VARIABLE INVESTORS SERIES TRUST
2122 York Road
Oak Brook, Illinois 60523
June __, 1999
Dear Shareholder:
Warburg Pincus Asset Management, Inc. ("Warburg") is the sub-adviser to
the Growth & Income Portfolio (the "Portfolio") of the Variable Investors Series
Trust (the "Trust"). On February 15, 1999 the parent companies of Warburg
entered into an agreement with Credit Suisse Group ("Credit Suisse") pursuant to
which Credit Suisse will acquire Warburg. Following such acquisition, Credit
Suisse intends to combine Warburg with its existing U.S. asset management
business. As a result of this two-stage transaction, it is necessary for the
shareholders of the Portfolio to approve a new investment sub-advisory
agreement. The acquisition will not affect the current level of advisory
services provided to the Portfolio and the contractual advisory fee paid to the
new sub-adviser will remain the same.
THE BOARD OF TRUSTEES BELIEVES THAT THE PROPOSAL SET FORTH IN THE
NOTICE OF SPECIAL MEETING IS IMPORTANT AND RECOMMENDS THAT YOU READ THE ENCLOSED
MATERIALS CAREFULLY AND THEN VOTE FOR THE PROPOSAL.
Your vote is important. PLEASE TAKE A MOMENT NOW TO VOTE BY COMPLETING
AND RETURNING YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
Respectfully,
[ARNOLD R. BERGMAN SIGNATURE]
Arnold R. Bergman
Secretary
SHAREHOLDERS ARE URGED TO VOTE BY COMPLETING AND RETURNING THE PROXY CARD TO
ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF
YOUR SHAREHOLDINGS.
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that a Special Meeting of Shareholders (the "Special
Meeting") of the Growth & Income Portfolio (the "Portfolio") of Variable
Investors Series Trust (the "Trust") will be held at the offices of First
Variable Advisory Services Corp., 2122 York Road, Oak Brook, Illinois 60523, on
__________, 1999, at 10:00 a.m., local time, to approve or disapprove a new
investment sub-advisory agreement for the Portfolio between First Variable
Advisory Services Corp. and a direct or indirect U.S. investment advisory
subsidiary of Credit Suisse Group.
The appointed proxies, in their discretion, will vote on any other
business as may properly come before the Special Meeting or any adjournments
thereof.
Holders of record of shares of the Portfolio at the close of business
on __________, 1999 are entitled to vote at the Special Meeting and at any
adjournments thereof.
By order of the Board of Trustees,
[ARNOLD R. BERGMAN SIGNATURE]
Arnold R. Bergman
Secretary
June __, 1999
YOUR VOTE IS IMPORTANT! PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED
PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ACCOMPANYING POSTAGE PREPAID
ENVELOPE. IF YOU SIGN, DATE AND RETURN THE PROXY BUT GIVE NO VOTING INSTRUCTION,
YOUR SHARES WILL BE VOTED IN FAVOR OF THE PROPOSAL NOTICED ABOVE.
THE TRUST'S ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES AUDITED FINANCIAL
STATEMENTS OF THE PORTFOLIO AS OF DECEMBER 31, 1998, MAY BE OBTAINED WITHOUT
CHARGE BY CALLING (800) 228-1035 OR WRITING TO THE TRUST AT 2122 YORK ROAD, OAK
BROOK, ILLINOIS 60523.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY PROMPTLY.
THE TRUSTEES OF THE TRUST RECOMMEND THAT YOU CAST YOUR VOTE FOR APPROVAL OF THE
NEW INVESTMENT SUB-ADVISORY AGREEMENT.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
VARIABLE INVESTORS SERIES TRUST
GROWTH & INCOME PORTFOLIO
2122 York Road
Oak Brook, Illinois 60523
PROXY STATEMENT FOR THE SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD __________, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Board") of Variable Investors Series
Trust (the "Trust") for use at the Special Meeting of Shareholders of the Growth
& Income Portfolio (the "Portfolio"), to be held at the offices of First
Variable Advisory Services Corp., 2122 York Road, Oak Brook, Illinois 60523, on
__________, 1999 at 10:00 a.m., local time, and at any and all adjournments
thereof (the "Special Meeting").
VOTING
The Trust was established to be used exclusively as the underlying
investment for certain variable life insurance and variable annuity contracts
("Variable Contracts") offered by certain participating life insurance companies
through their separate accounts. First Variable Life Insurance Company ("First
Variable Life") is the only participating life insurance company in the
Portfolio and First Variable Life and certain of its separate accounts are the
only shareholders. Pursuant to current interpretations of the Investment Company
Act of 1940, as amended (the "1940 Act"), First Variable Life will solicit
voting instructions from owners of Variable Contracts (the "Contract Owners")
with respect to matters to be acted upon at the Special Meeting. All shares in
the Portfolio held by First Variable Life or one of its separate accounts will
be voted by First Variable Life in accordance with voting instructions received
from the Contract Owners. First Variable Life will vote all of the shares which
it is entitled to vote in the same proportion as the votes cast by the Contract
Owners on the issues presented, including shares which are attributable to
interests of First Variable Life and certain of its separate accounts in the
Portfolio. First Variable Life has fixed the close of business on __________,
1999 as the last day for which voting instructions will be accepted.
The proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of the Portfolio. The term "majority of the
outstanding voting securities" as defined in the 1940 Act, and as used in this
Proxy Statement, means: the affirmative vote of the lesser of (1) 67% of the
voting securities of the Portfolio present at the meeting if more than 50% of
the outstanding shares of the Portfolio are present in person or by proxy or (2)
more than 50% of the outstanding shares of the Portfolio.
2
If the accompanying form of proxy is properly executed and returned in
time to be voted at the Special Meeting, the shares covered thereby will be
voted by First Variable Life in accordance with the instructions marked thereon.
Executed proxies that are unmarked will be voted for the proposal to approve the
proposed New Sub-Advisory Agreement (defined below) for the Portfolio. Any proxy
may be revoked at any time prior to its exercise by a written notice of
revocation addressed to and received by the Secretary of the Trust, by
delivering a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person. The proposal being considered at the
Special Meeting will be approved only if a sufficient number of votes are cast
in favor of that proposal. Accordingly, votes to abstain and votes against will
have the same effect in determining whether the proposal is approved.
The Board has fixed the close of business on __________, 1999 as the
record date (the "Record Date") for the determination of shareholders entitled
to notice of and to a vote at the Special Meeting. Shareholders on the Record
Date will be entitled to one vote for each full share held and to a
proportionate fractional vote for each fractional share.
As of the Record Date, there were ___________ shares of the Portfolio
outstanding. As of the Record Date, all of the shares of the Portfolio were
owned by First Variable Life, First Variable Annuity Fund A, First Variable
Annuity Fund E, First Variable Annuity Fund M and First Variable Separate
Account VL. First Variable Annuity Funds A, E and M and First Variable Separate
Account VL are separate accounts of First Variable Life. Their shares will be
voted in accordance with voting instructions received from Contract Owners as
described above under "Voting." The amount owned beneficially by the officers
and Trustees of the Trust, as a group, is less than one percent of the
Portfolio's outstanding shares.
The Notice, this Proxy Statement and the accompanying proxy card will
be first mailed to shareholders on or about __________, 1999.
The purpose of the Special Meeting is to permit the Portfolio's
shareholders to consider a New Sub-Advisory Agreement (defined below).
The costs of the Special Meeting, including the solicitation of proxies
and voting instructions from Contract Owners, will be paid by Warburg Pincus
Asset Management, Inc. ("Warburg"), the current investment sub-adviser to the
Portfolio, and Credit Suisse Group ("Credit Suisse").
3
If, by the time scheduled for the Special Meeting, a quorum is not
present or if a quorum is present but sufficient votes in favor of the proposal
described in this Proxy Statement are not received, the persons named as proxies
may propose one or more adjournments of the Special Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of the shares present in person or represented by proxy at the
session of the Special Meeting to be adjourned. The persons named as proxies
will vote in favor of any such adjournment those proxies which instruct them to
vote in favor of any of the proposals to be considered at the adjourned meeting,
and will vote against any such adjournment those proxies which instruct them to
vote against or to abstain from voting on all of the proposals to be considered
at the adjourned meeting.
PROPOSAL: APPROVAL OF NEW SUB-ADVISORY AGREEMENT
DESCRIPTION OF SUB-ADVISER AND CERTAIN EVENTS
Warburg currently acts as the investment sub-adviser for the Portfolio
pursuant to a sub-advisory agreement (the "Current Sub-Advisory Agreement")
entered into with First Variable Advisory Services Corp. (the "Adviser"), the
investment adviser for the Portfolio.
On February 15, 1999, the parent companies of Warburg entered into a
Merger Agreement and Plan of Reorganization (the "Merger Agreement") with Credit
Suisse. Under the terms of the Merger Agreement, Credit Suisse will acquire the
direct parent company of Warburg (the "Acquisition"). Upon consummation of the
Acquisition, Credit Suisse intends to combine Warburg with Credit Suisse's
existing U.S. asset management business (the "Reorganization"), and such
combined businesses are expected to be conducted by a single direct or indirect
wholly-owned U.S. subsidiary of Credit Suisse, which would be organized as a
limited liability company or a corporation (the "New Sub-Adviser").
Following consummation of the Reorganization, the New Sub-Adviser would
act as the investment sub-adviser to the Portfolio, as further described below.
It is currently anticipated that the New Sub-Adviser will operate under the name
"Credit Suisse Asset Management" (followed by an indication of its status as a
limited liability company or a corporation). However, it is possible that the
Acquisition will be consummated but that the Reorganization will be delayed or
ultimately not consummated, in which case Warburg (under Credit Suisse
ownership) would continue to act as the investment sub-adviser to the Portfolio
until such time (if ever) as the Reorganization is consummated. The Acquisition
and the Reorganization are together referred to herein as the "Merger". Upon
completion of the Reorganization, the headquarters of the New Sub-Adviser will
be in New York; until completion of the Reorganization, the headquarters of
Warburg are expected to remain in New York.
4
THE NEW SUB-ADVISER
Credit Suisse is a global financial services company, providing a
comprehensive range of banking and insurance products. Active on every continent
and in all major financial centers, Credit Suisse comprises five business units
- -- Credit Suisse Asset Management ("CSAM") (asset management); Credit Suisse
First Boston (investment banking); Credit Suisse Private Banking (private
banking); Credit Suisse (retail banking); and Winterthur (insurance). Credit
Suisse has approximately $680 billion of global assets under management and
employs approximately 62,000 people worldwide. The principal business address of
Credit Suisse is Paradeplatz 8, CH 8070, Zurich, Switzerland.
CSAM is the global institutional asset management and mutual fund arm
of Credit Suisse. CSAM employs approximately 1,600 people worldwide and has
global assets under management of approximately $210 billion in multiple product
services, including equities, fixed income, derivatives and balanced portfolios.
The principal worldwide business address of CSAM is Uetlibergstrasse 231, CH
8045, Zurich, Switzerland.
CSAM's U.S. asset management business, formerly known as BEA
Associates, changed its name to CSAM in January 1999 to more accurately reflect
its integration into Credit Suisse Asset Management and, together with its
predecessor firms, has been engaged in the investment advisory business for over
60 years. In the U.S., CSAM is an investment manager for corporate and state
pension funds, endowments and other institutions and has U.S. assets under
management of approximately $35 billion. The principal U.S. business address of
CSAM's U.S. operations is 153 East 53rd Street, New York, NY 10022.
Currently, CSAM is organized as a general partnership with two general
partners, Credit Suisse Capital Corp. and Credit Suisse Advisors Corp. As part
of the Reorganization, CSAM will reorganize as a limited liability company or a
corporation, which will be a direct or indirect wholly-owned U.S. subsidiary of
Credit Suisse. This entity will be the New Sub-Adviser of the Portfolio.
William W. Priest will be the Chief Executive Officer of the New
Sub-Adviser. Since 1990, Mr. Priest has been the Chairman of the Management
Committee, Chief Executive Officer and Executive Director of CSAM (U.S.). Mr.
Priest is a director of TIG Holdings, Inc. and of other investment companies
advised by CSAM.
It is anticipated that the directors of the New Sub-Adviser will be
Philip Ryan, Agnes Reicke, Hal Liebes and Michael Guarasci, each of whom is
currently an executive officer of Credit Suisse and/or its affiliates. The
5
business address for Mr. Ryan is Beaufort House, 15 St. Botolph Street, London
EC3A 7JJ England. The business address for Ms. Reicke is Uetlibergstrasse 231,
CH 8045, Zurich, Switzerland. The business address for Messrs. Liebes and
Guarasci is 153 East 53rd Street, New York, NY 10022. The New Sub-Adviser will
also have an operating committee consisting of senior investment professionals
drawn from the combined resources of Warburg and CSAM.
None of the officers or Trustees of the Trust are officers or directors
of the New Sub-Adviser.
THE MERGER
The Acquisition and the Reorganization are expected to be consummated
simultaneously. In such event, consummation of the Merger would constitute a
single "assignment," as that term is defined in the 1940 Act, of the Portfolio's
Current Sub-Advisory Agreement with Warburg. As required by the 1940 Act, the
Current Sub-Advisory Agreement provides for its automatic termination in the
event of its assignment. In anticipation of the Merger, a new investment
sub-advisory agreement (the "New Sub-Advisory Agreement"; together with the
Current Sub-Advisory Agreement, the "Advisory Agreement") between the Adviser
and the New Sub-Adviser is being proposed for approval by shareholders of the
Portfolio to take effect upon consummation of the Acquisition and
Reorganization. However, if the Acquisition is consummated but the
Reorganization is delayed or not ultimately consummated, the New Sub-Advisory
Agreement would take effect between the Adviser and Warburg (under Credit Suisse
ownership) upon consummation of the Acquisition, and would remain in effect with
Warburg until such time (if ever) as the Reorganization is consummated; approval
of the New Sub-Advisory Agreement at the Special Meeting will constitute
shareholder approval for the New Sub-Advisory Agreement to take effect with the
New Sub-Adviser if the Acquisition and the Reorganization are consummated
simultaneously, and to take effect with Warburg if the Acquisition is
consummated prior to consummation of the Reorganization.
In the event that the Acquisition and the Reorganization are not
simultaneously consummated, upon consummation of the Reorganization, the New
Sub-Advisory Agreement would be transferred to the New Sub-Adviser as part of
the combination of the businesses of Warburg and Credit Suisse's existing U.S.
asset management business, and the New Sub-Adviser thereafter would act as the
investment sub-adviser to the Portfolio pursuant to the New Sub-Advisory
Agreement. If not consummated simultaneously with the Acquisition, consummation
of the Reorganization could be deemed to constitute a second "assignment" of the
Portfolio's investment sub-advisory agreement (which would result in its
automatic termination, as discussed above); approval of the New Sub-Advisory
Agreement at the Special Meeting also will constitute shareholder approval for
the New Sub-Advisory Agreement to take effect with the New Sub-Adviser upon
6
consummation of the Reorganization (if consummated) in the event that the
Reorganization is consummated after consummation of the Acquisition.
A copy of the New Sub-Advisory Agreement is attached hereto as Exhibit
A. THE NEW SUB-ADVISORY AGREEMENT FOR THE PORTFOLIO IS IN ALL RESPECTS ON THE
SAME TERMS AS THE CURRENT SUB-ADVISORY AGREEMENT (except that the New
Sub-Adviser will be the investment sub-adviser following consummation of the
Reorganization). The material terms of the Current Sub-Advisory Agreement are
described under "Description of the Current Sub-Advisory Agreement" below.
BOARD RECOMMENDATION
On March 4, 1999, the Board voted unanimously to approve the New
Sub-Advisory Agreement and to recommend its approval to shareholders.
The Board recommends that the Portfolio's shareholders vote in favor of
the approval of the New Sub-Advisory Agreement.
BOARD EVALUATION
On March 4, 1999, representatives of Warburg and Credit Suisse met in
person with the Board. At that time, the representatives described the general
terms of the Merger and the anticipated benefits for the Warburg organization
and for the Portfolio and Warburg's other investment advisory clients. The Board
was also presented with additional information regarding the Merger, including
the general terms of the Merger and additional information regarding Credit
Suisse and its affiliates, including its existing U.S. asset management
business. The Board also obtained assurances that the legal and proxy costs
relating to the Merger would be borne by Warburg and Credit Suisse. The Board
discussed this information among themselves and with representatives of Warburg
and Credit Suisse. They were assisted in their review of this information by
their independent legal counsel.
In the course of these discussions, Warburg advised the Board that it
did not expect that the proposed Merger would have a material effect on the
operations of the Portfolio or its shareholders. In addition, Warburg advised
the Board that no changes to the individuals responsible for the day-to-day
management of the Portfolio are currently expected and that senior executives of
Warburg are expected to retain similar positions in the combined firm following
consummation of the Reorganization. However, Warburg has advised the Board that,
as a result of its operations being combined with Credit Suisse's existing U.S.
asset management business, it is possible that changes in certain personnel and
service providers currently involved in providing services to the Portfolio may
7
result from future efforts to combine the strengths and efficiencies of both
firms. In their discussions with the Board, Warburg and Credit Suisse
representatives also emphasized the strengths of the Credit Suisse organization
and its commitment to provide the combined asset management organization with
the resources necessary to continue to provide high quality services to the
Portfolio and other investment advisory clients of the organization.
During the course of their deliberations, the Board considered a
variety of factors including the nature, quality and extent of the services that
Warburg has provided and the New Sub- Adviser will provide to the Portfolio; the
continuity from and quality of personnel from Warburg to the New Sub-Adviser;
the maintenance of the identical contractual advisory fee rates; the
substantially identical nature of the Current Sub-Advisory Agreement to the New
Sub-Advisory Agreements (other than the change to the New Sub-Adviser as the
investment adviser upon consummation of the Reorganization); and the likely
impact of the Merger on the Portfolio and Warburg's asset management operations.
In addition to the foregoing factors, the Board gave careful
consideration to the anticipated strengths of the combined organization and the
resources and commitment of Credit Suisse, the parent company of the New
Sub-Adviser, to emphasize high-quality services. In connection with the
foregoing, the Board considered, among other things, Credit Suisse and the New
Sub-Adviser's financial resources to attract top quality personnel and develop
its investment and operational capabilities.
The Board considered the foregoing factors with respect to the
Portfolio. In their deliberations, the Board considered the above factors as
they relate to Warburg under the assumption that both the Reorganization is
consummated and that, alternatively, it is not.
The Board then unanimously approved the New Sub-Advisory Agreement.
DESCRIPTION OF THE CURRENT SUB-ADVISORY AGREEMENT
Under the Current Sub-Advisory Agreement, subject to the oversight and
review of the Adviser and the Board, Warburg manages the investment and
reinvestment of the assets of the Portfolio. Specifically, Warburg determines
the investments to be purchased or sold, provides the Adviser with records
concerning its activities which the Adviser or the Trust is required to
maintain, and renders regular reports to the Adviser and to officers and
trustees of the Trust.
In return for the services provided by Warburg as investment
sub-adviser, the Adviser pays Warburg an annualized advisory fee equal to .50 of
1% of the average daily net assets of the Portfolio, which is accrued daily and
payable monthly. For fiscal year 1998, the Sub-Adviser was paid an advisory fee
rate of 0.50%, after waivers and/or expense limitations, and an aggregate fee of
$134,066.
8
Under the Current Sub-Advisory Agreement, Warburg is responsible for
all expenses incurred by it in the performance of its duties, which does not
include expenses of the Trust or the Portfolio, such as brokerage fees and
commissions and taxes.
The Current Sub-Advisory Agreement further provides that in the absence
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the obligations or duties thereunder on the part of Warburg, Warburg shall not
be liable to Adviser, the Trust, the Portfolio or to any shareholder for any act
or omission in the course of or connected in any way with rendering services or
for any losses sustained in the purchase, holding or sale of any securities.
The Current Sub-Advisory Agreement may be terminated without penalty
upon sixty (60) days' written notice by Warburg, the Adviser or the Trust on
behalf of the Portfolio. The Trust may agree to terminate the Current
Sub-Advisory Agreement either by the vote of a majority of the outstanding
voting securities of the Portfolio, or by a vote of the Board. As stated above,
the Current Sub-Advisory Agreement automatically terminates in the event of its
assignment.
Warburg has acted as the investment adviser for the Portfolio since
[May 1995/the Portfolio commenced operations]. The Current Sub-Advisory
Agreement was last approved by the Board and the shareholders of the Portfolio
on [ ] and the Current Sub-Advisory Agreement was last continued to [ ]. The
Current Sub-Advisory Agreement was submitted to shareholders prior to its
becoming effective, as required by the 1940 Act.
The following table sets forth the contractual advisory fee rate and
net assets as of the Record Date of other U.S. registered investment companies
advised by Warburg and CSAM with similar investment policies and objectives as
the Portfolio.
CONTRACTUAL
NET ASSETS AS ADVISORY
OF APRIL 30, FEE RATE (+)
-------- -----------
NAME OF FUND 1999
- ------------ ----
Warburg Advised Funds
- ---------------------
Warburg Pincus Growth & Income Fund $800,205,636 0.75%
Warburg Pincus Institutional Fund, Inc. - Value Portfolio $58,910,087 0.75% (0.36%)
9
CONTRACTUAL
NET ASSETS AS ADVISORY
OF APRIL 30, FEE RATE (+)
-------- -----------
NAME OF FUND 1999
- ------------ ----
Warburg Pincus Trust - Growth & Income Portfolio $14,380,769 0.75% (0%)
Jefferson Pilot Variable Fund, Inc. - Growth & Income $66,833,467 0.50%
Portfolio
CSAM ADVISED FUNDS
- ------------------
American General Annuity - Credit $19,878,524 0.50%
Suisse Growth & Income Fund
- ------------------
+ Advisory fee rate after waivers and/or expense limitations, if applicable,
appears in parentheses next to the contractual advisory fee rate.
THE NEW SUB-ADVISORY AGREEMENT
Other than identification of the New Sub-Adviser and the execution and
termination dates, the New Sub-Advisory Agreement is substantially identical to
the Current Sub-Advisory Agreement. In particular, the contractual advisory fee
rate paid by the Adviser will not be changed.
The New Sub-Advisory Agreement for the Portfolio will be dated as of
the date of the consummation of the Acquisition, which is expected to occur in
mid-1999. The New Sub-Advisory Agreement will be in effect until __________,
2000, and may continue thereafter from year to year only if specifically
approved at least annually by the Board or by the vote of a majority of the
outstanding voting securities of the Portfolio at a meeting called for such
purpose. In the event that shareholders of the Portfolio do not approve the New
Sub-Advisory Agreement, the corresponding Current Sub-Advisory Agreement will
remain in effect until the closing of the Acquisition, at which time it would
terminate. In such event, the Board will take such action as it deems to be in
the best interests of the Portfolio and its shareholders. In the event the
Acquisition is not consummated, Warburg will continue to provide services to the
Portfolio in accordance with the terms of the Current Sub-Advisory Agreement for
such periods as may be approved at least annually by the Board.
DIFFERENCES BETWEEN THE CURRENT AND NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement is substantially the same as the Current
Sub-Advisory Agreement in all material respects (except that the New Sub-Adviser
10
will become a party to the New Sub-Advisory Agreement following the consummation
of the Reorganization (if consummated)).
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement for the Portfolio requires
the affirmative vote of a "majority of the outstanding voting securities" of the
Portfolio as defined in the 1940 Act. The Board unanimously recommendS that the
CONTRACT OWNERS of the Portfolio vote in favor of this Proposal.
OTHER MATTERS
The Board of Trustees knows of no other business to be brought before
the Special Meeting. However, if any other matters properly come before the
Special Meeting, it is intended that the proxies will vote thereon in their
discretion.
By order of the Board of Trustees,
[Arnold R. Bergman signature]
Arnold R. Bergman
Secretary
Dated: June __, 1999
Oak Brook, Illinois
11
EXHIBIT A
FORM OF
NEW INVESTMENT SUB-ADVISORY AGREEMENT
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between FIRST VARIABLE ADVISORY SERVICES CORP.,
a Massachusetts corporation and a wholly-owned subsidiary of First Variable Life
Insurance Company ("Life Company"), having its principal place of business in
Boston, Massachusetts (hereinafter referred to as "Adviser"), and
_______________ ASSET MANAGEMENT, INC. having its principal place of business in
New York, New York (hereinafter referred to as "Sub-Adviser").
WHEREAS, Variable Investors Series Trust (the "Trust"), an open-end
diversified management investment company, as that term is defined in the
Investment Company Act of 1940, as amended ("Act"), that is registered as such
with the Securities and Exchange Commission has appointed Adviser as investment
adviser for all its portfolios including the Growth & Income Portfolio (the
"Portfolio"); and
WHEREAS, Sub-Adviser is engaged in the business of rendering investment
management services; and
WHEREAS, Adviser desires to retain Sub-Adviser to provide certain
investment management services for the Portfolio of the Trust as more fully
described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Adviser hereby retains Sub-Adviser to assist Adviser in its capacity
as investment adviser for the Portfolio. Subject to the oversight and review of
Adviser and the Board of Trustees of the Trust, Sub-Adviser shall manage the
investment and reinvestment of the assets of the Portfolio. Sub-Adviser will
determine in its discretion, subject to the oversight and review of Adviser, the
investments to be purchased or sold, will provide Adviser with records
concerning its activities which Adviser or the Trust is required to maintain,
and will render regular reports to Adviser and to officers and Trustees of the
Trust concerning its discharge of the foregoing responsibilities. The services
of Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
shall be free to render similar services to others.
2. Neither the Trust, Adviser, nor affiliated persons of the Trust or
Adviser shall give any information or make any representations or statements
concerning Sub-Adviser, except with the prior permission of Sub-Adviser.
A-1
3. Sub-Adviser, in its supervision of the investments of the Portfolio,
will be guided by the Portfolio's investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on file with the Securities and Exchange Commission, all as communicated by
Adviser to Sub-Adviser.
4. Adviser shall pay to Sub-Adviser, for all services rendered to the
Portfolio by Sub-Adviser hereunder, the fees set forth in Exhibit A attached
hereto. During the term of this Agreement, Sub-Adviser will bear all expenses
incurred by it in the performance of its duties hereunder, which shall not
include expenses of the Trust or the Portfolio, such as brokerage fees and
commissions and taxes.
5. The term of this Agreement shall begin on the date of its execution
and shall remain in effect for two years from that date and from year to year
thereafter, subject to the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be specifically approved
at least annually by the vote of a majority of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons", as
defined in Section 2(a)(19) of the Act, of any party (other than as Trustees of
the Trust) cast in person at a meeting called for that purpose; and (b) Adviser
shall not have notified the Trust in writing at least sixty (60) days prior to
the anniversary date of this Agreement in any year thereafter that it does not
desire such continuation with respect to the Portfolio.
6. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty, by the Trustees of
the Trust or by a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in Section 2(a)(42) of the Act, on sixty (60) days'
written notice to Sub-Adviser, or by Adviser or Sub-Adviser upon not less than
sixty (60) days' written notice to the other party.
7. This Agreement may not be assigned by Adviser or Sub-Adviser and
shall automatically terminate in the event of any assignment. Sub-Adviser may
employ or contract with such other person, persons, corporation, or corporations
at its own cost and expense as it shall determine in order to assist it in
carrying out this Agreement.
8. Sub-Adviser represents and warrants that the Portfolio will at all
times be invested in such a manner as to ensure compliance with Section 817(h)
of the Internal Revenue Code of 1986, as amended and Treasury Regulations
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Section 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations; provided, however, that Adviser
shall promptly provide Sub-Adviser with copies of such Section 817(h) and
Regulation Section 1.817-5 as currently in effect and as modified or amended
from time to time. Sub-Adviser will be relieved of this obligation and shall be
held harmless when (i) the Portfolio is invested in compliance with the
requirements of Section 817(h) and/or Regulation Section 1.817-5 as most
recently provided to Sub-Adviser by Adviser or (ii) when direction from the
Adviser or Trustees causes noncompliance with Section 817(h) and/or Regulation
Section 1.817-5. Sub-Adviser agrees to provide quarterly reports to Adviser,
executed by a duly authorized officer of Sub-Adviser, within seven (7) days of
the close of each calendar quarter certifying as to compliance with said Section
or Regulations. In addition to the quarterly reports, Adviser may request and
Sub-Adviser agrees to provide Section 817 diversification compliance reports at
more frequent intervals, as reasonably requested by Adviser.
9. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this Agreement on the
part of Sub-Adviser ("disabling conduct"), neither Sub-Adviser, any affiliated
person of Sub-Adviser nor any person who controls Sub-Adviser, within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act")
shall be liable to Adviser, the Trust, the Portfolio or to any shareholder for
any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding, or
sale of any security.
10. The Sub-Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Portfolio with broker-dealers
selected by the Sub-Adviser. In executing portfolio transactions and selecting
broker-dealers, the Sub-Adviser will use its best efforts to seek best execution
on behalf of the Portfolio. In assessing the best execution available for any
transaction, the Sub-Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are used
in Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act")) provided
to the Portfolio and/or other accounts over which the Sub-Adviser, an affiliate
of the Sub-Adviser (to the extent permitted by law) or another investment
adviser of the Portfolio exercises investment discretion. The Sub-Adviser is
authorized to cause the Portfolio to pay a broker-dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
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another broker-dealer would have charged for effecting that transaction if, but
only if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer viewed in terms of that particular transaction or
in terms of all of the accounts over which investment discretion is so
exercised.
11. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees who
are not "interested persons," as defined in Section 2(a)(19) of the Act, of any
party to this Agreement (other than as Trustees of the Trust) cast in person at
a meeting called for that purpose, and on behalf of the Portfolio by the holders
of a majority of the outstanding voting securities of the Portfolio, as defined
in Section 2(a)(42) of the Act.
12. This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Massachusetts.
13. This Agreement will become binding on the parties hereto upon their
execution of the attached Exhibit A to this Agreement.
14. It is understood that any information or recommendation supplied by
the Sub-Adviser in connection with the performance of its obligations hereunder
is to be regarded as confidential and for use only by the Adviser, the Trust or
such persons as the Adviser may designate in connection with the Portfolio. It
is also understood that any information supplied to Sub-Adviser in connection
with the performance of its obligations hereunder, particularly, but not
necessarily limited to, any list of securities which, on a temporary basis, may
not be bought or sold for the Portfolio, is to be regarded as confidential and
for use only by the Sub-Adviser in connection with its obligation to provide
investment advice and other services to the Portfolio.
Each party to this Agreement hereby acknowledges that it is registered
as an investment adviser under the Investment Advisers Act of 1940, it will use
its reasonable best efforts to maintain such registration, and it will promptly
notify the other if it ceases to be so registered, if its registration is
suspended for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its registration
should not be suspended or terminated.
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EXHIBIT A
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Adviser hereunder, Adviser
shall pay to Sub-Adviser and Sub-Adviser agrees to accept as full compensation
for all services rendered hereunder, an annual fee as follows:
Growth & Income Portfolio
.50 of 1% on an annualized basis of the average daily
net assets of the Portfolio.
Such fees shall accrue daily and be paid monthly.
Witness the due execution hereof this ___ day of __________,
1999.
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
____________________ By:__________________________
____________ ASSET MANAGEMENT, INC.
Attest:
____________________ By:__________________________
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PROXY
GROWTH & INCOME PORTFOLIO
OF
VARIABLE INVESTORS SERIES TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
KNOW ALL MEN BY THESE PRESENTS that the undersigned
shareholder(s) of the Growth & Income Portfolio of Variable Investors Series
Trust ("Trust") hereby appoints ________________________, or any one of them
true and lawful attorneys with power of substitution of each, to vote all shares
which the undersigned is entitled to vote, at the Special Meeting of
Shareholders of the Trust to be held on _________, 1999 at the offices of First
Variable Advisory Services Corp., 2122 York Road, Oak Brook, Illinois 60523 at
10:00 a.m., local time, and at any adjournment thereof ("Meeting"), as follows:
1. To approve a New Sub-Advisory Agreement between First Variable Advisory
Services Corp. and a direct or indirect U.S. investment advisory subsidiary of
Credit Suisse Group (the "New Sub-Adviser"), such New Sub-Advisory Agreement to
contain the same terms and conditions as the Current Investment Sub-Advisory
Agreement, except for the dates of execution and termination and the
identification of the New Sub-Adviser.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Discretionary authority is hereby conferred as to all other matters as
may properly come before the meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
Dated: ____________________, 1999
First Variable Life Insurance Company
_____________________________________
Name of Insurance Company
____________________________________
Name and Title of Authorized Officer
____________________________________
Signature of Authorized Officer
GROWTH & INCOME PORTFOLIO
Name(s) of Separate Account(s)
of the Insurance Company
Owning Share in the Portfolio:
__________________________________