THE DIVERSIFIED INVESTORS FUNDS GROUP
4 Manhattanville Road
Purchase, New York 10577
February 9, 1996
Dear Shareholder:
On Friday, March 8, 1996 at 9:00 a.m. we will hold a special meeting of
shareholders of Diversified Investors Growth & Income Fund (the "Fund"), a
series of The Diversified Investors Funds Group (the "Trust"), to vote on an
important proposal relating to the Fund.
VOTING ONLY TAKES A FEW MINUTES - PLEASE RESPOND PROMPTLY.
As a shareholder, you cast one vote for each share that you own. Every
shareholder's vote is important, no matter how many shares you own.
Please take a few moments to read the enclosed materials and then cast your
vote on the enclosed proxy card. Item 1 has been carefully considered by the
Board of Trustees of the Trust, which is responsible for protecting your
interests as a shareholder. The Board of Trustees of the Trust believes that
the proposal described as Item 1 is fair and reasonable and recommends that you
vote in favor of such proposal.
The proposals you will vote on for the Fund are summarized below. Complete
information is contained in the enclosed Proxy Statement.
ITEM 1. To consider and vote on approval of a new Investment
Subadvisory Agreement between Diversified Investment Advisors,
Inc. and The Putnam Advisory Company, Inc.
ITEM 2. To transact such other business as may properly come before
the Special Meeting of Shareholders and any adjournments
thereof.
After you have voted on Item 1, please be sure to SIGN YOUR PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
This is your opportunity to voice your opinion on matters affecting the Fund.
Your participation is extremely important, no matter how many or how few shares
you own.
We appreciate your prompt response. Thank you.
Sincerely,
Robert F. Colby
Secretary
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DIVERSIFIED INVESTORS GROWTH & INCOME FUND
a series of The Diversified Investors Funds Group
4 Manhattanville Road
Purchase, New York 10577
Telephone: (914) 697-8000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held March 8, 1996
A Special Meeting of Shareholders of DIVERSIFIED INVESTORS GROWTH & INCOME FUND
(the "Fund"), a series of The Diversified Investors Funds Group (the "Trust"),
will be held at the offices of Diversified Investment Advisors, Inc., 4
Manhattanville Road, Purchase, New York 10577, on March 8, 1996 at 9:00 a.m.,
Eastern Time, for the following purposes:
ITEM 1. To consider and vote on approval of a new Investment
Subadvisory Agreement between Diversified Investment Advisors,
Inc. and The Putnam Advisory Company, Inc.
ITEM 2. To transact such other business as may properly come before
the Special Meeting of Shareholders and any adjournments
thereof.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE IN FAVOR OF ITEM 1.
Only shareholders of record on January 22, 1996 will be entitled to vote at the
Special Meeting of Shareholders and at any adjournments thereof.
Robert F. Colby, Secretary
February 9, 1996
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSES OF
A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND
IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
DIVERSIFIED INVESTORS GROWTH & INCOME FUND
a series of The Diversified Investors Funds Group
4 Manhattanville Road
Purchase, New York 10577
Telephone: (914) 697-8000
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form of
proxy are being mailed by the Board of Trustees of The Diversified Investors
Funds Group (the "Trust") on behalf of Diversified Investors Growth & Income
Fund (the "Fund"), a series of the Trust, on or about February 10, 1996. They
are being furnished in connection with the solicitation of proxies by the Board
of Trustees of the Trust for use at the special meeting of shareholders of the
Fund, or any adjournment thereof, to be held at the offices of Diversified
Investment Advisors, Inc., 4 Manhattanville Road, Purchase, New York 10577, on
March 8, 1996, 9:00 a.m., Eastern Time (the "Meeting") for the purposes set
forth in the accompanying Notice of Special Meeting.
The Fund is one of the eight series of the Trust, which is a registered
investment company organized as a Massachusetts business trust under a
Declaration of Trust dated as of April 23, 1993. The Fund was designated as a
separate series of the Trust on April 23, 1993. The mailing address of the
Trust is 4 Manhattanville Road, Purchase, New York 10577. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
Growth & Income Portfolio (the "Portfolio"), a series of Diversified Investors
Portfolios (the "Portfolio Series"), a registered investment company. The
Portfolio has the same investment objective as the Fund. Shareholders of the
Fund are being asked to vote on certain matters with respect to the Portfolio
because the Portfolio has called a meeting of its investors to vote on such
matters.
The Fund commenced operations on July 1, 1994. The annual report for the Fund
for the period ended December 31, 1994, including audited financial statements,
and the semi-annual report for the Fund for the period ended June 30, 1995 have
previously been sent to shareholders and are available upon request without
charge by calling the Trust toll-free at (800) 926-0044.
MANNER OF VOTING PROXIES AND VOTE REQUIRED
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. If no instructions are specified, shares will be
voted for proposed Item 1. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked prior to its exercise by a signed
writing delivered at the Meeting or filed with the Secretary of the Trust.
If sufficient votes to approve the proposed Item 1 are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares voted at the Meeting. When
voting on a proposed adjournment, the persons named as proxies will vote all
shares that they are entitled to vote with respect to Item 1 for the proposed
adjournment, unless directed to disapprove the item, in which case such shares
will be voted against the proposed adjournment.
<PAGE>
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Fund entitled to vote is required to constitute a
quorum at the Meeting. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or
nominees do not have discretionary power) will be treated as shares that are
present but which have not been voted. For this reason, abstentions and broker
"non-votes" will have the effect of a "no" vote for purposes of obtaining the
requisite approval of Item 1.
The cost of soliciting proxies in the accompanying form, including the fees of
a proxy soliciting agent, will be borne by Diversified Investment Advisors,
Inc., a Delaware corporation described below. In addition to solicitation by
mail, proxies may be solicited by the Board of Trustees of the Trust, officers,
and regular employees and agents of the Trust without compensation therefor.
Diversified Investment Advisors, Inc. may reimburse brokerage firms and others
for their expenses in forwarding proxy materials to the beneficial owners and
soliciting them to execute the proxies.
The close of business on January 22, 1996 has been fixed as the Record Date for
the determination of shareholders entitled to notice of and to vote at the
Meeting. 38,435.026 shares of the Fund, par value $0.00001 per share, were
outstanding as of the close of business on the Record Date. Shareholders of
record at the close of business on the Record Date will be entitled to one vote
for each share held.
INTERESTS OF CERTAIN PERSONS
As of the Record Date, no Trustees or officers of the Trust owned beneficially
or had the right to vote any outstanding shares of the Fund.
As of the Record Date, no person(s) owned of record or had the right to vote 5%
or more of the outstanding shares of the Fund.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Massachusetts business trust and as such is not required to hold
annual meetings of shareholders, although special meetings may be called for
the Fund, or for the Trust as a whole, for purposes such as electing Trustees
or removing Trustees, changing fundamental policies, or approving an advisory
contract. Shareholder proposals to be presented at any subsequent meeting of
shareholders must be received by the Trust at the Trust's office within a
reasonable time before the proxy solicitation is made.
ITEM 1. APPROVAL OR DISAPPROVAL OF PUTNAM INVESTMENT
SUBADVISORY AGREEMENT
BACKGROUND
As disclosed in the Fund's Prospectus, the Fund is a SpokeSM fund within a
two-tier, master/feeder mutual fund structure, also referred to as a Hub and
Spoke(R) structure. Hub and Spoke(R) is a registered service mark of Signature
Financial Group, Inc. In such Hub and Spoke(R) structure, the Fund, unlike
other mutual funds which directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
<PAGE>
investable assets in the Portfolio. The Portfolio has the same investment
objective as the Fund.
Diversified Investment Advisors, Inc., a Delaware corporation (the "Adviser"),
4 Manhattanville Road, Purchase, New York 10577, manages the assets of the
Portfolio pursuant to an Investment Advisory Agreement dated as of January 3,
1994 (the "Advisory Agreement"). Subject to the terms of the Advisory
Agreement, the Adviser is responsible for the management of the Portfolio,
selects, subject to the review and approval of the Board of Trustees of the
Portfolio Series, an appropriate subadviser to make the day-to-day investment
selections for the Portfolio consistent with the guidelines and directions set
by the Adviser and the Board of Trustees of the Portfolio Series and reviews
such subadviser's continued performance.
Munder Capital Management ("Munder") is a Delaware general partnership with
principal offices at 480 Pierce Street, Birmingham, Michigan 48009. Prior to
November 13, 1995, Munder served as the investment subadviser of the Portfolio
pursuant to an Investment Subadvisory Agreement between Munder and the Adviser
(the "Munder Investment Subadvisory Agreement"). The Munder Investment
Subadvisory Agreement was most recently approved by the Board of Trustees of
the Portfolio Series, including a majority of the Trustees who are not
"interested persons," as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), of any party to the Munder Investment Subadvisory
Agreement (the "Independent Trustees") on January 25, 1995, and was approved by
the holders of beneficial interests in the Portfolio on April 24, 1995, in
connection with a corporate reorganization of Munder.
At a meeting of the Board of Trustees of the Portfolio Series held on November
7, 1995, the Board reviewed, at the Adviser's request, certain investment
strategies for the Portfolio. The Board authorized the Adviser to terminate the
Munder Investment Subadvisory Agreement and enter into a new subadvisory
agreement with The Putnam Advisory Company, Inc. ("Putnam"). The Adviser
terminated the Munder Investment Subadvisory Agreement effective November 13,
1995. The Adviser also entered into an Investment Subadvisory Agreement with
Putnam dated as of November 13, 1995 (the "Putnam Investment Subadvisory
Agreement").
In accordance with the requirements of the 1940 Act, the Putnam Investment
Subadvisory Agreement must be approved by the holders of beneficial interests
in the Portfolio. The Portfolio and the Fund have agreed that the shareholders
of the Fund will be asked to vote on all matters on which the Fund is asked to
vote as a holder of a beneficial interest in the Portfolio. The Trust will cast
all of the Fund's votes with respect to the Putnam Investment Subadvisory
Agreement in the same proportion as the votes of the Fund's shareholders cast
at the Meeting on this Item 1.
THE MUNDER AND THE PUTNAM INVESTMENT SUBADVISORY AGREEMENTS
The terms of the Putnam Investment Subadvisory Agreement are similar to those
of the Munder Investment Subadvisory Agreement, with the exception of the
identity of the service provider, the effective dates and termination dates and
the compensation payable to the service provider by the Adviser. A description
of the investment advisory fees to be paid to Putnam by the Adviser is set
forth below under the caption "Investment Advisory Fees." The Putnam Investment
Subadvisory Agreement became effective on November 13, 1995 and, if approved by
the vote of the holders of a "majority of the outstanding voting securities"
(as such term is defined below) of the Portfolio, will continue in effect for a
two-year period from November 7, 1995, and thereafter from year to year,
<PAGE>
subject to approval annually in accordance with the 1940 Act. The Putnam
Investment Subadvisory Agreement may be terminated at any time without the
payment of any penalty by the Board of Trustees of the Portfolio Series or by
the vote of a "majority of the outstanding voting securities" of the Portfolio
or by the Adviser. The Putnam Investment Subadvisory Agreement may also be
terminated by Putnam upon 90 days' advance written notice to the Adviser. The
Putnam Investment Subadvisory Agreement will also terminate automatically in
the event of its "assignment" (as defined in the 1940 Act).
Under the Putnam Investment Subadvisory Agreement, as under the Munder
Investment Subadvisory Agreement, Putnam will furnish continuing portfolio
management services to the Portfolio, subject always to the provisions of the
1940 Act and to the investment objectives, policies, procedures and
restrictions imposed by the Portfolio's then current Registration Statement
under the 1940 Act. Investment management decisions of Putnam will be made by
committee and not by managers individually. Putnam will also provide the
Adviser with such investment advice and reports and data as are requested by
the Adviser.
Like the Munder Investment Subadvisory Agreement, the Putnam Investment
Subadvisory Agreement provides that Putnam shall be responsible only for
managing the assets of the Portfolio in good faith and in accordance with
investment guidelines, and shall have no responsibility whatsoever for, and
shall incur no liability on account of, (i) diversification, selection or
establishment of such investment objectives, fundamental policies and
restrictions, (ii) advice on, or management of, any other assets for the
Adviser or the Portfolio, (iii) filing of any tax or information returns or
forms, withholding or paying any taxes, or seeking any exemption or refund,
(iv) registration with any government or agency, (v) administration of the
plans and trusts investing through the Portfolio, or (vi) overall Portfolio
compliance with the requirements of the 1940 Act, which requirements are
outside of Putnam's control, and Subchapter M of the Internal Revenue Code of
1986, as amended, and shall be indemnified and held harmless by the Adviser for
any loss in carrying out the terms and provisions of the agreement, including
reasonable attorney's fees, indemnification to the Portfolio, or any
shareholder thereof and brokers and commission merchants, fines, taxes,
penalties and interest; provided, however that the Adviser shall not be
required to indemnify Putnam for any such liability arising out of Putnam's
negligence, bad faith, malfeasance or disregard of its duties in providing
management services under the agreement.
Shareholders should refer to Exhibit A attached hereto for the complete terms
of the Putnam Investment Subadvisory Agreement, and the description of the
Putnam Investment Subadvisory Agreement set forth herein is qualified in its
entirety by the provisions of the Putnam Investment Subadvisory Agreement as
set forth in such Exhibit.
INVESTMENT ADVISORY FEES
Under the Putnam Investment Subadvisory Agreement, the Adviser (not the
Portfolio) pays Putnam for its services on the basis of the annual fee schedule
set forth below:
Putnam Fee Schedule
.30% of first $100,000,000 of net assets
.20% of net assets in excess of $100,000,000
<PAGE>
Net assets are equal to the market value of the Portfolio. Fees will be
calculated monthly by multiplying the arithmetic average of the beginning and
ending monthly net assets of the Portfolio by the fee schedule and dividing by
twelve. Fees will be paid by the Adviser quarterly.
Under the Munder Investment Subadvisory Agreement, the Adviser (not the
Portfolio) paid Munder for its services on the basis of the annual fee schedule
set forth below:
Munder Fee Schedule
.50% of first $50,000,000 of net assets
.30% of next $25,000,000 of net assets
.25% of net assets in excess of $75,000,000
Net assets were equal to the market value of the Portfolio. Fees were
calculated monthly by multiplying the arithmetic average of the beginning and
ending monthly net assets of the Portfolio by the fee schedule and dividing by
twelve. Fees were paid by the Adviser quarterly.
Approval of the Putnam Investment Subadvisory Agreement will have no effect
upon the amount of advisory fees paid by the Portfolio to the Adviser. The
Adviser, not the Portfolio, pays investment advisory fees to Putnam as a
subadviser to the Portfolio. Putnam will receive from the Adviser a lower level
of compensation than the Adviser would have paid to Munder under the Munder
Investment Subadvisory Agreement. Because Putnam will receive a lower level of
fees from the Adviser, the Adviser will be able to retain more of the fees paid
to it by the Portfolio.
Fees accrued to Munder for services provided pursuant to the Munder Investment
Subadvisory Agreement for the period from January 1, 1995 to November 13, 1995
were $346,834. Neither Munder nor any affiliated person of Munder nor any
affiliated person of such person received any other fees from the Adviser or
from the Portfolio for services provided to the Portfolio during the fiscal
year of the Portfolio ended December 31, 1995. There were no other material
payments by the Adviser or the Portfolio to Munder, any affiliated person of
Munder, or any affiliated person of such person, during the fiscal year of the
Portfolio ended December 31, 1995.
Fees that would have accrued to Putnam for services provided pursuant to the
Putnam Investment Subadvisory Agreement for the period from January 1, 1995 to
November 13, 1995, had the Putnam Investment Subadvisory Agreement been in
effect for such period, would have been $295,341, a 14.8% decrease in the
amount of fees paid to Munder for such period under the Munder Investment
Subadvisory Agreement.
As of December 31, 1995, the Portfolio had net assets of $124,821,581.
For the most recently completed fiscal year of the Portfolio, no commissions
were paid to any broker that (i) is an affiliated person of the Portfolio, or
(ii) is affiliated with any such person described in clause (i) of this
paragraph, or (iii) an affiliated person of which is an affiliated person of
the Portfolio, the Adviser, Munder, Putnam, or the administrator or distributor
of the Portfolio.
<PAGE>
INFORMATION REGARDING PUTNAM
Putnam, a Massachusetts corporation, is a wholly-owned subsidiary of Putnam
Investments, Inc., which is in turn wholly owned by Marsh & McLennan Companies
Inc., a Delaware corporation ("Marsh"). The principal address of Putnam is One
Post Office Square, Boston, MA 02109, and the principal address of Marsh is
1166 Avenue of the Americas, New York, NY 10036 -2774. Marsh is a publicly
traded company. Total assets under management by Putnam and its affiliates
for clients with investment objectives similar to that of the Portfolio at
December 31, 1995 were approximately $2.9 billion, $1.2 billion of which were
assets of a registered investment company.
Listed below are the names, positions and principal occupations of the
directors and principal executive officers of Putnam. The principal business
address of each director and principal executive officer, as it relates to his
or her duties at Putnam, is the same as that of Putnam.
POSITION AND OTHER BUSINESS, PROFESSION
NAME OFFICES WITH Putnam VOCATION, EMPLOYMENT
Lawrence J. Lasser Director and President - President, Chief Executive
Officer and Director
Putnam Investments Inc.
One Post Office Square
Boston, Massachusetts 02109
- Director
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas,
New York, New York 10036
- Trustee and Vice President
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- Director
Inroads/Central New England,Inc.
99 Bedford Street
Boston, Massachusetts 02109
Thomas J. Lucey Director and Senior - Senior Managing Director and
Managing Director Chief of Institutional Business
Putnam Investments Inc.
One Post Office Square
Boston, Massachusetts 02109
Steven Spiegel Director and Senior - Director and Senior Managing
Managing Director Director of Putnam
Investments, Inc.
From 1977 to 1994
Officer of Lehman Brothers
<PAGE>
John C. Talanian Director - Managing Director and Director
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109
Takehiko Watanabe Director - Managing Director and General
Manager
Business Development
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109
There have been no purchases or sales of any interests in Putnam or Marsh or
any of Putnam's or Marsh's subsidiaries since the beginning of the most
recently completed fiscal year by any of the Trustees of the Portfolio Series
or any of the Trustees of the Trust. No officer or Trustee of the Portfolio
Series or the Trust is an officer, employee, director or shareholder of Putnam
or has any other material direct or indirect interest in Putnam or any other
person controlling, controlled by or under common control with Putnam. Since
January 1, 1995, none of the Trustees of the Portfolio Series or the Trust has
had any material interest, direct or indirect, in any material transaction, or
in any material proposed transaction, to which Putnam, Marsh or any subsidiary
of Putnam or Marsh was or is to be a party.
Other investment companies having a similar investment objective as the
Portfolio for which Putnam or its affiliates serves as an investment adviser
or subadviser and the rates of compensation therefor, are set forth in Exhibit B
attached hereto.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Board of Trustees of the Portfolio Series authorized the Adviser to
terminate the Munder Investment Subadvisory Agreement and approved the Putnam
Investment Subadvisory Agreement at a meeting held on November 7, 1995.
Before authorizing the Adviser to terminate the Munder Investment Subadvisory
Agreement or approving the Putnam Investment Subadvisory Agreement, the Board
of Trustees of the Portfolio Series considered information with respect to
Munder's performance under the Munder Investment Subadvisory Agreement and
whether the Putnam Investment Subadvisory Agreement was in the best interests
of the Portfolio and its holders of beneficial interests. The Trustees
considered the nature and quality of services expected to be provided by Putnam
and reviewed and discussed information regarding fees, expense rates and
performance. In evaluating Putnam's ability to provide services to the
Portfolio, the Trustees considered information as to Putnam's business
organization, financial resources, personnel and other matters. The Trustees
compared the investment performance of certain accounts advised by Putnam
having investment objectives similar to the Portfolio as compared to various
benchmarks and to the investment performance of the Portfolio's assets as
managed by Munder. The Trustees also compared the amount of fees to be paid to
Putnam by the Adviser under the Putnam Investment Subadvisory Agreement to the
amount of fees paid to Munder by the Adviser under the Munder Investment
Subadvisory Agreement.
The Board of Trustees of the Portfolio Series also considered that under
circumstances in which best price and execution may be obtained from more than
one broker or dealer, Putnam may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and other
<PAGE>
information to Putnam. Although certain research, market and statistical
information from brokers and dealers can be useful to the Portfolio and Putnam,
Putnam has advised that such information is, in its opinion, only supplementary
to Putnam's own research activities and the information must still be analyzed,
weighed and reviewed by Putnam. It was noted that such information may be
useful to Putnam in providing services to clients other than the Portfolio.
Conversely, it was noted that information provided to Putnam by brokers and
dealers through whom other clients of Putnam effect securities transactions may
be useful to Putnam in providing services to the Portfolio.
Based upon its review, the Board of Trustees of the Portfolio Series concluded
that (a) for relevant periods Munder's investment performance underperformed
both the performance of relevant benchmarks and Putnam's performance in
managing assets of growth and income clients, (b) the terms of the Putnam
Investment Subadvisory Agreement are reasonable, fair and in the best interests
of the Portfolio and its holders of beneficial interests, and (c) the fees
provided in the Putnam Investment Subadvisory Agreement are fair and reasonable
in light of the usual and customary charges made by others for services of the
same nature and quality. Accordingly, after consideration of the above factors,
and such other factors and information as it deemed relevant, the Board of
Trustees of the Portfolio Series, including all of the Independent Trustees,
unanimously authorized the Adviser to terminate the Munder Investment
Subadvisory Agreement, approved the Putnam Investment Subadvisory Agreement and
voted to recommend its approval by the holders of beneficial interests in the
Portfolio.
REQUIRED VOTE
Approval of the Putnam Investment Subadvisory Agreement will require the
approval of "a majority of the outstanding voting securities" (as defined
below) of the Portfolio present in person or represented by proxy at a meeting
of the holders of the beneficial interests in the Portfolio. Under the 1940
Act, a "majority of the outstanding voting securities" of an issuer means the
affirmative vote by the lesser of (a) 67% or more of the issuer's voting
securities present at a meeting if the holders of more than 50% of the issuer's
outstanding voting securities are present in person or represented by proxy or
(b) more than 50% of the issuer's outstanding voting securities (the "1940 Act
Majority"). The Portfolio and the Fund have agreed that the shareholders of the
Fund will be asked to vote on all matters on which the Fund is asked to vote as
a holder of a beneficial interest in the Portfolio. The Trust will cast all of
the Fund's votes with respect to the Putnam Investment Subadvisory Agreement in
the same proportion as the votes of the Fund's shareholders cast at the Meeting
on this Item 1. The percentage of the Fund's votes representing shareholders of
the Fund not voting at the Meeting will be voted by the Trust in the same
proportion as those cast by shareholders of the Fund who do, in fact, vote.
Because there are holders of beneficial interests in the Portfolio besides the
Fund, it is possible that the Putnam Investment Subadvisory Agreement will not
be approved by the requisite vote, even if the Putnam Investment Subadvisory
Agreement is approved by a 1940 Act Majority of the outstanding voting
securities of the Fund. It is also possible that the Putnam Investment
Subadvisory Agreement will be approved by the requisite vote, even if the
Putnam Investment Subadvisory Agreement is not approved by a 1940 Act Majority
of the outstanding voting securities of the Fund.
<PAGE>
In the event that the Putnam Investment Subadvisory Agreement does not receive
the requisite shareholder approval, the Adviser would negotiate a new
investment subadvisory agreement with a different advisory organization or make
other appropriate arrangements, in either event subject to approval in
accordance with the 1940 Act.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND
VOTE FOR APPROVAL OF THE PUTNAM INVESTMENT SUBADVISORY AGREEMENT.
ITEM 2. OTHER BUSINESS
The management of the Trust knows of no other business to be presented at the
Meeting. If any additional matters should be properly presented, it is intended
that the enclosed proxy (if not limited to the contrary) will be voted in
accordance with the judgment of the persons named in the enclosed form of
proxy.
ADDITIONAL INFORMATION
The Fund's Distributor is Diversified Investors Securities Corp., 4
Manhattanville Road, Purchase, New York 10577. The Fund's Administrator and
Transfer Agent is Diversified Investment Advisors, Inc., 4 Manhattanville Road,
Purchase, New York 10577.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Robert F. Colby, Secretary
February 9, 1996
<PAGE>
EXHIBIT A
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of November 13, 1995, by and
between Diversified Investment Advisors, Inc., a Delaware corporation
("Diversified") and the Putnam Advisory Company, Inc., a Massachusetts
corporation ("Subadvisor").
WITNESSETH:
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940 and has been
retained to provide investment advisory services to the Growth and Income
Portfolio ("Portfolio"), a series of Diversified Investors Portfolios, a
diversified open-end management investment company registered under the
Investment Company Act of 1940 ("1940 Act");
WHEREAS, Diversified desires to retain the Subadvisor to furnish it with
portfolio investment advisory services in connection with Diversified's
investment advisory activities on behalf of the Portfolio, and the Subadvisor
is willing to furnish such services to Diversified;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Subadvisor. In accordance with and subject to the
Investment Advisory Agreement between the Portfolio and Diversified, attached
hereto as Schedule A (the "Advisory Agreement"), Diversified hereby appoints
the Subadvisor to perform the portfolio investment advisory services described
herein for the investment and reinvestment of the Portfolio's assets, subject
to the control and direction of Diversified and the Diversified Investors
Portfolios' Board of Trustees, for the period and on the terms hereinafter set
forth.
The Subadvisor shall provide Diversified with such investment advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Portfolio's assets. The Subadvisor shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held uninvested, subject always to the provisions of
the 1940 Act and to the Portfolio's then-current Prospectus and Statement of
Additional Information ("SAI").
In particular, the Subadvisor shall, without limiting the foregoing: (i)
continuously review, supervise and implement the investment program of the
Portfolio; (ii) monitor regularly the relevant securities for the Portfolio to
determine if adjustments are warranted and, if so, to make such adjustments;
(iii) determine, in the Subadvisor's discretion, the securities to be purchased
or sold or exchanged in order to keep the Portfolio in balance with its
designated investment strategy; (iv) determine, in the Subadvisor's discretion,
whether to exercise warrants or other rights with respect to the Portfolio's
securities; (v) determine, in the Subadvisor's discretion, whether the merit of
an investment has been substantially impaired by extraordinary events or
<PAGE>
financial conditions, thereby warranting the removal of such securities from
the Portfolio; (vi) as promptly as practicable after the end of each calendar
month, furnish a report showing: (a) all transactions during such month, (b)
all assets of the Portfolio on the last day of such month, rates of return, and
(c) such other information relating to the Portfolio as Diversified may
reasonably request; (vii) meet at least four times per year with Diversified
and with such other persons as may be designated on reasonable notice and at
reasonable locations, at the request of Diversified, to discuss general
economic conditions, performance, investment strategy, and other matters
relating to the Portfolio; (viii) provide the Portfolio with records concerning
the Subadvisor's activities which the Portfolio is required to by law maintain;
and (ix) render regular reports to the Portfolio's officers and Directors
concerning the Subadvisor's discharge of the foregoing responsibilities.
The Subadvisor shall also make recommendations to Diversified as to the
manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to the Portfolio's securities shall be exercised.
Should the Board of Trustees at any time make any definite determination
as to investment policy with respect to the Portfolio and notify the Subadvisor
thereof in writing, the Subadvisor shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
policy has been revoked.
The Subadvisor shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
Portfolio securities for the Portfolio's account with brokers or dealers
selected by it, and to that end the Subadvisor is authorized as the agent of
the Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
Subject to the primary objective of obtaining the best available prices and
execution, the Subadvisor may place orders for the purchase and sale of
portfolio securities with such broker/dealers who provide statistical, factual
and financial information and services to the Portfolio, to the Subadvisor, or
to any other fund or account for which the Subadvisor provides investment
advisory services and may place such orders with broker/dealers who sell shares
of the Portfolio or who sell shares of any other fund for which the Subadvisor
provides investment advisory services.
Notwithstanding the provisions of the previous paragraph and subject to
such policies and procedures as may be adopted by the Board of Trustees and
officers of the Portfolio, the Subadvisor may pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, in such instances
where the Subadvisor has determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such member, broker or dealer, viewed in terms of
either that particular transaction or the Subadvisor's overall responsibilities
with respect to the Portfolio and to other funds and separate accounts for
which the Subadvisor exercises investment discretion.
2. Allocation of Charges and Expenses. The Subadvisor shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 1 above. It is understood that the Portfolio
will pay all of its own expenses and liabilities including, without limitation,
compensation and out-of-pocket expenses of Trustees not affiliated with the
Subadvisor or Diversified; governmental fees; interest charges; taxes;
<PAGE>
membership dues; fees and expenses of independent auditors, of legal counsel
and of any transfer agent, administrator, distributor, shareholder servicing
agents, registrar or dividend disbursing agent of the Portfolio; expenses of
distributing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements and reports to governmental officers and commissions and to
shareholders of the Portfolio; expenses connected with the execution, recording
and settlement of Portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the
Portfolio; expenses of shareholder meetings; expenses of litigation and other
extraordinary or non-recurring events and expenses relating to the issuance,
registration and qualification of shares of the Portfolio.
3. Compensation of the Subadvisor. For the services to be rendered,
Diversified shall pay to the Subadvisor an investment advisory fee computed in
accordance with the terms of Schedule B herewith attached. If the Subadvisor
serves for less than the whole of any period specified, its compensation shall
be prorated.
4. Covenants and Representations of the Subadvisor. The Subadvisor
represents and warrants that it is duly registered as an investment advisor
under the Investment Advisers Act of 1940, and that it will remain so
throughout the term of this Agreement. The Subadvisor agrees that it will not
deal with itself, or with the Trustees of the Portfolio or with Diversified, or
the principal underwriter or distributor as principals in making purchases or
sales of securities or other property for the account of the Portfolio, except
as permitted by the 1940 Act, will not take a long or short position in the
shares of the Portfolio except as permitted by the Articles, and will comply
with all other provisions of the Articles and By-Laws and any current
Prospectus of the Portfolio relative to the Subadvisor, Advisor and its
Trustees and officers.
5. Limits on Duties. The Subadvisor shall be responsible only for managing
the assets in good faith and in accordance with the investment objectives,
fundamental policies and restrictions, and shall have no responsibility
whatsoever for, and shall incur no liability on account of (i) diversification,
selection or establishment of such investment objectives, fundamental policies
and restrictions, (ii) advice on, or management of, any other assets for
Diversified or the Portfolio, (iii) filing of any tax or information returns or
forms, withholding or paying any taxes, or seeking any exemption or refund,
(iv) registration with any government or agency, or (v) administration of the
plans and trusts investing through the Portfolio, or (vi) overall Portfolio
compliance with the requirements of the 1940 Act, which requirements are
outside of the Subadvisor's control, and Subchapter M of the Internal Revenue
Code of 1986, as amended, and shall be indemnified and held harmless by
Diversified for any loss in carrying out the terms and provisions of this
Agreement, including reasonable attorney's fees, indemnification to the
Portfolio, or any shareholder thereof and, brokers and commission merchants,
fines, taxes, penalties and interest; provided, however, that Diversified shall
not be required to indemnify Subadvisor for any such liability, damages, or
expenses arising out of Subadvisor's negligence, bad faith, malfeasance, or
disregard of its duties under this Agreement.
<PAGE>
The Subadvisor may apply to Diversified at any time for instructions and
may consult counsel for Diversified or its own counsel with respect to any
matter arising in connection with the duties of the Subadvisor. Also, the
Subadvisor shall be protected in acting upon advice of Diversified and/or
Diversified's counsel and upon any document which Subadvisor reasonably
believes to be genuine and to have been signed by the proper person or persons.
6. Exclusivity. The Subadvisor represents to Diversified that during the
first two years of this Agreement the Subadvisor will not enter into any new
subadvisory agreements with a manager unaffiliated with the Subadvisor to
manage any commingled fund(s) of the same investment discipline and which the
Subadvisor believes is primarily intended for companies in Diversified's target
market. (See Schedule C.) At the end of two years, this exclusive management
provision may be continued if both parties to this Agreement agree in writing
to do so. This exclusivity provision also ends if either party to the Agreement
terminates the Agreement.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and, unless
terminated earlier as provided below, shall remain in force for two years, on
which date it will terminate unless its continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of the Trustees of the
Portfolio who are not "interested persons" to this Agreement or of the
Subadvisor or Diversified at an in person meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Portfolio or by vote of a majority of the outstanding voting securities of the
Portfolio. However, if the shareholders of the Portfolio fail to approve the
Agreement as provided herein, the Subadvisor may continue to serve hereunder in
the manner and to the extent permitted by the Investment Company Act of 1940
and Rules thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolio, or by Diversified. The Subadvisor may terminate
the Agreement only upon giving 60 days' advance written notice to Diversified.
This Agreement shall automatically terminate in the event of its assignment.
This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Portfolio and by
vote of a majority of the Board of Trustees of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
8. Certain Records. Any records to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 adopted under the 1940 Act which
are prepared or maintained by the Subadvisor on behalf of the Portfolio are the
property of the Portfolio and will be surrendered promptly to the Portfolio on
request.
<PAGE>
9. Survival of Compensation Rates. All rights to compensation under this
Agreement shall survive the termination of this Agreement.
10. Entire Agreement. This Agreement states the entire agreement of the
parties with respect to investment advisory services to be provided to the
Portfolio by the Subadvisor and may not be amended except in a writing signed
by the parties hereto and approved in accordance with Section 7 hereof.
11. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
12. Change of Management and Pending Litigation. Subadvisor represents to
Diversified that it will disclose to Diversified promptly after it has
knowledge of any significant change or variation in its management structure or
personnel or any significant change or variation in its management style or
investment philosophy. In addition, Subadvisor represents to Diversified that
it will similarly disclose to Diversified, promptly after it has knowledge, the
existence of any pending legal action being brought against it whether in the
form of a lawsuit or a non-routine investigation by any federal or state
governmental agency.
Diversified represents to Subadvisor that any information received by
Diversified pursuant to this section will be kept strictly confidential and
will not be disclosed any third party.
13. Use of Name. Subadvisor hereby agrees that Diversified may use the
Subadvisor's name in its marketing or advertising materials. Diversified agrees
to allow the Subadvisor to examine and approve any such materials prior to use.
IN WITNESS WHEREOF, the parties thereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Diversified Investment Advisors, Inc.
By:/s/John J. Hughes
Putnam Advisory Company, Inc.
By:/s/Thomas J. Lucey
<PAGE>
SCHEDULE A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of ________________, 1993 by and between the Growth &
Income Portfolio, a series of Diversified Investors Portfolios (herein called
the "Portfolio"), and Diversified Investment Advisors, Inc. a Delaware
corporation (herein called "Diversified").
WHEREAS, the Portfolio is registered as a diversified, open-end,
management investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940; and
WHEREAS, the Portfolio desires to retain Diversified to render investment
advisory services, and Diversified is willing to so render such services on the
terms hereinafter set forth;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the promises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. The Portfolio hereby appoints Diversified to act as investment advisor
to the Portfolio for the period and on the terms set forth in this Agreement.
Diversified accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. (a) Diversified shall, at its expense, (i) employ sub-advisors or
associate with itself such entities as it believes appropriate to assist it in
performing its obligations under this Agreement and (ii) provide all services,
equipment and facilities necessary to perform its obligations under this
Agreement.
(b) The Portfolio shall be responsible for all of its expenses and
liabilities, including, but not limited to: compensation and out-of-pocket
expenses of Trustees not affiliated with any subadvisor or Diversified;
governmental fees; interest charges; taxes; membership dues; fees and expenses
of independent auditors, of legal counsel and of any transfer agent,
administrator, distributor, shareholder servicing agents, registrar or dividend
disbursing agent of the Portfolio; expenses of distributing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses, shareholder reports, notices, proxy statements and
reports to governmental officers and commissions and to shareholders of the
Portfolio; expenses connected with the execution, recording and settlement of
Portfolio security transactions; insurance premiums; fees and expenses of the
custodian for all services to
<PAGE>
the Portfolio, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of
shares of the Portfolio; expenses of shareholder meetings; expenses of
litigation and other extraordinary or non-recurring events and expenses
relating to the issuance, registration and qualification of shares of the
Portfolio.
3. (a) Subject to the general supervision of the Board of Trustees of the
Portfolio, Diversified shall formulate and provide an appropriate investment
program on a continuous basis in connection with the management of the
Portfolio, including research, analysis, advice, statistical and economic data
and information and judgments of both a macroeconomic and microeconomic
character.
Diversified will determine the securities to be purchased, sold, lent,
exchanged or otherwise disposed of or acquired by the Portfolio in accordance
with predetermined guidelines as set forth from time to time in the Portfolio's
then-current prospectus and Statement of Additional Information ("SAI") and
will place orders pursuant to its determinations either directly with the
issuer or with any broker or dealer who deals in such securities. In placing
orders with brokers and dealers, Diversified will use its reasonable best
efforts to obtain the best net price and the most favorable execution of its
orders, after taking into account all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Consistent with this obligation, Diversified may, to the
extent permitted by law, purchase and sell Portfolio securities to and from
brokers and dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934) to or for the
benefit of the Portfolio and/or other accounts over which Diversified or any of
its affiliates exercises investment discretion.
Subject to the review of the Portfolio's Board of Trustees from time to
time with respect to the extent and continuation of the policy, Diversified is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for effecting a securities transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if Diversified
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of Diversified with respect to the accounts as to which it
exercises investment discretion.
In placing orders with brokers and/or dealers, Diversified intends to seek
best price and execution for purchases and sales and may effect transactions
through itself and its affiliates on a securities exchange provided that the
commissions paid by the Portfolio are "reasonable and fair" compared to
commissions received by other broker-dealers having comparable execution
capability in connection with comparable transactions involving similar
securities and provided that the transactions in connection with which such
commissions are paid are effected pursuant to procedures established by the
Board of the Trustees of the Portfolio. All transactions are effected pursuant
to written authorizations from the Portfolio conforming to the requirements of
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder. Pursuant to such authorizations, an affiliated broker-dealer may
transmit, clear and settle transactions for the Portfolio that are executed on
a securities exchange provided that it arranges for unaffiliated brokers to
execute such transactions.
<PAGE>
Diversified shall determine from time to time the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining
to the Portfolio's securities shall be exercised, provided, however, that
should the Board of Trustees at any time make any definite determination as to
investment policy and notify Diversified thereof in writing, Diversified shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked.
Diversified will determine what portion of securities owned by the Portfolio
shall be invested in securities described by the policies of the Portfolio and
what portion, if any, should be held uninvested. Diversified will determine
whether and to what extent to employ various investment techniques available to
the Portfolio. In effecting transactions with respect to securities or other
property for the account of the Portfolio, Diversified may deal with itself and
its affiliates, with the Trustees of the Portfolio or with other entities to
the extent such actions are permitted by the 1940 Act.
(b) Diversified also shall provide to the Portfolio administrative
assistance in connection with the operation of the Portfolio, which shall
include compliance with all reasonable requests of the Portfolio for
information, including information required in connection with the Portfolio's
filings with the Securities and Exchange Commission and state securities
commissions.
(c) As a manager of the assets of the Portfolio, Diversified shall make
investments for the account of the Portfolio in accordance with Diversified's
best judgment and within the Portfolio's investment objectives, guidelines, and
restrictions, the 1940 Act and the provisions of the Internal Revenue Code of
1986 relating to regulated investment companies subject to policy decisions
adopted by the Board of Trustees.
(d) Diversified shall furnish to the Board of Trustees periodic reports
on the investment performance of the Portfolio and on the performance of its
obligations under this Agreement and shall supply such additional reports and
information as the Portfolio's officers or Board of Trustees shall reasonably
request.
(e) On occasions when Diversified deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
customers, Diversified, to the extent permitted by applicable law, may
aggregate the securities to be so sold or purchased in order to obtain the best
execution or lower brokerage commissions, if any. Diversified may also on
occasion purchase or sell a particular security for one or more customers in
different amounts. On either occasion, and to the extent permitted by
applicable law and regulations, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Diversified in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Portfolio and to such other customers.
(f) Diversified shall also provide the Portfolio with the following
services as may be required:
(i) providing office space, equipment and clerical personnel necessary
for maintaining the organization of the Portfolio and for
performing administrative and management functions;
<PAGE>
(ii) supervising the overall administration of the Portfolio, including
negotiation of contracts and fees with and the monitoring of
performance and billings of the Portfolio's transfer agent,
custodian and other independent contractors or agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Portfolio with applicable laws and regulations,
including registration statements, registration fee filings,
semi-annual and annual reports to investors, proxy statements and
tax returns;
(iv) preparation of agendas and supporting documents for and minutes of
meeting of Trustees, committees of Trustees and investors; and
(v) maintaining books and records of the Portfolio.
4. Diversified shall give the Portfolio the benefit of Diversified's best
judgment and efforts in rendering services under this Agreement. As an
inducement to Diversified's undertaking to render these services, the Portfolio
agrees that Diversified shall not be liable under this Agreement for any
mistake in judgment or in any other event whatsoever provided that nothing in
this Agreement shall be deemed to protect or purport to protect Diversified
against any liability to the Portfolio or its investors to which Diversified
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties under this Agreement or
by reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
5. In consideration of the services to be rendered by Diversified under
this Agreement, the Portfolio shall pay Diversified a fee accrued daily and
paid monthly at an annual rate equal to .60% of the Portfolio's average daily
net assets. If the fees payable to Diversified pursuant to this paragraph 5
begin to accrue before the end of any month or if this Agreement terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination,
as the case may be, shall be prorated according to the proportion which the
period bears to the full month in which the effectiveness or termination
occurs. For purposes of calculating the monthly fees, the value of the net
assets of the Portfolio shall be computed in the manner specified in its
Regulation Statement on Form N-1A for the computation of net asset value. For
purposes of this Agreement, a "business day" is any day the New York Stock
Exchange is open for trading.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
Diversified hereby agrees that all records which it maintains for the Portfolio
are property of the Portfolio and further agrees to surrender promptly to the
Portfolio any such records upon the Portfolio's request. Diversified further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records required to be maintained by Rule 31a-1 under the 1940 Act.
6. This Agreement shall be effective as to the Portfolio as of the date
the Portfolio commences investment operations after this Agreement shall have
been approved by the Board of Trustees of the Portfolio and the investor(s) in
the Portfolio in the manner contemplated by Section 15 of the 1940 Act and,
unless sooner terminated as provided herein, shall continue until the second
anniversary of the date hereof. Thereafter, if not terminated, this Agreement
shall continue in effect as to the Portfolio for successive periods of 12
months each, provided such continuance is specifically approved at least
<PAGE>
annually by the vote of a majority of those members of the Board of Trustees of
the Portfolio who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval; and either (a) by the vote of a majority of the full Board of
Trustees or (b) by vote of a majority of the outstanding voting securities of
the Portfolio; provided, however, that this Agreement may be terminated by the
Portfolio at any time, without the payment of any penalty, by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio on 60 days' written notice to Diversified, or by
Diversified as to the Portfolio at any time, without payment of any penalty, on
90 days' written notice to the Portfolio. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities", "interested person" and
"assignment" shall have the same meanings as such terms have in the 1940 Act
and the rule and regulatory constructions thereunder).
7. Except to the extent necessary to perform Diversified's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of Diversified, or any affiliate of Diversified, or any employee of
Diversified, to engage in any other business or devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other trust,
corporation, firm, individual or association.
8. The investment management services of Diversified to the Portfolio
under this Agreement are not to be deemed exclusive as to Diversified and
Diversified will be free to render similar services to others.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Portfolio.
This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and understandings relating
to the subject matter hereof. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors, to the extent permitted by law.
9. This Agreement shall be construed in accordance with the laws of the
State of New York provided that nothing herein shall be construed in a manner
inconsistent with the requirements of 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
Attest: Diversified Investment Advisors
Growth & Income Portfolio
By:
Attest: Diversified Investment Advisors, Inc.
By:
<PAGE>
SCHEDULE B
The Subadvisor shall be compensated for its services under this Agreement on
the basis of the below-described annual fee schedule. The fee schedule shall
only be amended by agreement between the parties.
FEE SCHEDULE
.30% of initial $100 million of net assets
.20% of net assets in excess of $100 million
Net assets are equal to the market value of the Portfolio. Fees will be
calculated by multiplying the arithmetic average of the beginning and ending
monthly net assets by the fee schedule and dividing by twelve. The fee will be
paid quarterly.
<PAGE>
SCHEDULE C
Target market for 401(a) plans is those plans with assets between $1 and $50
million.
For 403(b) plans, the target market is those plans that have an employee base
between 300 - 2000 lives, and with assets between $1 and $15 million.
<PAGE>
EXHIBIT B
OTHER INVESTMENT COMPANIES FOR WHICH THE PUTNAM ADVISORY
COMPANY, INC. IS AN INVESTMENT ADVISER OR SUBADVISER
FEE RATE
NET ASSETS AS (AS A % OF AVERAGE
INVESTMENT COMPANY OF DECEMBER 31, 1995 DAILY NET ASSETS)
Putnam Investors Fund $1.09 Billion 0.61%
<PAGE>
PROXY CARD PROXY CARD
DIVERSIFIED INVESTORS GROWTH & INCOME FUND
A SERIES OF THE DIVERSIFIED INVESTORS FUNDS GROUP
A PROXY FOR A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD MARCH 8, 1996
The undersigned, revoking all Proxies heretofore given, hereby appoints
each of Tom A. Schlossberg, Robert F. Colby and Gerald L. Katz, or any of them,
as Proxies of the undersigned with full power of substitution, to vote on
behalf of all of the undersigned all shares in the Diversified Investors Growth
& Income Fund (the "Fund"), a series of The Diversified Investors Funds Group
(the "Trust"), which the undersigned is entitled to vote at the Special Meeting
of Shareholders of the Fund to be held at the offices of Diversified Investment
Advisors, Inc., 4 Manhattanville Road, Purchase, New York 10577 on March 8,
1996, at 9:00 a.m., Eastern Time, and at any adjournment thereof, as fully as
the undersigned would be entitled to vote if personally present, as follows:
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.
1. To consider and vote on approval of a new Investment Subadvisory
Agreement between Diversified Investment Advisors, Inc. and The Putnam
Advisory Company, Inc.
______FOR ______AGAINST ______ABSTAIN
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR ANY PROPOSALS
FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date:_______________
-----------------------------------
Signature
-----------------------------------
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD
<PAGE>
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
