SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY REGISTRANT [X] FILED BY A PARTY OTHER THAN REGISTRANT [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Keynote Series Account - Keynote Equity Growth Subaccount
(Name of Registrant as Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No Fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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:
[ ] 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 the filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
4 Manhattanville Road
Purchase, New York 10577
April 6, 1998
Dear Contract Holder:
On May 15, 1998 at 9:00 a.m. (Eastern time) we will hold a special meeting of
contact holders of Group Variable Annuity Contracts issued by The Mutual Life
Insurance Company of New York ("MONY") with unit interests in the Keynote
Equity Growth Subaccount (the "Subaccount") of the Keynote Series Account to
vote on important proposals relating to the Subaccount.
VOTING ONLY TAKES A FEW MINUTES - PLEASE RESPOND PROMPTLY.
As a contract holder, you cast one vote for each $100 of dollar value of units
that you own. By separate mailing you will obtain instructions from affected
contract participants on how to vote your units.
Please take a few moments to read the enclosed materials and then cast your
vote on the enclosed proxy card in accordance with instructions received from
your contract participant. Items 1 and 2 have been carefully considered by MONY
which is responsible for protecting your interests as a contact holder. MONY
believes that the proposals are fair and reasonable and recommends that
contract holders and their participants vote in favor of the proposals.
The proposals you will vote on for the Subaccount are summarized below.
Complete information is contained in the enclosed Proxy Statement.
ITEM 1. (a) To instruct MONY to vote with respect to the approval of a
new Investment Subadvisory Agreement between Diversified
Investment Advisors, Inc. and Montag & Caldwell, Inc.
(b) To instruct MONY to vote with respect to the approval of a
new Investment Subadvisory Agreement between Diversified
Investment Advisors, Inc. and Dresdner RCM Global
Investors LLC.
ITEM 2. To instruct MONY to vote with respect to authorizing the
Board of Trustees of Diversified Investors Portfolios to select
and change investment subadvisers and enter into investment
subadvisory agreements without obtaining the approval of
Contract Holders and their Participants.
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ITEM 3. To transact such other business as may properly come before
the Special Meeting of Contract Holders and any adjournments
thereof.
After you have voted on Items 1 and 2, please be sure to SIGN YOUR PROXY CARD
AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
This is your opportunity to voice your opinion on matters affecting the
Subaccount. Your participation is extremely important, no matter how many or
how few units you own.
We appreciate your prompt response. Thank you.
Sincerely,
Robert F. Colby
Vice President and Assistant Secretary
<PAGE>
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
4 Manhattanville Road
Purchase, New York 10577
NOTICE OF A SPECIAL MEETING
OF CONTRACT HOLDERS
To be held on May 15, 1998
Dear Participant:
Certain contributions made on your behalf to The Mutual Life Insurance Company
of New York ("MONY") with respect to the Group Variable Annuity Contract (the
"Contract") issued by MONY to the holder of the Contract (the "Contract
Holder") have been allocated at your direction to the Keynote Equity Growth
Subaccount (the "Subaccount"), a subaccount of the Keynote Series Account, a
separate account of MONY. All of the investable assets of the Subaccount are
invested in Equity Growth Portfolio (the "Portfolio"), a series of Diversified
Investors Portfolios (the "Trust"), which is a registered investment company.
The Portfolio has called a meeting of its investors, including the Subaccount,
to vote on certain matters. MONY, as the legal owner of all of the assets of
the Subaccount, will vote on such matters in accordance with the instructions
received from contract owners of the Group Variable Annuity Contracts with unit
interests in the Subaccount, including the Contract Holder.
As a participant of record at the close of business on March 25, 1998 (the
"Record Date"), you are entitled to instruct the Contract Holder as to how it
should vote on certain proposals to be considered at a Special Meeting of
Contract Holders described in the enclosed Notice of Special Meeting and at any
adjournments thereof (the "Meeting"). The enclosed Proxy Statement and Notice
of Special Meeting with accompanying form of proxy are being mailed to you and
other participants by the Contract Holder on or about April 6, 1998.
The Meeting will be held at the offices of MONY at 4 Manhattanville Road,
Purchase, New York 10577, on May 15, 1998 at 9:00 a.m. Eastern Time. You are
entitled to provide the Contract Holder with voting instructions for the
following proposals to be voted upon:
ITEM 1. (a) To instruct MONY to vote with respect to the
approval of a new Investment Subadvisory
Agreement between Diversified Investment
Advisors, Inc. and Montag & Caldwell, Inc.
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(b) To instruct MONY to vote with respect to the
approval of a new Investment Subadvisory
Agreement between Diversified Investment
Advisors, Inc. and Dresdner RCM Global
Investors LLC.
ITEM 2. To instruct MONY to vote with respect to authorizing the
Board of Trustees of the Trust to select and change investment
subadvisers and enter into investment subadvisory agreements
without obtaining the approval of Contract Holders and their
Participants.
ITEM 3. To transact such other business as may properly come before
the Special Meeting of Contract Holders and any adjournments
thereof.
The proposals to be considered at the Meeting are discussed in the enclosed
Proxy Statement. You are urged to read the enclosed Proxy Statement prior to
completing your ballot instructing the Contract Holder how to vote.
To instruct the Contract Holder as to how to vote your interests in the
Contract allocated to the Subaccount, you are asked to promptly mark your
voting instructions on the enclosed ballot, then sign, date and mail it in the
accompanying envelope.
IF A BALLOT IS NOT MARKED TO INDICATE VOTING INSTRUCTIONS BUT IS SIGNED, DATED
AND RETURNED IT WILL BE TREATED AS AN INSTRUCTION TO VOTE THE INTERESTS
REPRESENTED THEREBY FOR THE PROPOSALS.
THE UNIT INTERESTS FOR WHICH THE CONTRACT HOLDER RECEIVES NO VOTING
INSTRUCTIONS FROM PARTICIPANTS WILL BE VOTED BY THE CONTRACT HOLDER IN THE SAME
PROPORTION AS UNIT INTERESTS FOR WHICH THE CONTRACT HOLDER DOES, IN FACT,
RECEIVE VOTING INSTRUCTIONS.
MONY is not aware of any matters, other than the specified proposals, to be
acted upon at the Meeting. If any other matters come before the Meeting, the
Contract Holder will vote upon such matters in its discretion. The Contract
Holder reserves the right to vote for the adjournment of the Meeting for the
purpose of further solicitation of voting instructions.
At any time prior to the vote by the Contract Holder of the interests in the
Subaccount, you may revoke your voting instructions by written notice to the
Assistant Secretary of MONY at 4 Manhattanville Road, Purchase, New York 10577.
<PAGE>
In addition to solicitation by mail, ballots may be solicited by the Board of
Directors, officers and employees of the Contract Holder without compensation
therefor.
Very truly yours,
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
By: Edward P. Bank
Title: Vice President and Assistant Secretary
April 6, 1998
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED BALLOT, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSES OF
A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND
IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
KEYNOTE SERIES ACCOUNT
a separate account of The Mutual Life Insurance Company of New York
4 Manhattanville Road
Purchase, New York 10577
Telephone: (914) 697-8000
NOTICE OF SPECIAL MEETING OF CONTRACT HOLDERS
To be held May 15, 1998
A Special Meeting of Contract Holders of Group Variable Annuity Contracts
issued by The Mutual Life Insurance Company of New York ("MONY"), with unit
interests in the KEYNOTE EQUITY GROWTH SUBACCOUNT (the "Subaccount") of the
KEYNOTE SERIES ACCOUNT, a unit investment trust registered with the Securities
and Exchange Commission, will be held at the offices of MONY, 4 Manhattanville
Road, Purchase, New York 10577, on May 15, 1998 at 9:00 a.m., Eastern time, for
the following purposes:
ITEM 1. (a) To instruct MONY to vote with respect to the
approval of a new Investment Subadvisory
Agreement between Diversified Investment
Advisors, Inc. and Montag & Caldwell, Inc.
(b) To instruct MONY to vote with respect to the
approval of a new Investment Subadvisory
Agreement between Diversified Investment
Advisors, Inc. and Dresdner RCM Global
Investors LLC.
ITEM 2. To instruct MONY to vote with respect to authorizing the
Board of Trustees of Diversified Investors Portfolios to select
and change investment subadvisers and enter into investment
subadvisory agreements without obtaining the approval of
contract holders and their participants.
ITEM 3. To transact such other business as may properly come before
the Special Meeting of Contract Holders and any adjournments
thereof.
THE BOARD OF DIRECTORS OF MONY RECOMMENDS THAT YOU VOTE IN FAVOR OF ITEMS 1 AND
2.
<PAGE>
Only contract holders of record on March 25, 1998 will be entitled to vote at
the Special Meeting of Contract Holders and at any adjournments thereof.
Edward P. Bank,
Vice President and
Assistant Secretary
April 6, 1998
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOU PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSES OF
A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND
IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
KEYNOTE EQUITY GROWTH SUBACCOUNT
OF
KEYNOTE SERIES ACCOUNT
a separate account of The Mutual Life Insurance Company of New York
4 Manhattanville Road
Purchase, New York 10577
Telephone: (914) 697-8000
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form of
proxy are being furnished in connection with the solicitation of proxies by the
Board of Directors of The Mutual Life Insurance Company of New York ("MONY"),
on behalf of the Keynote Series Account ("Keynote"), a separate account of
MONY, for use at a special meeting of contract holders (the "Contract Holders")
of Group Variable Annuity Contracts (the "Contracts") issued by MONY with unit
interests ("Units") in the Keynote Equity Growth Subaccount (the "Subaccount")
of Keynote, or any adjournment thereof, to be held at the offices of MONY, 4
Manhattanville Road, Purchase, New York 10577, on May 15, 1998, 9:00 a.m.,
Eastern time (the "Meeting"). The Meeting is being held for the purposes set
forth in the accompanying Notice of Special Meeting. These materials are being
mailed by the Board of Directors of MONY on or about April 6, 1998.
The Subaccount is one of seven subaccounts of Keynote, which is registered with
the Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act"). Keynote was
established by MONY as a separate account under New York Insurance Law on
December 16, 1987. The Subaccount was established on the same date. The mailing
address of MONY is 4 Manhattanville Road, Purchase, New York 10577. All of the
investable assets of the Subaccount are invested in Equity Growth Portfolio
(the "Portfolio"), a series of Diversified Investors Portfolios (the "Trust"),
which is registered with the Securities and Exchange Commission as an
investment company under the 1940 Act.
The annual report for the Subaccount for the period ended December 31, 1997,
including audited financial statements, has previously been sent to Contract
Holders and is available upon request without charge by contacting Catherine A.
Mohr, The Mutual Life Insurance Company of New York, 4 Manhattanville Road,
Purchase, New York 10577 or by calling MONY toll-free at (800) 926-0044.
MANNER OF VOTING PROXIES AND VOTE REQUIRED
The Subaccount is the holder of a beneficial interest in the Portfolio. MONY,
as legal owner of all the assets of the Subaccount, has been asked to vote on
<PAGE>
certain matters with respect to the Portfolio because the Portfolio has called
a meeting of its investors to vote on such matters. MONY will vote on such
matters in accordance with the instructions received from Contract Holders.
Each employee participating on the Record Date under a Contract issued to or
adopted by a Contract Holder (a "Participant") shall have the right to give
written instructions to the applicable Contract Holder with respect to the
interest in the Portfolio attributable to his or her portion of the Units held
in the Subaccount. Each Contract Holder shall provide voting instructions to
MONY with respect to its Units in accordance with the instructions received
from its Participants.
If the accompanying form of proxy is executed properly and returned, the Units
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. If no instructions are specified, Units will be
voted for proposed Items 1 and 2. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked prior to its exercise by a signed
writing delivered at the Meeting or filed with the Assistant Secretary of MONY.
If sufficient votes to approve the proposed Items 1 and 2 are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those Units voted at the Meeting. When voting
on a proposed adjournment, the persons named as proxies will vote all Units
that they are entitled to vote with respect to each Item for the proposed
adjournment, unless directed to disapprove the Item, in which case such Units
will be voted against the proposed adjournment.
The presence in person or by proxy of the holders of a majority of the Units of
the Subaccount is required to constitute a quorum at the Meeting. For purposes
of determining the presence of a quorum for transacting business at the
Meeting, abstentions will be treated as Units that are present but which have
not been voted. For this reason, abstentions will have the effect of a "no"
vote for purposes of obtaining the requisite approval of the proposals. Because
MONY is the sole Contract Holder, a quorum will be present at the Meeting.
MONY, as sole Contract Holder, will vote its Units in accordance with
instructions received from Participants, as described below.
The cost of soliciting proxies in the accompanying form, including any fees of
any proxy soliciting agent, will be borne by Diversified Investment Advisors,
Inc., the investment adviser of the Portfolio. This cost is not expected to
exceed $50,000. In addition to solicitation by mail, proxies may be solicited
by the Board of Directors of MONY, officers, and regular employees and agents
of MONY without compensation therefor. Diversified Investment Advisors, Inc.
may reimburse Contract Holders and others for their expenses in forwarding
proxy materials to Participants and soliciting them to provide instructions to
the Contract Holders.
<PAGE>
The close of business on March 25, 1998 has been fixed as the Record Date for
the determination of (a) Contract Holders entitled to notice of and to vote at
the Meeting, and (b) Participants entitled to give instructions to Contract
Holders as to how to vote at the Meeting. Units with an aggregate dollar value
of $10,355,309.82 were outstanding as of the close of business on the Record
Date. Contract Holders of record at the close of business on the Record Date
will be entitled to one vote per $100 of dollar value of Units in the
Subaccount, with fractional votes for amounts less than $100.
BACKGROUND
As disclosed in Keynote's Prospectus, all of the investable assets of the
Subaccount are invested in the Portfolio.
Diversified Investment Advisors, Inc., a Delaware corporation (the "Adviser"),
4 Manhattanville Road, Purchase, New York 10577, manages the assets of the
Portfolio pursuant to an Investment Advisory Agreement dated as of January 3,
1994, as amended (the "Advisory Agreement"). The Advisory Agreement was most
recently approved by the Board of Trustees of the Trust, including a majority
of the Trustees who are not "interested persons," as defined in the 1940 Act,
of any party to such agreement (the "Independent Trustees") on November 10,
1997. The Advisory Agreement was most recently submitted to a vote of the
Contract Holders on February 28, 1997 for the purpose of gaining Contract
Holder approval for the amendment to the Advisory Agreement lowering the
compensation available to the Adviser. Subject to the terms of the Advisory
Agreement, the Adviser is responsible for the management of the Portfolio,
selects and employs, subject to the review and approval of the Board of
Trustees of the Trust, one or more subadvisers to make the day-to-day
investment selections for the Portfolio consistent with the guidelines and
directions set by the Adviser and the Board of Trustees of the Trust, and
reviews the subadvisers' continued performance. The Adviser may terminate the
services of any subadviser at any time.
Prior to January 21, 1998, Chancellor LGT Asset Management, Inc. ("Chancellor
LGT"), a corporation having its principal offices at 1166 Avenue of the
Americas, New York, New York 10036, served as the investment subadviser of the
Portfolio pursuant to an Investment Subadvisory Agreement between Chancellor
LGT and the Adviser. The Chancellor LGT Subadvisory Agreement was approved by
the Board of Trustees of the Trust, including a majority of the Independent
Trustees, on November 12, 1996. The Chancellor LGT Subadvisory Agreement was
most recently submitted to a vote of the Contract Holders on February 28th for
the purpose of gaining Contract Holder approval for the Chancellor LGT
Subadvisory Agreement.
<PAGE>
At a special meeting of the Board of Trustees of the Trust held on January 21,
1998, the Board considered, at the Adviser's recommendation, the termination of
Chancellor LGT as the subadviser of the Portfolio. The Board reviewed
Chancellor LGT's investment performance as subadviser, and discussed the
recently announced proposed sale of Chancellor LGT and the recent departures of
members of senior management and changes in key investment personnel. The Board
also reviewed the Adviser's procedures for selecting a new subadviser and
considered the Adviser's recommendation that two subadvisers be hired to
replace Chancellor LGT. As discussed in Item 1 below under the heading
"Evaluation by the Board of Trustees", the Board authorized the Adviser to
terminate the Chancellor LGT Subadvisory Agreement and enter into new
subadvisory agreements with Montag & Caldwell, Inc. ("Montag") and Dresdner RCM
Global Investors LLC ("Dresdner RCM"). Accordingly, effective January 21, 1998,
the Adviser terminated the Chancellor LGT Subadvisory Agreement and entered
into Subadvisory Agreements with each of Montag and Dresdner RCM.
In accordance with the requirements of the 1940 Act, both the Montag
Subadvisory Agreement and the Dresdner RCM Subadvisory Agreement must be
approved by the holders of beneficial interests in the Portfolio. MONY, as the
legal owner of all the assets of the Subaccount, has been asked to vote on the
approval of the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory
Agreement in accordance with the instructions received from the Contract
Holders at the Meeting.
ITEM 1. (A) TO INSTRUCT MONY TO VOTE WITH RESPECT TO THE
APPROVAL OF A NEW INVESTMENT SUBADVISORY AGREEMENT
BETWEEN DIVERSIFIED INVESTMENT ADVISORS, INC. AND
MONTAG & CALDWELL, INC.
(B) TO INSTRUCT MONY TO VOTE WITH RESPECT TO THE
APPROVAL OF A NEW INVESTMENT SUBADVISORY AGREEMENT
BETWEEN DIVERSIFIED INVESTMENT ADVISORS, INC. AND
DRESDNER RCM GLOBAL INVESTORS LLC.
COMPARISON OF THE SUBADVISORY AGREEMENTS
The terms of the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory
Agreement are identical to those of the Chancellor LGT Subadvisory Agreement,
with the exception in each case of the identity of the service provider, the
effective date and termination date and the compensation payable by the Adviser
to the subadviser. A description of the investment advisory fees to be paid by
the Adviser to Montag and to Dresdner RCM is set forth below under the caption
"Investment Advisory Fees." The Montag Subadvisory Agreement and the Dresdner
RCM Subadvisory Agreement each became effective on January 21, 1998 and, if
approved by the vote of the holders of a "majority of the outstanding voting
<PAGE>
securities" (as such term is defined below) of the Portfolio, will continue in
effect for a two-year period from January 21, 1998, and thereafter from year to
year, subject to approval annually in accordance with the 1940 Act. Each
Subadvisory Agreement may be terminated at any time without the payment of any
penalty by the Board of Trustees of the Trust or by the vote of a "majority of
the outstanding voting securities" of the Portfolio or by the Adviser. The
Montag Subadvisory Agreement may also be terminated by Montag, and the Dresdner
RCM Subadvisory Agreement may also be terminated by Dresdner RCM, in each case
upon 90 days' advance written notice to the Adviser. Each Subadvisory Agreement
will also terminate automatically in the event of its "assignment" (as defined
in the 1940 Act).
Under the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory
Agreement, as under the Chancellor LGT Subadvisory Agreement, Montag and
Dresdner RCM each will furnish continuing portfolio management services to the
Portfolio with respect to the assets of the Portfolio allocated to it, subject
always to the provisions of the 1940 Act and to the investment objectives,
policies, procedures and restrictions imposed by the Portfolio's then current
Registration Statement under the 1940 Act. Investment management decisions of
each of Montag and Dresdner RCM will be made by committee and not by managers
individually. Montag and Dresdner RCM will also provide the Adviser with such
investment advice and reports and data as are requested by the Adviser.
Like the Chancellor LGT Subadvisory Agreement, the Montag Subadvisory Agreement
and the Dresdner RCM Subadvisory Agreement each provide that the subadviser
shall be responsible only for managing the assets of the Portfolio in good
faith and in accordance with investment guidelines, and shall have no
responsibility whatsoever for, and shall incur no liability on account of, (i)
diversification or selection of such investment guidelines, (ii) advice on, or
management of, any other assets for the Adviser, (iii) filing of any tax or
information returns or forms, withholding or paying any taxes, or seeking any
exemption or refund, (iv) registration with any government or agency, or (v)
administration of the plans and trusts investing through the Portfolio, and
shall be indemnified by the Adviser for any loss in carrying out the terms and
provisions of the agreement, including reasonable attorney's fees,
indemnification to brokers and commission merchants, fines, taxes, penalties
and interest. Each subadviser, however, shall be liable for any liability,
damages, or expenses of the Adviser arising out of the negligence, malfeasance
or violation of applicable law by it or any of its employees in providing
management under its Subadvisory Agreement; and, in such cases, the
indemnification by the Adviser referred to above shall be inapplicable.
Contract Holders and Participants should refer to Exhibit A attached hereto for
the complete terms of the Montag Subadvisory Agreement and the Dresdner RCM
Subadvisory Agreement. The description of the Subadvisory Agreements set forth
<PAGE>
herein is qualified in its entirety by the provisions of the Subadvisory
Agreements as set forth in such Exhibit.
INVESTMENT ADVISORY FEES
Under both the Montag Subadvisory Agreement and the Dresdner Subadvisory
Agreement, the Adviser (not the Portfolio) pays the subadvisers for their
services on the basis of the annual fee schedule set forth below:
Fee Schedule for Montag and Dresdner RCM
.50% of the aggregate net assets of the Portfolio allocated to Montag or
Dresdner RCM applied to the first $50 million dollars
.25% of the aggregate net assets of the Portfolio allocated to Montag or
Dresdner RCM applied to the next $50 million dollars
.20% of the aggregate net assets of the Portfolio allocated to Montag or
Dresdner RCM applied thereafter
The Montag Subadvisory Agreement and the Dresdner RCM Subadvisory Agreement
each provide that if at any time during the term of the respective Subadvisory
Agreement, Montag or Dresdner RCM charges another of its clients a lower fee
than that set forth above for the management of a similarly structured equity
growth fund, then the Adviser will also be charged the lower rate by Montag or
Dresdner RCM, as the case may be. The Adviser will benefit from the lower rate
from the first day that it is in effect for the other client.
Under each Subadvisory Agreement, as under the Chancellor LGT Subadvisory
Agreement, aggregate net assets are equal to the total market value of the
Portfolio. Fees are calculated by multiplying the arithmetic average of the
beginning and ending monthly net assets in the Portfolio allocated to Montag or
Dresdner RCM by the fee schedule and dividing by twelve. Fees are paid by the
Adviser quarterly.
Under the Chancellor LGT Subadvisory Agreement, the Adviser (not the Portfolio)
paid Chancellor LGT for its services on the basis of the annual fee schedule
set forth below:
Chancellor LGT Fee Schedule
.50% of the aggregate net assets of the Portfolio
applied to the first $50 million dollars
.30% of the aggregate net assets of the Portfolio
applied to the next $75 million dollars
.25% of the aggregate net assets of the Portfolio
applied to the next $75 million dollars
.20% of the aggregate net assets of the Portfolio applied thereafter
<PAGE>
Under the Chancellor LGT Subadvisory Agreement, aggregate net assets were equal
to the total market value of the Portfolio. Fees were calculated monthly by
multiplying the arithmetic average of the beginning and ending monthly net
assets of the Portfolio by the fee schedule and dividing by twelve. Fees were
paid by the Adviser quarterly.
Approval of the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory
Agreement, by themselves, would have no effect upon the amount of advisory fees
paid by the Portfolio to the Adviser. The Adviser, not the Portfolio, pays
investment advisory fees to both Montag and Dresdner RCM as subadvisers to the
Portfolio.
Fees payable to Chancellor LGT for services provided pursuant to the Chancellor
LGT Subadvisory Agreement for the period from January 1, 1997 to December 31,
1997 were $1,038,789. Neither Chancellor LGT nor any affiliated person of
Chancellor LGT, nor any affiliated person of any such affiliated person,
received any other fees from the Adviser or from the Portfolio for services
provided to the Portfolio during the fiscal year of the Portfolio ended
December 31, 1997. There were no other material payments by the Adviser or the
Portfolio to Chancellor LGT, any affiliated person of Chancellor LGT, or any
affiliated person of any such affiliated person, during the fiscal year of the
Portfolio ended December 31, 1997.
Fees that would have been payable to Montag for services provided pursuant to
the Montag Subadvisory Agreement for the period from January 1, 1997 to
December 31, 1997, had the Montag Subadvisory Agreement been in effect for such
period and assuming that Montag managed 50% of the Portfolio's assets at all
times during the period, are $563,144. Fees that would have been payable to
Dresdner RCM for services provided pursuant to the Dresdner RCM Subadvisory
Agreement for the period from January 1, 1997 to December 31, 1997, had the
Dresdner RCM Subadvisory Agreement been in effect for such period and assuming
that Dresdner RCM managed 50% of the Portfolio's assets at all times during the
period, are $563,144. The aggregate of these fees represents an 8.4% increase
in the amount of fees payable to Chancellor LGT for such period under the
Chancellor LGT Subadvisory Agreement.
As of December 31, 1997, the Portfolio had net assets of $426,312,188.00.
For the Portfolio's fiscal year ended December 31, 1997, no commissions were
paid to any broker (i) that is an affiliated person of the Portfolio, (ii) that
is an affiliated person of any such person described in the foregoing clause
(i), or (iii) an affiliated person of which is an affiliated person of the
Portfolio, the Adviser, Chancellor LGT, Montag, Dresdner RCM or the
administrator or distributor of the Portfolio.
<PAGE>
INFORMATION REGARDING MONTAG
Montag is a Georgia corporation having an office at 1100 Atlanta Financial
Center, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326. Montag is a wholly
owned subsidiary of Alleghany Corporation, whose shares are traded on the New
York Stock Exchange. The principal executive offices of Alleghany Corporation
are located at 375 Park Avenue, New York, New York 10152. Alleghany Corporation
is a holding company whose subsidiaries are engaged in businesses which include
property and casualty reinsurance and insurance, industrial minerals and steel
fastener importing and distribution. Montag and its predecessors have been
engaged in the business of providing investment counseling to individuals and
institutions since 1945.
MANAGEMENT AND GOVERNANCE. Listed below are the names, positions and principal
occupations of the members of the Board of Directors and the principal
executive officer of Montag, as of January 1, 1998. The principal business
address of each member of the Board of Directors and principal executive
officer, as it relates to his duties at Montag, is the same as that of Montag,
unless noted below.
NAME POSITION WITH PRINCIPAL OCCUPATION
MONTAG
Solon P. Patterson Chairman of the Board Mr. Patterson is
Chairman of Montag.
Ronald E. Canakaris Director and Chief Mr. Canakaris is the
Investment Office President, Chief
Executive Officer and
Chief Investment Officer
of Montag.
David F. Seng Director Mr. Seng serves as
Executive Vice President,
Treasurer and Investment
Counselor for Montag.
No officer or Trustee of the Trust currently is an officer or employee of
Montag or a member of Montag's Board of Directors. No officer or Trustee of the
Trust has any other material direct or indirect interest in Montag or any other
person controlling, controlled by or under common control with Montag. Since
January 1, 1997, none of the Trustees of the Trust has had any material
interest, direct or indirect, in any material transactions, or in any material
proposed transactions, to which Montag, Alleghany Corporation, or any
subsidiary of Montag or Alleghany Corporation was or is to be a party.
MANAGEMENT ACTIVITIES. Montag's total assets under management as of June 30,
1997 exceeded $12 billion.
<PAGE>
Montag acts as investment manager for the portfolios of registered investment
companies with investment objectives similar to the Portfolio's investment
objective of providing a high level of capital appreciation and secondary
objective of providing current income. The name of each such fund, together
with information concerning the fund's net assets and the fees paid to Montag
for its services, are set forth in Exhibit B.
INFORMATION REGARDING DRESDNER RCM
Dresdner RCM is a Delaware limited liability company that maintains its
principal executive offices at Four Embarcadero Center, San Francisco,
California 94111. Dresdner RCM is a wholly owned subsidiary of Dresdner Bank,
which owns 99% of Dresdner RCM's equity interests directly and 1% of such
interests through Dresdner Kleinwort Benson North America, Inc. ("Kleinwort
Benson"), a wholly owned subsidiary of Dresdner Bank. Dresdner Bank is an
international banking organization whose corporate headquarters are located at
Jurgen-Ponto-Platz 1, 60301 Frankfurt am Main, Germany. The address of
Kleinwort Benson is 75 Wall Street, New York, New York 10005.
Dresdner RCM was organized on April 30, 1996 as a wholly owned subsidiary of
Dresdner Bank to acquire the assets and business of RCM Capital Management, a
California Limited Partnership conducting investment management operations from
offices in California. The acquisition was consummated on June 14, 1996.
Dresdner RCM is registered as an investment adviser with the Securities and
Exchange Commission under the Investment Advisers Act of 1940, as amended.
MANAGEMENT AND GOVERNANCE. Pursuant to a management agreement among Dresdner
Bank, Kleinwort Benson, Dresdner RCM and RCM Limited L.P., a California Limited
Partnership ("RCM Limited"), RCM Limited manages the day-to-day business and
affairs of Dresdner RCM, subject to the oversight of Dresdner RCM's Board of
Managers. The sole general partner of RCM Limited is RCM General Corporation, a
California corporation ("RCM General"). As of March 1998, RCM General has 24
shareholders and RCM Limited has 45 limited partners. The business and affairs
of RCM General are managed by its board of directors. As of March 1998, the
directors of RCM General are William L. Price, Michael J. Apatoff, Luke D.
Knecht, Jeffrey S. Rudsten, William S. Stack and Kenneth B. Weeman, Jr. As of
January 1, 1998, the only person who owns 10% or more of the outstanding voting
securities of RCM General is Mr. Price, who owns approximately 10.1% of the
Common Stock of RCM General.
Pursuant to a governance agreement among Dresdner Bank, Dresdner RCM, RCM
Limited and the limited partners of RCM Limited, Dresdner RCM's Board of
Managers consists of nine members, six of whom are designated by RCM Limited
and three of whom are designated by Dresdner Bank. The governance agreement
<PAGE>
provides that Dresdner RCM may not reorganize, change its line of business,
sell or lease substantial assets, incur substantial indebtedness, encumber
substantial assets, issue or sell debt or equity securities, or exceed certain
budget and expense limits approved by the Board of Managers, among other
actions, absent the consent of a supermajority of Dresdner RCM's Board of
Managers, including a member designated by Dresdner Bank. Certain extraordinary
events, including marked declines in Dresdner RCM's assets under management,
Dresdner RCM's poor asset management performance and the departure of certain
limited partners of RCM Limited, will entitle Dresdner Bank to take any actions
necessary to ensure that Dresdner Bank's designees constitute a majority of the
Board of Managers.
Listed below are the names, positions and principal occupations of the members
of the Board of Managers and the principal executive officer of Dresdner RCM,
as of January 1, 1998. The principal business address of each member of the
Board of Managers and principal executive officer, as it relates to his duties
at Dresdner RCM, is the same as that of Dresdner RCM, unless noted below.
NAME POSITION WITH PRINCIPAL OCCUPATION
DRESDNER RCM
William L. Price (1) Chairman of Mr. Price is the Chief
the Board Investment Officer and a
Principal of Dresdner RCM
Michael J. Apatoff (1) Member Mr. Apatoff is the President
and a Principal of Dresdner
RCM
Eamonn F. Dolan (1) Member Mr. Dolan is a Principal of
Dresdner RCM
Jeffrey S. Rudsten (1) Member Mr. Rudsten is a Principal of
Dresdner RCM
William S. Stack (1) Member Mr. Stack is a Principal of
Dresdner RCM
Kenneth B. Weeman, Jr. Member Mr. Weeman is the Chief
(1) Operating Officer and a
Principal of Dresdner RCM
Gerhard Eberstadt (2) Member Mr. Eberstadt is the Senior
(3) Chairman of Dresdner Bank
Joachim Madler (2)(3) Member Mr. Madler is a Member of the
Board of Managing Directors
of Dresdner Bank
George N. Fugelsang (3)(4) Member Mr. Fugelsang is the Senior
General Manager of Dresdner
Bank
(1) Each such person was designated as a member of the Board of Managers of
Dresdner RCM by RCM Limited.
(2) The principal business address of each such person is Dresdner Bank AG,
Jurgen-Ponto-Platz 1, 60301 Frankfurt am Main Germany.
(3) Each such person was designated as a member of the Board of Managers of
Dresdner RCM by Dresdner Bank.
<PAGE>
(4) The principal business address of Mr. Fugelsang is 75 Wall Street, New
York, New York, 10005.
No officer or Trustee of the Trust or Director of MONY currently is an officer
or employee of Dresdner RCM or a member of Dresdner RCM's Board of Managers, an
officer, employee, director or stockholder of RCM General, or a partner of RCM
Limited. No officer or Trustee of the Trust or Director of MONY has any other
material direct or indirect interest in Dresdner RCM, RCM General or RCM
Limited or any other person controlling, controlled by or under common control
with Dresdner RCM. Since January 1, 1997, none of the Trustees of the Trust or
Director of MONY has had any material interest, direct or indirect, in any
material transactions, or in any material proposed transactions, to which
Dresdner RCM, Dresdner Bank or any subsidiary of Dresdner RCM or Dresdner Bank
was or is to be a party.
Dresdner RCM has advised the Subaccount that neither RCM Limited nor RCM
General is registered as an investment adviser under the Advisers Act. Dresdner
RCM believes that such registration is not required because RCM Limited and RCM
General do not engage and will not engage in any investment management
activities of Dresdner RCM. As a result, neither the management agreement nor
the governance agreement described above has been submitted for approval by the
Board of Trustees of the Trust or the holders of beneficial interests in the
Portfolio.
MANAGEMENT ACTIVITIES. As of January 1, 1998, Dresdner RCM had approximately
$30.0 billion of assets under management. Dresdner RCM's predecessor company,
RCM Capital Management, a California Limited Partnership, was organized in July
1986 as the successor to the business and operations of Rosenberg Capital
Management, which was established in 1970.
Dresdner RCM acts as investment manager for the portfolios of registered
investment companies with investment objectives similar to the Portfolio's
investment objective of providing a high level of capital appreciation and
secondary objective of providing current income. The name of each such fund,
together with information concerning the fund's net assets and the fees paid to
Dresdner RCM for its services, are set forth in Exhibit C.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Board of Trustees of the Trust authorized the Adviser to terminate the
Chancellor LGT Subadvisory Agreement and approved the Montag Subadvisory
Agreement and the Dresdner RCM Subadvisory Agreement at a meeting held on
January 21, 1998.
Before authorizing the Adviser to terminate the Chancellor LGT Subadvisory
Agreement, the Board of Trustees of the Trust reviewed with the Adviser its
recommendation that the services of Chancellor LGT as subadviser of the
<PAGE>
Portfolio be terminated. The Trustees reviewed Chancellor LGT's performance
under the Chancellor LGT Subadvisory Agreement, which had been below benchmark
during the fourth quarter of 1996 and the first quarter of 1997 but had
improved somewhat during the final three quarters of 1997. The Trustees also
considered recent changes in senior management at Chancellor LGT, including the
resignation of the chief executive officer and the president in August, 1997,
and the announcement in December, 1997 that Chancellor LGT would be sold, which
announcement was followed by the resignation in January, 1998 of Chancellor
LGT's Head of U.S. Equities. The Head of U.S. Equities was directly responsible
for the team of investment professionals managing the Portfolio's assets. The
Trustees agreed with the Adviser that the management uncertainties involving
Chancellor LGT suggested that it would be in the best interests investors in
the Portfolio to terminate Chancellor LGT as subadviser.
The Board of Trustees of the Trust also reviewed the Adviser's procedures for
selecting a new subadviser. The Trustees considered information with respect to
each of Montag and Dresdner RCM and whether the Montag Subadvisory Agreement
and the Dresdner RCM Subadvisory Agreement were in the best interests of the
Portfolio and its holders of beneficial interests. The Trustees noted that in
recent years the Portfolio had underperformed the benchmarks selected for it,
and that it was important to attempt to reverse that trend. The Trustees
considered that, in many circumstances, a combination of subadvisers could be
less likely to result in significant fund underperformance by diminishing
volatility in performance and curtailing the extremes of performance. The
Trustees considered the nature and quality of services expected to be provided
by each of Montag and Dresdner RCM and reviewed and discussed information
regarding each subadviser's fees, expense ratio and performance. In evaluating
each subadviser's ability to provide services to the Portfolio, the Trustees
considered information as to the subadviser's business organization, financial
resources, personnel and other matters. The Trustees compared the investment
performance of certain accounts advised by each of Montag and Dresdner RCM
having investment objectives similar to the Portfolio against various
benchmarks and to the investment performance of the Portfolio's assets as
managed by Chancellor LGT.
Based upon its review, the Board of Trustees of the Trust concluded that (a)
management uncertainties at Chancellor LGT which could directly affect
management of the Portfolio's assets suggested that it would be in the best
interests of investors in the Portfolio to terminate the services of Chancellor
LGT as subadviser of the Portfolio, (b) for relevant periods Chancellor LGT's
investment performance underperformed both Montag's and Dresdner RCM's
performance in managing assets of equity growth clients, (c) the terms of each
of the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory Agreement
are reasonable, fair and in the best interests of the Portfolio and its holders
of beneficial interests, and (d) the fees provided in each of the Montag
Subadvisory Agreement and the Dresdner RCM Subadvisory Agreement are fair and
<PAGE>
reasonable in light of the usual and customary charges made for services of the
same nature and quality. Accordingly, after consideration of the above factors,
and such other factors and information as it deemed relevant, the Board of
Trustees of the Trust, including all of the Independent Trustees, authorized
the Adviser to terminate the Chancellor LGT Subadvisory Agreement, approved
each of the Montag Subadvisory Agreement and the Dresdner RCM Subadvisory
Agreement and voted to recommend the approval of each Subadvisory Agreement by
the holders of beneficial interests in the Portfolio.
REQUIRED VOTE
Approval of each Agreement will require the approval of "a majority of the
outstanding voting securities" (as defined below) of the Portfolio present in
person or represented by proxy at a meeting of the holders of the beneficial
interests in the Portfolio. Under the 1940 Act, a "majority of the outstanding
voting securities" of an issuer means the affirmative vote by the lesser of (a)
67% or more of the issuer's voting securities present at a meeting if the
holders of more than 50% of the issuer's outstanding voting securities are
present in person or represented by proxy or (b) more than 50% of the issuer's
outstanding voting securities (a "1940 Act Majority").
MONY, as legal owner of all the assets of the Subaccount, has been asked to
vote on the approval of the Montag Subadvisory Agreement and the Dresdner RCM
Subadvisory Agreement in accordance with instructions received from Contract
Holders at the Meeting. The percentage of the Subaccount's votes representing
Contract Holders not voting at the Meeting will be voted by MONY in the same
proportion as those cast by Contract Holders who do, in fact, vote. Each
Contract Holder will in turn provide voting instructions to MONY with respect
to the Contract Holder's Units in accordance with instructions received from
its Participants. For Units for which no timely instructions from Participants
are received, each Contract Holder will instruct MONY to vote those Units in
the same proportion as Units for which the Contract Holder does, in fact,
receive voting instructions.
Because there are holders of beneficial interests in the Portfolio besides the
Subaccount, it is possible that either or both of the Montag Subadvisory
Agreement and the Dresdner RCM Subadvisory Agreement will not be approved by
the requisite vote, even if MONY is instructed to vote in favor of the
Subadvisory Agreements by a 1940 Act Majority of the outstanding Units of the
Subaccount. It is also possible that either or both of the Subadvisory
Agreements will be approved by the requisite vote, even if MONY is instructed
to vote against approval of the Subadvisory Agreements by a 1940 Act Majority
of the outstanding Units of the Subaccount.
In the event that both Subadvisory Agreements do not receive the requisite
shareholder approval, the Adviser would negotiate a new investment subadvisory
<PAGE>
agreement with a different advisory organization or make other appropriate
arrangements, in either event subject to approval in accordance with the 1940
Act.
THE BOARD OF DIRECTORS OF MONY RECOMMENDS THAT CONTRACT HOLDERS AND THEIR
PARTICIPANTS VOTE FOR APPROVAL OF EACH OF THE MONTAG SUBADVISORY AGREEMENT AND
THE DRESDNER RCM SUBADVISORY AGREEMENT.
ITEM 2. TO INSTRUCT MONY TO VOTE WITH RESPECT TO AUTHORIZING THE
BOARD OF TRUSTEES OF THE TRUST TO SELECT AND CHANGE INVESTMENT
SUBADVISERS AND ENTER INTO INVESTMENT SUBADVISORY AGREEMENTS
WITHOUT OBTAINING THE APPROVAL OF CONTRACT HOLDERS AND THEIR
PARTICIPANTS.
As discussed above, the Adviser selects and employs one or more subadvisers to
make the day-to-day investment selections for the Portfolio, and reviews the
subadvisers' continued performance. See "Background." The Adviser may terminate
the services of any subadviser at any time; however, retaining the services of
a new subadviser currently requires Portfolio investor approval.
The 1940 Act requires that all contracts pursuant to which persons serve as
investment advisers to investment companies be approved by a 1940 Act Majority.
This requirement would apply to the appointment of any new or replacement
subadviser to the Portfolio. Absent exemptive relief from the Securities and
Exchange Commission, holders of beneficial interests in the Portfolio
(including MONY, as legal owner of all the assets of the Subaccount) would be
asked to approve the advisory contract for the new subadviser. MONY would then
seek approval of the contract from the Contract Holders of the Subaccount and
their Participants. The Securities and Exchange Commission has previously
granted conditional exemptions from these 1940 Act Majority vote requirements.
The Trust has applied for such an exemption, and if it is granted and this
proposed Item 2 is approved, the Board of Trustees of the Trust would be able,
without further approval by the holders of beneficial interests, to appoint
additional or replacement subadvisers. The Trustees would not, however, be able
to replace the Adviser as investment adviser without complying with the 1940
Act and applicable regulations governing investor approval of advisory
contracts.
This Item 2 is intended to facilitate the efficient supervision and management
of the subadvisers by the Adviser and the Board of Trustees of the Trust. The
Adviser continuously monitors the performance of the subadvisers and may from
time to time recommend that the Board of Trustees of the Trust replace a
subadviser or appoint additional subadvisers, depending on the Adviser's
assessment of which subadviser or combination of subadvisers it believes will
optimize the Portfolio's chances of achieving its investment objective. If the
<PAGE>
Securities and Exchange Commission were to grant the exemptive relief and
Contract Holders were to approve this proposed Item 2, MONY would no longer be
required to call meeting of the Contract Holders of the Subaccount each time a
new subadviser is appointed.
Contract Holder meetings entail substantial costs which could diminish the
benefits of the current subadvisory arrangements. These costs must be weighed
against the benefits of contract holder scrutiny of proposed contracts with
additional or replacement subadvisers. However, even in the absence of contract
holder approval, any proposal to add or replace subadvisers would receive
careful review. First, the Adviser would assess the Portfolio's needs and, if
it believed additional or replacement subadvisers could benefit the Portfolio,
would search for available investment subadvisers. Second, any recommendations
made by the Adviser would have to be approved by a majority of the Board of
Trustees of the Trust, including a majority of the Independent Trustees. In
selecting any new or replacement subadvisers, the Trustees are required to
determine that an investment management agreement with the subadviser is
reasonable, fair and in the best interests of a portfolio and its investors,
and that the fees provided in the agreement are fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality. Finally, any further appointments of additional or replacement
subadvisers would have to comply with any conditions contained in the
Securities and Exchange Commission exemptive order, if such order is granted.
The Board of Directors of MONY believes that the proposed authority to select
and change investment subadvisers and enter into investment subadvisory
agreements without obtaining the approval of the holders of beneficial
interests in the Portfolio is in the best interests of the Contract Holders of
the Subaccount and their Participants.
REQUIRED VOTE
Authorizing the Board of Trustees of the Trust to select and change investment
subadvisers and enter into investment subadvisory agreements without obtaining
the approval of the holders of beneficial owners will require the approval of a
1940 Act Majority of the outstanding voting securities of the Portfolio,
present in person or represented by proxy at a meeting of investors in the
Portfolio.
THE BOARD OF DIRECTORS OF MONY RECOMMENDS THAT THE CONTRACT HOLDERS AND THEIR
PARTICIPANTS VOTE FOR AUTHORIZING THE BOARD OF TRUSTEES OF THE TRUST TO SELECT
AND CHANGE INVESTMENT SUBADVISERS AND ENTER INTO INVESTMENT SUBADVISORY
AGREEMENTS WITHOUT OBTAINING THE APPROVAL OF CONTRACT HOLDERS AND THEIR
PARTICIPANTS.
<PAGE>
ITEM 3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE SPECIAL MEETING OF CONTRACT HOLDERS AND ANY ADJOURNMENTS
THEREOF.
The management of MONY knows of no other business to be presented at the
Meeting. If any additional matters should be properly presented, it is intended
that the enclosed proxy (if not limited to the contrary) will be voted in
accordance with the judgment of the persons named in such proxy.
ADDITIONAL INFORMATION
The principal underwriter and distributor of the Contracts is MONY Securities
Corp., 1740 Broadway, New York, New York 10019. The Portfolio's
Administrator and Transfer Agent is Diversified Investment Advisors, Inc., 4
Manhattanville Road, Purchase, New York 10577.
As of the Record Date, no Directors or officers of MONY owned beneficially or
had the right to vote any outstanding Units of the Subaccount. As of the Record
date, MONY owned of record 100% of the outstanding Units of the Subaccount.
Since neither Keynote nor the Subaccount holds annual meetings of contract
holders, Contract Holder proposals to be presented at any subsequent meeting of
contract holders must be received by MONY at its office within a reasonable
time before the proxy solicitation is made.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Edward P. Bank
Vice President and Assistant Secretary
April 6, 1998
<PAGE>
PROXY CARD PROXY CARD
KEYNOTE EQUITY GROWTH SUBACCOUNT
OF
KEYNOTE SERIES ACCOUNT
A SEPARATE ACCOUNT OF THE MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
A PROXY FOR A SPECIAL MEETING
OF CONTRACT HOLDERS TO BE HELD MAY 15, 1998
The undersigned owner of a group variable annuity contract (a "Contract")
issued by The Mutual Life Insurance Company of New York ("MONY") with unit
interests in the Keynote Equity Growth Subaccount (the "Subaccount"), a
subaccount of the Keynote Series Account ("Keynote"), revoking all Proxies
heretofore given, hereby appoints each of Tom A. Schlossberg, Robert F. Colby
and Gerald L. Katz, or any of them, as Proxies of the undersigned with full
power of substitution, to vote on behalf of the undersigned its unit interests
in the Subaccount which the undersigned is entitled to vote at the Special
Meeting of Contract Holders of the Subaccount to be held at the offices of MONY
at 4 Manhattanville Road, Purchase, New York 10577 on May 15, 1998, at 9:00
a.m., Eastern time, and at any adjournment thereof, as fully as the undersigned
would be entitled to vote if personally present, as follows:
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MONY.
THE BOARD OF DIRECTORS OF MONY RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.
1. (a) To instruct MONY to vote with respect to the approval
of a new Investment Subadvisory Agreement between
Diversified Investment Advisors, Inc. and Montag &
Caldwell, Inc.:
____FOR ____AGAINST ____ABSTAIN
(b) To instruct MONY to vote with respect to the approval of a new
Investment Subadvisory Agreement between Diversified Investment
Advisors, Inc. and Dresdner RCM Global Investors LLC:
____FOR ____AGAINST ____ABSTAIN
2. To instruct MONY to vote with respect to authorizing the Board of
Trustees of Diversified Investors Portfolios to select and change
investment subadvisers and enter into investment subadvisory agreements
<PAGE>
without obtaining the approval of Contract Holders and their
Participants.
____FOR ____AGAINST ____ABSTAIN
THE UNIT INTERESTS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR VOTED TO
INSTRUCT MONY TO VOTE FOR ANY PROPOSAL FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date:_______________
________________________________
Signature of Contract Holder
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEAR ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
<PAGE>
BALLOT BALLOT
KEYNOTE EQUITY GROWTH SUBACCOUNT
OF
KEYNOTE SERIES ACCOUNT
A SEPARATE ACCOUNT OF THE MUTUAL
LIFE INSURANCE COMPANY OF NEW YORK
INSTRUCTIONS FOR A SPECIAL MEETING
OF CONTRACT HOLDERS TO BE HELD MAY 15, 1998
The undersigned, a participant in a Group Variable Annuity Contract (the
"Contract") issued by The Mutual Life Insurance Company of New York ("MONY"),
revoking all proxies heretofore given, hereby instructs the holder of the
Contract (the "Contract Holder") to vote its unit interests in the Keynote
Equity Growth Subaccount (the "Subaccount"), a subaccount of the Keynote Series
Account ("Keynote"), which are attributable to the undersigned's participation
in the Contract and which the Contract Holder is entitled to vote at the
Special Meeting of Contract Holders of the Subaccount to be held at MONY, 4
Manhattanville Road, Purchase, New York 10577 on May 15, 1998, at 9:00 a.m.,
Eastern time, and at any adjournment thereof, as fully as the undersigned would
be entitled to vote if personally present, as follows:
INSTRUCTIONS SOLICITED ON BEHALF OF THE CONTRACT HOLDER.
THE BOARD OF DIRECTORS OF MONY RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
1. (a) To instruct MONY to vote with respect to the approval
of a new Investment Subadvisory Agreement between
Diversified Investment Advisors, Inc. and Montag &
Caldwell, Inc.:
____FOR ____AGAINST ____ABSTAIN
(b) To instruct MONY to vote with respect to the approval of a new
Investment Subadvisory Agreement between Diversified Investment
Advisors, Inc. and Dresdner RCM Global Investors LLC:
____FOR ____AGAINST ____ABSTAIN
2. To instruct MONY to vote with respect to authorizing the Board of
Trustees of Diversified Investors Portfolios to select and change
investment subadvisers and enter into investment subadvisory agreements
<PAGE>
without obtaining the approval of Contract Holders and their
Participants.
____FOR ____AGAINST ____ABSTAIN
THE UNIT INTERESTS ATTRIBUTABLE TO THE UNDERSIGNED'S PARTICIPATION IN THE
CONTRACT WILL BE VOTED AS INDICATED OR VOTED TO INSTRUCT MONY TO VOTE FOR ANY
PROPOSALS FOR WHICH NO CHOICE IS INDICATED.
THE CONTRACT HOLDER IS INSTRUCTED IN ITS DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
Date:_______________
___________________________________
Signature
___________________________________
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
EXHIBIT A
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of January 21, 1998, by and
between Diversified Investment Advisors, Inc., a Delaware corporation
("Diversified") and [Montag & Caldwell, Inc.] [Dresdner RCM Global Investors
LLC] ("Subadviser").
WITNESSETH:
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940 and has been
retained to provide investment advisory services to the Equity Growth
Portfolio, a series of Diversified Investors Portfolios ("Portfolio"), a
diversified open-end management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Diversified desires to retain the Subadviser to furnish it with
portfolio management services in connection with Diversified's investment
advisory activities on behalf of the Portfolio, and the Subadviser is willing
to furnish such services to Diversified;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Subadviser. In accordance with and subject to the
Investment Advisory Agreement between the Portfolio and Diversified, attached
hereto as Schedule A (the "Advisory Agreement"), Diversified hereby appoints
the Subadviser to perform the portfolio management services described herein
for the investment and reinvestment of such amount of the Portfolio's assets as
is determined from time to time by the Portfolio's Board of Trustees, subject
to the control and direction of Diversified and the Portfolio's Board of
Trustees, for the period and on the terms hereinafter set forth.
The Subadviser shall provide Diversified with such investment advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Portfolio's assets. The Subadviser shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held uninvested, subject always to the provisions of
the 1940 Act and to the Portfolio's then-current Prospectus and Statement of
Additional Information ("SAI"). The Subadviser will not supervise the
<PAGE>
investment of cash. Cash in the Fund will be invested by Diversified who shall
be solely responsible for the investment of such cash.
In particular, the Subadviser shall: (i) continuously review, supervise
and administer the investment program of the Portfolio; (ii) monitor regularly
the relevant securities for the Portfolio to determine if adjustments are
warranted and, if so, to make such adjustments on a periodic basis; (iii)
determine, in the Subadviser's discretion, the securities to be purchased or
sold or exchanged in order to keep the Portfolio in balance with its designated
investment strategy; (iv) determine, in the Subadviser's discretion, whether to
exercise warrants or other rights with respect to the Portfolio's securities;
(v) determine, in the Subadviser's discretion, whether the merit of an
investment has been substantially impaired by extraordinary events or financial
conditions, thereby warranting the removal of such securities from the
Portfolio; (vi) as promptly as practicable after the end of each calendar
month, furnish a report showing: (a) all transactions during such month, (b)
all assets of the Portfolio on the last day of such month, rates of return, and
(c) such other information relating to the Portfolio as the Diversified may
reasonably request; (vii) meet at least four times per year with Diversified
and with such other persons as may be designated on reasonable notice and at
reasonable locations, at the request of Diversified, to discuss general
economic conditions, performance, investment strategy, and other matters
relating to the Portfolio; (viii) provide the Portfolio with records concerning
the Subadviser's activities which the Portfolio is required to by law maintain;
and (ix) render regular reports to the Portfolio's officers and Directors
concerning the Subadviser's discharge of the foregoing responsibilities.
The Subadviser shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Portfolio's securities shall be exercised. Should the Board
of Trustees of the Portfolio at any time, however, make any definite
determination as to investment policy and notify the Subadviser thereof in
writing, the Subadviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked.
The Subadviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
Portfolio securities for the Portfolio's account with brokers or dealers
selected by it, and to that end the Subadviser is authorized as the agent of
the Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
<PAGE>
such orders, the Subadviser is directed to seek for the Portfolio, in its best
judgment, prompt execution in an effective manner at the most favorable price.
Subject to this requirement of seeking the most favorable price, securities may
be bought from or sold to broker-dealers who have furnished statistical,
research and other information or services to the Subadviser or the Portfolio,
subject to any applicable laws, rules and regulations.
2. Allocation of Charges and Expenses. The Subadviser shall furnish at
its own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 1 above. It is understood that the
Portfolio will pay all of its own expenses including, without limitation,
compensation and out-of-pocket expenses of Trustees not affiliated with the
Subadviser or Diversified; governmental fees; interest charges; taxes;
membership dues; fees and expenses of independent auditors, of legal counsel
and of any transfer agent, administrator, distributor, shareholder servicing
agents, registrar or dividend disbursing agent of the Portfolio; expenses of
distributing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements and reports to governmental officers and commissions and to
shareholders of the Portfolio; expenses connected with the execution, recording
and settlement of Portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the
Portfolio; expenses of shareholder meetings; expenses of litigation and other
extraordinary or non-recurring events and expenses relating to the issuance,
registration and qualification of shares of the Portfolio.
3. Compensation of the Subadviser. For the services to be rendered,
Diversified shall pay to the Subadviser an investment advisory fee computed in
accordance with the terms of Schedule B herewith attached. If the Subadviser
serves for less than the whole of any period specified, its compensation shall
be prorated.
4. Covenants and Representations of the Subadviser. The Subadviser agrees
that it will not deal with itself, or with the Trustees of the Portfolio or
with Diversified, or the principal underwriter or distributor as principals in
making purchases or sales of securities or other property for the account of
the Portfolio, except as permitted by the 1940 Act, will not take a long or
short position in the shares of the Portfolio except as permitted by the
Portfolio's Articles, and will comply with all other applicable provisions of
the Portfolio's Articles and By-Laws and any current Prospectus of the
Portfolio.
5. Limits on Duties. The Subadviser shall be responsible only for
managing the assets in good faith and in accordance with the investment
guidelines, and shall have no responsibility whatsoever for, and shall incur no
<PAGE>
liability on account of (i) diversification or selection of such investment
guidelines, (ii) advice on, or management of, any other assets for Diversified,
(iii) filing of any tax or information returns or forms, withholding or paying
any taxes, or seeking any exemption or refund, (iv) registration with any
government or agency, or (v) administration of the plans and trusts investing
through the Portfolio, and shall be indemnified by Diversified for any loss in
carrying out the terms and provisions of this Agreement, including reasonable
attorney's fees, indemnification to brokers and commission merchants, fines,
taxes, penalties and interest. Subadviser, however, shall be liable for any
liability, damages, or expenses of Diversified arising out of the negligence,
malfeasance or violation of applicable law by it or any of its employees in
providing management under this Agreement; and, in such cases, the
indemnification by Diversified, referred to above shall be inapplicable.
The Subadviser may apply to Diversified at any time for instructions and
may consult counsel for Diversified or its own counsel with respect to any
matter arising in connection with the duties of the Subadviser. Also, the
Subadviser shall be protected in acting upon any document which it reasonably
believes to be genuine and to have been signed by the proper person or persons.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and, unless
terminated earlier as provided below, shall remain in force for two years, on
which date it will terminate unless its continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of the Trustees of the
Portfolio who are not "interested persons" to this Agreement or of the
Subadviser or Diversified at a meeting specifically called for the purpose of
voting on such approval, and (b) by the Board of Trustees of the Portfolio or
by vote of a majority of the outstanding voting securities of the Portfolio.
However, if the shareholders of the Portfolio fail to approve the Agreement as
provided herein, the Subadviser may continue to serve hereunder in the manner
and to the extent permitted by the 1940 Act and Rules thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolio, or by Diversified. The Subadviser may terminate
the Agreement only upon giving 90 days' advance written notice to Diversified.
This Agreement shall automatically terminate in the event of its assignment.
This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Portfolio and by
vote of a majority of the Board of Trustees of the Portfolio who are not
<PAGE>
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
7. Certain Records. Any records to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 adopted under the 1940 Act which
are prepared or maintained by the Subadviser on behalf of the Portfolio are the
property of the Portfolio and will be surrendered promptly to the Portfolio on
request.
8. Survival of Compensation Rates. All rights to compensation under this
Agreement shall survive the termination of this Agreement.
9. Entire Agreement. This Agreement states the entire agreement of the
parties with respect to management of the Portfolio and may not be amended
except in a writing signed by the parties.
10. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11. Change of Management and Pending Litigation. Subadviser represents to
Diversified that it will disclose to Diversified as soon as it has knowledge of
any significant change or variation in its management structure or personnel or
any significant change or variation in its management style or investment
philosophy. In addition, Subadviser represents to Diversified that it will
similarly disclose to Diversified, as soon as it has knowledge, the existence
of any pending or threatened significant legal action being brought against it
whether in the form of a lawsuit or an investigation by any federal or state
governmental agency.
Diversified represents to Subadviser that any information received by
Diversified pursuant to this section will be kept strictly confidential.
12. Use of Name. Subadviser hereby agrees that Diversified
may use the Subadviser's name in its marketing or advertising
materials. Diversified agrees to allow the Subadviser to examine
and approve any such materials prior to use.
<PAGE>
IN WITNESS WHEREOF, the parties thereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Diversified Investment Advisors, Inc.
By: /s/ John T. Hughes
[Montag & Caldwell, Inc.]
[Dresdner RCM Global Investors LLC]
By:________________________________
<PAGE>
SCHEDULE A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of January 3, 1994 by and between the Equity Growth
Portfolio, a series of Diversified Investors Portfolios (herein called the
"Portfolio"), and Diversified Investment Advisors, Inc. a Delaware corporation
(herein called
"Diversified").
WHEREAS, the Portfolio is registered as a diversified, open-end,
management investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940; and
WHEREAS, the Portfolio desires to retain Diversified to render investment
advisory services, and Diversified is willing to so render such services on the
terms hereinafter set forth;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. The Portfolio hereby appoints Diversified to act as investment advisor
to the Portfolio for the period and on the terms set forth in this Agreement.
Diversified accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. (a) Diversified shall, at its expense, (i) employ sub-advisors or
associate with itself such entities as it believes appropriate to assist it in
performing its obligations under this Agreement and (ii) provide all services,
equipment and facilities necessary to perform its obligations under this
Agreement.
(b) The Portfolio shall be responsible for all of its expenses and
liabilities, including, but not limited to: compensation and out-of-pocket
expenses of Trustees not affiliated with any subadviser or Diversified;
governmental fees; interest charges; taxes; membership dues; fees and expenses
<PAGE>
of independent auditors, of legal counsel and of any transfer agent,
administrator, distributor, shareholder servicing agents, registrar or dividend
disbursing agent of the Portfolio; expenses of distributing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses, shareholder reports, notices, proxy statements and
reports to governmental officers and commissions and to shareholders of the
Portfolio; expenses connected with the execution, recording and settlement of
Portfolio security transactions; insurance premiums; fees and expenses of the
custodian for all services to the Portfolio, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of calculating
the net asset value of shares of the Portfolio; expenses of shareholder
meetings; expenses of litigation and other extraordinary or non-recurring
events and expenses relating to the issuance, registration and qualification of
shares of the Portfolio.
3. (a) Subject to the general supervision of the Board of Trustees of the
Portfolio, Diversified shall formulate and provide an appropriate investment
program on a continuous basis in connection with the management of the
Portfolio, including research, analysis, advice, statistical and economic data
and information and judgments of both a macroeconomic and microeconomic
character.
Diversified will determine the securities to be purchased, sold, lent,
exchanged or otherwise disposed of or acquired by the Portfolio in accordance
with predetermined guidelines as set forth from time to time in the Portfolio's
then-current prospectus and Statement of Additional Information ("SAI") and
will place orders pursuant to its determinations either directly with the
issuer or with any broker or dealer who deals in such securities. In placing
orders with brokers and dealers, Diversified will use its reasonable best
efforts to obtain the best net price and the most favorable execution of its
orders, after taking into account 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 or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Consistent with this obligation, Diversified may, to the
extent permitted by law, purchase and sell Portfolio securities to and from
brokers and dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934) to or for the
benefit of the Portfolio and/or other accounts over which Diversified or any of
its affiliates exercises investment discretion.
Subject to the review of the Portfolio's Board of Trustees from time to
time with respect to the extent and continuation of the policy, Diversified is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for effecting a securities transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if Diversified
<PAGE>
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of Diversified with respect to the accounts as to which it
exercises investment discretion.
In placing orders with brokers and/or dealers, Diversified intends to
seek best price and execution for purchases and sales and may effect
transactions through itself and its affiliates on a securities exchange
provided that the commissions paid by the Portfolio are "reasonable and fair"
compared to commissions received by other broker-dealers having comparable
execution capability in connection with comparable transactions involving
similar securities and provided that the transactions in connection with which
such commissions are paid are effected pursuant to procedures established by
the Board of the Trustees of the Portfolio. All transactions are effected
pursuant to written authorizations from the Portfolio conforming to the
requirements of Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Pursuant to such authorizations, an affiliated
broker-dealer may transmit, clear and settle transactions for the Portfolio
that are executed on a securities exchange provided that it arranges for
unaffiliated brokers to execute such transactions.
Diversified shall determine from time to time the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining
to the Portfolio's securities shall be exercised, provided, however, that
should the Board of Trustees at any time make any definite determination as to
investment policy and notify Diversified thereof in writing, Diversified shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked.
Diversified will determine what portion of securities owned by the Portfolio
shall be invested in securities described by the policies of the Portfolio and
what portion, if any, should be held uninvested. Diversified will determine
whether and to what extent to employ various investment techniques available to
the Portfolio. In effecting transactions with respect to securities or other
property for the account of the Portfolio, Diversified may deal with itself and
its affiliates, with the Trustees of the Portfolio or with other entities to
the extent such actions are permitted by the 1940 Act.
(b) Diversified also shall provide to the Portfolio administrative
assistance in connection with the operation of the Portfolio, which shall
include compliance with all reasonable requests of the Portfolio for
information, including information required in connection with the Portfolio's
filings with the Securities and Exchange Commission and state securities
commissions.
<PAGE>
(c) As a manager of the assets of the Portfolio, Diversified shall
make investments for the account of the Portfolio in accordance with
Diversified's best judgment and within the Portfolio's investment objectives,
guidelines, and restrictions, the 1940 Act and the provisions of the Internal
Revenue Code of 1986 relating to regulated investment companies subject to
policy decisions adopted by the Board of Trustees.
(d) Diversified shall furnish to the Board of Trustees periodic
reports on the investment performance of the Portfolio and on the performance
of its obligations under this Agreement and shall supply such additional
reports and information as the Portfolio's officers or Board of Trustees shall
reasonably request.
(e) On occasions when Diversified deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
customers, Diversified, to the extent permitted by applicable law, may
aggregate the securities to be so sold or purchased in order to obtain the best
execution or lower brokerage commissions, if any. Diversified may also on
occasion purchase or sell a particular security for one or more customers in
different amounts. On either occasion, and to the extent permitted by
applicable law and regulations, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Diversified in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Portfolio and to such other customers.
(f) Diversified shall also provide the Portfolio with the following
services as may be required:
(i) providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Portfolio and
for performing administrative and management functions;
(ii) supervising the overall administration of the Portfolio,
including negotiation of contracts and fees with and the
monitoring of performance and billings of the Portfolio's
transfer agent, custodian and other independent contractors or
agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Portfolio with applicable laws and
regulations, including registration statements, registration fee
filings, semi-annual and annual reports to investors, proxy
statements and tax returns;
<PAGE>
(iv) preparation of agendas and supporting documents for and minutes
of meeting of Trustees, committees of Trustees and investors;
and
(v) maintaining books and records of the Portfolio.
4. Diversified shall give the Portfolio the benefit of Diversified's best
judgment and efforts in rendering services under this Agreement. As an
inducement to Diversified's undertaking to render these services, the Portfolio
agrees that Diversified shall not be liable under this Agreement for any
mistake in judgment or in any other event whatsoever provided that nothing in
this Agreement shall be deemed to protect or purport to protect Diversified
against any liability to the Portfolio or its investors to which Diversified
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties under this Agreement or
by reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
5. In consideration of the services to be rendered by Diversified under
this Agreement, the Portfolio shall pay Diversified a fee accrued daily and
paid monthly at an annual rate equal to .70% of the Portfolio's average daily
net assets. If the fees payable to Diversified pursuant to this paragraph 5
begin to accrue before the end of any month or if this Agreement terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination,
as the case may be, shall be prorated according to the proportion which the
period bears to the full month in which the effectiveness or termination
occurs. For purposes of calculating the monthly fees, the value of the net
assets of the Portfolio shall be computed in the manner specified in its
Regulation Statement on Form N-1A for the computation of net asset value. For
purposes of this Agreement, a "business day" is any day the New York Stock
Exchange is open for trading.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
Diversified hereby agrees that all records which it maintains for the Portfolio
are property of the Portfolio and further agrees to surrender promptly to the
Portfolio any such records upon the Portfolio's request. Diversified further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records required to be maintained by Rule 31a-1 under the 1940 Act.
6. This Agreement shall be effective as to the Portfolio as of the date
the Portfolio commences investment operations after this Agreement shall have
been approved by the Board of Trustees of the Portfolio and the investor(s) in
the Portfolio in the manner contemplated by Section 15 of the 1940 Act and,
unless sooner terminated as provided herein, shall continue until the second
anniversary of the date hereof. Thereafter, if not terminated, this Agreement
<PAGE>
shall continue in effect as to the Portfolio for successive periods of 12
months each, provided such continuance is specifically approved at least
annually by the vote of a majority of those members of the Board of Trustees of
the Portfolio who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval; and either (a) by the vote of a majority of the full Board of
Trustees or (b) by vote of a majority of the outstanding voting securities of
the Portfolio; provided, however, that this Agreement may be terminated by the
Portfolio at any time, without the payment of any penalty, by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio on 60 days' written notice to Diversified, or by
Diversified as to the Portfolio at any time, without payment of any penalty, on
90 days' written notice to the Portfolio. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities", "interested person" and
"assignment" shall have the same meanings as such terms have in the 1940 Act
and the rule and regulatory constructions thereunder).
7. Except to the extent necessary to perform Diversified's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of Diversified, or any affiliate of Diversified, or any employee of
Diversified, to engage in any other business or devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other trust,
corporation, firm, individual or association.
8. The investment management services of Diversified to the Portfolio
under this Agreement are not to be deemed exclusive as to Diversified and
Diversified will be free to render similar services to others.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Portfolio.
This Agreement embodies the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
Should any part of this Agreement be held or made invalid by a court decision,
<PAGE>
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.
9. This Agreement shall be construed in accordance with the laws of the
State of New York provided that nothing herein shall be construed in a manner
inconsistent with the requirements of 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
Attest: Diversified Investments Portfolios
/s/ John Hughes By:/s/ Tom Schlossberg
- --------------------- ---------------------------------
Chairman and President
Attest: Diversified Investment Advisors, Inc.
/s/ Catherine A. Mohr By:/s/ Gerald L. Katz
- --------------------- ---------------------------------
Vice President and CFO
<PAGE>
AMENDMENT NO. 1 TO THE
INVESTMENT ADVISORY AGREEMENT DATED JANUARY 3, 1994
BETWEEN
EQUITY GROWTH PORTFOLIO, A SERIES OF
DIVERSIFIED INVESTORS PORTFOLIOS, AND DIVERSIFIED
INVESTMENT
ADVISORS, INC.
WHEREAS, the Equity Growth Portfolio, a series of Diversified Investors
Portfolios ("Portfolio"), and Diversified Investment Advisors, Inc.
("Diversified") entered into an Investment Advisory Agreement ("Agreement") as
of January 3, 1994 whereby Diversified would render investment advisory
services to the Portfolio; and
WHEREAS, Section 8 of the Agreement provides for its amendment by the
Portfolio and Diversified provided that any material amendment must be approved
by a majority vote of the outstanding securities of the Portfolio; and
WHEREAS, the Portfolio and Diversified wish to amend the Agreement with
respect to the applicable fee schedule; now
NOW, THEREFORE, subject to obtaining the required majority vote of the
outstanding securities of the Portfolio, the Agreement is amended as follows,
such amendment to be effective as of November 15, 1996.
The first sentence of Section 5 of the Agreement is amended in its
entirety to read as follows:
In consideration of the services to be rendered by Diversified under this
Agreement, the Portfolio shall pay Diversified a fee accrued daily and
paid monthly at an annual rate equal to .62% of the Portfolio's average
daily net assets.
This Amendment No. 1 to the Agreement shall be construed in accordance
with the laws of the State of New York provided that nothing herein shall be
construed in a manner inconsistent with the requirements of the Investment
Company Act of 1940.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be executed by their officers designated below.
Attest: Diversified Investors Portfolios
_________________________ By:/s/ Tom Schlossberg
----------------------------------
Tom Schlossberg
Chairman and President
Attest: Diversified Investment Advisors, Inc.
________________________ By:_________________________________
<PAGE>
SCHEDULE B
The Subadviser shall be compensated for its services under this Agreement on
the basis of the below-described annual fee schedule. The fee schedule shall
only be amended by agreement between the parties.
FEE SCHEDULE
.50% of the aggregate net assets of the Portfolio allocated to the
Subadviser applied to the first $50 million dollars
.25% of the aggregate net assets of the Portfolio allocated to the
Subadviser applied to the next $50 million dollars
.20% of the aggregate net assets of the Portfolio applied allocated to the
Subadviser applied thereafter
Aggregate net assets are equal to the total market value of the Portfolio. Fees
will be calculated by multiplying the arithmetic average of the beginning and
ending monthly net assets in the Portfolio by the fee schedule and dividing by
twelve. The fee will be paid quarterly.
Subadviser further agrees that if at anytime during the term of this
Subadvisory Agreement Subadviser offers another of its clients a lower fee than
that set forth in this Schedule B for the management of a similarly structured
Equity Growth Portfolio/Fund then Diversified will also be charged the lower
rate. Diversified will benefit from the lower rate from the first day that it
is in effect for Subadviser's other client. It is understood and agreed by both
Subadviser and Diversified that this paragraph is applicable solely to
Diversified's Equity Growth Portfolio and not to any other fund/assets which
Subadviser now manages or may manage in the future on Diversified's behalf.
<PAGE>
EXHIBIT B
OTHER FUNDS TO WHICH MONTAG ACTS AS INVESTMENT ADVISER:
FUND NAME NET ASSETS AS ANNUAL RATE OF FEE WAIVERS OR
OF DECEMBER COMPENSATION REDUCTIONS
31, 1997
Montag & $851,974,216 0.80% of net None
Caldwell assets (1)
Growth Fund
Enterprise $651,806,982 0.30% on first None
Growth Portfolio $100 million of
net assets,
0.25% on next
$100 million of
net assets and
0.20% on
average in
excess of
$200 million
Style Select $8,655,840 0.48% of None
Large Cap average daily
Growth Portfolio net assets
allocated to
Montag
(1) As of December 31, 1997.
<PAGE>
EXHIBIT C
OTHER FUNDS TO WHICH DRESDNER RCM ACTS AS INVESTMENT ADVISER:
FUND NAME NET ASSETS AS ANNUAL RATE OF FEE WAIVERS OR
OF DECEMBER COMPENSATION REDUCTIONS
31, 1997
Dresdner RCM $960,825,038 0.75% of None
Growth Equity average daily
Fund net assets
Dresdner RCM $661,410,636 1.0% of None
Small Cap Fund average daily
net assets
Dresdner RCM $ 98,442,929 0.75% of (1)
International average daily
Growth Equity net assets
Fund A
Bergstrom $158,894,821(2) 0.70% on first None
Capital $10 million of
Corporation average annual
net assets,
declining in
increments to
0.25% on
average in
excess of $100
million
Dresdner RCM $ 6,950,334 1.0% of average (3)
Global daily net assets
Technology
Fund
Dresdner RCM $ 4,455,582 1.0% of average (3)
Global Small daily net assets
Cap Fund
Dresdner RCM $ 4,670,936 1.0% of average (4)
Global Health daily net assets
Care Fund
Dresdner RCM $ 5,025,234 0.70% of (5)
Large Cap average daily
Growth Fund net assets
Dresdner RCM $ 3,000,236 1.0% of average (5)
Biotechnology daily net assets
Fund
Dresdner RCM $ 2,995,754 1.0% of average (5)
Emerging daily net assets
Market Fund
(1) Dresdner RCM has voluntarily undertaken to pay Dresdner RCM International
Growth Equity Fund A the amount, if any, by which certain ordinary operating
expenses of such fund exceed 1% of the average daily net assets of the fund on
an annual basis. Dresdner RCM may terminate this undertaking at any time, on at
least 30 days' advance notice, in its sole discretion.
(2) Dresdner RCM is a subadviser to the Bergstrom Capital Corporation and
managed $96,055,092 of Bergstrom Capital Corporation's $158,894,821 net assets,
as of December 31, 1997.
(3) Dresdner RCM has voluntarily undertaken, until at least December 31, 1997,
to pay the Dresdner RCM Global Technology Fund and the Global Small Cap Fund on
a quarterly basis the amount, if any, by which certain ordinary operating
expenses of each such fund exceed the annual rate of 1.75% of the respective
average daily net assets of each fund.
(4) Dresdner RCM has voluntarily undertaken, until at least December 31, 1997,
to pay the Dresdner RCM Large Cap Growth Fund on a quarterly basis the amount,
if any, by which certain ordinary operating expenses of such fund exceed the
annual rate of 0.95% of the average daily net assets of the fund.
(5) Dresdner RCM has voluntarily undertaken, until at least December 31, 1997,
to pay the Dresdner RCM Global Health Care Fund, Dresdner RCM Biotechnology
Fund and Dresdner RCM Emerging Markets Fund on a quarterly basis the amount, if
any, by which certain ordinary operating expenses of each such fund exceed the
annual rate of 1.50% of the average daily net assets of the fund.
