SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
PILGRIM VARIABLE PRODUCTS TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
Pilgrim Variable Products Trust
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(800) 992-0180
July __, 2000
Dear Shareholder:
ReliaStar Financial Corp., the indirect parent company of Pilgrim
Investments, Inc., the investment adviser to Pilgrim VP Growth Opportunities,
Growth + Value, High Yield Bond, International Value, MagnaCap, MidCap
Opportunities, Research Enhanced Index and SmallCap Opportunities Portfolios
(collectively, the "Portfolios") of Pilgrim Variable Products Trust ("the
Trust"), is being acquired by the financial services firm ING Groep N.V.
Headquartered in Amsterdam, ING is a global financial institution active in the
fields of insurance, banking, and asset management.
At the shareholder meeting on August 18, 2000, you will be asked to approve
new advisory contracts and, as applicable, sub-advisory contracts to take effect
after the acquisition. If approved, Pilgrim Investments will continue to manage
the Portfolios following the transaction. Except for the dates, these new
contracts are the same as those currently in effect. Approval of the new
advisory and sub-advisory contracts is sought so that management of each
Portfolio can continue uninterrupted after the transaction, because the current
agreements may terminate automatically as a result of the transaction. At the
shareholder meeting, you also will be asked to ratify the independent auditors
and to elect new Trustees.
After careful consideration, the Board of Trustees of the Trust unanimously
approved each of the proposals and recommends that shareholders vote "FOR" each
proposal.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO AVOID
THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS, PLEASE TAKE
A FEW MINUTES TO READ THE PROXY STATEMENT AND CAST YOUR VOTE. IT IS IMPORTANT
THAT YOUR VOTE BE RECEIVED BY NO LATER THAN AUGUST 17, 2000.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
ROBERT W. STALLINGS
Chief Executive Officer and President
<PAGE>
PILGRIM VARIABLE PRODUCTS TRUST
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(800) 992-0180
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2000
To the Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Pilgrim VP Growth
Opportunities, Growth + Value, High Yield Bond, International Value, MagnaCap,
MidCap Opportunities, Research Enhanced Index and SmallCap Opportunities
Portfolios (collectively, the "Portfolios") of Pilgrim Variable Products Trust
(the "Trust") will be held on August 18, 2000 at 9:30 a.m., local time, at 40
North Central Avenue, Suite 1200, Phoenix, Arizona 85004 for the following
purposes:
1. To elect eleven Trustees to serve until their successors are elected and
qualified;
2. To approve a new Investment Management Agreement between the Trust and
Pilgrim Investments, Inc. ("Pilgrim Investments") to reflect the
acquisition of Pilgrim Investments by ING Groep N.V. ("ING"), with no
change in the advisory fees payable to Pilgrim Investments;
3. (a) For shareholders of Pilgrim VP International Portfolio, to approve a
new Sub-Advisory Agreement between Pilgrim Investments and Brandes
Investment Partners, L.P. ("Brandes") to reflect the acquisition of
Pilgrim Investments by ING, with no change in the sub-advisory fee
payable to Brandes;
(b) For shareholders of Pilgrim VP Research Enhanced Index Portfolio, to
approve a new Sub-Advisory Agreement between Pilgrim Investments and
J.P. Morgan Investment Management Inc. ("J.P. Morgan") to reflect the
acquisition of Pilgrim Investments by ING, with no change in the
sub-advisory fee payable to J.P. Morgan; and
(c) For shareholders of Pilgrim VP Growth + Value Portfolio, to approve a
new Sub-Advisory Agreement between Pilgrim Investments and Navellier
Fund Management, Inc. ("Navellier") to reflect the acquisition of
Pilgrim Investments by ING, with no change in the sub-advisory fee
paid to Navellier;
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the Portfolios for the fiscal year ending December 31, 2000;
and
5. To transact such other business as may properly come before the Meeting of
Shareholders or any adjournments thereof.
Shareholders of record at the close of business on June 28, 2000 are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Trustees,
JAMES M. HENNESSY, Secretary
Dated: July __, 2000
<PAGE>
Pilgrim Variable Products Trust
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2000
A Special Meeting (the "Meeting") of Shareholders of Pilgrim VP Growth
Opportunities, Growth + Value, High Yield Bond, International Value, MagnaCap,
MidCap Opportunities, Research Enhanced Index and SmallCap Opportunities
Portfolios (collectively, the "Portfolios") of Pilgrim Variable Products Trust
(the "Trust") will be held on August 18, 2000 at 9:30 a.m., local time, at 40
North Central Avenue, Suite 1200, Phoenix, Arizona 85004 for the following
purposes:
1. To elect eleven Trustees to serve until their successors are elected and
qualified;
2. To approve a new Investment Management Agreement between the Portfolios and
Pilgrim Investments, Inc. ("Pilgrim Investments") to reflect the
acquisition of Pilgrim Investments by ING Groep N.V. ("ING"), with no
change in the advisory fees payable to Pilgrim Investments;
3. (a) For shareholders of Pilgrim VP International Value Portfolio, to
approve a new Sub-Advisory Agreement between Pilgrim Investments and
Brandes Investment Partners, L.P. ("Brandes") to reflect the
acquisition of Pilgrim Investments by ING, with no change in the
sub-advisory fee payable to Brandes;
(b) For shareholders of Pilgrim VP Research Enhanced Index Portfolio, to
approve a new Sub-Advisory Agreement between Pilgrim Investments and
J.P. Morgan Investment Management Inc. ("J.P. Morgan") to reflect the
acquisition of Pilgrim Investments by ING, with no change in the
sub-advisory fee payable to J.P. Morgan; and
(c) For shareholders of Pilgrim VP Growth + Value Portfolio, to approve a
new Sub-Advisory Agreement between Pilgrim Investments and Navellier
Fund Management, Inc. ("Navellier") to reflect the acquisition of
Pilgrim Investments by ING, with no changes in the sub-advisory fee
payable to Navellier;
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the Portfolios for the fiscal year ending December 31, 2000;
and
5. To transact such other business as may properly come before the Meeting of
Shareholders or any adjournments thereof.
The date of the first mailing of this Proxy Statement is expected to be on
or about ________________, 2000.
The Board of Trustees is soliciting votes from shareholders of each
Portfolio only with respect to the particular Proposals that affect that
Portfolio. The following table identifies the Portfolios entitled to vote on
each Proposal.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO PROPOSAL 1 PROPOSAL 2 PROPOSAL 3(A) PROPOSAL 3(B) PROPOSAL 3(C) PROPOSAL 4
--------- ---------- ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Growth Opportunities X X X
Growth + Value X X X X
High Yield Bond X X X
International Value X X X X
MagnaCap X X X
MidCap Opportunities X X X
Research Enhanced Index X X X X
SmallCap Opportunities X X X
</TABLE>
GENERAL OVERVIEW
On April 30, 2000, ReliaStar Financial Corp. ("ReliaStar") entered into an
agreement (the "Transaction") to be acquired by ING Groep N.V. ("ING"). ING is a
global financial institution active in the fields of insurance, banking, and
asset management. Headquartered in Amsterdam, it conducts business in more than
60 countries, and has almost 90,000 employees. ING seeks to provide a full range
of integrated financial services to private, corporate, and institutional
clients through a variety of distribution channels. As of December 31, 1999, ING
had total assets of approximately $471.8 billion and assets under management of
approximately $330.3 billion. ING includes, among its numerous direct and
indirect subsidiaries, Baring Asset Management, Inc. in Boston, Mass., ING
Investment Management Advisors B.V. in The Hague, the Netherlands, Furman Selz
Capital Management LLC in New York, N.Y., ING Investment Management LLC in
Atlanta, Georgia, Baring International Investment Limited in London, England and
Baring Asset Management (Asia) Limited in Hong Kong. Completion of the
Transaction is contingent upon, among other things, approval by the
Directors/Trustees of the Pilgrim Funds, and certain Pilgrim Fund shareholder
and regulatory approvals. The closing of the Transaction is expected to occur
during the third quarter of 2000.
In the Transaction, ING will issue to stockholders of ReliaStar $54.00 in
cash for each share of ReliaStar common stock held by them, subject to possible
adjustments. On __________, 2000, the total number of shares of ReliaStar
outstanding was ___.
Pilgrim is expected to remain intact after the Transaction. Pilgrim does
not currently anticipate that there will be any changes in the investment
personnel primarily responsible for the management of the Portfolios as a result
of the Transaction. ING's principal executive offices are located at
Strawinskylaan 2631, 1077 zz Amsterdam, P.O. Box 810, 1000 AV Amsterdam, the
Netherlands.
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PROPOSAL NO. 1
ELECTION OF TRUSTEES
The Board of Trustees of the Trust has nominated eleven individuals (the
"Nominees") for election to the Board. Shareholders are being asked to elect the
Nominees to serve as Trustees, each to serve until his or her successor is duly
elected and qualified. Pertinent information about each Nominee is set forth
below. Each Nominee has consented to serve as a Trustee if elected.
All of the Nominees except for Al Burton, Jock Patton and Robert W.
Stallings are currently Trustees of the Trust. Messrs. Burton, Patton and
Stallings currently serve as Advisory Board Members of the Trust. As Advisory
Board Members, Messrs. Burton, Patton and Stallings participate in board
meetings for the Trust, but do not vote on matters pertaining to the Trust. Mr.
Lipson, a current Trustee of the Trust, is not standing for election as a
Trustee of the Trust.
The Nominees are being nominated to provide uniformity across the Boards of
Directors/Trustees of all of the Pilgrim Funds. In evaluating the Nominees, the
Trustees took into account their background and experience, including their
familiarity with the issues relating to these types of funds and investments as
well as their careers in business, finance, marketing and other areas. The
Trustees also considered the experience of each of the Nominees as trustees or
directors of certain of the funds in the Pilgrim group of funds.
INFORMATION REGARDING NOMINEES
Below are the names, ages, business experience during the past five years
and other directorships of the Nominees. An asterisk (*) has been placed next to
the name of each Nominee who would constitute an "interested person," as defined
in the Investment Company Act of 1940, by virtue of that person's affiliation
with the Trust or Pilgrim Investments or any of its affiliates. The address of
each Nominee is 40 North Central Avenue, Suit 1200, Phoenix, Arizona 85004.
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<TABLE>
<CAPTION>
Position(s) to be
Name, Age Held With the Fund Principal Occupation During Past 5 Years
--------- ------------------ ----------------------------------------
<S> <C> <C>
Al Burton (Age 72) Trustee President of Al Burton Productions for more than the last five
years. Mr. Burton is also a Director, Trustee or Advisory board
member of each of the funds managed by Pilgrim.
Paul S. Doherty Trustee President, of Doherty, Wallace, Pillsbury and Murphy, P.C.,
(Age 66) Attorneys. Formerly a Director of Tambrands, Inc. (1993-1998).
Mr. Doherty is also a Director or Trustee of each of the funds
managed by Pilgrim.
Robert B. Goode Trustee Retired. Mr. Goode was formerly Chairman, American Direct Business
(Age 69) Insurance Agency, Inc. (1996 - 2000). Mr. Goode is also a Director
or Trustee of each of the funds managed by Pilgrim.
Alan L. Gosule Trustee Partner and Chairman of the Tax Department of Clifford Chance, Rogers
(Age 59) & Wells (since 1991). Mr. Gosule is a Director of F.L. Putnam
Investment Management Co., Inc., Simpson Housing Limited Partnership,
Home Properties of New York, Inc., CORE Cap, Inc. and Colonnade
Partners. Mr. Gosule is also a Director or Trustee of each of the
funds managed by Pilgrim.
Walter H. May Trustee Retired. Mr. May was formerly Managing Director and Director of
(Age 63) Marketing for Piper Jaffray, Inc. Mr. May is also a director or
Trustee of each of the funds managed by Pilgrim.
Jock Patton (Age 54) Trustee Private Investor. Director of Hypercom Corporation (since January
1999), and JDA Software Group, Inc. (since January 1999). Mr. Patton
is also a Director of Buick of Scottsdale, Inc., National Airlines,
Inc., BG Associates, Inc., BK Entertainment, Inc., Arizona
Rotorcraft, Inc. and Director and Chief Executive Officer of Rainbow
Multimedia Group, Inc. Mr. Patton was formerly Director of Stuart
Entertainment, Inc., Director of Artisoft, Inc. (August 1994-July
1998); and a President and Co-owner of StockVal, Inc. (April 1993 -
June 1997). Mr. Patton is also a Director, Trustee, or a member of
the Advisory board of each of the funds managed by Pilgrim.
David W.C. Putnam Trustee President, Clerk and Director of F.L. Putnam Securities Company, Inc.
(Age 60) and its affiliates (since 1978). Mr. Putnam is Director of Anchor
Investment Management Corporation and President and Director/Trustee
of Anchor Capital Accumulation Trust, Anchor International Bond
Trust, Anchor Gold and Currency Trust, Anchor Resources and
Commodities Trust and Anchor Strategic Assets Trust. Mr. Putnam was
formerly Director of Trust Realty Corp. and Bow Ridge Mining Co. Mr.
Putnam is also a Director or Trustee of each of the funds managed by
Pilgrim.
John R. Smith Trustee President of New England Fiduciary Company (since 1991). Mr. Smith
(Age 76) is Chairman of Massachusetts Educational Financing Authority (since
1987), Vice Chairman of Massachusetts Health and Education Authority
(since 1979) and Vice-Chairman of MHI, Inc. (Massachusetts Non-Profit
Energy Purchasers Consortium) (since 1996). Mr. Smith is also a
Director or Trustee of each of the funds managed by Pilgrim.
</TABLE>
4
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<TABLE>
<CAPTION>
Position(s) to be
Name, Age Held With the Fund Principal Occupation During Past 5 Years
--------- ------------------ ----------------------------------------
<S> <C> <C>
*Robert W. Stallings Trustee Chairman, Chief Executive Officer and President of Pilgrim Group,
(Age 51) Inc. ("Pilgrim Group") (since December 1994); Chairman, Pilgrim
Investments, Inc. (since December 1994); Chairman, Pilgrim
Securities, Inc. ("Pilgrim Securities") (since December 1994);
President and Chief Executive Officer of Pilgrim Funding, Inc. (since
November 1999); and President and Chief Executive Officer of Pilgrim
Capital Corporation and its predecessors (since August 1991). Mr.
Stallings is also a Director, Trustee, or a member of the Advisory
Board of each of the Pilgrim Funds.
*John G. Turner Trustee/ Chairman and Chief Executive Officer of ReliaStar Financial Corp. and
(Age 60) Chairman ReliaStar Life Insurance Co. (since 1993); Chairman of ReliaStar Life
Insurance Company of New York (since 1995); Chairman of Northern Life
Insurance Company (since 1992). Mr. Turner was formerly, Director
of Northstar Investment Management Corporation and affiliates (1993
to 1999) and President of ReliaStar Financial Corp. and ReliaStar
Life Insurance Co. (1989-1991). Mr. Turner is also Chairman of each
of the funds managed by Pilgrim.
David Wallace Trustee Chairman of FECO Engineered Systems, Inc. Mr. Wallace is President
(Age 76) and Trustee of the Robert R. Young Foundation; Governor of the New
York Hospital, Trustee of Greenwit Hospital and Director of UMC
Electronics and Zurn Industries, Inc. Mr. Wallace was formerly
Chairman of Lone Star Industries and Putnam Trust Company, Chairman
and Chief Executive Officer of Todd Shipyards, Bangor Punta
Corporation, and National Securities & Research Corporation. Mr.
Wallace is also a Director or Trustee of each of the funds managed by
Pilgrim.
</TABLE>
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* An "interested person" as defined in section 2(a)(19) of the 1940 Act.
During the most recent fiscal year, the Board of Trustees of the Trust held
six meetings. Each Trustee attended more than 75% of such meetings during the
period the Trustee served as a Trustee.
COMMITTEES
The Board of Trustees of the Trust has an Audit Committee whose function is
to meet with the independent auditors for the Trust to review the scope of the
Trust's audit, the Trust's financial statements and interim accounting controls,
and to meet with management concerning these matters, among other things. The
Committee currently consists of David W. Wallace, Paul S. Doherty, Robert B.
Goode and John R. Smith. During the year ended December 31, 1999, the Audit
Committee met one time. [Each member of the Audit Committee attended that
meeting.]
The Board of Trustees of the Trust has a Valuation Committee whose function
is to review the determination of the value of securities held by the Portfolios
for which market quotations are not available. The Committee currently consists
of David W.C. Putnam, Alan L. Gosule and Walter H. May. Al Burton and Jock
Patton currently serve as Advisory Board Members of this Committee. The
Valuation Committee was created on November 16, 1999, and did not meet during
the fiscal year ended December 31, 1999.
The Board of Trustees of the Trust has an Executive Committee to act for
the full Board if necessary in the event that Board action is needed between
regularly scheduled Board meetings. The Committee currently consists of John G.
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Turner and Walter H. May. The Executive Committee was created on January 27,
2000, and therefore did not meet during the fiscal year ended December 31, 1999.
The Board of Trustees of the Trust has a Nominating Committee for the
purpose of considering candidates to fill Independent Trustee vacancies on the
Board. The Nominating Committee currently consists of Walter H. May, Paul S.
Doherty and Robert B. Goode. Mary Baldwin and Al Burton serve as Advisory Board
Members of this Committee. The Nominating Committee was created on November 16,
1999, and did not meet during the fiscal year ended December 31, 1999. The Trust
currently does not have a policy regarding whether the Nominating Committee will
consider nominees recommended by shareholders of the Trust.
REMUNERATION OF TRUSTEES AND OFFICERS
The Trust currently pays each Trustee or Advisory Board Member who is not
an "interested person" of the adviser a pro rata share, as described below, of
(i) an annual retainer of $20,000; (ii) $5,000 per quarterly Board meeting;
(iii) $500 per committee meeting; (iv) $500 per special or telephonic meeting;
and (v) out-of-pocket expenses. The pro rata share paid by the Trust is based on
the Trust's average net assets as a percentage of the average net assets of all
the funds managed by Pilgrim Investments for which the Trustees serve in common
as Directors or Trustees or as Advisory Board Members, if applicable. Certain of
the Pilgrim Funds had different compensation schedules in place for the Trustees
during portions of 1999.
The following table sets forth the compensation paid to each of the
Trustees of the Trust for the fiscal year ended December 31, 1999. Trustees who
are interested persons of the Trust do not receive any compensation from the
Trust. In the column headed "Total Compensation From Fund Complex Paid to
Trustees," the number in parentheses indicates the total number of investment
company boards of Directors/Trustees in the Pilgrim Fund complex on which the
Trustee served during that year.
AMOUNT PAID BY TOTAL COMPENSATION FROM COMPANIES
NAME OF PERSON, POSITION TRUST TO TRUSTEES IN FUND COMPLEX PAID TO TRUSTEES
------------------------ ----------------- ---------------------------------
Paul S. Doherty $1,592.33 $12,445
Trustee (12 companies)
Robert B. Goode $1,592.33 $12,062
Trustee (12 companies)
Alan L. Gosule $1,500 $
Trustee ---------
(12 companies)
Mark L. Lipson (2) $ 0 $ 0
Trustee (12 companies)
Walter H. May $1,592.33 $12,446
Trustee (12 companies)
David W. C. Putnam $ 702 $11,202
Trustee (12 companies)
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AMOUNT PAID BY TOTAL COMPENSATION FROM COMPANIES
NAME OF PERSON, POSITION TRUST TO TRUSTEES IN FUND COMPLEX PAID TO TRUSTEES
------------------------ ----------------- ---------------------------------
John R. Smith $1,592.33 $12,445
Trustee (12 companies)
John G. Turner (2) $ 0 $ 0
Trustee (12 companies)
David W. Wallace $ 702 $11,586
Trustee (12 companies)
----------
(1) Mary A. Baldwin, Al Burton, Jock Patton, and Robert W. Stallings were
elected Advisory Board Members of the Trust on November 16, 1999. They are
compensated by the Trust for their services as an Advisory Board Member at
the same rate at which Trustees of the Trust are compensated.
(2) "Interested person," as defined in the Investment Company Act of 1940,
because of affiliation with Pilgrim Investments.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of the Trust voting at
the Meeting is required to approve the election of each Nominee for the Trust.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES
UNDER PROPOSAL NO. 1.
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PROPOSAL NO. 2
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
Shareholders of the Trust are being asked to approve a new Investment
Management Agreement (the "New Agreement") between the Trust and Pilgrim
Investments. APPROVAL OF THE NEW AGREEMENT IS SOUGHT SO THAT THE MANAGEMENT OF
EACH PORTFOLIO CAN CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE
CURRENT INVESTMENT MANAGEMENT AGREEMENT (THE "CURRENT AGREEMENT") MAY TERMINATE
AUTOMATICALLY AS A RESULT OF THE TRANSACTION, WHICH IS DESCRIBED IN "GENERAL
OVERVIEW" ABOVE.
The Transaction between ReliaStar and ING is scheduled to September 2000.
As a result of this transaction, ReliaStar will become a wholly-owned subsidiary
of ING America Insurance Holdings, Inc., a subsidiary of ING. Pilgrim
Investments will remain a wholly-owned subsidiary of ReliaStar. The change in
ownership of Pilgrim Investments resulting from this transaction may be deemed
under the Investment Company Act of 1940 to be an assignment of the Current
Agreement. The Current Agreement provides for its automatic termination upon an
assignment. Accordingly, the New Agreement between Pilgrim Investments and the
Trust is proposed for approval by shareholders of each Portfolio. The New
Agreement is attached as Appendix A to this proxy statement.
Pilgrim Investments and representatives of ING have advised the Trust that
currently no change is expected in the investment advisory and other personnel
in connection with the Transaction and that it is currently anticipated the same
persons responsible for management of the Portfolios under the Current Agreement
will continue to be responsible under the New Agreement. Pilgrim Investments
does not anticipate that the Transaction will cause any reduction in the quality
of services now provided to the Portfolios or have any adverse effect on Pilgrim
Investments' ability to fulfill its obligations to the Portfolios.
The terms of the New Agreement are the same in all respects as the terms of
the Current Agreement, except for the dates. The Current Agreement was last
approved by the Trust's Board of Trustees, including a majority of the Trustees
who were not parties to the Current Agreement or interested persons of such
parties, at a Meeting of the Board of Trustees held on April 27, 2000.
Shareholders of each Portfolio last approved the Current Agreement on the
following dates: for the Growth & Value, High Yield Bond, Research Enhanced
Index and SmallCap Opportunities Portfolio, on April 15, 1994; for the
International Value Portfolio, on April 30, 1997; and for the Growth
Opportunities, MagnaCap, and MidCap Opportunities Portfolios, on April 28, 2000.
At the June 13, 2000 meeting of the Board of Trustees, the New Agreement
was approved unanimously by the Board of Trustees, including all of the Trustees
who are not interested parties to the New Agreement or interested persons of
such parties. The New Agreement as approved by the Board of Trustees is
submitted for approval by the shareholders of the Portfolios. The New Agreement
must be voted upon separately by each Portfolio.
If the New Agreement is approved by shareholders, it will take effect
immediately after the closing of the Transaction. The New Agreement will remain
in effect for two years from the date it takes effect, and, unless earlier
terminated, will continue from year to year thereafter, provided that such
continuance is approved annually (i) by the Trust's Board of Trustees or by the
vote of a majority of the outstanding voting securities of the Portfolios, and,
in either case, (ii) by a majority of the Trust's Trustees who are not parties
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to the New Agreement or "interested persons" of any such party (other than as
Trustees of the Trust).
If the shareholders of any Portfolio should fail to approve the New
Agreement with respect to that Portfolio, the Transaction may not be
consummated. If the Transaction is not consummated, Pilgrim Investments will
continue to serve as adviser for all of the Portfolios under the Current
Agreement.
THE TERMS OF THE NEW AGREEMENT
The terms of the New Agreement will be the same in all respects as that of
the respective Current Agreement, except for the dates. The New Agreement
requires Pilgrim Investments to provide, subject to the supervision of the Board
of Trustees, investment advice and investment services to the Portfolios and to
furnish advice and recommendations with respect to investment of the Portfolios'
assets and the purchase or sale of portfolio securities. Pilgrim Investments
also provides investment research and analysis.
There will be no increase in advisory fees for any of the Portfolios. The
annual advisory fees under the New Agreement for each Portfolio are listed
below:
PORTFOLIO ADVISORY FEE
--------- ------------
Growth + Value Portfolio, High 0.75% of the first $250 million of
Yield Bond Portfolio, Research aggregate average daily net assets of
Enhanced Index Portfolio, and the Portfolio; 0.70% of the next $250
SmallCap Opportunities Portfolio million of such assets; 0.65% of the
next $250 million of such assets; 0.60%
of the next $250 million of such assets
and 0.55% of the aggregate average daily
net assets in excess of $1 billion.
International Value Portfolio 1.00% of aggregate average daily net
assets.
MagnaCap Portfolio, Growth 0.75% of aggregate average daily net
Opportunities Portfolio and assets of the Portfolio.
MidCap Opportunities Portfolio
Like the Current Agreement, the New Agreement provides that Pilgrim
Investments is not subject to liability to the Portfolio for any act or omission
in the course of, or connected with, rendering services under the Agreement,
except by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under the Agreement.
The New Agreement may be terminated by a Portfolio without penalty upon not
less than 60 days' notice by the Board of Trustees, by a vote of the holders of
a majority of the Portfolio's outstanding shares voting as a single class, or by
Pilgrim Investments. The New Agreement will terminate automatically in the event
of its "assignment" (as defined in the Investment Company Act)
INFORMATION ABOUT PILGRIM INVESTMENTS
Organized in December 1994, Pilgrim Investments is registered as an
investment adviser with the Securities and Exchange Commission. As of May 31,
2000, Pilgrim Investments managed over $15.9 billion in assets. Pilgrim
Investments is an indirect wholly-owned subsidiary of ReliaStar. Through its
subsidiaries, ReliaStar offers individuals and institutions life insurance and
annuities, employee benefits products and services, life and health reinsurance,
retirement plans, mutual funds, bank products, and personal finance education.
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Prior to April 30, 2000, Pilgrim Advisors, Inc. ("Pilgrim Advisors") served
as investment adviser to the Portfolios. On April 30, 2000, Pilgrim Advisors,
also an indirect wholly-owned subsidiary of ReliaStar, merged with Pilgrim
Investments, and Pilgrim Investments is the surviving corporation from that
merger.
Pilgrim's principal address is 40 North Central Avenue, Suite 1200,
Phoenix, Arizona 85004.
See Appendix B to this proxy statement for a list of the directors and
principal executive officers of Pilgrim Investments and a list of other
investment companies with similar investment objectives for which Pilgrim
Investments acts as investment adviser. Appendix B to this proxy statement also
identifies fees that have been paid by the Portfolios to Pilgrim Investments and
certain of its affiliates during each Portfolio's most recent fiscal year.
From time to time, Pilgrim Investments receives brokerage and research
services from brokers that execute securities transactions for certain of the
Portfolios. The commission paid by a Portfolio to a broker that provides such
services to Pilgrim Investments may be greater than the commission would be if
the Portfolio used a broker that does not provide the same level of brokerage
and research services. Additionally, Pilgrim may use such services for clients
other than the specific Portfolio or Portfolios from which the related
commissions are derived.
EVALUATION BY THE BOARD OF TRUSTEES
In determining whether or not it was appropriate to approve the New
Agreement and to recommend approval to shareholders, the Board of Trustees,
including the Trustees who are not interested persons of Pilgrim Investments,
considered various materials and representations provided by Pilgrim Investments
and met with a representative of ING. The Independent Trustees were advised by
independent legal counsel with respect to these matters.
Information considered by the Trustees included, among other things, the
following: (1) Pilgrim Investments' representation that it is expected to remain
intact after the Transaction, and that the same persons currently responsible
for management of the Portfolios are expected to continue to manage the
Portfolios after the Transaction closes; (2) that the senior management
personnel responsible for the management of Pilgrim Investments are expected to
continue to be responsible for the management of Pilgrim Investments; (3) that
the compensation to be received by Pilgrim Investments under the New Agreement
is the same as the compensation paid under the Current Agreement; (4) ING
America Insurance Holdings, Inc.'s representation that it will use reasonable
best efforts to assure that an "unfair burden"(as defined in the Investment
Company Act) is not imposed on the Portfolios as a result of the Transaction;
(5) the commonality of the terms and provisions of the New Agreement and Current
Agreement; (6) ING's financial strength and commitment to the advisory business;
and (7) Pilgrim Investments, representation that it will keep any expense
limitation agreements in effect until at least October 31, 2001.
Further, the Board of Trustees reviewed its determinations reached at the
meeting of the Board of Trustees on April 27, 2000 respecting the Current
Agreement and, with respect to the Current Agreement, (1) the nature and quality
of the services rendered by Pilgrim Investments under the Agreements; (2) the
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fairness of the compensation payable to Pilgrim Investments under the
Agreements; (3) the results achieved by Pilgrim Investments for the Portfolios;
and (4) the personnel, operations and financial condition, and investment
management capabilities, methodologies, and performance of Pilgrim Investments.
The Board also considered the services provided by Pilgrim Group, Inc. as
administrator to the Portfolios and the fees received by Pilgrim Group, Inc. for
such services.
Based upon its review, the Board determined that, by approving the New
Agreement, the Portfolios can best be assured that services from Pilgrim
Investments will be provided without interruption. The Board also determined
that the New Agreement is in the best interests of each Portfolio and its
shareholders. Accordingly, after consideration of the above factors, and such
other factors and information it considered relevant, the Board of Trustees
unanimously approved the New Agreement and voted to recommend its approval by
each Portfolio's shareholders.
The effectiveness of this Proposal No. 2 is conditioned on the consummation
of the Transaction. Accordingly, in the event that the Transaction is not
consummated, Pilgrim Investments will continue to manage the Portfolios pursuant
to the Current Agreement.
VOTE REQUIRED
Shareholders of each Portfolio must separately approve the New Investment
Management Agreement with respect to that Portfolio. Approval of this Proposal
No. 2 by a Portfolio requires an affirmative vote of the lesser of (i) 67% or
more of the shares of the Portfolio's shares present at the Meeting if more than
50% of the outstanding shares of the Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding shares of the Portfolio.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.
PROPOSAL NO. 3
APPROVAL OF SUB-ADVISORY AGREEMENTS
(INTERNATIONAL VALUE, RESEARCH ENHANCED INDEX
AND GROWTH + VALUE PORTFOLIOS ONLY)
Shareholders of each Portfolio that is sub-advised by another investment
advisory firm (each a "Sub-Advised Portfolio") are being asked to approve a new
Sub-Advisory Agreement with the sub-adviser (each a "Sub-Adviser") for that
Portfolio. SHAREHOLDER APPROVAL OF NEW SUB-ADVISORY AGREEMENTS (EACH A "NEW
SUB-ADVISORY AGREEMENT") IS BEING SOUGHT SO THAT THE MANAGEMENT OF EACH
SUB-ADVISED PORTFOLIO CAN CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE
THE TRANSACTION MAY TERMINATE AUTOMATICALLY THE CURRENT SUB-ADVISORY AGREEMENTS
(EACH A "CURRENT SUB-ADVISORY AGREEMENT") FOR THE SUB-ADVISED PORTFOLIOS. The
New Sub-Advisory Agreements are included as Appendices C, D, and E to this proxy
statement.
The following table lists the Portfolios for which approval is being sought
and identifies the Sub-Adviser for that Portfolio. While the Board is seeking
shareholder approval of the New Sub-Advisory Agreements, these Agreements do not
restrict the Board's ability to terminate or replace the Sub-Adviser for a
Portfolio at any time in the future, subject to any shareholder approval that
may be required.
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PORTFOLIO SUB-ADVISER
--------- -----------
Proposal 3(a):
International Value Portfolio Brandes Investment Partners, L.P
Proposal 3(b):
Research Enhanced Index Portfolio J.P. Morgan Investment Management Inc.
Proposal 3(c):
Growth + Value Portfolio Navellier Fund Management, Inc.
The New Sub-Advisory Agreements must be voted upon separately by each
Sub-Advised Portfolio to which a New Sub-Advisory Agreement pertains. If a New
Sub-Advisory Agreement is approved by shareholders of a Sub-Advised Portfolio,
it will take effect immediately after the closing on the Transaction. It will
remain in effect for two years from the date it takes effect, and, unless
earlier terminated, will continue in effect from year to year thereafter,
provided that each such continuance is approved at least annually (i) by the
Trust's Board of Trustees or by the vote of a majority of the outstanding voting
securities of the particular Portfolio, and, in either case, (ii) by a majority
of the Trust's Trustees who are not parties to the New Sub-Advisory Agreement or
"interested persons" of any such party (other than as Trustees of the Trust).
At the June 13, 2000 meeting of the Board of Trustees, each New
Sub-Advisory Agreement was approved unanimously by the Board of Trustees,
including all of the Trustees who are not interested parties to the New
Sub-Advisory Agreements or interested persons of such parties.
If the shareholders of a Portfolio should fail to approve the New
Sub-Advisory Agreement that pertains to that Portfolio, the Board of Trustees
shall meet to consider appropriate action.
TERMS OF THE NEW SUB-ADVISORY AGREEMENTS
Each New Sub-Advisory Agreements, like the Current Sub-Advisory Agreements,
requires the Sub-Adviser to provide, subject to supervision by the Board of
Trustees and Pilgrim Investments, a continuous investment program for the
Portfolio and to determine the composition of the assets of the Portfolio,
including determination of the purchase, retention, or sale of the securities,
cash and other investments for the Portfolio, in accordance with the Portfolio's
investment objectives, policies and restrictions.
The fees payable to the Sub-Advisers, which are paid by Pilgrim Investments
and not by the Sub-Advised Portfolios, will remain the same under the New
Sub-Advisory Agreements. The sub-advisory fees are set forth below:
FUND: SUB-ADVISORY FEE:
----- -----------------
Research Enhanced Index Portfolio 0.20% of the Portfolio's average daily
net assets.
Growth + Value Portfolio 0.35% of the Portfolio's average daily
net assets.
International Value Portfolio 0.50% of the Portfolio's average daily
net assets.
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Like the Current Sub-Advisory Agreements, each New Sub-Advisory Agreement
provides that the Sub-Adviser is not subject to liability for any damages,
expenses, or losses to the Sub-Advised Portfolio connected with or arising out
of any investment advisory services rendered under the agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
under the agreement.
The termination provisions of the New Sub-Advisory Agreements are the same
as those of the Current Sub-Advisory Agreements. Each such agreement may be
terminated by Pilgrim Investments upon 60 days' written notice to the
Sub-Adviser and the Portfolio, by a Portfolio upon the vote of a majority of the
Board of Trustees of the Trust or a majority of the outstanding shares of the
applicable Portfolio, upon 60 days' written notice to Pilgrim Investments and
the respective Sub-Adviser, and by the Sub-Adviser upon 60 days' written notice.
Each New Sub-Advisory Agreement will terminate automatically in the event of its
"assignment" (as defined in the Investment Company Act).
INFORMATION ABOUT BRANDES INVESTMENT PARTNERS, L.P.
Brandes Investment Partners, L.P. ("Brandes") serves as Sub-Adviser to the
International Value Portfolio. Brandes was formed in May 1996 as the successor
to its general partner, Brandes Investment Partners, Inc., which has been
providing investment advisory services (through various predecessor entities)
since 1974. Brandes currently manages over $33 billion in international
portfolios. Brandes' principal address is 12750 High Bluff Drive, San Diego,
California 92130.
Brandes has managed the International Value Portfolio pursuant to a
Sub-Advisory Agreement dated ________. The Sub-Advisory Agreement was last
approved by the Board of Trustees on April 27, 2000 and by shareholders of the
Portfolio on _________. For the fiscal year ended December 31, 1999, Brandes was
paid sub-advisory fees of $0. Brandes has agreed to waive all compensation until
the Portfolio's assets exceed $50 million.
INFORMATION ABOUT J.P. MORGAN INVESTMENT MANAGEMENT INC.
J.P. Morgan Investment Management Inc. ("J.P. Morgan") serves as
Sub-Adviser to the Research Enhanced Index Portfolio. J.P. Morgan was formed in
May 1984 and evolved from the Trust and Investment Division of Morgan Guaranty
Trust Company which acquired its first tax-exempt client in 1913 and its first
pension account in 1940. J.P. Morgan currently manages approximately $349
billion for institutions and pension funds. The company is a wholly-owned
subsidiary of J.P. Morgan & Co. J.P. Morgan's principal address is 522 Fifth
Avenue, New York, New York 10036.
J.P. Morgan has managed the Research Enhanced Index Portfolio pursuant to a
Sub-Advisory Agreement dated April 30, 1999. The Sub-Advisory Agreement was last
approved by the Board of Trustees on April 27, 2000 and was approved by
shareholders of the Portfolio on April 8, 1999. For the fiscal year ended
December 31, 1999, J.P. Morgan was paid sub-advisory fees of $32,985.
INFORMATION ABOUT NAVELLIER FUND MANAGEMENT, INC.
Navellier Fund Management, Inc. ("Navellier") serves as Sub-Adviser to the
Growth + Value Portfolio. Navellier and its affiliate, Navellier & Associates,
Inc., manage over $5 billion for institutions, pension funds, and high net worth
individuals. Navellier's principal address is 1 East Liberty, Third Floor, Reno,
Nevada 89501.
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Navellier has managed the Growth + Value Portfolio pursuant to a
Sub-Advisory Agreement dated November 1, 1998. The Sub-Advisory Agreement was
last approved by the Board of Trustees on April 27, 2000, and by shareholders of
the Portfolio on January 31, 1996. For the fiscal year ended December 31, 1999,
Navellier was paid sub-advisory fees of $177,138.
RECOMMENDATION OF TRUSTEES
In determining whether or not it was appropriate to approve the New
Sub-Advisory Agreement for each Portfolio and to recommend approval to
shareholders, the Board of Trustees considered, among other things, the fact
that the Sub-Advised Portfolios will continue to be managed by the same
Sub-Advisers, that the compensation to be received by the Sub-Advisers under the
New Sub-Advisory Agreements is the same as the compensation paid under the
Current Sub-Advisory Agreements, and that the Transaction is not expected to
have any effect on services rendered by the Sub-Advisers. Further, the Board of
Trustees reviewed its determinations reached at the meetings of the Board of
Trustees held on April 27, 2000 respecting the Current Sub-Advisory Agreements
and, with respect to the Current Sub-Advisory Agreements, (1) the nature and
quality of the services rendered by the Sub-Advisers under the Agreements; (2)
the fairness of the compensation payable to the Sub-Advisers under the
Agreements; (3) the results achieved by the Sub-Advisers for the Portfolios; and
(4) the personnel, operations and financial condition, and investment management
capabilities, methodologies, and performance of the Sub-Advisers.
Based upon its review, the Board has determined that, by approving the New
Sub-Advisory Agreements, the Sub-Advised Portfolios can best be assured that
services from the Sub-Advisers will be provided without interruption. The Board
believes that retaining the Sub-Advisers is in the best interests of the
Sub-Advised Portfolios and their shareholders. Accordingly, after consideration
of the above factors, and such other factors and information it considered
relevant, the Board of Trustees unanimously approved the New Sub-Advisory
Agreements and voted to recommend its approval by each Portfolio's shareholders.
The effectiveness of this Proposal No. 3 is conditioned on the consummation
of the Transaction. Accordingly, in the event that the Transaction is not
consummated, each Sub-Adviser will continue to manage the respective Sub-Advised
Portfolio pursuant to the Current Sub-Advisory Agreements.
VOTE REQUIRED
Shareholders of each Sub-Advised Portfolio must separately approve the
respective New Sub-Advisory Agreement with respect to that Portfolio. Approval
of this Proposal No. 3 by a Portfolio requires an affirmative vote of the lesser
of (i) 67% or more of the shares of the Portfolio's shares present at the
Meeting if more than 50% of the outstanding shares of the Portfolio are present
or represented by proxy, or (ii) more than 50% of the outstanding shares of the
Portfolio.
THE BOARD OF TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 3.
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PROPOSAL NO. 4
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC AUDITORS
Shareholders are being asked to ratify the selection of the accounting firm
of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") to act as the
independent auditors for the Trust for the fiscal year ending December 31, 2000.
At a meeting of the Board held on January 27, 2000, the Board of Trustees
of the Trust, including a majority of Trustees who are not "interested persons"
as defined in the Investment Company Act of 1940, as amended, as well as the
Trustees who were members of the Audit Committee, selected
PricewaterhouseCoopers to act as the independent auditors for the fiscal year
ending December 31, 2000.
PricewaterhouseCoopers has served as independent auditors for the Trust
with respect to its financial statements for the fiscal years ended December 31,
[ ] through December 31, 1999.
PricewaterhouseCoopers has advised the Trust that it is an independent
auditing firm and has no direct financial or material indirect financial
interest in the Trust. PricewaterhouseCoopers has further informed the Board
that certain PricewaterhouseCoopers professionals had investments in certain
Pilgrim Funds during a period in which PricewaterhouseCoopers was performing
audit services for the Pilgrim Funds and during the period of the firm's
engagement to conduct the audit, but that none of those professionals performed
services for the Pilgrim Funds. Representatives of PricewaterhouseCoopers are
not expected to be at the Meeting but have been given the opportunity to make a
statement if they wish, and will be available telephonically should any matter
arise requiring their participation.
VOTE REQUIRED
The affirmative vote of a majority of the shares of the Trust voted at the
Meeting is required to approve this Proposal No. 4.
THE BOARD OF TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 4.
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GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Management of the Portfolios does not know of any matters to be presented
at the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
SECTION 15(F) OF THE INVESTMENT COMPANY ACT
ING America Insurance Holdings, Inc. and ReliaStar, the indirect parent
company of Pilgrim Investments, have agreed to use their reasonable best efforts
to assure compliance with the conditions of Section 15(f) of the Investment
Company Act of 1940. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser or any affiliated persons thereof to receive any amount or
benefit in connection with a transaction that results in a change in control of
or identity of the investment adviser to an investment company as long as two
conditions are met. First, no "unfair burden" may be imposed on the investment
company as a result of the transaction relating to the change of control, or any
express or implied terms, conditions or understandings applicable thereto. As
defined in the Investment Company Act of 1940, the term "unfair burden" includes
any arrangement during the two-year period after the change in control whereby
the investment adviser (or predecessor or successor 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 security holders
(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 of the investment company).
Second, during the three year period immediately following the change of
control, at least 75% of an investment company's board of directors/trustees
must not be "interested persons" of the investment adviser or the predecessor
investment adviser within the meaning of the Investment Company Act of 1940.
VOTING RIGHTS
Shares of the Portfolios of the Trust are currently offered to separate
accounts ("Separate Accounts") of insurance companies that are affiliated with
each other: ReliaStar Life Insurance Company (formerly "Northwestern National
Life Insurance Company"), Northern Life Insurance Company and ReliaStar Life
Insurance Company of New York (the "Affiliated Insurance Companies"). The
Portfolios serve as investment vehicles for variable annuity and variable life
products ("Variable Contracts") issued by the Affiliated Insurance Companies.
In accordance with current law, the Affiliated Insurance Companies will
request voting instructions from the owners of the Variable Contracts ("Variable
Contract Owners") and will vote shares or other voting interests in each
Separate Account in proportion to the voting instructions received. Each
Affiliated Insurance Company is required to vote shares of the Portfolio held by
its Separate Accounts in accordance with instructions received from Variable
Contract Owners. Each Affiliated Insurance Company is also required to vote
shares of the Portfolio held in each of their respective Separate Accounts for
which no voting instructions have been received in the same proportion as it
votes shares held by that Separate Account for which it has received
instructions. Shares held by an Affiliated Insurance Company in its general
account, if any, must be voted in the same proportion as the votes cast with
respect to shares held in all of such Company's Variable Accounts in the
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aggregate. Variable Contract Owners permitted to give instructions to the
Portfolio and the number of shares for which such instructions may be given for
purposes of voting at the Meeting, and any adjournment thereof will be
determined as of the record date. In connection with the solicitation of such
instructions from Variable Contract Owners, it is expected that the Affiliated
Insurance Companies will furnish a copy of this Proxy Statement to Variable
Contract Owners.
Each share of each Portfolio is entitled to one vote. Shareholders of
each Portfolio at the close of business on June 28, 2000 (the "Record Date")
will be entitled to be present and to give voting instructions for the Portfolio
at the Meeting and any adjournments thereof with respect to their shares owned
as of the Record Date. As of the Record Date, the Portfolios had the following
shares outstanding:
PORTFOLIO SHARES OUTSTANDING
--------- ------------------
Growth Opportunities Portfolio [ ]
Growth + Value Portfolio [ ]
High Yield Bond Portfolio [ ]
International Value Portfolio [ ]
MagnaCap Portfolio [ ]
MidCap Opportunities Portfolio [ ]
Research Enhanced Index Portfolio [ ]
SmallCap Opportunities Portfolio [ ]
To the knowledge of the Portfolios, as of ______, 2000, no current Trustee
of the Portfolios owned 1% or more of the outstanding shares of any Portfolio
and the officers and Trustees of the Portfolios own, as a group, less than 1% of
the shares of each Portfolio.
A majority of the outstanding shares of the Trust or Portfolio on the
Record Date, present in person or represented by proxy (including the Affiliated
Insurance Companies), must be present to constitute a quorum.
If a quorum is not present at the Meeting, or if a quorum is present but
sufficient votes to approve any or all of the Proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. A shareholder vote may be taken on one
or more of the Proposals in this proxy statement prior to any adjournment if
sufficient votes have been received with respect to a Proposal. Any adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. The persons named in the enclosed proxies
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of any Proposal that has not been adopted, will vote against any
adjournments those proxies required to be voted against any Proposal that has
not been adopted, and will not vote any proxies that direct them to abstain from
voting on such Proposals.
BENEFICIAL OWNERS
Appendix F to this proxy statement lists the persons that, to the knowledge
of the Portfolios, owned a Variable Contract or Contracts that entitled the
person to give voting instructions with respect to 5% or more of the outstanding
shares of a Portfolio as of ________, 2000.
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SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about _________,2000.
A Variable Contract Owner may revoke the accompanying proxy at any time
prior to its use by filing with the Trust a written revocation or duly executed
proxy bearing a later date. In addition, any Variable Contract Owner who attends
the Meeting in person may vote by ballot at the Meeting, thereby canceling any
proxy previously given. The persons named in the accompanying proxy will vote as
directed by the proxy, but in the absence of voting directions in any proxy that
is signed and returned, they intend to vote "FOR" each of the proposals and may
vote in their discretion with respect to other matters not now known to the
Board of the Trust that may be presented at the Meeting.
EXPENSES
Pilgrim Investments or an affiliate, or ING, will pay the expenses of the
Trust in connection with this Notice and Proxy Statement and the Meeting,
including the printing, mailing, solicitation and vote tabulation expenses,
legal fees, and out of pocket expenses.
ADVISER AND DISTRIBUTOR
Pilgrim Investments is located at 40 North Central Avenue, Suite 1200,
Phoenix, Arizona 85004, and serves as the investment adviser to each of the
Portfolios. Pilgrim Securities, Inc., whose address is 40 North Central Avenue,
Suite 1200, Phoenix, Arizona 85004, is the Distributor for each of the
Portfolios.
EXECUTIVE OFFICERS OF THE TRUST
Officers of the Trust are elected by the Board and hold office until they
resign, are removed or are otherwise disqualified to serve. The principal
executive officers of the Trust, together with such person's position with the
Trust and principal occupation for the last five years, are listed on Appendix G
attached hereto.
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SHAREHOLDER PROPOSALS
The Portfolios are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the Investment Company Act of 1940 Act, as amended.
A shareholder proposal to be considered for inclusion in the proxy statement at
any subsequent meeting of shareholders must be submitted a reasonable time
before the proxy statement for that meeting is mailed. Whether a proposal is
submitted in the proxy statement will be determined in accordance with
applicable federal and state laws.
REPORTS TO SHAREHOLDERS
The Trust will furnish, without charge, a copy of the Annual Report and the
most recent Semi-Annual Report regarding the Trust on request. Requests for such
reports should be directed to Pilgrim Investments at 40 North Central Avenue,
Suite 1200, Phoenix, Arizona 85004 or at (800) 992-0180.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
JAMES M. HENNESSY, Secretary
July ___, 2000
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004
(800) 992-0180
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EXHIBIT LIST
APPENDIX DESCRIPTION
-------- -----------
A Investment Management Agreement between the Trust and Pilgrim
Investments, Inc.
B Information regarding Pilgrim Investments, Inc.
C Sub-Advisory Agreement for the Pilgrim VP International Value
Portfolio
D Sub-Advisory Agreement for the Pilgrim VP Research Enhanced Index
Portfolio
E Sub-Advisory Agreement for the Pilgrim VP Growth & Value Portfolio
F Persons Owning 5% or more of the Portfolios
G Officers of the Trust
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM VARIABLE PRODUCTS TRUST
(GROWTH OPPORTUNITIES, GROWTH + VALUE, HIGH YIELD BOND, INTERNATIONAL VALUE,
MAGNACAP, MIDCAP OPPORTUNITIES, RESEARCH ENHANCED INDEX AND SMALLCAP
OPPORTUNITIES PORTFOLIOS)
PILGRIM VARIABLE PRODUCTS TRUST
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated this __ day of September 2000, by and between PILGRIM VARIABLE
PRODUCTS TRUST, a Massachusetts business trust, (the "Trust") and PILGRIM
INVESTMENTS, INC., a Delaware business corporation (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and assets; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Trust has retained the Adviser to render investment advisory
services to certain series of the Trust identified in Schedule A (each a "Fund"
and collectively the "Funds").
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser to the
Trust and the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services described, for the compensation provided, in this Agreement.
2. Subject to the supervision of the Trustees, the Adviser shall manage the
investment operations of the Funds and the composition of each Fund's
portfolio, including the purchase and retention and disposition of
portfolio securities, in accordance with each Fund's investment objectives,
policies and restrictions as stated in the Trust's Prospectus and Statement
of Additional Information (as defined below) subject to the following
understandings:
(a) The Adviser shall provide supervision of each Fund's investments and
determine from time to time what investments will be made, held or
disposed of or what securities will be purchased and retained, sold or
loaned by each Fund, and what portion of the assets will be invested
or held uninvested as cash.
(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.
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(c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of
Trust, By-Laws, Prospectus and Statement of Additional Information of
the Trust, with the instructions and directions of the Trustees and
(ii) conform to and comply with the requirements of the Investment
Company Act and all other applicable federal and state laws and
regulations.
(d) (i) The Adviser shall determine the securities to be purchased or
sold by each Fund and will place orders pursuant to its
determinations with or through such persons, brokers or dealers
to carry out the policy with respect to brokerage as set forth in
the Trust's Prospectus and Statement of Additional Information or
as the Trustees may direct from time to time. In providing each
Fund with investment supervision, the Adviser will give primary
consideration to securing the most favorable price and efficient
execution. The Adviser may also consider the financial
responsibility, research and investment information and other
services and research related products provided by brokers or
dealers who may effect or be a party to any such transactions or
other transactions to which other clients of the Adviser may be a
party. The Funds recognize that the services and research related
products provided by such brokers may be useful to the Adviser in
connection with its services to other clients.
(ii) When the Adviser deems the purchase or sale of a security to be
in the best interest of a Fund as well AS other clients, the
Adviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased
in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of
the securities so purchased or sold, as well as the expenses
incurred in the transactions, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with
its fiduciary obligations to each Fund and to such other clients.
(e) The Adviser shall maintain, or cause to be maintained, all books and
records required under the Investment Company Act to the extent not
maintained by the custodian of the Trust. The Adviser shall render to
the Trustees such periodic and special reports as the Trustees may
reasonably request.
(f) The Adviser shall provide the Trust's custodian on each business day
information relating to all transactions concerning each Fund's
assets.
(g) The investment management services of the Adviser to the Trust and to
each Fund under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if
any:
(a) Declaration of Trust, as amended, as filed with the Secretary of the
Commonwealth of Massachusetts (such Declaration of Trust, as in effect
on the date hereof and as further amended from time to time, are
herein called the "Declaration of Trust");
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(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Trustees authorizing the appointment of
the Adviser and approving this Agreement on behalf of the Trust and
each Fund;
(d) Registration Statement on Form N-lA under the Investment Company Act
and the Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange
Commission (the "Commission"), relating to the Trust and shares of
beneficial interest of each Fund and all amendments thereto.
(e) Notification of Registration of the Trust under the Investment Company
Act on Form N-8A as filed with the Commission and all amendments
thereto;
(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references
to this Agreement, the Prospectus and the Statement of Additional
Information shall be to such documents as most recently amended or
supplemented and in effect.
4. The Adviser shall authorize and permit any of its directors, officers and
employees who may be elected as trustees or officers of the Trust and/or
the Funds to serve in the capacities in which they are elected. All
services to be furnished by the Adviser under this Agreement may be
furnished through such directors, officers or employees of the Adviser.
5. The Adviser agrees that all records which it maintains for the Trust and/or
the Funds are property of the Trust and/or the Funds. The Adviser will
surrender promptly to the Trust and/or the Funds any such records upon
either the Trust's or a Fund's request. The Adviser further agrees to
preserve such records for the periods prescribed in Rule 3la-2 of the
Commission under the Investment Company Act.
6. In connection with the services rendered by the Adviser under this
Agreement, the Adviser will pay all of the following expenses:
(a) the salaries and expenses of all personnel of the Trust, the Funds and
the Adviser required to perform the services to be provided pursuant
to this Agreement, except the fees of the trustees who are not
affiliated persons of the Adviser, and
(b) all expenses incurred by the Adviser, the Trust or by the Funds in
connection with the performance of the Adviser's responsibilities
hereunder, other than brokers' commissions and any issue or transfer
taxes chargeable to each respective Fund in connection with its
securities transactions.
7. For the services provided and the expenses assumed pursuant to this
Agreement, each Fund, other than the Pilgrim VP SmallCap Opportunities
Portfolio, the Pilgrim VP Growth + Value Portfolio, the Pilgrim VP Research
Enhanced Index Portfolio, and the Pilgrim VP High Yield Bond Portfolio,
will pay to the Adviser as compensation a fee accrued daily and paid
monthly at the annual rate of 0.75% of the first $250,000,000 of aggregate
average daily net assets of the Fund; 0.70% of the next $250,000,000 of
such assets; 0.65% of the next $250,000,000 of such assets; 0.60% of the
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<PAGE>
next $250,000,000 of such assets and 0.55% of the remaining aggregate
average daily net assets of the Fund in excess of $1,000,000,000. The
Pilgrim VP International Value Portfolio will pay to the Adviser as
compensation a fee accrued daily and paid monthly at the annual rate of
1.00% of aggregate average daily net assets of the Fund. The Pilgrim VP
MagnaCap Portfolio, the Pilgrim VP Growth Opportunities Portfolio and the
Pilgrim VP MidCap Opportunities Portfolio will each pay to the Adviser as
compensation a fee accrued daily and paid monthly at the annual rate of
0.75% of aggregate average daily net assets of the Fund.
8. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Trust and/or a
Fund in connection with or arising out of the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
9. Generally, this Agreement shall continue in effect for an initial period of
two years from the date of adoption by the Trust on behalf of a particular
Fund and shall continue in effect thereafter for so long as such
continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the Trustees of the Trust acting separately on
behalf of each Fund, who are not interested persons of the Trust, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) a majority of the Trustees of the Trust or the holders of a majority
of the outstanding voting securities of each respective Fund; provided
however, that this Agreement may be terminated by the Trust, on behalf of a
Fund at any time, without the payment of any penalty, by the Trustees
acting on behalf of a Fund or by vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of a Fund, or
by the Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the other party.
This Agreement shall terminate automatically in the event of its assignment
provided that a transaction which does not, under the Investment Company
Act, result in a change of actual control or management of the Adviser's
business shall not be deemed to be an assignment for the purposes of this
Agreement.
10. This agreement shall terminate automatically in the event of its
assignment; the term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act.
11. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a trustee,
officer or employee of the Trust and/or the Funds to engage in any other
business or to devote his time and attention in part to the management or
other aspect of any business, whether of a similar or dissimilar nature,
nor limit or restrict the right of the Adviser to engage in any other
business or to render services of any kind to any other person or entity.
12. During the term of this Agreement, the Trust and each Fund agrees to
furnish the Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of each Fund or the public, which
refer in any way to the Adviser, prior to use thereof and not to use such
material if the Adviser reasonably objects in writing within five business
days (or such other time as may be mutually agreed) after receipt. In the
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event of termination of the Agreement, the Trust and/or each Fund will
continue to furnish to the Adviser such other information relating to the
business affairs of the Trust and/or each Fund as the Adviser at any time,
or from time to time, reasonably requests in order to discharge its
obligations hereunder.
13. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders
of the majority of the outstanding voting securities of each Fund and (ii)
a majority of the members of the Trustees who are not interested persons of
the Trust or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
14. The Adviser, the Trust and the Funds each agree that the name "Pilgrim" is
proprietary to, and a property right of, the Adviser. The Trust and the
Funds agree and consent that (i) each will only use the name "Pilgrim" as
part of its name and for no other purpose, (ii) each will not purport to
grant any third party the right to use the name "Pilgrim" and (iii) upon
the termination of this Agreement, the Trust and the Funds shall, upon the
request of the Adviser, cease to use the name "Pilgrim," and shall use its
best efforts to cause its officers, trustees and shareholders to take any
and all actions which the Adviser may request to effect the foregoing.
15. Any notice or other communications required to be given pursuant to this
Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Adviser at 40 North Central Avenue, Suite
1200, Phoenix, Arizona 85004; or (2) to the Trust and/or the Funds at 40
North Central Avenue, Suite 1200, Phoenix, Arizona 85004.
16. This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona. The terms "interested person", "assignment",
and "vote of the majority of the outstanding securities" shall have the
meaning set forth in the Investment Company Act.
17. The Declaration of Trust, establishing the Trust, dated December 17, 1993,
a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Pilgrim Variable Products Trust"
refers to the Trustees under the Declaration collectively as trustees, but
not individually or personally; and no Trustee, shareholder, officer,
employee or agent of the Trust and/or the Funds may be held to any personal
liability, nor may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the Trust property only shall be liable.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year written
above.
PILGRIM VARIABLE PRODUCTS TRUST
By:
-------------------------------------
PILGRIM INVESTMENTS, INC.
By:
-------------------------------------
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<PAGE>
SCHEDULE A
TO THE
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
PILGRIM VARIABLE PRODUCTS TRUST
AND
PILGRIM INVESTMENTS, INC.
FUNDS
-----
Pilgrim VP MagnaCap Portfolio
Pilgrim VP Research Enhanced Index Portfolio
Pilgrim VP Growth Opportunities Portfolio
Pilgrim VP MidCap Opportunities Portfolio
Pilgrim VP Growth + Value Portfolio
Pilgrim VP SmallCap Opportunities Portfolio
Pilgrim VP International Value Portfolio
Pilgrim VP High Yield Bond Portfolio
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<PAGE>
APPENDIX B
INFORMATION REGARDING PILGRIM INVESTMENTS, INC.
A. DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF PILGRIM INVESTMENTS
Set forth below is the name and principal occupation of the principal
executive officer and each director of Pilgrim Investments, Inc. The business
address of each such person is 40 North Central Avenue, Suite 1200, Phoenix,
Arizona 85004.
<TABLE>
<CAPTION>
POSITION WITH PILGRIM
NAME AND AGE INVESTMENTS PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS
------------ ----------- -----------------------------------------------
<S> <C> <C>
Robert W. Stallings Chairman of the Board Chairman, Chief Executive Office and President of Pilgrim Group,
(51) of Directors Inc. ("Pilgrim Group") (since December 1994); Chairman, Pilgrim
Investments (since December 1994); Chairman, Pilgrim Securities,
Inc. ("Pilgrim Securities") (since December 1994); and Chief
Executive Officer of Pilgrim Capital Corporation and its
predecessors (since August 1992). Mr. Stallings is also a Director,
Trustee, or Advisory Board Member of each of the Pilgrim Funds.
James R. Reis (42) Director, Vice Director, Vice Chairman (since December 1994); Executive Vice
Chairman, Executive President (since April 1995) and Director of Structured Finance
Vice President and (since April 1998), Pilgrim Group and Pilgrim Investments;
Director of Structured Director (since December 1994) and Vice Chairman (since
Finance November 1995) of Pilgrim Securities; Executive Vice
President, Assistant Secretary and Chief Credit Officer of
Pilgrim Prime Rate Trust; Executive Vice President and Assistant
Secretary of each of the other Pilgrim Funds. Presently serves or
has served as an officer or director of other affiliates of Pilgrim
Capital Corporation.
Stanley D. Vyner President and Chief President and Chief Executive Officer (since August 1996), Pilgrim
(49) Executive Officer Investments; Executive Vice President of most of the Pilgrim Funds
(since July 1996). Formerly Chief Executive Officer (November 1993
- December 1995) HSBC Asset Management Americas, Inc.
</TABLE>
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<PAGE>
B. FEES PAID TO PILGRIM INVESTMENTS, INC., PILGRIM GROUP, INC. AND PILGRIM
SECURITIES, INC.(1)
<TABLE>
<CAPTION>
AGGREGATE ADVISORY SHAREHOLDER SERVICING DISTRIBUTION FEES
FEES PAID TO PILGRIM FEES PAID TO PAID TO PILGRIM
FUND INVESTMENTS, INC. PILGRIM GROUP, INC. SECURITIES, INC.
---- ----------------- ------------------- ----------------
<S> <C>
Growth Opportunities
Growth + Value
High Yield Bond
International Value
MagnaCap
MidCap Opportunities
Research Enhanced Index
SmallCap Opportunities
</TABLE>
----------
(1) For the fiscal year ended December 31, 1999.
C. The following is a list of investment companies advised by Pilgrim
Investments with investment objectives that are substantially similar to
the investment objectives of the Portfolios:
[Add List]
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APPENDIX C
SUB-ADVISORY AGREEMENT WITH BRANDES INVESTMENT PARTNERS, L.P.
(PILGRIM VP INTERNATIONAL VALUE PORTFOLIO)
SUB-ADVISORY AGREEMENT
PILGRIM VP INTERNATIONAL VALUE PORTFOLIO
AGREEMENT made this ___th day of September 2000, by and between Pilgrim
Investments, Inc., Delaware Corporation (hereinafter the "Adviser"), investment
adviser for the Pilgrim VP International Value Portfolio, a series of the
Pilgrim Variable Products Trust (the "Trust") (hereinafter the "Fund") and
Brandes Investment Partners, L.P., a California limited partnership (hereinafter
the "Subadviser").
WHEREAS, the Adviser has been retained by the Trust on behalf of the Fund
to provide investment advisory services to the Fund pursuant to an Investment
Advisory Agreement made on this ___th day of September 2000 (the "Investment
Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Fund's shareholders have approved the
appointment of the Subadviser to perform certain investment advisory services
for the Fund pursuant to this Subadvisory Agreement with the Adviser and the
Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Adviser and the Subadviser as follows:
1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform advisory
services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein
provided
2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising those
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion, subject at all times to the supervision of the
Adviser and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition, and the
sale, redemption, and exchange of investments, subject to the duty -to
render to the Trustees of the Fund and the Adviser written reports of
the composition of the portfolio of the Fund as often as the Adviser
or the Trustees of the Fund shall reasonably require;
(b) to make all decisions relating to the manner, method, and timing of
investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected,
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<PAGE>
and to engage such consultants, analysts and experts in connection
therewith as may be considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund,
provided the Subadviser shall have no authority to direct the transfer
of the Fund's funds or assets to itself or other affiliated persons
and shall have no authority over the disbursement (as opposed to
investment decisions) of funds or assets nor any custody of any of the
Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any
specific or general directions which the Trustees of the Fund or the
Adviser may give in writing to the Subadviser with regard to any of
the foregoing powers shall, unless the contrary is expressly stated
herein, override the general authority given by this provision to the
extent that the Trustees of the Fund may, at any time and from time to
time, direct, either generally or to a limited extent and either alone
or in concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary
duties or any laws with regard to the Subadviser's duties and
responsibilities), all or any of the same as they shall think fit and,
in particular, the Adviser shall have the right to direct the
Subadviser to place trades through brokers and other agents of the
Adviser's choice, subject to such brokers or agents executing such
trades on a "best execution basis", i.e. at the best price and/or with
research or other services which render that broker's services the
most appropriate for the Subadviser's needs, and further that the
Subadviser is satisfied that the dealing and execution quality of such
brokers are satisfactory to the Subadviser; and PROVIDED FURTHER that
nothing herein shall be construed as giving the Subadviser power to
manage the aforesaid cash and investments in such a manner as would
cause the Fund to be considered a "dealer" in stocks, securities or
commodities for U.S. federal income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's
performance of the duties delineated in subparagraphs (a)-(d) above.
The Subadviser further agrees that, in performing its duties
hereunder, it will:
(a) (i) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code of 1986, as amended, (the
"Code") and all other applicable federal and state laws and
regulations, the Prospectus and Statement of Additional Information
for the Fund, and with any applicable procedures adopted by the
Trustees in writing and made available to Subadviser; (ii) manage the
Fund in accordance with the investment requirements for regulated
investment companies under Subchapter M of the Code and regulations
issued thereunder, and (iii) direct the placement of orders pursuant
to its investment determinations for the Fund directly with the
issuer, or with any broker or dealer, in accordance with applicable
policies expressed in the Fund's Prospectus and/or Statement of
Additional Information and in accordance with applicable legal
requirements;
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<PAGE>
(b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Subadviser will keep the Fund and the
Trustees informed of developments materially affecting the Fund's
portfolio and shall, on the Subadviser's own initiative, furnish to
the Fund from time to time whatever information the Subadviser
believes appropriate for this purpose;
(c) make available to the Fund's administrator, Pilgrim Group, Inc. (the
"Administrator"), the Adviser, and the Fund, promptly upon their
request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws
and regulations. The Subadviser will furnish the Trustees with such
periodic and special reports regarding the Fund as they may reasonably
request;
(d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates (i) becomes aware that it is
subject to a statutory disqualification that prevents the Subadviser
from serving as an investment adviser pursuant to this Subadvisory
Agreement; or (ii) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The
Subadviser further agrees to notify the Fund and the Adviser
immediately of any material fact known to the Subadviser respecting or
relating to the Subadviser that is not contained in the Fund's
Registration Statement, or any amendment or supplement thereto, but
that is required to be disclosed therein, and of any statement
contained therein respecting or relating to the Subadviser that
becomes untrue in any material respect. The Adviser shall likewise
immediately notify the Subadviser if it becomes aware of any
regulatory action of the type described in this subparagraph 2(d)
respecting or relating to the Fund, the Adviser, or any Affiliates of
the Adviser.
3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all expenses
associated with the management of its business operations in performing its
responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its partners, officers and
employees, and other internal operating costs. The Fund shall bear its own
overhead and other internal operating costs (whether incurred directly or
by the Adviser or the Subadviser) including, without limitation:
(a) the costs incurred by the Fund in the preparation and printing of its
Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to
investors subscribing for shares);
(b) all fees and expenses on behalf of the Fund to the Transfer Agent and
the Custodian;
(c) the reasonable fees and expenses of accountants, auditors, lawyers and
other professional advisors to the Fund;
(d) any interest, fee or charge payable on or on account of any borrowing
by the Fund;
(e) fiscal and governmental charges and duties relating to the purchase,
sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
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<PAGE>
(f) the fees of any stock exchange or over-the-counter market on which the
shares may from time to time be listed, quoted or dealt in and the
expenses of obtaining any such listing, quotation or permission to
deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of or
in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares in newspapers
and other publications;
(j) all expenses incurred in the convening of meetings of shareholders or
in the preparation of agreements or other documents relating to the
Fund or in relation to the safe custody of the documents of title of
any investments;
(k) all Trustees communication costs; and
(l) all premiums and costs for Fund insurance and blanket fidelity bonds.
4. COMPENSATION. The Subadviser agrees to waive all compensation until the
Fund's net assets exceed $50 million. After the Fund's net assets exceed
$50 million, the Adviser will pay the Subadviser at the end of each
calendar month an advisory fee computed daily at an annual rate equal to
fifty (50) percent of the management fee that the Fund pays the Adviser.
5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by applicable laws or regulations. The Subadviser also
agrees that records it maintains and preserves pursuant to Rules 31a-2
under the 1940 Act (excluding trade secrets or intellectual property
rights) in connection with its services hereunder are the property of the
Fund and will be surrendered promptly to the Fund upon its request and the
Subadviser further agrees that it will furnish to regulatory authorities
having the requisite authority any information or reports in connection
with its services hereunder which may be requested in order to determine
whether the operations of the Fund are being conducted in accordance with
applicable laws and regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall exercise
its best business judgment and reasonable care in rendering the services
provided by it under this Subadvisory Agreement. The Subadviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or the holders of the Fund's shares or by the Adviser
in connection with the matters to which this Subadvisory Agreement relates,
provided that nothing in this Subadvisory Agreement shall be deemed to
protect or purport to protect the Subadviser against liability to the Fund
or to holders of the Fund's shares or to the Adviser to which the
Subadviser would otherwise be subject by reason of willful misfeasance, bad
faith or negligence on its part in the performance of its duties or by
reason of the Subadviser's reckless disregard of its obligations and duties
under this Subadvisory Agreement. As used in this Section 6, the term
"Subadviser" shall include any officers, directors, employees or other
affiliates of the Subadviser performing services for the Fund.
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<PAGE>
7. SERVICES NOT EXCLUSIVE. It is understood that, except as may otherwise be
agreed by the Adviser and the Subadviser, the services of the Subadviser
are not exclusive. The Subadviser is not required to recommend to the Fund
the same investments it recommends to its other clients. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither the Subadviser nor any of its partners officers or employees shall
act as principal or agent or receive any commission. If the Subadviser
provides any advice to its clients concerning the shares of the Fund, the
Subadviser shall act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
8. DURATION AND TERMINATION. This Subadvisory Agreement shall continue in
effect for a period of two years unless sooner terminated as provided
herein and shall continue automatically for successive annual periods
provided that such continuance is specifically approved at least annually
by the affirmative vote of (i) a majority of the Trustees of the Trust who
are not interested persons of the Trust (as defined in the 1940 Act), cast
in person at a meeting called for the purpose of voting on such approval,
and (ii) a majority of the Trustees of the Trust or the holders of a
majority of the outstanding voting securities of the Fund (as defined in
the 1940 Act). Notwithstanding the foregoing, this Subadvisory Agreement
may be terminated: (a) at any time without penalty by the. Fund or Adviser
upon the vote of a majority of the Trustees or by vote of the majority of
the Fund's outstanding voting securities (as defined in the 1940 Act), upon
sixty (60) days' written notice to the Subadviser, or (b) by the Subadviser
at any time without penalty, upon (60) days' written notice to the Fund or
Adviser. This Subadvisory Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940 Act) or the assignment
or termination of the Investment Advisory Agreement.
9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by both parties, and no material amendment of this
Subadvisory Agreement shall be effective until approved by an affirmative
vote of (i) a majority of the outstanding voting securities of the Fund,
and (ii) a majority of the Trustees of the Fund, including a majority of
Trustees who are not interested persons of any party to this Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the Subadviser
from and against all liabilities, losses, expenses, reasonable attorneys'
fees and costs or damages (other than liabilities, losses, expenses,
attorneys fees and costs or damages arising from the Subadviser failing to
meet the standard of care required hereunder in the performance by the
Subadviser of, or its failure to perform, the services required hereunder),
arising from: (i) the Adviser's (or its affiliates' and their respective
agents' and employees') failure to perform its duties or assume its
obligations hereunder, or from its wrongful actions or omissions,
including, but not limited to claims asserted or threatened by any
shareholder of the Fund, governmental or regulatory agency, or any other
person; (ii) claims arising from any wrongful act by the Fund or any of the
Fund's trustees, officers, employees, or representatives, or by the
Adviser, its officers, employees or representatives, or from any actions by
the Funds distributors or any representative of the Fund; (iii) any action
or claim against the Subadviser based on any alleged untrue statement or
misstatement of material fact in any registration statement, prospectus,
shareholder report or other information or materials relating to the Fund
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<PAGE>
or shares issued by the Fund or any amendment thereof or supplement
thereto, or the failure or alleged failure to state therein a material fact
required to be stated in order that the statements therein are not
misleading, provided that such claim is not based upon information provided
to the Adviser by the Subadviser or which facts or information the
Subadviser failed to provide or disclose. With respect to any claim for
which the Subadviser shall be entitled to indemnity hereunder, the Adviser
shall assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Subadviser of investigating and/or
defending any claim asserted or threatened by any party, subject always to
the Adviser first receiving a written undertaking from the Subadviser to
repay any amounts paid on its behalf in the event and to the extent of any
subsequent final determination by a court that the Subadviser was not
entitled to indemnification hereunder in respect of such claim.
(a) The Subadviser hereby agrees to indemnify the Adviser, its affiliates
and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs or damages (other than
liabilities, losses, expenses, attorneys fees and costs or damages
arising from the Adviser's failure to perform its responsibilities
hereunder or claims arising from its acts or failure to act in
performing this Agreement) arising from Subadviser's or its agents'
and employees' failure to perform its duties and assume its
obligations hereunder, or from any failure of Subadviser to meet the
standard of care set forth in Section 6 of this Agreement, including
any action or claim against the Adviser based on any alleged untrue
statement or misstatement of a material fact made or provided by the
Subadviser contained in any registration statement, prospectus,
shareholder report or other information or materials relating to the
Fund or shares issued by the Fund, or the failure or alleged failure
to state a material fact therein required to be stated in order that
the statements therein are not misleading, which fact should have been
made or provided by the Subadviser to the Adviser. With respect to any
claim for which the Adviser is entitled to indemnity hereunder, the
Subadviser shall assume the reasonable expenses and costs (including
any reasonable attorneys' fees and costs) of the Adviser of
investigating and/or defending any claim asserted or threatened by any
party, subject always to the Subadviser first receiving a written
undertaking from the Adviser to repay any amounts paid on its behalf
in the event and to the extent of any subsequent final determination
by a court that the Adviser was not entitled to indemnification
hereunder in respect of such claim.
(b) In the event that the Subadviser or Adviser is or becomes a party to
any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification (the "Indemnitee")
shall promptly notify the other party thereof. After becoming notified
of the same, the party from whom indemnification is sought (the
"Indemnitor") shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense of the
Indemnitee therein with counsel reasonably satisfactory to the party
seeking indemnification. The Indemnitor shall not in connection with
any action or proceeding or separate but similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegation or circumstances, be liable for the fees or expenses of
more than one separate firm of attorneys at any time for Indemnitees.
After properly assuming the defense thereof, the Indemnitor shall not
be liable hereunder to the Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof, other than damages, if any, by way of judgment, settlement,
or otherwise pursuant to this provision. The Indemnitor shall not be
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liable hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be unreasonably
withheld. The Indemnitee shall fully cooperate with the Indemnitor in
the defense of any claim and any litigation or other legal proceedings
resulting from the claim. The Indemnitee may participate in the
defense of the claim and any litigation or other legal proceedings
resulting from the claim. The Indemnitee may employ separate counsel
to participate in such defense, and the fees and expenses of such
counsel shall not be at the expense of the Indemnitee, but only if the
employment thereof (a) has been specifically authorized in writing by
the Indemnitor, which authorization shall not be unreasonably withheld
and (b) relates to the defense of any claim or any litigation or other
legal proceedings resulting from the claim to the extent the claim or
any litigation or other legal proceedings resulting from the claim
seeks injunctive, specific performance or other nonmonetary relief
involving or affecting the business, operations or assets of the
Indemnitee (or an Affiliate of the Indemnitee). The provisions of this
Section 10 shall survive the termination of this Agreement.
11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this Agreement
be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an agent of the
Fund. Likewise, the Fund, the Adviser and their respective affiliates,
agents and employees shall not be deemed agents of the Subadviser and shall
have no authority to bind Subadviser.
12. USE OF NAMES. (a) The Fund may, subject to sub-clause (b) below, use the
name, "Brandes Investment Partners, L.P." ("Brandes") or the name of any
principal of Brandes, or any component, abbreviation or other name derived
therefrom for promotional purposes only for so long as this Subadvisory
Agreement (or any extension, renewal or amendment thereof) continues in
force, unless the Subadviser or such principal shall specifically consent
in writing to such continued use thereafter. Any permitted use by the Fund
during the term hereof of the name of the Subadviser or any of its
principals, or any derivative thereof, shall in no way prevent the
Subadviser or any of it shareholders or any of their successors, from using
or permitting the use of such name (whether singly or in any combination
with any other words) for, by or in connection with an entity or enterprise
other than the Fund. At the conclusion of this Subadvisory Agreement or in
the event of any termination of this Subadvisory Agreement for any reason,
each of the authorized parties and their respective employees,
representatives, affiliates, and associates agree that they shall
immediately cease using each such name and any derivatives of said names
for any purpose whatsoever.
(a) The Adviser and its affiliates on one hand, and the Subadviser on the
other, shall not publish or distribute, and the Adviser shall cause
the Fund not to publish or distribute to Fund shareholders,
prospective investors, sales agents or members of the public, any
disclosure document, offering literature (including any form of
advertisement or other solicitation materials calculated to lead
investors to subscribe for and purchase shares of the Fund) or other
document referring by name to the Subadviser or its affiliates on one
hand and the Adviser or its affiliates on the other, unless the other
party shall have consented in writing to such references in the form
and context in which they appear.
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13. CHANGE IN IDENTITY. The Subadviser shall notify the Adviser of any change
in the identity or control of its general or limited partners promptly
after such change occurs.
14. MISCELLANEOUS.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of Massachusetts (without regard to principles of conflicts of law),
provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders
of the SEC thereunder.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
15. NOTICES. Any notice, instruction or other instrument required or permitted
to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or
sent by prepaid registered mail, express mail or by facsimile to the
parties at such offices or such other address as may be notified by either
party from time to time addressed to its President. Such notice,
instruction or other instrument shall be deemed to have been served, in the
case of a registered letter at the expiration of seventy-two (72) hours
after posting; in the case of express mail, within twenty-four (24) hours
after dispatch; and in the case of facsimile, immediately on dispatch; and
if delivered outside normal business hours it shall be deemed to have been
received at the next time after delivery or transmission when normal
business hours commence. Evidence that the notice, instruction or other
instrument was properly addressed, stamped and put into the post shall be
conclusive evidence of posting.
16. ATTORNEYS' FEES. In the event of a material breach of this Agreement by any
party hereto, the prevailing party, as determined by the trier of fact,
shall be entitled to reasonable attorneys' fees and costs as determined by
the court in such action, in addition to any other damages awarded.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year set forth
above.
Pilgrim Investments, Inc.
By:
-------------------------------------
Title:
Brandes Investment Partners, L.P.
By:
-------------------------------------
Title:
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APPENDIX D
SUB-ADVISORY AGREEMENT WITH J.P. MORGAN INVESTMENT MANAGEMENT INC.
(PILGRIM VP RESEARCH ENHANCED INDEX PORTFOLIO)
SUB-ADVISORY AGREEMENT
PILGRIM VP RESEARCH ENHANCED INDEX PORTFOLIO
AGREEMENT made this __th day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),
investment adviser for the Pilgrim VP Research Enhanced Index Portfolio, a
series of Pilgrim Variable Products Trust (the "Trust") (hereinafter the "Fund")
and J.P. Morgan Investment Management Inc., a Delaware corporation (hereinafter
the "Subadviser").
WHEREAS, the Adviser has been retained by the Fund, an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), to provide investment advisory services to
the Fund pursuant to an Investment Advisory Agreement dated this ___th day of
September 2000 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the 1940 Act, and the Fund's
shareholders have approved the appointment of the Subadviser to perform certain
investment advisory services for the Fund pursuant to this Subadvisory Agreement
with the Adviser and the Subadviser is willing to perform such services for the
Fund;
WHEREAS, the Subadviser is or will be registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act") prior to
performing its services for the Fund under this Agreement;
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform advisory
services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein
provided.
2. Duties of Subadviser. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion; subject at all times to the supervision of the
Adviser and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of
investments, subject to the duty to render to the Trustees of the
Fund, the Adviser and the Custodian written reports of the composition
of the portfolio of the Fund as often as the Trustees of the Fund
shall reasonably require;
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(b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected,
and to engage such consultants, analysts and experts in connection
therewith as may be considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund,
provided that the Subadviser shall have no other authority to direct
the transfer of the Fund's funds or assets to itself or other persons
and shall have no other authority over the disbursement (as opposed to
investment decisions) of funds or assets nor any custody of any of the
Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any
specific or general directions which the Trustees of the Fund, or the
Adviser may give to the Subadviser with regard to any of the foregoing
powers shall, unless the contrary is expressly stated therein,
override the general authority given by this provision to the extent
that the Trustees of the Fund may, at any time and from time to time,
direct, either generally or to a limited extent and either alone or in
concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary
duties or any laws with regard to the Subadviser's duties and
responsibilities), all or any of the same as they shall think fit and,
in particular, the Adviser shall have the right to request the
Subadviser to place trades through brokers and other agents of the
Adviser's choice, subject to the Subadviser's judgment that such
brokers or agents will execute such trades on the best overall terms
available, taking into consideration factors the Subadviser deems
relevant including, without limitation, the price of the security,
research or other services which render that broker's services the
most appropriate for the Subadviser's needs, the financial condition
and dealing and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction
and on a continuing basis; and provided further that nothing herein
shall be construed as giving the Subadviser power to manage the
aforesaid cash and investments in such a manner as would cause the
Fund to be considered a "dealer" in stocks, securities or commodities
for U.S. federal income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's
performance of the duties delineated in subparagraphs (a)-(d) of this
provision.
The Subadviser further agrees that, in performing its duties hereunder, it
will
(i) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act the Internal Revenue Code (the "Code") and all other
applicable federal and state laws and regulations, the current Prospectus
and Statement of Additional Information for the Fund supplied to the
Subadviser by the Adviser, and with any applicable procedures adopted by
the Trustees in writing supplied to the Subadviser by the Adviser; (ii)
manage the Fund in accordance with the investment requirements for
regulated investment companies under Subchapter M of the Code and
regulations issued thereunder; (iii) direct the placement of orders
pursuant to its investment determinations for the Fund directly with the
issuer, or with any broker or dealer, in accordance with applicable
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<PAGE>
policies expressed in the Fund's Prospectus and/or Statement of Additional
Information and in accordance with applicable legal requirements.
(a) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated
strategies. In addition, the Subadviser will keep the Fund and the
Trustees informed of developments materially affecting the Fund's
portfolio and shall, on the Subadviser's own initiative, furnish to
the Fund from time to time whatever information the Subadviser
believes appropriate for this purpose;
(b) make available to the Fund's administrator, Pilgrim Group, Inc. (the
"Administrator"), the Adviser, and the Fund, promptly upon their
request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws
and regulations. The Subadviser will furnish the Trustees with such
periodic and special reports regarding the Fund as they may reasonably
request;
(c) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates: (i) becomes aware that it is
subject to a statutory disqualification that prevents the Subadviser
from serving as an investment adviser pursuant to this Subadvisory
Agreement; or (ii) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The
Subadviser further agrees to notify the Fund and the Adviser
immediately of any material fact known to the Subadviser respecting or
relating to the Subadviser that is not contained in the Fund's
Registration Statement, or any amendment or supplement thereto, but
that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect. The
Fund, Adviser, Administrator, and their Affiliates shall likewise
immediately notify the Subadviser if any of them becomes aware of any
regulatory action of the type described in this subparagraph 2(d).
3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all expenses
associated with the management of its business operations in performing its
responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and
employees, and other internal operating costs; provided, however, that the
Subadviser shall be entitled to reimbursement on a monthly basis by the
Adviser of all reasonable out-of-pocket expenses properly incurred by it in
connection with serving as subadviser to the Fund. For the avoidance of
doubt, the Fund shall bear its own overhead and other internal operating
costs (whether incurred directly or by the Adviser or the Subadviser)
including, without limitation:
(a) the costs incurred by the Fund in the preparation and printing of the
Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to
investors subscribing for shares);
(b) all fees and expenses on behalf of the Fund to the Transfer Agent and
the Custodian;
(c) the reasonable fees and expenses of accountants, auditors, lawyers and
other professional advisors to the Fund;
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<PAGE>
(d) any interest, fee or charge payable on or on account of any borrowing
by the Fund;
(e) fiscal and governmental charges and duties relating to the purchase,
sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on which
shares of the Fund may from time to time be listed, quoted or dealt in
and the expenses of obtaining any such listing, quotation or
permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of or
in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the Fund in
newspapers and other publications;
(j) all expenses incurred in the convening of meetings of shareholders or
in the preparation of agreements or other documents relating to the
Fund or in relation to the safe custody of the documents of title of
any investments;
(k) all Trustees communication costs; and
(l) all premiums and costs for Fund insurance and blanket fidelity bonds.
4. COMPENSATION. As compensation for the services provided by the Subadviser
under this Agreement, the Adviser will pay the Subadviser at the end of
each calendar month an advisory fee computed daily at an annual rate equal
to 0.20 of 1% of the Fund's average daily net assets. The "average daily
net assets" of the Fund shall mean the average of the values placed on the
Fund's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value of the Fund is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as of such
other time. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Funds Declaration of Trust and
the Registration Statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business
day, then for the purposes of this Section 4, the value of the net assets
of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of regular trading on the New York Stock Exchange,
or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of
the net asset value of the shares of the Fund has been so suspended for a
period including any month end when the Subadviser's compensation is
payable pursuant to this Section, the Subadviser's compensation payable at
the end of such month shall be computed on the basis of the value of the
net assets of the Fund as last determined (whether during or prior to such
month). If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that day for
the purposes of this Section 4.
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<PAGE>
5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by applicable laws or regulations. The Subadviser also
agrees that records it maintains and preserves pursuant to Rules 31a-2
under the 1940 Act (excluding trade secrets or intellectual property
rights) in connection with its services hereunder are the property of the
Fund and will be surrendered promptly to the Fund upon its request and the
Subadviser further agrees that it will furnish to regulatory authorities
having the requisite authority any information or reports in connection
with its services hereunder which may be requested in order to determine
whether the operations of the Fund are being conducted in accordance with
applicable laws and regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall exercise
its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the
holders of the Fund's shares or by the Adviser in connection with the
matters to which this Subadvisory Agreement relates, provided that nothing
in this Subadvisory Agreement shall be deemed to protect or purport to
protect the Subadviser against liability to the Fund or to holders of the
Fund's shares or to the Adviser to which the Subadviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Subadviser's
reckless disregard of its obligations and duties under this Subadvisory
Agreement. As used in this Section 6, the term "Subadviser" shall include
any officers, directors, employees or other affiliates of the Subadviser
performing services for the Fund.
7. SERVICES NOT EXCLUSIVE. The Advisor understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor
to fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time
to time between the Advisor and the Subadviser, the Trust has no objection
to the Subadviser so acting, provided that whenever the Fund and one or
more other accounts or investment companies advised by the Subadviser have
available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a methodology believed to be
equitable to each entity. The Subadviser agrees to allocate similar
opportunities to sell securities. The Advisor recognizes that, in some
cases, this procedure may limit the size of the position that may be
acquired or sold for the Fund. In addition, the Adviser understands that
the persons employed by the Subadviser to assist in the performance of the
Shareholder'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 Subadviser or any affiliate of the Subadviser to engage in
and devote time and attention to other business or to render services of
whatever kind or nature.
8. DURATION AND TERMINATION. This Agreement shall become effective as of the
date of its execution and shall continue in effect for a period of two
years from the date of execution. Thereafter, this Agreement shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Fund's Trustees 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 also is approved by a majority of the Fund's 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
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<PAGE>
voting on such approval. This Agreement is terminable, without penalty, on
60 days written notice, by the Adviser, by the Fund's Trustees, or by vote
of holders of a majority of the Fund's shares. For a period of eighteen
months from the date of execution of this Agreement, the Subadviser may
terminate this Agreement, without penalty, on six months written notice.
Thereafter, the Subadviser may terminate this Agreement, without penalty,
on 60 days written notice. This Agreement will terminate automatically five
business days after the Subadviser receives written notice of the
termination of the advisory agreement between the Fund and the Adviser.
This Agreement also will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by both parties, and no material amendment of this
Subadvisory Agreement shall be effective until approved by an affirmative
vote of (i) a majority of the outstanding voting securities of the Fund,
and (ii) a majority of the Trustees of the Fund, including a majority of
Trustees who are not interested persons of any party to this Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
10. INDEMNIFICATION.
(a) The Adviser hereby agrees to indemnify the Subadviser and its
affiliates from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation to the preparation of this Agreement; each party
bearing responsibility for its own such costs and fees) or damages
(other than liabilities, losses, expenses, attorneys fees and costs or
damages arising from the Subadviser failing to meet the standard of
care required in Section 6 of this Subadvisory Agreement in the
performance by the Subadviser of, or its failure to perform, the
services required hereunder), arising from the Adviser's (its
affiliates and their respective agents and employees) failure to
perform its duties or assume its obligations hereunder, or from its
wrongful actions or omissions, including, but not limited to, any
claims for non-payment of advisory fees; claims asserted or threatened
by any shareholder of the Fund, governmental or regulatory agency, or
any other person; claims arising from any wrongful act by the Fund or
any of the Fund's trustees, officers, employees, or representatives,
or by the Adviser, its officers, employees or representatives, or from
any actions by the Fund's distributors or any representative of the
Fund; any action or claim against the Subadviser based on any alleged
untrue statement or misstatement of material fact in any registration
statement, prospectus, shareholder report or other information or
materials covering shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the failure or alleged
failure to state therein a material fact required to be stated in
order that the statements therein are not misleading, provided that
such claim is not based upon information provided to the Adviser by
the Subadviser or approved by the Subadviser in the manner provided in
paragraph 12(b) of this Agreement, or which facts or information the
Subadviser failed to provide or disclose. With respect to any claim
for which the Subadviser shall be entitled to indemnity hereunder, the
Adviser shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Subadviser of
investigating and/or defending any claim asserted or threatened by any
party, subject always to the Adviser first receiving a written
under-taking from the Subadviser to repay any amounts paid on its
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<PAGE>
behalf in the event and to the extent of any subsequent determination
that the Subadviser was not entitled to indemnification hereunder in
respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its affiliates
and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation, to the preparation of this Agreement; each party
bearing responsibility for its own such costs and fees) or damages
(other than liabilities, losses, expenses, attorneys fees and costs or
damages arising from the Adviser's failure to perform its
responsibilities hereunder or claims arising from its acts or failure
to act in performing this Agreement) arising from Subadviser's (its
affiliates and their respective agents and employees) willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of the Subadviser's reckless disregard of its
obligations and duties under this Subadvisory Agreement, or arising
from failure to act in any action or claim against the Adviser based
on any alleged untrue statement or misstatement of a material fact
made or provided by or with the consent of Subadviser contained in any
registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by the
Fund, or the failure or alleged failure to state a material fact
therein required to be stated in order that the statements therein are
not misleading, which fact should have been made or provided by the
Subadviser to the Adviser. With respect to any claim for which the
Adviser is entitled to indemnity hereunder, the Subadviser shall
assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Adviser of investigating and/or
defending any claim asserted or threatened by any party, subject
always to the Subadviser first receiving a written undertaking from
the Adviser to repay any amounts paid on its behalf in the event and
to the extent of any subsequent determination that the Adviser was not
entitled to indemnification hereunder in respect of such claim.
(c) In the event that the Subadviser or Adviser is or becomes a party to
any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification shall promptly
notify the other party thereof. After becoming notified of the same,
the party from whom indemnification is sought shall be entitled to
participate in any such action or proceeding and shall assume any
payment for the full defense thereof with counsel reasonably
satisfactory to the party seeking indemnification. After properly
assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal
or other expenses subsequently incurred by such party in connection
with the defense thereof, other than damages, if any, by way of
judgment, settlement, or otherwise pursuant to this provision. The
party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected without
its written consent, which consent shall not be unreasonably withheld.
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11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this Agreement
be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an agent of the
Fund. Likewise, the Fund, the Adviser and their respective affiliates,
agents and employees shall not be deemed agents of the Subadviser and shall
have not authority to bind Subadviser.
12. USE OF NAME.
(a) The Fund may, subject to sub-clause (b) below, use the name, "J.P.
Morgan Investment Management Inc. or "J.P. Morgan" for promotional
purposes only for so long as this Agreement (or any extension, renewal
or amendment thereof) continues in force, unless the Subadviser shall
specifically consent in writing to such continued use thereafter. Any
permitted use by the Fund during the term hereof of the name of the
Subadviser or J.P. Morgan shall in no way prevent the Subadviser or
any of it shareholders or any of their successors, from using or
permitting the use of such name (whether singly or in any combination
with any other words) for, by or in connection with an entity or
enterprise other than the Fund. The name and right to the name J.P.
Morgan Investment Management Inc. or any derivation of the name J.P.
Morgan shall at all times be owned and be the sole and exclusive
property of J.P. Morgan and its affiliated entities. J.P. Morgan
Investment Management Inc., by entering into this Agreement, is
allowing the Fund to use the name J.P. Morgan Investment Management
Inc. and/or J.P. Morgan solely by or on behalf of the Fund. At the
conclusion of this Agreement or in the event of any termination of
this Agreement or if the Subadviser's services are terminated for any
reason, each of the authorized parties and their respective employees,
representatives, affiliates, and associates agree that they shall
immediately cease using the name J.P. Morgan Investment Management
Inc. and/or J.P. Morgan of said name for any purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Fund not to publish or distribute to Fund
shareholders, prospective investors, sales agents or members of the
public any disclosure document, offering literature (including any
form of advertisement or other solicitation materials calculated to
lead investors to subscribe for and purchase shares of the Fund) or
other document referring by name to the Subadviser or any of its
affiliates, unless the Subadviser shall have consented in writing to
such references in the form and context in which they appear; provided
however, that where the Fund timely seeks to obtain approval of
disclosure contained in any documents required to be filed by the
Fund, and such approval is not forthcoming on or before the date on
which such documents are required by law to be filed, the Subadviser
shall be deemed to have consented to such disclosure.
13. MISCELLANEOUS.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of New York, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Advisers Act, or rules or
orders of the SEC thereunder. In the event of any litigation in which
the Adviser and the Subadviser are adverse parties and there are no
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other parties to such litigation, such action shall be brought in the
United States District Court for the State of New York, located in New
York, New York.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
14. NOTICES. Any notice, instruction or other instrument required or permitted
to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or
sent by prepaid registered mail, express mail or by facsimile to the
parties at such offices or such other address as may be notified by either
party from time to time. Such notice, instruction or other instrument shall
be deemed to have been served, in the case of a registered letter at the
expiration of seventy-two (72) hours after posting; in the case of express
mail, within twenty-four (24) hours after dispatch; and in the case of
facsimile, immediately on dispatch, and if delivered outside normal
business hours it shall be deemed to have been received at the next time
after delivery or transmission when normal business hours commence.
Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
15. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund),
and each of their employees and affiliates agree not to knowingly solicit
to invest, or accept or retain as investors, in the Fund any persons or
entities who are clients of or investors in any fund or investment vehicle
managed by any entity owned or affiliated with J.P. Morgan Investment
Management Inc.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year set forth
above.
PILGRIM INVESTMENTS, INC.
By:
-------------------------------------
Title:
J.P. Morgan Investment Management Inc.
By:
-------------------------------------
Title:
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APPENDIX E
SUB-ADVISORY AGREEMENT WITH NAVELLIER FUND MANAGEMENT, INC.
(PILGRIM VP GROWTH + VALUE PORTFOLIO)
SUBADVISORY AGREEMENT
PILGRIM VP GROWTH + VALUE PORTFOLIO
AGREEMENT made this ___th day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),
investment adviser for the Pilgrim VP Growth + Value Portfolio, a series of the
Pilgrim Variable Products Trust (the "Trust") (hereinafter the "Fund") and
Navellier Fund Management, Inc., a Delaware corporation (hereinafter the
"Subadviser").
WHEREAS, the Adviser has been retained by the Fund, an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), to provide investment advisory services to
the Fund pursuant to an amended Investment Advisory Agreement dated this ___th
day of September, 2000 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the 1940 Act, and the Fund's
shareholders have approved the appointment of the Subadviser to perform certain
investment advisory services for the Fund pursuant to this Subadviser Agreement
with the Adviser and the Subadviser is willing to perform such services for the
Fund;
WHEREAS, the Subadviser is or will be registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act") prior to
performing its services for the Fund under this Agreement;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Adviser and the Subadviser as follows:
1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform advisory
services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein
provided.
2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion; subject at all times to the supervision of the
Adviser and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of
investments, subject to the duty to render to the Trustees of the
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Fund, the Adviser and the Custodian written reports of the composition
of the portfolio of the Fund as often as the Trustees of the Fund
shall reasonably require;
(b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected,
and to engage such consultants, analysts and experts in connection
therewith as may be considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund,
provided that the Subadviser shall have no authority to direct the
transfer of the Fund's funds or assets to itself or other persons and
shall have no authority over the disbursement (as opposed to
investment decisions) of funds or assets nor any custody of any of the
Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any
specific or general directions which the Trustees of the Fund, or the
Adviser may give to the Subadviser with regard to any of the foregoing
powers shall, unless the contrary is expressly stated therein,
override the general authority given by this provision to the extent
that the Trustees of the Fund may, at any time and from time to time,
direct, either generally or to a limited extent and either alone or in
concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary
duties or any laws with regard to the Subadviser's duties and
responsibilities), all or any of the same as they shall think fit and,
in particular the Adviser shall have the right to direct the
Subadviser to place trades through brokers \and other agents of the
Adviser's choice, subject to such brokers or agents executing such
trades on a "best execution basis", i.e. at the best price and/or with
research or other services which render that broker's services the
most appropriate for the Subadviser's needs, and further that the
Subadviser is satisfied that the dealing and execution quality of such
brokers are satisfactory to the Subadviser, and PROVIDED FURTHER that
nothing herein shall be construed as giving the Subadviser power to
manage the aforesaid cash and investments in such a manner as would
cause the Fund to be considered a "dealer" in stocks, securities or
commodities for U.S. federal income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's
performance of the duties delineated in subparagraphs (a)-(d) of this
provision.
The Subadviser further agrees that, in performing its duties hereunder, it
will:
(a) (i) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, the Internal Revenue Code (the "Code") and all other
applicable federal and state laws and regulations, the Prospectus and
Statement of Additional Information for the Fund, and with any
applicable procedures adopted by the Trustees in writing and made
available to Subadviser, (ii) manage the Fund in accordance with the
investment requirements for regulated investment companies under
Subchapter M of the Code and regulations issued thereunder; (iii)
direct the placement of orders pursuant to its investment
determinations for the Fund directly with the issuer, or with any
broker or dealer, in accordance with applicable policies expressed in
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the Fund's Prospectus and/or Statement of Additional Information and
in accordance with applicable legal requirements.
(b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Subadviser will keep the Fund and the
Trustees informed of developments materially affecting the Fund's
portfolio and shall, on the Subadviser's own initiative, furnish to
the Fund from time to time whatever information the Subadviser
believes appropriate for this purpose;
(c) make available to the Fund's administrator, Pilgrim Group, Inc. (the
"Administrator"), the Adviser, and the Fund, promptly upon their
request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws
and regulations. The Subadviser will furnish the Trustees with such
periodic and special reports regarding the Fund as they may reasonably
request;
(d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates: (i) becomes aware that it is
subject to a statutory disqualification that prevents the Subadviser
from serving as an investment adviser pursuant to this Subadvisory
Agreement; or (ii) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The
Subadviser further agrees to notify the Fund and the Adviser
immediately of any material fact known to the Subadviser respecting or
relating to the Subadviser that is not contained in the Fund's
Registration Statement, or any amendment or supplement thereto, but
that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect. The
Fund, Adviser, Administrator, and their Affiliates shall likewise
immediately notify the Subadviser if any of them becomes aware of any
regulatory action of the type described in this subparagraph 2(d).
3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all expenses
associated with the management of its business operations in performing its
responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and
employees, and other internal operating costs; provided, however, that the
Subadviser shall be entitled to reimbursement on a monthly basis by the
Adviser of all reasonable out-of-pocket expenses properly incurred by it in
connection with serving as subadviser to the Fund. For the avoidance of
doubt, the Fund shall bear its own overhead and other internal operating
costs (whether incurred directly or by the Adviser or the Subadviser)
including, without limitation:
(a) the costs incurred by the Fund in the preparation and printing of the
Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to
investors subscribing for shares);
(b) all fees and expenses on behalf of the Fund to the Transfer Agent and
the Custodian;
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(c) the reasonable fees and expenses of accountants, auditors, lawyers and
other professional any interest, fee or charge payable on or on
account of any borrowing by the Fund;
(d) any interest, fee or charge payable on or on account of any borrowing
by the Fund;
(e) fiscal and governmental charges and duties relating to the purchase,
sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on which the
shares may from time to time be listed, quoted or dealt in and the
expenses of obtaining any such listing, quotation or permission to
deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of or
in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares in newspapers
and other publications;
(j) all expenses incurred in the convening of meetings of shareholders or
in the preparation of agreements or other documents relating to the
Fund or in relation to the safe custody of the documents of title of
any investments;
(k) all Trustees communication costs; and
(l) all premiums and costs for Fund insurance and blanket fidelity bonds.
4. COMPENSATION. As compensation for the services provided by the Subadviser
under this Agreement, the Adviser will pay the Subadviser at the end of
each calendar month an advisory fee computed daily at an annual rate equal
to 0.35 of 1% of the Fund's average daily net assets. The "average daily
net assets" of the Fund shall mean the average of the values placed on the
Fund's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value of the Fund is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as of such
other time. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Fund's Declaration of Trust
and the Registration Statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business
day, then for the purposes of this Section 4, the value of the net assets
of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of regular trading on the New York Stock Exchange,
or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of
the net asset value of the shares of the Fund has been so suspended for a
period including any month end when the Subadviser's compensation is
payable pursuant to this Section, the Subadviser's compensation payable at
the end of such month shall be computed on the basis of the value of the
net assets of the Fund as last determined (whether during or prior to such
month). If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that
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day shall be deemed to be the sole determination thereof on that day for
the purposes of this Section 4.
5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by applicable laws or regulations. The Subadviser also
agrees that records it maintains and preserves pursuant to Rules 3 1a-2
under the 1940 Act (excluding trade secrets or intellectual property
rights) in connection with its services hereunder are the property of the
Fund and will be surrendered promptly to the Fund upon its request and the
Subadviser further agrees that it will furnish to regulatory authorities
having the requisite authority any information or reports in connection
with its services hereunder which may be requested in order to determine
whether the operations of the Fund are being conducted in accordance with
applicable laws and regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall exercise
its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the
holder's of the Fund's shares or by the Adviser in connection with the
matters to which this Subadvisory Agreement relates, provided that nothing
in this Subadvisory Agreement shall be deemed to protect or purport to
protect the Subadviser against liability to the Fund or to holders of the
Fund's shares or to the Adviser to which the Subadviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Subadviser's
reckless disregard of its obligations and duties under this Subadvisory
Agreement. As used in this Section 6, the term "Subadvisor" shall include
any officers, directors, employees or other affiliates of the Subadviser
performing services for the Fund.
7. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Subadviser are not exclusive, and that nothing in this Subadvisory
Agreement shall prevent the Subadviser, its affiliates or its or their
officers, directors and employees from providing similar services to other
investment companies (whether or not their investment objectives and
policies are similar to those of the Fund) or from engaging in other
investment advisory activities. When the Subadviser recommends the purchase
or sale of a security for other investment companies and other clients, and
at the same time the Subadviser recommends the purchase or sale of the same
security for the Fund, it is understood that in light of its fiduciary duty
to the Fund, such transactions will be executed on a basis that is fair and
equitable to the Fund; provided, however, that the Subadviser is not
required to recommend to the Fund the same investments it recommends to its
other clients. In connection with purchases or sales of portfolio
securities for the account of the Fund, neither the Subadviser nor any of
its directors, officers or employees shall act as a principal or agent or
receive any commission. If the Subadviser provides any advice to its
clients concerning the shares of the Fund, the Subadviser shall act solely
as investment counsel for such clients and not in any way on behalf of the
Fund.
8. DURATION AND TERMINATION. This Subadvisory Agreement shall continue in
effect for a period of two years unless sooner terminated as provided
herein. Notwithstanding the foregoing, this Subadvisory Agreement may be
terminated: (a) at any time without penalty by the Fund or Adviser upon the
vote of a majority of the Trustees or by vote of the majority of the Fund's
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outstanding voting securities, upon sixty (60) days' written notice to the
Subadviser, or (b) by the Subadviser without cause at any time without
penalty, upon (60) days' written notice to the Fund or Adviser. This
Subadvisory Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act) or the assignment or termination of
the Investment Advisory Agreement.
9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by both par-ties, and no material amendment of this
Subadvisory Agreement shall be effective until approved by an affirmative
vote of (i) a majority of the outstanding voting securities of the Fund,
and (ii) a majority of the Trustees of the Fund, including a majority of
Trustees who are not interested persons of any party to this Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
10. INDEMNIFICATION.
(a) The Adviser hereby agrees to indemnify the Subadviser from and against
all liabilities, losses, expenses, reasonable attorneys' fees and
costs (other than attorneys' fees and costs in relation to the
preparation of this Agreement; each party bearing responsibility for
its own such costs and fees) or damages (other than liabilities,
losses, expenses, attorneys fees and costs or damages arising from the
Subadviser failing to meet the standard of care required hereunder in
the performance by the Subadviser of, or its failure to perform, the
services required hereunder), arising from the Adviser's (its
affiliates and their respective agents and employees) failure to
perform its duties or assume its obligations hereunder, or from its
wrongful actions or omissions, including, but not limited to, any
claims for non-payment of advisory fees; claims asserted or threatened
by any shareholder of the Fund, governmental or regulatory agency, or
any other person; claims arising from any wrongful act by the Fund or
any of the Fund's trustees, officers, employees, or representatives,
or by the Adviser, its officers, employees or representatives, or from
any actions by the Fund's distributors or any representative of the
Fund; any action or claim against the Subadviser based on any alleged
untrue statement or misstatement of material fact in any registration
statement, prospectus, shareholder report or other information or
materials covering shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the failure or alleged
failure to state therein a material fact required to be stated in
order that the statements therein are not misleading, provided that
such claim is not based upon information provided to the Adviser by
the Subadviser or approved by the Subadviser in the manner provided in
paragraph 12(b) of this Agreement, or which facts or information the
Subadviser failed to provide or disclose. With respect to any claim
for which the Subadviser shall be entitled to indemnity hereunder, the
Adviser shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Subadviser of
investigating and/or defending any claim asserted or threatened by any
party, subject always to the Adviser first receiving a written
undertaking from the Subadviser to repay any amounts paid on its
behalf in the event and to the extent of any subsequent determination
that the Subadviser was not entitled to indemnification hereunder in
respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its affiliates
and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and
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costs in relation to the preparation of this Agreement; each party
bearing responsibility for its own such costs and fees) or damages
(other than liabilities, losses, expenses, attorneys fees and costs or
damages arising from the Adviser's failure to perform its
responsibilities hereunder or claims arising from its acts or failure
to act in performing this Agreement) arising from Subadviser's (its
affiliates and their respective agents and employees) failure to
perform its duties and assume its obligations hereunder, or from any
wrongful act of Subadviser or its failure to act in performing this
Agreement, including any action or claim against the Adviser based on
any alleged untrue statement or misstatement of a material fact made
or provided by or with the consent of Subadviser contained in any
registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by the
Fund, or the failure or alleged failure to state a material fact
therein required to be stated in order that the statements therein are
not misleading, which fact should have been made or provided by the
Subadviser to the Adviser. With respect to any claim for which the
Adviser is entitled to indemnity hereunder, the Subadviser shall
assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Adviser of investigating and/or
defending any claim asserted or threatened by any party, subject
always to the Subadviser first receiving a written undertaking from
the Adviser to repay any amounts paid on its behalf in the event and
to the extent of any subsequent determination that the Adviser was not
entitled to indemnification hereunder in respect of such claim.
(c) In the event that the Subadviser or Adviser is or becomes a party to
any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification shall promptly
notify the other party thereof. After becoming notified of the same,
the party from whom indemnification is sought shall be entitled to
participate in any such action or proceeding and shall assume any
payment for the full defense thereof with counsel reasonably
satisfactory to the party seeking indemnification. After properly
assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal
or other expenses subsequently incurred by such party in connection
with the defense thereof, other than damages, if any, by way of
judgment, settlement, or otherwise pursuant to this provision. The
party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected without
its written consent, which consent shall not be unreasonably withheld.
11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this Agreement
be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an agent of the
Fund. Likewise, the Fund, the Adviser and their respective affiliates,
agents and employees shall not be deemed agents of the Subadviser and shall
have not authority to bind Subadviser.
12. USE OF NAME.
(a) The Fund may, subject to sub-clause (b) below, use the name,
"Navellier Fund Management, Inc." or any component, abbreviation or
other name derived therefrom for promotional purposes only for so long
as this Agreement (or any extension, renewal or amendment thereof)
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continues in force, unless the Subadviser shall specifically consent
in writing to such continued use thereafter. Any permitted use by the
Fund during the term hereof of the name of the Subadviser, Navellier,
or any derivative thereof, shall in no way prevent the Subadviser or
any of it shareholders or any of their successors, from using or
permitting the use of such name (whether singly or in any combination
with any other words) for, by or in connection with an entity or
enterprise other than the Fund. The name and right to the name
Navellier Fund Management, Inc. or any derivation of the name
Navellier shall at all times be owned and be the sole and exclusive
property of Louis Navellier and his affiliated entities. Navellier
Fund Management Inc., by entering into this Agreement, is allowing the
Fund to use the name Navellier and/or derivatives thereof solely by or
on behalf of the Fund. At the conclusion of this Agreement or in the
event of any termination of this Agreement or if the Subadviser's
services are terminated for any reason, each of the authorized parties
and their respective employees, representatives, affiliates, and
associates agree that they shall immediately cease using the name
Navellier and/or any derivatives of said name for any purpose
whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Fund not to publish or distribute to Fund
shareholders, prospective investors, sales agents or members of the
public any disclosure document, offering literature (including any
form of advertisement or other solicitation materials calculated to
lead investors to subscribe for and purchase shares of the Fund) or
other document referring by name to the Subadviser, unless the
Subadviser shall have consented in writing to such references in the
form and context in which they appear; provided however, that where
the Fund timely seeks to obtain approval of disclosure contained in
any documents required to be filed by the Fund, and such approval is
not forthcoming on or before the date on which such documents are
required by law to be filed, the Subadviser shall be deemed to have
consented to such disclosure.
13. MISCELLANEOUS.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of Nevada, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders
of the SEC thereunder. In the event of any litigation in which the
Adviser and the Subadviser are adverse parties and there are no other
parties to such litigation, such action shall be brought in the United
States District Court for the State of Nevada, located in Reno,
Nevada.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
14. NOTICES. Any notice, instruction or other instrument required or permitted
to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or
sent by prepaid registered mail, express mail or by facsimile to the
parties at such offices or such other address as may be notified by either
party from time to time. Such notice, instruction or other instrument shall
E-8
<PAGE>
be deemed to have been served, in the case of a registered letter at the
expiration of seventy-two (72) hours after posting; in the case of express
mail, within twenty-four (24) hours after dispatch; and in the case of
facsimile, immediately on dispatch, and if delivered outside normal
business hours it shall be deemed to have been received at the next time
after delivery or transmission when normal business hours commence.
Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
15. ATTORNEYS' FEES. In the event of a material breach of this Agreement by any
party hereto, the prevailing party, as determined by the trier of fact,
shall be entitled to reasonable attorneys' fees and costs as determined by
the court in such action, in addition to any other damages awarded.
16. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund),
and each of their employees and affiliates agree not to knowingly solicit
to invest, or accept or retain as investors, in the Fund any persons or
entities who are clients of or investors in any fund or investment vehicle
managed by any entity owned by Louis Navellier.
E-9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year set forth.
PILGRIM INVESTMENTS, INC.
By:
-------------------------------------
Title:
Navellier Fund Management, Inc.
By:
-------------------------------------
Title:
E-10
<PAGE>
APPENDIX F
[TO BE PROVIDED]
As of June __, 2000, the Trustees and officers as a group owned less than 1% of
any class of each Portfolio's outstanding shares. As of that date, to the
knowledge of management, no person owned beneficially or of record more than 5%
of the outstanding shares of any Portfolio, except as follows:
F-1
<PAGE>
APPENDIX G
OFFICERS OF THE TRUST
The following persons currently are principal executive officers of the
Trust (unless otherwise noted, the mailing address of the officers is 40 North
Central Avenue, Suite 1200, Phoenix, Arizona 85004):
Robert W. Stallings, Chief Executive Officer and President. (Age 51)
Chairman, Chief Executive Officer and President of Pilgrim Group, Inc.
("Pilgrim Group") (since December 1994); Chairman, Pilgrim Investments,
Inc. (since December 1994); Chairman, Pilgrim Securities, Inc. ("Pilgrim
Securities") (since December 1994); President and Chief Executive Officer
of Pilgrim Funding, Inc. (since November 1999); and President and Chief
Executive Officer of Pilgrim Capital Corporation and its predecessors
(since August 1991). Mr. Stallings is also a Director, Trustee, or a member
of the Advisory Board of each of the Pilgrim Funds.
James R. Reis, Executive Vice President and Assistant Secretary. (Age 42)
Director, Vice Chairman (since December 1994), Executive Vice President
(since April 1995), and Director of Structured Finance (since April 1998),
Pilgrim Group and Pilgrim Investments; Director (since December 1994) and
Vice Chairman (since November 1995) of Pilgrim Securities; Executive Vice
President, Assistant Secretary and Chief Credit Officer of Pilgrim Prime
Rate Trust; Executive Vice President and Assistant Secretary of each of the
other Pilgrim Funds. Presently serves or has served as an officer or
director of other affiliates of Pilgrim Capital Corporation.
Stanley D. Vyner, Executive Vice President. (Age 49) President and Chief
Executive Officer (since August 1996), Pilgrim Investments; Executive Vice
President of most of the Pilgrim Funds (since July 1996). Formerly Chief
Executive Officer (November 1993 - December 1995) HSBC Asset Management
Americas, Inc.
James M. Hennessy, Executive Vice President and Secretary. (Age 51)
Executive Vice President and Secretary, Pilgrim Capital Corporation and its
predecessors (since April 1998). Executive Vice President and Secretary
(since April 1998), Pilgrim Group, Pilgrim Securities and Pilgrim
Investments; Executive Vice President and Secretary of each of the Pilgrim
Funds. Formerly Senior Vice President, Pilgrim Capital Corporation and its
affiliates (April 1995 - April 1998).
Michael J. Roland, Senior Vice President and Principal Financial Officer.
(Age 42) Senior Vice President and Chief Financial Officer, Pilgrim Group,
Pilgrim Investments and Pilgrim Securities (since June 1998); Senior Vice
President and Principal Financial Officer of each of the Pilgrim Funds. He
served in same capacity from January, 1995 - April, 1997. Formerly, Chief
Financial Officer of Endeavor Group (April 1997 to June 1998).
Robert S. Naka, Senior Vice President and Assistant Secretary. (Age 37)
Senior Vice President, Pilgrim Investments (since November 1999) and
Pilgrim Group, Inc. (since August 1999). Senior Vice President and
Assistant Secretary of each of the Pilgrim Funds. Formerly Vice President,
Pilgrim Investments (April 1997 - October 1999), Pilgrim Group, Inc.
Formerly Assistant Vice President, Pilgrim Group, Inc. (August 1995 -
February 1997).
Robyn L. Ichilov, Vice President and Treasurer. (Age 32) Vice President,
Pilgrim Investments (since August 1997), Accounting Manager (since November
1995). Vice President and Treasurer of most of the other Pilgrim Funds.
G-1
<PAGE>
Kevin G. Mathews, Senior Vice President and Senior Portfolio Manager. (Age
40) Senior Vice President, Pilgrim Investments (since July 1998). Formerly
Vice President, Pilgrim Investments (August 1995 - July 1998); Vice
President, Van Kampen America Capital (May 1987 - April 1995).
Mary Lisanti, Executive Vice President and Portfolio Manager. (Age 43)
Executive Vice President and Chief Investment Adviser-Equities, Pilgrim
Investments (since November 1999). Formerly Sub-Adviser, Strong Capital
Management (September 1996 - May 1998); Managing Director and Sub-Advisor,
Bankers Trust Corporation (March 1993 - August 1996).
G-2
<PAGE>
PILGRIM VARIABLE PRODUCTS TRUST
GROWTH OPPORTUNITIES PORTFOLIO
GROWTH + VALUE PORTFOLIO
HIGH YIELD PORTFOLIO
INTERNATIONAL VALUE PORTFOLIO
MAGNACAP PORTFOLIO
MIDCAP OPPORTUNITIES PORTFOLIO
RESEARCH ENHANCED INDEX PORTFOLIO
SMALLCAP OPPORTUNITIES PORTFOLIO
(EACH A "PORTFOLIO" AND COLLECTIVELY, THE "PORTFOLIOS")
The undersigned hereby instructs Robert W. Stallings or James M. Hennessy
(Proxies) to vote the shares held by him at the Special Meeting of Shareholders
of the Pilgrim VP Growth Opportunities, Growth + Value, High Yield Bond,
International Value, MagnaCap, MidCap Opportunities, Research Enhanced Index and
SmallCap Opportunities Portfolios to be held at ____ a.m., local time, on August
18, 2000 at 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004 and at
any adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of which is
hereby acknowledged, and in the Proxies' discretion, upon such other matters as
may properly come before the meeting or any adjournment thereof.
Please vote, sign and date this voting instruction and return it in the enclosed
envelope.
These voting instructions will be voted as specified. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Please indicate your vote by an "x" in the appropriate box below.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
1. To elect eleven Trustees For All Against All For all Except Abstain
[ ] [ ] [ ] [ ]
Nominees: Al Burton Walter H. May, Jr. John R. Smith
Paul S. Doherty Jock Patton Robert W. Stallings
Robert B. Goode, Jr. David W. C. Putnam John G. Turner
Alan L. Gosule David W. Wallace
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL
EXCEPT" BOX AND STRIKE THROUGH THAT NOMINEE'S NAME.
2. For shareholders of all the Portfolios, to For Against Abstain
approve a new Investment Management Agreement [ ] [ ] [ ]
between the Portfolios and Pilgrim
Investments, Inc. ("Pilgrim Investments").
<PAGE>
3(a). For shareholders of the Pilgrim VP For Against Abstain
International Value Portfolio, to approve a [ ] [ ] [ ]
new Portfolio Management Agreement between
Pilgrim Investments and Brandes Investment
Partners, L.P. .
3(b). For shareholders of the Pilgrim VP Research For Against Abstain
Enhanced Index Portfolio, to approve a new [ ] [ ] [ ]
Portfolio Management Agreement between
Pilgrim Investments and J.P. Morgan
Investment Management, Inc.
3(c). For shareholders of the Pilgrim VP Growth + For Against Abstain
Value Portfolio, to approve a new Portfolio [ ] [ ] [ ]
Management Agreement between Pilgrim
Investments and Navellier Fund Management,
Inc.
4. To ratify the appointment of For Against Abstain
PricewaterhouseCoopers LLP as independent [ ] [ ] [ ]
auditors for your Portfolio for the fiscal
year ending December 31, 2000.
5. To transact such other business as may For Against Abstain
properly come before the Meeting of [ ] [ ] [ ]
Shareholders or any adjournments thereof
This proxy must be signed exactly as your name(s) appears hereon. If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.
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Signature Date
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Signature (if held jointly) Date
