<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Paragon Portfolio
4900 Sears Tower
Chicago, Illinois 60606
________________________________________________________________
(Name of Registrant as specified in its Charter)
Paragon Portfolio
----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X ] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
[ ] $125 per Item 22(a) (2) of Exchange Act Schedule 14A.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 011:* N/A
4) Proposed maximum aggregate value of transaction: N/A
* Set forth the amount on which the filing is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid: N/A
2) Form, schedule or Registration statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
Notes:
<PAGE>
PARAGON PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER ___, 1995
Notice is hereby given that a Special Meeting of the Shareholders ("Special
Meeting") of the Paragon Treasury Money Market Fund ("Paragon Money Market"),
Paragon Short-Term Government Fund ("Paragon Short-Term"), Paragon Intermediate-
Term Bond Fund ("Paragon Intermediate"), Paragon Louisiana Tax-Free Fund
("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth"), Paragon
Value Equity Income Fund ("Paragon Equity"), Paragon Gulf South Growth Fund
("Paragon Gulf South"), Paragon Power Intermediate-Term Bond Portfolio ("Paragon
Power Intermediate"), Paragon Power Value Growth Portfolio ("Paragon Power
Growth"), Paragon Power Value Equity Income Portfolio ("Paragon Power Equity"),
and Paragon Power Gulf South Growth Portfolio ("Paragon Power Gulf South"),
separate series of the Paragon Portfolio (the "Trust"), will be held at the
Trust's offices at 10:00 am. (Eastern Time) at 4900 Sears Tower, Chicago,
Illinois 60606, for the following purposes:
1. To approve an Investment Advisory Agreement between Banc One
Investment Advisors Corporation ("BOIA") and the Trust with respect to
the eleven portfolios (the "Funds") of the Trust;
2. To approve a Sub-Investment Advisory Agreement between Banc One
Investment Advisors Corporation and Goldman Sachs Asset Management
with respect to Paragon Treasury Money Market Fund;
3. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
The proposed Investment Advisory Agreement and proposed Sub-Investment
Advisory Agreement will become effective only upon the acquisition of Premier
Bancorp, Inc. by BANC ONE CORPORATION. The proposals referred to above are
discussed in the Proxy Statement attached to the Notice. Each Shareholder is
invited to attend the Special Meeting in person.
Shareholders of record at the close of business on November 17, 1995 (the
"Shareholders") are entitled to notice of, and to vote at, this Special Meeting
or any adjournment thereof.
By Order of the Trustees
Michael J. Richman
Secretary
December , 1995
YOUR VOTE IS IMPORTANT. YOU CAN HELP THE FUNDS AVOID THE NECESSITY AND EXPENSE
OF SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE
ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE SPECIAL MEETING, PLEASE MARK,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE
REPRESENTED AT THE SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
<PAGE>
PARAGON PORTFOLIO
4900 Sears Tower
Chicago, Illinois 60606
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER ____, 1995
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees (the
"Trustees") of Paragon Portfolio (the "Trust"). The proxy is revocable at any
time before it is voted by sending written notice of the revocation or a
subsequently executed proxy to the Trust or by appearing personally and electing
to vote on December _____, 1995 at the Special Meeting of Shareholders of the
Funds at 10:00 am. (Eastern Time) at 4900 Sears Tower, Chicago, Illinois 60606
(such meeting and any adjournment thereof is referred to herein as the "Special
Meeting"). The cost of preparing and mailing the Notice of Special Meeting, the
proxy card, this proxy statement and any additional proxy material has been or
is to be borne by Banc One Investment Advisers Corporation. Proxy solicitations
will be made primarily by mail, but may also be made by telephone, telegraph, or
personal interview conducted by certain officers or employees of the Trust or
Goldman Sachs Asset Management ("GSAM") (the Trust's administrator pursuant to
an administration agreement between GSAM and the Trust dated as of December 15,
1989, as amended July 1 , 1991 and October 20, 1994 (the "Administration
Agreement")). In the event that a Shareholder signs and returns the proxy
ballot, but does not indicate a choice as to any of the items on the proxy
ballot, the proxy attorneys will vote those Shares in favor of such proposal(s).
Only Shareholders of record at the close of business on November 17, 1995
will be entitled to vote at the Special Meeting. On November 17, 1995, Paragon
Money Market had outstanding _________________ shares of beneficial interest
("Shares"), Paragon Short-Term had________________Shares outstanding, Paragon
Intermediate had _________________ Shares outstanding, Paragon Louisiana had
_________________ Shares outstanding, Paragon Growth had _________________
Shares outstanding, Paragon Equity had _________________ Shares outstanding,
Paragon Gulf South had _________________ Shares outstanding, Paragon Power
Intermediate had _________________ Shares outstanding , Paragon Power Growth
had _________________ Shares outstanding, Paragon Power Equity had
_________________ Shares outstanding, and Paragon Power Gulf South had
_________________ Shares outstanding. Each Share of each Fund is entitled to
one vote and each fractional share is entitled to a proportionate fractional
vote on each matter to be acted upon at the Special Meeting. This proxy
statement and the enclosed proxy card will be sent to Shareholders of record on
or about December _____, 1995.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, Shares represented by abstentions and "broker non-votes"
will be counted as present, but not as votes cast, at the Special Meeting.
Under the Investment Company Act of 1940 (the "1940 Act"), the affirmative vote
necessary to approve the matter under consideration may be determined with
reference to a percentage of votes present at the Special Meeting, which would
have the effect of treating abstentions and non-votes as if they were votes
against the proposal. If approved by Shareholders, the proposed Investment
Advisory Agreement and proposed Sub-Investment Advisory Agreement will become
effective only if Premier Bancorp, Inc. is acquired by BANC ONE CORPORATION.
The Trust's executive offices are located at 4900 Sears Tower, Chicago,
Illinois 60606. This proxy statement and the enclosed Notice of Special Meeting
and form of proxy are first being mailed to Shareholders on or about December
___, 1995.
A COPY OF THE TRUST'S ANNUAL REPORT DATED NOVEMBER 30, 1994 AND SEMI-ANNUAL
REPORT DATED MAY 31, 1995 ARE AVAILABLE UPON REQUEST FROM GSAM AND MAY BE
OBTAINED WITHOUT CHARGE BY CALLING 1-800-525-8907.
- 2 -
<PAGE>
INTRODUCTION
This Special Meeting is being called for the following purposes: (1) to
approve an Investment Advisory Agreement between Banc One Investment Advisors
Corporation ("BOIA") and the Trust with respect to the Funds; (2) to approve a
Sub-Investment Advisory Agreement between BOIA and Goldman Sachs Asset
Management ("GSAM"); and (3) to transact such other business as may properly
come before the Special Meeting or any adjournment thereof. Execution of the
Investment Advisory Agreement and the Sub-Investment Advisory Agreement are
contingent upon the acquisition of Premier Bancorp, Inc. by BANC ONE
CORPORATION.
Approval of Proposal (1) and (2) as to each Fund requires the affirmative
vote of the lesser of: (a) 67% or more of the outstanding Shares of such Fund
present at the Special Meeting, if the holders of more than 50% of the
outstanding Shares are present or represented by proxy, or (b) more than 50% of
the outstanding Shares of such Fund.
SUMMARY OF PROPOSALS
DESCRIPTION OF PROPOSAL FUND SOLICITED
(1) Approval of an Investment Paragon Money Market
Advisory Agreement between Paragon Short-Term
BOIA and the Trust Paragon Intermediate
Paragon Louisiana
Paragon Growth
Paragon Equity
Paragon Gulf South
Paragon Power Intermediate
Paragon Power Growth
Paragon Power Equity
Paragon Power Gulf South
(2) Approval of a Sub-Investment Paragon Money Market
Advisory Agreement between
BOIA and GSAM
PROPOSAL (1) - APPROVAL OF INVESTMENT ADVISORY
AGREEMENT BETWEEN BOIA AND THE TRUST
WITH RESPECT TO EACH FUND
On October 31, 1995, the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust or BOIA, as defined in the
1940 Act, unanimously approved the form of a new investment advisory agreement
between BOIA and the Trust on behalf of each of the respective Funds. A copy of
the form of the proposed investment advisory agreement between BOIA and the
Trust appears as Exhibit A to this proxy statement. The Trustees propose that
the Shareholders of each of the Funds vote to reconfigure the investment
advisory arrangement with respect to the Funds by selecting BOIA as the
investment adviser of each of the Funds.
- 3 -
<PAGE>
Current Investment Advisory Contract
- ------------------------------------
At the present time, Premier Investment Advisers, L.L.C., ("Premier"), an
indirect subsidiary of Premier Bancorp, Inc., serves as investment adviser to
Paragon Short-Term, Paragon Intermediate, Paragon Growth, Paragon Equity,
Paragon Louisiana, Paragon Gulf South, Paragon Power Intermediate, Paragon Power
Growth, Paragon Power Equity, and Paragon Power Gulf South and as sub-adviser to
Paragon Money Market. Goldman Sachs Asset Management ("GSAM") serves as
investment adviser to Paragon Money Market pursuant to an investment advisory
agreement dated December 15, 1989. Premier became the Funds' investment
adviser or subadviser on December 31, 1993, as the result of the transfer to it
of each Fund's investment advisory or sub-advisory agreement with Premier
Investment Advisors, Inc. ("PIA Inc."), the Funds' previous investment adviser
or sub-adviser. The investment advisory agreements and the sub-advisory
agreement were most recently approved by the Trustees, including the "non-
interested" Trustees, on February 2, 1995, by the shareholders of each Fund
(other than Paragon Gulf South) on April 19, 1991 and by the shareholders of
Paragon Gulf South on October 30, 1992. The investment advisory agreements and
the sub-advisory agreement are effective until April 30, 1996. However, the
Trust's advisory arrangements will terminate as a matter of law upon the
acquisition of Premier Bancorp, Inc., the indirect parent of Premier, by BANC
ONE CORPORATION ("BANC ONE"), the indirect parent of BOIA. The acquisition of
Premier Bancorp, Inc. by BANC ONE is expected to be completed in early 1996.
Under each of the separate investment advisory agreements between the
relevant adviser and the Trust on behalf of each Fund, the adviser, subject to
the supervision of the Trustees of the Trust and in conformity with the stated
policies of each Fund, acts as investment adviser and directs the investments of
the Fund. The advisers are responsible for the management of each Fund's assets
in accordance with such Fund's investment objectives and policies.
Premier and GSAM are entitled to receive investment advisory fees from each
Fund for which they act as adviser equal to an annual rate, as a percentage of
the Fund's average daily net assets, as follows:
Management Fee
--------------
Paragon Money Market .20%
Paragon Short-Term .50%
Paragon Intermediate .50%
Paragon Louisiana .50%
Paragon Growth .65%
Paragon Equity .65%
Paragon Gulf South .65%
Paragon Power Intermediate .50%
Paragon Power Growth .65%
Paragon Power Equity .65%
Paragon Power Gulf South .65%
Pursuant to the subadvisory agreement among Paragon Money Market, GSAM and
Premier, Premier reviews on a quarterly basis the portfolio and investment
strategy of Paragon Money Market and consults with GSAM as needed regarding that
Fund's investments. As compensation, GSAM pays to Premier quarterly a
subadvisory fee equal, on an annual basis, to .10% of that Fund's average daily
net assets. The Fund pays only the .20% advisory fee to GSAM and is not
responsible for the payment of the .10% subadvisory fee to Premier.
For the fiscal year ended November 30, 1994, the amount of advisory fees
paid by each Fund then in existence to Premier or GSAM was as follows:
Paragon Money Market $564,345
Paragon Short-Term $802,652
Paragon Intermediate $1,615,908
Paragon Louisiana $808,333
Paragon Growth $1,154,672
- 4 -
<PAGE>
Paragon Equity $683,343
Paragon Gulf South $523,002
Paragon Power Intermediate N/A
Paragon Power Growth N/A
Paragon Power Equity N/A
Paragon Power Gulf South N/A
Proposed Investment Advisory Contract
- -------------------------------------
Under the proposed Investment Advisory Agreement, if approved, BOIA will
have full responsibility for providing continuous investment advisory services
to each Fund. In accordance with each Fund's investment objective, policies and
restrictions, and subject to the general supervision of the Trustees, BOIA will
manage the Funds' day-to-day investment activities. BOIA will provide
investment research and make investment decisions concerning, and place all
orders for, purchases and sales of the Funds' securities. BOIA also will
maintain the Funds' records relating to such purchases and sales. Upon the
acquisition of Premier Bancorp, Inc. by BANC ONE CORPORATION, BOIA contemplates
that Donald E. Allred, Richard L. Chauvin and Keith W. Mooney, all of whom
performed identical responsibilities as employees of Premier, will participate
in decisions with respect to the Funds' investments, other than those of Paragon
Money Market. The combined contributions of these experienced portfolio
managers and BOIA to the Funds' management should enhance the level of services
to Shareholders.
In consideration for the services provided and expenses assumed under the
Investment Advisory Agreement, the Trust would pay BOIA a monthly fee at an
annual rate of the Fund's average daily net assets as follows:
Management Fee
--------------
Paragon Money Market Fund .20%
Paragon Short-Term .50%
Paragon Intermediate .50%
Paragon Louisiana .50%
Paragon Growth .65%
Paragon Equity .65%
Paragon Gulf South .65%
Paragon Power Intermediate .50%
Paragon Power Growth .65%
Paragon Power Equity .65%
Paragon Power Gulf South .65%
If approved by Shareholders of a Fund, the proposed Investment Advisory
Agreement will become effective as to that Fund on January 2, 1996, but only if
Premier Bancorp, Inc. is acquired by BANC ONE CORPORATION by that date. If
Premier Bancorp, Inc. is acquired by BANC ONE CORPORATION at a date later than
January 2, 1996, the Investment Advisory Agreement will become effective as of
that date. Unless sooner terminated, the proposed Investment Advisory Agreement
will continue for an initial term ending January 1, 1998, and will thereafter
continue for successive one-year terms, provided that such continuation is
specifically approved at least annually by the Trustees, or by the vote of a
majority of the outstanding Shares of such Fund, and, in either case, by a
majority of the Trustees who are not interested persons as defined in the 1940
Act, by vote cast in person at a meeting called for such purpose. Either BOIA
or the Trust may, at any time on 60 days' prior written notice, terminate the
Investment Advisory Agreement as to any Fund without payment of any penalty, by
action of its Board of Trustees, or by vote of the majority of that Fund's
outstanding voting securities. The Investment Advisory Agreement will terminate
automatically in the event of its assignment, as defined in the 1940 Act.
The Trustees unanimously approved the proposed Investment Advisory
Agreement at a meeting held on
- 5 -
<PAGE>
October 31, 1995. In unanimously approving the proposed Investment Advisory
Agreement and recommending its approval by Shareholders, the Trustees, including
the independent Trustees, considered the best interests of Shareholders of the
Funds and took into account all factors they deemed relevant. The factors
considered by the Trustees included the nature, quality, and extent of services
furnished by BOIA; the investment record of BOIA in managing funds of a similar
type; the depth of BOIA's investment management knowledge and experience; and
data on investment performance, management fees and expense ratios of
competitive funds and other funds advised by BOIA. In addition, the Board
considered the extensive experience of BOIA and its affiliates in providing
investment management advice. After considering these factors, the Trustees
concluded that the Investment Advisory Agreement would be beneficial to the
Funds and the Shareholders.
In the event that the holders of a majority of the outstanding Shares of
any of the Funds vote in the negative with respect to the approval of the
Investment Advisory Agreement, the Trustees will consider such further action as
they may determine to be in the best interests of such Fund's Shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUNDS VOTE TO
APPROVE THE PROPOSED INVESTMENT ADVISORY AGREEMENT.
PROPOSAL (2) - APPROVAL OF SUB-INVESTMENT ADVISORY
AGREEMENT BETWEEN BOIA AND GSAM
Under the proposed agreement, BOIA will act as investment manager to
Paragon Money Market, pursuant to an investment advisory agreement between BOIA
and the Trust, which appears as Exhibit B to this proxy statement and GSAM will
act as sub-investment adviser pursuant to a sub-investment advisory agreement
(the "Sub-Investment Advisory Agreement") between BOIA, GSAM and Paragon Money
Market.
On October 31, 1995, the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust or GSAM, as defined in the
1940 Act, unanimously approved the form of a new sub-investment advisory
agreement between BOIA and GSAM on behalf of Paragon Money Market. The Trustees
propose that the Shareholders of Paragon Money Market vote to reconfigure the
investment advisory arrangement with respect to the Fund by selecting GSAM as
the sub-investment adviser of the Fund.
Under this arrangement, if approved, BOIA will have full responsibility for
providing investment advisory services to Paragon Money Market. BOIA will
discharge this responsibility in part through retention of GSAM, at BOIA's sole
expense, to manage the day-to-day investment program of Paragon Money Market.
BOIA will oversee the activities of GSAM and will be responsible for setting any
policies it deems appropriate for GSAM's activities, subject to the direction of
the Fund's Trustees.
Shareholders of Paragon Money Market will continue to receive the benefits
of BOIA's supervision of the managers of such Fund and, under the proposed
arrangement, will receive the additional benefit of GSAM's investment advisory
services. Decisions with respect to Paragon Money Market's investments will
continue to be made by the individuals who made such decisions when GSAM acted
as the Fund's investment adviser.
In consideration for the services provided and expenses assumed under the
Sub-Investment Advisory Agreement, BOIA has agreed to pay GSAM a fee, computed
daily and paid monthly, at an annual rate of ten one-hundredths of one percent
(.10%) of Paragon Money Market's average daily net assets. BOIA will bear sole
responsibility for the payment of this fee to GSAM.
Pursuant to the Sub-Investment Advisory Agreement, GSAM, in accordance with
the Fund's investment objective, policies and restrictions, and subject to the
general supervision of the Trustees and BOIA, will manage the Fund's day-to-day
investment activities. GSAM will make investment decisions concerning, and
place all orders for, purchases and sales of the Fund's securities and maintain
the Fund's records relating to such purchases and sales. GSAM will bear those
expenses expressly stated to be payable by it under the Sub-Investment Advisory
Agreement.
- 6 -
<PAGE>
If approved by Shareholders, the proposed Sub-Investment Advisory Agreement
will become effective on January 2, 1996, but only if Premier Bancorp, Inc. is
acquired by BANC ONE CORPORATION by that date. If Premier Bancorp, Inc. is
acquired by BANC ONE CORPORATION at a date later than January 2, 1996, the Sub-
Investment Advisory Agreement will become effective as of that date. Unless
sooner terminated, the Sub-Investment Advisory Agreement will continue for an
initial term ending May 31, 1996 and will thereafter continue for successive
one-year terms, provided that such continuation is specifically approved at
least annually by Trustees, or by the vote of a majority of the outstanding
Shares of the Fund, and, in either case, by a majority of the Trustees who are
not interested persons as defined in the Investment Company Act of 1940, by vote
cast in person at a meeting called for such purpose. The Sub-Investment
Advisory Agreement will terminate automatically in the event of its assignment,
as defined in the 1940 Act.
In unanimously approving the proposed Sub-Investment Advisory Agreement and
recommending their approval by shareholders, the Trustees of the Funds,
including the independent Trustees, considered the best interests of
shareholders of the Fund and took into account all factors they deemed relevant.
The factors considered by the independent Trustees included the nature, quality
and extent of the service provided by GSAM, and data on investment performance,
management fees and expense ratios of competitive funds. After considering
these factors, the Trustees concluded at their meeting on October 31, 1995 that
the Sub-Investment Advisory Agreement would be beneficial to the Fund and to
shareholders.
In the event that holders of a majority of the outstanding shares of the
Fund vote in the negative with respect to the Sub-Investment Advisory Agreement,
the Trustees will consider such further action as they may determine to be in
the best interests of the Fund's shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF PARAGON MONEY
MARKET VOTE TO APPROVE THE SUB-INVESTMENT ADVISORY AGREEMENT.
FUTURE PLANS FOR THE FUNDS
- --------------------------
At their meeting on October 31, 1995, the Trustees of the Trust
unanimously approved a proposal to consolidate each Fund (other than the Power
Portfolios) with a similar existing or new series (the "One Group Funds") of The
One Group. Like the Trust, The One Group is an open-end, management investment
company. BOIA acts or will act as the investment adviser to each of the One
Group Funds. The Funds' shareholders will not be asked to consider or vote on
the proposed consolidations at their December ___, 1995 meeting. Instead, it is
expected that another shareholder meeting will be held in February, 1996 for the
purpose of acting on a consolidation proposal. Shareholders of the Funds will
receive separate proxy materials containing detailed information about the
proposed consolidations prior to the February, 1996 meeting. If the
consolidation proposed is approved, the consolidations would take place on or
about March 1, 1996. The Trustees of the Trust would have also approved the
termination of the Power Portfolios.
INFORMATION ABOUT BOIA
- ----------------------
BOIA is an indirect, wholly-owned subsidiary of BANC ONE CORPORATION, a
bank holding company incorporated in the state of Ohio. B0IA's offices are
located at 774 Park Meadow Road, Westerville, Ohio 43081. BANC ONE
CORPORATION's offices are located at 100 East Broad Street, Columbus, Ohio
43271. BANC ONE CORPORATION operates 65 banks in Colorado, Illinois, Indiana,
Kentucky, Ohio, Texas, Wisconsin, Arizona, Utah, Oklahoma and West Virginia and
over 1,408 offices. In addition, BANC ONE CORPORATION has several affiliates
that engage in data processing, venture capital, investment and merchant
banking, and other diversified services including trust, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $86 billion as
of June 30, 1995.
BOIA represents a consolidation of the investment advisory staffs of a
number of bank affiliates of BANC ONE CORPORATION, which have considerable
experience in the management of open-end management investment company
portfolios, including The One Group\\(R)\\ since 1985 (then known as The
Helmsman Fund). Prior to January 1993, Bank One, Milwaukee, NA, Bank One
Columbus, NA, and Bank Indianapolis, NA served
- 7 -
<PAGE>
as the investment adviser to these portfolios. Bank One, Milwaukee, NA is an
indirect wholly-owned subsidiary of BANC ONE CORPORATION.
As of June 30, 1995, BOIA, together with its advisory affiliates, acted as
investment adviser for approximately $35 billion in assets, of which over $10
billion is in The One Group. BOIA serves as investment adviser to the following
portfolios of The One Group(R) which have investment objectives similar to
those of the Funds:
<TABLE>
<CAPTION>
Assets Fees After Waiver Fees Absent Waiver
-------------- ------------------ -------------------
<S> <C> <C> <C>
The One Group Treasury Securities
Money Market Fund $1,178,091,000 .21% .35%
The One Group Limited Volatility
Bond Fund $ 410,746,000 .28% .60%
The One Group Income Equity Fund $ 170,919,000 .74% .74%
The One Group Government
Bond Fund $ 379,826,000 .44% .45%
</TABLE>
The name and principal occupation of each of the principal executive
officers and directors of BOIA are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal
Name and Address With the BOIA Occupation
- --------------------------- ------------------ --------------------------
<S> <C> <C>
Michael J. McMennamin Director Executive Vice President and
Chief Financial Officer
BANC ONE CORPORATION
Frederick L. Cullen Director Chairman, President and
Chief Executive Officer,
Bank One, Columbus, NA
and President, Banc One
Ohio Corporation
David R. Meuse Director Chairman and
Chief Executive
Officer, Banc One
Capital Holdings
Corporation
Robert T. Johnson Director President, Personal Trust,
Bank One, Arizona, NA
Geoff Von Kuhn Director President, Banc One
Institutional Investor
Services Group
Matthew V. Wible Secretary Senior Attorney,
BANC ONE CORPORATION
</TABLE>
- 8 -
<PAGE>
<TABLE>
<S> <C> <C>
David J. Kundert Chairman and Chief Chairman and
Executive Officer Chief Executive
Officer, Banc One
Investment Management
and Trust Group
</TABLE>
The principal business address of the principal executive officer and
directors of BOIA is 774 Park Meadow Road, Westerville, Ohio 43081.
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in Investment Company
------------------
Institute v. Camp that the federal statute commonly referred to as the Glass-
- -----------------
Steagall Act prohibits a national bank from operating a fund for the collective
investment of managing agency accounts. Subsequently, the Board of Governors of
the Federal Reserve System (the "Board") issued a regulation and interpretation
to the effect that the Glass-Steagall Act and such decision: (a) preclude a bank
holding company registered under the Bank Holding Company Act of 1956 (the
"Holding Company Act") or any non-bank affiliate thereof from sponsoring,
organizing or controlling a registered open-end investment company continuously
engaged in the issuance of its shares, but (b) do not prohibit such a holding
company or affiliate from acting as investment adviser, transfer agent and
custodian to such investment company. In 1981 the United States Supreme Court
held in Board of Governors of the Federal Reserve System v. Investment Company
----------------------------------------------------------------------
Institute that the Board did not exceed its authority under the Holding Company
- ---------
Act when it adopted its regulation and interpretation authorizing bank holding
companies and their non-bank affiliates to Act as investment advisers to
registered closed-end investment companies. In the Board of Governors case the
------------------
Supreme Court also stated that if a national bank complied with the restrictions
imposed by the Board in its regulation and interpretation authorizing bank
holding companies and their non-bank affiliates to Act as investment advisers to
investment companies, a national bank performing investment advisory services
for an investment company would not violate the Glass-Steagall Act.
BOIA has represented to the Trust in the Investment Advisory Agreement
that it may perform the services contemplated by the Trust's Prospectus, the
Trust's Statement of Additional Information and the Investment Advisory
Agreement, without violation of applicable statutes and regulations. Future
changes in either federal or state statutes and regulations relating to the
permissible activities of banks or bank holding companies and the subsidiaries
or affiliates of those entities, as well as further judicial or administrative
or interpretations of present and future regulations, could prevent or restrict
BOIA from continuing to perform such services for the Trust. Depending upon the
nature of any changes in services which could be provided by BOIA, the Trustees
would review the Trust's relationship with BOIA and consider taking all action
necessary in the circumstances.
Should future legislative, judicial or administrative action prohibit or
restrict the proposed activities of or its affiliated and correspondent banks in
connection with customer purchases of Shares of the Trust, such banks might be
required to alter materially or discontinue the services offered by them to
customers. It is not anticipated, however, that any change in the Trust's
method of operations would effect the net asset value per Share of any Fund of
the Trust or result in financial losses to any customer.
INFORMATION ABOUT PREMIER INVESTMENT ADVISORS, L.L.C.
- -----------------------------------------------------
Premier became the Funds' investment adviser or subadviser on December 31,
1993 as the result of the transfer to it of each Fund's Investment Advisory or
Subadvisory Agreement with Premier Investment Advisors, Inc. ("PIA Inc."), the
Funds' previous investment adviser or subadviser. PIA Inc. had managed each of
the Funds since inception. Prior to its incorporation in 1985, PIA Inc. was the
Investment Department of the Trust Division of Louisiana National Bank of Baton
Rouge (Premier Bank's predecessor), the flagship bank of the holding company.
In addition to managing the assets of the Funds, Premier also manages
approximately $700
- 9 -
<PAGE>
million in assets for tax-exempt organizations, pension plans, other employee
benefit plans, foundations, endowments and personal trust as of December 31,
1994.
INFORMATION ABOUT GOLDMAN SACHS ASSET MANAGEMENT
- ------------------------------------------------
GSAM, One New York Plaza, New York, New York, 10004, a separate operating
division of Goldman, Sachs & Co., acts as investment adviser to Paragon Treasury
Money Market Fund and also serves as the Funds' administrator. Goldman Sachs
was registered as an investment adviser in 1981. As of January 31, 1995, GSAM,
together with its advisory affiliates, acted as investment adviser,
administrator or distributor for approximately $48.7 billion in assets.
GSAM serves as investment adviser to the following money market funds, which
have investment objectives and policies similar to those of Paragon Money
Market.
<TABLE>
<CAPTION>
Total Assets as Fees After Fees Absent
of 10/31/95 Waivers Waivers
--------------- ----------- ------------
<S> <C> <C> <C>
Goldman Sachs Money Market $ 923,549,608 .35% .35%
Trust--Institutional Liquid
Assets-Treasury Obligations Portfolio
Goldman Sachs Money Market $1,719,397,025 .04% .075%
Trust--Financial Square Funds-Financial
Square Treasury Obligation Fund
</TABLE>
GSAM is also the administrator for the Funds. Under the Administration
Agreement of the trust, GSAM administers the Trust's business affairs, subject
to the supervision of the Board of Trustees, and in connection therewith
furnishes the Trust with office facilities and is responsible for ordinary
clerical, recordkeeping and bookkeeping services required to be maintained by
the Trust (excluding those maintained by the Trust's custodian, transfer agent
or investment adviser), preparation and filing of documents required to comply
with federal and state securities laws, supervising the activities of the
Trust's custodian and transfer agent, providing assistance in connection with
meetings of the Board of Trustees and shareholders and other administrative
services necessary to conduct the Trust's business. For these services and
facilities, each Fund has agreed to pay to GSAM a monthly fee at an annual rate
of .15% of the Fund's average daily net assets. However, GSAM has voluntarily
reduced the administration fee payable by Paragon Louisiana to .10% of that
Fund's average daily net assets.
INFORMATION ABOUT GOLDMAN, SACHS & CO.
- --------------------------------------
Goldman, Sachs & Co. ("Goldman Sachs") serves as the Distributor of shares of
the Funds pursuant to a Distribution Agreement with the Trust. Shares may also
be sold by investment dealers who are members of the NASD and certain other
financial service firms, who have entered into dealers agreements with Goldman
Sachs ("Authorized Dealers"). The minimum investment requirements, services,
programs and purchase and redemption options for shares purchased through a
particular Authorized Dealer may be different from those available to investors
purchasing through other Authorized Dealers. The Distributor will assist in the
sale of shares of the Funds upon the terms and at the offering price described
herein. The Distributor also assists in advertising and marketing shares of the
Funds, including the distribution of the Funds' Prospectus and Statement of
Additional Information and marketing materials.
The name and principal address of the general partners of Goldman Sachs is
attached as Exhibit C.
- 10 -
<PAGE>
ADDITIONAL INFORMATION
TRUSTEES OF THE TRUST
None of the trustees or officers of the Trust hold positions with BOIA, or
have an interest in BOIA or in a person controlling, controlled by or under
common control with BOIA.
BENEFICIAL OWNERS
The following list indicates the percentage ownership of the Shareholders
who, to the best knowledge of the Funds, are the beneficial owners of more than
5% of the outstanding Shares of the Funds:
<TABLE>
<CAPTION>
Type of Percentage
Fund Ownership Address of Ownership
- ---- --------- ------ ------------
<S> <C> <C> <C>
Paragon Money Market LaBanc & Co. LaBanc & Co. 92%
c/o Premier Bank, NA Premier Bank, NA
as Trustee PO Box 1511
Baton Rouge, LA
70821-1511
Paragon Short-Term '' '' 92%
Paragon Intermediate '' '' 90%
Paragon Louisiana '' '' 70%
Paragon Growth '' '' 83%
Paragon Equity '' '' 94%
Paragon Gulf South '' '' 79%
Paragon Power GNA Variable GNA Variable 100%
Intermediate Investment Investment
Account Account of Great
Northern
Insured Annuity
Corporation
5600 Two Union
Square
Seattle,
Washington
98111-0490
Paragon Power Growth '' '' 100%
Paragon Power Equity '' '' 100%
Paragon Power Gulf South '' '' 100%
</TABLE>
- 11 -
<PAGE>
For the fiscal year ended November 30, 1994, the Funds paid brokerage
commissions as follows:
<TABLE>
<CAPTION>
Total
Total Total Brokerage
Brokerage Amount of Commissions
Total Commissions Transactions Paid to
Brokerage Paid to on which Brokers Who
Commissions Affiliated Commissions Provided
Paid Persons Paid Research
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Paragon Value
Growth Fund+ $232,059 $-0- (0%)* $151,349,263 $171,479
Paragon Value
Equity Income
Fund + $117,597 $-0- (0%)* $ 72,375,548 $ 93,822
Paragon Gulf
South
Growth Fund++ $ 60,992 $-0- (0%)* $ 25,726,579 $ 34,135
</TABLE>
- -----------------------
* Percent of total commission paid
+ Commenced operations December 29, 1989.
++ Commenced operations July 1, 1999.
As a group, the officers and Trustees of the Trust own less than 1% of the
outstanding Shares of each of the Funds.
Dated: December ___ , 1995
IF YOU DO NOT EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE SIGN YOUR PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND
DELAY. FOR YOUR CONVENIENCE, NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
- 12 -
<PAGE>
PARAGON PORTFOLIO
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Marcia L. Beck,
Pauline Taylor, John Mosior, Nancy Mucker and Michael J. Richman, with full
power of substitution in each, to vote all the shares of beneficial interest of
Paragon Treasury Money Market Fund ("Paragon Money Market"), Paragon Short-Term
Government Fund ("Paragon Short-Term"), Paragon Intermediate-Term Bond Fund
("Paragon Intermediate"), Paragon Louisiana Tax-Free Fund ("Paragon Louisiana"),
Paragon Value Growth Fund ("Paragon Growth"), Paragon Value Equity Income Fund
("Paragon Equity"), Paragon Gulf South Growth Fund ("Paragon Gulf South"),
Paragon Power Intermediate-Term Bond Portfolio ("Paragon Power Intermediate"),
Paragon Power Value Growth Portfolio ("Paragon Power Growth"), Paragon Power
Value Equity Income Portfolio ("Paragon Power Equity"), and Paragon Power Gulf
South Growth Portfolio ("Paragon Power Gulf South") (collectively, the "Funds"),
each of which is a separate series of the Paragon Portfolio (the "Trust"),
which the undersigned is (are) entitled to vote at the Special Meeting of
Shareholders (the "Meeting") of the Funds to be held at the Trust's offices at
10:00 a.m. (Eastern Time) at 4900 Sears Tower, Chicago, Illinois 60606 and at
any adjournment thereof. All powers may be exercised by a majority of said
proxy holders or substitutes voting or acting, or , if only one votes and acts,
then by that one.
1. To approve an Investment Advisory Agreement between Banc One Investment
Advisors Corporation ("BOIA") and the Trust with respect to the eleven
portfolios (the "Funds") of the Trust;
---- ---- ----
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
2. To approve a Sub-Investment Advisory Agreement between Banc One Investment
Advisors Corporation and Goldman Sachs Asset Management with respect to
Paragon Treasury Money Market Fund;
---- ---- ----
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
3. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
---- ---- ----
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
- 13 -
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of January 1, 1996 between The Paragon Portfolio, a
Massachusetts business trust (herein called the "Trust"), and Banc One
Investment Advisors Corporation, an Ohio Corporation with its principal office
in Westerville, Ohio (herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the investment Adviser to furnish
investment advisory and related services to the series of the Trust identified
in Schedule A hereto (the "Portfolios") and the Investment Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
l. Appointment. The Trust hereby appoints the Investment Adviser to
-----------
act as investment adviser to the Portfolios for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Trust has furnished the Investment
----------------------
Adviser with copies properly certified or authenticated of each of the following
documents:
(a) the Trust's Declaration of Trust, as filed with the Secretary of
State of the Commonwealth of Massachusetts on October 2, 1989, and all
amendments thereto or restatements thereof (such Declaration, as presently in
effect and as it shall from time to time be amended or restated, is herein
called the "Declaration of Trust");
(b) the Trust's By-Laws and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this Agreement;
A-1
<PAGE>
(d) the Trust's original Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission on
____________, 1989 and all amendments thereto;
(e) the Trust's current Registration Statement on Form N-lA under the
Securities Act of 1933, as amended ("1933 Act"), and under the 1940 Act, as
filed with the Securities and Exchange Commission; and
(f) the Portfolios' most recent prospectus and Statement of Additional
Information (such prospectus and Statement of Additional Information, as
presently in effect, and all amendments and supplements thereto are herein
collectively called the "Prospectus").
The Trust will furnish promptly the Investment Adviser with copies of
all amendments of or supplements to the foregoing documents.
3. Management. Subject to the supervision of the Trust's Board of
-----------
Trustees, the Investment Adviser will provide or cause to be provided a
continuous investment program for each Portfolio, including investment research
and management with respect to all securities and investments and cash
equivalents in said Portfolios. The Investment Adviser will determine or cause
to be determined from time to time what securities and other investments will be
purchased, retained or sold by the Trust with respect to the Portfolios and will
place or cause to be placed orders for purchase and sale on behalf of the Trust
with respect to the Portfolios. The Investment Adviser will provide the
services under this Agreement in accordance with each Portfolio's investment
objective, policies and restrictions as stated in the Prospectus and resolutions
of the Trust's Board of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will comply in all material respects with all applicable Rules and
Regulations of the Securities and Exchange Commission and in addition will
conduct its activities under this Agreement in accordance with any
applicable regulations pertaining to the investment advisory activities of
the Investment Adviser;
(c) will not make loans to any person to purchase or carry shares of
beneficial interest of the Trust or make loans to the Trust;
(d) will place or cause to be placed orders pursuant to its investment
determinations for the Trust either directly with the issuer or with any
broker or dealer. In regard to such orders placed with brokers and dealers,
the Investment Adviser or any sub-investment adviser employed by the
Investment Adviser will attempt to obtain prompt execution of orders in an
effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, the Investment Adviser or any sub-investment
adviser employed by the Investment Adviser may, in its discretion,
A-2
<PAGE>
purchase and sell portfolio securities to and from brokers and dealers who
provide the Investment Adviser or any such sub-investment adviser with
research advice and other services. In no instance will portfolio
securities be purchased from or sold to The One Group Services Company, the
Investment Adviser or any sub-investment adviser employed by the Investment
Adviser, or any affiliated person of either the Trust, The One Group
Services Company, the Investment Adviser or any sub-investment adviser
employed by the Investment Adviser;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present or potential interest holders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where the Investment Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply when requested to
divulge such information by duly constituted authorities, or when so
requested by the Trust; and
(f) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Trust, the Investment Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Trust's account are customers of the Investment Adviser or of
its parent or its subsidiaries or affiliates. In dealing with such
customers, the Investment Adviser and its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities
of those customers are held by the Trust.
4. Use of Sub-Investment Adviser. The Investment Adviser may,
------------------------------
subject to the approvals required under the 1940 Act, employ a sub-investment
adviser to assist the Investment Adviser in the performance of its duties under
this Agreement. Such use does not relieve the Investment Adviser of any duty or
liability it would otherwise have under this Agreement. Compensation of the
sub-Investment Adviser for services provided and expenses assumed under any
agreement between the Investment Adviser and the sub-Investment Adviser
permitted under this paragraph is the sole responsibility of the Investment
Adviser.
5. Services Not Exclusive. The investment management services
-----------------------
furnished by the Investment Adviser hereunder are not to be deemed exclusive.
Except to the extent necessary to perform the Investment Adviser's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of the Investment Adviser, or any subsidiary or affiliate of the
Investment Adviser, or any employee of the Investment Adviser, to engage in any
other business or to devote time and attention to any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
person.
6. Books and Records. In compliance with the requirements of Rule
------------------
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. The Investment Adviser further agrees to
A-3
<PAGE>
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, the Investment
--------
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust. The Trust will be responsible for
all of the Trust's expenses and liabilities.
8. Compensation. For the services provided and the expenses assumed
-------------
pursuant to this Agreement, each of the Portfolios will pay the Investment
Adviser and the Investment Adviser will accept as full compensation therefor a
fee computed daily and paid monthly in arrears on the first business day of each
month at the applicable annual rate set forth on Schedule A hereto. If the fee
payable to the Adviser pursuant to this paragraph begins to accrue before the
end of any month or if this Agreement terminates before the end of any month,
the fee for the period from such date to the end of such month or from the
beginning of such month to the date of termination, as the case may be, shall be
prorated according to the proportion which such period bears to the full month
in which such effectiveness or termination occurs. For purposes of calculating
fees, the value of the Trust's net assets shall be computed in the manner
specified in the Prospectus and the Fund's Declaration of Trust for the
computation of the value of the Trust's net assets in connection with the
determination of the net asset value of the Trust's shares.
If in any fiscal year the aggregate expenses of any of the Portfolios (as
defined under the securities regulations of any state having jurisdiction over
the Fund) exceed the expense limitations of any such state, the Investment
Adviser will reimburse the Portfolio for a portion of such excess expenses equal
to such excess times the ratio of the fees otherwise payable by the Portfolio to
the Investment Adviser hereunder (after giving effect to any waiver of fees
agreed to by the Investment Adviser) to the aggregate fees otherwise payable by
the Portfolio to the Investment Adviser hereunder (after giving effect to any
waiver off fees agreed to by the Investment Adviser) and to Goldman Sachs Asset
Management under the Administration Agreement between it and the Fund (after
giving effect to any waiver off fees agreed to by Goldman Sachs Asset Management
under said Administration Agreement). The obligation of the Investment Adviser
to reimburse the Portfolios hereunder is limited in any fiscal year to the
amount of its fee hereunder for such fiscal year, provided, however, that
notwithstanding the foregoing, the Investment Adviser shall reimburse the
Portfolios for such proportion of such excess expenses regardless of the amount
of fees paid to it during such fiscal year to the extent that the securities
regulations of any state having jurisdiction over the Trust so require. Such
expense reimbursement, if any, will be estimated daily and reconciled and paid
on a monthly basis.
9. Limitation of Liability. The Investment Adviser shall not be
-----------------------
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolios in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
A-4
<PAGE>
10. Duration and Termination. This Agreement will become effective
------------------------
as to a particular Portfolio as of the date first written above, provided that
it shall have been approved by vote of a majority of the outstanding voting
securities of such Portfolio, in accordance with the requirements under the 1940
Act, and, unless sooner terminated as provided herein, shall continue in effect
until December 31, 1997. Thereafter, if not terminated, this Agreement shall
continue in effect as to a particular Portfolio for successive periods of twelve
months each ending on December 31 of each year, such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Trust's Board of Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of the outstanding voting
securities of such Portfolio. Notwithstanding the foregoing, this Agreement may
be terminated as to a particular Portfolio at any time on sixty days' written
notice, without the payment of any penalty, by the Trust (by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio) or by the Investment Adviser. 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 persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. 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.
12. Miscellaneous. 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.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the Commonwealth of Massachusetts.
The names "Paragon Portfolio" and "Trustees of Paragon Portfolio" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated as of October 2, 1989 to which reference is hereby made and a copy
of which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The Paragon Portfolio"
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series of Shares of the Trust must look solely to
A-5
<PAGE>
the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PARAGON PORTFOLIO
Seal By: ___________________________________
(Title)
BANC ONE INVESTMENT ADVISORS
CORPORATION
By:_____________________________________
(Title)
A-6
<PAGE>
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT BETWEEN
PARAGON PORTFOLIO
AND
BANC ONE INVESTMENT ADVISORS CORPORATION
DATED JANUARY 2, 1996
NAME OF FUND COMPENSATION
------------ ------------
Paragon Treasury Money Market Fund Annual rate of twenty one-hundredths of
Paragon Treasury Money Market Fund's
average daily assets
Paragon Short Term Government Fund Annual rate of fifty one-hundredths of
Paragon Short Term Government Fund's
average daily assets
Paragon Intermediate Term Bond Fund Annual rate of fifty one-hundredths of
Paragon Intermediate Term Bond Fund's
average daily assets
Paragon Value Equity Income Fund Annual rate of sixty-five one-hundredths
of Paragon Value Equity Income Fund's
average daily assets
Paragon Louisiana Tax-Free Fund Annual rate of fifty one-hundredths of
Paragon Louisiana Tax-Free Fund's average
daily assets
Paragon Value Growth Fund Annual rate of sixty-five one-hundredths
of Paragon Value Growth Fund's average
daily assets
Paragon Gulf South Fund Annual rate of sixty-five one-hundredths
of Paragon Gulf South Fund's average daily
assets
Paragon Power Intermediate-Term Annual rate of fifty one-hundredths of
Bond PortfolioParagon Power Intermediate-
Term Bond Portfolio's average daily assets
Paragon Power Value Growth Portfolio Annual rate of sixty-five one-hundredths
of Paragon Power Value Growth Portfolio's
average daily assets
A-7
<PAGE>
Paragon Power Value Equity Income
Portfolio Annual rate of sixty-five one-hundredths
of Paragon Power Value Equity Income
Portfolio's average daily assets
Paragon Power Gulf South Growth
Portfolio Annual rate of sixty-five one-hundredths
of Paragon Power Gulf South Growth
Portfolio's average daily assets
A-8
<PAGE>
Exhibit B
PARAGON PORTFOLIO
4900 Sears Tower
Chicago, IL 60606
January __, 1996
Goldman Sachs
Asset Management
One New York Plaza
New York, NY 10004
Investment Advisory Agreement For Subadviser
--------------------------------------------
(Paragon Treasury Money Market Fund)
Dear Sirs:
Banc One Investment Advisors Corporation, an Ohio corporation with its principal
office in Westerville, Ohio (the "Investment Adviser"), is investment adviser to
Paragon Portfolio (the "Trust") on behalf of Paragon Treasury Money Market Fund
(the "Fund"). The Trust has been organized under the laws of Massachusetts to
engage in the business of an investment company. The shares of beneficial
interest of the Trust ("Shares") are divided into multiple series, including the
Fund, as established pursuant to a written instrument executed by the Trustees
of the Trust. Pursuant to authority granted the Adviser by the Trust's Trustees
and pursuant to the provisions of the Investment Advisory Agreement dated
January __, 1996 between the Adviser and the Trust, the Adviser has selected you
to act as an investment subadviser of the Fund and to provide certain services,
as more fully set forth below, and you are willing to act as such investment
subadviser and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Adviser and the Trust on behalf of the
Fund agree with you as follows:
I. ADVISORY SERVICES
Subject to the supervision of the Investment Adviser and the Trust's Board
of Trustees, you will provide a continuous investment program for the Fund,
including investment research and management with respect to all
securities, investments and cash equivalents in the Fund's portfolio. You
will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund and will place orders for
purchases and sales on behalf of the Fund. You will provide services under
this Agreement in accordance with the Fund's investment objective, policies
and restrictions as
B-1
<PAGE>
stated in the Fund's Prospectus and in resolutions of the Trust's Board of
Trustees.
In the performance of your duties hereunder, you are and shall be an
independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or
represent the Trust in any way or otherwise be deemed to be an agent of the
Trust or of the Adviser. You will make your officers and employees
available to meet with the Trust's officers and Trustees at least quarterly
on due notice to review the investments and investment program of the Fund
in the light of current and prospective economic and market conditions.
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act of 1940 (the "Act"), you agree that all records which you
maintain for the Fund are the property of the Fund. You further agree to
surrender promptly to the Fund any such records upon the Fund's request.
You agree to preserve for the periods prescribed by Rule 31c-2 under the
Act the records required to be maintained by Rule 31a-1 under the Act.
You will treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and prior, present
or potential shareholders and will not use such records and information for
any purpose other than the performance of your responsibilities, except
after prior notification and approval in writing by the Fund. Such
approval shall not be unreasonably withheld and may not be withheld where
you may be exposed to civil or criminal contempt proceedings for failure to
comply when requested to divulge such information by duly constituted
authorities or when requested by the Fund.
II. ALLOCATION OF CHARGES AND EXPENSES
You will bear your own costs of providing services hereunder. Except as
aforesaid, you will not be required to pay any expenses of the Fund.
III. COMPENSATION OF THE SUBADVISER
For all investment management services to be rendered hereunder, the
Adviser will pay you on the last day of each month a fee, at an annual rate
equal to .10% of the average daily net assets, as defined below, of the
Fund. The "average daily net assets" of the Fund are defined as the
average of the values placed on the net assets as of 4:00 p.m. (New York
time), on each day on which the net asset value of the Fund's portfolio is
determined consistent with the provisions of Rule 22c-1 under the
Investment Company Act of 1940 or, if the Fund lawfully determines the
value of the net assets of its portfolio as of some other time on each
business day, as of such time. The value of net assets of the Fund shall
be determined pursuant to the applicable provisions of the Declaration of
Trust of the Trust. If, pursuant to such provisions, the
B-2
<PAGE>
determination of net asset value is suspended for any particular business
day, then for the purposes of this paragraph III, the value of the net
assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of regular trading on the New York Stock
Exchange, or as of such other time as the value of the net assets of the
Fund's portfolio may lawfully be determined on that day. If the
determination of the net asset value of the Shares of the Fund has been
suspended pursuant to the Declaration of Trust of the Trust for a period
including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month). If the Fund
determines the value of the net assets of its portfolio more than once on
any day, the last such determination thereof on that day shall be deemed to
be the sole determination thereof on that day for the purposes of this
paragraph III.
IV. LIMITATION OF LIABILITY
You shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or except a loss
resulting from willful misfeasance, bad faith or gross negligence on your
part in the performance of your duties or from reckless disregard by you of
your obligations and duties under this Agreement. Any person, even though
also employed by you, who may be or become an employee of and paid by the
Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as your
employee or agent. The Adviser shall indemnify you for any damages and
related expenses incurred by you as a result of the performance of your
duties hereunder, unless the same shall result from behavior found by a
final judicial determination to constitute willful misfeasance, bad faith,
gross negligence or a reckless disregard of your obligations, as specified
above.
V. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall remain in force until May 31, 1996. This Agreement
may, on 45 days' written notice, be terminated at any time without the
payment of any penalty, by the Board of Trustees, by vote of a majority of
the outstanding voting securities of the Fund, by the Adviser, or by you.
This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the Act (particularly the
definitions of "interested person," "assignment" and "majority of the
outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
B-3
<PAGE>
VI. AMENDMENT OF THIS AGREEMENT
No provisions 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. No amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board of Trustees, including a majority
of the Trustees who are not interested persons of the Adviser, you or the
Trust, cast in person at a meeting called for the purpose of voting on such
approval.
It shall be your responsibility to furnish to the Trustees of the Trust
such information as may reasonably be necessary in order for such Trustees
to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to paragraphs V or VI hereof.
VII. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
VIII.MISCELLANEOUS
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. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
The name "Paragon Portfolio" is the designation of the Trustees for the time
being under the Declaration of Trust dated October 2, 1989, as amended from to
time, and all persons dealing with the Trust or the Fund must look solely to the
property of the Trust or the Fund for the enforcement of any claims against the
Trust as neither the Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Trust. No
series of the Trust (including the Fund) shall be liable for any claims against
any other series of the Trust.
If you are in agreement with the foregoing, please sign the form of acceptance
on the accompanying counterpart of this letter and return one such counterpart
to the Trust and the other such counterpart to the Adviser, whereupon this
letter shall become a binding contract.
Yours very truly,
B-4
<PAGE>
PARAGON PORTFOLIO
(ON BEHALF OF PARAGON TREASURY
MONEY MARKET FUND)
Attest:
By: By:
------------------------------ --------------
Michael J. Richman
Title: Secretary of the Trust
BANC ONE INVESTMENT ADVISORS CORPORATION
Attest:
By:______________________ By:_________________________
Name Name
Title Title
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
Attest:
By:______________________ By:_________________________
Name Name
Title Title
B-5
<PAGE>
Exhibit C
GOLDMAN SACHS ASSET MANAGEMENT
The following individuals are all general partners of Goldman, Sachs & Co.
NAME AND PRINCIPAL NAME AND PRINCIPAL
BUSINESS ADDRESS BUSINESS ADDRESS
---------------- ----------------
Jon Corzine, Chairman (1)(2) Hideo Ishihara (10)
Roy J. Zuckerberg (2) Oki Matsumoto Inc. (2)
David M. Silfen (2) Richard M. Hayden (2)
Eugene V. Fife (7) Armen A. Avanessians (2)
Robert J. Hurst (2) Howard C. Katz (2)
Paul M. Achleitner (7) Peter K. Barker (9)
Joel S. Beckman (2) David W. Blood (7)
Eric S. Dobkin (2) Henry M. Paulson, Jr.(8)
Willard J. Overlock, Jr. (2) Zachariah Cobrinik (7)
Jonathan L. Cohen (2) Kevin W. Kennedy (2)
Frederic B. Garonzik(7) Daniel M. Neidich (2)
William C. Landreth (11) Edward Spiegel (2)
Gary D. Cohn (7) Christopher A. Cole (2)
Fischer Black (5) Henry Cornell (13)
Robert F. Cummings, Jr. (2) Robert V. Delaney (2)
Angelo De Caro (7) Joseph DellaRosa (2)
Steven G. Einhorn (2) David B. Ford (2)
J. Michael Evans (7) Lawton W. Fitt (2)
David M. Leuschen (2) Michael D. McCarthy (2)
Michael R. Lynch (2) Joseph D. Gatto (2)
Donald C. Opatrny, Jr. (7) Thomas E. Tuft (2)
Peter C. Gerhard (2) Michael P. Mortara (2)
Robert J. Katz (1) (2) Lloyd C. Blankfein (2)
Nomi P. Ghez (2) John P. Curtin, Jr. (2)
David T. Hamamoto (2) Dexter D. Earle (2)
Gavyn Davies (7) Christopher Flowers (2)
Nobuyoshi John Ehara (10) Walter H. Haydock (15)
Nobuyoshi John Ehara Inc. (10) Jun Makihara Inc. (9)
Gary Gensler (2) Thomas J. Healey (2)
Charles T. Harris, III (2) Robert E. Higgins (2)
Stephen Hendel (2) David L. Henle (2)
Ernest S. Liu (2) Charles B. Mayer, Jr. (2)
Eff W. Martin (11) Mark Schwartz (2)
Michael J. O'Brien (7) Robert K. Steel (7)
Stephen M. Semlitz (2) John A. Thain (2)
Francis J. Ingrassia (2) Scott B. Kapnick (7)
John L. Thornton (7) Joseph R. Zimmel (2)
Bracebridge H. Young, Jr. (10) Gary L. Zwerling (2)
C-1
<PAGE>
NAME AND PRINCIPAL NAME AND PRINCIPAL
BUSINESS ADDRESS BUSINESS ADDRESS
---------------- -----------------
Barry L. Zubrow (2) Andrew M. Alper (2)
Jon R. Aisbitt (7) Frank L. Coulson, Jr. (2)
William J. Buckley (2) Richard A. Friedman (2)
Connie Duckworth (8) John H. Gleberman (2)
Alan R. Gillespie (7) Steven M. Heller (2)
Jacob D. Goldfield (2) Robert S. Kaplan (10)
Ann F. Kaplan (2) Kevin M. Kelly (2)
Peter D. Kiernan, III (2) Gaetano J. Muzio (2)
T. Willem Mesdag (7) Timothy J. O'Neill (2)
Robin Neustein (2) John J. Powers (2)
Scott M. Pinkus (2) Arthur J. Reimers,III (7)
Stephen D. Quinn (2) Richard A. Sapp (7)
James P. Riley, Jr. (2) Donald F. Textor (2)
John C. Kleinert (2) Patrick J. Ward (10)
Thomas B. Walker, III (2) Jon Winkelried (2)
Jeffrey M. Weingarten (7) Gregory K. Palm (7)
Richard E. Witten (2) John O. Downing (7)
Carlos A. Cordeiro (7) Michael D. Fascitelli (2)
W. Mark Evans (7) Reuben Jeffrey, III (2)
Sylvain M. Hefes (7) Jun Makihara (9)
Lawrence H. Linden (2) Robert B. Morris,III (11)
Masanori Mochida (10) Suzanne M. Johnson (9)
Philip D. Murphy (14) Carl G.E. Palmstierna (7)
Terence M. O'Toole (2) J. David Rogers (10)
Michael G. Rantz (2) Peter Savitz (10)
Joseph Sassoon (7) Ralph F. Severson (11)
Charles B. Seelig, Jr. (2) Gary A. Syman (10)
Gene T. Sykes (9) John L. Townsend, III (2)
Leslie C. Tortora (2) David A. Viniar (2)
Lee G. Vance (7) Peter A. Weinberg (2)
John S. Weinberg (2) George W. Wellde, Jr. (2)
Laurence M. Weiss (2) Sharmin Mossavar-
Jaime E. Yordan (2) Rahmani (5)
Jonathan L. Kolatch (2) Robert Litterman (2)
Peter S. Kraus (2) Thomas J. Macirowski (2)
Jonathan M. Lopatin (2) Oki Matsumoto (10)
Peter G. Mallinson (13) Eric M. Mindich (2)
E. Scott Mead (7) Thomas K. Montag (2)
Steven T. Mnuchin (2) Kipp M. Nelson (7)
Edward A. Mule (2) Robert J. O'Shea (2)
Christopher K. Norton (14) Jack L. Salzman (2)
Wiet H. Pot (7) Michael F. Schwerin (2)
Eric S. Schwartz (2) Richard G. Sherlund (2)
Richard S. Sharp (7) Cody J. Smith (2)
C-2
<PAGE>
NAME AND PRINCIPAL NAME AND PRINCIPAL
BUSINESS ADDRESS BUSINESS ADDRESS
---------------- -----------------
Michael S. Sherwood (7) Esta E. Stecher (2)
Daniel W. Stanton (2) Byron D. Trott (8)
Frederic E. Steck (11) Peter S. Wheeler (13)
Barry S. Volpert (2) Gary W. Williams (2)
Anthony G. Williams (7) Danny O. Yee (13)
Tracy R. Wolstencroft (4) Mark A. Zurack (2)
Michael J. Zamkow (2) Masnori Mochida Inc. (10)
Hideo Ishihara Inc (10)
__________
(1) Management Committee
(2) 85 Broad Street, New York, NY 10004
(3) Mellon Bank Center, 1735 Market Street, 26th Floor,
Philadelphia, PA 19103
(4) 100 Crescent Court, Suite 1000, Dallas, TX 75201
(5) One New York Plaza, New York, NY 10004
(6) 1000 Louisiana Street, Suite 550, Houston, TX 77002
(7) Peterborough Court, 133 Fleet Street, London EC4A 2BB,
England
(8) 4900 Sears Tower, Chicago, IL 60606
(9) 333 South Grand Avenue, Suite 1900, Los Angeles, CA 90071
(10) ARK Mori Bldg.,10th Floor, 12-32 Akasaka, 1-chome, Minato-
ku, Tokyo 107, Japan
(11) 555 California Street, 31st Floor, San Francisco, CA 94104
(12) Exchange Place, 53 State Street, 13th Floor, Boston, MA 02109
(13) Asia Pacific Finance Tower, 35th Floor, Citibank Plaza, 3
Garden Road, Hong Kong
(14) Finanz GmbH, MesseTurm, 60308 Frankfurt am Main 1, Germany
(15) Munsterhof 4, 8022, Zurich, Switzerland
C-3
