FROM THE TRUST PAYABLE TO TRUSTEES*
- ---------------------------------------- ---------------- -----------------------------------------------
<S> <C> <C>
Arthur H. Bernstein, Esq., Trustee...... $ 12,875** $46,125 for service on 4 boards
David E. Anderson, Trustee.............. $ 12,750 $43,250 for service on 4 boards
Edmond R. Davis, Esq., Trustee.......... $ 12,250 $42,750 for service on 4 boards
John W. English, Trustee................ $ 12,250 $42,750 for service on 4 boards
Alfred E. Osborne, Jr., Ph.D., $ 5,000 $20,250 for service on 4 boards
Trustee...............................
</TABLE>
- ---------------
* Sierra Advisors reimbursed the Trust for the cost, including Trustees' fees,
of all special meetings held with regard to contemplation of the sale of
Sierra Capital Management Corporation, as well as the Merger.
** Mr. Bernstein defers, pursuant to the Plan, all compensation received from
the Trust.
MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES
There were ten meetings of the Board of Trustees held during the fiscal
year ended December 31, 1996. During that fiscal year, all Trustees attended at
least 75% of the meetings of the Board.
The Board has an Audit Committee. The Audit Committee makes recommendations
to the full Board with respect to the engagement of independent accountants and
reviews the results of the audit engagement and matters having a material effect
on the Funds' financial operations with the independent accountants. The members
of the Audit Committee during the fiscal year ended December 31, 1996, were
Messrs. Bernstein (Chairman), Anderson, Davis, English and Osborne, each of whom
is a Disinterested Trustee. The Audit
6
<PAGE> 13
Committee met once during the fiscal year ended December 31, 1996 and all
members, except Dr. Osborne who was not then a Trustee, attended the meeting.
The Board has a Nominating Committee. The Nominating Committee makes
recommendations to the full Board with respect to candidates for the Board.
Recommendations by shareholders are not routinely considered by the Nominating
Committee. The members of the Nominating Committee during the fiscal year ended
December 31, 1996, were Messrs. Cerini (Mr. Cerini resigned as a Trustee of the
Trust effective May 29, 1997), Anderson, Bernstein, Davis, and English, each of
whom, with the exception of Mr. Cerini, is a Disinterested Trustee. The
Nominating Committee met once during the fiscal year ended December 31, 1996 and
each Trustee attended the meeting.
BOARD APPROVAL OF THE ELECTION OF TRUSTEES
At a meeting of the Board held on October 27-28, 1997, the Board
recommended that shareholders vote FOR each of the Nominees for Trustee named
herein. In recommending that shareholders elect the Nominees as Trustees of the
Trust, the Board considered the Nominees' experience and qualifications. In
particular, the Board took into account the fact that each of the Nominees who
has not previously served on the Board has previous experience serving on the
Boards of Directors of the Composite Funds.
SHAREHOLDER APPROVAL OF THE ELECTION OF TRUSTEES
The Election of each Nominee requires the affirmative vote of a plurality
of all votes cast at the Special Meeting, provided that a majority of the shares
entitled to vote are present in person or by Proxy at the Special Meeting. If
your shares are represented at the meeting but you give no voting instructions,
your shares will be voted FOR all Nominees named herein. If the Nominees are not
approved by shareholders of the Trust, the Board will consider alternative
nominations.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE FOR THE
ELECTION OF THE NOMINEES.
PROPOSAL 2: TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST,
ON BEHALF OF EACH FUND AND PORTFOLIO, AND COMPOSITE RESEARCH &
MANAGEMENT CO.
The Board has approved, subject to shareholder approval, the appointment of
Composite as the investment adviser for each Fund and Portfolio and recommends
that shareholders of each Fund and Portfolio approve the New Management
Agreement between the Trust, on behalf of each Fund and Portfolio, and
Composite, a form of which is attached hereto as Exhibit A. The Trustees of the
Trust, including all of the Disinterested Trustees, approved the New Management
Agreement with respect to each Fund and Portfolio at a meeting held on October
27-28, 1997. The Trustees do not anticipate, as a result of the change in
investment advisers, any reduction in the quality of services now provided to
the Funds and Portfolios.
The Trustees recommend that Composite replace the Funds' and Portfolios'
current investment advisers, Sierra Advisors and Sierra Services (the
"Advisers"), respectively. The Advisers, as the result of the Merger, are now
indirect subsidiaries of Washington Mutual. Washington Mutual has indicated that
it intends to consolidate all of its investment advisory businesses within
Composite. As a result of such consolidation, which would likely occur in early
1998, the Advisers would cease to exist as separate entities.
SIERRA ADVISORS
Sierra Advisors is registered under the Investment Advisers Act of 1940
(the "Advisers Act") and is currently the investment adviser to each Fund.
Although Sierra Advisors serves as investment adviser to each Fund, investment
discretion for the Funds has been delegated to various sub-advisers.
Nonetheless, Sierra Advisors remains responsible for analyzing economic and
market trends; formulating and assessing investment policies and recommending
changes to the Board where appropriate; supervising compliance by sub-advisers
7
<PAGE> 14
with each Fund's investment objectives, policies and limits, as well as with
laws and regulations applicable to each Fund; evaluating the performance of the
sub-advisers in light of selected benchmarks and the needs of the Funds;
evaluating potential additional or replacement sub-advisers and recommending
changes to the Board where appropriate; and reporting to the Board and
shareholders on the foregoing. The sub-advisers, in turn, are responsible for
continuously reviewing, supervising and administering the particular Fund's
investment program.
SIERRA SERVICES
Sierra Services is registered under the Advisers Act and is currently the
investment adviser to each Portfolio of the Trust. Sierra Services provides its
proprietary asset allocation services to the Portfolios, formulates the
Portfolios' investment policies, analyzes economic and market trends, exercises
investment discretion over the assets of the Portfolios and monitors the
allocation of each Portfolio's asset and each Portfolio's performance. Although
it is expected that each Portfolio typically will be fully invested in
underlying funds as a part of a "fund of funds" arrangement, Sierra Services
may, from time to time, direct the investment of each Portfolio's cash balances
in money market securities or in other instruments, including stock or bond
index futures and options thereon. Sierra Services is a registered broker-dealer
under the Securities Exchange Act of 1934, and a member of the National
Association of Securities Dealers, Inc. ("NASD"). Sierra Services is a wholly
owned subsidiary of Sierra Capital Management Corporation ("Sierra Capital"),
which is an indirect wholly owned subsidiary of Washington Mutual.
COMPOSITE
Composite, a subsidiary of Washington Mutual, with principal offices
located at 1201 Third Avenue, Seattle, Washington 98101, is also registered
under the Advisers Act. Composite has been in the investment management business
since 1944 and currently manages more than $2.6 billion for mutual funds and
institutional accounts, including more than $1.7 billion within the Composite
Funds. It is anticipated that Composite would retain investment discretion for
the Global Money, Short Term High Quality Bond, U.S. Government, Corporate
Income and the Growth and Income Funds, and all of the Portfolios, and would, at
least initially, delegate investment discretion for the remaining Funds to the
sub-advisers listed in Proposals 4, 5 and 6 of this Proxy Statement.
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF COMPOSITE
<TABLE>
<CAPTION>
NAME AND POSITION
WITH COMPOSITE ADDRESS PRINCIPAL OCCUPATION
- ---------------------------- ------------------ ------------------------------------
<S> <C> <C>
William G. Papesh 1201 Third Avenue Director and President, Composite
Director and President Seattle, WA 98101 Research & Management Co.; Director
and President, Murphey Favre
Securities Services Inc.; Director
and President, Composite Funds
Distributor, Inc.
Kerry K. Killinger 1201 Third Avenue Chairman, President, Chief Executive
Director Seattle, WA 98101 Officer and Director, Washington
Mutual, Inc.
Monte D. Calvin 1201 Third Avenue First Vice President and Director,
Director and Treasurer Seattle, WA 98101 Murphey Favre Securities Services,
Inc.; Director and Treasurer,
Composite Research & Management Co.;
Director, Composite Funds
Distributor, Inc.
</TABLE>
8
<PAGE> 15
<TABLE>
<CAPTION>
NAME AND POSITION
WITH COMPOSITE ADDRESS PRINCIPAL OCCUPATION
- ---------------------------- ------------------ ------------------------------------
<S> <C> <C>
Craig S. Davis 1201 Third Avenue Executive Vice President, Washington
Director Seattle, WA 98101 Mutual, Inc.; Director, Composite
Research & Management Co.; Director,
Murphey Favre Services, Inc.;
Director, Composite Funds
Distributor, Inc.; Director, WM
Financial Services, Inc.
J. Pamela Dawson 1201 Third Avenue Director and President,
Director Seattle, WA 98101 WM Financial Services, Inc.;
Director, Composite Research &
Management Co.; Director, Murphey
Favre Securities Services, Inc.;
Director, Composite Funds
Distributor, Inc.
</TABLE>
Composite currently provides investment services to the following
investment companies having an investment objective similar to the investment
objective of the Funds and Portfolios:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
UNDER MANAGEMENT RATE OF
NAME OF OTHER INVESTMENT COMPANY AS OF OCTOBER 30, 1997 COMPENSATION
- -------------------------------------- ---------------------- --------------------------------
<S> <C> <C>
GLOBAL MONEY FUND:
Composite Cash Management 0.45% on first $1 billion
Money Market Portfolio.............. $262,958,107 0.40% over $1 billion
U.S. GOVERNMENT FUND: 0.625% of first $250 million
Composite U.S. Government Fund...... $112,703,451 0.50% over $250 million
CORPORATE INCOME FUND: 0.625% of first $250 million
Composite Income Fund............... $ 89,195,914 0.50% over $250 million
Income Portfolio.................... $ 18,159,818 0.50%
GROWTH & INCOME FUND: 0.625% of first $250 million
Composite Growth & Income Fund...... $349,922,358 0.50% over $250 million
Growth & Income Portfolio........... $ 55,023,234 0.50%
</TABLE>
THE PROPOSED INVESTMENT MANAGEMENT AGREEMENT
In anticipation of the consolidation of the Advisers with Composite, as
disclosed in the Introduction above, the Board of Trustees, including the
Disinterested Trustees, unanimously approved the New Management Agreement.
Although the form of the New Management Agreement is different from the form of
the Current Advisory Agreements, the material provisions of the New Management
Agreement are substantially similar to the material provisions of the Current
Advisory Agreements. The New Management Agreement, unlike the Current Advisory
Agreements, does not attempt to restate the provisions of Section 36 of the Act
that impose upon Composite a fiduciary duty with respect to the receipt of
compensation by Composite and its affiliates for services. In addition, the New
Management Agreement differs from the Current Advisory Agreements as follows:
(1) the identity of the manager; (2) the dates of execution, effectiveness and
initial term; (3) the deletion of provisions relating to state expense limits
that have been preempted by federal law; (4) inclusion of a specific provision
allowing for amendment of the Agreement under limited circumstances; (5)
inclusion of a provision restricting the Trust's use of the proprietary names
"Sierra" and "Composite"; and (6) the provision for termination of the New
Management Agreement by the adviser upon 60 days notice, rather than the 90 days
notice required under the Current Advisory Agreements. See "The New Management
Agreement" below.
THE CURRENT ADVISORY AGREEMENTS
The Current Advisory Agreements, between Sierra Advisors and the Trust with
respect to the Funds and between Sierra Services and the Trust with respect to
the Portfolios were most recently renewed by the
9
<PAGE> 16
Trustees at a meeting of the Board held on September 9, 1997. The Current
Advisory Agreements are dated and were last approved by shareholders on the
following dates:
<TABLE>
<CAPTION>
DATE OF CURRENT DATE LAST APPROVED BY
FUND ADVISORY AGREEMENT SHAREHOLDERS
---- ------------------ ---------------------
<S> <C> <C>
Global Money Fund April 8, 1993 May 10, 1993
Short Term High Quality Bond Fund January 1, 1994 January 12, 1994
U.S. Government Fund April 8, 1993 May 6, 1993
Corporate Income Fund April 8, 1993 May 7, 1993
Growth and Income Fund January 1, 1994 January 3, 1994
Growth Fund April 8, 1993 May 7, 1993
Emerging Growth Fund January 1, 1994 January 12, 1994
International Growth Fund April 8, 1993 March 17, 1993
PORTFOLIO
---------
Capital Growth Portfolio May 1, 1997 May 2, 1997
Growth Portfolio May 1, 1997 May 2, 1997
Balanced Portfolio May 1, 1997 May 2, 1997
Value Portfolio May 1, 1997 May 2, 1997
</TABLE>
The Current Advisory Agreements between Sierra Advisors and the Trust with
respect to the Funds provide that Sierra Advisors, in return for its fee, will
(1) participate in the formulation of each Fund's investment policies; (2)
analyze their economic trends affecting each Fund; (3) monitor the expenses
incurred by each Fund; (4) monitor the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934) that
are provided to each Fund and that may be considered by each Fund's investment
sub-adviser in selecting brokers or dealers to execute particular transactions;
and (5) monitor and evaluate the services provided by each Fund's investment
sub-adviser under its investment sub-advisory agreement, including, without
limitation, the sub-advisor's adherence to the Fund's investment objective(s)
and policies and the Fund's investment performance. Subject to the approval of
the Board and the shareholders of each Fund, Sierra Advisors may delegate
certain of its duties enumerated above to one or more sub-advisers.
The Current Advisory Agreements between Sierra Services and the Trust with
respect to the Portfolios provide that Sierra Services, in return for its fee;
(1) will provide its proprietary asset allocation services to each Portfolio;
(2) formulate each Portfolio's investment policies; (3) analyze economic and
market trends; (4) exercise investment discretion over the assets of the
Portfolios; and (5) monitor the allocation of each Portfolio's assets and each
Portfolio's performance.
The Current Advisory Agreements relating to the Funds provide for payment
of compensation to Sierra Advisors on the first business day of each month for
the previous month at the following annual rates:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
($ MILLIONS)
---------------------------------------------------------------------------------------------------
AFTER $25; AFTER 50; AFTER 100; AFTER 125; AFTER 200; AFTER 400;
FUND FIRST $25 NEXT $25 NEXT 50 NEXT 25 NEXT 75 NEXT 200 NEXT 100 OVER 500
- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Global Money Fund........... .50 % .50 % .50 % .50 % .50 % .50 % .50 % .40 %
Growth Fund................. .95 % .875% .875% .875% .875% .875% .875% .875%
Short Term High Quality Bond
Fund...................... .50 % .50 % .50 % .50 % .50 % .45 % .45 % .40 %
Emerging Growth Fund........ .90 % .85 % .85 % .85 % .85 % .85 % .85 % .75 %
International Growth Fund... .95 % .95 % .85 % .85 % .75 % .75 % .75 % .75 %
U.S. Government Fund........ .60 % .60 % .60 % .60 % .60 % .60 % .60 % .50 %
Corporate Income Fund....... .65 % .65 % .65 % .65 % .65 % .65 % .65 % .50 %
Growth and Income Fund...... .80 % .80 % .80 % .75 % .75 % .70 % .65 % .575%
</TABLE>
The Current Advisory Agreements relating to the Portfolios, provide for
payment of compensation to Sierra Services on the first business day of each
month for the previous month for each Portfolio at the annual rate of 0.10% of
the Portfolio's average daily net assets.
10
<PAGE> 17
The Current Advisory Agreements provide that the Advisers will bear all
expenses in connection with the performance of their services under the
Agreements, including, without limitation, payment of any sub-advisory fees to
any sub-adviser. Each Fund and Portfolio assumes and shall pay or cause to be
paid all other expenses of the Fund and Portfolio.
The Current Advisory Agreements are terminable, without penalty, on 60 days
written notice, by the Board or by vote of holders of a majority of a Funds' and
Portfolios' shares, or upon 90 days written notice, by the Advisers. The Current
Advisory Agreements will terminate automatically in the event of its assignment.
The Current Advisory Agreements obligate the Advisers, in the performance
of their duties, to exercise their best judgment in rendering their services,
but provides that the Advisers shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or gross negligence on the
part of the Advisers or their officers, Directors or employees, or reckless
disregard by the Advisers of their obligations and duties under the agreements.
The Current Advisory Agreements also provide that any claims by the Advisers
against a Fund or Portfolio may be satisfied only from the assets of that Fund
or Portfolio, and that no shareholder, Trustee or officer of the Trust may be
held personally liable or responsible for any obligations arising out of such
agreement.
For the fiscal year ended December 31, 1996, the Trust paid management fees
to Sierra Advisors as follows:
<TABLE>
<CAPTION>
MANAGEMENT
FEES PAID TO
FUND SIERRA ADVISORS*
-------------------------------------------------------------- ----------------
<S> <C>
Global Money Fund**........................................... $ 40,314
Growth Fund................................................... $961,131
Short Term High Quality Bond Fund**........................... $ 56,022
Emerging Growth Fund.......................................... $461,791
International Growth Fund..................................... $524,048
U.S. Government Fund.......................................... $363,268
Corporate Income Fund......................................... $381,643
Growth and Income Fund........................................ $436,358
</TABLE>
- ---------------
* After fee waivers.
** Composite has voluntarily undertaken to waive, through December 31, 1998, a
portion of the annual management fees if and to the extent that total Fund
expenses would otherwise exceed the Fund's level of expenses as of June 30,
1997.
Because the Portfolios have only recently commenced operations, the Trust
paid no management fees to Sierra Services for the fiscal year ended December
31, 1996. For the fiscal period from commencement of operations on June 3, 1997
(September 9, 1997 for the Value Portfolio) through October 31, 1997, the Trust
paid management fees to Sierra Services as follows:
<TABLE>
<CAPTION>
MANAGEMENT
FEES PAID TO
PORTFOLIO SIERRA SERVICES
-------------------------------------------------------------- ----------------
<S> <C>
Balanced Portfolio............................................ $498
Growth Portfolio.............................................. $241
Capital Growth Portfolio...................................... $ 85
Value Portfolio............................................... N/A
</TABLE>
THE NEW MANAGEMENT AGREEMENT
The Board approved the proposed New Management Agreement between the Trust
and Composite, a form of which is attached as Exhibit A hereto, at a meeting
held October 27-28, 1997. The New Management Agreement provides that Composite,
in return for its fee, will (1) provide supervision of each Fund's and
Portfolio's investments, furnish a continuous investment program for each Fund's
and Portfolio's portfolio and
11
<PAGE> 18
determine from time to time what securities will be purchased, retained, or sold
by each Fund and Portfolio, and what portion of the assets will be invested or
held as cash; (2) determine the securities to be purchased or sold by each Fund
and Portfolio and place orders for the purchase and sale of portfolio securities
pursuant to its determinations with brokers or dealers it selects. Subject to
the provisions of the Agreement and Declaration of Trust of the Trust and the
1940 Act, Composite may delegate certain of its duties enumerated above to one
or more sub-advisers.
The New Management Agreement provides that Composite will bear all expenses
in connection with the performance of its services under the Agreement,
including payment of sub-advisory fees to any sub-adviser, and the salaries and
expenses of any of the officers or employees of Composite who act as officers,
Trustees or employees of the Trust; but excluding the cost of securities
purchased for each Fund and Portfolio and the amount of any brokerage fees and
commissions incurred in executing portfolio transactions for the Fund or
Portfolio. Each Fund and Portfolio assumes and shall pay or cause to be paid all
other expenses of such Fund or Portfolio.
The New Management Agreement is terminable, without penalty, upon 60 days
written notice by the Board or by vote of holders of a majority of a Fund's or
Portfolio's shares, or upon 60 days written notice, by Composite. The New
Management Agreement will terminate automatically in the event of its
assignment.
The New Management Agreement obligates Composite, in the performance of its
duties, to exercise its best judgment in rendering its services, but provides
that Composite shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of
Composite or its officers, directors or employees, or reckless disregard by
Composite of its obligations and duties under the agreement. The New Management
Agreement also provides that any claims by Composite against a Fund or Portfolio
may be satisfied only from the assets of that Fund or Portfolio, and that no
shareholder, Trustee, officer, employee or agent of a Fund, Portfolio or any
other Fund or Portfolio may be held personally liable or responsible for any
obligations arising out of such agreement.
The New Management Agreement provides for payment to Composite of a monthly
management fee, computed on the average daily net assets, at the following
annual rates:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
($ MILLIONS)
---------------------------------------------------------------------------------------------------
AFTER 25; AFTER 50; AFTER 100; AFTER 125; AFTER 200; AFTER 400;
FIRST 25 NEXT 25 NEXT 50 NEXT 25 NEXT 75 NEXT 200 NEXT 100 OVER 500
-------- ------------- --------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FUND
Global Money Fund........... .50% .50 % .50 % .50 % .50 % .50 % .50 % .40 %
Growth Fund................. .95% .875% .875% .875% .875% .875% .875% .875%
Short Term High Quality Bond
Fund...................... .50% .50 % .50 % .50 % .50 % .45 % .45 % .40 %
Emerging Growth Fund........ .90% .85 % .85 % .85 % .85 % .85 % .85 % .75 %
International Growth Fund... .95% .95 % .85 % .85 % .75 % .75 % .75 % .75 %
U.S. Government Fund........ .60% .60 % .60 % .60 % .60 % .60 % .60 % .50 %
Corporate Income Fund....... .65% .65 % .65 % .65 % .65 % .65 % .65 % .50 %
Growth and Income Fund...... .80% .80 % .80 % .75 % .75 % .70 % .65 % .575%
</TABLE>
With respect to each Portfolio, the New Management Agreement provides for
payment to Composite of a monthly management fee, computed on the average daily
net assets, at the annual rate of 0.10%.
The management fee as a percentage of net assets payable by each Fund and
Portfolio will be the same under the New Management Agreement as under the
Current Advisory Agreements. If the investment advisory fee under the New
Management Agreement had been in effect for the Trust's most recently completed
fiscal year, the advisory fee to which Composite would have been entitled is
identical to that to which Sierra Advisors or Sierra Services was entitled under
the Current Advisory Agreements.
The New Management Agreement would take effect upon the later to occur of
(1) the obtaining of shareholder approval or (2) January 1, 1998. The New
Management Agreement will continue in effect for an
12
<PAGE> 19
initial two-year term and thereafter for successive annual periods as long as
such continuance is approved in accordance with the 1940 Act.
The Board accepted a recommendation by Composite to consolidate the Sierra
Funds and the Composite Funds into a single family of funds with a common board
of trustees and with Composite as each fund's investment adviser. In accepting
this recommendation, the Board considered that, based on Composite's projections
and commitments, each fund's overall level of expenses would generally be
reduced or remain unchanged and that Washington Mutual planned to consolidate
the Advisers with Composite sometime in early 1998. Before reaching its
conclusions, the Board conducted an extensive "due diligence" review. Among
other things, the Board received reports from counsel and independent experts
specifically hired to evaluate Composite's ability to manage the Funds and
Portfolios, reviewed Composite's overall business plan for the Funds and
Portfolios, including the ability of its affiliates to provide administration
and distribution services, met with portfolio managers at Composite, and met
with the directors of the Composite Funds. The Board also was informed of the
resources of Washington Mutual and its affiliates that could be made available
to Composite, the Funds and Portfolios. The Trustees also considered Composite's
experience as adviser and service provider to the Composite Funds.
Although the Merger did not result in an "assignment" of the Current
Advisory Agreements, in light of the upcoming consolidation of the Advisers with
Composite, the Advisers and Composite have indicated that they intend to comply
with the requirements of Section 15(f) of the 1940 Act. Section 15(f) provides a
non-exclusive safe harbor for an investment adviser to an investment company or
any of its affiliated persons to receive any amount or benefit in connection
with a change in control of the investment adviser that results in the
"assignment" of an advisory agreement, as that term is defined in the 1940 Act,
so long as the following two conditions are met. First, for a period of three
years after the change of control, at least 75% of the board members of the
investment company must not be interested persons of the acquired adviser or the
acquiror (Sierra Advisors or Sierra Services and Composite, respectively, in
this case). If the Nominees listed in Proposal 1 above are elected by
shareholders, the Trust would meet this condition of Section 15(f). Second, an
"unfair burden" must not be imposed upon the investment company as a result of
such transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the assignment whereby
the investment adviser, or any interested person of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). The Advisers and Composite are not aware of any
express or implied term, condition, arrangement or understanding that would
impose an "unfair burden" on the Trust as a result of the recent Merger or the
upcoming consolidation of the Advisers with Composite.
The Board also considered that the costs of the Special Meeting would be
borne by Composite and its affiliates.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Board, including the
Disinterested Trustees, unanimously approved the New Management Agreement with
respect to each Fund and Portfolio and voted to recommend its approval to the
shareholders of each Fund and Portfolio.
In the event that shareholders of a Fund or Portfolio do not approve the
New Management Agreement, the Current Advisory Agreement for such Fund or
Portfolio will remain in effect and the Board will take such action as it deems
in the best interest of the Fund or Portfolio and its shareholders, which may
include proposing that shareholders approve an agreement in lieu of the New
Management Agreement.
SHAREHOLDER APPROVAL OF THE NEW MANAGEMENT AGREEMENT
Approval of the New Management Agreement requires the affirmative vote of a
majority of the outstanding shares of each Fund or Portfolio. For purposes of
this proposal, "majority of the outstanding
13
<PAGE> 20
shares" means the vote of (1) 67% or more of a Fund's or Portfolio's outstanding
shares present at the Special Meeting, if the holders of more than 50% of the
outstanding shares of the Fund or Portfolio are present in person or represented
by Proxy, or (2) more than 50% of a Fund's or Portfolio's outstanding shares,
whichever is less.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND AND
PORTFOLIO VOTE FOR APPROVAL OF THE NEW MANAGEMENT AGREEMENT.
PROPOSAL 3: TO APPROVE A PROPOSAL WHICH WOULD AUTHORIZE THE BOARD OF TRUSTEES
TO REPLACE OR APPOINT INVESTMENT SUB-ADVISERS FOR EACH FUND WITHOUT
THE NECESSITY OF SEEKING SHAREHOLDER APPROVAL.
This Proposal would permit the Board to replace or appoint investment
sub-advisers for each Fund without obtaining shareholder approval of the
relevant Fund's shareholders. This proposal is being submitted to the
shareholders of each Fund for approval as required by the terms of an exemptive
application filed with the SEC and will not become effective with respect to any
particular Fund unless and until (1) the SEC has granted the relief requested in
the exemptive application; and (2) this proposal has been approved by a majority
vote of such Fund's shareholders.
It is anticipated that implementation of this Proposal will enable the
Trust to achieve a higher degree of management efficiency and will reduce the
need for costly and perfunctory shareholder meetings in the future. If
shareholders approve this Proposal, and an SEC order is obtained, the Board
would be able, upon the recommendation of a Fund's investment adviser (currently
Sierra Advisors, but if Proposal 2, above, is approved, Composite) and without
shareholder approval, to replace an investment sub-adviser and/or appoint
additional sub-advisers to the Funds, and to utilize investment sub-advisory
agreements for the Funds with terms that are different from those currently
used. For example, if this Proposal were currently in place, shareholders would
not be required to consider and approve Proposals 4, 5 and 6 herein.
Currently, the Trust operates within a structure whereby for each Fund
Sierra Advisors is responsible for analyzing economic and market trends;
formulating and assessing investment policies and recommending changes to the
Board where appropriate; supervising compliance by sub-advisers with each Fund's
investment objectives, policies and limits, as well as with laws and regulations
applicable to the Fund; evaluating the performance of the sub-advisers in light
of selected benchmarks and the needs of the Funds; evaluating potential
additional or replacement sub-advisers and recommending changes to the Board
where appropriate; and reporting to the Board and shareholders on the foregoing.
Each Fund's sub-adviser, in turn, is responsible for continuously reviewing,
supervising and administering the particular Fund's investment program with
respect to the Fund's assets. Should Proposal 2, above, be approved by a
majority of shareholders of each Fund, Composite will replace Sierra Advisors as
the investment adviser for each Fund. Although Composite currently intends to
retain investment discretion for several of the Funds, it also intends to
continue the investment sub-adviser structure with respect to several Funds.
SEC EXEMPTIVE RELIEF
Section 15(a) of the 1940 Act requires that all contracts pursuant to which
persons serve as investment advisers to investment companies be approved by
shareholders. As interpreted, this requirement applies to the appointment of
investment sub-advisers to any Fund for which Sierra Advisors or Composite acts
or in the future acts as an investment adviser. The SEC has previously granted
exemptions from the shareholder approval requirements under certain
circumstances for open-end investment companies (mutual funds) with investment
sub-advisers and, therefore, the Trust has applied for such an exemption. If the
SEC approves the Trust's application and shareholders approve this Proposal, the
Board would, without shareholder approval, be able to appoint additional or
replacement sub-advisers without unnecessarily having to seek shareholder
acquiescence. The Board would not, however, be able to replace the investment
adviser to each Fund of the Trust without receiving shareholder approval, as
required by the 1940 Act and applicable regulations governing mutual fund
advisory contracts. There can be no assurance that the exemptive order will be
granted.
14
<PAGE> 21
The SEC in the past has required open-end investment companies seeking
relief similar to that of the Trusts to agree to the following conditions: (1)
adequate and prominent disclosure in the fund's prospectus concerning the
investment sub-adviser structure as well as the existence, substance and effect
of the SEC order; (2) within 60 days of the hiring of a new investment
sub-adviser for the fund, the investment adviser will provide shareholders with
an information statement meeting proxy regulation requirements, except as
modified by the SEC order with respect to the disclosure of fees paid to the
investment sub-adviser(s); (3) the investment adviser will not enter into an
investment sub-advisory agreement with any affiliated investment sub-adviser
without such agreement, including the compensation to be paid thereunder, being
approved by the shareholders of the fund; (4) no director, trustee or officer of
the fund or the investment adviser will own directly or indirectly (other than
through a pooled investment vehicle over which such person does not have
control) any interest in an investment sub-adviser except for (i) ownership of
interests in the investment adviser or any entity that controls, is controlled
by or is under common control with the investment adviser, or (ii) ownership of
less than 1% of the outstanding securities of any class of equity or debt of a
publicly traded company that is either an investment sub-adviser or an entity
that controls, is controlled by or is under common control with an investment
sub-adviser; (5) a majority of the fund's board of directors/trustees will be
"independent," and the nomination of new or additional independent
directors/trustees will be placed with the discretion of the then existing
independent directors/trustees; (6) when an investment sub-adviser change is
proposed for a fund with an affiliated adviser, the fund's directors/trustees,
including a majority of the independent directors/trustees, are required to make
a separate finding, reflected in the board minutes, that such change is in the
best interests of the fund and its shareholders and does not involve a conflict
of interest from which the investment adviser or affiliated sub-adviser derives
an inappropriate advantage; (7) the fund will disclose, both as a dollar amount
and as a percentage of net assets, in its registration statement the respective
fee disclosure on an aggregate basis; (8) at all times, independent counsel
knowledgeable about the 1940 Act and the duties of independent
directors/trustees will be engaged to represent the fund's independent trustees;
(9) the investment adviser will provide the directors/trustees no less
frequently than quarterly with information about the investment adviser's
profitability, reflecting the impact on its profitability of the hiring or
termination of investment sub-advisers; and (10) whenever a sub-adviser is hired
or terminated, the investment adviser will provide the directors/trustees with
information showing the expected impact on the adviser's profitability.
If the SEC changes these conditions for granting the relief as requested by
the Trust or the SEC order is granted with materially different conditions, the
Trust will take appropriate action, which could include soliciting shareholders
for reapproval of this Proposal in light of the new conditions.
TRUSTEE CONSIDERATIONS
This Proposal is intended to facilitate the efficient operation of those
Funds with investment sub-advisors, afford the Trust increased management
flexibility and allow the investment adviser to perform to the fullest extent
the principal functions the Trust pays it to perform with respect to investment
sub-advisers -- that is continuously monitoring the performance of the
sub-advisers and, from time to time, recommending that the Board replace
sub-advisers or appoint additional sub-advisers, depending on the investment
adviser's assessment of a sub-adviser's performance and the probability of such
investment sub-adviser achieving a Fund's investment objective. In addition, the
Proposal, if approved, would avoid the need to seek shareholder approval of new
investment sub-advisory agreements when an agreement has been terminated as a
result of a change in control of the sub-adviser. However, a change in an
investment sub-advisory agreement that reduces the sub-advisory fee payable by
the investment adviser would, absent a reduction in the management fee, benefit
the investment adviser rather than the shareholders of a Fund. While there is no
way of knowing exactly how often the investment adviser may recommend, and the
Board approve, the termination and replacement of a particular sub-adviser or
the selection of an additional sub-adviser, each of which would typically
require a shareholder meeting, experience has shown that the use of sub-advisers
results in more frequent shareholder meetings than would otherwise be the case.
Because shareholder meetings result in substantial costs, the Board believes
that approval of this Proposal would benefit shareholders.
15
<PAGE> 22
In reaching this conclusion the Trustees weighed the costs of shareholder
meetings against the benefits of shareholder scrutiny of proposed contracts with
additional or replacement sub-advisers. To this end, the Trustees considered
that, even in the absence of shareholder approval, any proposal to add or
replace an investment sub-adviser would receive careful review. First, the
investment adviser would assess the Fund's needs and, if it believed additional
or replacement sub-advisers could benefit the Fund, would review the relevant
universe of available investment managers. Second, any recommendations made by
the investment adviser would have to be approved by a majority of the Board,
including a majority of the Disinterested Trustees. Finally, any selections of
additional or replacement investment sub-advisers would have to comply with
conditions contained in the SEC exemptive order, if it is granted.
SHAREHOLDER APPROVAL OF THE PROPOSAL
Approval of the Proposal for the Trust requires the affirmative vote of a
majority of the outstanding shares of each Fund of the Trust. For purposes of
this proposal, "majority of the outstanding shares" means the vote of (1) 67% or
more of a Fund's outstanding shares present at the Special Meeting, if the
holders of more than 50% of the outstanding shares of a Fund are present in
person or represented by proxy; or (2) more than 50% of a Fund's outstanding
shares whichever is less.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND OF THE
TRUST VOTE FOR THIS PROPOSAL.
PROPOSAL 4: TO APPROVE NEW INVESTMENT SUB-ADVISORY AGREEMENT FOR THE GROWTH
FUND BETWEEN COMPOSITE AND JANUS CAPITAL CORPORATION.
PROPOSAL 5: TO APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT FOR THE EMERGING
GROWTH FUND BETWEEN COMPOSITE AND JANUS CAPITAL CORPORATION.
The Current Sub-Advisory Agreements provide that they will terminate upon
the termination of the Current Advisory Agreements. As a result of the proposed
approval of a New Management Agreement (in Proposal 2 above), which will cause
the termination of the Current Advisory Agreements, the Board, including a
majority of the Disinterested Trustees, at a meeting held on October 27-28,
1997, concluded that entry into New Sub-Advisory Agreement for the Growth Fund
and the Emerging Growth Fund would be in the best interests of those Funds and
their shareholders. Therefore, the Board is recommending that shareholders of
each Fund approve the selection of Janus Capital Corporation ("Janus") to
continue to serve as the investment sub-adviser to the Growth Fund and the
Emerging Growth Fund following Composite's becoming the adviser to the Funds,
and approve a New Sub-Advisory Agreement. Other than the change of the
investment adviser to the Funds from Sierra Advisors to Composite, provisions
regarding the dates of effectiveness and termination and deleting the Trust as a
party to the Agreement, there are no material differences between the Current
Sub-Advisory Agreements and the New Sub-Advisory Agreement.
THE CURRENT SUB-ADVISORY AGREEMENTS
Janus currently serves as the investment sub-advisor to the Growth Fund and
the Emerging Growth Fund pursuant to separate agreements by and among the Trust,
Sierra Advisors and Janus dated September 17, 1993, and January 1, 1994,
respectively, and approved by the sole shareholder of each Fund, at commencement
of operations, on March 17, 1993. Under the Current Sub-Advisory Agreement,
Janus makes the day-to-day investment decisions for the assets of each Fund,
subject to the supervision of, and policies established by, Sierra Advisors and
the Trustees.
The Current Sub-Advisory Agreement provides that Janus, in return for its
fee, and subject to the supervision of the Board and Sierra Advisors, will (1)
maintain compliance procedures for each Fund that Janus believes are adequate to
ensure its compliance with the applicable provisions of the 1940 Act and the
Advisers Act; (2) make investment decisions for each Fund in accordance with the
Fund's investment objective(s) and policies as stated in the Fund's Prospectus
and Statement of Additional Information as in effect and, after notice to Janus,
as they may be amended from time to time; (3) place purchase and sale orders on
behalf of each Fund to effectuate the investment decisions made; (4) maintain
books and records with respect to the securities transactions of each Fund in
accordance with the 1940 Act and the Advisers Act
16
<PAGE> 23
and the rules adopted thereunder and furnish Sierra Advisors quarterly, annual
and special reports as it may reasonably request; (5) treat confidentially and
as proprietary information of the Trust, all records and other information
relative to the Trust and past, present or potential shareholders (other than
information publicly available, otherwise legally in the hands of Janus or
pertaining to mutual clients); and (6) will not knowingly use such records and
information for any purpose other than performance of its responsibilities and
duties under the Current Sub-Advisory Agreements, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and, notwithstanding the foregoing, such records may
not be withheld where Janus may be exposed to civil or criminal contempt
proceedings for failure to comply when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust. In providing
these services, Janus will supervise each Fund's investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of each Fund's assets.
Subject to the supervision of Sierra Advisors and in accordance with the
investment objective and policies as stated in the Funds' Prospectus and
Statement of Additional Information, Janus is authorized, in its discretion and
without prior consultation with Sierra Advisors, to buy, sell, lend, and
otherwise trade in any stocks, bonds, and other securities and investment
instruments on behalf of each Fund, without regard to the length of time the
securities have been held and the resulting rate of portfolio turnover or any
tax considerations, and so long as consistent with the foregoing, the majority
or the whole of each Fund may be invested in such proportions of stocks, bonds,
other securities or investment instruments, or cash as Janus shall determine. In
addition, Janus will furnish each Fund or Sierra Advisors with whatever
statistical information the Funds or Sierra Advisors may reasonably request with
respect to the instruments that each Fund may hold or contemplate purchasing.
The Current Sub-Advisory Agreements provide for the payment of a fee to
Janus from Sierra Advisors on the first business day of each month for services
provided in the previous month at the annual rate of 0.55% of each Fund's
average daily net assets including cash and cash equivalents up to $25 million
and 0.50% of each Fund's average daily net assets in excess of $25 million.
The Current Sub-Advisory Agreements provide that Janus will bear all
expenses in connection with the performance of its services under the
Agreements, which expenses shall not include brokerage fees or commissions in
connection with the effectuation of securities transactions. Janus shall bear no
expenses of the Trust, the Funds or Sierra Advisors. The Trust will bear certain
other expenses to be incurred in its operation, including but not limited to
organizational expenses, taxes, interest, brokerage fees and commissions, if
any; fees of the Disinterested Trustees; SEC fees and state Blue Sky
qualification fees; out-of-pocket expenses of custodians, transfer and dividend
disbursing agents and the Trust's sub-administrator and transaction charges of
custodians; insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Trust's existence; costs attributable to investor services,
including without limitation, telephone and personnel expenses; costs of
preparing and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Funds and of the
officers or Board; and any extraordinary expenses.
The services of Janus are not deemed to be exclusive, and Janus is free to
render investment advisory and other services to others, including fiduciary and
other managed accounts as well as to other investment companies or series of
investment companies, so long as its services under the Current Sub-Advisory
Agreements are not impaired thereby. The Current Sub-Advisory Agreements also
provide that purchase or sell orders for the Funds may be aggregated with
contemporaneous purchase or sell orders of other clients of Janus; provided that
(i) no advisory account will be favored by Janus over any other account; (ii)
each client of Janus who participates in such an aggregated order will
participate at the average share price, with all transaction costs shared on a
pro rata basis; (iii) only advisory clients' transactions will be aggregated for
such an aggregated order; and (iv) the accounts of clients whose orders are
aggregated will be segregated on Janus's books and records so as to identify the
particular client who has the beneficial interest therein. Janus shall use its
best efforts to obtain execution of Fund transactions at prices which are
advantageous to the Funds and at commission rates that are reasonable in
relation to the benefits received.
17
<PAGE> 24
Each Current Sub-Advisory Agreement has an initial term of one year from
the effective date, and thereafter shall continue for successive annual periods,
provided the continuation is approved by the Board or by vote of a majority of
each Fund's outstanding voting securities, as well as by a majority of the
Disinterested Trustees. Each Current Sub-Advisory Agreement may be terminated,
without the payment of any penalty, upon 60 days written notice by Sierra
Advisors, the Board or by the vote of a majority of the outstanding voting
securities of a Fund, or upon 60 days written notice by Janus. In addition, each
Current Sub-Advisory Agreement will also terminate automatically upon its
assignment.
Under each Current Sub-Advisory Agreement, except as may otherwise be
provided by federal securities laws, Janus is not liable for any error of
judgment or for any loss suffered by a Fund or Sierra Advisors in connection
with performance of its obligations under the agreement, except for any losses
resulting from willful misfeasance, bad faith or gross negligence on Janus' part
in the performance of its duties or from reckless disregard of its obligations
and duties under the agreement. In addition, each Current Sub-Advisory Agreement
also provides that obligations under the Agreement are binding upon the property
and assets of a Fund and not the trustees, officers or shareholders of a Fund
individually.
THE PROPOSED NEW SUB-ADVISORY AGREEMENT
The Board approved the proposed New Sub-Advisory Agreement for the Growth
Fund and the Emerging Growth Fund between Composite and Janus at a meeting held
on October 27-28, 1997, a form of which is attached hereto as Exhibit B. The
form of the proposed New Sub-Advisory Agreement is substantially identical to
the Current Sub-Advisory Agreements, except for the change of the investment
adviser from Sierra Advisors to Composite, the dates of execution, effectiveness
and initial term and the deletion of the Trust as a party to the Agreement.
The sub-advisory fees as a percentage of net assets payable by Composite
under the New Sub-Advisory Agreement will be the same as the fees payable by
Sierra Advisors under the Current Sub-Advisory Agreements. If the sub-advisory
fees under the New Sub-Advisory Agreement had been in effect for the Funds' most
recently completed fiscal year, the sub-advisory fees to which Janus would have
been entitled would have been equal to that which it actually received under the
Current Sub-Advisory Agreements.
The Board recommends the New Sub-Advisory Agreement for approval by the
shareholders of each Fund. The New Sub-Advisory Agreement would take effect upon
the obtaining of shareholder approval. The New Sub-Advisory Agreement will
continue in effect for an initial term of one year and thereafter for successive
annual periods as long as such continuance is approved in accordance with the
1940 Act.
In evaluating the New Sub-Advisory Agreement, the Board considered the
continuity of services by Janus. In this regard, the Board took account of each
Fund's Current Sub-Advisory Agreement and the New Sub-Advisory Agreement,
including their terms relating to the services to be provided thereunder by
Janus, and that the fees and expenses payable under the New Sub-Advisory
Agreement will be equal to those paid under the Current Sub-Advisory Agreements.
Although the Trust is not a party to the New Sub-Advisory Agreement, it is not
expected that this change will have a material effect on the legal remedies
available to the Trust or shareholders in the event of a breach of the New
Sub-Advisory Agreement.
Approval of the New Sub-Advisory Agreement is contingent on the approval by
shareholders of the New Management Agreement between the Trust and Composite.
However, if the New Management Agreement is approved and shareholders of a Fund
do not approve the New Sub-Advisory Agreement, then the Board will take such
action as it deems is in the best interest of the Fund and its shareholders,
which may include proposing that shareholders approve an agreement in lieu of
the New Sub-Advisory Agreement.
INFORMATION REGARDING JANUS
Janus is located at 100 Fillmore Street, Denver, Colorado 80206. Janus is
an indirect, majority owned subsidiary of Kansas City Southern Industries, Inc.
("KCSI"). KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation, information processing and financial services.
Janus
18
<PAGE> 25
has provided investment advice to mutual funds and other large financial clients
since 1970. As of June 30, 1997, Janus had approximately $60 billion in assets
under management.
Each director and the principal executive officer of Janus and their
principal occupations are listed below.
<TABLE>
<CAPTION>
NAME AND POSITION WITH JANUS ADDRESS PRINCIPAL OCCUPATION
- ------------------------------ --------------------- --------------------------
<S> <C> <C>
Thomas H. Bailey 100 Fillmore St. Chairman of Trustees and
President, Director and Denver, CO President of Janus
Chairman and Chief Executive Investment Fund and Janus
Officer Aspen Series; Chairman and
Director of Idex
Management, Inc.
James P. Craig, III 100 Fillmore St. Trustee and Executive Vice
Vice President, Director and Denver, CO President of Janus
Chief Investment Officer Investment Fund and Janus
Aspen Series.
Michael E. Herman 9300 Ward Pkwy. President of Kansas City
Director Kansas City, MO Royals Baseball Team;
Chairman of Finance
Committee, Ewing Marion
Kauffman Foundation.
Thomas A. McDonnell 1055 Broadway President and Director of
Director Kansas City, MO DST Systems, Inc.;
Director of Euronet
Services, Inc.
Landon H. Rowland 114 W. 11th St. President and Chief
Director Kansas City, MO Executive Officer of
Kansas City Southern
Industries, Inc.
Michael Stolper 525 "B" Street President of Stolper &
Director San Diego, CA Company.
</TABLE>
None of the officers or Trustees of the Trust is an officer, employee,
director, or shareholder of Janus.
As compensation for investment sub-advisory services to the Funds for the
fiscal year ended December 31, 1996, Janus received compensation from the Growth
Fund and Emerging Growth Fund totaling $551,003 and $276,789, respectively.
Janus currently provides investment services to the following investment
companies having an investment objective similar to the investment objective of
the Growth Fund:
<TABLE>
<CAPTION>
AMOUNT OF
ASSETS
UNDER
MANAGEMENT AS
OF SEPTEMBER
NAME OF INVESTMENT COMPANY 30, 1997 RATE OF COMPENSATION
- ----------------------------------------- -------------- ------------------------------------
<S> <C> <C>
.75% of first $300 million .70% of
Janus Investment Fund next $200 million .65% over $500
Janus Mercury Fund................... $2,087,700,000 million
.55% on first $100 million .50% on
JNL Series Trust $100-500 million .45% over $500
JNL Aggregate Growth Series.......... $ 75,483,488 million
New England Funds Trust I .55% on first $50 million .50% over
New England Star Advisers Fund....... $ 237,395,661 $50 million
Sierra Trust Funds .55% on first $100 million .50% over
Growth Fund.......................... $ 289,609,355 $100 million
Seasons Series Trust (Growth segments of .60% on first $200 million .55% over
four multi-managed portfolios)........ $ 13,429,742 $200 million (on combined assets)
</TABLE>
19
<PAGE> 26
Janus currently provides investment services to the following investment
companies having an investment objective similar to the investment objective of
the Emerging Growth Fund:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
UNDER MANAGEMENT
AS OF SEPTEMBER
NAME OF INVESTMENT COMPANY 30, 1997 RATE OF COMPENSATION
- ---------------------------------------- ----------------- ------------------------------------
<S> <C> <C>
.75% of first $300 million .70% of
Janus Investment Fund next $200 million .65% on assets
Janus Enterprise Fund............... $ 588,500,000 over $500 million
.75% on first $300 million(1) .70%
Janus Aspen Series of next $200 million .65% on assets
Aggressive Growth Portfolio......... $ 477,500,000 over $500 million
Allmerica Investment Trust -- .60% on first $100 million, .55%
Select Capital Appreciation Fund.... $ 221,900,000 over $100 million
.55% on first $100 million, .55% on
JNL Series Trust $100-$500 million, .45% over $500
JNL Capital Growth Series........... $ 70,300,000 million
John Hancock Variable Series Trust .60% on first $100 million, .55%
I -- Mid Cap Growth Portfolio........ $ 34,900,000 over $100 million
.60% on first $100 million, .55% on
Maxim Series Fund, Inc. -- next $400 million and .45% on assets
Mid-Cap Portfolio................... $ 226,200,000 over $500 million
.55% on first $100 million, .50% on
Metropolitan Series Fund -- next $400 million, .45% over $500
Janus Mid-Cap Portfolio............. $ 61,600,000 million
Sierra Trust Funds -- .55% on first $100 million, .50%
Emerging Growth Fund................ $ 262,000,161 over $100 million
IDEX Series Fund 50% of fees received by adviser less
IDEX Capital Appreciation 50% of fee waiver or
Portfolio............................. $ 25,900,000 reimbursement(2)
</TABLE>
- ---------------
(1) Janus Capital has agreed to reduce the portfolio's advisory fee to the
extent that such fee exceeds the effective rate of the Janus retail fund
corresponding to such portfolio (Janus Enterprise Fund). The effective rate
is the advisory fee calculated by the corresponding retail fund as of the
last day of each calendar quarter (expressed as an annual rate). The
effective rate of Janus Enterprise Fund was .72% for the quarter ended
September 30, 1997.
(2) Adviser's fee is 1.00% of first $750 million, 0.9% of next $250 million, and
0.85% of the assets in excess of $1 billion.
The fees charged by Janus to the other investment companies are, in some
cases, for services in addition to those provided under the New Sub-Advisory
Agreement.
SHAREHOLDER APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT
Approval of the New Sub-Advisory Agreement for the Fund requires the
affirmative vote of a majority of the outstanding shares of each Fund. For
purposes of this proposal, "majority of the outstanding shares" means the vote
of (1) 67% or more of the Fund's outstanding shares present at the Special
Meeting, if the holders of more than 50% of the outstanding shares of each Fund
are present in person or represented by proxy; or (2) more than 50% of each
Fund's outstanding shares whichever is less.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE GROWTH FUND AND
THE EMERGING GROWTH FUND VOTE FOR APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT.
20
<PAGE> 27
PROPOSAL 6: TO APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT FOR THE
INTERNATIONAL GROWTH FUND BETWEEN COMPOSITE AND WARBURG PINCUS
ASSET MANAGEMENT, INC.
As a result of the proposed termination of the Current Advisory Agreements,
the Board, including a majority of the Disinterested Trustees, at a meeting held
on October 27-28, 1997, concluded that entry into a New Sub-Advisory Agreement
for the Fund would be in the best interests of the Fund and its shareholders.
Therefore, the Board is recommending that shareholders of the Fund approve the
selection of Warburg Pincus Asset Management, Inc. ("Warburg") to continue to
serve as the investment sub-adviser to the International Growth Fund and approve
a New Sub-Advisory Agreement. Other than the change of the investment adviser to
the Fund from Sierra Advisors to Composite, provisions regarding the dates of
effectiveness and termination, and deletion of the Trust as a party to the
Agreement, there are no material differences between the Current Sub-Advisory
Agreement and New Sub-Advisory Agreement.
THE CURRENT SUB-ADVISORY AGREEMENT
Warburg currently serves as the investment sub-adviser to the International
Growth Fund pursuant to an agreement by and among the Trust, Sierra Advisors and
Warburg dated April 8, 1996. The Current Sub-Advisory Agreement was approved by
shareholders on June 21, 1996 for the purpose of decreasing sub-advisory fees
and adding reciprocal and expanded indemnification provisions. Under the Current
Sub-Advisory Agreement, Warburg makes the day-to-day investment decisions for
the assets of the Fund, subject to the supervision of, and policies established
by, Sierra Advisors and the Trustees.
The Current Sub-Advisory Agreement provides that Warburg, in return for its
fee, and subject to the supervision of the Board and Sierra Advisors will (1)
act in conformity with the Trust's Master Trust Agreement, the 1940 Act, the
Advisers Act and the Internal Revenue Code of 1986; (2) make investment
decisions for the Fund in accordance with the Fund's investment objective(s) and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as in effect and, after notice to Warburg, as they may be amended
from time to time; (3) place purchase and sale orders on behalf of the Fund to
effectuate the investment decisions made; (4) maintain books and records with
respect to the securities transactions of the Fund and will furnish to the Board
such periodic, regular and special reports as the Board may request; (5) treat
confidentially and as proprietary information of the Trust, all records and
other information relative to the Trust and past, present or potential
shareholders (other than information publicly available, otherwise legally in
the hands of Warburg or pertaining to mutual clients); and (6) will not use such
records and information for any purpose other than performance of its
responsibilities and duties under the Current Sub-Advisory Agreement, except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and, notwithstanding the foregoing, such
records may not be withheld where Warburg may be exposed to civil or criminal
contempt proceedings for failure to comply when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
In providing these services, Warburg will supervise the Fund's investments and
conduct a continual program of investment, evaluation and, if appropriate, sale
and reinvestment of the Fund's assets. In addition, Warburg will furnish the
Fund or Sierra Advisors with whatever statistical information the Fund or Sierra
Advisors may reasonably request with respect to the instruments that the Fund
may hold or contemplate purchasing.
In fulfilling its obligations under the Current Sub-Advisory Agreement,
Warburg is entitled to rely on and act in accordance with, and Sierra Advisors
has agreed to hold Warburg harmless for any act or omission taken in good faith
in reliance on, information and instructions, which may be standing
instructions, provided to Warburg by Sierra Advisors, the Trust's administrator,
or other agent of Sierra Advisors designated by Sierra Advisors. Such
information and instructions shall be conveyed to Warburg in a timely manner so
as to permit Warburg to take such action as may be required in an orderly
fashion.
The Current Sub-Advisory Agreement provides for the payment of a fee to
Warburg from Sierra Advisors not more than ten days following the last day of
each month for services provided in the previous month at the annual rate of
0.50% of the Fund's average daily net assets. In the event that any reduction in
the fees paid to Sierra Advisors under the Current Advisory Agreement is
required as a result of any statutory or regulatory limitation on investment
company expenses, there shall be a proportionate reduction in the fee
21
<PAGE> 28
payable to Warburg; provided that Warburg never will be required to pay more
than the amount of fees it receives.
The Current Sub-Advisory Agreement provides that Warburg will bear all
expenses in connection with the performance of its services under the Agreement,
which expenses shall not include brokerage fees or commissions in connection
with the effectuation of securities transactions. The Trust will bear certain
other expenses to be incurred in its operation, including but not limited to
organizational expenses, taxes, interest, brokerage fees and commissions, if
any; fees of Disinterested Trustees; SEC fees and state Blue Sky qualification
fees; out-of-pocket expenses of custodians, transfer and dividend disbursing
agents and the Trust's sub-administrator and transaction charges of custodians;
insurance premiums; outside auditing and legal expenses; costs of maintenance of
the Trust's existence; costs attributable to investor services, including
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Fund and of the officers or
Board; and any extraordinary expenses.
The services of Warburg are not deemed to be exclusive, and Warburg is free
to render investment advisory and other services to others, including fiduciary
and other managed accounts as well as to other investment companies or series of
investment companies, so long as its services under the Current Sub-Advisory
Agreement are not impaired thereby. The Current Sub-Advisory Agreement also
provides that whenever the Fund and one or more other accounts or investment
companies advised by Warburg 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. Similarly, opportunities to
sell securities will be allocated in an equitable manner.
The Current Sub-Advisory Agreement has an initial term of two years from
the effective date, and thereafter shall continue for successive annual periods,
provided the continuation is approved by the Board or by a vote of a majority of
the Fund's outstanding voting securities, as well as by a majority of the
Disinterested Trustees. The Current Sub-Advisory Agreement may be terminated,
without the payment of any penalty on 60 days written notice by Sierra Advisors,
the Board or by the vote of a majority of the outstanding voting securities of
the Fund, or upon 90 days written notice by Warburg. In addition, the Current
Sub-Advisory Agreement will also terminate automatically upon its assignment.
Under the Current Sub-Advisory Agreement, Warburg is not liable for any
error of judgment or for any loss suffered by the Fund or Sierra Advisors in
connection with performance of its obligations under the agreement, except for
any losses resulting from a breach of a fiduciary duty with respect to the
receipt of compensation for services, or resulting from willful misfeasance, bad
faith or gross negligence on Warburg's part in the performance of its duties or
from reckless disregard of its obligations and duties under the agreement. In
addition, the Current Sub-Advisory Agreement also provides that obligations
under the Agreement are binding upon the property and assets of the Fund and not
the Trustees, officers, or shareholders of the Fund individually.
THE PROPOSED NEW SUB-ADVISORY AGREEMENT
The Board approved the proposed New Sub-Advisory Agreement for the fund
between Composite and Warburg at a meeting held on October 27-28, 1997 a form of
which is attached hereto as Exhibit C. The proposed New Sub-Advisory Agreement
is substantially identical to the Current Sub-Advisory Agreement, except for the
change of the investment adviser from Sierra Advisors to Composite, the dates of
execution, effectiveness and initial term, and the deletion of the Trust as a
party to the Agreement.
The sub-advisory fees as a percentage of net assets now payable by
Composite will be the same under the New Sub-Advisory Agreement as under the
Current Sub-Advisory Agreement. If the sub-advisory fee under the New
Sub-Advisory Agreement had been in effect for the Fund's most recently completed
fiscal year, the sub-advisory fee to which Warburg would have been entitled
would have been identical to that to which it was entitled under the Current
Sub-Advisory Agreement.
22
<PAGE> 29
At a meeting held on October 27-28, 1997, the Board, including the
Disinterested Trustees, unanimously approved the New Sub-Advisory Agreement and
recommended the New Sub-Advisory Agreement for approval by the shareholders of
the Fund. The New Sub-Advisory Agreement would take effect upon the obtaining of
shareholder approval. The New Sub-Advisory Agreement will continue in effect for
an initial term of two years and thereafter for successive annual periods as
long as such continuance is approved in accordance with the 1940 Act.
In evaluating the New Sub-Advisory Agreement, the Board considered the
continuity of services by Warburg. In this regard, the Board took account of the
Fund's Current Sub-Advisory Agreement and the New Sub-Advisory Agreement,
including their terms relating to the services to be provided thereunder by
Warburg and that the fees and expenses payable under the New Sub-Advisory
Agreement will be equal to those paid under the Current Sub-Advisory Agreement.
Although the Trust is not a party to the New Sub-Advisory Agreement, it is not
expected that this change will have a material effect on the legal remedies
available to the Trust or shareholders in the event of a breach of the New
Sub-Advisory Agreement.
Approval of the New Sub-Advisory Agreement is contingent on the approval by
shareholders of the New Management Agreement between the Trust and Composite.
However, if the New Management Agreement is approved and shareholders of the
Fund do not approve the New Sub-Advisory Agreement, then the Board will take
such action as it deems is in the best interest of the Fund and its
shareholders, which may include proposing that shareholders approve an agreement
in lieu of the New Sub-Advisory Agreement.
INFORMATION REGARDING WARBURG
Warburg is located at 466 Lexington Avenue, New York, New York 10017-3147.
Warburg is a professional investment counseling firm that provides investment
services to investment companies, employee benefit plans, endowment funds,
foundations and other institutions and individuals. As of September 30, 1997,
Warburg managed approximately $21.1 billion of assets, including approximately
$12.5 billion of investment company assets. Incorporated in 1970, Warburg is
indirectly controlled by Warburg, Pincus & Co. ("WP&Co."), which has no other
business other than being a holding company of Warburg and its affiliates.
Lionel I. Pincus, the managing partner of WP&Co., may be deemed to control both
WP&Co. and Warburg.
Each Director and the principal executive officer of Warburg and their
principal occupations are listed below.
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
----------------------- -------------------- ----------------------------------
<S> <C> <C>
Lionel I. Pincus 466 Lexington Avenue Chief Executive Officer
New York, NY 10017
John L. Furth 466 Lexington Avenue Chairman of the Board of Directors
New York, NY 10017
John L. Vogelstein 466 Lexington Avenue Managing Director
New York, NY 10017
</TABLE>
None of the officers or Trustees of the Trust is an officer, employee,
director, or shareholder of Warburg.
As compensation for investment sub-advisory services to the Fund for the
fiscal year ended December 31, 1996, Warburg received compensation with respect
to the Fund in the amount of $292,199.
23
<PAGE> 30
Warburg currently provides investment services to the following investment
companies having an investment objective similar to the investment objective of
the International Growth Fund:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS UNDER
MANAGEMENT
NAME OF INVESTMENT COMPANY AS OF OCTOBER 21, 1997 RATE OF COMPENSATION
------------------------------------------------ ----------------------- ---------------------
<S> <C> <C>
Warburg Pincus International Equity Fund........ $ 3,183,668,000 1.00%
Warburg Pincus Institutional Fund, Inc.
International Equity Portfolio............. $ 1,262,021,000 0.80%
Evergreen Investment Trust
Evergreen International Equity Fund........ $ 288,360,155 0.55%
Sierra Trust Funds
International Growth Fund.................. $ 61,845,541 0.50%
Style Select Series, Inc.
International Equity Portfolio............. $ 26,418,580 0.70%
(on first
$100 million)
</TABLE>
The fees charged by Warburg to the other investment companies are, in some
cases, for services in addition to those provided under the New Sub-Advisory
Agreement.
SHAREHOLDER APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT
Approval of the New Sub-Advisory Agreement for the International Growth
Fund requires the affirmative vote of a majority of the outstanding shares of
the Fund. For purposes of this proposal, "majority of the outstanding shares"
means the vote of (1) 67% or more of the Fund's outstanding shares present at
the Special Meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present in person or represented by proxy; or (2) more than 50%
of the Fund's outstanding shares whichever is less.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS
OF THE INTERNATIONAL GROWTH FUND VOTE FOR APPROVAL OF
THE NEW SUB-ADVISORY AGREEMENT.
ADDITIONAL INFORMATION
TRUSTEES AND EXECUTIVE OFFICERS
Information about the Trust's current Trustees is set forth under Proposal
1 above. Presently, no officer of the Trust is an officer, employee, director or
shareholder of Composite. Nonetheless, each of the following officers of the
Trust, except Mr. Grant, are officers or employees of an entity that is under
common control with Composite:
<TABLE>
<CAPTION>
ADDRESS AND BUSINESS EXPERIENCE SHARES BENEFICIALLY
NAME, AGE AND POSITION DURING THE PAST FIVE YEARS OWNED AS OF
WITH THE TRUST (INCLUDING DIRECTORSHIPS)* THE RECORD DATE
- ------------------------- --------------------------------------------------- -------------------
<S> <C> <C>
Keith B. Pipes (41) Senior Vice President, Chief Financial Officer and **
President and Chief Secretary, Sierra Capital Management Corporation
Executive Officer 1988 to 1997; Chief Financial Officer, Secretary
and Treasurer, Sierra Fund Administration
Corporation, 1988 to 1997; Executive Vice President
and Secretary, Sierra Investment Advisors
Corporation, 1988 to 1997; Senior Vice President,
Chief Financial Officer and Secretary, Sierra
Investment Services Corporation, 1992 to 1997.
Michael D. Goth (52) Chief Operating Officer, Sierra Investment Advisors **
Senior Vice President Corporation, 1991 to present.
Stephen C. Scott (52) President and Chief Investment Officer, Sierra **
Senior Vice President Investment Advisors Corporation, 1988 to present;
Senior Vice President and Chief Investment Officer,
Sierra Investment Services Corporation, 1996 to
present.
</TABLE>
24
<PAGE> 31
<TABLE>
<CAPTION>
ADDRESS AND BUSINESS EXPERIENCE SHARES BENEFICIALLY
NAME, AGE AND POSITION DURING THE PAST FIVE YEARS OWNED AS OF
WITH THE TRUST (INCLUDING DIRECTORSHIPS)* THE RECORD DATE
- ------------------------- --------------------------------------------------- -------------------
<S> <C> <C>
Craig M. Miller (38) Vice President and Controller, Sierra Capital **
Treasurer and Chief Management Corporation, Sierra Fund Administration
Financial Officer Corporation and Sierra Investment Services
Corporation, 1993 to present; Audit Manager,
Coopers & Lybrand, L.L.P., 1987 to 1993.
Richard W. Grant (52) 2000 One Logan Square, Philadelphia, PA 19103 **
Secretary Partner, Morgan, Lewis & Bockius LLP, 1989 to
present.
Darren S. Kishimoto (31) Fund Administration Manager, Sierra Fund **
Assistant Secretary Administration Corporation, 1994 to present; Senior
Fund Administrator, 1992 to 1994.
Bradley F. Hersh (29) Finance Manager, Sierra Fund Administration **
Assistant Treasurer Corporation, 1996 to present; Senior Financial
Analyst, GW Securities, 1991 to 1995.
</TABLE>
- ---------------
* The address of each officer of the Trust, unless otherwise noted, is 9301
Corbin Avenue, Suite 333, Northridge, CA 91324.
** As of the Record Date, the Trustees and officers of the Trust as a group
beneficially owned an aggregate of less than 1% of the shares of each Fund
and Portfolio of the Trust.
Each officer of the Trust will hold such office until a successor has been
elected by the Board. It is the intention of the Nominees, if elected, to
replace certain of the Trust's officers with individuals familiar with
Composite's mutual fund organization.
PRINCIPAL UNDERWRITER
Sierra Investment Services Corporation, located at 9301 Corbin Avenue,
Northridge, California 91324, acts as the Trust's principal underwriter or
distributor. Sierra Services is a wholly owned subsidiary of Sierra Capital
Management Corporation which is an indirect wholly owned subsidiary of
Washington Mutual. For the fiscal year ended December 31, 1996, the Trust paid
no distribution fee to Sierra Services. Effective January 1, 1998, Composite
Funds Distributor, Inc. located at 601 W. Main Avenue, Spokane, WA 99201 will
become the Trust's distributor. Composite Funds Distributor, Inc. is a wholly
owned subsidiary of Washington Mutual.
ADMINISTRATOR
Sierra Administration, located at 9301 Corbin Avenue, Northridge,
California 91324, acts as the Trust's administrator. Sierra Administration is a
wholly owned subsidiary of Sierra Capital Management Corporation which is
located at the same address. For the fiscal year ended December 31, 1996, the
Trust paid administration fees to Sierra Fund Administration Corporation with
regard to the Funds as shown below. Because the Portfolios have only recently
commenced operations, the Trust paid no administration fees to Sierra
Administration with regard to the Portfolios for the fiscal year ended December
31, 1996. Amounts
25
<PAGE> 32
shown with respect to the Portfolios are for the fiscal period from commencement
of operations on June 3, 1997 (September 9, 1997 for the Value Portfolio)
through October 31, 1997.
<TABLE>
<CAPTION>
ADMINISTRATION
FUND/PORTFOLIO FEES*
-------------------------------------------------------------------- --------------
<S> <C>
Global Money Fund................................................... $ 36,725
Growth Fund......................................................... $193,861
Short Term High Quality Bond Fund................................... $ 24,031
Emerging Growth Fund................................................ $ 95,144
International Growth Fund........................................... $100,408
U.S. Government Fund................................................ $108,980
Corporate Income Fund............................................... $105,686
Growth and Income Fund.............................................. $ 98,181
Value Portfolio..................................................... N/A
Balanced Portfolio.................................................. $(19,632)
Growth Portfolio.................................................... $(19,095)
Capital Growth Portfolio............................................ $(19,306)
</TABLE>
- ---------------
* Net of fee waivers and/or expense reimbursements.
Effective January 1, 1998, Murphey Favre Securities Services, Inc., located
at 601 W. Main Avenue, Spokane, Washington 99201, will become the Trust's
administrator and transfer agent. Murphey Favre Securities Services, Inc., is a
wholly owned subsidiary of Washington Mutual.
PORTFOLIO TRANSACTIONS
In the fiscal year ended December 31, 1996 the Trust paid $760,663 in
brokerage commissions, including $6,031, or 0.8%, in brokerage commissions to
affiliated brokers. Brokerage commissions paid to affiliate brokers was
comprised of (1) $3,086 paid to J.P. Securities and J.P. Limited, which are
affiliates of J.P. Morgan, the investment sub-advisor to the Global Money Fund
and Growth and Income Fund; and (2) $2,945 paid to Donaldson, Lufkin & Jenrette,
which is an affiliate of Janus, the investment sub-advisor to the Growth Fund
and Emerging Growth Fund.
26
<PAGE> 33
BENEFICIAL OWNERS
To the Trust's knowledge, as of the Record Date, the following were
beneficial owners of 5% or more of the outstanding shares of each Fund and
Portfolio.
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF TOTAL
BENEFICIAL SHARES
NAME AND ADDRESS OWNERSHIP OUTSTANDING
- ------------------------------------------------------------------------- --------- ----------------
<S> <C> <C>
SHORT TERM HIGH QUALITY BOND FUND:
Saul and Rose Geller, 3995 Overland Ave. #315, Culver City, CA 90232 262,617 5.31%
BALANCED PORTFOLIO:
Hanns K. Hottes, 125 Shevelin Road, Novato, CA 94947 14,737 7.41%
Richard H. Redding, 4647 Malaga Cir., Santa Barbara, CA 93110 9,956 5.00%
Gladys R. Dunlap, 16330 Sunflower Tr., Orlando, FL 32828 11,329 5.69%
True Family Decedents Trust, 5309 Canterbury Dr., San Diego, CA 92116 28,826 14.50%
CAPITAL GROWTH PORTFOLIO:
M. Betty Wiseman Clegg, 901 Buckingham Dr., Silver Spring, MD 20901 4,555 9.20%
Russell W. Livingston, 5506 R D Ave., Orlando, FL 32822 6,973 14.09%
Bonny Stauffer, 3205 B Gardens E. Dr., Palm Beach, FL 33410 2,633 5.32%
Mary R. Fortune, 6211 62nd Way, West Palm Beach, FL 33409 4,162 8.41%
Art R. Pierce, 1320 North Street #8, Santa Rosa, CA 95404 3,300 6.67%
Tatyana Rybakova, 1030 N. Carson #13, Los Angeles, CA 90046 2,743 5.54%
Miguel Medina, 1202 West Service Ave., West Covina, CA 91790 4,308 8.70%
Earsel A. Blount, 510 S. Burnside Ave. #1F, Los Angeles, CA 90036 7,471 15.10%
GROWTH PORTFOLIO:
Bobbie Joe Griner, 2506 Hawthorne Ave., Orlando, FL 32806 5,354 5.14%
Mary E. and Ernest A. Perry, 124 Spree Ct., Galt, CA 95632 10,036 9.64%
Zane Y. and Verna R. Webb, 20056 Eagle Crest Dr., Foresthill, CA 95631 18,662 17.93%
William T. and Kathleen S. Short, 4012 Garnet Rd., Pollock Pines, CA 7,288 7.00%
95726
Valerie Becker, 309 Spencer Way, Seal Beach, CA 90740 5,808 5.58%
Moaciv J. and Cleorice G. Santos, 1946 Layton St., Pasadena, CA 91104 5,518 5.30%
VALUE PORTFOLIO:
Eleanor M. Clark, 7412 Olive Dr., Bakersfield, CA 93308 8,901 90.76%
</TABLE>
SUBMISSION OF SHAREHOLDER PROPOSALS
As a Massachusetts business trust, the Trust and its Funds and Portfolios
are not required to hold annual shareholders' meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent meeting
should send their written proposals to The Sierra Variable Trust, 9301 Corbin
Avenue, Northridge, California 91324, c/o Secretary, The Sierra Variable Trust a
reasonable period in advance of any such meeting.
REQUIRED VOTE
Approval of Proposal 1 requires the affirmative vote of a plurality of all
votes cast at the Special Meeting, provided that a majority of the outstanding
shares entitled to vote are present in person or by proxy. Approval of Proposals
2, 3, 4, 5 and 6 requires the affirmative vote of a majority of the outstanding
shares of each affected Fund or Portfolio. As defined in the 1940 Act, the vote
of a majority of the outstanding shares means the vote of (1) 67% or more of a
Fund's or Portfolio's outstanding shares present at a meeting, if the holders of
more than 50% of the outstanding shares of a Fund or Portfolio are present or
represented by proxy; or (2) more than 50% of a Fund's or Portfolio's
outstanding shares, whichever is less.
27
<PAGE> 34
Abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
for which the brokers or nominees do not have discretionary power) will not be
counted for or against the Proposals but will be counted for purposes of
determining whether a quorum is present. Abstentions and broker non-votes will
be counted as votes present for purposes of determining a "majority of the
outstanding voting securities" present at the Special Meeting and will therefore
have the effect of counting against Proposals 2, 3, 4, 5 and 6. Brokers who hold
shares as record owners for beneficial owners may have the authority under the
rules of the various stock exchanges to vote those shares with respect to the
Proposals when they have not received instructions from beneficial owners.
OTHER MATTERS
No business other than the matters described above is expected to come
before the Special Meeting, but should any matter incident to the conduct of the
Special Meeting or any question as to an adjournment of the Special Meeting
arise, the persons named in the enclosed Proxy will vote thereon according to
their best judgment in the interest of the Trust.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Trustees,
Keith B. Pipes
President
Dated: November 25, 1997
28
<PAGE> 35
EXHIBIT A
THE SIERRA VARIABLE TRUST
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated ,
1997, between The Sierra Variable Trust, a Massachusetts business trust, (the
"Trust"), on behalf of each of its series which are listed on the signature page
of this Agreement (each referred to herein as a "Fund" and collectively the
"Funds") and Composite Research & Management Co., a Washington corporation (the
"Manager").
WITNESSETH
WHEREAS, the Trust is an open-end series management investment company,
registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust, desires to retain the Manager to render investment
management services to each Fund, and the Manager is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Manager to act as investment
manager to the Funds for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Management. Subject to the supervision of the Board of Trustees of the
Trust, the Manager shall manage the investment operations of each Fund and the
composition of each Fund's portfolio, including the purchase, retention and
disposition of securities therefor, in accordance with such Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as such terms are hereinafter defined) and
resolutions of the Trust's Board of Trustees and subject to the following
understandings:
(a) The Manager shall provide supervision of each Fund's investments,
furnish a continuous investment program for each Fund's portfolio and
determine from time to time what securities will be purchased, retained, or
sold by each Fund, and what portion of the assets will be invested or held
as cash.
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Agreement and
Declaration of Trust of the Trust and the investment policies of the Funds
as determined by the Board of Trustees of the Trust.
(c) The Manager shall determine the securities to be purchased or sold
by the Funds and shall place orders for the purchase and sale of portfolio
securities, pursuant to its determinations, with brokers or dealers
selected by the Manager. In executing portfolio transactions and selecting
brokers or dealers, the Manager shall use its best efforts to seek on
behalf of the Funds the best overall terms available. In assessing the best
overall terms available for any transaction, the Manager may consider all
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the size of the transaction, the
timing of the transaction, the reputation, financial condition, experience,
and execution capability of a broker or dealer, the amount of commission,
and the value of any brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934), provided
by a broker or dealer. The Manager is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the
amount of commission another broker or dealer would have charged for
effecting the transaction if the Manager determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
A-1
<PAGE> 36
that particular transaction or in terms of the overall responsibilities of
the Manager to the Fund and/or other accounts over which the Manager
exercises investment discretion.
(d) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of a Fund as well as other fiduciary
accounts for which it has investment responsibility, the Manager, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so sold or purchased in order to obtain the best
execution, most favorable net price or lower brokerage commissions.
(e) Subject to the provisions of the Agreement and Declaration of
Trust of the Trust and the 1940 Act, the Manager, at its expense, may
select and contract with one or more investment sub-advisers (the
"sub-adviser") for each Fund to perform some or all of the services for
which it is responsible pursuant to this Section 2. The Manager shall be
solely responsible for the compensation of any sub-adviser of a Fund for
its services to such Fund. The Manager may terminate the services of any
sub-adviser at any time in its sole discretion, and shall, at such time,
assume the responsibilities of such sub-adviser unless and until a
successor sub-adviser is selected. To the extent that more than one
sub-adviser is selected, the Manager shall, in its sole discretion,
determine the amount of the Fund's assets allocated to each such
sub-adviser.
3. Services Not Exclusive. The investment management services rendered by
the Manager hereunder to the Funds are not to be deemed exclusive, and the
Manager shall have the right to render similar services to others, including,
without limitation, other investment companies.
4. Expenses. During the term of this Agreement, the Manager shall pay all
expenses incurred by it in connection with its activities under this Agreement
including the salaries and expenses of any of the officers or employees of the
Manager who act as officers, Trustees or employees of the Trust but excluding
the cost of securities purchased for the Funds and the amount of any brokerage
fees and commissions incurred in executing portfolio transactions for the Funds,
and shall provide the Funds with suitable office space. Other expenses to be
incurred in the operation of the Funds (other than those borne by any third
party), including without limitation, taxes, interest, brokerage fees and
commissions, fees of Trustees who are not officers, directors, or employees of
the Manager, federal registration fees and state Blue Sky qualification fees,
administration fees, bookkeeping, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of maintaining the Funds' or the
Trust's existence, costs of independent pricing services, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of preparing, printing and distributing prospectuses to
existing shareholders, costs of stockholders' reports and meetings of
shareholders and Trustees of the Funds or the Trust, as applicable, and any
extraordinary expenses will be borne by the Funds.
5. Compensation. For the services provided pursuant to this Agreement, the
Trust shall pay to the Manager as full compensation therefor a monthly fee
computed on the average daily net assets at the annual rate for each Fund as
stated in Schedule A attached hereto. The Trust acknowledges that the Manager,
as agent for the Funds, will allocate a portion of the fee equal to the
sub-advisory fee payable to the sub-advisor, if any, under its sub-advisory
agreement to the sub-advisor for sub-advisory services. The Trust acknowledges
that the Manager, as agent for the Funds, may allocate a portion of the fee to
Murphey Favre Securities Services, Inc. for administrative services, portfolio
accounting and regulatory compliance systems. The Manager also from time to time
and in such amounts as it shall determine in its sole discretion may allocate a
portion of the fee to Composite Funds Distributor, Inc. for facilitating
distribution of the Funds. This payment would be made from revenue which
otherwise would be considered profit to the Manager for its services. This
disclosure is being made to the Trust solely for the purpose of conforming with
requirements of the Washington Department of Revenue for exclusion of revenue
from the Washington Business and Occupation Tax.
6. Limitation of Liability. The Manager shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
A-2
<PAGE> 37
7. Delivery of Documents. The Trust has heretofore delivered to the Manager
true and complete copies of each of the following documents and shall promptly
deliver to it all future amendments and supplements thereto, if any:
(a) Agreement and Declaration of Trust as presently in effect and as
amended from time to time;
(b) Bylaws of the Trust;
(c) Registration Statement under the Securities Act of 1933 and under
the 1940 Act of the Trust on Form N-1A, and all amendments thereto, as
filed with the Securities and Exchange Commission (the "Registration
Statement") relating to the Trust and the shares of the Funds;
(d) Notification of Registration of the Trust under the 1940 Act on
Form N-8A;
(e) Prospectuses of the Trust relating to shares of the Funds (such
prospectuses as presently in effect and/or as amended or supplemented from
time to time, the "Prospectus"); and
(f) Statement of Additional Information of the Trust relating to
shares of the Funds (such statement as presently in effect and/or as
amended or supplemented from time to time, the "Statement of Additional
Information").
8. Duration and Termination. This Agreement shall become effective as of
the date first above-written for an initial period of two years and shall
continue thereafter so long as such continuance is specifically approved at
least annually (a) by the vote of the Board of Trustees including a majority of
those members of the Trust's Board of Trustees who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a meeting
called for that purpose, or by vote of a majority of the outstanding voting
securities of each Fund. Notwithstanding the foregoing, (a) this Agreement may
be terminated with respect to any Fund at any time, without the payment of any
penalty, by either the Trust (by vote of the Trust's Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund) or the
Manager, on sixty (60) days prior written notice to the other and (b) shall
automatically terminate in the event of its assignment. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the meanings assigned to such
terms in the 1940 Act.
9. Amendments. No provision of this Agreement may be amended, modified,
waived or supplemented except by a written instrument signed by the party
against which enforcement is sought. No amendment of this Agreement shall be
effective until approved in accordance with any applicable provisions of the
1940 Act.
10. Use of Name and Logo. The Trust agrees that it shall furnish to the
Manager, prior to any use or distribution thereof, copies of all prospectuses,
statements of additional information, proxy statements, reports to stockholders,
sales literature, advertisements, and other material prepared for distribution
to stockholders of the Trust or to the public, which in any way refer to or
describe the Manager or which include any trade names, trademarks or logos of
the Manager or of any affiliate of the Manager. The Trust further agrees that it
shall not use or distribute any such material if the Manager reasonably objects
in writing to such use or distribution within five (5) business days after the
date such material is furnished to the Manager.
The Manager and/or its affiliates own the names "Sierra", "Composite" and
any other names which may be listed from time to time on a Schedule B to be
attached hereto that they may develop for use in connection with the Trust,
which names may be used by the Trust only with the consent of the Manager and/or
its affiliates. The Manager, on behalf of itself and/or its affiliates, consents
to the use by the Trust of such names or any other names embodying such names,
but only on condition and so long as (i) this Agreement shall remain in full
force, (ii) the Fund and the Trust shall fully perform, fulfill and comply with
all provisions of this Agreement expressed herein to be performed, fulfilled or
complied with by it, and (iii) the Manager is the manager of the Fund and the
Trust. No such name shall be used by the Trust at any time or in any place or
for any purposes or under any conditions except as provided in this section. The
foregoing authorization by the Manager, on behalf of itself and/or its
affiliates, to the Trust to use such names as part of a business or name is not
exclusive of the right of the Manager and/or its affiliates themselves to use,
or to authorize others to use, the same; the Trust acknowledges and agrees that
as between the Manager and/or its affiliates and the Funds or the Trust, the
Manager and/or its affiliates have the exclusive right so to use, or authorize
others to use,
A-3
<PAGE> 38
such names, and the Trust agrees to take such action as may reasonably be
requested by the Manager, on behalf of itself and/or its affiliates, to give
full effect to the provisions of this section (including, without limitation,
consenting to such use of such names). Without limiting the generality of the
foregoing, the Trust agrees that, upon (i) any violation of the provisions of
this Agreement by the Trust, or (ii) any termination of this Agreement, by
either party or otherwise, the Trust will, at the request of the Manager, on
behalf of itself and/or its affiliates, made within six months after such
violation or termination, use its best efforts to change the name of the Trust
so as to eliminate all reference, if any, to such names and will not thereafter
transact any business in a name containing such names in any form or combination
whatsoever, or designate itself as the same entity as or successor to an entity
of such names, or otherwise use such names or any other reference to the Manager
and/or its affiliates, except as may be required by law. Such covenants on the
part of the Trust shall be binding upon it, its Trustees, officers,
shareholders, creditors and all other persons claiming under or through it.
The provisions of this section shall survive termination of this Agreement.
11. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, if to the Trust: 601 W. Main Ave., Suite 300,
Spokane, Washington 99201; or if to the Manager: 1201 Third Avenue, Suite 1220,
Seattle, Washington 98101; or to either party at such other address as such
party shall designate to the other by a notice given in accordance with the
provisions of this section.
12. Miscellaneous.
(a) Except as otherwise expressly provided herein or authorized by the
Board of Trustees of the Trust from time to time, the Manager for all purposes
herein shall be deemed to be an independent contractor and shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
(b) The Trust shall furnish or otherwise make available to the Manager such
information relating to the business affairs of the Trust as the Manager at any
time or from time to time reasonably requests in order to discharge its
obligations hereunder.
(c) This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts and shall inure to the benefit of
the parties hereto and their respective successors.
(d) If any provision of this Agreement shall be held or made invalid or by
any court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Agreement and Declaration of Trust and Limitation of Liability. A copy
of the Agreement and Declaration of Trust of the Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed by an officer of the Trust on behalf of
the Trustees of the Trust, as trustees and not individually, on further behalf
of the Funds, and that the obligations of this Agreement shall be binding upon
the assets and properties of each Fund, individually, and shall not be binding
upon the assets and property of any other series of the Trust or upon any of the
Trustees, officers, employees, agents or shareholders of the Funds or the Trust
individually.
A-4
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first above-written.
THE SIERRA VARIABLE TRUST, on behalf
of its series SHORT TERM HIGH QUALITY
BOND FUND,
GROWTH FUND,
EMERGING GROWTH FUND
INTERNATIONAL GROWTH FUND
GLOBAL MONEY FUND
U.S. GOVERNMENT FUND
CORPORATE INCOME FUND
GROWTH AND INCOME FUND
CAPITAL GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
VALUE PORTFOLIO
By:
------------------------------------
Name:
Title:
Attest:
By:
--------------------------------
Name:
Title:
COMPOSITE RESEARCH & MANAGEMENT CO.
By:
------------------------------------
William G. Papesh
President
Attest:
By:
--------------------------------
Sharon L. Howells
Secretary
A-5
<PAGE> 40
SCHEDULE A
THE SIERRA VARIABLE TRUST
INVESTMENT MANAGEMENT AGREEMENT
The fees to be charged to The Sierra Variable Trust for services provided
under this Agreement (including any sub-advisory fees) are as follows:
<TABLE>
<CAPTION>
UP TO OVER
$500M $500M
----- ------
<S> <C> <C> <C> <C> <C>
Global Money Fund.............................. 0.500% 0.400%
U.S. Government Fund........................... 0.600% 0.500%
Corporate Income Fund.......................... 0.650% 0.500%
</TABLE>
<TABLE>
<CAPTION>
UP TO OVER
$25M $25M
----- ------
<S> <C> <C> <C> <C> <C>
Growth Fund.................................... 0.950% 0.875%
</TABLE>
<TABLE>
<CAPTION>
UP TO $200M- OVER
$200M $500M $500M
----- ------ ------
<S> <C> <C> <C> <C> <C>
Short Term High Quality Bond Fund.............. 0.500% 0.450% 0.400%
</TABLE>
<TABLE>
<CAPTION>
UP TO $25M- OVER
$25M $500M $500M
----- ------ ------
<S> <C> <C> <C> <C> <C>
Emerging Growth Fund........................... 0.900% 0.850% 0.750%
</TABLE>
<TABLE>
<CAPTION>
UP TO $50M- OVER
$50M $125M $125M
----- ------ ------
<S> <C> <C> <C> <C> <C>
International Growth Fund...................... 0.950% 0.850% 0.750%
</TABLE>
<TABLE>
<CAPTION>
UP TO $100M- $200M- $400M- OVER
$100M $200M $400M $500M $500M
----- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Growth & Income Fund........................... 0.800% 0.750% 0.700% 0.650% 0.575%
</TABLE>
<TABLE>
<CAPTION>
ALL ASSET LEVELS
----------------
<S> <C>
Capital Growth Portfolio..................................................... 0.10%
Growth Portfolio............................................................. 0.10%
Balanced Portfolio........................................................... 0.10%
Value Portfolio.............................................................. 0.10%
</TABLE>
A-6
<PAGE> 41
EXHIBIT B
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made and entered into this day of , 1997, by
and between Composite Research & Management Co. (the "Manager"), a corporation
organized under the laws of the State of Washington and Janus Capital
Corporation (the "Sub-Adviser"), a corporation organized under the laws of the
State of Colorado.
WITNESSETH:
WHEREAS, the Manager is engaged in the business of rendering investment
advisory and management services, is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is the
investment adviser to the Growth Fund and the Emerging Growth Fund of The Sierra
Variable Trust (the "Trust"), an unincorporated business trust organized under
the laws of The Commonwealth of Massachusetts, pursuant to a Management
Contract, dated as of , 1997, between the Manager and the Trust (the
"Management Contract");
WHEREAS, the Trust is engaged in business as an open-end, management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust offers a number of investment portfolios, each with its
own investment objective and strategies, and of which two investment portfolios
are the Growth Fund and the Emerging Growth Fund (each a "Fund" and together,
the "Funds");
WHEREAS, the Sub-Adviser is engaged in the business of rendering investment
advisory and management services and is registered as an investment adviser
under the Advisers Act;
WHEREAS, the Manager is authorized to retain sub-advisers and desires to
retain the Sub-Adviser to furnish investment advisory and management services to
the Fund and the Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is hereby agreed by and among the parties hereto as follows:
1. Investment Description; Appointment. The Manager, with the approval of
the Trust, desires to employ and hereby appoints the Sub-Adviser to act as
investment sub-adviser to the Funds. The Sub-Adviser accepts the appointment and
agrees to furnish the services described herein for the compensation set forth
below.
In performance of its duties, the Sub-Adviser will comply with the
limitations specified in the Trust's Master Trust Agreement, the By-laws of the
Trust and the stated investment objectives, policies and restrictions of each
Fund as set forth in the Trust's Registration Statement on Form N-1A, File No.
33-57732, as in effect and which may be amended from time to time (the
"Registration Statement"), and in such manner and to such extent as may from
time to time be approved by the Board of Trustees of the Trust. Copies of the
Registration Statement, have been or will be submitted to the Sub-Adviser.
Copies of all amendments or supplements to the Registration Statement and the
Trust's Agreement and Declaration of Trust will be provided to the Sub-Adviser
during the continuance of this Agreement before or at the time such amendments
or supplements become effective.
The Manager agrees to furnish the Sub-Adviser with minutes of meetings of
the Board of Trustees of the Trust to the extent they may affect the duties of
the Sub-Adviser, a certified copy of any financial statements or reports
prepared by certified or independent public accountants for the Trust which
relate to the Funds, and with copies of any financial statements or reports made
by the Trust to its shareholders or to any governmental body or securities
exchange, and any further materials or information which the Sub-Adviser may
reasonably request to enable it to perform its functions under this Agreement.
B-1
<PAGE> 42
2. Services as Investment Sub-Adviser. Subject to the supervision of the
Board of Trustees of the Trust and of the Manager, the Sub-Adviser will (a)
maintain compliance procedures for the Funds that the Sub-Adviser believes are
adequate to ensure its compliance with the applicable provisions of the 1940 Act
and the Advisers Act; (b) make investment decisions for the Funds in accordance
with each Fund's investment objective(s) and policies as stated in each Fund's
Registration Statement and, after notice to the Sub-Adviser, as they may be
amended from time to time; (c) place purchase and sale orders on behalf of the
Funds to effectuate the investment decisions made; (d) maintain books and
records with respect to the securities transactions of the Funds in accordance
with the 1940 Act and the Advisers Act and the rules adopted thereunder and will
furnish to the Manager quarterly, annual and special reports as the Manager may
reasonably request; and (e) treat confidentially and as proprietary information
of the Trust, all records and other information relative to the Trust and prior,
present or potential shareholders; and will not knowingly use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and such records
may not be withheld where the Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
In providing those services, the Sub-Adviser will supervise each Fund's
investments and conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of each Fund's assets.
Subject to the supervision of the Manager and in accordance with the
investment objective and policies as stated in the Trust's Registration
Statement, the Sub-Adviser is authorized, in its discretion and without prior
consultation with the Manager, to buy, sell, lend and otherwise trade in any
stocks, bonds and other securities and investment instruments on behalf of each
Fund, without regard to the length of time the securities have been held and the
resulting rate of portfolio turnover or any tax considerations, and so long as
consistent with the foregoing, the majority or the whole of each Fund may be
invested in such proportions of stocks, bonds, other securities or investment
instruments, or cash as the Sub-Adviser shall determine. In addition, the Sub-
Adviser will furnish the Funds or the Manager with whatever statistical
information the Funds or the Manager may reasonably request with respect to the
instruments that the Funds may hold or contemplate purchasing.
3. Brokerage. Subject to (i) the over-riding objective of obtaining the
best possible execution of orders; and (ii) review and approval of the Board of
Trustees of the Trust, which may be conducted as often as quarterly, the
Sub-Adviser shall place all orders for the purchase and sale of investments for
the Funds with brokers, dealers, futures commissions merchants, or other sources
(hereafter, "brokers or dealers") selected by the Sub-Adviser, which may include
brokers or dealers affiliated with the Sub-Adviser. All transactions with any
affiliated person of the Trust, or where any such affiliated person acts as
broker or agent in connection with any such transaction, shall be accomplished
in compliance with the 1940 Act, the Advisers Act, the Securities Exchange Act
of 1934, as amended, the rules adopted thereunder and the procedures adopted
thereunder by the Trust. As provided in the Management Contract, any entity or
person associated with the Manager or Sub-Adviser which is a member of a
national securities exchange is authorized to effect any transaction on such
exchange for the account of a Fund which is permitted by Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust has
consented to the retention of compensation for the transactions in accordance
with Rule 11a2-2(T)(2)(iv). Purchase or sell orders for the Funds may be
aggregated with contemporaneous purchase or sell orders of other clients of the
Sub-Adviser; provided that (i) no advisory account will be favored by the
Sub-Adviser over any other account; (ii) each client of the Sub-Advisor who
participates in such an aggregated order will participate at the average share
price, with all transaction costs shared on a pro rata basis; (iii) only
advisory clients' transactions will be aggregated for such an aggregated order;
and (iv) the accounts of clients whose orders are aggregated will be segregated
on the Sub-Adviser's books and records so as to identify the particular client
who has the beneficial interest therein. The Sub-Adviser shall use its best
efforts to obtain execution of Fund transactions at prices which are
advantageous to such Fund and at commission rates that are reasonable in
relation to the benefits received. However, the Sub-Adviser may select brokers
or dealers on the basis that they provide brokerage, research, or other services
or products to a Fund and/or other accounts serviced by the Sub-Adviser. The
Sub-Adviser may pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission or dealer spread
another broker or dealer would have charged for effecting that
B-2
<PAGE> 43
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
products and/or services provided by such broker or dealer. This determination,
with respect to brokerage and research services or products, may be viewed in
terms of either that particular transaction or the overall responsibilities
which the Sub-Adviser and its affiliates have with respect to a Fund and to
accounts over which they exercise investment discretion, and not all such
services or products may be used by the Sub-Adviser in managing a Fund; provided
that with respect to such transaction and such determination the affiliates of
the Sub-Adviser shall have the same responsibilities to the Funds as the
Sub-Adviser has under this Agreement.
4. Information Provided to the Trust. The Sub-Adviser will keep the Trust
and the Manager informed of developments materially affecting each Fund of which
the Sub-Adviser becomes aware and will, on its own initiative, furnish the Trust
and the Manager on at least a quarterly basis with whatever information the Sub-
Adviser believes is appropriate for this purpose.
5. Standard of Care. The Sub-Adviser shall exercise its best judgment in
rendering the services described in paragraphs 2 and 3 above. Except as may
otherwise be provided by federal or state securities laws, the Sub-Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by a Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement (the conduct
excepted in this sentence shall be referred to as "Disqualifying Conduct").
6. Compensation. In consideration of the services rendered pursuant to
this Agreement, the Manager will pay the Sub-Adviser on the first business day
of each month a fee for the previous month at the annual rate of .55% of each
Fund's average daily net assets up to $25 million and .50% of each Fund's
average daily net assets in excess of $25 million. The fee for the first month
shall be prorated based upon the number of days the account was open in that
month. Upon any termination of this Agreement before the end of a month, the fee
for such part of that month shall be prorated according to the proportion that
such period bears to the full monthly period and shall be payable upon the date
of termination of this Agreement. For the purpose of determining fees payable to
the Sub-Adviser, the value of each Fund's net assets shall be computed at the
times and in the manner specified in the Registration Statement.
7. Expenses. The Sub-Adviser will bear all of its expenses in performing
its services under this Agreement, which expenses shall not include brokerage
fees or commissions in connection with the effectuation of securities
transactions. The Sub-Adviser shall bear no expenses of the Trust, a Fund or the
Manager. The Trust bears the expenses described in its Registration Statement.
Any reimbursement of advisory fees required by the Management Contract between
the Trust and the Manager or any voluntary or statutory expense limitation
provision shall be the sole responsibility of the Manager.
8. Services to Other Companies or Accounts. The Manager 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 Manager has no objection to the Sub-Adviser so acting,
provided that whenever a 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 a manner
reasonably equitable to each entity. Similarly, opportunities to sell securities
will be allocated in such an equitable manner. The Manager recognizes that in
some cases this procedure may limit the size of the position that may be
acquired or disposed of for a Fund. In addition, the Manager understands that
the persons employed by the Sub-Adviser to assist in 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 business or to render services of whatever kind or
nature. The Manager recognizes and agrees that the Sub-Adviser may provide
advice to other clients which may differ from or be identical to advice given
with respect to a Fund.
9. Term of Agreement. This Agreement shall become effective upon its
execution, shall continue for a one year term and shall continue thereafter,
with respect to a Fund, so long as such continuance is specifically
B-3
<PAGE> 44
approved at least annually by (i) the Board of Trustees of the Trust or (ii) a
vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, with respect to a Fund, without penalty, on 60 days
written notice by the Manager, the Board of Trustees of the Trust or by vote of
holders of a majority of the Fund's shares, or upon 60 days written notice, by
the Sub-Adviser and will terminate automatically upon any termination of the
Management Contract. In addition, this Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act). The
Sub-Adviser agrees to notify the Manager of any circumstances that to its best
knowledge and belief might result in this Agreement being deemed to be assigned.
10. Representations of the Manager and the Sub-Adviser. The Manager
represents that (i) a copy of the Trust's Agreement and Declaration of Trust,
dated January 27, 1993, together with all amendments thereto, is on file in the
office of the Secretary of The Commonwealth of Massachusetts, (ii) the
appointment of the Sub-Adviser has been duly authorized; (iii) it has acted and
will continue to act in conformity with the 1940 Act and other applicable laws;
and (iv) it is authorized to perform the services herein.
The Sub-Adviser represents that it is authorized to perform the services
described herein.
11. Indemnification. The Manager shall indemnify and hold harmless the
Sub-Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorneys' fees and other related expenses), howsoever
arising from or in connection with this Agreement or the performance by the Sub-
Adviser of its duties hereunder; provided, however, that nothing contained
herein shall require that the Sub-Adviser be indemnified for Disqualifying
Conduct.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to a Fund until approved by vote of a majority of the
outstanding voting securities 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.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto.
14. Governing Law. This Agreement shall be governed in accordance with the
laws of the Commonwealth of Massachusetts.
15. Miscellaneous. (a) Unless the Manager gives the Sub-Adviser written
instructions to the contrary, the Sub-Adviser shall vote all proxies solicited
by or with respect to the issuers of securities in which assets of a Fund may be
invested. The Sub-Adviser shall use its best good faith judgment to vote such
proxies in a manner which best serves the interests of such Fund's shareholders.
(b) The Manager shall provide the Sub-Adviser with a copy of each Fund's
agreement (the "Custody Agreement") with the Custodian (the "Custodian")
designated to hold the assets of the Fund and any modification thereto in
advance. Each Fund's assets shall be maintained in the custody of the Custodian
identified in, and in accordance with the terms and conditions of, the Custody
Agreement. The Sub-Adviser shall have no liability for the acts or omissions of
the Custodian. Any assets added to a Fund shall be delivered directly to the
Custodian.
(c) The Manager agrees and acknowledges that the Sub-Adviser is the sole
owner of the name and mark "Janus" and that all use of any designation comprised
in whole or part of Janus (a "Janus Mark") under this Agreement shall inure to
the benefit of the Sub-Adviser. The use by the Trust on its own behalf or on
behalf of a Fund of any Janus Mark in any advertisement or sales literature or
other materials promoting a Fund shall be with the consent of the Sub-Adviser.
The Trust and the Manager shall not, without the consent of the Sub-Adviser,
make representations regarding the Sub-Adviser intended to be disseminated to
the investing public
B-4
<PAGE> 45
in any disclosure document, advertisement or sales literature or other materials
promoting a Fund. Such consent shall not be required for any documents or other
materials intended for broker-dealer use only, for use by the Trust's trustees
and for internal use by the Trust and the Manager. Consent by the Sub-Adviser to
such use of any Janus Mark and any such representation shall not be unreasonably
withheld and shall be deemed to be given if no written objection is received by
the Trust, such Fund or the Manager within 3 business days after the request is
made by the Trust, a Fund or the Manager for such use of any Janus Mark or any
such representation. Upon termination of this Agreement for any reason, the
Trust and the Manager shall cease all use of any Janus Mark(s) as soon as
reasonably practicable.
(d) The Sub-Adviser agrees and acknowledges that the Trust is the sole
owner of the name and mark "The Sierra Variable Trust" and the Manager is the
sole owner of the name and mark "Composite Research & Management Co." and that
any and all use of any designation comprised in whole or in part of "The Sierra
Variable Trust" or "Composite Research & Management Co." (a "Composite Mark")
under this Agreement shall inure to the benefit of the Trust or the Manager,
respectively. The use by the Sub-Adviser on its own behalf of any Composite Mark
in any advertisement or sales literature or other materials promoting the Sub-
Adviser shall be with the consent of the Trust or the Manager, respectively. The
Sub-Adviser shall not, without the consent of the Trust or the Manager, as
applicable, make representations regarding the Trust, a Fund or the Manager in
any disclosure document, advertisement or sales literature or other materials
promoting the Sub-Adviser. Consent by the Trust and the Manager to such use of
any Composite Mark and any such representations shall not be unreasonably
withheld and shall be deemed to be given if no written objection is received by
the Sub-Adviser within 5 business days after the request by the Sub-Adviser is
made for such use of any Composite Mark or any such representations. Upon
termination of this Agreement for any reason, the Sub-Adviser shall cease any
and all use of any Composite Mark as soon as reasonably practicable.
(e) The Sub-Adviser may perform its services through any employee, officer
or agent of the Sub-Adviser, and the Trust and the Funds shall not be entitled
to the advice, recommendation, or judgment of any specific person.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
ATTEST: COMPOSITE RESEARCH &
MANAGEMENT CO.
By:
- ------------------------------- -----------------------------
Name: Name:
Title: Title:
ATTEST: JANUS CAPITAL CORPORATION
By:
- ------------------------------- -----------------------------
Name: Name:
Title: Title:
B-5
<PAGE> 46
EXHIBIT C
FORM OF
SUB-ADVISER AGREEMENT
Sub-Adviser Agreement executed as of , 1997 between Composite
Research & Management Co., a Washington corporation (the "Manager"), and Warburg
Pincus Asset Management, 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 SIERRA VARIABLE 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 (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 Manager 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. 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,
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<PAGE> 47
including, without limitation, information concerning the Fund, its funds
available, or to become available, for investment and generally as to the
condition 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 Manager
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
C-2
<PAGE> 48
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 Manager 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 Manager 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 Manager 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 Manager 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 investment advisory agreement between the Trust
and the Manager and relating to the Fund (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
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<PAGE> 49
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-4
<PAGE> 50
(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 reviewed and approved on behalf of the Trust by
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 Asset Management, 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
C-5
<PAGE> 51
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
"Composite Research & Management Co." 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.
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<PAGE> 52
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.
COMPOSITE RESEARCH & MANAGEMENT CO.
By:
------------------------------------
Name:
Title:
WARBURG PINCUS
ASSET MANAGEMENT, INC.
By:
------------------------------------
Name:
Title:
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<PAGE> 53
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
GLOBAL MONEY FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTGMF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--GLOBAL MONEY FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 54
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
SHORT TERM HIGH QUALITY BOND FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTST KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--SHORT TERM HIGH QUALITY BOND FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 55
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
U.S. GOVERNMENT FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTUSG KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--U.S. GOVERNMENT FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 56
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
CORPORATE INCOME FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTCIF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--CORPORATE INCOME FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 57
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
GROWTH AND INCOME FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTGAI KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--GROWTH AND INCOME FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 58
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
GROWTH FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTGRF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--GROWTH FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
4. To approve a new Investment Sub-Advisory Agreement for
the Growth Fund between Composite and Janus Capital
Corporation. (contingent upon approval of Proposal 2) [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 59
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
EMERGING GROWTH FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTEGF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--EMERGING GROWTH FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
5. To approve a new Investment Sub-Advisory Agreement for
the Emerging Growth Fund between Composite and Janus
Capital Corporation. (contingent upon approval
of Proposal 2) [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 60
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
INTERNATIONAL GROWTH FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTIGF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--INTERNATIONAL GROWTH FUND
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
3. To approve implementation of a structure for the Trust
which would permit the Board of Trustees to replace or
appoint investment sub-advisers of each Fund without
the necessity of seeking shareholder approval. [ ] [ ] [ ]
6. To approve a new Investment Sub-Advisory Agreement for
the International Growth Fund between Composite and
Warburg Pincus Asset Management, Inc. (contingent
upon approval of Proposal 2) [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 61
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
CAPITAL GROWTH PORTFOLIO
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTCGP KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--CAPITAL GROWTH PORTFOLIO
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 62
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
GROWTH PORTFOLIO
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTGRP KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--GROWTH PORTFOLIO
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 63
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
BALANCED PORTFOLIO
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTBAP KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--BALANCED PORTFOLIO
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE> 64
AMERICAN GENERAL LIFE
P.O. BOX 1931
HOUSTON, TX 77251
THE SIERRA VARIABLE TRUST
VALUE PORTFOLIO
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE SIERRA VARIABLE TRUST.
This proxy is for your use in voting on various matters relating to The
Sierra Variable Trust (the "Trust"). The undersigned hereby instructs American
General Life Insurance Company Separate Account D ("Separate Account D") to vote
shares of the Global Money Fund, Short Term High Quality Bond Fund, U.S.
Government Fund, Corporate Income Fund, Growth and Income Fund, Growth Fund,
Emerging Growth Fund and International Growth Fund (the "Funds"), and the Value
Portfolio, Balanced Portfolio, Growth Portfolio and Capital Growth Portfolio
(the "Portfolios"), attributable to his/her variable annuity contract for which
the undersigned is entitled to give instructions at the Special Meeting of
Shareholders of the Funds/Portfolios to be held at 11:00 a.m. Pacific Time on
December 23, 1997, and at any adjournment thereof, upon the proposals 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
Information Statement and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been received by
Separate Account D before the 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.
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 proposals.
By signing and dating below you instruct American General Life Insurance Company
Separate Account D to vote shares of the Funds/Portfolios attributable to your
variable annuity contract at the Special Meeting of Shareholders of The Trust or
at any and all adjournments of the Special Meeting. It shall vote as recommended
by the trustees, except as you have otherwise indicated on the card below and in
its discretion upon such other matters as may properly come before the Special
Meeting.
Note: Please sign your name(s) as printed above.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SVTVAP KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE SIERRA VARIABLE TRUST--VALUE PORTFOLIO
VOTE ON PROPOSALS
1. To consider and act upon a proposal to elect a Board of Trustees. 01)
Arthur H. Bernstein, 02) Anne V. Farrell, 03) Daniel L. Pavelich, 04)
Wayne L. Attwood, 05) John W. English, 06) Jay Rockey, 07) David E.
Anderson, 08) Michael K. Murphy, 09) Richard C. Yancey, 10) Kristianne
Blake, 11) Alfred E. Osborne, Jr., 12) Edmond R. Davis, 13) William G.
Papesh
FOR WITHHOLD FOR ALL To withhold authority to vote for
ALL ALL EXCEPT: specific nominees, mark "For All
Except" and write the nominee's
[ ] [ ] [ ] number on the line below.
-----------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
2. To approve a new Investment Management Agreement
between the Trust, on behalf of each Fund, and
Composite Research & Management Co. ("Composite"). [ ] [ ] [ ]
</TABLE>
To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.
- --------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
