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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
THE EQUI-SELECT SERIES TRUST
----------------------------
(Name of Registrant as Specified In Its Charter)
THE EQUI-SELECT SERIES TRUST
----------------------------
(Name of Person 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:_____
(2) Aggregate number of securities to which transaction applies:________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_________________________________
(4) Proposed maximum aggregate value of transaction:____________________
(5) Total fee paid:_____________________________________________________
[ ] Fee paid previously with preliminary materials.__________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
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THE EQUI-SELECT SERIES TRUST
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DE 19801
800-366-0066
PROXY STATEMENT
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
[__________], 1998
To the Shareholders of the Equi-Select Series Trust:
A Special Meeting ("Meeting") of the Shareholders of the International
Fixed Income Portfolio (the "Portfolio") of the Equi-Select Series Trust
("Trust") (the "Meeting") will be held at 1001 Jefferson Street, Suite
400, Wilmington, Delaware, 19801, on [________], 1998, at 10:00 a.m.,
local time. At the Meeting, shareholders of the Portfolio will be asked
to approve the following proposal:
To approve a new Portfolio Management Agreement with respect
to the Portfolio among the Trust, Directed Services, Inc. and
Baring International Investment Limited;
and to transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Trustees has fixed the close of business on March 31, 1998, as
the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Trustees
[__________], 1998 Myles R. Tashman, Secretary
YOUR VOTE IS IMPORTANT! PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE
ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ACCOMPANYING POSTAGE
PREPAID ENVELOPE.
IF YOU SIGN, DATE AND RETURN THE PROXY BUT GIVE NO VOTING INSTRUCTIONS, YOUR
SHARES WILL BE VOTED IN FAVOR OF ALL PROPOSALS NOTICED ABOVE.
<PAGE>
THE EQUI-SELECT SERIES TRUST
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DE 19801
800-366-0066
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
[________], 1998
The enclosed proxy is solicited by the Board of Trustees (the "Board") of
the Equi-Select Series Trust (the "Trust") to be voted at a Special Meeting of
the Shareholders of the Trust, and at any and all adjournments thereof (the
"Meeting"), to be held at 1001 Jefferson Street, Suite 400, Wilmington,
Delaware, 19801, on [________], 1998, at 10:00 a.m. local time. The
approximate mailing date of this Proxy Statement and accompanying form of proxy
is [_______], 1998.
The Board has fixed the close of business on March 31, 1998, as the record
date (the "Record Date") for the determination of holders of shares of
beneficial interest ("Shares") of the Trust entitled to vote at the Meeting.
Shareholders on the Record Date will be entitled to one vote for each full Share
held and a fractional vote for each fractional Share.
The presence in person or by proxy of the holders of thirty percent of the
outstanding Shares is required to constitute a quorum at the Meeting. As of the
Record Date, the sole shareholders of the Portfolio were participating insurance
companies. Since participating insurance companies are the legal owners of the
Shares, attendance by the participating insurance companies at the meeting will
constitute a quorum under the Trust's Declaration of Trust. Shares beneficially
held by Variable Contract Owners present in person or represented by proxy at
the Meeting will be counted for the purpose of calculating the votes cast on the
issues before the Meeting.
In the event that a quorum is present at the Meeting but sufficient votes
to approve any of the proposals are not received, the persons named as proxies
may propose one or more adjournments of such Meeting to permit further
solicitation of proxies provided they determine that such an adjournment and
additional solicitation is reasonable and in the interest of the shareholders
based on a consideration of all relevant factors including the nature of the
relevant proposal, the percentage of votes then cast, the percentage of negative
votes then cast, the nature of the proposed solicitation activities and the
nature of the reasons for such solicitation. A vote may be taken on a proposal
in this Proxy Statement for the Trust prior to any adjournment if sufficient
votes have been received for approval of that proposal.
The Trust is comprised of nine operational portfolios (each a "Portfolio").
Shares of each Portfolio currently are offered to affiliated insurance company
separate accounts to serve as an investment medium for variable annuity
contracts and variable life insurance policies (collectively, "Variable
Contracts") issued by insurance companies. These separate accounts are
registered with the Securities and Exchange Commission as investment companies.
In accordance with interpretations of the Investment Company Act of 1940 (the
"1940 Act"), each insurance company ("Participating Insurance Company") issuing
a Variable Contract funded by a registered separate account for which the Trust
serves as an investment medium is required to request voting instructions from
the owners of the Variable Contracts ("Variable Contract Owners") and to furnish
a copy of this Proxy Statement to Variable Contract Owners. Further, each such
insurance company will vote Shares or other voting interests in the separate
account in proportion to the voting instructions received from Variable Contract
Owners. The insurance company is also required to vote Shares of the Portfolio
held in each registered separate account for which it has not received
instructions in the same proportion as it votes Shares held by that separate
account for which it has received instructions. Shares held by an insurance
company in its general account, if any, must be voted in the same proportion
as the votes cast with respect to Shares held in all of the insurer's registered
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separate accounts, in the aggregate. Variable Contract Owners permitted to give
instructions for the Portfolio and the number of Shares for which such
instructions may be given for purposes of voting at the Meeting, and at any
adjournment thereof, will be determined as of the Record Date for the Meeting.
In connection with the solicitation of such instructions from Variable Contract
Owners, it is expected that participating insurance companies will furnish a
copy of this Proxy Statement to Variable Contract Owners. The Participating
Insurance Companies have fixed the close of business on [_________], 1998, as
the last day on which voting instructions will be accepted.
The Trust knows of no items of business other than those mentioned in the
Notice of Meeting that accompanies this Proxy Statement to be presented at the
Meeting. If any other matters are properly presented, it is the intention of
the persons named as proxies to vote proxies in accordance with their best
judgment.
INTRODUCTION
As described in the Trust's prospectus, investment management services are
provided to the Trust and to each of its several Portfolios by Directed
Services, Inc. ("DSI"). DSI is a New York corporation and a wholly owned
subsidiary of ING Groep, N.V. ("ING"), a publicly traded company based in the
Netherlands with worldwide insurance and banking subsidiaries. DSI is
registered with the Securities and Exchange Commission as an investment
adviser and a broker-dealer. On January 2, 1998, DSI, an affiliate of Equitable
Investment Services, Inc. ("EISI"), the named investment advisor, assumed the
responsibilities of EISI under the Investment Advisory Agreement dated October
24, 1997. Subject to the supervision and approval of the Board and of the
shareholders of the respective Portfolio, DSI is responsible for engaging
various investment advisory organizations (each, a "Sub-Advisor") to provide
portfolio management services to the respective Portfolio. DSI is also
responsible for monitoring and evaluating the performance of the various
Sub-Advisors. DSI has formulated a portfolio management strategy for the Trust
that would encourage the Trust's growth and provide a range of investment
opportunities for the Participating Insurance Companies and their Variable
Contract Owners. DSI has come to believe that the Trust's interests - and
those of its shareholders - are best served by, through the medium of the
Trust's several series, a matrix of diverse but complimentary investment
portfolios. As the Trust's Manager, DSI is pursuing this goal by employing
Sub-Advisors whose differing styles cover the investment spectrum, from those
that favor value-oriented investing to aggressive growth. DSI believes that
the proposals set forth in this Proxy Statement represent several steps toward
furthering this goal. The proposal in this Proxy Statement was presented to a
meeting of the Trust's Board of Trustees ("Board") on February 14, 1998, with
the recommendation of DSI, and has been considered and approved by the Board,
including those Board members ("Independent Trustees") who are not "interested
persons" of the Trust within the meaning of the Investment Company Act of 1940
("1940 Act").
BACKGROUND INFORMATION. Baring International Investment Limited ("BIIL"),
located at 155 Bishopsgate London, is registered under the Investment Advisor's
Act of 1940 and provides investment management services. BIIL is a wholly
owned subsidiary of Baring Asset Management Holdings Limited ("BAMHL"). BAMHL,
a company registered is England and Wales, is the parent of the world-wide group
of investment management companies that operate under the collective name Baring
Asset Management ("BAM"). BAMHL, an affiliate of DSI, is also a wholly owned
subsidiary of ING.
BAM provides global investment management services and maintains major
investment offices in Boston, London, Hong Kong and Tokyo, and together with its
predecessor corporation was founded in 1762. BAM provides advisory services to
institutional investors, offshore investment companies, insurance companies and
private clients. As of December 31, 1997, BAM managed approximately $36.1
billion of assets.
Paul Thursby, Investment Manager, will be responsible for the day-to-day
management of the International Fixed Income Portfolio. Mr. Thursby has been an
investment professional with BIIL since 1991 and has 18 years of investment
experience. He is a specialist in the Japanese domestic bond market and lives
in Japan for two years while working for Prudential Bache. He has recently been
recognized by
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Micropal for his outstanding management of Fixed Income funds. He
is a senior member of the Fixed Income and Currency Team and sits on the Fixed
Income Strategy Group. His specialization is the construction of diversified
portfolios on behalf of U.S., U.K. and Japanese clients.
Directors and Executive Officers
John Bolsover; Chairman
David Brennan; Chief Executive Officer
Michael Banton; Chief Investment Officer
Donald Walker ; Director of Investment Process
[____________]; Director
[____________]; Director
[____________]; Director
[____________]; Director
BIIL does not act as investment adviser to any other U.S. registered
investment companies with investment objectives and policies similar to those
of the International Fixed Income Portfolio.
PROPOSAL RELATING TO INVESTMENT ADVISORY ARRANGEMENT. At the Meeting,
shareholders of the International Fixed Income Portfolio are being asked to
approve an investment advisory contract with Baring International Investment
Limited. In addition to the information about the proposed Sub-Advisor, the
text of the Sub-Advisory Agreement is included in this Proxy Statement as
Exhibit A. Approval of the Sub-Advisory Agreement requires the approval of
"a majority of the outstanding voting securities" of the Portfolio. Under the
1940 Act, this term means (i) 67% of the outstanding securities of the Portfolio
represented at a meeting at which more than 50% of the outstanding shares are
present in person or by proxy, or (ii) more than 50% of the outstanding
securities of the Portfolio, whichever is less.
ANNUAL REPORT. The Trust's 1997 Annual Report to Shareholders was mailed
to shareholders on or about February 27, 1998. IF YOU SHOULD DESIRE AN
ADDITIONAL COPY OF AN ANNUAL REPORT, IT CAN BE OBTAINED, WITHOUT CHARGE, FROM
DSI BY CALLING (800) 366-0066.
PROPOSAL: APPROVAL OF INTERNATIONAL FIXED INCOME PORTFOLIO
SUB-ADVISORY AGREEMENT
SUMMARY OF NEW SUB-ADVISORY ARRANGEMENT. The investment objective of the
International Fixed Income Portfolio is high total return. The Portfolio seeks
to achieve its objective through investment in securities selected on the basis
of fundamental investment research for their long-term growth prospects. At a
meeting of the Board held on February 14, 1998, the Board approved the
engagement of BIIL pursuant to an agreement among DSI, BIIL and the Trust ("BIIL
Agreement"). The terms and conditions of the BIIL Agreement, including the
portfolio management fee, are substantially the same as those of the Current
Agreement.
If the BIIL Agreement is approved by the shareholders of the International Fixed
Income Portfolio, the BIIL Agreement will become effective on May 1, 1998, and,
unless sooner terminated, the BIIL Agreement will remain in force until May 1,
2000. The BIIL Agreement will continue in effect from year to year thereafter
in accordance with its terms.
THE BOARD OF TRUSTEES RECOMMENDS THE YOU VOTE
"FOR" PROPOSAL 1.
DISCUSSION OF PROPOSAL 1. If this proposal is approved by shareholders of
the International Fixed Income Portfolio, BIIL will serve as the Sub-Advisor of
the Portfolio in accordance with the BIIL Agreement as approved.
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CONSIDERATIONS OF THE BOARD. At a meeting of the Board held on February
14, 1998, the Board, including a majority of the Independent Trustees, approved
the BIIL Agreement. The Board considered information provided to it relating
to the management style and past performance record of BIIL. The Board was also
presented with information relating to the nature and quality of the services
to be provided by BIIL, the background and experience of those individuals who
would be responsible for making day-to-day investment decisions with respect to
assets of the Portfolio, other entities to which BIIL provides investment
advisory services and the relationship between DSI and Baring. The Board also
considered the fact that the terms and conditions pursuant to which BIIL would
provide its services were substantially the same as those contained in the
Current Agreement.
DESCRIPTION OF THE BIIL AGREEMENT. The terms and conditions set forth in
the BIIL Agreement are identical to those contained in the Current Agreement
except for the description of the sub-advisor, the effective and termination
dates. Both agreements require the sub-advisor, subject to the overall
supervision of the Board, to provide a continuous investment program for the
assets of the Portfolio, or that portion of such assets as may be, from time to
time allocated to it. Under both agreements, the named sub-advisor is
responsible, among other things, for the provision of investment research and
management of all investments and the selection of brokers and dealers through
which securities transactions are executed. The agreements each also provide
that the sub-advisor will not be liable to the Trust for any act or omission
connected with or arising out of any services rendered under the agreement,
except losses that may be sustained by reason of willful misfeasance, bad faith
or gross negligence on the part of the sub-advisor. Each of the agreements also
provides for its termination, at any time and without penalty, either by the
Trust, DSI or by the sub-advisor, in each case upon sixty days' written notice,
and for its termination in the event of an "assignment" as described in the 1940
Act.
If approved at the Meeting, the BIIL Agreement will continue in effect for
two years from its effective date, unless sooner terminated. Thereafter, unless
sooner terminated, the BIIL Agreement shall continue in effect from year to year
for so long as its continuance is specifically approved, at least annually, by
(i) a majority of the Board or the vote of the holders of a majority of the
Portfolio' outstanding voting securities; and (ii) the affirmative vote, cast in
person at a meeting called for the purpose of voting on such continuance, of a
majority of the Trust's Independent Trustees. The Current Agreement was last
approved by the Board (including the Independent Trustees) at a meeting of the
Board held on August 19, 1997, and by the shareholders of the Portfolio on
October 9, 1997.
ADDITIONAL INFORMATION ABOUT THE TRUST
Outstanding Shares. As of the Record Date, the Portfolio had [________] shares
outstanding.
SHAREHOLDERS OF THE TRUST. As of the Record Date, no persons were known to
the Trust to be the beneficial owner of more than 5% of the Shares of the
Portfolio.
OFFICERS OF THE TRUST. The principal executive officers of the Trust and
their ages and principal occupations are set forth following. The executive
officers of the Trust are elected annually and each serves until his or her
successor shall have been duly elected and qualified.
PAUL E. LARSON, age 45, serves as Treasurer and Principal Financial Officer of
the Trust. Additionally, he is President and Director of many of the Equitable
Life of Iowa Companies. Prior to January 1998, he served as Executive Vice
President and Chief Financial Officer Equitable of Iowa Companies and may of its
subsidiaries, since 1977.
MYLES R. TASHMAN, age 55 serves as Secretary of the Trust. Additionally, he is
Executive Vice President and Secretary, Golden American since 1993, General
Counsel since July, 1996 an director since January 1998; Executive Vice
President and Secretary, DSI since 1993, General Counsel since July, 1996 an
Director since January 1998; Assistant Secretary, Equitable Life since 1996;
Executive Vice President,
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Secretary, General Counsel and Director since 1996;
formerly, Senior Vice President and General Counsel, United Pacific Life
Insurance Company (1986-1993).
KIMBERLY K. KRUMVIEDE, age 31, serves as Vice President of the Trust.
Additionally, she is Managing Director, Treasurer/Secretary of EISI since
February, 1996. Director - Administration, Treasurer/Secretary of EISI from
June, 1994 to January, 1996. Principal - Research Adviser from April, 1994 to
June, 1994; Chief Financial Officer, Joliet Concrete Products, Inc., Joliet,
Illinois, from September, 1991 to March, 1994.
ERIC J. ENGSTROM, age 30, serves as Assistant Vice President and Principal
Accounting Officer of the Trust. Additionally, he is a Financial Analyst for
EISI since October 1996. Previously, he has served as Senior Accountant for
Aldridge, Borden & Co from September 1995 to September 1996 Assistant to the
CEO for the Intravenous Nurses Society from September 1994 to August 1995; Ph.D.
student at the University of Chicago's Graduate School of Business from October
1992 to August 1994.
ADJOURNMENT. In the event that sufficient votes in favor of any of the
proposals set forth in the Notice of the Meeting are not received by the time
scheduled for Meeting, the persons named as Proxies may propose one or more
adjournments of the Meeting after the date set for the original Meeting to
permit further solicitation of proxies with respect to any such proposals. In
addition, if, in the judgment of the persons named as Proxies, it is advisable
to defer action on one or more proposals, the persons named as Proxies may
propose one or more adjournments of the Meeting for a reasonable time. Any
such adjournments will require the affirmative vote of a majority of the votes
cast on the questions in person or by proxy at the session of the Meeting to be
adjourned, as required the Trust's Declaration of Trust and By-Laws. 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. Any proposals for which sufficient favorable votes have been
received by the time of the Meeting will be acted upon and such action will be
final regardless of whether the Meeting is adjourned to permit additional
solicitation with respect to any other proposal.
COSTS OF SOLICITATION. The costs associated with the Meeting will be paid
by DSI. Neither the Trust nor its Shareholders will bear any costs associated
with the Meeting, any additional proxy solicitation or any adjourned session.
OTHER BUSINESS AND SHAREHOLDER PROPOSALS. The management of the Trust
knows of no other business to be presented at the meeting other than the matters
set forth in this Statement. If any other business properly comes before the
meeting, the persons designated as proxies will exercise their best judgment
in deciding how to vote on such matters.
Pursuant to the applicable laws of the Commonwealth of Massachusetts, the
Amended and Restated Agreement and Declaration of Trust and the By-Laws of the
Trust, the Trust need not hold annual or regular shareholder meetings, although
special meetings may be called for a specific Portfolio, or for the Trust as a
whole, for purposes such as electing or removing Trustees, changing fundamental
policies or approving a contract for investment advisory services. Therefore,
it is probable that no annual meeting of shareholders will be held in 1998 or
in subsequent years until so required by the 1940 Act or other applicable laws.
For those years in which annual shareholder meetings are held, proposals which
shareholders of the Trust intend to present for inclusion in the proxy materials
with respect to the annual meeting of shareholders must be received by the Trust
within a reasonable period of time before the solicitation is made.
Please complete the enclosed authorization card and return it promptly in
the enclosed self-addressed postage-paid envelope. You may revoke your proxy at
any time prior to the meeting by written notice to the Trust or by submitting an
authorization card bearing a later date.
By Order of the Board of Trustees
____________________________
Myles R. Tashman
Secretary
[________], 1998
Wilmington, Delaware
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VOTING INSTRUCTION/PROXY
THE EQUI-SELECT SERIES TRUST
The Undersigned Contract Owner of a variable annuity contract or variable
life insurance policy (each referred to as "Contract") issued by participating
insurance companies and funded by separate accounts of a participating insurance
companies hereby instructs shares of the International Fixed Income Portfolio of
the Equi-Select Series Trust (the "Trust") attributable to his or her Contract
at the Meeting of Shareholders of the Trust to be held on [_____________], 1998,
at 10:00 a.m., EDT, 1001 Jefferson Street, Suite 400, Wilmington, Delaware, and
at any adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of which is
hereby acknowledged, and in the participating insurance companies' discretion,
upon such other matters as may properly come before the Meeting or any
adjournment thereof.
[Contract Number]
[Name of Contract Owner]
[Name of Joint Owner]
[Address 1]
[Address 2]
[Address 3]
[City], [State] [Zip Code]
This voting instruction is solicited on behalf of the Board of Trustees of
the Trust. The Board of Trustees of the Trust recommends that you vote FOR all
of the following proposals. The costs associated with the Meeting will be paid
by Directed Services, Inc. ("DSI"). Neither the Trust nor its Shareholders will
bear any costs associated with this Meeting.
UNITS PROPOSAL FOR AGAINST ABSTAIN
To approve a new Portfolio Management
Agreement with respect to the
Portfolio among the Trust, Directed
Services, Inc. and Baring International
Investment Limited: / / / / / /
This voting instruction will be voted as specified. If NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS. If this voting
instruction is not returned properly executed, such votes will be cast by the
pertinent participating insurance company on behalf of the pertinent separate
account in the same proportion as it votes shares held by that separate account
for which it has received instructions from contract owners participating in the
above-listed Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING INSTRUCTION AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT:
Joint Owners must EACH sign. Trustees and others signing in a representative
capacity should so indicate.
Date:______________________, 1998
_________________________________
Contract Owner
_________________________________
Joint Owner (If Any)
<PAGE>
Exhibit A
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement is made and entered into on this ___ day of
__________, 1998, by and among Baring International Investment Limited, a
company incorporated in England (the "Sub-Adviser"), Directed Services, Inc.,
a Delaware corporation (the "Adviser"), and Equi-Select Series Trust, a
Massachusetts business trust (the "Trust").
WITNESSETH:
WHEREAS, the Adviser is engaged pursuant to an Investment Advisory
Agreement (the "Advisory Agreement") with the Trust in the investment of the
Trust's assets in accordance with the Trust's Prospectus and Statement of
Additional Information (collectively the "Prospectus"); and
WHEREAS, pursuant to the Advisory Agreement the Adviser may delegate its
responsibilities for the management of the investment of the assets of one or
more portfolios of the Trust to one or more sub-advisers; and
WHEREAS, Adviser desires to so delegate responsibility for management of
the investments of one or more portfolios to Sub-Adviser, and Sub-Adviser agrees
to manage the investment of one or more portfolios in accordance with this Sub-
Advisory Agreement and the Prospectus;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Adviser hereby appoints Sub-Adviser to act as the investment advisor to
Adviser with respect to one or more portfolios as identified in "Schedule A",
which is attached hereto and by this reference is incorporated herein, (singly
or collectively the "Portfolio"). Sub-Adviser hereby accepts such appointment
and agrees to render the services herein set forth, for the compensation set
forth on Schedule B, which is attached hereto and by this reference is
incorporated herein. Adviser represents to Sub-Adviser that it is authorized
pursuant to the Advisory Agreement to delegate to the Sub-Adviser all of the
services to be performed by the Sub-Adviser pursuant hereto.
2. Subject to the supervision of the Trustees of the Trust and the Adviser,
Sub-Adviser will manage the securities and investments (including cash) of the
Portfolio, including the purchase, retention and disposition thereof, and the
execution of agreements relating thereto in accordance with the Portfolio's
investment objectives, policies and restrictions as those are stated in the
Prospectus and further subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for the
Portfolio and in so doing shall determine from time to time what investments or
securities will be purchased, retained or sold by the Portfolio, and what
portion of the assets will be invested or held uninvested as cash;
(b) The Sub-Adviser in the performance of its duties and obligations under
this Agreement shall act in conformity with the Declaration of Trust, Bylaws and
the Prospectus of the Trust, and with the instructions and directions of the
Trustees of the Trust and, to the extent consistent therewith and herewith, of
the Adviser, and will conform to and comply with the requirements of the
Investment Company Act of 1940 (the "1940 Act"), and all other applicable
federal and state laws and regulations;
(c) The Sub-Adviser shall determine the securities to be purchased or sold
by the Portfolio and, as agent for the Portfolio, will effect transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities. The Sub-Adviser shall also determine
whether or not the Portfolio shall enter into repurchase or reverse repurchase
agreements or engage in any other investment transactions or techniques that are
consistent with subsection (b) above;
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(d) The Sub-Adviser shall maintain all books and records with respect to
the securities transactions of the Portfolio and shall render to the Adviser or
Adviser's designees, such periodic and special reports as the Adviser may
reasonably request;
(e) The Sub-Adviser shall, to the extent the information is within its
control, provide or cause to be provided to the Trust's Custodian all requested
information relating to all transactions concerning the assets of the Portfolio
(other than share transactions of the Portfolio);
(f) The investment advisory services of Sub-Adviser to the Portfolio under
this Sub-Advisory Agreement are not to be deemed exclusive, and the Sub-Adviser
shall be free to render similar service to others;
(g) The Sub-Adviser is authorized, subject to the supervision of the
Adviser and the Trustees of the Trust, to place orders for the purchase and sale
of the Portfolio's investments with or through such persons, brokers or dealers,
including the Sub-Adviser or affiliates thereof, and to negotiate commissions to
be paid on such transactions in accordance with the Portfolio's policy with
respect to brokerage as set forth in the Prospectus. The Sub-Adviser may, on
behalf of the Portfolio, pay brokerage commissions to a broker which provides
brokerage and research services to the Sub-Adviser in excess of the amount
another broker would have charged for effecting the transaction, provided the
Sub-Adviser determines in good faith that the amount is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker in terms of the particular transaction or in terms of the Sub-Adviser's
overall responsibilities with respect to the Portfolio and the accounts as to
which the Sub-Adviser exercises investment discretion. It is recognized that
the services provided by such brokers may be useful to the Sub-Adviser in
connection with the Sub-Adviser's service to other clients. On occasions when
Sub-Adviser deems the purchase or sale of a security to be in the best interest
of the Portfolio as well as other customers, the Sub-Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by Sub-Adviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Portfolio
and, if applicable, to such other customers. The Trust and the Adviser
acknowledge that in order to comply with Federal Securities laws and related
regulatory requirements, there may be periods when the Sub-Adviser will not be
permitted to initiate or recommend certain types of transactions in the
securities of issuers for which affiliates of the Sub-Adviser are performing
investment banking services, and neither the Trust nor the Adviser will be
advised of that fact. For example, during certain periods when affiliates of
the Sub-Adviser are engaged in an underwriting or other distribution of a
company's securities, the Sub-Adviser may be prohibited from purchasing or
recommending the purchase of certain securities of that company for its clients.
Similarly, the Sub-Adviser may on occasion be prohibited from selling or
recommending the sale of securities of a company for which affiliates are
providing investment banking services.
(h) The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares and/or Equitable Life Insurance Company
of Iowa variable insurance contracts, as reasonably requested by the Adviser.
Such support shall include, but not necessarily be limited to, presentations by
representatives of the Sub-Adviser at investment seminars, conferences and other
industry meetings. Any materials utilized by the Adviser which contain any
information relating to the Sub-Adviser shall be submitted to the Sub-Adviser
for approval prior to use, not less than five (5) business days before such
approval is needed by the Adviser. Any materials utilized by the Sub-Adviser
which contain any information relating to the Adviser, Equitable Life Insurance
Company of Iowa (including any information relating to its separate accounts or
variable annuity contracts) or the Trust shall be submitted to the Adviser for
approval prior to use, not less than five (5) business days before such approval
is needed by the Sub-Adviser, which approval shall not be unreasonably withheld.
(i) The Trust represents that it has delivered true and correct copies to
the Sub-Adviser of, and agrees to promptly notify and deliver to the Sub-Adviser
all future amendments and supplements to, the Prospectus, the Trust's
Declaration of Trust, the Trust's Bylaws, resolutions or other instructions of
the Trustees relevant to the Sub-Adviser's performance of its duties under this
Agreement, the Advisory Agreement and the Trust's Registration Statement on
Form N-1A.
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3. The Sub-Adviser agrees that all records which it maintains for the
Portfolio pursuant to 2(d) are the property of the Trust and will promptly
surrender any of such records to Adviser upon the Trustees' or Adviser's
request. The Sub-Adviser shall preserve for periods prescribed by Rule 31a-2
of the 1940 Act any such records as are required to be maintained by the Sub-
Adviser with respect to the Portfolio by Rule 31a-1 of the 1940 Act.
4. For performance of the services hereunder with respect to the Portfolios,
the Adviser shall pay the Sub-Adviser pursuant to the Fee Schedule contained in
Schedule B. The fee prescribed in Schedule B shall be calculated daily and
payable monthly in arrears at an annual rate per Schedule B of the Portfolio's
average daily net assets.
5. The Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust, Portfolio or the Adviser in
connection with the matters to which this Sub-Advisory Agreement relates, except
for a loss resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Sub-Advisory Agreement.
6. The term of this Sub-Advisory Agreement shall begin on the date first above
written, and unless sooner terminated as hereinafter provided, this Sub-Advisory
Agreement shall remain in effect for two (2) years from such date. Thereafter,
this Sub-Advisory Agreement shall continue in effect with respect to the
Portfolios from year to year, subject to the termination provisions and all
other terms and conditions hereof; provided, such continuance with respect to
the Portfolios is approved at least annually by vote of the holders of a
majority of the outstanding voting secu-rities of the Portfolio or by the
Trustees of the Trust; provided, that in either event such con-tinu-ance is
also approved annually by the vote, cast in person at a meeting called for the
purpose of vot-ing on such approval, of a majority of the Trustees of the Trust
who are not parties to this Sub-Advisory Agreement or interested persons of any
party hereto; and provided further that the -Sub-Adviser shall not have notified
the Trust in writing at least sixty (60) days prior to the end of the initial
two (2) year period, or at least sixty (60) days prior to the anniversary date
of the execution of this Sub-Advisory Agreement of any year thereafter that it
does not desire such continuation. The Sub-Adviser shall furnish to the Trust,
promptly upon its request, such information as may reasonably be necessary to
evaluate the terms of this Sub-Advisory Agreement or any extension, renewal or
amendment thereof. This Sub-Advisory Agreement may be terminated at any time by
any party hereto, without the payment of any penalty, upon sixty (60) days'
prior written notice to the other parties; provided, that in the case of
termination by the Trust, such action shall have been authorized (i) by
resolution of the Trust's Board of Trustees, including the vote or written
consent of Trustees of the Trust who are not parties to this Sub-Advisory
Agreement or interested persons of any party hereto, or (ii) by vote of a
majority of the outstanding voting securities of the Portfolio. This Agreement
shall automatically terminate in the event of its "assignment" (as defined in
the 1940 Act).
7. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall not, unless otherwise expressly provided
herein or authorized by the Trustees of the Trust from time to time, have
any authority to act for or represent the Portfolio or Trust in any way or
otherwise be deemed to be an agent of the Portfolio or the Trust.
8. This Sub-Advisory Agreement is entered into by the Trust pursuant to
authority granted by the Trustees, and the obligations created hereby are not
binding on any of the Trustees or shareholders of the Trust individually, but
bind only the property of the Trust and the Portfolios.
9. This Sub-Advisory Agreement may be amended only in accordance with the 1940
Act.
10. Any notice that is required to be given by the parties to each other under
the terms of this Sub-Advisory Agreement shall be in writing, delivered, or
mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Sub-Adviser:
Baring International Investment Limited
High Street Tower
125 High Street, Suite 2700
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Boston, MA 02120-2723
Attention: Deborah A. Parry
(b) If to the Manager:
Directed Services, Inc.
1001 Jefferson Plaza
Wilmington, DE 19801
Attention: Myles Tashman, Esq.
Facsimile: (302) 576-3520
(c) If to the Trust:
Equi-Select Series Trust
909 Locust Street
Des Moines, Iowa 50309
Attention: Myles Tashman, Esq.
Facsimile: (302) 576-3520
11. This Sub-Advisory Agreement shall be governed and construed in accordance
with the laws of The Commonwealth of Massachusetts.
12. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original.
13. Under the rules of the Investment Management Regulatory Organization
("IMRO"), clients must be placed in specific categories which are dictated by
different considerations including the nature and financial description of the
client, the experience of the client in certain investments and other factors.
On the basis of the information which the Adviser has given, it is a Non-Private
Customer in relation to the services to be provided in accordance with this
Agreement.
14. The Sub-Adviser understands that the Adviser does not require transaction
confirmation notes from Sub-Adviser. The information which would have been
contained in the Adviser's confirmation notes will be included in the periodic
statements specified below. The Sub-Adviser will deliver or send to the Adviser
on a monthly basis and after the date of termination, a statement of the
contents and value of the Investment Portfolio and an assessment of its
performance.
Each statement will include:
a) the number of units of each asset comprising the Portfolio, the aggregate
of the initial value of each and the aggregate of their value at the time the
statement is made up; and
b) the basis on which such values have been calculated with a note of any
change in such basis from that used in the immediately preceding statement.
This basis shall be:
i) taken from mid-market price indications from a representative sample
of market makers, or
ii) where, in the opinion of the Sub-Adviser, the investment concerned is
not readily realizable then it shall be taken at such fair valuation as
may be determined on each occasion by the Sub-Adviser.
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<PAGE>
15. The Sub-Adviser may undertake transactions in options, future, or contracts
for differences ("Relevant Transactions") in accordance with the Prospectus.
The markets on which Relevant Transactions are executed can be highly volatile.
Such investments carry a high risk of loss and, in the case of futures,
contracts for differences and the grant of options, a relatively small adverse
market movement may result not only in the loss of the original investment but
also in unquantifiable further loss exceeding any margin deposited. The Sub-
Adviser may pay margin, or (subject to the rules of the exchange concerned)
deposit investments by way of margin or collateral, on any Relevant Transaction
out of the funds or investments in the Portfolio. The Sub-Adviser may enter
into Relevant Transactions under which the Trust may be required to pay amounts,
or deposit investments, in respect of margin or collateral in excess of (as the
case may be) the funds or the investments held in the Portfolio. Subject to the
limits specified in the Prospectus, the Sub-Adviser may borrow on the Trust's
behalf in order to meet any calls for margin or collateral and the Sub-Adviser
and the Trust acknowledge that the amounts which may be so committed are
unquantifiable, due to the nature of the commitments. In connection with
Relevant Transactions, the Sub-Adviser may, without reference to the Adviser,
make contractual or other arrangements to settle or close out outstanding
obligations in circumstances required by any exchange or intermediate broker
with or through which the Sub-Adviser effects such transactions.
16. The Sub-Adviser, the Adviser and the Trust may record telephone
conversations with each other. Any recordings made by the Sub-Adviser shall be
the property of the Sub-Adviser.
17. The Sub-Adviser has in operation a written procedure in accordance with the
rules of IMRO for the effective consideration and proper handling of complaints
from clients. Any complaint by the Adviser and/or the Trust hereunder should be
sent in writing to the Compliance Officer of the Sub-Adviser at the address
specified in Section 10. The Adviser and/or the Trust are also entitled to make
any complaint about the Sub-Adviser to IMRO.
IN WITNESS WHEREOF, the parties hereto have caused this Sub-Advisory
Agreement to be executed by their respective officers designated below as of the
day and year first above written.
ADVISER: TRUST:
DIRECTED SERVICES, INC. EQUI-SELECT SERIES TRUST
By:_______________________________ By:_______________________________
SUB-ADVISER:
BARING INTERNATIONAL INVESTMENT LIMITED
By:_______________________________
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<PAGE>
SCHEDULE A
PORTFOLIO LISTING
INTERNATIONAL FIXED INCOME PORTFOLIO
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<PAGE>
SCHEDULE B
FEE SCHEDULE
International Fixed Income Portfolio .45% of first $200 million
.40% of next $300 million
.30% of next $500 million
.25% of next $1 billion
.10% of average net assets
over and above $2 billion
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