SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No.______)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[XX] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
DG INVESTOR SERIES
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
DG INVESTOR SERIES
DG EQUITY FUND
DG OPPORTUNITY FUND
DG MID CAP FUND
DG INTERNATIONAL EQUITY FUND
DG LIMITED TERM GOVERNMENT INCOME FUND
DG GOVERNMENT INCOME FUND
DG MUNICIPAL INCOME FUND
DG PRIME MONEY MARKET FUND
DG TREASURY MONEY MARKET FUND
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
A special meeting (together with any adjournments or postponements, the
"Meeting") of the shareholders of DG Investor Series (the "Trust"), which
consists of the nine portfolios listed above (each such portfolio individually
referred to as a "Fund," and collectively as the "Funds"), will be held at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779 at 2:00 P.M. (Eastern time), on Friday, April 24, 1998,
for the purpose of considering and voting upon the following proposals:
EACH FUND WILL VOTE SEPARATELY ON PROPOSAL ONE
(1) A proposal to approve or disapprove a new Investment Advisory Contract
on behalf of each Fund (the "New Advisory Contract") (which provides for no
increase in advisory fees for the Funds), between the Trust and First American
National Bank, a subsidiary of First American Corporation, the terms of which
are substantially similar to the current investment advisory agreement between
the Trust and its present investment adviser. The New Advisory Contract will be
subject to and effective upon the consummation of the pending merger (the
"Merger") of Deposit Guaranty Corp., the ultimate corporate parent of the Funds'
present investment adviser, ParkSouth Corporation ("ParkSouth"), into First
American Corporation.
(2) THREE FUNDS WILL EACH VOTE SEPARATELY ON PROPOSAL TWO
DG OPPORTUNITY FUND ONLY:
(A) A proposal, in connection with the Merger, to approve or disapprove a
new Sub-Advisory Agreement between Womack Asset Management, the present
sub-adviser to the DG Opportunity Fund, and First American National Bank,
on behalf of the DG Opportunity Fund.
DG MID CAP FUND ONLY:
(B) A proposal, in connection with the Merger, to approve or disapprove a
new Sub-Advisory Agreement between Bennett Lawrence Management, LLC, the
present sub-adviser to the DG Mid Cap Fund, and First American National
Bank, on behalf of the DG Mid Cap Fund.
DG INTERNATIONAL EQUITY FUND ONLY:
(C) A proposal, in connection with the Merger, to approve or disapprove a
New Sub-Advisory Agreement between Lazard Freres Asset Management, the
present sub-adviser to the DG International Equity Fund, and First
American National Bank, on behalf of the DG International Equity Fund.
Such other business as may properly come before the Meeting.
The Trustees have fixed February 24, 1998 as the record date for determination
of shareholders of each Fund entitled to vote at the Meeting on all matters
relating to each such Fund. The enclosed Proxy Statement describes the Merger,
the New Advisory Contract, Deposit Guaranty Corp., ParkSouth, First American
Corporation, First American National Bank, the three new sub-advisory agreements
and the sub-advisers.
A Proxy solicited by the Trustees is enclosed herewith. Please mark, sign,
date, and return the Proxy promptly in the enclosed business reply envelope. If
you attend the Meeting, you may, if you wish, withdraw your Proxy and vote in
person.
By Order of the Board of Trustees
John W. McGonigle
Dated: March 13, 1998 SECRETARY
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY
BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
-22-
DG INVESTOR SERIES
DG EQUITY FUND
DG OPPORTUNITY FUND
DG MID CAP FUND
DG INTERNATIONAL EQUITY FUND
DG LIMITED TERM GOVERNMENT INCOME FUND
DG GOVERNMENT INCOME FUND
DG MUNICIPAL INCOME FUND
DG PRIME MONEY MARKET FUND
DG TREASURY MONEY MARKET FUND
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
--------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Trustees of DG Investor Series (the "Trust") for use at
the special meeting of shareholders of the Trust, which consists of the nine
portfolios listed above (each portfolio individually referred to as a "Fund,"
and collectively as the "Funds") to be held at Federated Investors Tower, 19th
Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779 at 2:00 P.M.
(Eastern time), on Friday, April 24, 1998 (together with any adjournments or
postponements thereof, the "Meeting"), for the purposes set forth in the
accompanying Notice of Special Meeting.
Copies of solicitation materials may be furnished to banks, brokerage
houses and other custodians, nominees and fiduciaries for forwarding to
beneficial owners of the shares, and normal handling charges may be paid for
such forwarding services. THE COST OF PREPARING AND MAILING THE NOTICE OF
SPECIAL MEETING, THE PROXY CARDS, THIS PROXY STATEMENT AND ANY ADDITIONAL PROXY
MATERIALS HAS BEEN OR WILL BE BORNE BY PARKSOUTH CORPORATION ("PARKSOUTH"), THE
FUNDS' CURRENT INVESTMENT ADVISER, OR BY DEPOSIT GUARANTY CORP., PARKSOUTH'S
ULTIMATE CORPORATE PARENT. 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, PARKSOUTH, FEDERATED SHAREHOLDER
SERVICES COMPANY (THE TRUST'S TRANSFER AGENT), AND/OR FEDERATED ADMINISTRATIVE
SERVICES (THE TRUST'S ADMINISTRATOR). 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 PROXIES WILL VOTE THOSE SHARES IN FAVOR OF SUCH
PROPOSAL(S).
INTRODUCTION
The Meeting is being called to permit shareholders of each Fund to approve
or disapprove a new investment advisory contract (the "New Advisory Contract")
between the Trust, on behalf of each of the respective Funds, and First American
National Bank, a wholly-owned subsidiary of First American Corporation ("First
American"). In addition, shareholders of the DG Opportunity Fund will be asked
to approve or disapprove a new sub-advisory agreement between First American
National Bank and Womack Asset Management; shareholders of the DG Mid Cap Fund
will be asked to approve a new sub-advisory agreement between First American
National Bank and Bennett Lawrence Management, LLC; and shareholders of the DG
International Equity Fund will be asked to approve a new sub-advisory agreement
between First American National Bank and Lazard Freres Asset Management. The
three new sub-advisory agreements are collectively referred to in this Proxy
Statement as the "New Sub-Advisory Agreements," and may each individually be
referred to as a "New Sub-Advisory Agreement."
Consideration of the New Advisory Contract and the New Sub-Advisory
Agreements has been made necessary by the pending acquisition (the "Merger") of
Deposit Guaranty Corp. ("DGC"), the ultimate corporate parent of ParkSouth, by
First American. The Board of Trustees of the Trust proposes that the New
Advisory Contract and the New Sub-Advisory Agreements take effect on the date
that the Merger is consummated. At that time, the current investment advisory
agreement between the Trust and ParkSouth, and the current sub-advisory
agreements between ParkSouth and the sub-advisers, will automatically terminate
in accordance with their terms and as required by the Investment Company Act of
1940, as amended (the "1940 Act"). It is presently anticipated that the Merger
will be consummated on or about April 30, 1998 (the "Merger Closing Date").
Shareholders of the Funds are NOT being asked to vote on the Merger of DGC into
First American.
Shareholders should consider the following factors in determining whether
to approve the New Advisory Contract (and, in the case of shareholders of the DG
Opportunity Fund, the DG Mid Cap Fund and the DG International Equity Fund,
whether to approve the respective New Sub-Advisory Agreement):
o the Board of Trustees of the Trust has unanimously approved the New
Advisory Contract for all of the Funds, and the New Sub-Advisory
Agreements for the affected Funds;
o no change in any Fund's investment objective or investment policies
and restrictions will take place;
o there will be no change in the fees payable by a Fund to First
American National Bank for advisory services, and there will be no
change in the fees payable by First American National Bank to any
sub-adviser;
o the Trustees of the Trust will remain unchanged;
investment personnel presently employed by ParkSouth, who are
experienced in managing the Funds, will continue to manage the Funds'
investment programs under the New Advisory Contract as employees of First
American National Bank; and
o there will be no change in the personnel at the sub-advisers who
manage the assets of the DG Opportunity Fund, the DG Mid Cap Fund
and the DG International Equity Fund.
The following table identifies the proposals to be voted on at the Meeting
and the shareholders who are being solicited with respect to each proposal:
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PROPOSAL SHAREHOLDERS SOLICITED
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Approval of the New Advisory Contract with First Each Fund, voting
American National Bank for each respective Fund. separately, on a
Fund-by-Fund basis.
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Approval of a new sub-advisory agreement between DG Opportunity Fund.
Womack Asset Management and First American National
Bank.
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Approval of a new sub-advisory agreement between DG Mid Cap Fund.
Bennett Lawrence Management, LLC, and First American
National Bank.
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Approval of a new sub-advisory agreement between DG International
Lazard Freres Asset Management and First American Equity Fund.
National Bank.
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Such other business as may properly come before the The Trust, or each
Meeting or any adjournment thereof. affected Fund, voting
separately, as
appropriate.
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On February 24, 1998, the Funds had outstanding the following number of
shares of beneficial interest (the "Shares"), each Share being entitled to one
vote and fractional Shares having proportionate voting rights. The total
outstanding Shares consist of:
DG Equity Fund 31,065,481 Shares
DG Opportunity Fund 7,692,333 Shares
DG Mid Cap Fund 10 Shares
DG International Equity Fund 2,526,620 Shares
DG Limited Term Government Income Fund 6,647,904 Shares
DG Government Income Fund 26,776,021 Shares
DG Municipal Income Fund 4,446,045 Shares
DG Prime Money Market Fund 190,190,116 Shares
DG Treasury Money Market Fund 350,133,009 Shares
Only shareholders of record at the close of business on February 24, 1998
will be entitled to notice of, and to vote at, the Meeting. Each shareholder of
each Fund entitled to vote on a proposal is entitled to one vote on each such
proposal per Share held as of the record date. Shares may be represented in
person or by proxy. With respect to each matter to be considered at the Meeting,
more than 50% of the total number of outstanding Shares of each Fund,
respectively, entitled to vote on the matter, represented in person or by proxy,
shall be required to constitute a quorum at the Meeting for each Fund for the
purpose of voting on the matter.
Under the 1940 Act, the New Advisory Contract must be approved by the
holders of a majority of the outstanding Shares of each Fund, and each New
Sub-Advisory Agreement must be approved by the holders of a majority of the
outstanding Shares of the affected Fund, with each Fund's shareholders voting
separately. Approval by each Fund of the New Advisory Contract, and approval by
a Fund of a New Sub-Advisory Agreement, requires the affirmative vote of (i) 67%
or more of the Shares of the Fund present at the Meeting, if holders of more
than 50% of the outstanding Shares of that Fund on the record date are present,
in person or by proxy, or (ii) more than 50% of the outstanding Shares of that
Fund on the record date, whichever is less. Consequently, with respect to each
proposal, abstentions and broker non-votes (I.E., proxies sent in by brokers and
other nominees which cannot be voted on a proposal because instructions have not
been received from the beneficial owners) will be counted toward the
establishment of a quorum, and as part of the base number of votes to be used in
determining if the proposal has received the requisite number of votes for
approval. Thus, an abstention or a broker non-vote will have the same effect as
a vote "against" such proposal. DGC, ParkSouth and their affiliates intend to
vote in favor of the proposals all Shares held by them in their fiduciary
capacity and subject to voting discretion. It is anticipated that DGC, ParkSouth
and their affiliates will be voting sufficient Shares of each Fund to assure
approval of the New Advisory Contract by each Fund and approval of the New
Sub-Advisory Agreements by the affected Funds.
If approved by the holders of a majority of the outstanding Shares of each
Fund, it is anticipated that the New Advisory Contract will become effective
upon the Merger Closing Date. Similarly, if approved by the holders of a
majority of the outstanding Shares of an affected Fund, it is anticipated that
each New Sub-Advisory Agreement will become effective upon the Merger Closing
Date. If the holders of a majority of the outstanding Shares of a Fund do not
approve the New Advisory Contract or a New Sub-Advisory Agreement (if
applicable), and the Merger is consummated, the Board of Trustees will consider
what action to take in the best interests of the shareholders of that Fund.
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the Meeting and gives verbal notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any Proxy given pursuant to this solicitation may be revoked prior to
the Meeting by delivering an instrument revoking it or a duly executed Proxy
bearing a later date to the Secretary of the Trust. If a Proxy is properly
completed and returned by the shareholder and is not revoked, it will be voted
at the Meeting in the manner specified thereon. If a Proxy is properly executed
and returned, but no choice is specified thereon, it will be voted in favor of
the proposals described in this Proxy Statement.
The Trust will provide, without charge and upon verbal or written request,
to each shareholder of record of a Fund, a copy of the Fund's annual report for
the fiscal year ended February 28, 1997, and the most recent semi-annual report
succeeding such annual report. Written or telephone requests for such documents
should be directed to DG Investor Series, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7010, telephone: 1-800-530-7377.
Federated Administrative Services (the "Administrator") provides
administrative services for the Trust, and Federated Shareholder Services
Company, (the "Transfer Agent") serves as the Trust's transfer agent and
dividend disbursing agent and provides portfolio accounting services. The
Trust's distributor and principal underwriter is Federated Securities Corp. (the
"Distributor"). The Administrator, Transfer Agent, and Distributor are
collectively referred to herein as the "Present Administration." The address of
the Present Administration is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is currently contemplated that the Present
Administration will continue to serve in these capacities following the Merger
Closing Date.
The Board of Trustees of the Trust proposes to mail this Proxy Statement,
the enclosed Notice of Special Meeting and the Proxy Cards on or about March 13,
1998.
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY CONTRACT
(APPLIES TO ALL FUNDS)
INTRODUCTION
ParkSouth Corporation ("ParkSouth") currently provides investment advisory
services to each Fund of the Trust pursuant to an investment advisory contract
between the Trust and ParkSouth dated March 1, 1997 (the "Current Advisory
Contract").
Deposit Guaranty Corp. ("DGC"), the Adviser's ultimate corporate parent,
has agreed to merge into First American Corporation ("First American") (such
transaction being the "Merger"). It is presently expected that the Merger will
be consummated on or about April 30, 1998 (the "Merger Closing Date"). In
conjunction with the Merger, it is contemplated that First American National
Bank will succeed to the advisory business of ParkSouth. The Merger and
integration of ParkSouth into First American National Bank may be deemed to be
an assignment under the Investment Company Act of 1940, as amended (the "1940
Act") and result in the automatic termination of the Current Advisory Contract.
In anticipation of the consummation of the Merger, [and the integration of
ParkSouth into First American National Bank,] and to provide for continuity of
investment advisory services to the Funds, shareholders of each Fund are being
asked to approve a new investment advisory contract between the Trust and First
American National Bank (the "New Advisory Contract").
Under the New Advisory Contract, First American National Bank will be
responsible for providing advisory services to the Funds. The terms of the New
Advisory Contract are identical, in all material respects, to the Current
Advisory Contract, except for: (i) the replacement of ParkSouth by First
American National Bank as the identified investment adviser to the Funds, and
(ii) the effective date. The effective date of the New Advisory Contract will be
the Merger Closing Date. A copy of the New Advisory Contract is attached as
Exhibit I to this Proxy Statement. The Trust will execute the New Advisory
Contract for each Fund that approves the New Advisory Contract by execution of a
schedule identifying the fees for services to the respective Fund.
ACQUISITION OF DGC BY FIRST AMERICAN
On December 8, 1997, DGC and First American entered into an Agreement and
Plan of Merger (the "Merger Agreement") whereby DGC [and its affiliates and
subsidiaries] will be merged into First American, a registered bank holding
company and financial services holding company headquartered in Nashville,
Tennessee. The boards of directors of DGC and First American have approved the
Merger. There are various conditions precedent to the consummation of the
Merger, including approval by federal and state regulatory authorities, and the
approval by shareholders of both DGC and First American. The Merger may be
terminated or abandoned at any time prior to its consummation by the mutual
consent of DGC and First American or upon the occurrence of other events
specified in the Merger Agreement. The meeting of DGC shareholders to vote on
the Merger will be held on April 14, 1998, and the meeting of First American's
shareholders will be held on April 16, 1998.
First American conducts various investment advisory activities through its
subsidiaries, including First American National Bank. The principal offices of
First American are located at First American Center, 315 Deaderick Street,
Nashville, Tennessee 37238. First American National Bank provides personal
trust, estate, employee benefit trust, corporate trust and custody services to
over 3000 individual and business clients, and investment advisory services.
First American National Bank presently serves as the investment adviser to The
Infinity Mutual Funds, Inc., an open-end management investment company, and its
AmeriStar Portfolios. First American National Bank and its affiliates, as of
December 31, 1997, had approximately $5.9 billion in assets under trust and
approximately $9 billion in assets under management.
As required by the 1940 Act, the Current Advisory Contract for the Funds
provides for its automatic termination upon its assignment. The Merger will
result in a change of control of ParkSouth and DGC and hence, an assignment
which would automatically terminate the Current Advisory Contract. To assure the
continued supervision of the investments of the Funds, a new advisory contract
must be approved which will take effect at the time the Current Advisory
Contract terminates. The Meeting has been called because the 1940 Act requires
that shareholders of an investment company vote on all investment advisory
agreements.
As more fully described below, the terms and conditions of the New
Advisory Contract are identical in all material respects to the Current Advisory
Contract. The sole differences between the Current Advisory Contract and the New
Advisory Contract are: (i) the substitution of First American National Bank for
ParkSouth, and (ii) the effective date which, in the case of the New Advisory
Contract, will be the Merger Closing Date. It is currently expected that the
Merger Closing Date will occur on or about April 30, 1998. THE NEW ADVISORY
CONTRACT PROVIDES FOR NO INCREASE IN THE ADVISORY FEES PAYABLE BY ANY FUND, AND
IS NOT EXPECTED TO CHANGE THE TYPE OR EXTENT OF SERVICES PROVIDED TO THE FUNDS.
Should the Merger not be consummated, ParkSouth will continue to serve as
investment adviser to the Funds pursuant to the Current Advisory Contract.
At a meeting held on February 26, 1998, the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons" (as
that term is defined in the 1940 Act) (the "Independent Trustees") of the Trust
unanimously approved the New Advisory Contract and recommended that it be
submitted to shareholders for their approval at the Meeting.
INFORMATION ABOUT THE CURRENT ADVISORY CONTRACT
The Current Advisory Contract was most recently approved by the Board of
Trustees of the Trust, including a majority of the Independent Trustees, with
respect to each Fund, on February 27, 1997. Federated Administrative Services,
as the initial shareholder of each Fund, initially approved the Current Advisory
Contract on the following dates:
DG Equity Fund July 17, 1992 DG Opportunity Fund July 22, 1994 DG
Mid Cap Fund September 3, 1997 DG International Equity Fund March
31, 1997 DG Limited Term Government Income Fund July 17, 1992 DG
Government Income Fund July 17, 1992 DG Municipal Income Fund
December 11, 1992 DG Prime Money Market Fund January 30, 1997 DG
Treasury Money Market Fund May 4, 1992
The Current Advisory Contract provides that ParkSouth shall provide
investment management services to the Funds, subject to the supervision of the
Board of Trustees of the Trust. Under the Current Advisory Contract, ParkSouth
is entitled to receive advisory fees from the Funds, computed daily and paid
daily, at the annual rates of: 0.50% of the average daily net assets of each of
the DG Prime Money Market Fund and the DG Treasury Money Market Fund; 0.60% of
the average daily net assets of each of the DG Limited Term Government Income
Fund, the DG Government Income Fund and the DG Municipal Income Fund; 0.75% of
the average daily net assets of the DG Equity Fund; 0.95% of the average daily
net assets of the DG Opportunity Fund; and 1.00% of the average daily net assets
of each of the DG Mid Cap Fund and the DG International Equity Fund.
The table below sets forth: (i) the net assets for each Fund as of the six
month period ended August 31, 1997; (ii) the rates of advisory fees, computed
daily and payable daily, to which ParkSouth is entitled for the services
provided and expenses assessed pursuant to the Current Advisory Contract; (iii)
advisory fees (net of waivers) paid by each Fund for the fiscal year ended
February 28, 1997; and (iv) the effective rates of each of the advisory fees
(net of waivers) expressed as a percentage of average net assets for the fiscal
year ended February 28, 1997:
<PAGE>
ASSETS OF DG INVESTOR SERIES AND ADVISORY FEES PAID TO PARKSOUTH CORPORATION
Net Assets Annual Actual Advisory Effective
as of Advisory Fee Fees Advisory
August 31, (Based on (Net of Waivers) FEES(1)
1997 Average Net Paid
ASSETS) For Fiscal Year
Ended
FEBRUARY 28, 1997
DG Equity Fund $589,940,000 0.75% 0.75% $3,213,522
DG Opportunity Fund $106,693,349 0.95% 0.79% $568,562
DG Mid Cap Fund $0 1.00% N/A% N/A
DG International Equity $10,777,644 1.00% N/A% N/A
Fund
DG Limited Term $80,575,763 0.60% 0.40% $351,982
Government Income
Fund
DG Government Income $269,325,598 0.60% 0.50% $1,140,913
Fund
DG Municipal Income Fund $49,100,103 0.60% 0.25% $116,346
DG Prime Money Market $168,498,305 0.50% N/A% N/A
Fund
DG Treasury Money Market $242,315,203 0.50% 0.30% $683,140
Fund
TOTAL DG Investor $1,517,225,965
Series
(1) Each current fee waiver represents a percentage of daily net assets of each
Fund calculated at an annualized rate. The current voluntary fee waivers and
reimbursements may be modified or terminated by ParkSouth at any time at its
sole discretion. Similarly, under the New Advisory Contract, First American
National Bank may modify or terminate the voluntary fee waivers and
reimbursements at its sole discretion.
For the fiscal year ended February 28, 1997, the DG Equity and Opportunity
Funds paid $75,624.30 and $315,139.07, respectively, in total dollar amounts of
brokerage commissions. None of the other Funds paid any brokerage commissions or
entered into any brokerage transactions during the fiscal year ended February
28, 1997. The Funds, however, engaged in transactions with dealers acting as
principal and the costs of such transactions involve dealer spreads rather than
brokerage commissions.
INFORMATION ABOUT THE NEW ADVISORY CONTRACT
Under the New Advisory Contract, First American National Bank shall manage
the Funds' investments. Subject to the direction of the Board of Trustees of the
Trust, First American National Bank shall provide investment research and
supervision of the investments of each Fund, and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets. The New Advisory Contract provides that
First American National Bank shall determine from time to time what securities
or other instruments will be purchased, retained or sold by the Trust with
respect to each Fund. First American National Bank, in its supervision of the
assets of each Fund, is guided by each Fund's investment objective and policies,
and the provisions and restrictions contained in the Declaration of Trust and
the By-Laws of the Trust and as set forth in the Funds' prospectuses and
Statements of Additional Information that are on file with the Securities and
Exchange Commission (the "SEC"). The form of the New Advisory Contract
(including the execution page for each Fund) is attached to this Proxy Statement
as Exhibit I.
The New Advisory Contract states that each Fund shall pay (or cause to be
paid) all of its own expenses and its allocable share of Trust expenses,
including, without limitation, the expenses of organizing the Trust and
continuing its existence; fees and expenses of the Trustees and officers of the
Trust; fees for investment advisory services and administrative personnel and
services; expenses incurred in the distribution of the Shares, including
expenses of administrative support services; fees and expenses of preparing and
printing the Trust's Registration Statements under the Securities Act of 1933
and the 1940 Act, and any amendments thereto; expenses of registering and
qualifying the Trust, the Funds, and Shares of the Funds under federal and state
laws and regulations; expenses of preparing, printing, and distributing
prospectuses (and any amendments thereto) to shareholders; interest expense,
taxes, fees, and commissions of every kind; expenses of issue (including cost of
share certificates), purchase, repurchase, and redemption of Shares, including
expenses attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs, auditing, accounting, and
legal expenses; reports to shareholders and governmental officers and
commissions; expenses of meetings of Trustees and shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and such
nonrecurring items as may arise, including all losses and liabilities incurred
in administering the Trust and the Funds. Each Fund will also pay its allocable
share of such extraordinary expenses as may arise, including expenses incurred
in connection with litigation, proceedings, and claims and the legal obligations
of the Trust to indemnify its officers and Trustees and agents with respect
thereto.
It is presently anticipated that the Present Administration will continue
to provide services to the Trust. The Trust's expenses will continue to include
expenses of administrative personnel and services provided to the Trust by the
Administrator at an annual rate as described in the prospectuses and Statements
of Additional Information for the Funds.
THE NEW ADVISORY CONTRACT PROVIDES THAT THE ADVISORY FEES PAYABLE TO FIRST
AMERICAN NATIONAL BANK BY THE FUNDS WILL BE IDENTICAL TO THOSE PAYABLE TO
PARKSOUTH UNDER THE CURRENT ADVISORY CONTRACT. The advisory fees payable under
the New Advisory Contract by the Funds are equal to a fixed percentage of the
daily net assets of each Fund calculated at an annualized rate, payable on a
daily basis, and are listed on page 6 of this Proxy Statement. From time to
time, First American National Bank, under the New Advisory Contract, consistent
with ParkSouth's present practice under the Current Advisory Contract, may waive
its fee or reimburse a Fund for certain of its expenses in order to reduce the
Fund's expense ratio. As a result, the Fund's return and yield would be higher
than it would be if the fees and such expenses had been paid by the Fund.
As in the Current Advisory Contract, the New Advisory Contract provides
that in the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties of First American National Bank
under the New Advisory Contract, First American National Bank and its affiliates
shall not be liable to the Trust or to any shareholder for any act or omission
in the course of, or connected in any way with, rendering services or for any
losses that may be sustained in the purchase, holding, or sale of any security.
If approved by shareholders of the Funds at the Meeting, the New Advisory
Contract will continue for a period of two years from its date of execution,
unless terminated, and may be continued from year to year thereafter by the
Board of Trustees. The continuation of the New Advisory Contract must be
approved by a majority vote of the Trustees, including a majority of the
Independent Trustees cast in person at a meeting called for that purpose. Under
the New Advisory Contract, First American National Bank has the right, in any
year, to notify the Trust in writing at least 60 days before the New Advisory
Contract's anniversary date that it does not desire a renewal of the New
Advisory Contract. The Trustees, or a majority of the outstanding voting shares
of the Trust, may terminate the New Advisory Contract at any time without
penalty by giving First American National Bank 60 days' written notice. The New
Advisory Contract may not be assigned by First American National Bank and will
terminate automatically in the event of its assignment. The New Advisory
Contract provides that it may be amended by a vote of both a majority of the
Trustees, including a majority of the Independent Trustees, and on behalf of a
Fund by the holders of a majority of the outstanding voting shares of such Fund.
If the New Advisory Contract is approved by shareholders of one or more
Funds and the Merger is consummated, the New Advisory Contract will be executed
and become effective with respect to such Funds on the Merger Closing Date. In
the event the Merger is not consummated, the Current Advisory Contract will
continue in accordance with its terms. If the Merger is consummated and if the
New Advisory Contract is not approved by the shareholders of a Fund, the Board
of Trustees will consider what actions should be taken, including but not
limited to, terminating the Current Advisory Contract or requesting that First
American National Bank perform investment advisory services for that Fund at
cost until a new investment advisory contract is approved by the shareholders of
that Fund.
INFORMATION ABOUT PARKSOUTH AND FIRST AMERICAN NATIONAL BANK
PARKSOUTH CORPORATION
ParkSouth has served as the investment adviser to the Trust since March 1,
1997. Prior to that date, Deposit Guaranty National Bank (the "Bank") had served
as the investment adviser to the Trust since May 5, 1992, the date of the
Trust's establishment. ParkSouth is an investment adviser registered under the
Investment Advisers Act of 1940 (the "Advisers Act"), providing investment
management services to individuals and institutional clients. ParkSouth's
address is P.O. Box 1200, Jackson, Mississippi 39215-1200. ParkSouth is a
subsidiary of the Bank, which is a national banking association. The Bank is a
subsidiary of Deposit Guaranty Corp ("DGC"). The Adviser manages, in addition to
the Funds, $100 million in assets, as of December 31, 1997. Through its
subsidiaries and affiliates, DGC offers a full range of financial services to
the public, including commercial lending, depository services, cash management,
brokerage services, retail banking, mortgage banking, investment advisory
services and trust services. The address of DGC is 201 East Capital Street,
Jackson, MS, 39201
The principal executive officers and directors of DGC are listed in the
table below. The business address of each such individual is DGB-14, P.O. Box
1200, Jackson, Mississippi 39215-1200:
Other Substantial
NAME POSITION WITH DGC Business,
PROFESSION, VOCATION OR
EMPLOYMENT
Michael B. Bernis Director Executive Vice President
Retail Service
Entergy Ccorporation
Richard H. Bremer Director President
Energy Services
Central and South West
Services, Inc.
Warren A. Hood,Jr. Director Chairman
Atlas Roofing Corporation
Hood Industries, Inc. and
Southern Bag Corporation
Charles L. Irby Director President
Irby Construction Co.
Howard L. McMillan, Jr. Director
President and Chief
Operating Officer
Richard D. McRae, Jr. Director President
McRae Investments
Private Investor
W. R. Newman, III Director President
J. A. Bentley Lumber Co., Inc.
John N. Palmer Director Chairman of the Board
Mobile Telecommunication
Techologies Corp.
E. B. Robinson, Jr. Director
Chairman of the Board and
Chief Executive Officer
Steven C. Walker Director
Executive Vice President
J. Kelley Williams Director Chairman and
Chief Executive Officer
ChemFirst, Inc.
Specialty Chemicals
FIRST AMERICAN NATIONAL BANK
First American is a registered bank holding company and a financial
services company headquartered in Nashville, Tennessee. Through its related
banking subsidiaries, including First American National Bank, First American
provides banking and banking-related services throughout the mid-south region of
the United States. On December 31, 1997, First American and its affiliates had
total assets of approximately $5.9 billion under trust and approximately $9
billion under management.
The principal executive officer and directors of First American National
Bank are listed in the table below. The business address of each such individual
is First American Center, 315 Deaderick Street, Nashville, Tennessee 37237.
Certain executive officers and directors of First American National Bank also
hold or have held various positions with bank and non-bank affiliates of First
American National Bank, including First American.
<TABLE>
<CAPTION>
NAME Position with First Other Substantial Business,
American Profession,
NATIONAL VOCATION OR
BANK EMPLOYMENT
<S> <C> <C>
Samuel E. Beale, III Director President and Chief
Executive Officer of
Morrison Restaurants, Inc.
Dennis C. Bottorff Director and Chief President and Chief
Executive Officer Executive Officer of First
American Corporation
Earnest W. Deavenport, Jr. Director Group Vice President of
Eastman Kodak Company
Reginald D. Dickson Director President Emeritus of
INROADS, Inc.
T. Scott Fillebrown Director Private Investor
James A. Haslam, II Director President and Chief
Executive Officer of Pilot
Corporation
Martha R. Ingram Director Director of Public Affairs
of Ingram Industries, Inc.
Walter D. Knestrick Director Chairman of the Board of
Walter Knestrick
Contractor, Inc.
Gene C. Koonce Director President and Chief
Executive Officer of United
Cities Gas Company
James R. Martin Director Chairman and Chief
Executive Officer of
PlastiLine, Inc.
William O. McCoy Director Vice Chairman of the Board
of BellSouth Corporation
Dale W. Polley Director, Vice Chairman Vice Chairman and Chief
and Chief Administrative Officer of
Administrative Officer First American Corporation
Toy F. Reid Director Retired Executive Vice
President of Eastman Kodak
Company
Roscoe R. Robinson Director Vice Chancellor for Health
Affairs of Vanderbilt
University Medical Center
James F. Smith Director Chairman of the Board of
First American Corporation
Cal Turner, Jr. Director Chairman and Chief
Executive Officer of Dollar
General Corporation
David K. Wilson Director Chairman of the Board of
Cherokee Equity Corporation
Toby S. Wilt Director President of TSW Investment
Company
William S. Wire, II Director Chairman of the Board of
Genesco, Inc.
</TABLE>
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Advisory Contract was unanimously approved on behalf of each Fund
by the Board of Trustees (the "Board") of the Trust, including the Independent
Trustees, at a meeting held on February 26, 1998. By approving the New Advisory
Contract, the Trustees have acted in what they believe to be the best interests
of the shareholders of each Fund. The Trustees considered information relating
to ParkSouth, First American, First American National Bank and the consolidated
entity that would result from the consummation of the Merger, including First
American National Bank's present capabilities and expertise in serving as
investment adviser to its own family of mutual funds. The Trustees reviewed the
terms of the New Advisory Contract, including the fact that no change is being
proposed to either the advisory fee payable by any Fund or the type of services
being provided to the Funds. It was also noted that the New Advisory Contract is
identical to the Current Advisory Contract, except for its date and the
substitution of First American National Bank for ParkSouth.
Specifically, in connection with approval of the New Advisory Contract on
behalf of each Fund, the Board considered that the terms of the Merger do not
require or result in any changes in the Funds' investment objectives or
policies, the investment management or operation of the Funds, the investment
personnel managing the Funds, or the shareholder services or other business
activities of the Funds. ParkSouth and DGC have informed the Board that the
Merger is not expected to result in any such change, although no assurance can
be given that such a change will not occur. ParkSouth and DGC also have advised
that, at present, they are not aware of plans or proposals to make any material
changes in the business, corporate structure or composition of senior management
or personnel that manage the Funds, or in the manner in which those individuals
render investment advisory services to each Fund. If, after the Merger Closing
Date, changes in First American National Bank are proposed that might materially
affect its services to a Fund, the Board will consider the effect of those
changes and take such action as it deems advisable under the circumstances.
In light of these representations, in approving the New Advisory Contract,
the Board placed particular emphasis on ParkSouth's (and its predecessor, the
Bank's) record of service to the Funds and the expectation that the Merger
should not have any material adverse effect on the Funds' ongoing operations or
on the extent or quality of services provided by First American National Bank to
the Funds, or increase the cost to the Funds of such services. It was noted in
this regard that, as part of its ongoing responsibilities, the Board throughout
the years has monitored the Funds' performance, as well as the manner in which
ParkSouth (and before ParkSouth, the Bank) has carried out its duties as
investment adviser to the Funds.
Section 15(f) of the 1940 Act provides that in connection with the sale of
any interest in any investment adviser which results in the "assignment" of an
investment advisory agreement, an investment adviser of a registered investment
company, such as the Trust, or an affiliated person of such investment adviser,
may receive any amount or benefit if (i) for a period of three years after the
sale, at least 75% of the members of the board of trustees of the investment
company are not interested persons of the investment adviser or the predecessor
adviser, and (ii) there is no "unfair burden" imposed on the investment company
as a result of such sale or any express or implied terms, conditions or
understanding applicable thereto. For this purpose, "unfair burden" is defined
to include any arrangement during the two-year period after the transaction,
whereby the investment adviser or its predecessor or successor investment
advisers, or any interested persons of any such adviser, receives or is entitled
to receive any compensation directly or indirectly (i) from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company other than bona fide ordinary compensation
as principal underwriter for such company, or (ii) from the investment company
or its security holders for other than bona fide investment advisory or other
services. This provision of the 1940 Act was enacted by Congress in 1975 to make
it clear that an investment adviser (or an affiliated person of the adviser) can
realize a profit on the sale of the adviser's business subject to the two
safeguards described above. The Board has requested and received assurances from
DGC and ParkSouth that no "unfair burden" will be imposed on the Trust as a
result of the Merger and the proposed transactions.
Based upon the considerations set forth above, the Trustees have
determined that the New Advisory Contract is in the best interest of each Fund
and its shareholders. In addition, management expects that there will be no
diminution in the scope and quality of services provided to the Trust as a
result of these transactions. In fact, as described above, the New Advisory
Contract is identical in all material respects, except as to (i) the
substitution of First American National Bank for ParkSouth and (ii) its date, as
the Current Advisory Contract under which the Trust is presently operating and
which has been approved previously by the shareholders of each Fund. The Board
believes that the Funds will receive investment management services under the
New Advisory Contract at least equivalent to those that they receive under the
Current Advisory Contract, and at the same fee and expense levels.
In the event the Merger is not consummated, the Current Advisory Contract
will continue in accordance with its terms. If the Merger is consummated and if
the New Advisory Contract is not approved by the shareholders of any Fund, the
Current Advisory Contract will terminate and the Board of Trustees will consider
what actions should be taken, including but not limited to, requesting that
First American National Bank perform investment advisory services at cost until
a new investment advisory contract is approved by the shareholders of that Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND
VOTE "FOR" THE APPROVAL OF THE NEW ADVISORY CONTRACT.
PROPOSAL 2-A
APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY AGREEMENT
(APPLIES ONLY TO THE DG OPPORTUNITY FUND)
Womack Asset Management ("Womack Management"), 2120 Deposit Guaranty
Plaza, Jackson, Mississippi 39201, presently serves as the sub-adviser to the DG
Opportunity Fund pursuant to a sub-advisory agreement dated July 21, 1997 (the
"Present Womack Sub-Advisory Agreement"). Womack Management is an investment
adviser registered under the Advisers Act, and was formed in February 1997 by
William A. Womack. Prior to forming Womack Management, Mr. Womack had been a
Senior Vice President and Trust Investment Officer of the Bank (the parent
corporation of ParkSouth and, prior to March 1, 1997, the investment adviser to
the DG Opportunity Fund and the Trust's other Funds) and the portfolio manager
for the DG Opportunity Fund.
As indicated in the section entitled "Approval or Disapproval of a New
Investment Advisory Contract" in this Proxy Statement, on December 8, 1997,
First American and DGC entered into the Merger Agreement. See "Acquisition of
DGC by First American." Consummation of the transactions contemplated by the
Merger will cause a change of ownership of ParkSouth as ParkSouth is integrated
into First American National Bank. This change in ownership of ParkSouth will
automatically terminate the Current Advisory Contract, which will, in turn,
automatically terminate the Present Womack Sub-Advisory Agreement, in accordance
with its terms and as required by the 1940 Act. Thus, although immediately
following the Merger, Womack Management would remain the entity responsible for
providing sub-advisory services to the DG Opportunity Fund, the change in
ownership of ParkSouth requires approval by the shareholders of the DG
Opportunity Fund of a new sub-advisory agreement (the "New Womack Sub-Advisory
Agreement") between First American National Bank, on behalf of the DG
Opportunity Fund, and Womack Management. A copy of the New Womack Sub-Advisory
Agreement is attached as Exhibit II-A to this Proxy Statement.
On February 26, 1998, the Trustees of the Trust, including the Independent
Trustees, unanimously approved the New Womack Sub-Advisory Agreement, voting to
continue having Womack Management act as the DG Opportunity Fund's sub-adviser.
The terms of the New Womack Sub-Advisory Agreement are identical, in all
material respects, to the Present Womack Sub-Advisory Agreement, except for: (i)
the replacement of ParkSouth by First American National Bank as the identified
investment adviser to the DG Opportunity Fund, and (ii) the effective date,
which, in the case of the New Womack Sub-Advisory Agreement, will be the Merger
Closing Date. As indicated in the section entitled "Approval or Disapproval of a
New Investment Advisory Contract" of this Proxy Statement, it is currently
expected that the Merger Closing Date will occur on or about April 30, 1998.
On May 14, 1997, at the request of Womack Management, the Present Womack
Sub-Advisory Agreement was approved by the Board of Trustees, including a
majority of the Independent Trustees, and was recommended by the Trustees for
shareholder approval. At a shareholder meeting held on July 21, 1997, a majority
of the shareholders of the DG Opportunity Fund approved the Present Womack
Sub-Advisory Agreement.
Pursuant to the terms of the Present Womack Sub-Advisory Agreement and the
New Womack Sub-Advisory Agreement, subject to the direction of the Board of
Trustees and either ParkSouth (in the Present Womack Sub-Advisory Agreement) or
First American National Bank (in the New Womack Sub-Advisory Agreement), Womack
Management acts as the discretionary sub-adviser for all assets of the DG
Opportunity Fund other than cash and cash-equivalents. Under the terms of the
Present Womack Sub-Advisory Agreement and the New Womack Sub-Advisory Agreement,
Womack Management makes all determinations with respect to the investment of
non-cash assets of the DG Opportunity Fund, and takes such steps as may be
necessary to implement the same, including the placement of purchase and sale
orders on behalf of the DG Opportunity Fund.
The Present Womack Sub-Advisory Agreement and the New Womack Sub-Advisory
Agreement provide that Womack Management shall pay the expenses incurred by it
and its staff in connection with the performance of its services under each
Womack Sub-Advisory Agreement, including the payment of salaries of all officers
and employees who are employed by Womack Management. Under the Present Womack
Sub-Advisory Agreement, ParkSouth pays Womack Management, and under the New
Womack Sub-Advisory Agreement, First American National Bank will pay Womack
Management, a monthly fee based on the average daily net assets of Opportunity
Fund under management by the sub-adviser during the preceding month. The
sub-advisory fee shall be the sum of: 0.32% of the average daily net assets up
to $50 million; 0.075% of the average daily net assets in excess of $50 million
and up to $70 million; and 0.25% of the average daily net assets in excess of
$70 million. Applying the foregoing formula to the DG Opportunity Fund's current
level of net assets, Womack Management would presently be entitled to a
sub-advisory fee equal to 0.25% of the DG Opportunity Fund's average daily net
assets, payable by ParkSouth from ParkSouth's investment advisory fee of 0.95%
of the DG Opportunity Fund's average daily net assets. THE FEE PAYABLE TO WOMACK
MANAGEMENT IS IDENTICAL IN THE PRESENT WOMACK SUB-ADVISORY AGREEMENT AND THE NEW
WOMACK SUB-ADVISORY AGREEMENT.
The New Womack Sub-Advisory Agreement provides, with respect to the DG
Opportunity Fund that, if approved by shareholders of the Fund, it will remain
in effect for an initial period of two years from the date of its execution and
shall continue in effect for successive one-year periods, provided such
continuance is specifically approved at least annually by vote of a majority of
Trustees, including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval. Womack Management has
the right, in any year, to notify First American National Bank in writing, at
least 60 days before the New Womack Sub-Advisory Agreement's anniversary date,
that it does not desire a renewal of the New Womack Sub-Advisory Agreement. The
New Womack Sub-Advisory Agreement may be terminated by the Trustees at any time
without penalty, or by a vote of a majority of the outstanding shares of the DG
Opportunity Fund on 60 days' written notice. The New Womack Sub-Advisory
Agreement will immediately terminate in the event of its assignment (as such
term is defined in the 1940 Act) or in the event of the termination of the
Trust's then-effective advisory agreement with First American National Bank. The
New Womack Sub-Advisory Agreement provides that it may be amended by a vote of
both a majority of the Trustees, including a majority of the Independent
Trustees, and by the holders of a majority of the outstanding shares of the DG
Opportunity Fund, and when required by the 1940 Act.
If the New Womack Sub-Advisory Agreement and the New Advisory Contract are
approved by shareholders of the DG Opportunity Fund and the Merger is
consummated, the New Womack Sub-Advisory Agreement will be executed and become
effective on the Merger Closing Date, which is expected to be on or about April
30, 1998. In the event the Merger is not consummated, the Present Womack
Sub-Advisory Agreement (as well as the Current Advisory Contract) will continue
in accordance with their terms. If the Merger is consummated and if the New
Advisory Contract IS approved but the New Womack Sub-Advisory Agreement is NOT
approved by the shareholders of the DG Opportunity Fund, First American National
Bank would be fully responsible for the Fund's investment activities. If the
Merger is consummated and if neither the New Advisory Contract nor the New
Womack Sub-Advisory Agreement is approved by the shareholders of the DG
Opportunity Fund, the Present Womack Sub-Advisory Agreement will terminate and
the Board of Trustees will consider what actions should be taken, including but
not limited to, requesting that First American National Bank or Womack
Management perform investment advisory services at cost until a new investment
advisory contract is approved by the shareholders.
As indicated earlier in this Proxy Statement under the section entitled
"Approval or Disapproval of a New Investment Advisory Contract," there are
various conditions precedent to the consummation of the Merger, including
approval by the shareholders of DGC and First American and approval by
regulatory authorities. Shareholders of the DG Opportunity Fund are not being
asked to vote on the Merger.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Womack Sub-Advisory Agreement was unanimously approved on behalf
of the DG Opportunity Fund by the Board of Trustees of the Trust, including the
Independent Trustees, at a meeting held on February 26, 1998. By approving the
New Womack Sub-Advisory Agreement, the Trustees have acted in what they believe
to be the best interest of the shareholders of the DG Opportunity Fund. The
Trustees considered information relating to Womack Management, ParkSouth, First
American, First American National Bank and the consolidated entity that would
result from the completion of the Merger. The Board considered Womack
Management's present capabilities and expertise in serving as sub-adviser to the
DG Opportunity Fund. The Trustees reviewed the terms of the New Womack
Sub-Advisory Agreement, including the fact that the sub-advisory services would
continue to be performed at the same costs and by the same personnel at Womack
Management as they currently are under the Present Womack Sub-Advisory
Agreement. It was also noted that Womack Management has served as the
sub-adviser to the Fund since March 1997, and that Mr. Womack has acted as the
Fund's portfolio manager since its inception.
The section entitled "Trustees' Recommendations and Other Information"
that appears earlier in this Proxy Statement discusses additional factors
considered by the Trustees, as well as matters such as "assignment" of an
investment advisory contract and "unfair burden" with respect to the realization
of a profit by ParkSouth and DGC as a result of the Merger. These statements are
also applicable to shareholders of the DG Opportunity Fund with respect to the
approval or disapproval of the New Womack Sub-Advisory Agreement. Shareholders
should therefore review this information prior to determining whether to approve
the New Womack Sub-Advisory Agreement.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF THE
DG OPPORTUNITY FUND VOTE "FOR" THE APPROVAL OF THE
NEW WOMACK SUB-ADVISORY AGREEMENT
PROPOSAL 2-B
APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY AGREEMENT
(APPLIES ONLY TO THE DG MID CAP FUND)
Bennett Lawrence Management, LLC ("Bennett Lawrence"), 757 Third Avenue,
19th Floor, New York, New York 10017, presently serves as the sub-adviser to the
DG Mid Cap Fund pursuant to a sub-advisory agreement dated August 6, 1997 (the
"Present Bennett Sub-Advisory Agreement"). Bennett Lawrence, a New York limited
liability company, is registered as an investment adviser under the Advisers
Act. Bennett Lawrence provides investment management services to client
discretionary accounts with assets totalling approximately $900 million as of
December 31, 1997. Bennett Lawrence's clients include both individuals and
institutions. In addition to serving as the sub-adviser to the DG Mid Cap Fund,
Bennett Lawrence is currently acting as a sub-adviser to a multi-manager fund.
As indicated in the section entitled "Approval or Disapproval of a New
Investment Advisory Contract" in this Proxy Statement, on December 8, 1997,
First American and DGC entered into the Merger Agreement. See "Acquisition of
DGC by First American." Consummation of the transactions contemplated by the
Merger will cause a change of ownership of ParkSouth as ParkSouth is integrated
into First American National Bank. This change in ownership of ParkSouth will
automatically terminate the Current Advisory Contract between the Trust and
ParkSouth, which will, in turn, automatically terminate the Present Bennett
Sub-Advisory Agreement, in accordance with its terms and as required by the 1940
Act. Thus, although immediately following the Merger, Bennett Lawrence would
remain the entity responsible for providing sub-advisory services to the DG Mid
Cap Fund, the change in ownership of ParkSouth requires approval by the
shareholders of the DG Mid Cap Fund of a new sub-advisory agreement (the "New
Bennett Sub-Advisory Agreement") between First American National Bank, on behalf
of the DG Mid Cap Fund, and Bennett Lawrence. A copy of the New Bennett
Sub-Advisory Agreement is attached as Exhibit II-B to this Proxy Statement.
On February 26, 1998, the Trustees of the Trust, including the Independent
Trustees, unanimously approved the New Bennett Sub-Advisory Agreement, voting to
continue to have Bennett Lawrence act as the DG Mid Cap Fund's sub-adviser. The
terms of the New Bennett Sub-Advisory Agreement are identical, in all material
respects, to the Present Bennett Sub-Advisory Agreement, except for: (i) the
replacement of ParkSouth by First American National Bank as the identified
investment adviser to the DG Mid Cap Fund, and (ii) the effective date which, in
the case of the New Bennett Sub-Advisory Agreement, will be the Merger Closing
Date. As indicated in the section entitled "Approval or Disapproval of a New
Investment Advisory Contract" of this Proxy Statement, it is currently expected
that the Merger Closing Date will occur on or about April 30, 1998.
On May 14, 1997, at the request of Bennett Lawrence, the Present Bennett
Sub-Advisory Agreement was approved by the Board of Trustees, including a
majority of the Independent Trustees, and was recommended by the Trustees for
shareholder approval. Federated Administrative Services, as the sole initial
shareholder of the DG Mid Cap Fund, approved the Present Bennett Sub-Advisory
Agreement on September 3, 1997.
Pursuant to the terms of the Present Bennett Sub-Advisory Agreement and
the New Bennett Sub-Advisory Agreement, subject to the direction of ParkSouth
(in the case of the Present Bennett Sub-Advisory Agreement) or First American
National Bank (in the case of the New Bennett Sub-Advisory Agreement), Bennett
Lawrence acts as a discretionary investment sub-adviser for all assets of the DG
Mid Cap Fund other than any assets of the Fund that Bennett Lawrence has
determined are to be held in cash and cash equivalents, which are managed by
ParkSouth (or, in the case of the New Bennett Sub-Advisory Agreement, First
American National Bank). Under the terms of the Present Bennett Sub-Advisory
Agreement and the New Bennett Sub-Advisory Agreement, Bennett Lawrence
formulates and implements a continuing program for the management of the
non-cash assets of the DG Mid Cap Fund. Bennett Lawrence amends and periodically
updates such program from time to time as financial and other economic
conditions warrant. Bennett Lawrence makes all determinations with respect to
the investment of such assets and takes all steps as may be necessary to
implement its investment decisions, including the placement of purchase and sale
orders on behalf of the DG Mid Cap Fund.
The Present Bennett Sub-Advisory Agreement and the New Bennett
Sub-Advisory Agreement provide that ParkSouth or First American National Bank,
as applicable, will pay Bennett Lawrence a sub-advisory fee determined by
applying the following annual rates to the DG Mid Cap Fund's average daily
assets: 0.75% of the Fund's assets up to and including $5 million; 0.65% of the
Fund's assets over $5 million up to and including $10 million; and 0.55% of the
Fund's assets over $10 million. The sub-advisory fee is calculated by ParkSouth
or First American National Bank, as applicable, is accrued daily, and paid
quarterly, in arrears, to Bennett Lawrence. Applying the foregoing formula to
the DG Mid Cap Fund's current level of assets, Bennett Lawrence would be
entitled to receive a sub-advisory fee equal to 0.75% of the DG Mid Cap Fund's
average daily net assets, payable by ParkSouth from ParkSouth's investment
advisory fee of 1.00% of the Fund's average daily net assets. THE FEE PAYABLE TO
BENNETT LAWRENCE IS IDENTICAL IN THE PRESENT BENNETT SUB-ADVISORY AGREEMENT AND
THE NEW BENNETT SUB-ADVISORY AGREEMENT.
If approved by shareholders of the DG Mid Cap Fund at the Meeting, the New
Bennett Sub-Advisory Agreement will remain in effect for an initial period of
two years from the date of its execution, unless terminated, and may be
continued from year to year thereafter by the Board of Trustees. The
continuation of the New Bennett Sub-Advisory Agreement must be approved by a
majority vote of the Trustees, including a majority of the Independent Trustees,
cast in person at a meeting called for that purpose. Bennett Lawrence has the
right, in any year, to notify First American National Bank in writing at least
60 days before the New Bennett Sub-Advisory Agreement's anniversary date, that
it does not desire a renewal of the New Bennett Sub-Advisory Agreement. The
Trustees, or a majority of the outstanding voting shares of the DG Mid Cap Fund,
may terminate the New Bennett Sub-Advisory Agreement at any time without penalty
by giving Bennett Lawrence 60 days' written notice. The New Bennett Sub-Advisory
Agreement may not be assigned and shall terminate automatically in the event of
any assignment as defined in the 1940 Act. The New Bennett Sub-Advisory
Agreement provides that it may be amended by a vote of both a majority of the
Trustees, including a majority of the Independent Trustees, and by the holders
of a majority of the outstanding voting shares of the DG Mid Cap Fund.
If the New Bennett Sub-Advisory Agreement and the New Advisory Contract
are approved by shareholders of the DG Mid Cap Fund and the Merger is
consummated, the New Bennett Sub-Advisory Agreement will be executed and become
effective on the Merger Closing Date. In the event the Merger is not
consummated, the Present Bennett Sub-Advisory Agreement (as well as the Current
Advisory Contract) will continue in accordance with their terms. If the Merger
is consummated and if the New Advisory Contract IS approved but the New Bennett
Sub-Advisory Agreement is NOT approved by the shareholders of the DG Mid Cap
Fund, First American National Bank would be fully responsible for the DG Mid Cap
Fund's investment activities. If the Merger is consummated and if neither the
New Advisory Contract nor the New Bennett Sub-Advisory Agreement is approved by
the shareholders of the DG Mid Cap Fund, the Present Bennett Sub-Advisory
Agreement will terminate and the Board of Trustees will consider what actions
should be taken, including but not limited to requesting that First American
National Bank or Bennett Lawrence perform investment advisory services at cost
until a new investment advisory contract is approved by the shareholders.
As indicated earlier in this Proxy Statement under the section entitled
"Approval or Disapproval of a New Investment Advisory Contract," there are
various conditions precedent to the consummation of the Merger, including
approval by the shareholders of DGC and First American and approval by
regulatory authorities. Shareholders of the DG Opportunity Fund are not being
asked to vote on the Merger.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Bennett Sub-Advisory Agreement was unanimously approved on behalf
of the DG Mid Cap Fund by the Board of Trustees of the Trust, including the
Independent Trustees, at a meeting held on February 2_, 1998. By approving the
New Bennett Sub-Advisory Agreement, the Trustees have acted in what they believe
to be the best interest of the shareholders of the DG Mid Cap Fund. The Trustees
considered information relating to Bennett Lawrence, ParkSouth, First American,
First American National Bank and the consolidated entity that would result from
the completion of the Merger. The Board considered Bennett Lawrence's present
capabilities and expertise in serving as sub-adviser to the DG Mid Cap Fund. The
Trustees reviewed the terms of the New Bennett Sub-Advisory Agreement, including
the fact that the sub-advisory services would continue to be performed at the
same costs and by the same personnel at Bennett Lawrence. It was noted that
Bennett Lawrence has served as the sub-adviser to the DG Mid Cap Fund since its
inception.
The section entitled "Trustees' Recommendations and Other Information"
that appears earlier in this Proxy Statement discusses additional factors
considered by the Trustees, as well as matters such as "assignment" of an
investment advisory contract and "unfair burden" with respect to the realization
of a profit by ParkSouth and DGC as a result of the Merger. These statements are
also applicable to shareholders of the DG Mid Cap Fund with respect to the
approval or disapproval of the New Bennett Sub-Advisory Agreement. Shareholders
should therefore review this information prior to determining whether to approve
the New Bennett Sub-Advisory Agreement.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE
DG MID CAP FUND VOTE "FOR" THE APPROVAL
OF THE NEW BENNETT SUB-ADVISORY AGREEMENT
PROPOSAL 2-C
APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY AGREEMENT
(APPLIES ONLY TO THE DG INTERNATIONAL EQUITY FUND)
Lazard Freres Asset Management ("Lazard Freres"), 30 Rockefeller Plaza,
New York, New York 10020, presently serves as the sub-adviser to the DG
International Equity Fund pursuant to a sub-advisory agreement dated March 31,
1997 (the "Present Lazard Sub-Advisory Agreement"). Lazard Freres is a division
of Lazard Freres & Co. L.L.C, a New York limited liability company, which is
registered as an investment adviser under the Advisers Act and is a member of
the New York, American and Midwest Stock Exchanges. Lazard Freres provides
investment management services to client discretionary accounts with assets
totalling approximately $60 billion as of December 31, 1997. Lazard Freres'
clients include both individuals and institutions.
As indicated in the section entitled "Approval or Disapproval of a New
Investment Advisory Contract" in this Proxy Statement, on December 8, 1997,
First American and DGC signed the Merger Agreement. See "Acquisition of DGC by
First American." Consummation of the transactions contemplated by the Merger
will cause a change in the ownership of ParkSouth as ParkSouth is integrated
into First American National Bank. This change in ownership of ParkSouth will
automatically terminate the Current Advisory Contract between the Trust and
ParkSouth, which, in turn, will automatically terminate the Present Lazard
Sub-Advisory Agreement in accordance with its terms and as required by the 1940
Act. Thus, although immediately following the Merger, Lazard Freres would remain
the entity responsible for providing sub-advisory services to the DG
International Equity Fund, the change in ownership of ParkSouth requires
approval by the shareholders of the DG International Equity Fund of the new
sub-advisory agreement between First American National Bank, on behalf of the DG
International Equity Fund, and Lazard Freres (the "New Lazard Sub-Advisory
Agreement"). A copy of the New Lazard Sub-Advisory Agreement appears as Exhibit
II-C to this Proxy Statement.
On February 26, 1998, the Trustees, including a majority of the
Independent Trustees, approved the New Lazard Sub-Advisory Agreement with Lazard
Freres to act as the DG International Equity Fund's sub-adviser. The terms of
the New Lazard Sub-Advisory Agreement are identical in all material respects to
the Present Lazard Sub-Advisory Agreement, except for: (i) the replacement of
ParkSouth by First American National Bank as the identified investment adviser
for the DG International Equity Fund, and (ii) the effective date, which, in the
case of the New Lazard Sub-Advisory Agreement, will be the Merger Closing Date.
As indicated in the section entitled "Approval or Disapproval of a New
Investment Advisory Contract" of this Proxy Statement, it is currently expected
that the Merger Closing Date will occur on or about April 30, 1998.
On February 27, 1997, at the request of Lazard Freres, the Present Lazard
Sub-Advisory Agreement was approved by the Board of Trustees, including a
majority of the Independent Trustees, and was recommended by the Trustees for
shareholder approval. Federated Administrative Services, as the sole initial
shareholder of the DG International Equity Fund, approved the Present Lazard
Sub-Advisory Agreement on March 31, 1997.
Under the terms of the Present Lazard Sub-Advisory Agreement and the New
Lazard Sub-Advisory Agreement, subject to the direction of ParkSouth (in the
case of the Present Lazard Sub-Advisory Agreement) or First American National
Bank (in the case of the New Lazard Sub-Advisory Agreement), Lazard Freres acts
as discretionary investment sub-adviser to the DG International Equity Fund.
Under the terms of the Present Lazard Sub-Advisory Agreement, Lazard Freres
formulates and implements a continuing program for the management of the assets
of the DG International Equity Fund, and periodically amends and updates such
programs from time to time as financial and other economic conditions warrant.
Lazard Freres makes all determinations with respect to the investment of the
assets of the DG International Equity Fund and takes all steps as may be
necessary to implement its investment decisions, including the placement of
purchase and sale orders on behalf of the DG International Equity Fund.
The Present Lazard Sub-Advisory Agreement and the New Lazard Sub-Advisory
Agreement provide that ParkSouth or First American National Bank, as applicable,
will pay Lazard Freres an annual sub-advisory fee equal to 0.50% of the average
daily net assets of the DG International Equity Fund. The sub-advisory fee is
calculated by ParkSouth, or First American National Bank, as applicable, is
accrued daily, and paid monthly, to Lazard Freres. THE FEE PAYABLE TO LAZARD
FRERES IS IDENTICAL IN THE PRESENT LAZARD SUB-ADVISORY AGREEMENT AND THE NEW
LAZARD SUB-ADVISORY AGREEMENT.
If approved by shareholders of the DG International Equity Fund at the
Meeting, the New Lazard Sub-Advisory Agreement will remain in effect for an
initial period of two years from its date of execution, unless terminated, and
may be continued from year to year thereafter by the Board of Trustees. The
continuation of the New Lazard Sub-Advisory Agreement must be approved by a
majority vote of the Trustees, including a majority of the Independent Trustees,
cast in person at a meeting called for that purpose. Lazard Freres has the
right, in any year, to notify First American National Bank in writing at least
60 days before the New Lazard Sub-Advisory Agreement's anniversary date, that it
does not desire a renewal of the New Lazard Sub-Advisory Agreement. The
Trustees, or a majority of the outstanding voting shares of the DG International
Equity Fund, may terminate the New Lazard Sub-Advisory Agreement at any time
without penalty by giving Lazard Freres 60 days' written notice. The New Lazard
Sub-Advisory Agreement may not be assigned and shall terminate automatically in
the event of any assignment as defined in the 1940 Act. The New Lazard
Sub-Advisory Agreement provides that it may be amended by a vote of both a
majority of the Trustees, including a majority of the Independent Trustees, and
by the holders of a majority of the outstanding voting shares of the DG
International Equity Fund.
If the New Lazard Sub-Advisory Agreement and the New Advisory Contract are
approved by shareholders of the DG International Equity Fund and the Merger is
consummated, the New Lazard Sub-Advisory Agreement will be executed and become
effective on the Merger Closing Date, which is expected to be on or about April
30, 1998. In the event the Merger is not consummated, the Present Lazard
Sub-Advisory Agreement (as well as the Current Advisory Contract) will continue
in accordance with their terms. If the Merger is consummated and if the New
Advisory Contract IS approved but the New Lazard Sub-Advisory Agreement is NOT
approved by the shareholders of the DG International Equity Fund, First American
National Bank would be fully responsible for the DG International Equity Fund's
investment activities. If the Merger is consummated and if neither the New
Advisory Contract nor the New Lazard Sub-Advisory Agreement is approved by the
shareholders of the DG International Equity Fund, the Present Lazard
Sub-Advisory Agreement will terminate and the Board of Trustees will consider
what actions should be taken, including but not limited to requesting that First
American National Bank or Lazard Freres perform investment advisory services at
cost until a new investment advisory contract is approved by the shareholders.
As indicated earlier in this Proxy Statement under the section entitled
"Approval or Disapproval of a New Investment Advisory Contract," there are
various conditions precedent to the consummation of the Merger, including
approval by the shareholders of DGC and First American and approval by
regulatory authorities. Shareholders of the DG International Equity Fund are not
being asked to vote on the Merger.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The Lazard New Sub-Advisory Agreement was unanimously approved on behalf
of the DG International Equity Fund by the Board of Trustees of the Trust,
including the Independent Trustees, at a meeting held on February 2_, 1998. By
approving the New Lazard Sub-Advisory Agreement, the Trustees have acted in what
they believe to be the best interest of the shareholders of the DG International
Equity Fund. The Trustees considered information relating to Lazard Freres,
ParkSouth, First American, First American National Bank and the consolidated
entity that would result from the completion of the Merger. The Board considered
Lazard Freres' present capabilities and expertise in serving as sub-adviser to
the DG International Equity Fund. The Trustees reviewed the terms of the New
Lazard Sub-Advisory Agreement, including the fact that the sub-advisory services
would continue to be performed at the same costs and by the same personnel at
Lazard Freres. It was noted that Lazard Freres has served as the sub-adviser to
the DG International Equity Fund since its inception.
The section entitled "Trustees' Recommendations and Other Information"
that appears earlier in this Proxy Statement discusses additional factors
considered by the Trustees, as well as matters such as "assignment" of an
investment advisory contract and "unfair burden" with respect to the realization
of profit by ParkSouth and DGC as a result of the Merger. These statements are
also applicable to shareholders of the DG International Equity Fund with respect
to the approval or disapproval of the New Lazard Sub-Advisory Agreement.
Shareholders should therefore review this information prior to determining
whether to approve the New Lazard Sub-Advisory Agreement.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF
THE DG INTERNATIONAL EQUITY FUND VOTE "FOR" APPROVAL OF
THE NEW LAZARD SUB-ADVISORY AGREEMENT
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Meeting has been called to act upon the business set forth in the
Notice of Special Meeting, and the business which management intends to present
or knows that others will present is the business mentioned in the Notice of
Special Meeting. If any other matters lawfully come before the Meeting, and in
all procedural matters at said Meeting, it is the intention that the enclosed
Proxy shall be voted in accordance with the best judgment of the attorneys named
therein, or their substitutes, present and acting at the Meeting.
If at the time any session of the Meeting is called to order, a quorum is
not present in person or by proxy, the persons named as proxies may vote those
Proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of one or more of
the proposals have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
Proxies with respect to any such proposal. All such adjournments will require
the affirmative vote of a majority of the Shares present in person or by proxy
at the session of the Meeting to be adjourned. The persons named as proxies will
vote those Proxies which they are required to vote against the proposal against
such an adjournment, and will vote other Proxies in favor of any such
adjournment. A vote may be taken on one or more of the proposals in this Proxy
Statement prior to any such adjournment if sufficient votes for its approval
have been received and it is otherwise appropriate.
<PAGE>
SHAREHOLDER MEETINGS
The Trust is organized as a Massachusetts business trust. The Trust's
Declaration of Trust does not require that an annual meeting of shareholders be
held each year. Thus, no Fund is required, and no Fund intends, to hold annual
or other periodic meetings of shareholders, except as required by the 1940 Act.
The next meeting of the shareholders of a Fund will be held at such time as the
Board of Trustees may determine or at such time as may be legally required. Any
shareholder proposal intended to be presented at such meeting must be received
by the Trust at its office a reasonable time prior to the meeting, as determined
by the Board of Trustees, to be included in the Fund's proxy statement and form
of proxy relating to such meeting, and must satisfy all other legal
requirements. Upon consummation of the Merger and execution of the New Advisory
Contract and the New Sub-Advisory Agreements, the principal offices of the Trust
will continue to be located at 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7010.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15219, serves as the Trust's independent auditors and audited the
Trust's operations for the fiscal year ended February 28, 1997. At its meeting
on May 12, 1997, the Trust's Board of Trustees selected KPMG Peat Marwick LLP to
serve in such capacity for the fiscal year ending February 28, 1998.
OFFICERS
The executive officers of the Trust are elected annually by the Board of
Trustees. Each officer holds office until the election and qualification of his
successor. Officers receive no compensation from the Trust for their services in
such capacities. The address of each executive officer of the Trust is Federated
Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. The
names and principal occupations of the executive officers of the Trust are as
follows:
NAME AND POSITION WITH THE TRUST PRINCIPAL OCCUPATIONS
Edward C. Gonzales Vice Chairman, Treasurer and Trustee,
President and Treasurer Federated Investors; Vice President,
Federated Advisers, Federated Management,
Federated Research, Federated Research Corp.,
Federated Global Research Corp. and Passport
Research, Ltd.; Executive Vice President and
Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the
investment companies distributed by Federated
Securities Corp. (the "Federated Funds");
President, Executive Vice President and
Treasurer of some of the Funds.
J. Christopher Donahue President and Trustee, Federated
Executive Vice President Investors, Federated Advisers, Federated
Management, and Federated Research; President
and Director, Federated Research Corp. and
Federated Global Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated
Shareholder Services Company, and Federated
Shareholder Services; Director, Federated
Services Company; President or Executive Vice
President of the Federated Funds; Director or
Trustee of some of the Federated Funds.
John W. McGonigle Executive Vice President, Secretary, and
Executive Vice President and Trustee, Federated Investors; Trustee,
Secretary Federated Advisers, Federated Management,
and Federated Research; Director, Federated
Research Corp. and Federated Global Research
Corp.; Trustee, Federated Shareholder
Services Company; Director, Federated
Services Company; President and Trustee,
Federated Shareholder Services; Director,
Federated Securities Corp.; Executive Vice
President and Secretary of the Federated
Funds; Treasurer of some of the Federated
Funds.
<PAGE>
Richard B. Fisher Executive Vice President and Trustee,
Executive Vice President Federated Investors; Chairman and
Director, Federated Securities Corp.;
President or Vice President of some of the
Federated Funds; Director or Trustee of some
of the Federated Funds.
Charles L. Davis, Jr. Vice President and Assistant Treasurer of
Vice President and Assistant some of the Federated Funds.
Treasurer
The following list sets forth certain information concerning the only
"persons" (as that term is defined by the SEC) who are known by the Trust to be
the beneficial owners of more than 5% of the Shares of any Fund as of February
24, 1998:
DG EQUITY FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 19,532,945 Shares (62.88%)
and Commercial National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 6,527,583 Shares (21.01%).
DG OPPORTUNITY FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 5,473,112 Shares (71.15%) and
Commercial National Bank, acting in various capacities for numerous accounts,
was the owner of record of approximately 571,755 Shares (7.43%).
DG INTERNATIONAL EQUITY FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 2,340,426 Shares (92.62%).
DG LIMITED TERM GOVERNMENT INCOME FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 5,193,811 Shares (78.13%) and
Commercial National Bank, acting in various capacities for numerous accounts,
was the owner of record of approximately 792,624 Shares (11.92%).
DG GOVERNMENT INCOME FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 17,754,378 Shares (66.31%)
and Commercial National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 6,111,291 Shares (22.82%).
DG MUNICIPAL INCOME FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 4,058,805 Shares (91.29%) and
Commercial National Bank, acting in various capacities for numerous accounts,
was the owner of record of approximately 222,498 Shares (5.00%).
DG PRIME MONEY MARKET FUND
National Financial Services Corp., New York, NY, acting in various capacities
for numerous accounts, was the owner of record of approximately 190,109,116
Shares (99.79%).
DG TREASURY MONEY MARKET FUND
Deposit Guaranty National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 230,156,297 Shares (65.73%)
and Commercial National Bank, acting in various capacities for numerous
accounts, was the owner of record of approximately 671,128,046 Shares (19.17%).
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Under this definition, Deposit Guaranty
National Bank and its officers, including Commercial National Bank, may be
deemed to control the Funds.
Officers and Trustees of the Trust own less than 1% of the outstanding Shares of
each Fund of the Trust.
PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARDS
AND RETURN SUCH CARD PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
By Order of the Board of Trustees
John W. McGonigle
March 13, 1998 SECRETARY
<PAGE>
I-12
EXHIBIT I
("NEW ADVISORY CONTRACT")
INVESTMENT ADVISORY CONTRACT
This Contract is made this ___ day of April, 1998, between First American
National Bank, a national banking association having its principal place of
business in Nashville, Tennessee (the "Adviser"), and DG Investor Series, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940, as amended, and is
registered as such with the Securities and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction of the
Trustees, Adviser shall provide investment research and supervision of the
investments of the Funds and conduct a continuous program of investment
evaluation and of appropriate sale or other disposition and reinvestment of each
Fund's assets.
<PAGE>
Adviser, in its supervision of the investments of each of the Funds
will be guided by each of the Fund's investment objective and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statements and exhibits as may be
on file with the Securities and Exchange Commission.
Each Fund shall pay or cause to be paid all of its own expenses and
its allocable share of Trust expenses, including, without limitation, the
expenses of organizing the Trust and continuing its existence; fees and expenses
of Trustees and officers of the Trust; fees for investment advisory services and
administrative personnel and services; expenses incurred in the distribution of
its shares ("Shares"), including expenses of administrative support services;
fees and expenses of preparing and printing its Registration Statements under
the Securities Act of 1933 and the Investment Company Act of 1940, as amended,
and any amendments thereto; expenses of registering and qualifying the Trust,
the Funds, and Shares of the Funds under federal and state laws and regulations;
expenses of preparing, printing, and distributing prospectuses (and any
amendments thereto) to shareholders; interest expense, taxes, fees, and
commissions of every kind; expenses of issue (including cost of Share
certificates), purchase, repurchase, and redemption of Shares, including
expenses attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs, auditing, accounting, and
legal expenses; reports to shareholders and governmental officers and
commissions; expenses of meetings of Trustees and shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and such
nonrecurring items as may arise, including all losses and liabilities incurred
in administering the Trust and the Funds. Each Fund will also pay its allocable
share of such extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, and claims and the legal obligations of
the Trust to indemnify its officers and Trustees and agents with respect
thereto.
Each of the Funds shall pay to Adviser, for all services rendered to
each Fund by Adviser hereunder, the fees set forth in the exhibits attached
hereto.
The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of one
or more of the Funds) to the extent that any Fund's expenses exceed such lower
expense limitation as the Adviser may, by notice to the Fund, voluntarily
declare to be effective.
This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each Fund
presently set forth on an exhibit (and any subsequent Funds added pursuant to an
exhibit during the initial term of this Contract) for two years from the date of
this Contract set forth above and thereafter for successive periods of one year,
subject to the provisions for termination and all of the other terms and
conditions hereof if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Trustees of the Trust, including
a majority of the Trustees who are not parties to this Contract or interested
persons of any such party cast in person at a meeting called for that purpose;
and (b) Adviser shall not have notified a Fund in writing at least sixty (60)
days prior to the anniversary date of this Contract in any year thereafter that
it does not desire such continuation with respect to that Fund. If a Fund is
added after the first approval by the Trustees as described above, this Contract
will be effective as to that Fund upon execution of the applicable exhibit and
will continue in effect until the next annual approval of this Contract by the
Trustees and thereafter for successive periods of one year, subject to approval
as described above.
Notwithstanding any provision in this Contract, it may be terminated
at any time with respect to any Fund, without the payment of any penalty, by the
Trustees of the Trust or by a vote of the shareholders of that Fund on sixty
(60) days' written notice to Adviser.
This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. Adviser may employ or contract with
such other person, persons, corporation, or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the Funds
or to any shareholder for any act or omission in the course of or connected in
any way with rendering services or for any losses that may be sustained in the
purchase, holding, or sale of any security.
This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act, on
behalf of a Fund by a majority of the outstanding voting securities of such Fund
as defined in Section 2(a)(42) of the Act.
The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight. The
Adviser agrees to submit any proposed sales literature for the Trust (or any
Fund) or for itself or its affiliates which mentions the Trust (or any Fund) to
the Trust's distributor for review and filing with the appropriate regulatory
authorities prior to the public release of any such sales literature, provided,
however, that nothing herein shall be construed so as to create any obligation
or duty on the part of the Adviser to produce sales literature for the Trust (or
any Fund). The Trust agrees to cause its distributor to promptly review all such
sales literature to ensure compliance with relevant requirements, to promptly
advise Adviser of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and to
cause such sales literature to be distributed to prospective investors in the
Trust.
Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees that
the obligations pursuant to this Contract of a particular Fund and of the Trust
with respect to that particular Fund be limited solely to the assets of that
particular Fund, and Adviser shall not seek satisfaction of any such obligation
from any other Fund, the shareholders of any Fund, the Trustees, officers,
employees or agents of the Trust, or any of them.
The Trust and the Funds are hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the Adviser
and agree that the obligations assumed by the Adviser pursuant to this Contract
shall be limited in any case to the Adviser and its assets and, except to the
extent expressly permitted by the Investment Company Act of 1940, as amended,
the Trust and the Funds shall not seek satisfaction of any such obligation from
the shareholders of the Adviser, the Trustees, officers, employees, or agents of
the Adviser, or any of them.
This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
<PAGE>
NAME CHANGED TO DG TREASURY MONEY MARKET FUND - EFFECTIVE 10/1/97
EXHIBIT A
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG U.S. GOVERNMENT MONEY MARKET FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to .50 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of .50 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT B
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG LIMITED TERM GOVERNMENT INCOME FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.60 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.60 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT C
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG GOVERNMENT INCOME FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.60 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.60 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT D
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG EQUITY FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.75 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.75 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT E
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.60 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.60 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT F
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG OPPORTUNITY FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.95 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.95 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT G
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG PRIME MONEY MARKET FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 0.50% of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.50 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT H
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG INTERNATIONAL EQUITY FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 1% applied to the daily net
assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
EXHIBIT I
to the
Investment Advisory Contract
DG INVESTOR SERIES
DG MID CAP FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the DG Investor Series shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 1% applied to the daily net
assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this April __, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: DG INVESTOR SERIES
By: By:
Title: Title:
<PAGE>
II-A-8
EXHIBIT II-A
DG INVESTOR SERIES
SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") is made and
entered into as of the ___ day of April, 1998 by and between First American
National Bank (the "Adviser") and Womack Asset Management (the "Sub-Adviser").
PRELIMINARY STATEMENTS
DG Investor Series, a Massachusetts business trust (the "Trust"), is
an open-end management company as defined in the Investment Company Act of 1940
and is registered as such with the Securities and Exchange Commission.
The Adviser has been retained by the Trust under the Investment
Advisory Contract dated as of April __, 1998 (the "Contract") to act as
investment adviser with respect to each of the Trust's investment portfolios,
including the DG Opportunity Fund (the "Fund").
The Adviser is authorized under the Contract to "contract with such
other person, persons, corporation, or corporations at its own cost and expense
as it shall determine in order to assist it in carrying out this Contract."
The Adviser wishes to retain the Sub-Adviser to provide, and the
Sub-Adviser wishes to render, portfolio management services for the Fund, all
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and the covenants
herein contained, the Adviser and the Sub-Adviser agree as follows:
APPOINTMENT. The Adviser hereby appoints the Sub-Adviser to act as a
discretionary sub-adviser to the Fund for all assets of the Fund other than cash
and cash equivalents. The Sub-Adviser hereby accepts the appointment and agrees
to use its best professional judgment to make and implement investment decisions
for the Fund in accordance with the provisions of this Agreement.
DUTIES OF THE SUB-ADVISER
Subject to the direction and control of the Adviser and the Board of
Trustees of the Trust, the Sub-Adviser shall be responsible for the management
of the investment operations of the Fund and the determination of what portion
of the Fund's assets will be held in cash and cash equivalents and what portion
will be invested in equity securities and other assets. Any cash and cash
equivalents in the Fund shall be managed by the Adviser. The Sub-Adviser is
hereby authorized to select portfolio securities for investment, to determine
whether to purchase and sell securities for the Fund, and upon making any
purchase or sale decision for the Fund, to place orders for the execution of
such portfolio transactions in accordance with Section 4 of this Agreement and
any operational procedures that may be specified by the Adviser from time to
time ("Operational Procedures"). The Sub-Adviser shall consult with the Adviser
upon the Adviser's reasonable request with respect to any investment decision
made by it for the Fund and assist the Adviser and the Trust's officers in
connection with the operation of the Fund and perform any further acts that may
be necessary to effectuate the purposes of this Agreement.
In providing portfolio management services to the Fund, the
Sub-Adviser shall be subject to such investment restrictions as are set forth in
the Investment Company Act of 1940 and rules thereunder; the Internal Revenue
Code; applicable state securities laws; the supervision and control of the Board
of Trustees; such specific instructions as the Board of Trustees may adopt and
as may be communicated to the Sub-Adviser; the investment objectives, policies
and restrictions of the Fund; and instructions from the Adviser.
SUPERVISION AND COMPLIANCE. Notwithstanding any provision of this
Agreement, the Adviser shall retain all rights to supervise, and, in its
discretion, conduct investment advisory activities relating to the Fund. The
activities of the Sub-Adviser shall be subject at all times to the direction and
control of the Board of Trustees of the Trust and the Adviser, and shall comply
with: (a) the Declaration of Trust and By-Laws of the Trust; (b) the
Registration Statement of the Trust, as it may be amended from time to time,
including the investment objectives and policies set forth therein; (c) the
Investment Company Act of 1940 and the Investment Advisers Act of 1940 and the
regulations thereunder; (d) the Internal Revenue Code and the regulations
thereunder applicable to regulated investment companies; (e) any other
applicable laws or regulations; and (f) such other limitations as the Adviser or
the Board of Trustees of the Trust may adopt. The Sub-Adviser shall comply with
all requests by the officers and agents of the Trust to review, examine or audit
any records concerning the Sub-Adviser's investment advisory activities in
connection with the Fund. The Sub-Adviser shall provide all information, records
or other materials as the Adviser may reasonably request in order to oversee
compliance by the Sub-Adviser with the provisions of this Agreement and with
applicable law and shall take such actions or refrain from taking such actions
as the Adviser in its best judgment may reasonably request as necessary to
promote or ensure such compliance.
PURCHASE AND SALE OF SECURITIES. The Sub-Adviser shall place orders for
the purchase or sale of securities on behalf of the Fund with any broker and/or
dealer who deals in such securities, all in the manner as set forth herein and
in accordance with the Operational Procedures.
In placing orders with brokers and/or dealers, the Sub-Adviser shall
use its 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 and/or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities using brokers 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 Fund and/or other accounts over which the Sub-Adviser or the
Adviser exercises investment discretion. The Sub-Adviser is authorized to pay a
broker who provides such brokerage and research services a commission for
effecting a securities transaction which is in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of brokerage and research services provided by such
broker. This determination may be viewed in terms of either that particular
transaction or of the overall responsibilities of the Sub-Adviser with respect
to the accounts as to which it exercises investment discretion.
Notwithstanding the foregoing, the Board of Trustees and the Adviser
periodically may review the commissions paid by the Fund and determine whether
those commissions were reasonable in relation to the brokerage and research
services received.
EXPENSES. The Sub-Adviser shall furnish, at its own expense, all office
space, office facilities, equipment and personnel necessary or appropriate to
the performance of its duties under this Agreement. The Sub-Adviser also shall
pay the salaries of all personnel performing services related to the
Sub-Adviser's duties under this Agreement.
COMPENSATION OF THE SUB-ADVISER. In consideration of the services to be
rendered by the Sub-Adviser under this Agreement, the Adviser shall pay the
Sub-Adviser a fee as set forth in EXHIBIT A to this Agreement.
SERVICES TO OTHERS. The services of the Sub-Adviser to the Adviser and the
Trust are not to be deemed exclusive, and, except as may be provided in any
other agreement between the Sub-Adviser and the Adviser, the Sub-Adviser may
render services to others and to engage in other activities, so long as such
services and activities do not adversely affect the Sub-Adviser's ability to
perform its obligations under this Agreement; provided, however, that during the
term of this Agreement, the Sub-Adviser shall not render any portfolio
management services to any other open-end management company except with the
prior written consent of the Adviser.
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF THE SUB-ADVISER
As of the Effective Date of this Agreement (as defined below in
Section 10(a) of this Agreement), the Sub-Adviser will be registered as an
"investment adviser" under the Investment Advisers Act of 1940.
The Sub-Adviser will comply with the provisions of the Adviser's
written code of ethics and any policies and procedures thereunder (including any
sanctions imposed by the Adviser), and with the Adviser's policies and
procedures designed to detect and prevent the misuse of material, nonpublic
information that are applicable to its sub-advisory services rendered under this
Agreement. In addition, the Sub-Adviser will adopt or has adopted a written code
of ethics complying with the requirements of Rule 17j-1 under the Investment
Company Act of 1940, will provide the Adviser with a copy of that code of ethics
and evidence of its adoption, and will make such reports to the Trust as
required by Rule 17j-1. The Sub-Adviser will also adopt or has adopted policies
and procedures sufficient to enable the Sub-Adviser to detect and prevent the
misuse of material, nonpublic information by the Sub-Adviser or any person
associated with the Sub-Adviser, in compliance with the federal and state
securities laws.
The Sub-Adviser will prepare, maintain, keep current and preserve on
behalf of the Trust and the Adviser all records concerning the Sub-Adviser's
activities in connection with the Fund that the Fund is required by law to
maintain, including, but not limited to, records required under paragraphs
(b)(5), (b)(6), (b)(9), (b)(10), and (f) of Rule 31a-1 under the Investment
Company Act (a summary of these provisions as currently in effect is attached
hereto as EXHIBIT B). Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under the Investment
Company Act of 1940 that are prepared by the Sub-Adviser on behalf of the Fund
are the property of the Fund and will be surrendered promptly on request to the
Fund or any person acting on behalf of the Trust during the term of this
Agreement and at any time after the termination of this Agreement. The
Sub-Adviser will comply with all reasonable requests for information by the
Adviser or the Trust's officers or Board of Trustees, including information
required for the Fund's filings with the Securities and Exchange Commission and
state securities commissions.
The Sub-Adviser will promptly after filing with the Securities and
Exchange Commission any amendment to its Form ADV furnish a copy of such
amendment to the Trust and the Adviser.
The Sub-Adviser will immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company under Section 9(a) of the
Investment Company Act or otherwise.
LIMITATIONS ON LIABILITY; INDEMNIFICATION
The Sub-Adviser hereby is notified expressly of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees that
the obligations under this Agreement of the Fund and of the Trust with respect
to the Fund are limited solely to the assets of the Fund, and the Sub-Adviser
shall not seek satisfaction of any such obligation from any other investment
portfolio of the Trust; any shareholders of any investment portfolio; any
Trustee; or officers, employees or agents of the Trust.
The Sub-Adviser shall give the Adviser and the Trust the benefit of
its best judgment and efforts in rendering services under this Agreement. The
Sub-Adviser agrees to indemnify and hold harmless the Adviser, its shareholders,
officers, directors, employees, agents and affiliates (referred to collectively
herein as the Adviser) from and against any and all claims, demands, judgments,
losses, costs, expenses (including, without limitation, court costs and
attorneys' fees), liabilities, or damages, which at any time or from time to
time may be paid, incurred or suffered by or asserted against the Adviser,
arising out of, based upon or resulting from any act or omission of the
Sub-Adviser in performing its obligations under this Agreement; provided,
however, that the Sub-Adviser shall not be obligated to indemnify the Adviser to
the extent that such matters arise from or are caused by the Adviser's willful
malfeasance or bad faith.
EFFECTIVE DATE; TERMINATION; AND ASSIGNMENT.
This Agreement shall become effective as of the Effective Date as
defined below and shall continue in effect for two years from the Effective Date
and thereafter for successive periods of one year, subject to the provisions for
termination and all of the other terms and conditions in this Agreement if: (i)
such continuation is specifically approved at least annually by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees who
are not parties to this Agreement or interested persons of any such party (other
than as Trustees of the Trust), cast in person at a meeting called for that
purpose, and, where required under the Investment Company Act of 1940, by vote
of a majority of the outstanding voting securities of the Fund; and (ii) neither
party has notified the other in writing at least sixty (60) days prior to the
anniversary date of the Effective Date in any year thereafter that it does not
desire such continuation. The Effective Date is the date on which this Agreement
is approved by the vote of a majority of the outstanding voting securities of
the Fund.
This Agreement may be terminated at any time without the payment of
any penalty (i) by action of the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund upon sixty (60) days' written
notice to the Sub-Adviser and (ii) in the event of termination of the Contract
for any reason whatsoever. This Agreement also may be terminated at any time by
the Adviser (i) on account of the Sub-Adviser's repeated failure to comply with
the Adviser's requests or instructions issued hereunder, or (ii) in the event of
a breach of fiduciary duty by the Sub-Adviser.
Termination of this Agreement will not affect (i) the validity of
any action previously taken by the Adviser or the Sub-Adviser under this
Agreement or (ii) liabilities or obligations of the parties from transactions
initiated before termination of this Agreement. Anything herein to the contrary
notwithstanding, termination of this Agreement shall not affect the
indemnification provisions set forth above in Section 9 of this Agreement, which
shall remain operative and in full force and effect notwithstanding such
termination.
This Agreement shall terminate automatically in the event of its
assignment (as defined in the Investment Company Act of 1940 and any rules
thereunder, as they may be interpreted by the staff of the Securities and
Exchange Commission).
So long as both the Adviser and the Sub-Adviser shall be legally
qualified to act an investment adviser to the Fund, neither the Adviser nor the
Sub-Adviser shall act as an investment adviser (as such term is defined in the
Investment Company Act of 1940) to the Fund except as provided herein and in the
Contract or in such other manner as may be expressly agreed between the Adviser
and the Sub-Adviser; provided, however, that if the Adviser or the Sub-Adviser
shall resign or for any reason by unable or unwilling to serve prior to the end
of the term of this Agreement, the remaining party, the Sub-Adviser or the
Adviser as the case may be, shall not be prohibited from serving as an
investment adviser to the Fund by reason of the provisions of this Subsection
10(e).
GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Pennsylvania without giving effect to the choice of
law provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act of 1940 and the regulations thereunder.
AMENDMENT. This Agreement may be amended from time to time by agreement of
the parties; provided, however, such amendment shall be approved by the vote of
a majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust), cast in person at a meeting called for
that purpose, and, where required under the Investment Company Act of 1940, by
vote of a majority of the outstanding voting securities of the Fund.
WAIVER. The failure of either party to insist, in one or more instances,
upon strict performance of the obligations of this Agreement, or to exercise any
rights contained herein, shall not be construed as a waiver, or relinquishment
for the future of such obligation or right, which shall remain and continue in
full force and effect.
MISCELLANEOUS. The captions in this Agreement are included for the
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, statute,
regulation, or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this Agreement
to be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
FIRST AMERICAN NATIONAL BANK
By:
Name:
Title:
WOMACK ASSET MANAGEMENT, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT A
DG INVESTOR SERIES
DG OPPORTUNITY FUND
Sub-Advisory Agreement
SUB-ADVISORY FEES
For all services rendered by the Sub-Adviser hereunder, the Adviser shall
pay, on a monthly basis, a Sub-Advisory Fee, based on the average daily net
assets of the Fund under management by the Sub-Adviser during the preceding
month, as described below. The Sub-Advisory fee shall be the sum of: 0.32% of
average daily net assets up to $50 million; 0.075% of average daily net assets
in excess of $50 million and up to $70 million; and 0.25% of average daily net
assets in excess of $70 million. The Sub-Advisory Fee will be accrued daily, and
for any period in which the Sub-Advisor provides portfolio management services
under this Agreement for less than one full month, the Sub-Advisory Fee will be
prorated by the number of the days of the month during which such services were
rendered.
<PAGE>
EXHIBIT B
DG INVESTOR SERIES
DG OPPORTUNITY FUND
Sub-Advisory Agreement
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER
<PAGE>
(RULE 31A-1(B)(5) AND (6) OF THE INVESTMENT COMPANY ACT OF 1940). A record
of each brokerage order, and all other portfolio purchase and sales orders by
the Sub-Adviser or on behalf of the Fund for, or in connection with, the
purchase or sale of securities, whether executed or unexecuted. Such records
shall include:
The name of the broker,
The terms and conditions of the order, and of any modification or
cancellation thereof,
The time of entry or cancellation,
The price at which executed,
The time of receipt of report of execution, and
The name of the person who placed the order on behalf of the Fund.
(RULE 31A-1(B)(9) OF THE INVESTMENT COMPANY ACT OF 1940). A record for
each fiscal quarter, completed within ten (10) days after the end of the
quarter, showing specifically the basis or bases upon which the allocation of
orders for the purchase and sale of portfolio securities to brokers or dealers
was made, and the division of brokerage commissions or other compensation on
such purchase and sale orders. The record:
Shall include the consideration given to:
the sale of shares of a feeder fund of the Portfolio
the supplying of services or benefits by brokers or dealers to:
The Fund,
The Adviser,
Yourself (the Sub-Adviser), and
Any person other than the foregoing.
Any other considerations other than the technical qualifications of
the brokers and dealers as such.
Shall show the nature of the services or benefits made available.
Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions
or other compensation.
Shall include the name of the person responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation.
(RULE 31A-1(B)(10) OF THE INVESTMENT COMPANY ACT OF 1940). A record in the
form of an appropriate memorandum identifying the person or persons, committees,
or groups authorizing the purchase or sale of portfolio securities. Where an
authorization is made by a committee or group, a record shall be kept of the
names of its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation, or instruction
supporting or authorizing the purchase or sale of portfolio securities and such
other information as is appropriate to support the authorization.*
(RULE 31A-1(F) OF THE INVESTMENT COMPANY ACT OF 1940). Such accounts,
books and other documents as are required to be maintained by registered
investment advisers by rule adopted under Section 204 of the Investment Advisers
Act of 1940, to the extent such records are necessary or appropriate to record
the Sub-Adviser's transactions made with respect to the Fund Account.
<PAGE>
II-B-5
EXHIBIT II-B
DG INVESTOR SERIES
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between First American National Bank, a national
banking association having its principal place of business in Nashville,
Tennessee (hereinafter referred to as "Adviser") and Bennett Lawrence
Management, LLC, a New York limited liability company (hereinafter referred to
as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound, hereby agree as
follows:
_ The Adviser in its capacity as investment adviser to DG Mid Cap
Fund (the "Fund"), a portfolio of DG Investor Series ("Trust"), under the
Investment Advisory Contract dated as of April __, 1998, appoints the
Sub-Adviser as a discretionary investment sub-adviser to the Fund pursuant to
the terms set forth in this Agreement.
<PAGE>
_ (a) The Sub-Adviser will deal in good faith and with due diligence
and will use professional skill, care and judgment in the performance of its
duties under this Agreement. In so doing, the Sub-Adviser shall formulate and
implement a continuing program for the management of the assets of the Fund. The
Sub-Adviser shall amend and update such program from time to time as financial
and other economic conditions warrant. The Sub-Adviser shall make all
determinations with respect to the investment of the assets of the Fund and
shall take such steps as may be necessary to implement the same, including the
placement of purchase and sale orders on behalf of the Fund; PROVIDED, HOWEVER,
that any assets of the Fund that the Sub-Adviser has determined are to be held
in cash and cash equivalents shall be managed by the Adviser. The Adviser shall
be responsible for the administration of the investment activities of the Fund,
including compliance with the requirements of the Investment Company Act of
1940, except for the investment management activities specifically delegated to
the Sub-Adviser pursuant to this Agreement. The Sub-Adviser's activities
hereunder shall comply with: (i) the Declaration of Trust and By-Laws of the
Trust; (ii) the Registration Statement of the Trust, as it may be amended from
time to time, including the investment objectives and policies set forth
therein; (iii) the Investment Company Act of 1940 and the Investment Advisers
Act of 1940 and the regulations thereunder; (iv) the Internal Revenue Code and
the regulations thereunder applicable to regulated investment companies; (v) any
other applicable laws or regulations; and (vi) such other limitations as the
Adviser or the Board of Trustees of the Trust may adopt.
The Sub-Adviser will adopt or has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the Investment
Company Act of 1940, will provide the Adviser with a copy of the code of ethics
and evidence of its adoption, and will make such reports to the Trust or other
persons as required by Rule 17j-1. The Sub-Adviser will also adopt or has
adopted policies and procedures sufficient to enable the Sub-Adviser to detect
and prevent the misuse of material, nonpublic information by the Sub-Adviser or
any person associated with the Sub-Adviser, in compliance with federal and state
securities laws.
The Sub-Adviser will prepare, maintain, keep current and
preserve on behalf of the Trust and the Adviser all records concerning the
Sub-Adviser's activities in connection with the Fund that the Fund is required
by law to maintain, including, but not limited to, records required under
paragraphs (b)(5), (b)(6), (b)(9), (b)(10), and (f) of rule 31a-1 under the
Investment Company Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under the Investment
Company Act of 1940 that are prepared by the Sub-Adviser on behalf of the Fund
are the property of the Fund and will be surrendered promptly on request to the
Fund or any person acting on behalf of the Trust during the term of this
Agreement and at any time after the termination of this Agreement; provided,
however, that the Sub-Adviser has the right to make and retain copies. The
Sub-Adviser will comply with all reasonable requests for information by the
Adviser or the Trust's officers or Board of Trustees, including information
required for the Fund's filings with the Securities and Exchange Commission and
state securities commissions.
The Sub-Adviser will promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and the Adviser.
The Sub-Adviser will immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act of 1940 or otherwise.
(a) The Sub-Adviser's power to direct the investment and
reinvestment of the assets of the Fund shall be exercised in accordance with
applicable law, the Fund's governing documents and the investment objectives,
policies and restrictions set forth in the then-current Prospectus and Statement
of Additional Information (collectively the "Prospectus") relating to the Fund
contained in the Trust's Registration Statement under the Investment Company Act
of 1940 and the Securities Act of 1933, as amended. The Adviser may also place
additional limitations on the Sub-Adviser's investment decisions by written
notice to the Sub-Adviser. The Adviser agrees to provide promptly, or cause to
be provided promptly, to the Sub-Adviser a copy of the documents mentioned above
and all changes made to such documents.
While the Sub-Adviser will have day-to-day responsibility for
the discretionary investment decisions to be made on behalf of the Fund, the
Sub-Adviser will be subject to oversight by the Adviser. Such oversight,
however, shall not require prior approval of discretionary investment decisions
made by the Sub-Adviser by the Adviser pursuant to the preceding sentence.
The Trust retains the right, on reasonable prior written
notice to the Adviser and the Sub-Adviser, to amend the Fund's investment
objectives, policies and restrictions placed on the Sub-Adviser's investment
decisions. Similarly, the Adviser retains the right, on reasonable prior written
notice to the Sub-Adviser, to amend any additional limitations, if any, that
have been placed on the Sub-Adviser's investment decisions with respect to the
Fund. Upon receipt of such prior notice from either the Trust or the Adviser,
the Sub-Adviser will promptly notify both the Fund and the Adviser if adoption
of such amendment would interfere with the completion of any transaction
commenced on behalf of the Fund prior to the Sub-Adviser's receipt of the
notice. In the event that the Trust or the Adviser proceeds to amend the Fund's
investment objectives, policies and restrictions or any additional limitations
after being notified by the Sub-Adviser of the pending transaction commenced on
behalf of the Fund, or in the event that the Trust or the Adviser amends the
Fund's investment objectives, policies and restrictions or any additional
limitations without providing reasonable prior notice to the Sub-Adviser, the
Sub-Adviser may complete such transaction unless doing so would violate any
applicable law, rule or regulation. In such an event, the Sub-Adviser will not
be responsible for any loss that may result from the completion of the
transaction.
Except as may be qualified elsewhere in this Agreement, the
Sub-Adviser is hereby authorized, for and on behalf of the Fund, in its
discretion, to:
exercise any conversion and/or subscription rights available in connection
with any securities or other investments held in the Fund;
maintain all or part of the Fund's assets uninvested in short-term
income-producing instruments for such periods of time as shall be deemed
reasonable and prudent by the Sub-Adviser;
instruct the Custodian, to deliver for cash received, securities or other
cash and/or securities instruments sold, exchanged, redeemed or otherwise
disposed of from the Fund, and to pay cash for securities or other cash and/or
securities instruments delivered to the Custodian and/or credited to the Fund
upon acquisition of the same for the Fund;
determine how to vote all proxies received with respect to securities held
in the Fund and direct the Custodian as to the voting of such proxies; and
generally, perform any other act necessary to enable the
Sub-Adviser to carry out its obligations under the Agreement.
(a) The Sub-Adviser shall select the brokers and dealers through
which transactions on behalf of the Fund will be executed and the markets on or
in which such transactions will be executed. The Sub-Adviser shall place, in the
name of the Fund or its nominee (or appropriate foreign equivalent), all such
orders for the purchase or sale or of securities due to or from the Fund with
any broker and/or dealer who deals in such securities, all in the manner as
forth below and in accordance with such operational procedures as may be agreed
to from time to time by the Adviser and the Sub-Adviser.
In placing orders with brokers and/or dealers, the Sub-Adviser
shall use its 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 and/or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities using brokers that 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 Fund and/or other accounts over which the Sub-Adviser or the
Adviser exercises investment discretion. The Sub-Adviser is authorized to pay a
broker that provides such brokerage and research services a commission for
effecting a securities transaction which is in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of brokerage and research services provided by such
broker. This determination may be viewed in terms of either that particular
transaction or of the overall responsibilities of the Sub-Adviser with respect
to the accounts as to which it exercises investment discretion.
Notwithstanding for foregoing, the Board of Trustees and the
Adviser periodically shall review the commissions paid by the Fund and determine
whether those commissions were reasonable in relation to the brokerage and
research services received.
It is understood that certain other clients (including other funds,
portfolios and accounts) of the Sub-Adviser may have investment objectives and
policies similar to those of the Fund and that the Sub-Adviser may, from time to
time, make recommendations that result in the purchase (or sale) or a particular
security by its other clients and the Fund during the same period of time. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. In such event, the
Sub-Adviser shall allocate the securities or investments to be purchased or
sold, as well as the expense incurred in the transactions (including price) in a
manner the Sub-Adviser considers equitable and consistent with its obligations
to the Fund and the Sub-Adviser's other clients.
The Sub-Adviser agrees that it will only enter into transactions
that are covered by Section 10(f) or Section 17(e) of the Investment Company Act
of 1940 if it has (i) complied with Rule 10f-3 or Rule 17e-1 thereunder,
respectively, or the terms of an appropriate exemptive order issued to the Fund
by the SEC, and (ii) has complied with the procedures adopted thereunder by the
Board of Trustees of the Trust, which may, pursuant to authority granted by the
Trust, be supplemented by interpretive guidelines of the Adviser. Aside from
parties that are known or should be known by the Sub-Adviser, the Adviser shall
promptly notify the Sub-Adviser of any additional parties with whom engaging in
a transaction for the Fund would result in a violation of the Investment Company
Act of 1940.
For its services under this Agreement, Sub-Adviser shall receive
from Adviser an annual fee (the "Sub-Advisory Fee"), as set forth in Exhibit A
hereto.
This Agreement shall take effect on the date that the parties
execute the exhibit to this Agreement relating to such Fund and shall continue
in effect for the Fund for two years from the date of its execution and from
year to year thereafter, subject to the provisions for termination and all of
the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
Trustees of the Trust) cast in person at a meeting called for that purpose; and
(b) the Adviser shall not have notified the Trust in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter that
it does not desire such continuation with respect to the Fund.
Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the Trustees
of the Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Act) of the Fund on sixty (60) days' written
notice to the Adviser; (b) by the Sub-Adviser or the Adviser upon sixty (60)
days' written notice to the other party to the Agreement. Termination of this
Agreement will not affect (i) the validity of any action previously taken by the
Adviser or the Sub-Adviser under this Agreement or (ii) liabilities or
obligations of the parties from transactions initiated before termination of
this Agreement.
This Agreement shall automatically terminate:
in the event of its assignment (as defined in the Investment Company Act of
1940); or
in the event of termination of the Investment Advisory Contract for any
reason whatsoever.
So long as both the Adviser and the Sub-Adviser shall be legally
qualified to act as an investment adviser, neither the Adviser nor the
Sub-Adviser shall act as an investment adviser (as such term is defined in the
Investment Company Act of 1940) to the Fund except as provided herein and in the
Investment Advisory Contract or in such other manner as may be expressly agreed
between the Adviser and the Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign prior
to the end of any term of this Agreement or for any reason be unable or
unwilling to serve for a successive term which has been approved by the Trustees
of the Trust pursuant to the provisions of Paragraph 8 of this Agreement or
Paragraph 6 of the Investment Advisory Contract, the remaining party, the
Sub-Adviser or the Adviser, as the case may be, shall not be prohibited from
serving as an investment adviser to such Fund by reason of the provisions of
this Paragraph 11.
This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the
Investment Company Act of 1940, by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to the choice of law
provisions thereof, to the extent that such laws are consistent with provisions
of the Investment Company Act of 1940 and the regulations thereunder. The
failure of either party to insist, in one or more instances, upon strict
performance of the obligations of this Agreement, or to exercise any rights
contained herein, shall not be construed as a waiver, or relinquishment for the
future of such obligation or right, which shall remain and continue in full
force and effect. Should any part of this Agreement be held or made invalid by a
court decision, statute, regulation, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
EXHIBIT A
DG INVESTOR SERIES
DG MID CAP FUND
Sub-Advisory Agreement
For all services rendered by Sub-Adviser hereunder, the Adviser shall pay
the Sub-Adviser a Sub-Advisory Fee based on the average daily net assets of the
Fund, as follows:
FUND ASSETS ANNUAL RATE
Any assets up to and including $5 million 0.75%
Any assets over $5 million up to and including $10 0.65%
million
Any assets over $10 million 0.55%
The Sub-Advisory Fee shall be calculated by the Adviser and shall be accrued
daily, and paid quarterly in arrears, as set forth in the Investment Advisory
Contract dated April __, 1998.
This Exhibit incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed on their behalf by their duly authorized officers, and their corporate
seals to be affixed hereto this ___ day of April, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: BENNETT LAWRENCE MANAGEMENT, LLC
By: By:
Title: Title:
<PAGE>
II-C-21
EXHIBIT II-C
DG INVESTOR SERIES
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between First American National Bank, a national
banking association having its principal place of business in Nashville,
Tennessee (hereinafter referred to as "Adviser") and Lazard Freres Asset
Management, a division of Lazard Freres & Co. L.L.C., a New York limited
liability company (hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree as
follows:
The Adviser in its capacity as investment adviser to the DG
International Equity Fund (the "Fund"), a portfolio of DG Investor Series
("Trust"), appoints the Sub-Adviser as a discretionary investment sub-adviser to
the Fund pursuant to the terms set forth in this Agreement.
<PAGE>
(a) The Sub-Adviser will deal in good faith and with due diligence
and will use professional skill, care and judgment in the performance of its
duties under this Agreement. In so doing, the Sub-Adviser shall formulate and
implement a continuing program for the management of the assets of the Fund. The
Sub-Adviser shall amend and update such program from time to time as financial
and other economic conditions warrant. The Sub-Adviser shall make all
determinations with respect to the investment of the assets of the Fund and
shall take such steps as may be necessary to implement the same, including the
placement of purchase and sale orders on behalf of the Fund. The Adviser shall
be responsible for the administration of the investment activities of the Fund,
including compliance with the requirements of the Investment Company Act of
1940, except for the investment management activities specifically delegated to
the Sub-Adviser to this Agreement.
The Sub-Adviser will adopt or has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the Investment
Company Act of 1940, will provide the Adviser with a copy of the code of ethics
and evidence of its adoption, and will make such reports to the Trust as
required by Rule 17j-1. The Sub-Adviser will also adopt or has adopted policies
and procedures sufficient to enable the Sub-Adviser to detect and prevent the
misuse of material, nonpublic information by the Sub-Adviser or any person
associated with the Sub-Adviser, in compliance with federal and state securities
laws.
The Sub-Adviser will prepare, maintain, keep current and
preserve on behalf of the Trust and the Adviser all records concerning the
Sub-Adviser's activities in connection with the Fund that the Fund is required
by law to maintain, including, but not limited to, records required under
paragraphs (b)(5), (b)(6), (b)(9), (b)(10), and (f) of rule 31a-1 under the
Investment Company Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under the Investment
Company Act of 1940 that are prepared by the Sub-Adviser on behalf of the Fund
are the property of the Fund and will be surrendered promptly on request to the
Fund or any person acting on behalf of the Trust during the term of this
Agreement and at any time after the termination of this Agreement; provided,
however, that the Sub-Adviser has the right to make and retain copies. The
Sub-Adviser will comply with all reasonable requests for information by the
Adviser or the Trust's officers or Board of Trustees, including information
required for the Fund's filings with the Securities and Exchange Commission and
state securities commissions.
The Sub-Adviser will promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and the Adviser.
The Sub-Adviser will immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act of 1940 or otherwise.
(a) The Sub-Adviser's power to direct the investment and
reinvestment of the assets of the Fund shall be exercised in accordance with
applicable law, the Fund's governing documents and the investment objectives,
policies and restrictions set forth in the then-current Prospectus and Statement
of Additional Information (collectively the "Prospectus") relating to the Fund
contained in the Trust's Registration Statement under the Investment Company Act
of 1940 and the Securities Act of 1933, as amended. The Adviser may also place
additional limitations on the Sub-Adviser's investment decisions by written
notice to the Sub-Adviser. The Adviser agrees to provide promptly, or cause to
be provided promptly, to the Sub-Adviser a copy of the documents mentioned above
and all changes made to such documents.
While the Sub-Adviser will have day-to-day responsibility for
the discretionary investment decisions to be made on behalf of the Fund, the
Sub-Adviser will be subject to oversight by the Adviser. Such oversight,
however, shall not require prior approval of discretionary investment decisions
made by the Sub-Adviser by the Adviser pursuant to the preceding sentence.
The Trust retains the right, on reasonable prior written
notice to the Adviser and the Sub-Adviser, to amend the Fund's investment
objectives, policies and restrictions placed on the Sub-Adviser's investment
decisions. Similarly, the Adviser retains the right, on reasonable prior written
notice to the Sub-Adviser, to amend any additional limitations, if any, that
have been placed on the Sub-Adviser's investment decisions with respect to the
Fund. Upon receipt of such prior notice from either the Trust or the Adviser,
the Sub-Adviser will promptly notify both the Fund and the Adviser if adoption
of such amendment would interfere with the completion of any transaction
commenced on behalf of the Fund prior to the Sub-Adviser's receipt of the
notice. In the event that the Trust or the Adviser proceeds to amend the Fund's
investment objectives, policies and restrictions or any additional limitations
after being notified by the Sub-Adviser of the pending transaction commenced on
behalf of the Fund, or in the event that the Trust or the Adviser amends the
Fund's investment objectives, policies and restrictions or any additional
limitations without providing reasonable prior notice to the Sub-Adviser, the
Sub-Adviser may complete such transaction unless doing so would violate any
applicable law, rule or regulation. In such an event, the Sub-Adviser will not
be responsible for any loss that may result from the completion of the
transaction.
Except as may be qualified elsewhere in this Agreement, the
Sub-Adviser is hereby authorized, for and on behalf of the Fund, in its
discretion, to:
exercise any conversion and/or subscription rights available in connection
with any securities or other investments held in the Fund;
maintain all or part of the Fund's assets uninvested in short-term
income-producing instruments for such periods of time as shall be deemed
responsible and prudent by the Sub-Adviser;
instruct the Custodian, to deliver for cash received, securities or other
cash and/or securities instruments sold, exchanged, redeemed or otherwise
disposed of from the Fund, and to pay cash for securities or other cash and/or
securities instruments delivered to the Custodian and/or credited to the Fund
upon acquisition of the same for the Fund;
determine how to vote all proxies received with respect to securities held
in the Fund and direct the Custodian as to the voting of such proxies; and
generally, perform any other act necessary to enable the
Sub-Adviser to carry out its obligations under the Agreement.
(a) The Sub-Adviser shall select the brokers and dealers through
whom transactions on behalf of the Fund will be executed and the markets on or
in which such transactions will be executed. The Sub-Adviser shall place, in the
name of the Fund or its nominee (or appropriate foreign equivalent), all such
orders for the purchase or sale or of securities due to or from the Fund with
any broker and/or dealer who deals in such securities, all in the manner as set
forth below and in accordance with such operational procedures as may be agreed
to from time to time by the Adviser and the Sub-Adviser.
In placing orders with brokers and/or dealers, the Sub-Adviser
shall use its 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 and/or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities using brokers 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 Fund and/or other accounts over which the Sub-Adviser or the
Adviser exercises investment discretion. The Sub-Adviser is authorized to pay a
broker that provides such brokerage and research services a commission for
effecting a securities transaction which is in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of brokerage and research services provided by such
broker. This determination may be viewed in terms of either that particular
transactions or of the overall responsibilities of the Sub-Adviser with respect
to the accounts as to which it exercises investment discretion.
Notwithstanding the foregoing, the Board of Trustees and the
Adviser periodically shall review the commissions paid by the Fund and determine
whether those commissions were reasonable in relation to the brokerage and
research services received. In addition, the Board of Trustees of the Trust, in
its discretion, may instruct the Sub-Adviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Fund.
It is understood that certain other clients (including other funds,
portfolios and accounts) of the Sub-Adviser may have investment objectives and
policies similar to those of the Fund and that the Sub-Adviser may, from time to
time, make recommendations that result in the purchase (or sale) of a particular
security by its other clients and the Fund during the same period of time. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. In such event, the
Sub-Adviser shall allocate the securities or investments to be purchased or
sold, as well as the expense incurred in the transactions (including price) in a
manner the Sub-Adviser considers equitable and consistent with its obligations
to the Fund and the Sub-Adviser's other clients.
The Sub-Adviser agrees that it will only enter into transactions
that are covered by Section 10(f) or Section 17(e) of the Investment Company Act
of 1940 if it has (i) complied with Rule 10f-3 or Rule 17e-1 thereunder,
respectively, or the terms of an appropriate exemptive order issued to the Fund
by the SEC, and (ii) has complied with the procedures adopted thereunder by the
Board of Trustees of the Trust which may, pursuant to authority granted by the
Trust, be supplemented by interpretive guidelines of the Adviser. Aside from
parties that are known or should be known by the Sub-Adviser, the Adviser shall
promptly notify the Sub-Adviser of any additional parties with whom engaging in
a transaction for the Fund would result in a violation of the Investment Company
Act of 1940.
For its services under this Agreement, Sub-Adviser shall receive
from Adviser an annual fee (the "Sub-Advisory Fee"), as set forth in the exhibit
hereto.
This Agreement shall begin for the Fund on the date that the parties
execute the exhibit to this Agreement relating to such Fund and shall continue
in effect for the Fund for two years from the date of its execution and from
year to year thereafter, subject to the provisions for termination and all of
the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
Trustees of the Trust) cast in person at a meeting called for that purpose; and
(b) the Adviser shall not have notified the Trust in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter that
it does not desire such continuation with respect to the Fund.
Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the Trustees
of the Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Act) of the Fund on sixty (60) days' written
notice to the Adviser; (b) by the Sub-Adviser or the Adviser upon 60 days'
written notice to the other party to the Agreement. Termination of this
Agreement will not affect (i) the validity of any action previously taken by the
Adviser or the Sub-Adviser under this Agreement or (ii) liabilities or
obligations of the parties from transactions initiated before termination of
this Agreement.
This Agreement shall automatically terminate:
in the event of its assignment (as defined in the Investment Company Act of
1940); or
in the event of termination of the Investment Advisory Contract for any
reason whatsoever.
So long as both the Adviser and the Sub-Adviser shall be legally
qualified to act as an investment adviser to the Fund, neither the Adviser nor
the Sub-Adviser shall act as an investment adviser (as such term is defined in
the Investment Company Act of 1940) to the Fund except as provided herein and in
the Investment Advisory Contract or in such other manner as may be expressly
agreed between the Adviser and the Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign prior
to the end of any term of this Agreement or for any reason be unable or
unwilling to serve for a successive term which has been approved by the Trustees
of the Trust pursuant to the provisions of Paragraph 8 of this Agreement or
Paragraph 6 of the Investment Advisory Contract, the remaining party, the
Sub-Adviser or the Adviser, as the case may be, shall not be prohibited from
serving as an investment adviser to such Fund by reason of the provisions of
this Paragraph 11.
This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the
Investment Company Act of 1940, by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to the choice of law
provisions thereof, to the extent that such laws are consistent with provisions
of the Investment Company Act of 1940 and the regulations thereunder. The
failure of either party to insist, in one or more instances, upon strict
performance of the obligations of this Agreement, or to exercise any rights
contained herein, shall not be construed as a waiver, or relinquishment for the
future of such obligation of right, which shall remain and continue in full
force and effect. Should any part of this Agreement be held or made invalid by a
court decision, statute, regulation, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
EXHIBIT A
DG INVESTOR SERIES
DG INTERNATIONAL EQUITY FUND
Sub-Advisory Agreement
For all services rendered by Sub-Adviser hereunder, Adviser shall pay
Sub-Adviser a Sub-Advisory Fee equal to .50% (one-half of one percent) of the
average daily net assets of the above-mentioned portfolio. The Sub-Advisory Fee
shall be accrued daily, and paid monthly as set forth in the Investment Advisory
Contract dated April __, 1998.
This Exhibit duly incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed on their behalf by their duly authorized officers, and their corporate
seals to be affixed hereto this ___ day of April, 1998.
ATTEST: FIRST AMERICAN NATIONAL BANK
By: By:
Title: Title:
ATTEST: LAZARD FRERES ASSET MANAGEMENT
By: By:
Title: Title:
<PAGE>
[Account Number]
DG EQUITY FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie
M. Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Equity Fund (the "Fund"), a portfolio
of DG Investor Series (the "Trust"), to be held at Federated Investors Tower,
19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 2:00 p.m. (Eastern
time) on Friday, April 24, 1998 and at all adjournments thereof, in respect of
all Shares of the Fund as to which the undersigned may be entitled to vote or
act. Each proxy shall have power of substitution and a majority of said proxies
or their substitutes, or any one if only one be present and acting, shall have
all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. IF NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR
SUCH PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER
WHICH MAY PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG EQUITY FUND
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Equity Fund, and
First American National Bank, the terms of which are substantially similar to
the existing investment advisory contract between the Trust and ParkSouth
Corporation ("ParkSouth"), subject to and FORAGAINSTABSTAIN effective upon the
consummation of the acquisition of Deposit Guaranty Corp., _________ the
ultimate corporate parent of ParkSouth, by First American Corporation.
Transaction of such other business as may properly come before the meeting or
any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG OPPORTUNITY FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Opportunity Fund (the "Fund"), a
portfolio of DG Investor Series (the "Trust"), to be held at Federated Investors
Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 2:00 p.m.
(Eastern time) on Friday, April 24, 1998 and at all adjournments thereof, in
respect of all Shares of the Fund as to which the undersigned may be entitled to
vote or act. Each proxy shall have power of substitution and a majority of said
proxies or their substitutes, or any one if only one be present and acting,
shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG OPPORTUNITY FUND
VOTE ON PROPOSALS
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Opportunity Fund, and
First American National Bank, the terms of which are substantially similar to
the existing investment advisory contract between the Trust and ParkSouth
Corporation ("ParkSouth"), subject to and
effective upon the consummation of the FORAGAINSTABSTAIN
acquisition of Deposit Guaranty Corp.,
the ultimate corporate parent of _________
ParkSouth, by First American Corporation
(the "Merger").
(2) To approve or disapprove a new Sub-Advisory Agreement between First American
National Bank, on behalf of the DG Opportunity Fund, and Womack Asset
Management, the present sub-adviser to FORAGAINSTABSTAIN
the DG Opportunity Fund, subject to and
effective upon the consummation of the _________
Merger.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG MID CAP FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Mid Cap Fund (the "Fund"), a portfolio
of DG Investor Series (the "Trust"), to be held at Federated Investors Tower,
19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 2:00 p.m. (Eastern
time) on Friday, April 24, 1998 and at all adjournments thereof, in respect of
all Shares of the Fund as to which the undersigned may be entitled to vote or
act. Each proxy shall have power of substitution and a majority of said proxies
or their substitutes, or any one if only one be present and acting, shall have
all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG MID CAP FUND
VOTE ON PROPOSALS
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Mid Cap Fund, and
First American National Bank, the terms of which are substantially similar to
the existing investment advisory contract between the Trust and ParkSouth
Corporation ("ParkSouth"), subject to and
effective upon the consummation of the FORAGAINSTABSTAIN
acquisition of Deposit Guaranty Corp.,
the ultimate corporate parent of _________
ParkSouth, by First American Corporation
(the "Merger").
(2) To approve or disapprove a new Sub-Advisory Agreement between First American
National Bank, on behalf of the DG Mid Cap Fund, and Bennett Lawrence
Management, LLC, the present sub-adviser FORAGAINSTABSTAIN to the DG Mid Cap
Fund, subject to and effective upon the consummation of the _________ Merger.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG INTERNATIONAL EQUITY FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG International Equity Fund (the
"Fund"), a portfolio of DG Investor Series (the "Trust"), to be held at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA
15222-3779 at 2:00 p.m. (Eastern time) on Friday, April 24, 1998 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one if
only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG INTERNATIONAL EQUITY FUND
VOTE ON PROPOSALS
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG International Equity
Fund, and First American National Bank, the terms of which are substantially
similar to the existing investment advisory contract between the Trust and
ParkSouth Corporation ("ParkSouth"),
subject to and effective upon the FORAGAINSTABSTAIN consummation of the
acquisition of Deposit Guaranty Corp., the ultimate _________ corporate parent
of ParkSouth, by First American Corporation (the "Merger").
(2) To approve or disapprove a new Sub-Advisory Agreement between First American
National Bank, on behalf of the DG International Equity Fund, and Lazard Freres
Asset Management, the present
sub-adviser to the DG International FORAGAINSTABSTAIN
Equity Fund, subject to and effective
upon the consummation of the Merger. _________
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG LIMITED TERM GOVERNMENT INCOME FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Limited Term Government Income Fund
(the "Fund"), a portfolio of DG Investor Series (the "Trust"), to be held at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA
15222-3779 at 2:00 p.m. (Eastern time) on Friday, April 24, 1998 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one if
only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
- -------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG LIMITED TERM GOVERNMENT INCOME FUND
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Limited Term
Government Income Fund, and First American National Bank, the terms of which are
substantially similar to the existing investment advisory contract between the
Trust and ParkSouth Corporation
("ParkSouth"), subject to and effective FORAGAINSTABSTAIN upon the consummation
of the acquisition of Deposit Guaranty Corp., the ultimate _________ corporate
parent of ParkSouth, by First American Corporation.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ _______
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG GOVERNMENT INCOME FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Government Income Fund (the "Fund"), a
portfolio of DG Investor Series (the "Trust"), to be held at Federated Investors
Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 2:00 p.m.
(Eastern time) on Friday, April 24, 1998 and at all adjournments thereof, in
respect of all Shares of the Fund as to which the undersigned may be entitled to
vote or act. Each proxy shall have power of substitution and a majority of said
proxies or their substitutes, or any one if only one be present and acting,
shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG GOVERNMENT INCOME FUND
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Government Income
Fund, and First American National Bank, the terms of which are substantially
similar to the existing investment advisory contract between the Trust and
ParkSouth Corporation ("ParkSouth"), subject to and
effective upon the consummation of the FORAGAINSTABSTAIN
acquisition of Deposit Guaranty Corp.,
the ultimate corporate parent of _________
ParkSouth, by First American Corporation.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG MUNICIPAL INCOME FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Municipal Income Fund (the "Fund"), a
portfolio of DG Investor Series (the "Trust"), to be held at Federated Investors
Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at 2:00 p.m.
(Eastern time) on Friday, April 24, 1998 and at all adjournments thereof, in
respect of all Shares of the Fund as to which the undersigned may be entitled to
vote or act. Each proxy shall have power of substitution and a majority of said
proxies or their substitutes, or any one if only one be present and acting,
shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG MUNICIPAL INCOME FUND
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Municipal Income
Fund, and First American National Bank, the terms of which are substantially
similar to the existing investment advisory contract between the Trust and
ParkSouth
Corporation ("ParkSouth"), subject to and FORAGAINSTABSTAIN effective upon the
consummation of the acquisition of Deposit Guaranty Corp., _________ the
ultimate corporate parent of ParkSouth, by First American Corporation.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ ________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG PRIME MONEY MARKET FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Prime Money Market Fund (the "Fund"),
a portfolio of DG Investor Series (the "Trust"), to be held at Federated
Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at
2:00 p.m. (Eastern time) on Friday, April 24, 1998 and at all adjournments
thereof, in respect of all Shares of the Fund as to which the undersigned may be
entitled to vote or act. Each proxy shall have power of substitution and a
majority of said proxies or their substitutes, or any one if only one be present
and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG PRIME MONEY MARKET FUND
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Prime Money Market
Fund, and First American National Bank, the terms of which are substantially
similar to the existing investment advisory contract between the Trust and
ParkSouth Corporation ("ParkSouth"), subject to and
effective upon the consummation of the FORAGAINSTABSTAIN
acquisition of Deposit Guaranty Corp.,
the ultimate corporate parent of _________
ParkSouth, by First American Corporation
(the "Merger").
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ _____
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
[Account Number]
DG TREASURY MONEY MARKET FUND
Proxy for Special Meeting of Shareholders - April 24, 1998
The undersigned hereby appoints Gail Cagney, Patricia F. Conner, Marie M.
Hamm, Suzanne W. Land and Susan M. Jones as proxies to vote and act at the
Special Meeting of Shareholders of the DG Treasury Money Market Fund (the
"Fund"), a portfolio of DG Investor Series (the "Trust"), to be held at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA
15222-3779 at 2:00 p.m. (Eastern time) on Friday, April 24, 1998 and at all
adjournments thereof, in respect of all Shares of the Fund as to which the
undersigned may be entitled to vote or act. Each proxy shall have power of
substitution and a majority of said proxies or their substitutes, or any one if
only one be present and acting, shall have all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. IF
NO CHOICE IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH
PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. Please sign and
return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. KEEP THIS
PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DG Treasury Money Market Fund
VOTE ON PROPOSAL
(1) To approve or disapprove a new Investment Advisory Contract (the "New
Advisory Contract") between the Trust, on behalf of the DG Treasury Money Market
Fund, and First American National Bank, the terms of which are substantially
similar to the existing investment advisory contract between the Trust and
ParkSouth Corporation ("ParkSouth"),
subject to and effective upon the FORAGAINSTABSTAIN consummation of the
acquisition of Deposit Guaranty Corp., the ultimate _________ corporate parent
of ParkSouth, by First American Corporation.
Transaction of such other business as
may properly come before the meeting or any adjournment thereof.
x________________________________ _______ x_____________________ _____
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE>
