<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
MAGNA FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MAGNA FUNDS
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
- --------------------------------------------------------------------------------
1) Title of each class of securities to which transaction applies: Shares
of Beneficial Interest of Magna Intermediate Government Bond Fund and
of Magna Growth & Income Fund
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing is calculated and state how it was determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
MAGNA FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 219-4182
September 8, 1998
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of Magna
Funds, which will be held on October 7, 1998 at 8:30 a.m., Columbus Time, at
the offices of the Trust, 3435 Stelzer Road, Columbus, Ohio.
THE MATTERS TO BE ACTED UPON AT THE MEETING WITH RESPECT TO EACH FUND OF THE
TRUST ARE DESCRIBED IN THE ATTACHED NOTICE AND PROXY STATEMENT.
Although we would like very much to have each shareholder attend the Special
Meeting, we realize this is not possible. Whether or not you plan to be
present at the meeting, we need your vote. WE URGE YOU TO COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY. A POSTAGE-PAID ENVELOPE IS ENCLOSED
FOR THIS PURPOSE.
If you return your proxy promptly you can help avoid the expense of follow-up
mailings to achieve a quorum so that the business of the meeting can be
conducted. Proxies may be revoked at any time before they are voted by a
written revocation received by the Secretary of the Trust, by properly
executing a later-dated proxy or by attending the meeting and voting in
person. If your shares are held in street name, only your bank or broker can
vote your shares, and only upon receipt of your specific instructions. Please
contact the person responsible for your account and instruct him or her to
execute a proxy card today.
We look forward to seeing you at the meeting or receiving your proxy so that
your shares may be voted at the meeting.
By order of the Board of Trustees,
Robert L. Tuch
Secretary
<PAGE> 3
MAGNA FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 219-4182
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Magna Funds:
A Special Meeting of Shareholders (the "Special Meeting") of Magna Funds (the
"Trust") will be held on October 7, 1998 at 8:30 a.m., Columbus Time, at the
offices of the Trust, 3435 Stelzer Road, Columbus, Ohio.
1. To approve or disapprove New Investment Advisory Agreements,
in the forms set forth in Appendix A, between the Trust and Union
Planters Bank, N.A., as discussed in Part I of the attached Proxy
Statement. (Each Investment Advisory Agreement will be voted on only
by shareholders of the relevant Fund.)
2. To elect the Board of Trustees of the Trust, as described in Part II of the
attached Proxy Statement.
3. To consider such other matters as may properly come before the Special
Meeting.
By order of the Board of Trustees,
Robert L. Tuch
Secretary
September 8, 1998
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE SO YOU WILL BE REPRESENTED AT THE SPECIAL MEETING.
<PAGE> 4
MAGNA FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 219-4182
PROXY STATEMENT
GENERAL
THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF MAGNA FUNDS (THE "TRUST")
for use at the Special Meeting of Shareholders (the "Meeting") to be held on
October 7, 1998 at 8:30 a.m., Columbus Time, at the offices of the Trust, 3435
Stelzer Road, Columbus, Ohio, and at any adjournments thereof, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders (the "Notice"). Shareholders of record at the close of business
on August 31, 1998 are entitled to be present and to vote at the Meeting or
any adjourned session thereof. The Notice, proxy and this Proxy Statement have
been mailed to such shareholders of record on or about September 8, 1998.
The Trust currently consists of two series of shares, the Magna Intermediate
Government Bond Fund and the Magna Growth & Income Fund.
The Trust will furnish, without charge, a copy of the Annual Report for the
fiscal year ended August 31, 1997 and the Semi-Annual Report for the six month
period ended February 28, 1998, to any shareholder upon request. Shareholders
may request copies by writing the Trust at 3435 Stelzer Road, Columbus, Ohio
43219, or by calling toll-free at (800) 219-4182.
All shareholders of record at the close of business on August 31, 1998 are
entitled to one vote for each share of the Trust held. As of that date, there
were issued and outstanding the following number of shares of each Fund:
Shares Issued
Name of Fund and Outstanding
- ------------ ---------------
Magna Intermediate Government Bond Fund [ ]
Magna Growth & Income Fund [ ]
- ------------------------------ ---
Total [ ]
<PAGE> 5
Shareholders of each Fund will vote separately on Proposal I (approval of new
investment advisory agreements for each Fund). Shareholders of both Funds will
vote together as a single class on Proposal II (election of Trustees). The
presence at the Meeting, in person or by proxy, of the holders of 40% of the
Shares entitled to be cast of a Fund (for a Fund by Fund vote, such as Proposal
I), or of the Trust (for a Trust-wide vote, such as Proposal II) shall be
necessary and sufficient to constitute a quorum for the transaction of business.
For purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions and broker "non-votes" will be treated as shares that
are present and entitled to vote. Broker non-votes are proxies received by a
Fund from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to
-1-
<PAGE> 6
vote nor has (or chooses to exercise) discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
Votes cast by proxy or in person at the meeting will be counted by persons
appointed as tellers by the Trust. The tellers will count the total number of
votes cast "for" approval of the proposals for purposes of determining whether
sufficient affirmative votes have been cast. With respect to Proposal I,
abstentions and broker non-votes have the effect of negative votes on the
proposal. With respect to Proposal II, neither abstentions nor broker non-votes
have any effect on the outcome of the proposal.
Proxies may be revoked at any time before they are voted by a written
revocation received by the Secretary of the Trust, by properly executing a
later-dated proxy or by attending the meeting, requesting return of a proxy and
voting in person.
The costs of solicitation will be borne by Union Planters Bank, N.A. or Magna
Bank, N.A. Solicitation of proxies by personal interview, mail, telephone and
telegraph may be made by officers and trustees of the Trust and employees of
Union Planters Bank, N.A., Magna Bank, N.A., BISYS Fund Services and their
respective affiliates.
Those persons who are known to be the beneficial owners of more than five
percent of the shares of any Fund of the Trust as of August 31, 1998 are:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial
Name of Fund of Beneficial Owner Ownership Percent of Fund
- ------------ ------------------- --------- ---------------
<S> <C> <C> <C>
Magna Growth & Magna Group, Inc. [ ] shares [ ]
Income Fund Savings and Stock Investment Plan
8866 Ladue Road
St. Louis, Missouri 63124
[UPDATE AS OF RECORD DATE]
</TABLE>
-2-
<PAGE> 7
I. APPROVAL OR DISAPPROVAL OF THE
NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION. Magna Bank, N.A. (together with its predecessors,
"Magna"), 1401 South Brentwood Boulevard, St. Louis, Missouri 63144, acts as
investment adviser to each Fund pursuant to separate investment advisory
agreements entered into by each Fund and Magna (each a "Current Investment
Advisory Agreement," and together the "Current Investment Advisory Agreements").
Magna has served as investment adviser to the Funds since each Fund's inception
in 1994. On July 1, 1998, Magna Group, Inc., a bank holding company that then
owned 100% of Magna's outstanding voting securities, merged with and into Union
Planters Holding Corporation ("UPHC"), a wholly-owned subsidiary of Union
Planters Corporation ("UPC"), a bank holding company. It is presently
anticipated that Magna will be merged with and into Union Planters Bank,
National Association ("Union Planters Bank"), a wholly-owned subsidiary of UPHC,
on October 9, 1998 (the "Magna Bank Transaction"). The Magna Bank Transaction
may be deemed to result in an "assignment" of the Current Investment Advisory
Agreements for purposes of the Investment Company Act of 1940 (the "1940 Act"),
which regulates investment companies such as the Trust. Since, as required by
the 1940 Act, the Current Investment Advisory Agreements provide that they will
terminate automatically upon assignment, you are now being asked to approve new
investment advisory agreements (each a "New Investment Advisory Agreement")
between your Fund and Union Planters Bank. The New Investment Advisory
Agreements would take effect at the time of the Magna Bank Transaction.
As of August 31, 1998, [ ]% of the Magna Intermediate Government Bond
Fund shares and [ ]% of the Magna Growth & Income Fund shares were owned of
record by Magna; all of such shares were held for the benefit of accounts for
which Magna acts as trustee or custodian. Upon consummation of the Magna Bank
Transaction, all shares that immediately before the Magna Bank Transaction were
owned by Magna will be owned of record by Union Planters Bank, in each case for
the benefit of accounts for which Union Planters Bank acts as trustee or
custodian.
The investment advisory fee rate set forth in each New Investment
Advisory Agreement is identical to the fee rate set forth in the corresponding
Current Investment Advisory Agreement and, as described in greater detail below,
all other terms of the New Investment Advisory Agreement for each Fund are
substantially identical to the Fund's Current Investment Advisory Agreement in
all material respects. Further, it is presently expected that the same portfolio
managers and other key investment personnel currently responsible for Magna's
management of each Fund's investment operations will continue to have such
responsibilities as officers and employees of Union Planters Bank.
The Trustees of the Trust are proposing that shareholders approve the
New Investment Advisory Agreements between the Trust and Union Planters Bank. In
determining to recommend this proposal, the Trustees considered that Union
Planters Bank proposes that all of the personnel of Magna who have
responsibilities for the conduct of the Funds' investment operations continue to
have such responsibilities as officers and employees of Union Planters Bank
following the Magna Bank Transaction. These persons include, among others, the
individuals who have acted as portfolio managers for each of the Funds since
their inception in 1994. Union Planters Bank has indicated that the Magna Bank
Transaction will not result in any material changes in the investment process
that Magna has employed in managing the
-3-
<PAGE> 8
Funds' assets in the past. In this connection, the Trustees considered the scope
and quality of the services historically provided to the Funds by Magna, the
investment returns of the Funds, the performance and expense ratios of other
mutual funds and other managed investment products with investment objectives
similar to the Funds and the brokerage policies and practices employed by Magna
in its management of the Funds' investment portfolios.
A description of the New Investment Advisory Agreements, including the
services provided thereunder, the procedures for their termination and renewal
and other services to be provided by Union Planters Bank, is set forth below.
The description is qualified in its entirety by reference to the form of New
Investment Advisory Agreement included as Appendix A to this Proxy Statement.
Additional information about Union Planters Bank is set forth in Part III of
this Proxy Statement.
Each Fund's Current Investment Advisory Agreement was approved by the
sole initial shareholder of such Fund in connection with the organization of the
Trust in July 1994. Each Fund's Current Investment Advisory Agreement was most
recently approved by the Trustees of the Trust, including the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust (the
"Independent Trustees"), on April 23, 1998 for the one-year period commencing
July 1, 1998.
The New Investment Advisory Agreements will be formally considered for
approval by the Trustees, including the Independent Trustees, on October 7,
1998.
DESCRIPTION OF THE INVESTMENT ADVISORY AGREEMENTS. It is proposed that
Union Planters Bank serve as the investment adviser to each Fund of the Trust
pursuant to the New Investment Advisory Agreements between the Trust and Union
Planters Bank. The terms of the New Investment Advisory Agreements are identical
to the terms of the Current Investment Advisory Agreements in all material
respects, except for (i) their effective and termination dates, (ii) the parties
to such agreements (i.e., the New Investment Advisory Agreements are between
each Fund and Union Planters Bank, rather than between each Fund and Magna) and
(iii) the New Investment Advisory Agreements do not contain a provision
contained in the Current Investment Advisory Agreements which requires the
investment adviser to reduce its fees if necessary to comply with certain
expense limitations formerly imposed by state laws, as this provision is no
longer necessary or customary in view of changes in the law that have occurred
since the Current Investment Advisory Agreements were initially adopted in 1994.
The compensation payable to Union Planters Bank for its services under
the New Investment Advisory Agreements will be a monthly fee at the following
annual percentage rates applicable to the average daily net asset value of each
Fund, as determined at the close of each business day during the month as
follows:
ANNUAL
NAME OF FUND PERCENTAGE RATE
------------ ---------------
Magna Growth & Income Fund............................... 0.75%
Magna Intermediate Government Fund....................... 0.50%
Since each Fund's inception, Magna has voluntarily reduced its advisory
fees to the annual rate of 0.50%, in the case of the Magna Growth & Income Fund,
and 0.40%, in the
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<PAGE> 9
case of the Magna Intermediate Government Bond Fund. Union Planters Bank has
voluntarily undertaken to reduce its advisory fee with respect to each Fund to
the same levels through August 31, 1999.
For the year ended August 31, 1998, advisory fees paid to Magna pursuant to the
Current Investment Advisory Agreements (both before and after the voluntary fee
reduction described above), which provide for advisory fee rates identical to
those set forth in the New Investment Advisory Agreements, were as follows:
<TABLE>
<CAPTION>
GROSS FEES NET FEES
FUND (BEFORE REDUCTION) REDUCTION (AFTER REDUCTION)
<S> <C> <C> <C>
Magna Growth & Income Fund........................ $ ________ $ _______ $ ________
Magna Intermediate Government Bond Fund........... $ ________ $ _______ $ ________
</TABLE>
Under the New Investment Advisory Agreements, subject to such policies as the
Trustees of the Trust may determine, Union Planters Bank, at its expense (not
including brokers' commissions or other costs of acquiring or disposing of any
portfolio securities), will furnish continuously an investment program for, and
will make investment decisions on behalf of, the Funds and place all orders for
the purchase and sale of portfolio securities, subject always to applicable
investment objectives, policies and restrictions.
The New Investment Advisory Agreements also provide that, in placing orders
with brokers or dealers, Union Planters Bank will attempt to obtain prompt
execution of orders in an effective manner at the most favorable price.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, Union Planters Bank may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide Union Planters Bank and its affiliates with research and
other services. In so doing, a Fund may incur greater brokerage commissions than
it might otherwise pay.
Each New Investment Advisory Agreement provides that it will continue in effect
from its initial effective date (which is expected to be as of the closing of
the Magna Bank Transaction, provided that the New Investment Advisory Agreements
have been approved by the shareholders of the relevant Fund and a majority of
the Trustees, including a majority of the Independent Trustees) through
September 30, 2000, and thereafter with respect to such Fund only so long as
such continuance is approved at least annually by (i) the vote, cast in person
at a meeting called for such purpose, of a majority of the Independent Trustees
and by (ii) either the majority vote of the full Board of Trustees or the vote
of a "majority of the outstanding voting securities" (defined below) of that
Fund. Each New Investment Advisory Agreement automatically terminates on
assignment, and is terminable without penalty by the Trust or Union Planters
Bank on not more than 60 days' notice. Each New Investment Advisory Agreement
may only be amended by written instrument by an affirmative vote of the holders
of a "majority of the outstanding voting securities" (defined below) of the
relevant Fund.
Each New Investment Advisory Agreement provides that Union Planters Bank shall
not be subject to any liability to the Trust or to any shareholder of the Trust
for any act or omission in the course of or in connection with rendering
services thereunder in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
-5-
<PAGE> 10
In addition to the advisory fees described above, each Fund will pay all of its
expenses not expressly assumed by Union Planters Bank, including, without
limitation, fees and expenses of the Independent Trustees, interest charges,
taxes, brokers' commissions or other costs of acquiring or disposing of any
portfolio securities for each Fund, expenses of issuance, offering,
distribution, sale, redemption or repurchase of shares, the fees and expenses of
registering and qualifying the Trust and shares of the Funds for distribution
under federal and state laws and regulations, charges of custodians, auditing
and legal expenses, administration, accounting and transfer agency expenses,
expenses of determining net asset value of shares of each Fund, reports to
shareholders, expenses of meetings of shareholders, expenses of printing and
mailing prospectuses, reports, proxy statements and proxies to existing
shareholders, and its proportionate share of insurance premiums and professional
association dues or assessments. The Trust is also responsible for such
nonrecurring expenses as may arise, including litigation in which the Trust may
be a party, and other expenses as determined by the Trustees. The Trust may have
an obligation to indemnify its officers and Trustees with respect to such
litigation. All general Trust expenses are allocated among and charged to the
assets of each Fund on a basis that the Trustees deem fair and equitable, which
may be based on the relative net assets of the Funds or the nature of the
services performed and relative applicability to each Fund.
REQUIRED VOTE. Approval of each Fund's New Investment Advisory Agreement will
require the affirmative vote of a "majority of the outstanding voting
securities" of that Fund (as defined in the 1940 Act), which means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
that Fund or (2) 67% or more of the shares of that Fund present at the meeting
if more than 50% of the outstanding shares of that Fund are represented at the
meeting in person or by proxy. If the shareholders of any Fund do not approve
the New Investment Advisory Agreement, the Trustees will take such further
action as they may deem to be in the best interests of the shareholders of that
Fund.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE THE NEW
INVESTMENT ADVISORY AGREEMENTS.
II. ELECTION OF TRUSTEES
The Trustees have fixed the number of Trustees to be elected at six. The
nominees for Trustees of the Trust (the "Nominees") who are proposed for
election at the Special Meeting are Robert R. Archibald, Brad L. Badgley, Earl
E. Lazerson, Harry R. Maier, Robert E. Saur and Neil Seitz. All of the Nominees
are presently Trustees of the Trust. Mr. Archibald has served as a Trustee of
the Trust since June 7, 1994, and was most recently elected by the Trust's
shareholders on December 14, 1995. Mr. Saur, Mr. Lazerson and Mr. Maier were
elected to the Board by the Trust's shareholders on December 14, 1995. Mr. Seitz
was appointed to the Board by the Trustees on April 16, 1996. Mr. Badgley was
appointed to the Board by the Trustees on October 23, 1997. The principal
occupations and business experience for the last five years of each Nominee for
Trustee, and each Officer of the Trust, are as indicated in the table below.
The term of office of each person elected as a Trustee will be until the next
meeting held for the purpose of electing Trustees and until his successor is
elected and qualified (or until such Trustee's earlier retirement, resignation,
death or disqualification). Each of the Nominees has
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<PAGE> 11
agreed to serve as a Trustee if elected. If any of the Nominees should be
unavailable for election at the time of the meeting (which is not presently
anticipated), the persons named as proxies may vote for other persons in their
discretion, or the Trustees may vote to fix the number of Trustees at fewer than
six.
<TABLE>
<CAPTION>
TRUSTEES AND OFFICERS INFORMATION
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION WITH THE TRUST DURING THE PAST FIVE YEARS
- --------------------- ----------------------- --------------------------
<S> <C> <C>
Robert R. Archibald, Ph.D (49) Trustee President, Missouri
Missouri Historical Society Historical Society
P.O. Box 11940
St. Louis, MO 63112-0940
Earl E. Lazerson (66) Trustee President (until 1993) and
5 Hidden Valley Lane Professor (until 1994),
Edwardsville, IL 62022 So. Illinois University at
Edwardsville
Brad L. Badgley* (45) Trustee Attorney, Heiligenstein &
Heiligenstein & Badgley PC Badgley, PC; Director, Magna
30 Public Square Trust Company (an affiliate of
Belleville, Illinois 62220 Magna) (until 1997); Director,
Banc Star One (1995 to present)
Robert E. Saur (54) Trustee President and Owner,
750 S. Hanley Street Conrad Properties Corp.
Clayton, MO 63105 (real estate)
Harry R. Maier* (51) Trustee Chief Executive Officer,
118 Sun Lake Dr. Memorial Hospital
Belleville, IL 62221 Belleville, Illinois
Neil Seitz (54) Trustee Dean, School of Business, Saint
School of Business Louis University; Professor,
Saint Louis University Saint Louis University (until
3674 Lindell Blvd. 1993)
St. Louis, MO 63108
Walter B. Grimm (52) President Employee, BISYS Fund Services,
BISYS Fund Services Limited Partnership; President,
3435 Stelzer Road Leigh Investments Consulting
Columbus, Ohio 43219 (investments firm)
William J. Tomko (38) Vice President Vice President, BISYS
BISYS Fund Services Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Alaina V. Metz (30) Assistant Chief Administrator,
BISYS Fund Services Secretary Administrative and
3435 Stelzer Road Regulatory Services,
Columbus, Ohio 43219 BISYS Fund Services,
Limited Partnership
</TABLE>
-7-
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION WITH THE TRUST DURING THE PAST FIVE YEARS
- --------------------- ----------------------- --------------------------
<S> <C> <C>
Chuck L. Booth (37) Vice President Vice President, BISYS
BISYS Fund Services Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Paul T. Kane (41) Treasurer From December 1997 to
3435 Stelzer Road present, employee of BISYS
Columbus, Ohio 43219 Fund Services; from March
1995 to December 1997,
employee of Fidelity Service
Company
Robert L. Tuch (46) Secretary Vice President, BISYS Fund
BISYS Fund Services Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
Previous positions of officers of the Trust during the past five years with
BISYS or its affiliates are omitted if not materially different from their
current positions. Mr. Grimm and Mr. Tomko were first elected by the Trustees to
the serve in the offices noted above in January 1997. All other officers of the
Trust noted above were first elected by the Trustees to serve in the offices
noted above in October 1997. Each officer of the Trust serves at the pleasure of
the Trustees until his or her successor is elected or qualified, or until he or
she sooner dies, resigns, is removed or becomes disqualified.
- -----------------------
* Trustee or Nominee who is an "interested person" (as defined in the 1940 Act)
of the Trust. Mr. Maier and Mr. Badgley are "interested persons" by reason of
owning shares of Union Planters Corporation, the ultimate parent company of
Magna and of Union Planters Bank. Prior to July 1, 1998, Mr. Maier and Mr.
Badgley owned shares in Magna Group, Inc., and acquired shares of Union Planters
Corporation in connection with the merger of Magna Group, Inc. with and into
Union Planters Corporation.
The table below sets forth the beneficial ownership of Trust shares by each
Nominee. Unless otherwise noted below, each Nominee has sole investment power
and sole voting power with respect to his or her shares of the Trust and no
Nominee owns 1% or more of the outstanding shares of either Fund of the Trust.
As of August 31, 1998, those securities of the Trust which are known to be
beneficially owned by Nominees for Trustee of the Trust are:
Amount and Nature
of Beneficial
Name of Fund Beneficial Owner Ownership Percent of Fund
- ------------ ---------------- --------- ---------------
Magna Growth & Robert E. Saur [ ] shares *
Income Fund
[UPDATE AS OF RECORD DATE]
- ---------------------
* Less than 1% of such Fund's total outstanding securities.
- ---------------------
As of [RECORD DATE], the Trustees and officers of the Trust beneficially owned
as a group [ ] shares of the Magna Intermediate Government Bond Fund, comprising
less than 1% of the
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<PAGE> 13
outstanding shares of such Fund, and [ ] shares of the Magna Growth & Income
Fund, comprising less than 1% of the outstanding shares of such Fund.
The Board of Trustees met four times during the fiscal year ended August 31,
1998. Each Nominee attended at least 75% of the such meetings, except for Robert
R. Archibald, who attended two of the four meetings.
There are no committees of the Trust's Board of Trustees.
The Agreement and Declaration of Trust of the Trust provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
positions with the Trust, except if it is determined in the manner specified in
the Agreement and Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the Trust
or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its shareholders arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.
The Trust pays no compensation to its officers. Each Trustee is compensated at
the rate of $5,000 per annum plus $500 for each meeting of the Trustees
attended. The Trust provides no pension or retirement benefits to Trustees, but
has adopted a deferred payment arrangement under which each Trustee may elect
not to receive fees from the Trust on a current basis but to receive in a
subsequent period an amount equal to the value that such fees would have if they
had been invested in each Fund on the normal payment date for such fees. As a
result of this method of calculating the deferred payments, each Fund, upon
making the deferred payments, will be in the same financial position as if the
fees had been paid on the normal payment dates.
The following table sets forth the amount of the compensation paid (or deferred
in lieu of current payment) by the Trust during its fiscal year ended August 31,
1998 to the persons who served as Trustees during all or any portion of such
fiscal year:
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<PAGE> 14
AGGREGATE TOTAL
COMPENSATION COMPENSATION
PERSON FROM TRUST FROM TRUST
- ------ ------------ ------------
Robert R. Archibald $6000 $6000
Brad L. Badgley $6500 $6500
Earl E. Lazerson $6500 $6500
Harry R. Maier $7000 $7000
Robert E. Saur $7000 $7000
Neil Seitz $7000 $7000
REQUIRED VOTE. The election of Trustees of the Trust will be by a plurality of
the shares of the Trust (both Funds of the Trust voting together as a single
class) present at the Special Meeting in person or by proxy. Shares represented
by duly executed proxies will be voted for the election of the persons named
herein as Nominees, unless such authority has been withheld in accordance with
the instructions on the form of proxy. If no instructions are made, the proxy
will be voted for each such Nominee.
THE TRUSTEES RECOMMEND A VOTE FOR EACH NOMINEE.
III. MANAGEMENT OF THE TRUST
It is proposed that Union Planters Bank will serve as investment adviser to each
Fund of the Trust. The name, address and principal occupation of Union Planters
Bank's directors and principal executive officer are as follows:
<TABLE>
<CAPTION>
Name and Business Address Title Principal Occupation
------------------------- ----- --------------------
<S> <C> <C>
Albert M. Austin Director Chairman, Cannon,
Cannon, Austin & Cannon, Inc. Austin & Cannon,
6685 Poplar Avenue, #200 Inc.
Germantown, TN 38138
Marvin E. Bruce Director Retired
3260 Habersham Road
Atlanta, GA 30305
George W. Bryan Director Senior Vice
Sara Lee Corporation President, Sara Lee
8000 Centerview Parkway Corporation
Suite 300
Cordova, TN 38018
James E. Harwood Director President, Sterling
Sterling Equities Equities
845 Crossover Lane, Suite 124
Memphis, TN 38117
Parnell S. Lewis, Jr. Director President, Anderson-
Anderson-Tully Company Tully Company
1242 N. Second Street
Memphis, TN 38101
</TABLE>
-10-
<PAGE> 15
<TABLE>
<CAPTION>
Name and Business Address Title Principal Occupation
------------------------- ----- --------------------
<S> <C> <C>
C.J. Lowrance, III Director President, Lowrance
Lowrance Brothers & Company, Inc. Brothers &
Highway 61 Company, Inc.
Driver, AR 72329
Jackson W. Moore Director, President and President and Chief
Union Planters Corporation Chief Operating Officer Operating Officer,
7130 Goodlett Farms Pkwy. Union Planters
Memphis, TN 38017 Corporation and
Union Planters Bank,
N.A.
Stanley D. Overton Director Retired
#7 Warwick Lane
Nashville, TN 37205
Benjamin W. Rawlins, Jr. Director, Chairman and Chairman and Chief
Union Planters Corporation Chief Executive Officer Executive Officer,
7130 Goodlett Farms Parkway Union Planters
Memphis, TN 38017 Corporation and
Union Planters Bank,
N.A.
Dr. V. Lane Rawlins Director President, University of
University of Memphis Memphis
341 Administration Building
Campus Box 526643
Memphis, TN 38152-6643
Donald F. Schuppe Director Retired
6448 Wynfrey Place
Memphis, TN 38120
David M. Thomas Director Retired
1765 Camellia Drive
Greenville, MS 38701
Richard A. Trippeer, Jr. Director President, R.A.
R.A. Trippeer, Inc. Trippeer, Inc.
5865 Ridgeway Center Pkwy.
Suite 300
Memphis, TN 38120
Spence L. Wilson Director President, Kemmons
Kemmons Wilson, Inc. Wilson, Inc.
1629 Winchester Road
Memphis, TN 38116
</TABLE>
-11-
<PAGE> 16
Union Planters Bank, a national bank, is a wholly-owned subsidiary of UPHC, a
Tennessee corporation. UPHC is itself a wholly-owned subsidiary of UPC, a
Tennessee corporation and a bank holding company.
BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219, serves as the
Trust's Distributor and Administrator and, in general, supervises the operations
of the Trust.
IV. MISCELLANEOUS
OTHER BUSINESS. The Trustees know of no other business to be brought before the
Meeting. However, if any other matters properly come before the Meeting, it is
their intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not provide
for annual meetings of shareholders and the Trust does not currently intend to
hold any annual meetings. Shareholder proposals for inclusion in the Trust's
proxy statement for any special meeting must be received by the Trust a
reasonable period of time before the Trust begins to print and mail its proxy
materials. The timely submission of a proposal does not guarantee its inclusion.
ADJOURNMENT. In the event that sufficient votes in favor of any of the proposals
set forth in the Notice of the Special Meeting are not received by the time
scheduled for the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting in accordance with applicable law in order to permit
further solicitation of proxies with respect to any of such proposals. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of such proposals. They will vote
against any such adjournment those proxies required to be voted against any of
such proposals. The costs of any such additional solicitation and of any
adjourned session will be borne by Union Planters Bank or by Magna.
September [ ], 1998
-12-
<PAGE> 17
APPENDIX A
----------
MAGNA GROWTH & INCOME FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of ___________, 1998 between MAGNA FUNDS, a
Massachusetts business trust (herein called the "Trust"), and Union Planters
Bank, N.A., a national bank (herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Magna Growth & Income Fund (the "Fund"), an
investment portfolio of the Trust, and the Investment Adviser represents that it
is willing and possesses legal authority to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Management. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide a continuous investment program
for the Trust, including investment research and management with respect to all
securities and investments and cash equivalents of the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Trust's investment objective, policies and restrictions as stated in
the Prospectus and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to any fiduciary accounts for
which it has investment responsibilities;
(b) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) will place orders pursuant to its investment
determinations for the Trust either directly with the issuer or with
any broker or dealer. In placing orders with brokers and dealers, the
Investment Adviser will attempt to obtain prompt execution of orders in
an effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers
or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice and
other services. Unless and until appropriate procedures are adopted by
the Trustees of the Trust under Rule 17e-1 of the 1940 Act and unless
the provisions of such Rule are complied with, portfolio securities
will not be purchased from or sold to BISYS Fund Services, the
Investment Adviser, or any affiliated person of the Trust, BISYS Fund
Services, or the Investment Adviser;
<PAGE> 18
(d) will maintain all books and records with respect to the
Trust's securities transactions and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board may request;
and
(e) will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust
and prior, present or potential interestholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Investment
Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
3. Services Not Exclusive. The investment management services furnished
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 3la-3 under the 1940 Act the records required to be maintained by Rule
3la-1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee computed
daily and paid monthly at the applicable annual rate of 0.75% of average daily
net assets.
7. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by the Investment Adviser of its obligations
and duties under this Agreement.
8. Duration and Termination. This Agreement will become effective as to
the Trust as of the date first written above, provided that it shall have been
approved by vote of a majority of the outstanding voting securities of the Fund,
in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until [September 30],
2000.
Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months each ending on [June 30th] of each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Trust's Board of Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the vote of a majority of the Trust's Board of Trustees or by the
vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time on
sixty days' written notice, without the payment of any penalty, by the Trust (by
vote of the Fund's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund) or by the Investment Adviser. This Agreement will
immediately terminate in the event of its assignment. If the Investment Adviser
requires the Trust or the Fund to change its name so as to eliminate all
-2-
<PAGE> 19
references to the word "Magna," then this Agreement shall automatically
terminate at the time of such change unless the continuance of this Agreement
after such change shall have been specifically approved by vote of a majority of
the outstanding voting securities of the Fund and by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust or the
Investment Adviser, cast in person at a meeting called for the purpose of voting
on such approval. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning of such terms in the 1940 Act.)
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
on behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the Trustees, officers or shareholders individually but are binding
only upon the assets and property belonging to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
MAGNA FUNDS
Seal By:
-----------------------------------
Title:
-----------------------------------
UNION PLANTERS BANK, N.A.
Seal By:
-----------------------------------
Title:
-----------------------------------
-3-
<PAGE> 20
MAGNA FUNDS
MAGNA GROWTH & INCOME FUND
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
THIS SOLICITATION IS BEING MADE ON BEHALF OF THE BOARD OF TRUSTEES.
The undersigned shareholder, by completing this form does thereby appoint
[WALTER B. GRIMM AND LEWIS G. LAUGHLIN], and each of them, with power of
substitution, attorneys and proxies of the undersigned, and does thereby request
that all shares of Magna Funds which the undersigned is entitled to vote be cast
as directed at the Special Meeting of Shareholders of Magna Funds, to be held at
8:30 a.m., Columbus Time, on October 7, 1998 at the offices of the Trust, 3435
Stelzer Road, Columbus, Ohio 43219, and at any adjournment thereof.
TOTAL SHARES AS SHOWN BELOW PLEASE VOTE, DATE, SIGN EXACTLY AS YOUR NAME
APPEARS BELOW, AND RETURN THIS FORM IN THE
ENCLOSED SELF-ADDRESSED ENVELOPE.
NOTE: The undersigned hereby acknowledges
receipt of the Notice of Meeting and Proxy
Statement, and revokes any proxy heretofore
given with respect to the votes covered by this
proxy.
Dated , 1998
---------------------------------
------------------------------------------------
(Signature)
- --------------------------------------------------------------------------------
(1) PROPOSAL TO APPROVE THE NEW INVESTMENT ADVISORY AGREEMENT:
A. APPROVAL OF THE MAGNA GROWTH & INCOME FUND INVESTMENT ADVISORY
AGREEMENT (FOR MAGNA GROWTH & INCOME FUND SHAREHOLDERS ONLY)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. APPROVAL OF THE MAGNA INTERMEDIATE GOVERNMENT BOND FUND INVESTMENT
ADVISORY AGREEMENT (FOR MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SHAREHOLDERS ONLY)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) PROPOSAL TO APPROVE THE ELECTION OF THE NOMINEES FOR TRUSTEE:
The shares represented by this proxy will be voted as directed below,
or if no direction is indicated, will be voted FOR the election of all
Nominees for Trustee listed below. You may withhold authority to vote
for any Nominee(s) by lining through or otherwise striking his (or
their) name(s) of any Nominee:
Robert R. Archibald
Brad L. Badgley
Earl E. Lazerson
Harry R. Maier
Robert E. Saur
Neil Seitz
