SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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
....................................................................
(Name of Registrant/s as Specified In Its Charter)
....................................................................
(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):
................................................................
4) Proposed maximum aggregate value of transaction:
................................................................
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:
............................................
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
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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
March __, 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 ________, 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
_______ 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,
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, 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 shareholders of the Portfolio on
___________, 199_ 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 the Portfolio Advisor under certain circumstances, while
the New Portfolio Advisory Agreement has no indemnification clause. (4)
The New Portfolio Advisory Agreement states that 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.
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 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
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 and it will
not include any such "interested persons" for the three-year period after
the consummation of the Transaction.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF OPCAP
OpCap's principal executive officers and directors are shown below.
Principal Occupation
Name and Address* (all positions are with Oppenheimer)
--------------------
* The address of the officers and directors of OpCap is Oppenheimer Tower,
One World Financial Center, New York, NY 10281.
[Each of ______________________ owns more than 10% of the outstanding
voting securities of OpCap.]
Alan Gutmann is primarily responsible for the day-to-day investment
management of the equity portion of the Portfolio and Matthew Greenwald is
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. Both OpCap's and Oppenheimer's principal executive
offices are located at Oppenheimer Tower, One World Financial Center, New
York, NY 10281.
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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. [Certain
advisory agreements for investment companies to which OpCap is a party
require or permit OpCap to reduce or waive its fees under certain
circumstances.]
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 also noted that, regardless of the appointment of OpCap,
Morgan Grenfell, as one of the two existing portfolio advisors, had
already indicated that it would be terminating its portfolio advisory
relationship with the Portfolio because of insufficient profit margins
from its management services to the Portfolio. The Trustees considered the
Advisor's concerns about the effectiveness of Harbor's management of the
equity portion of the Portfolio. 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 submitted to the Shareholders of
the Portfolio on December __________, 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 __________,
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 March 31, 1998, 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 $____. 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. Had the Amendment been in
effect and such fees had not been waived, the Trust, on behalf of the
Portfolio, would have paid the Advisor, for its role as sponsor, $_____.
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 ______________
Edward G. Harness, Jr. Director, President and
Chief Executive Officer same
William F. Ledwin* Director ______________
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 ________________
Robert A. Dressman* Assistant Treasurer ________________
Timothy D. Speed* Assistant Treasurer ________________
------------------
</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.
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 February 4, 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 _______ _____%
Assurance Company
400 Broadway
Cincinnati, Ohio 45202]
Trustees and Officers __ [*]
(as a group)
</TABLE>
To the knowledge of the Trust, no other Shareholder beneficially owned
more than 5% of the outstanding shares of the Portfolio as of the same
date.
* Percent of class is less than 1%.
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 Oppenheimer Co., Inc. ("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 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 has been provided by PIMCO.
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
March __, 1997
Cincinnati, Ohio
16
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,
