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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Select Advisors Variable Insurance Trust
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(Name of Registrant/s 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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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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4) Date Filed:
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TOUCHSTONE BALANCED PORTFOLIO
(a series of Select Advisors Variable Insurance Trust)
311 Pike Street
Cincinnati, Ohio 45202
NOTICE OF SPECIAL MEETING
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Touchstone Balanced Portfolio (the "Portfolio"), a
separate series of Select Advisors Variable Insurance Trust (the "Trust")
will be held on April 23, 1997, at 10:00 a.m., Eastern Daylight Time, at
the offices of the Trust, 311 Pike Street, Cincinnati, Ohio 45202. At the
Meeting, Shareholders of the Portfolio will be asked to consider and vote
upon the following:
1. To approve or disapprove: (a) a new portfolio advisory
agreement between Touchstone Advisors, Inc. (the "Advisor")
and OpCap Advisors ("OpCap"), pursuant to which agreement
OpCap will act as portfolio advisor (i.e., subadvisor) with
respect to the assets of the Portfolio, as described in the
attached Proxy Statement; and (b) an amendment to the
existing investment advisory agreement between the Trust (on
behalf of the Portfolio) and the Advisor, pursuant to which
agreement the Advisor acts as investment advisor to the
Portfolio, as described in the attached Proxy Statement.
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Shareholders of record at the close of business on March 14, 1997, 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
Susan C. Mosher
Secretary
Cincinnati, Ohio
April 4, 1997
TOUCHSTONE BALANCED PORTFOLIO
(a series of Select Advisors Variable Insurance Trust)
311 Pike Street
Cincinnati, Ohio 45202
PROXY STATEMENT
This Proxy Statement is furnished by Select Advisors Variable Insurance
Trust (the "Trust") to the shareholders of its Touchstone Balanced
Portfolio (respectively, the "Shareholders" and the "Portfolio"), on
behalf of the Trust's Board of Trustees. This Proxy Statement is being
provided to you in connection with the Trust's solicitation of the
accompanying proxy, to be voted at a Special Meeting of Shareholders of
the Portfolio (the "Meeting") to be held on April 23, 1997, at 10:00 a.m.,
Eastern Daylight Time, at the offices of the Trust, 311 Pike Street,
Cincinnati, Ohio 45202, for the purposes set forth below and in the
accompanying Notice of Special Meeting. This Proxy Statement is being
mailed to Shareholders on or about April 4, 1997.
At the Meeting, Shareholders will be asked to consider and vote upon
the following:
1. To approve or disapprove: (a) a new portfolio advisory
agreement between Touchstone Advisors, Inc. (the "Advisor")
and OpCap Advisors ("OpCap"), pursuant to which agreement
OpCap will act as portfolio advisor (i.e., subadvisor) with
respect to the assets of the Portfolio, as described in this
Proxy Statement; and (b) an amendment to the existing
investment advisory agreement between the Trust (on behalf
of the Portfolio) and the Advisor, pursuant to which
agreement the Advisor acts as investment advisor to the
Portfolio, as described in this Proxy Statement.
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
The approval of the new investment advisory agreement with OpCap and the
amendment to the existing investment advisory agreement with the Advisor
are dependent upon each other and are being submitted to the Shareholders
as one proposal.
The Portfolio is a separate series of the Trust, which is a
Massachusetts business trust. The Advisor serves as the investment advisor
to each series of the Trust, including the Portfolio. In addition, the
Advisor is the Trust's sponsor. The address of the Advisor is 311 Pike
Street, Cincinnati, Ohio 45202. The Advisor, in its capacity as the
Trust's investment advisor, has engaged a number of portfolio advisors
(i.e. subadvisors) to manage the separate series of the Trust. Harbor
Capital Management Company, Inc. ("Harbor") and Morgan Grenfell Capital
Management, Inc. ("Morgan Grenfell") are the two portfolio advisors
currently engaged to manage investments of the Portfolio. The services
provided to the Portfolio by Harbor and Morgan Grenfell will be terminated
upon appointment of a new portfolio advisor. Investors Bank
& Trust Company ("Investors Bank") serves as administrator, custodian,
fund accounting agent and transfer agent for the Trust. The address of
Investors Bank is 89 South Street, Boston, Massachusetts 02111.
The shares of the Portfolio may be purchased only by separate accounts
("Separate Accounts") established by various insurance companies (the
"Insurance Companies") for the purpose of funding variable annuity
contracts and variable life insurance policies (such contracts and
policies are referred to herein as "Contracts") issued by the Insurance
Companies. The Insurance Companies, however, will vote the shares of the
Portfolio held in each Separate Account in accordance with instructions
received from variable life insurance policy owners and variable annuity
contract owners or participants (collectively, the "Contract Owners") with
respect to all matters on which the Shareholders are entitled to vote.
Interests in Contracts for which no timely instructions are received will
be voted in proportion to the instructions which are received from
Contract Owners. As of the close of business on March 14, 1997, there were
664,668.064 shares of the Portfolio outstanding.
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 the proposal and may vote in
their discretion with respect to other matters not now known to the
Trust's Board of Trustees that may be presented at the Meeting.
A Shareholder may revoke the accompanying proxy at any time prior to
its use by filing with the Secretary of the Trust a written revocation or
duly executed proxy bearing a later date. The proxy will not be voted if
the Shareholder is present at the Meeting and elects to vote in person.
Attendance at the Meeting alone will not serve to revoke the proxy.
The principal solicitation of proxies will be by mail, but they may be
solicited by telephone, telegraph and personal contact by Trustees,
officers and regular employees of the Trust. All costs associated with
the preparation, filing and distribution of this Proxy Statement, the
solicitation and the Meeting will be borne by the Advisor and not by the
Trust, the Portfolio or OpCap.
PROPOSAL TO APPROVE NEW PORTFOLIO ADVISORY AGREEMENT AND
AMENDMENT TO EXISTING INVESTMENT ADVISORY AGREEMENT
PORTFOLIO ADVISORY AGREEMENT BETWEEN THE ADVISOR AND OPCAP
BACKGROUND
At the Meeting, Shareholders are being asked to approve a new portfolio
advisory agreement for the Portfolio (the "New Portfolio Advisory
Agreement") between the Advisor and OpCap. Except for the fee arrangement
(which may result in an increase in fees paid by the Portfolio if either
one of the conditions described below is met), and the addition of
provisions regarding OpCap's expected use of an affiliated broker-dealer
to execute transactions on behalf of the Portfolio (the "affiliated
brokerage provisions"), the New Portfolio Advisory Agreement is identical
in all substantive respects to the portfolio advisory agreement dated
September 9, 1994, in effect between the Advisor and Harbor (the "Harbor
Agreement"). Except for the fee
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arrangement (which may result in an increase in fees paid by the Portfolio
if either one of the conditions described below is met), the affiliated
brokerage provisions and the other differences noted under "New Portfolio
Advisory Agreement" below, the New Portfolio Advisory Agreement is also
identical in all substantive respects to the portfolio advisory agreement,
dated September 9, 1994, in effect between the Advisor and Morgan Grenfell
(the "Morgan Grenfell Agreement"). (The Harbor Agreement and the Morgan
Grenfell Agreement are collectively referred to herein as the "Existing
Portfolio Advisory Agreements".) A copy of the New Portfolio Advisory
Agreement is set forth in Exhibit A to this Proxy Statement.
Under the investment advisory agreement between the Trust (on behalf of
the Portfolio) and the Advisor, the Advisor at its expense may select,
subject to the review and approval of the Trust's Board of Trustees, a
portfolio advisor or portfolio advisors to manage the investments of the
Portfolio. The Trust's Board of Trustees has selected OpCap as portfolio
advisor to the Portfolio and has approved the New Portfolio Advisory
Agreement, subject to approval by the investors in the Portfolio, to
become effective on May 1, 1997. For information regarding OpCap that the
Board of Trustees considered in making this selection, see "Information
about OpCap."
Approval of the New Portfolio Advisory Agreement would not result in
any increase in advisory fees paid by the Portfolio because the Advisor
will pay OpCap's portfolio advisory fee. However, approval of the
amendment to the existing investment advisory agreement would result in an
increase in the fees payable by the Trust (on behalf of the Portfolio) to
the Advisor, in part to offset any increased advisory fees being paid by
the Advisor to OpCap. Thus, approval of the proposal could result in an
increase in fees paid by the Portfolio if (1) an "expense cap" on the
Portfolio's expenses (described below and currently in effect through
March 31, 1998) is removed or (2) if the Portfolio's aggregate operating
expenses are less than the expense cap for a given fiscal year.
The affiliated brokerage provisions in the New Portfolio Advisory
Agreement permit OpCap to place brokerage transactions with Oppenheimer
Co., Inc. ("Opco"), an affiliate of OpCap. However, the New Portfolio
Advisory Agreement provides that OpCap may effect securities transactions
for the Portfolio only if (1) the commissions, fees or other remuneration
received or to be received by it are reasonable and fair compared to the
commissions, fees or other remuneration received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of
time and (2) the Trustees of the Trust, including a majority of those
Trustees who are not interested persons of the Trust, have adopted
procedures pursuant to Rule 17e-1 under the Investment Company Act of 1940
(the "1940 Act") for determining the permissible level of such
commissions. The Board of Trustees has previously adopted such procedures.
Therefore, OpCap's expected use of Opco to execute transactions on behalf
of the Portfolio should not result in an increase in brokerage commissions
paid by the Portfolio.
EXISTING PORTFOLIO ADVISORY AGREEMENTS
Harbor and Morgan Grenfell each serves as a portfolio advisor for a
portion (64.3% and 35.7%, respectively , as of December 31, 1996) of
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the assets of the Portfolio under the Existing Portfolio Advisory
Agreements. Harbor manages the equity portion of the Portfolio while
Morgan Grenfell manages the fixed income portion. The Existing Portfolio
Advisory Agreements were approved by the initial investors in the
Portfolio on September 1, 1994 and were last approved by the Trust's
Trustees, including the Trustees who were not "interested persons", on
December 19, 1996.
Under the Harbor Agreement, Harbor is entitled to receive from the
Advisor a fee for its services equal to the following percentages of the
average daily net assets of the Portfolio managed by Harbor: 0.50% of the
first $75 million, 0.40% of the next $75 million, and 0.30% thereafter.
Under the Morgan Grenfell Agreement, Morgan Grenfell is entitled to
receive from the Advisor a fee for its services equal to the following
percentages of the average daily net assets of the Portfolio managed by
Morgan Grenfell: 0.35% of the first $40 million and 0.30% thereafter. At
December 31, 1996, net assets of the Portfolio under Harbor's management
and Morgan Grenfell's management were $4,304,386 and $2,390,306,
respectively. For the fiscal year ended December 31, 1996, the Portfolio
paid fees of $13,352 and $5,340 to Harbor and Morgan Grenfell,
respectively.
NEW PORTFOLIO ADVISORY AGREEMENT
The New Portfolio Advisory Agreement was approved (subject to approval
by the Shareholders) by the Trust's Trustees, including the Trustees who
were not "interested persons", on February 14, 1997. The terms of the New
Portfolio Advisory Agreement are substantially identical to the terms of
the Harbor Agreement, except for the fee arrangement and the affiliated
brokerage provisions. The terms of the New Portfolio Advisory Agreement
are also substantially identical to the Morgan Grenfell Agreement, except
as follows: (1) Each agreement has a different fee arrangement. (2) The
New Portfolio Advisory Agreement contains the affiliated brokerage
provisions. (3) The Morgan Grenfell Agreement provides that the Advisor
will indemnify Morgan Grenfell under certain circumstances, while the New
Portfolio Advisory Agreement has no indemnification clause. (4) The New
Portfolio Advisory Agreement states that OpCap (the "Portfolio Advisor")
may pay a broker or dealer who provides research services to the Portfolio
a commission for effecting a portfolio transaction higher than the
commission another broker or dealer would have charged if, in addition to
the satisfaction of other conditions, the Portfolio derives or will derive
a significant benefit from such research services (a "significant benefit
clause"). The Morgan Grenfell Agreement does not contain a significant
benefit clause. The description of the New Portfolio Advisory Agreement
set forth in this Proxy Statement is qualified in its entirety by
reference to Exhibit A.
Under the New Portfolio Advisory Agreement, the Portfolio Advisor will
manage the investment and reinvestment of both the fixed income and equity
assets of the Portfolio, subject to and in accordance with the investment
objectives, policies and restrictions of the Portfolio and any directions
which the Advisor or the Trust's Board of Trustees may give from time to
time with respect to the Portfolio. In this regard, the Portfolio Advisor
will make all determinations with respect to the investment of the
Portfolio's assets and the purchase and sale of
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portfolio securities. In addition, the Portfolio Advisor will determine
the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Portfolio's securities will be
exercised. The Portfolio Advisor will render regular reports to the
Trust's Board of Trustees, to the Advisor and to any advisor(s) that the
Advisor engages to assist it in evaluating the Portfolio Advisor's
performance and activities.
The New Portfolio Advisory Agreement states that the Portfolio
Advisor's primary objective when placing orders with brokers and dealers
will be to obtain the most favorable price and execution available for the
Portfolio. In placing such orders the Portfolio Advisor may consider a
number of factors, including, without limitation, the overall direct net
economic result to the Portfolio (including commissions, which may not be
the lowest available but ordinarily should not be higher than the
generally prevailing competitive range), the financial strength and
stability of the broker, the efficiency with which the transaction will be
effected, the ability to effect the transaction at all where a large block
is involved, and the availability of the broker or dealer to stand ready
to execute possibly difficult transactions in the future. The Portfolio
Advisor is specifically authorized, to the extent authorized by law, to
pay a broker or dealer who provides research services to the Portfolio
Advisor an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have
charged for effecting such transaction, in recognition of such additional
research services rendered by the broker or dealer. However, such payment
is permissible only if the Portfolio Advisor determines in good faith that
the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer and that
the Portfolio derives or will derive a reasonably significant benefit from
such research services.
The New Portfolio Advisory Agreement will continue in effect until May
1, 1998, and it will continue thereafter provided that such continuance is
specifically approved by the Advisor and the Portfolio Advisor and, in
addition, at least annually by (1) the vote of the holders of a majority
of the outstanding voting securities of the Portfolio or by vote of a
majority of the Trust's Board of Trustees and (2) by the vote of a
majority of the Trustees of the Trust who are not parties to the New
Portfolio Advisory Agreement or interested persons of either the Advisor
or the Portfolio Advisor, cast in person at a meeting called for the
purpose of voting on such approval.
The New Portfolio Advisory Agreement may be terminated at any time,
without payment of any penalty, (1) by the Advisor, by the Trust's Board
of Trustees or by a vote of the majority of the outstanding voting
securities of the Portfolio, in any such case upon at least 60 days' prior
written notice to the Portfolio Advisor, and (2) by the Portfolio Advisor
upon at least 60 days' prior written notice to the Advisor and the Trust.
The New Portfolio Advisory Agreement terminates automatically in the event
of its assignment.
The New Portfolio Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties under the New Portfolio Advisory Agreement on the
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part of the Portfolio Advisor, the Portfolio Advisor will not be subject
to liability to the Advisor, the Trust or to any holder of an interest in
the Portfolio for any act or omission in the course of, or connected with,
rendering services under the New Portfolio Advisory Agreement or for any
losses that may be sustained in the purchase, holding or sale of any
security.
The Advisor pays the fees earned by the Portfolio Advisor with respect
to its management of the Portfolio's assets. As compensation for its
services, the Portfolio Advisor will be paid a monthly fee equal on an
annual basis to 0.60% of the first $20 million of average daily net assets
of the Combined Portfolios (as hereinafter defined), 0.50% of the next $30
million of average daily net assets of the Combined Portfolios, and 0.40%
thereafter. "Combined Portfolios" means the combined assets of the
Portfolio, Touchstone Balanced Fund A (a series of Select Advisors Trust
A), and Touchstone Balanced Fund C (a series of Select Advisors Trust C),
all of which will be served by the Portfolio Advisor in its investment
advisory capacity.
INFORMATION ABOUT OPCAP
OpCap is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment adviser with approximately $50.6 billion in assets
under management on January 31, 1997. Oppenheimer Financial Corp.
("Opfin"), a holding company, is a 1.0% general partner of OpCap. Opfin
also holds a one-third managing general partner interest in Oppenheimer
Capital, and Oppenheimer Capital, L.P., a Delaware limited partnership
whose units are traded on the New York Stock Exchange and of which Opfin
is the sole 1.0% general partner, owns the remaining two-thirds interest.
On February 13, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a
registered investment adviser with approximately $110 billion in assets
under management through various subsidiaries, signed an Agreement and
Plan of Merger with Oppenheimer Group, Inc. ("OGI") and its subsidiary
Opfin pursuant to which PIMCO Advisors and its affiliate, Thomson Advisory
Group Inc. ("TAG"), will acquire the one-third managing general partner
interest in Oppenheimer Capital, its 1.0% general partnership interest in
OpCap, and its 1.0% general partner interest in Oppenheimer Capital L.P.
(the "Transaction") and OGI will be merged with and into TAG. The
aggregate purchase price is approximately $265 million in convertible
preferred stock of TAG and assumption of certain indebtedness. The amount
of TAG preferred stock comprising the purchase price is subject to
reduction in certain circumstances. The Transaction is subject to certain
conditions being satisfied prior to closing, including consents from
certain lenders, approvals from regulatory authorities, including a
favorable tax ruling from the Internal Revenue Service, and consents of
certain clients, which are expected to take up to six months to obtain. If
the Transaction is consummated, it will involve a change in control of
Oppenheimer Capital and its subsidiary OpCap.
The principal business address of OpCap, Oppenheimer Capital and their
affiliates is Oppenheimer Tower, 200 Liberty Street, One World Financial
Center, New York, New York 10281. The principal business address of OpCap
would not change following the Transaction. Joseph La
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Motta is Chairman of Oppenheimer Capital and OpCap. George Long is
President of Oppenheimer Capital and Bernard H. Garil is President of
OpCap.
Alan Gutmann will be primarily responsible for the day-to-day
investment management of the equity portion of the Portfolio and Matthew
Greenwald will be primarily responsible for the day-to-day investment
management of the fixed-income portion of the Portfolio. Mr. Gutmann
joined Oppenheimer in 1991 and is Vice President. Mr. Greenwald joined
Oppenheimer in 1989 and is a Vice President.
Please refer to Exhibit B to this Proxy Statement, which identifies all
investment companies which have investment objectives similar to those of
the Portfolio and for which OpCap acts as investment sub-advisor or
advisor. Exhibit B also provides the fees charged such investment
companies by OpCap, and the size of each such investment company.
EFFECTS OF THE TRANSACTION
Upon consummation of the Transaction, Oppenheimer Capital and OpCap
will be controlled by PIMCO Advisors. PIMCO Advisors has advised OGI that
it anticipates that the senior portfolio management team of Oppenheimer
Capital will continue in their present capacities; that the eligibility of
OpCap to serve as an investment adviser or subadviser will not be affected
by the Transaction; and that Oppenheimer Capital and OpCap will be able to
continue to provide advisory and management services with no material
changes in operating conditions. PIMCO Advisors has further advised OGI
that it currently anticipates that the Transaction will not affect the
ability of Oppenheimer Capital and OpCap to fulfill their obligations
under their investment advisory or subadvisory agreements.
EFFECT OF TRANSACTION ON NEW PORTFOLIO ADVISORY AGREEMENT
As required by the 1940 Act, the New Portfolio Advisory Agreement
provides for its automatic termination upon its "assignment." The 1940 Act
defines "assignment" to include any direct or indirect transfer of a
controlling block of the assignor's outstanding voting securities by a
security holder of the assignor. If the Transaction is consummated, it
will give rise to an "assignment" of the New Portfolio Advisory Agreement
and thus its termination.
If the Transaction is consummated and the New Portfolio Advisory
Agreement is terminated as a result, the Advisor and OpCap intend to enter
into an amendment (the "Transaction Amendment") to the New Portfolio
Advisory Agreement. The Transaction Amendment will not change any of the
terms of the New Portfolio Advisory Agreement, except for the effective
and termination dates.
The Transaction Amendment will be submitted for approval to the Trust's
Board of Trustees, including the Trustees who are not "interested
persons." The Transaction Amendment must also be approved by the vote of a
"majority of the outstanding voting securities" (as defined under
"Required Vote and Trustees' Recommendation" below) of the Portfolio. To
avoid the expense of another proxy solicitation and meeting of the
Shareholders, the vote of the Shareholders on the New Portfolio Advisory
Agreement will be deemed to be a vote on the Transaction Amendment. Thus,
upon consummation of the Transaction and approval of the Transaction
Amendment by the Trust's Board of Trustees, the Transaction Amendment will
become effective without any additional vote of the Shareholders.
INFORMATION CONCERNING PIMCO ADVISORS
PIMCO Advisors, with approximately $110 billion in assets under
management as of December 31, 1996, is one of the largest publicly traded
money management firms in the United States. PIMCO Advisors' address is
800 Newport Center Drive, Suite 100, Newport Beach, California 92660.
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PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively (and will at the closing of the Transaction own a majority of
the voting stock of TAG which owns approximately 14.94% and 25.06%,
respectively), of the total outstanding Class A and Class B units of
limited partnership interest ("Units") of PIMCO Advisors and is PIMCO
Advisors' sole general partner. PIMCO GP is a California general
partnership with two general partners. The first of these is an indirect
wholly-owned subsidiary of Pacific Mutual Life Insurance Company ("Pacific
Mutual").
PIMCO Partners L.L.C. ("PPLLC"), a California limited liability
company, is the second, and managing, general partner of PIMCO GP. PPLLC's
members are the Managing Directors (the "PIMCO Managers") of Pacific
Investment Management Company, a subsidiary of PIMCO Advisors (the "PIMCO
Subpartnership"). The PIMCO Managers are: William H. Gross, Dean S.
Meiling, James F. Muzzy, William F. Podlich, III, Frank B. Rabinovitch,
Brent R. Harris, John L. Hague, William S. Thompson, Jr., William C.
Powers, David H. Edington, Benjamin Trosky, William R. Benz, II and Lee R.
Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Governance matters are allocated generally to the Operating Board and the
Operating Board delegates to the Operating Committee the authority to
manage day-to-day operations of PIMCO Advisors. The Operating Board is
composed of twelve members, including the chief executive officer of the
PIMCO Subpartnership as Chairman and six PIMCO Managers designated by the
PIMCO Subpartnership.
The authority of PIMCO Advisors' Operating Board and Operating
Committee to take certain specified actions is subject to the approval of
PIMCO Advisors' Equity Board. Equity Board approval is required for
certain major transactions (e.g., issuance of additional PIMCO Advisors'
Units and appointment of PIMCO Advisors' chief executive officer). In
addition, the Equity Board has jurisdiction over matters such as actions
which would have a material effect upon PIMCO Advisors' business taken as
a whole and (after an appeal from an Operating Board decision) matters
likely to have a material adverse economic effect on any subpartnership of
PIMCO Advisors. The Equity Board is composed of twelve members, including
the chief executive officer of PIMCO Advisors, three members designated by
a subsidiary of Pacific Mutual, the chairman of the Operating Board and
two members designated by PPLLC.
Because of its power to appoint (directly or indirectly) seven of the
twelve members of the Operating Board as described above, the PIMCO
Subpartnership may be deemed to control PIMCO Advisors. Because of the
direct or indirect power to appoint 25% of the members of the Equity
Board, (i) Pacific Mutual and (ii) the PIMCO Managers and/or the PIMCO
Subpartnership may each be deemed, under applicable provisions of the 1940
Act, to control PIMCO Advisors. Pacific Mutual, PIMCO Subpartnership and
the PIMCO Managers disclaim such control.
PIMCO Advisors, OpCap, OGI and Oppenheimer Capital have agreed to
comply and use all commercially reasonable efforts to cause compliance
with the provisions of Section 15(f) of the 1940 Act. Section 15(f)
provides, in pertinent part, that an investment adviser and its
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affiliates may receive any amount or benefit in connection with a sale
of an interest in such investment adviser which results in an assignment
of an investment advisory contract if (1) for a period of three years
after the time of such event, 75% of the members of the Board of Trustees
or Directors of the investment company which it advises are not
"interested persons" (as defined in the 1940 Act) of the new or old
investment adviser, and (2) during the two-year period after the date on
which the transaction occurs, there is no "unfair burden" imposed on the
investment company as a result of the transaction. For this purpose,
"unfair burden" is defined to include any arrangement during the two-year
period after the transaction whereby the investment adviser or predecessor
or successor investment advisers, or any interested person of any such
adviser, receives or is entitled to receive any compensation directly or
indirectly (i) from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment
company other than bona fide ordinary compensation as principal
underwriter for such company, or (ii) from the investment company or its
security holders for other than bona fide investment advisory or other
services. No compensation arrangements of the types described above are
contemplated in the Transaction. The Trust's Board of Trustees does not
presently include any "interested persons" of OpCap or PIMCO Advisors. It
is anticipated that the Trust will comply with or be exempt from the 75%
requirement for the three-year period after the consummation of the
Transaction. In connection therewith an application requesting exemption
from the 75% requirement will be filed with the Securities and Exchange
Commission. There can be no assurance that such exemptive relief will be
granted.
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TRUSTEES' CONSIDERATION
The Board of Trustees of the Trust believes that the terms of the New
Portfolio Advisory Agreement are fair to, and in the best interest of, the
Portfolio and the Trust. The Trust's Board of Trustees, including the
non-interested Trustees voting separately, recommends approval by the
Shareholders of the New Portfolio Advisory Agreement between OpCap and the
Advisor. In making this recommendation, the Trustees considered the
efficiency of having only one portfolio advisor manage both the equity and
fixed income components of the Portfolio, rather than the existing two.
The Trustees then reviewed the nature and quality of the proposed services
to be provided by OpCap to the Portfolio, OpCap's past performance record
with respect to balanced accounts, the scope of OpCap's portfolio
management activities, OpCap's investment philosophy and process, and the
quality of OpCap's capabilities generally. The Trustees also examined the
background and experience of the various officers and managers of
Oppenheimer Capital, especially those who would have direct involvement in
the Portfolio's management. Fees charged by entities providing services
comparable to those of OpCap were also considered.
After a comprehensive review of the matter, the Board of Trustees of
the Trust concluded that the Portfolio should receive investment advisory
services under the New Portfolio Advisory Agreement equal or superior to
those it currently receives under the Existing Portfolio Advisory
Agreements.
AMENDMENT TO EXISTING INVESTMENT ADVISORY AGREEMENT
BACKGROUND
At the Meeting, Shareholders are being asked to approve an amendment
(the "Amendment") to the investment advisory agreement (the "Investment
Advisory Agreement"), dated September 9, 1994, between the Trust, on
behalf of the Portfolio, and the Advisor. The Amendment makes no change to
the Investment Advisory Agreement except to increase the fee paid to the
Advisor by the Trust, on behalf of the Portfolio. Shareholders of the
Portfolio would bear the expense of the increased
10
fee. However, a "cap" has been placed on each Portfolio's expenses by
the Advisor (currently effective through March 31, 1998). Unless the
expense cap is removed or unless the Portfolio's aggregate operating
expenses are less than the expense cap for a given fiscal year, the impact
of the proposed increase in advisory fees is eliminated with respect to
the Portfolio's Shareholders. (See footnote 1 set forth in "The Amendment"
below for further information regarding the expense cap.) A copy of the
Investment Advisory Agreement and the Amendment is set forth in Exhibit C
to this Proxy Statement.
THE INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement was approved by the initial investors
in the Portfolio on September 1, 1994, and was last approved by the
Trust's Board of Trustees, including the Trustees who were not "interested
persons", on December 19, 1996. Under the Investment Advisory Agreement,
the Advisor manages the investment and reinvestment of the Portfolio's
assets. In fulfilling this obligation, the Advisor may engage separate
portfolio advisors, such as OpCap, to make all determinations with respect
to the investment of the Portfolio's assets, and to effect the purchase
and sale of portfolio securities. The Investment Advisory Agreement
provides that services by a portfolio advisor will also include
determining the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio
securities will be exercised. Under the Investment Advisory Agreement, the
Advisor causes each portfolio advisor to render regular reports to the
Trust's Board of Trustees.
The Investment Advisory Agreement continues in effect until December
31, 1997, and it will continue thereafter provided that such continuance
is specifically approved by the Trust and the Advisor and, in addition, at
least annually by (1) the vote of holders of a majority of the outstanding
voting securities of the Portfolio or by vote of a majority of the Trust's
Board of Trustees, and (2) by the vote of a majority of the Trustees of
the Trust who are not parties to the Investment Advisory Agreement or
interested persons of the Advisor, cast in person at a meeting called for
the purpose of voting on such approval.
The Investment Advisory Agreement may be terminated at any time, with
respect to the Portfolio, without payment of any penalty, (1) by the
Trust's Board of Trustees or by a vote of the majority of the outstanding
voting securities of the Portfolio upon 60 days' prior written notice to
the Advisor and (2) by the Advisor upon 60 days' prior written notice to
the Trust.
The Investment Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties under the Investment Advisory Agreement on the part
of the Advisor, the Advisor will not be subject to liability to the Trust
or to any holder of an interest in the Portfolio for any act or omission
in the course of, or connected with, rendering services under the
Investment Advisory Agreement or for any losses that may be sustained in
the purchase, holding or sale of any security. Under certain
11
circumstances, the Trust will indemnify the Advisor against losses,
claims, damages, liabilities or expenses resulting from acts or omissions
of the Trust.
The Investment Advisory Agreement states that the Trust pays to the
Advisor, as compensation for its services as investment advisor, a fee
that is equal on an annual basis to 0.70% of the average daily net assets
of the Portfolio.
THE AMENDMENT
The Amendment was approved by the Trust's Board of Trustees, including
the Trustees who were not "interested persons," on February 14, 1997. The
Amendment proposes only to increase the fee paid by the Trust, on behalf
of the Portfolio, to the Advisor. If adopted, the Amendment would increase
the fee on an annual basis from 0.70% of average daily net assets of the
Portfolio to 0.80% of average daily net assets of the Portfolio. The
Amendment would not change the Investment Advisory Agreement in any other
respect.
--------------------------
For the fiscal year ended December 31, 1996, the following table
provides the operating expenses of the Portfolio, expressed as a
percentage of the Portfolio's average daily net assets. It does not
reflect separate account expenses, including sales loads. The table
considers both the current advisory fee paid to the Advisor and the
proposed increased advisory fee.
ANNUAL OPERATING EXPENSES OF THE PORTFOLIO
CURRENT FEES PROPOSED FEES
------------ -------------
Advisors Fee 0.70% 0.80%
Rule 12b-1 Fees - -
Other Expenses(1)
(after waiver and
reimbursement) 0.20% 0.10%
----- -----
Total Operating Expenses(1)
(after waiver and
reimbursement) 0.90% 0.90%
===== =====
-----------
(1) The "Total Operating Expenses" charged to the Portfolio will not
exceed the percentage listed above. The Advisor, in its capacity as
sponsor of the Trust, has agreed to waive or reimburse certain of the
Operating Expenses of the Portfolio (as used herein, "Operating Expenses"
includes amortization of organizational expenses but is exclusive of
interest, taxes, brokerage commissions and other portfolio transaction
expenses, capital expenditures and extraordinary expenses) such that,
after such waivers or reimbursements, the aggregate Operating Expenses of
the Portfolio will not exceed on an annual basis the "Total Operating
Expenses" listed above (the "Expense Cap"). The Expense Cap may be
12
terminated by the Advisor, in its capacity as sponsor, as of the end of
any calendar quarter after December 31, 1997, by giving at least 30 days
prior written notice, and the sponsor agreement will terminate with
respect to the Trust if the Advisor (or an affiliate that has assumed such
obligations) ceases to be the sponsor of the Trust or the Advisor of the
Trust. For the year ended December 31, 1996, without the Expense Cap and
assuming current fees, "Other Expenses" and "Total Operating Expenses"
would have been 2.02% and 2.72% for the Portfolio. For the year ended
December 31, 1996, without the Expense Cap and assuming proposed fees,
"Other Expenses" and "Total Operating Expenses" would have been 2.02% and
2.82% for the Portfolio.
------------------------
Based on expenses incurred for the year ended December 31, 1996, an
investor would pay the expenses set forth in the table below on a $1,000
investment, assuming (1) a 5% annual return, (2) the total operating
expense ratio set forth in the immediately preceding chart, and (3)
redemption at the end of each time period. The table considers both the
current advisory fee paid to the Advisor and the proposed increased
advisory fee. The table does not reflect separate account expenses,
including sales loads.
THE PORTFOLIO
-------------
CURRENT FEES PROPOSED FEES
------------ -------------
1 Year $ 9 $ 9
3 Years $29 $29
5 Years $50 $50
10 Years $111 $111
INFORMATION ABOUT THE ADVISOR
The Advisor is a wholly-owned subsidiary of IFS Financial Services,
Inc., which is a wholly-owned subsidiary of Western-Southern Life
Assurance Company, located at 400 Broadway, Cincinnati, Ohio 45202.
Western-Southern Life Assurance Company is a wholly-owned subsidiary of
The Western and Southern Life Insurance Company. As of December 31, 1996,
the Advisor had assets under management of $169.3 million. For the fiscal
year ended December 31, 1996, the Advisor received $29,360 from the Trust
(on behalf of the Portfolio) for its services as investment advisor. Had
the Amendment been in effect for that period, the Advisor would have
received $33,554 from the Trust (on behalf of the Portfolio) for its
services as investment advisor (an increase of 14.3% over the amount
actually received).
For the fiscal year ended December 31, 1996, the Advisor waived all
fees for its services as sponsor to the Trust. If such fees had not been
waived, the Trust, on behalf of the Portfolio, would have paid the
Advisor, for its role as sponsor, $29,360. Whether or not the Amendment is
approved by Shareholders, the Advisor will continue as Sponsor to the
Trust.
13
<TABLE>
<CAPTION>
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF THE ADVISOR
POSITIONS AND OFFICES
---------------------
NAME AND ADDRESS* WITH TOUCHSTONE ADVISORS PRINCIPAL OCCUPATION
----------------- ------------------------ --------------------
<S> <C> <C>
James N. Clark* Director Executive Vice President,
The Western and Southern
Life Insurance Company
Edward G. Harness, Jr. Director, President and
Chief Executive Officer same
William F. Ledwin* Director Senior Vice President,
The Western and Southern
Life Insurance Company
Donald J. Wuebbling* Director, Secretary
and Chief Legal Officer same
Edward S. Heenan* Vice President and Controller same
Brian Manley Vice President and Chief
Financial Officer same
Richard K. Taulbee* Vice President same
Patricia Wilson Chief Compliance Officer same
Robert F. Morand* Assistant Secretary Attorney, The Western and
Southern Life Insurance
Company
Robert A. Dressman* Assistant Treasurer Attorney, The Western and
Southern Life Insurance
Company
Timothy D. Speed* Assistant Treasurer Assistant Vice President,
The Western and Southern
------------------ Life Insurance Company
</TABLE>
*Principal business address is 400 Broadway, Cincinnati, Ohio 45202
TRUSTEES' CONSIDERATION
The Board of Trustees of the Trust believes that the terms of the
Amendment are fair to, and in the best interest of, the Portfolio and the
Trust. The Trust's Board of Trustees, including the non-interested
Trustees voting separately, recommends approval by the Shareholders of the
Amendment. In making this recommendation, the Trustees considered the
nature and quality of the services that the Advisor has provided to the
Portfolio, the fees charged by investment advisors providing services
comparable to those of the Advisor, and the fees that would be charged to
the Advisor by OpCap, if it is selected as a portfolio advisor. After
consideration of the matter, the Board of Trustees concluded that the fee
increase proposed in the Amendment was appropriate.
REQUIRED VOTE AND TRUSTEES' RECOMMENDATION
At the Meeting, the Shareholders of the Portfolio will vote on the
proposal regarding the proposed New Portfolio Advisory Agreement and the
proposed Amendment. The affirmative vote of the holders of a "majority of
the outstanding voting securities" of the Portfolio is required to approve
the proposal. "Majority of the outstanding voting securities" of the
Portfolio for this purpose under the 1940 Act means the lesser of (1)
14
67% of the securities of the Portfolio present, if more than 50% of the
outstanding securities of the Portfolio are represented and voting, or (2)
more than 50% of such outstanding securities.
If a Shareholder abstains, the shares represented will be counted as
present and entitled to vote on the matter for purposes of determining a
quorum at the Meeting, but the abstention will have the effect of a
negative vote on the proposal. If a broker indicates on the form of proxy
that it does not have discretionary authority as to certain shares, those
shares will be counted as present at the meeting for quorum purposes but
not entitled to vote with respect to the proposal and thus will also have
the effect of a negative vote on the proposal.
Each shareholder vote for or against the proposal is effectively a vote
for or against three separate but interdependent matters: (1) the proposed
New Portfolio Adisory Agreement with OpCap, (2) the Transaction Amendment
to be effective upon consumation of the transaction involving OpCap and
PIMCO Advisors, and (3) the proposed Amendment to the Investment Advisory
Agreement with the Advisor. These matters are being presented to the
Shareholders as one proposal because they are interdependent, such that
the failure of any one part of the proposal would render the other two
parts moot. Accordingly, if a shareholder disagrees with any part of the
proposal, the shareholder should vote against the proposal.
Western-Southern Life Assurance Company owns 35.16% of the outstanding
voting securities of the Portfolio and has indicated that it intends to
vote for the proposal.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR
OF THE PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of March 12, 1997, the following persons were beneficial owners of
more than 5% of the outstanding shares of the Portfolio:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
<S> <C> <C>
Western-Southern Life 230,413.805 35.16%
Assurance Company
400 Broadway
Cincinnati, Ohio 45202
Western-Southern Life Assurance 419,894.744 64.08%*
Company Separate Account No. 1
400 Broadway
Cincinnati, Ohio 45202
Western-Southern Life Assurance 5,005.559 0.76%*
Company Separate Account No. 2
400 Broadway
Cincinnati, Ohio 45202
* Shares held by Separate Account No. 1 and Separate Account No. 2 will be
voted in accordance with instructions received from Contract Owners. For
additional information see introductory material at pages 1 and 2 of this
Proxy Statement.
</TABLE>
To the knowledge of the Trust, no other Shareholder beneficially owned
more than 5% of the outstanding shares of the Portfolio as of March 12,
1997.
As of March 12, 1997, the Trustees and officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the
Portfolio.
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
The Trust's management 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.
PORTFOLIO TRANSACTIONS
The Portfolio does not allocate its portfolio brokerage on the basis of
the sale of its shares, although brokerage firms whose customers purchase
shares of the Portfolio may participate in brokerage commissions.
Brokerage transactions are not placed with any person affiliated with the
Trust or the Advisor. OpCap will place brokerage
15
transactions with Opco, an affiliate of OpCap. Opco may be a major
recipient of brokerage commissions paid by the Portfolio.
SHAREHOLDER PROPOSALS
The Meeting is a special meeting of Shareholders. The Trust is not
required to, nor does it intend to, hold regular annual meetings of its
shareholders. If such a meeting is called, any shareholder who wishes to
submit a proposal for consideration at the meeting should submit the
proposal promptly to the Trust.
REPORTS TO SHAREHOLDERS
The Trust will furnish, without charge, a copy of the most recent
Annual Report to Shareholders of the Portfolio on request within three
business days of the request. Requests for such reports should be made by
telephone by calling (800) 669-2796 (press 3) or in writing to the Trust,
311 Pike Street, Cincinnati, Ohio 45202.
OPCAP AND PIMCO ADVISORS INFORMATION
All information contained in this Proxy Statement about OpCap and the
Transaction has been provided by OpCap, and all information contained in
this Proxy Statement about PIMCO Advisors has been provided by PIMCO
Advisors.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees
Susan C. Mosher
Secretary
April 4, 1997
Cincinnati, Ohio
16
EXHIBIT A
PORTFOLIO ADVISORY AGREEMENT
SELECT ADVISORS VARIABLE INSURANCE TRUST BALANCED PORTFOLIO
This PORTFOLIO ADVISORY AGREEMENT is made as of the ____ day of
________, 1997, by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation
(the "Advisor"), and OpCap Advisors (the "Portfolio Advisor"), a subsidiary of
Oppenheimer Capital, a Delaware general partnership.
WHEREAS, the Advisor has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940, as amended, and
has been retained by Select Advisors Variable Insurance Trust (the "Trust"), a
Massachusetts business trust organized pursuant to a Declaration of Trust dated
February 7, 1994 and registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act") to provide investment
advisory services to the Balanced Portfolio (herein the "Portfolio"); and
WHEREAS, the Portfolio Advisor also is an investment advisor registered
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Portfolio Advisor to furnish
it with portfolio management services in connection with the Advisor's
investment advisory activities on behalf of the Portfolio, and the Portfolio
Advisor is willing to furnish such services to the Advisor and the Portfolio;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE PORTFOLIO ADVISOR. In accordance with and subject
to the Investment Advisory Agreement between the Trust and the Advisor, attached
hereto as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Portfolio Advisor to manage the investment and reinvestment of those assets of
the Portfolio allocated to it by the Advisor (the "Portfolio Assets"), subject
to the control and direction of the Advisor and the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Portfolio Advisor
hereby accepts such employment and agrees during such period to render the
services and to perform the duties called for by this Agreement for the
compensation herein provided. The Portfolio Advisor shall at all times maintain
its registration as an investment advisor under the Investment Advisers Act of
1940 and shall otherwise comply in all material respects with all applicable
laws and regulations, both state and federal. The Portfolio Advisor shall for
all purposes herein be deemed an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust or the Portfolio.
2. DUTIES OF THE PORTFOLIO ADVISOR. The Portfolio Advisor will
provide the following services and undertake the following duties:
a. The Portfolio Advisor will manage the investment and
reinvestment of the assets of the Portfolio Assets, subject to and in
accordance with the investment objectives, policies and restrictions of
the Portfolio and any directions which the Advisor or the Trust's Board
of Trustees may give from time to time with respect to the Portfolio.
In furtherance of the foregoing, the Portfolio Advisor will make all
determinations with respect to the investment of the assets of the
Portfolio and the purchase and sale of portfolio securities and shall
take such steps as may be necessary or advisable to implement the same.
The Portfolio Advisor also will determine the manner in which voting
rights, rights to consent to corporate action and any other rights
pertaining to the portfolio securities will be exercised. The Portfolio
Advisor will render regular reports to the Trust's Board of Trustees,
to the Advisor and to RogersCasey Consulting, Inc. (or such other
advisor or advisors as the Advisor shall engage to assist it in the
evaluation of the performance and activities of the Portfolio Advisor).
Such reports shall be made in such form and manner and with respect to
such matters regarding the Portfolio and the Portfolio Advisor as the
Trust, the Advisor or RogersCasey Consulting, Inc. shall from time to
time request.
b. The Portfolio Advisor shall provide support to the Advisor
with respect to the marketing of the Portfolio, including but not
limited to: (i) permission to use the Portfolio Advisor's name as
provided in Section 5, (ii) permission to use the past performance and
investment history of the Portfolio Advisor as the same is applicable
to the Portfolio, and (iii) access to the individual(s) responsible for
day-to-day management of the Portfolio for marketing conferences,
teleconferences and other activities involving the promotion of the
Portfolio, subject to the reasonable request of the Advisor, (iv)
permission to use biographical and historical data of the Portfolio
Advisor and individual manager(s), and (v) permission to use the names
of clients to which the Portfolio Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
c. The Portfolio Advisor will, in the name of the Portfolio,
place orders for the execution of all portfolio transactions in
accordance with the policies with respect thereto set forth in the
Trust's registration statements under the 1940 Act and the Securities
Act of 1933, as such registration statements may be in effect from time
to time. In connection with the placement of orders for the execution
of portfolio transactions, the Portfolio Advisor will create and
maintain all necessary brokerage records of the Portfolio in accordance
with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act. All
records shall be the property of the Trust and shall be available for
inspection and use by the Securities and Exchange Commission (the
"SEC"), the Trust or any person retained by the Trust. Where
applicable, such records shall be maintained by the Advisor for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
When placing orders with brokers and
dealers, the Portfolio Advisor's primary objective shall be to obtain
the most favorable price and execution available for the Portfolio, and
in placing such orders the Portfolio Advisor may consider a number of
factors, including, without limitation, the overall direct net economic
result to the Portfolio (including commissions, which may not be the
lowest available but ordinarily should not be higher than the generally
prevailing competitive range), the financial strength and stability of
the broker, the efficiency with which the transaction will be effected,
the ability to effect the transaction at all where a large block is
involved and the availability of the broker or dealer to stand ready to
execute possibly difficult transactions in the future. The Portfolio
Advisor is specifically authorized, to the extent authorized by law
(including, without limitation, Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to pay a broker
or dealer who provides research services to the Portfolio Advisor an
amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged
for effecting such transaction, in recognition of such additional
research services rendered by the broker or dealer, but only if the
Portfolio Advisor determines in good faith that the excess commission
is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of the
particular transaction or the Portfolio Advisor's overall
responsibilities with respect to discretionary accounts that it
manages, and that the Portfolio derives or will derive a reasonably
significant benefit from such research services. The Portfolio Advisor
will present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information
as the Board of Trustees reasonably shall request.
d. The Advisor recognizes that, subject to the foregoing
provisions of this Section 2 Oppenheimer Co. Inc. ("Opco"), an
affiliate of the Portfolio Advisor, will act as the regular broker for
the portfolio so long as it is lawful for it so to act and that Opco
may be a major recipient of brokerage commissions paid by the
portfolio. Opco may effect securities transactions for the portfolio
only if (1) the commissions, fees or other remuneration received or to
be received by it are reasonable and fair compared to the commissions,
fees or other remuneration received by other brokers in connection with
comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time and
(2) the Trustees, including a majority of those Trustees who are not
interested persons, have adopted procedures pursuant to Rule 17e-1
under the 1940 Act for determining the permissible level of such
commissions.
e. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the Portfolio
Advisor or its affiliates, the transactions generally will be executed
as received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its order
executed first, (ii) although all orders placed on behalf of the
Portfolio will be considered free trades, having an order placed first
in the market does not necessarily guarantee the most favorable price,
and (iii) purchases will be combined where possible for the purpose of
negotiating brokerage
commissions, which in some cases might have a detrimental effect on the
price or volume of the security in a particular transaction as far as
the Portfolio is concerned.
f. In the event of any reorganization or other change in the
Portfolio Advisor, its investment principals, supervisors or members of
its investment (or comparable) committee, the Portfolio Advisor shall
give the Advisor and the Trust's Board of Trustees written notice of
such reorganization or change within a reasonable time (but not later
than 30 days) after such reorganization or change.
g. The Portfolio Advisor will bear its expenses of providing
services to the Portfolio pursuant to this Agreement except such
expenses as are undertaken by the Advisor or the Trust.
h. The Portfolio Advisor will manage the Portfolio Assets and
the investment and reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
3. COMPENSATION OF THE PORTFOLIO ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Portfolio Advisor, the Advisor will pay to
the Portfolio Advisor a monthly fee equal on an annual basis to 0.60%
of the first $20 million of the average daily net assets of the
Combined Portfolios, 0.50% of such average daily net assets in excess
of $20 million and up to $50 million and 0.40% of such average daily
net assets in excess of $50 million.
b. "Combined Portfolios," for purposes of this Section 3,
means the combined assets of the Portfolio and the Balanced Portfolio
of the Select Advisors Variable Trust, to which portfolio the Portfolio
Advisor also acts as investment advisor.
c. The fee of the Portfolio Advisor hereunder shall be
computed and accrued daily. If the Portfolio Advisor serves in such
capacity for less than the whole of any period specified in Section 3a,
the fee to the Portfolio Advisor shall be prorated. For purposes of
calculating the Portfolio Advisor's fee, the daily value of the net
assets of the Combined Portfolios shall be computed by the same method
as the Trust and the Select Advisors Variable Insurance Trust use,
respectively, to compute the net asset value of each such Portfolio for
purposes of purchases and redemptions of interests thereof.
d. The Portfolio Advisor reserves the right to waive all or a
part of its fees hereunder.
4. ACTIVITIES OF THE PORTFOLIO ADVISOR. It is understood that the
Portfolio Advisor may perform investment advisory services for various other
clients, including other
investment companies. The Portfolio Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Portfolio Advisor, (ii) the nature and amount of transactions
affecting the Portfolio that involve the Portfolio Advisor and affiliates of the
Portfolio Advisor, (iii) information regarding any potential conflicts of
interest arising by reason of its continuing provision of advisory services to
the Portfolio and to its other accounts, and (iv) such other information as the
Board of Trustees shall reasonably request regarding the Portfolio, the
Portfolio's performance, the services provided by the Portfolio Advisor to the
Portfolio as compared to its other accounts and the plans of, and the capability
of, the Portfolio Advisor with respect to providing future services to the
Portfolio and its other accounts. At least annually, the Portfolio Advisor shall
report to the Trustees the total number and type of such other accounts and the
approximate total asset value thereof (but not the identities of the beneficial
owners of such accounts). The Portfolio Advisor agrees to submit to the Trust a
statement defining its policies with respect to the allocation of business among
the Portfolio and its other clients.
It is understood that the Portfolio Advisor may become interested in
the Trust as an interest holder or otherwise.
The Portfolio Advisor has supplied to the Advisor and the Trust copies
of its Form ADV with all exhibits and attachments thereto (including the
Portfolio Advisor's statement of financial condition) and will hereafter supply
to the Advisor, promptly upon the preparation thereof, copies of all amendments
or restatements of such document.
Nothing in this Agreement shall prevent the Portfolio Advisor, any
parent, subsidiary or affiliate, or any director or officer thereof, from acting
as investment advisor for any other person, firm, or corporation, and shall not
in any way limit or restrict the Portfolio Advisor or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or commodities for its or their own account or for the account of
others for whom it or they may be acting, if such activities will not adversely
affect or otherwise impair the performance by the Portfolio Advisor of its
duties and obligations under this Agreement. The Portfolio Advisor will (i)
supply to the Advisor, upon the execution of this Agreement, with a true copy of
its currently effective Code of Ethics and policies regarding insider trading
and (ii) thereafter supply to Advisor copies of any amendments to or
restatements of such Code of Ethics or insider trading policies, and (iii)
report to the Board of Trustees not less often than quarterly with respect to
any violations of such Code of Ethics or insider trading policies by persons
covered thereby to the extent that such violations involve the assets or
activities of the Portfolio.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the
name of the Portfolio Advisor in any prospectus, sales literature or other
material relating to the Advisor or the Trust in any manner not approved in
advance by the Portfolio Advisor; provided, however, that the Portfolio Advisor
will approve all uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and provided further, that in no event shall such approval be
unreasonably withheld. The
Portfolio Advisor shall not use the name of the Advisor or the Trust in any
material relating to the Portfolio Advisor in any manner not approved in advance
by the Advisor or the Trust, as the case may be; provided, however, that the
Advisor and the Trust shall each approve all uses of their respective names
which merely refer in accurate terms to the appointment of the Portfolio Advisor
hereunder or which are required by the SEC or a state securities commission;
and, provided further, that in no event shall such approval be unreasonably
withheld.
6. LIMITATION OF LIABILITY OF THE PORTFOLIO ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Portfolio Advisor, the Portfolio Advisor
shall not be subject to liability to the Advisor, the Trust or to any holder of
an interest in the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. As used in this
Section 6, the term "Portfolio Advisor" shall include the Portfolio Advisor
and/or any of its affiliates and the directors, officers and employees of the
Portfolio Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Portfolio Advisor acknowledges
that it has received notice of and accepts the limitations upon the Trust's
liability set forth in its Declaration of Trust. The Portfolio Advisor agrees
that (i) the Trust's obligations to the Portfolio Advisor under this Agreement
(or indirectly under the Advisory Agreement) shall be limited, in any event to
the assets of the Portfolio and (ii) the Portfolio Advisor shall not seek
satisfaction of any such obligation from the holders of interests in the
Portfolio nor from any Trustee, officer, employee or agent of the Trust.
8. FORCE MAJEURE. The Portfolio Advisor shall not be liable for delays
or errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Portfolio Advisor shall take reasonable steps to
minimize service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of 12 months from the
date hereof; and it shall continue thereafter provided that such
continuance is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Portfolio or
by vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the Portfolio
Advisor, cast in person at a meeting called for the purpose of voting
on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority
of the outstanding voting securities of the Portfolio, in any such case
upon not less than 60 days' prior written notice to the Portfolio
Advisor and (ii) by the Portfolio Advisor upon not less than 60 days'
prior written notice to the Advisor and the Trust. This Agreement shall
terminate automatically in the event of its assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Portfolio affected
by such change.
d. The terms "assignment," "interested persons" and "majority"
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or
shall be found to be invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and that of the Advisor
for this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Portfolio Advisor shall be 225 Liberty Street, 16th Floor, New
York, New York 10281.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
BY _____________________________
Edward G. Harness, Jr.
President
Attest:
- -------------------------
Secretary
OPCAP ADVISORS
BY _____________________________
Name, President
Attest:
- -------------------------
Secretary
EXHIBIT B
The registered investment companies listed below are managed by OpCap
Advisors and have similar investment objectives to the Portfolio:
<TABLE>
<CAPTION>
<S> <C> <C>
FUND APPROXIMATE NET ASSETS ADVISORY FEE RATE
(AS OF 3/17/97)
Oppenheimer Quest $2,632,362,436 1.0% on the first $400 million;
Opportunity Value Fund1 .90% on the next $400 million;
.85% of net assets in excess of
$800 million
Oppenheimer Quest Growth $ 72,726,176 .85% of net assets
& Income Value Fund1
Enterprise Accumulation $2,108,010,440 .40% on the first $1 billion; .30%
Trust: on assets over $1 billion(2)
Managed Portfolio
Enterprise Group of Funds $249,013,537 .40% on the first $100 million;
Managed Portfolio .30% on assets in excess of $100
million(3)
Endeavor Series Trust: $4,518,408 .40%(4)
Opportunity Value
Portfolio
OCC Accumulation Trust: $214,452,435 .80% on the first $400 million;
Managed Portfolio .75% on the next $400 million;
.70% of net assets in excess of
$800 million(5)
WNL Series Trust:
Elite Value Asset $2,756,931 .40%(6)
Allocation Portfolio
</TABLE>
1 With respect to each of these funds, Oppenheimer Funds, Inc. ("OFI") is the
investment adviser and OpCap Advisors is the sub-adviser. OFI pays OpCap
Advisors monthly an annual fee based on the average daily net assets of the fund
as of November 22, 1995 (the
"base amount") plus 30% of the investment advisory fee collected by OFI based on
the total net assets of the fund that exceed the base amount.
2This fee is for investment advisory services only. Management services are
provided to the portfolios by a third party, not OpCap Advisors. The Manager,
who pays the investment advisory fee to OpCap Advisors, receives a management
fee, on an annual basis, of 0.80% of the first $400 million of average daily net
assets; .75% on the next $400 million and .70% on assets above $800 million of
the portfolio.
3 This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.75% of the average daily net assets of the portfolio.
4 This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.80% of average daily net assets of the portfolio. OpCap Advisors has agreed to
waive its fee until the assets of the portfolio are $25 million or until six
months after the inception date of the portfolio.
5 OpCap Advisors has agreed to waive its fee and reimburse expenses so that
operating expenses (net of any expense offsets) do not exceed 1.25% of the
portfolio's average daily net assets and on a voluntary basis, until December
31, 1997, so that expenses do not exceed 1.00% of the portfolio's average daily
net assets..
6 This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.65% of the average daily net assets of the portfolio.
EXHIBIT C
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of ________________, 1994, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
SELECT ADVISORS VARIABLE INSURANCE TRUST, a Massachusetts business trust created
pursuant to a Declaration of Trust dated February 7, 1994, as amended from time
to time (the "Trust").
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act"); and
WHEREAS, shares of beneficial in the Trust are divided into separate
series (each, along with any series which may in the future be established, a
"Portfolio"); and
WHEREAS, the Trust desires to avail itself of the services,
information, advice, assistance and facilities of an investment advisor and to
have an investment advisor perform for it various investment advisory and
research services and other management services; and
WHEREAS, the Advisor is an investment Advisor registered under the
Investment Advisers Act of 1940, as amended, and desires to provide investment
advisory services to the Trust;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE ADVISOR. The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Portfolio subject
to the control and direction of the Trust's Board of Trustees, for the period on
the terms hereinafter set forth. The Advisor hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. In
providing the services and assuming the obligations set forth herein, the
Advisor may, at its expense, employ one or more subadvisors for any Portfolio.
Any agreement between the Advisor and a subadvisor shall be subject to the
renewal, termination and amendment provisions of paragraph 10 hereof. The
Advisor undertakes to provide the following services and to assume the following
obligations:
a) The Advisor will manage the investment and reinvestment
of the assets of each Portfolio, subject to and in
accordance with the respective investment objectives and
policies of each Portfolio and any directions which the
Trust's Board of Trustees may issue from time to time.
In pursuance of the foregoing, the Advisor may engage
separate investment advisors ("Portfolio Advisor(s)") to
make all determinations with respect to the investment
of the assets of each Portfolio, to effect the purchase
and sale of portfolio securities and to take such steps
as may be necessary to implement the same. Such
determination and services by each Portfolio Advisor
shall also include determining the manner in which
voting rights, rights to consent to corporate action and
any other rights pertaining to the portfolio securities
shall be exercised. The Advisor shall, and shall cause
each Portfolio Advisor to, render regular reports to the
Trust's Board of Trustees concerning the Trust's and
each Portfolio's investment activities.
b) The Advisor shall, or shall cause the respective
Portfolio Advisor(s) to place orders for the execution
of all portfolio transactions, in the name of the
respective Portfolio and in accordance with the policies
with respect thereto set forth in the Trust's
registration statements under the 1940 Act and the
Securities Act of 1933, as such registration statements
may be amended from time to time. In connection with the
placement of orders for the execution of portfolio
transactions, the Advisor shall create and maintain (or
cause the Portfolio Advisors to create and maintain) all
necessary brokerage records for each Portfolio, which
records shall comply with all applicable laws, rules and
regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records
shall be the property of the Trust and shall be
available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person
retained by the Trust. Where applicable, such records
shall be maintained by the Advisor (or Portfolio
Advisor) for the periods and in the places required by
Rule 31a-02 under the 1940 Act.
c. In the event of any reorganization or other change in
the Advisor, its investment principals, supervisors or
members of its investment (or comparable) committee, the
Advisor shall give the Trust's Board of Trustees written
notice of such reorganization or change within a
reasonable time (but not later than 30 days) after such
reorganization or change.
d) The Advisor shall bear its expenses of providing
services to the Trust pursuant to this Agreement except
such expenses as are undertaken by the Trust. In
addition, the Advisor shall pay the salaries and fees,
2
if any, of all Trustees, officers and employees of the
Trust who are affiliated persons, as defined in Section
2(a)(3) of the 1940 Act, of the Advisor.
e) The Advisor will manage, or will cause the Portfolio
Advisors to manage, the Portfolio Assets and the
investment and reinvestment of such assets so as to
comply with the provisions of the 1940 Act and with
Subchapter M of the Internal Revenue Code of 1986, as
amended.
3. EXPENSES. The Trust shall pay the expenses of its operation,
including but not limited to (i) charges and expenses for Trust accounting,
pricing and appraisal services and related overhead, (ii) the charges and
expenses of the Portfolio's auditor's; (iii) the charges and expenses of any
custodian, transfer agent, plan agent, dividend disbursing agent and registrar
appointed by the Trust with respect to the Portfolios; (iv) brokers'
commissions, and issue and transfer taxes, chargeable to the Trust in connection
with securities transactions to which the Trust is a party; (v) insurance
premiums, interest charges, dues and fees for Trust membership in trade
associations and all taxes and fees payable by the Trust to federal, state or
other governmental agencies; (vi) fees and expenses involved in registering and
maintaining registrations of the Trust and/or shares of the Trust with the SEC,
state or blue sky securities agencies and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for filing
with the SEC; (vii) all expenses of meetings of Trustees and of shareholders of
the Trust and of preparing, printing and distributing prospectuses, notices,
proxy statements and all reports to shareholders and to governmental agencies;
(viii) charges and expenses of legal counsel to the Trust; (ix) compensation of
Trustees of the Trust; (x) the cost of preparing and printing share
certificates; and (xi) interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and
obligations assumed hereunder by the Advisor, the Trust
shall pay to the Advisor monthly a fee that is equal on
an annual basis to that percentage of the average daily
net assets of each Portfolio set forth on Schedule 1
attached hereto (and with respect to any future
Portfolio, such percentage as the Trust and the Advisor
may agree to from time to time). Such fee shall be
computed and accrued daily. If the Advisor serves as
investment advisor for less than the whole of any period
specified in this Section 4a, the compensation to the
Advisor shall be prorated. For purposes of calculating
the Advisor's fee, the daily value of each Portfolio's
net assets shall be computed by the same method as the
Trust uses to compute the net asset value of that
Portfolio.
3
b) The Advisor will pay all fees owing to each Portfolio
Advisor, and the Trust shall not be obligated to the
Portfolio Advisors in any manner with respect to the
compensation of such Portfolio Advisors.
c) The Advisor reserves the right to waive all or a part of
its fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Advisor as
stockholders, officers or otherwise, and that stockholders and officers of the
Advisor are or may become similarly interested in the Trust, and that the
Advisor may become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that, in consideration
of the Advisor's assumption of certain organization expenses of the Trust and of
the various Portfolios, the Advisor has reserved for itself the rights to the
name "Select Advisors Variable Insurance Trust (or any similar names) and that
use by the Trust of such name shall continue only with the continuing consent of
the Advisor, which consent may be withdrawn at any time, effective immediately,
upon written notice thereof to the Trust.
7. LIMITATION OF LIABILITY OF THE ADVISOR.
a. Absent willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of
the Advisor, the Advisor shall not be subject to liability to the Trust
or to any holder of an interest in any Portfolio for any act or
omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security. As used in this Section 7, the term
"Advisor" shall include Touchstone Advisors, Inc. and/or any of its
affiliates and the directors, officers and employees of Touchstone
Advisors, Inc. and/or of its affiliates.
4
b. The Trust will indemnify the Advisor against, and hold it
harmless from, any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from acts or omissions of the Trust. Indemnification shall be made only
after: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Trust was liable for
the damages claimed or (ii) in the absence of such a decision, a
reasonable determination based upon a review of the facts, that the
Trust was liable for the damages claimed, which determination shall be
made by either (a) the vote of a majority of a quorum of Trustees of
the Trust who are neither "interested persons" of the Trust nor parties
to the proceeding ("disinterested non-party Trustees") or (b) an
independent legal counsel satisfactory to the parties hereto, whose
determination shall be set forth in a written opinion. The Advisor
shall be entitled to advances from the Trust for payment of the
reasonable expenses incurred by it in connection with the matter as to
which it is seeking indemnification in the manner and to the fullest
extent that would be permissible under the applicable provisions of the
General Corporation Law of Ohio. The Advisor shall provide to the Trust
a written affirmation of its good faith belief that the standard of
conduct necessary for indemnification under such law has been met and a
written undertaking to repay any such advance if it should ultimately
be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be
met: (a) the Advisor shall provide security in form and amount
acceptable to the Trust for its undertaking; (b) the Trust is insured
against losses arising by reason of the advance; or (c) a majority of a
quorum of the Trustees of the Trust, the members of which majority are
disinterested non-party Trustees, or independent legal counsel in a
written opinion, shall have determined, based on a review of facts
readily available to the Trust at the time the advance is proposed to
be made, that there is reason to believe that the Advisor will
ultimately be found to be entitled to indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the interests in any Portfolio nor from any Trustee,
officer, employee or agent of the Trust.
9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
5
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of
twelve months from the date hereof and it shall continue
indefinitely thereafter as to each Portfolio, provided
that such continuance is specifically approved by the
parties hereto and, in addition, at least annually by
(i) the vote of holders of a majority of the outstanding
voting securities of the affected Portfolio or by vote
of a majority of the Trust's Board of Trustees and (ii)
by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of the
Advisor, cast in person at a meeting called for the
purpose of voting on such approval.
b) This Agreement may be terminated at any time, with
respect to any Portfolio(s), without payment of any
penalty, by the Trust's Board of Trustees or by a vote
of the majority of the outstanding voting securities of
the affected Portfolio(s) upon 60 days' prior written
notice to the Advisor and by the Advisor upon 60 days'
prior written notice to the Trust.
c) This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of
Trustees and, if required by applicable SEC rules and
regulations, a vote of the majority of the outstanding
voting securities of any Portfolio affected by such
change. This Agreement shall terminate automatically in
the event of its assignment.
d) The terms "assignment," "interested persons" and
"majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the 1940
Act.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions, in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered inn their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Declaration of Trust, dated as of February 7, 1994, the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust individually, but bind only the Trust estate.
SELECT ADVISORS VARIABLE INSURANCE
TRUST
By ________________________________
Edward G. Harness, Jr., President
Attest:
- ---------------------------
TOUCHSTONE ADVISORS, INC.
By ________________________________
Jill T. McGruder, Vice President
Attest:
- ---------------------------
7
AMENDMENT NO. 1 TO INVESTMENT ADVISORY AGREEMENT
This Amendment No. 1 to Investment Advisory Agreement is dated as of
May 1, 1997 and amends the Investment Advisory Agreement (the "Advisory
Agreement") dated September 9, 1994 made by and between Touchstone Advisors,
Inc., an Ohio corporation (the "Advisor"), and Select Advisors Variable
Insurance Trust, a Massachusetts business trust created pursuant to a
Declaration of Trust dated ___________, 1994 (the "Trust").
WHEREAS, the Advisor acts as investment advisor to the Trust pursuant
to the Advisory Agreement; and in such capacity the Advisor has engaged separate
portfolio advisors for each of the Trust's portfolios; and
WHEREAS, the Trust, by its Board of Trustees, has taken action to
terminate, effective as of the close of business on April 30, 1997, Portfolio
Advisory Agreements presently in effect between the Advisor and Harbor Capital
Management Company, Inc. ("Harbor Capital") and Morgan Grenfell Capital
Management, Inc. ("Morgan Grenfell") with respect to the Trust's Balanced
Portfolio, each such Portfolio Advisory Agreement being dated as of September 9,
1994; and
WHEREAS, such Board of Trustees also has taken action to enter into a
Portfolio Advisory Agreement with Op Cap Advisors, a subsidiary of Oppenheimer
Capital, a registered investment advisor, under which Op Cap Advisors will act
as Portfolio Advisor to the Trust's Balanced Portfolio, replacing Harbor Capital
and Morgan Grenfell; and
WHEREAS, the advisory fees to be paid to Op Cap Advisors under such
Portfolio Advisory Agreement will be higher than the fees currently being paid
to Harbor Capital and Morgan Grenfell under their Portfolio Advisor Agreements;
and
WHEREAS, the trust is agreeable to an increase in the fees being paid
under the Advisory Agreement sufficient to offset the increase in fees to be
paid to Op Cap Advisors, having found that such increased fees are comparable to
the average fees being paid to advisors of balanced portfolios generally.
NOW, THEREFORE, Schedule 1 to the Advisory Agreement is hereby amended,
effective as of the close of business on April 30, 1997, to read as set forth in
Exhibit A to this Amendment, the sole change in such Schedule being an increase
in the advisory fees to be paid by the Balanced Portfolio, from 0.70% to 0.80%
of average daily net assets.
8
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered in their names and on their behalf as of the day and year
first above written.
SELECT ADVISORS VARIABLE
INSURANCE TRUST
By:_________________________________
Edward G. Harness, Jr., President
TOUCHSTONE ADVISORS INC.
By:____________________________________
9
Exhibit A to
Amendment No. 1 to
Advisory Agreement
SCHEDULE 1
Emerging Growth Portfolio 0.80%
International Equity Portfolio 0.95%
Balanced Portfolio 0.80%
Income Opportunity 0.65%
Standby Income 0.25%
10
TOUCHSTONE BALANCED PORTFOLIO
(A SEPARATE SERIES OF SELECT ADVISORS VARIABLE INSURANCE TRUST)
THIS SOLICITATION IS MADE ON BEHALF OF THE TRUSTEES OF
SELECT ADVISORS VARIABLE INSURANCE TRUST
The undersigned appoints Edward G. Harness, Jr. and Edward S. Heenan and
each of them, with full power of substitution, as attorneys and proxies of the
undersigned, and does thereby request that the votes attributable to the
undersigned be cast at the Meeting of Shareholders of the Touchstone Balanced
Portfolio ( a separate series of Select Advisors Variable Insurance Trust (the
"Trust")) to be held at 10:00 a.m. on April 23, 1997 at the offices of the
Trust, 311 Pike Street, Cincinnati, Ohio, and at any adjournment thereof. If a
proxy is not received from a particular shareholder, then the votes attributable
to him or her will be allocated in the same ratio as votes for which
instructions have been received.
- --------------------------------------------------------------------------------
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BELOW, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSAL BELOW.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE PROPOSAL.
PLEASE VOTE BY CHECKING YOUR RESPONSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Approval of New Portfolio Advisory Agreement between FOR [ ] AGAINST [ ] ABSTAIN [ ]
Touchstone Advisors, Inc. and OpCap Advisors and Amendment
to Investment Advisory Agreement between Select Advisors
Variable Insurance Trust, on behalf of the Touchstone
Balanced Portfolio, and Touchstone Advisors, Inc.
2. In their discretion, to act upon such other matters FOR [ ] AGAINST [ ] ABSTAIN [ ]
as may properly come before the meeting.
TOTAL SHARES ATTRIBUTABLE TO THE UNDERSIGNED:
</TABLE>
PLEASE VOTE, DATE, SIGN EXACTLY AS YOUR NAME
APPEARS BELOW, AND RETURN THIS FORM IN THE
ENCLOSED SELF-ADDRESSED ENVELOPE.
NOTE: The undersigned hereby acknowledges receipt of the Notice
of Meeting and Proxy Statement and revokes any proxy heretofore
given with respect to the votes covered by this proxy.
Dated: , 1997
--------------------------
- ---------------------------------------
Signature
- ---------------------------------------
Signature If Jointly Held
[WESTERN & SOUTHERN LETTERHEAD]
Dear Variable Annuity Contract Owner:
Enclosed you will find a proxy statement regarding the voting of shares
of the Touchstone Balanced Portfolio beneficially owned by you through your
Touchstone Variable Annuity Contract. Although the portfolio shares are legally
held by a Western & Southern Separate Account, the Company is obligated to vote
those shares as directed by you. Accordingly, please review the enclosed Proxy
Statement carefully and then give us your voting instructions by marking and
returning the proxy that is enclosed. An addressed and stamped envelope is
supplied for your convenience. We urge you to exercise your voting rights by
marking and returning the proxy.
Yours very truly,
