<PAGE>
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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] 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:_________________________________________________________
<PAGE>
The Equi-Select Series Trust
909 Locust Street, Des Moines, Iowa 50309
Tel: (800) 344-6864
April 6, 1998
Dear Shareholders of the International Fixed Income Portfolio of the
Equi-Select Series Trust:
I am writing to share with you a very exciting change concerning your
investment in the International Fixed Income Portfolio (the "Portfolio")
of the Equi-Select Series Trust (the "Trust")within your Equi-Select or
GoldenSelect Variable Annuity Contract. We have recently appointed Baring
International Investment Limited, an affiliate of Equitable Life Insurance
Company of Iowa ("Equitable Life"), Golden American Life Insurance Company
("Golden American"), and the Trust to serve as Sub-Advisor to the Portfolio.
Enclosed are proxy materials for your approval of a new Sub-Advisory Agreement.
Except for the named Sub-Adviser, this new Sub-Advisory Agreement would be the
same as the current Sub-Advisory Agreement and would become effective on
May 1, 1998.
Management of the Trust recommends that you cast your vote "FOR" the approval
of the new Sub-Advisory Agreement. I urge you to review the enclosed proxy
statement, to cast your vote, and to return promptly the enclosed proxy in the
postage prepaid envelope provided. If you sign, date and return the proxy but
give no voting instructions, your shares will be voted at the Meeting in favor
of the proposal.
Thank you for your attention to this matter. Should you have any questions,
feel free to contact your Equitable Life customer service representative at
(800) 344-6864 or your Golden American customer service representative at
(800) 366-0066.
Sincerely,
/s/Myles R. Tashman
Myles R. Tashman
Secretary
<PAGE>
THE EQUI-SELECT SERIES TRUST
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DE 19801
800-344-6864
- -------------------------------------------------------------------
PROXY STATEMENT
- -------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
INTERNATIONAL FIXED INCOME PORTFOLIO
April 28, 1998
To the Shareholders of the International Fixed Income Portfolio of the
Equi-Select Series Trust:
Notice is hereby given to the holder of beneficial interest (the "Shares")
of the International Fixed Income Portfolio of the Equi-Select Series Trust, a
Massachusetts business trust, that a Special Meeting ("Meeting") will be held
at 1001 Jefferson Street, Suite 400, Wilmington, Delaware, 19801, on April 28,
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 Sub-Advisory Agreement with respect
to the Portfolio among the Trust, Directed Services, Inc. and
Baring International Investment Limited ("BIIL");
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
/s/Myles R. Tashman
_________________________________
Myles R. Tashman, Secretary
April 6, 1998
- ------------------------------------------------------------
MANAGEMENT OF THE TRUST RECOMMENDS THAT YOU CAST YOUR VOTE
FOR THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT AGREEMENT.
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 THE PROPOSAL NOTICED ABOVE.
- ------------------------------------------------------------
<PAGE>
THE EQUI-SELECT SERIES TRUST
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DE 19801
800-344-6864
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
INTERNATIONAL FIXED INCOME PORTFOLIO
April 28, 1998
This Proxy Statement is furnished in connection with the solicitation
by the Board of Trustees (the "Board") of the Equi-Select Series Trust
(the "Trust"), a Massachusetts business trust, of proxies 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 April 28, 1998, at
10:00 a.m. local time. The approximate mailing date of this Proxy
Statement and accompanying form of proxy is April 6, 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 International Fixed
Income Portfolio 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 Board of Trustees of the Trust is soliciting shareholder votes on a
proposal affecting only one portfolio, the International Fixed Income
Portfolio of the Trust (the "Portfolio"). Shareholders of the
Portfolio only are being requested to vote on this proposal to approve
a new Sub-Advisory Agreement among the Trust, Directed Services, Inc.
("DSI") and Baring Investment International Limited ("BIIL") which new
sub-advisory agreement ("BIIL Agreement") would be substantively
identical to the current sub-advisory agreement presently in effect
(the "Current Sub-Advisory Agreement") to become effective on the later
of May 1, 1998, or approval by a majority the Shareholders of the
Portfolio.
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. If you sign, date and
return the proxy but give no voting instructions, your shares will be
voted in favor of the proposal noticed above. If the voting instruction
is not returned or returned without proper execution, 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
Portfolio.
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,
as amended (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
Participating Insurance Company will vote Shares or other voting
interests in the separate accounts in proportion to the 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 signed 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 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 April 27, 1998,
as the last day on which voting instructions will be accepted.
A proxy may be revoked at any time before it is voted by the furnishing
of a written revocation, properly executed, to the Trust's Secretary
before the Meeting or by attending the Meeting. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers
and employees of the Trust or Equitable Life Insurance Company of Iowa
("Equitable Life") or their agents or affiliates personally or by
telephone. All expenses in connection with the solicitation of the
proxies will be borne by Equitable Life or DSI, the manager of the
Trust.
The Trust knows of no items of business other than the Proposal
mentioned in the Notice of Meeting that accompanies this Proxy
Statement which will be presented for consideration 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 DSI.
DSI, located at 1001 Jefferson Street, Wilmington, Delaware 19801, 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. EISI is located at 909 Locust
Street, Des Moines, Iowa 50309. Subject to the supervision and
approval of the Board and of the shareholders of each Portfolio, DSI is
responsible for engaging various investment advisory organizations
(each, a "Sub-Advisor") to provide portfolio management services to the
respective Portfolios. 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 proposal set
forth in this Proxy Statement represents a step 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 1940
Act.
BACKGROUND INFORMATION. Baring International Investment Limited
("BIIL"), located at 155 Bishopsgate, London, England, 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"), also located 155 Bishopsgate,
London, England and registered in England and Wales. BAMHL, an
affiliate of DSI and also a wholly owned subsidiary of ING. is the
parent of the world-wide group of investment management companies that
operate under the collective name Baring Asset Management ("BAM").
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 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 lived in Japan for two years while working for
Prudential Bache. He is a senior member of the BIIL's 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 OF BIIL
The business address of each person, except as noted following, is 155
Bishopsgate, London, England.
<TABLE>
<S> <C> <C>
Name Position With BIIL Other Affiliations
John Bolsover Chairman of the Board Chairman, Baring Asset
Management Inc.;
Chairman and Chief
Executive Officer,
Baring Asset Management
Holdings Limited
as Successor Co.
David J. Brennan Director and Chief Chairman and Chief
Executive Officer Executive Officer,
Baring Asset Managment
Limited;
Director, Chairman and
Chief Executive Officer,
Baring International
Investment(Far East)
Limited, and Baring Asset
Management (Asia)
Limited
Michael W. Banton Director and Chief Director and Group Chief
Investment Officer Investment Officer,
Baring Asset Managment
Ltd.
Julian T. Swayne Chief Financial Officer Controller and Chief
Financial
Toby H. Acton Chief Compliance Officer Officer, Baring Asset
Managment Ltd.
Michael D. Clegg Director and Head of Director, Baring Asset
Investment Operations Management Inc.
Mala S. Dhillon Director and Group Head of
Legal & Compliance
John E. Heskett Director and Group Head of
Sales, Business Development
and Client Service
Mark W. Weber Director and Group Head of
125 High Street Marketing,
Suite 2700
High Street Tower
Boston, MA 02110-2723
</TABLE>
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. Nevertheless, as of
September 30, 1997, BIIL managed over $2.8 billion in assets under
fixed income strategies. BIIL serves as advisor to individuals, banks,
non-U.S. registered investment companies, pension and profit sharing
plans, trusts, estates or charitable organizations, corporations or
other business entities.
PROPOSAL RELATING INVESTMENT ADVISORY ARRANGEMENT. At the Meeting,
shareholders of the Portfolio are being asked to approve an investment
advisory (sub-advisory) agreeement with BIIL. The text of the BIIL
Agreement is included in this Proxy Statement as Exhibit A. Approval
of the BIIL 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) 344-6864.
PROPOSAL
APPROVAL OF INTERNATIONAL FIXED INCOME PROTFOLIO
SUBADVISORY 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
subadvisory agreement which was last approved by Shareholders of the
Portfolio on October 9, 1997 in connection with the change of control
of EISI and DSI (the "Current Sub-Advisory Agreement").
The Current Sub-Advsory Agreement requires that the Sub-Adviser act act
as the investment adviser to the Trust and, as such, shall (i) obtain
and evaluate such information relating to the economy, industries,
business, securities markets and securities as it may deem necessary or
useful in discharging its responsibilities hereunder, (ii) formulate a
continuing program for the investment of the assets of the Trust in a
manner consistent with its investment objectives, policies and
restrictions, and (iii) determine from time to time securities to be
purchased, sold, retained or lent by the Trust, and implement those
decisions, including the selection of entities with or through which
such purchases, sales or loans are to be effected; provided, that the
Sub-Adviser will place orders pursuant to its investment determinations
either directly with the issuer or with a broker or dealer, and if with
a broker or dealer, (a) will attempt to obtain the best net price and
most favorable execution of its orders, and (b) may nevertheless in its
discretion purchase and sell portfolio securities from and to brokers
and dealers who provide the Adviser with research, analysis, advice and
similar services and pay such brokers and dealers in return a higher
commission or spread than may be charged by other brokers or dealers.
Under the Current Sub-Advisory Agreement, the current Sub-Adviser is
now paid an sub-advisory fee by DSI, not the Portfolio, calculated at
an annual rate of the average daily net asset of 0.45% of first $200
million; 0.40% of next $300 million; 0.30% of next $500 million; 0.25%
of next $1 billion; and 0.10% of average net assets over and above $2
billion. EISI (and not the Trust) paid to the current Sub-Adviser for
fiscal year ended December 31, 1997 a fee of $52,363.
Under the Investment Advisory Agreement, EISI was paid (and, since
January 2, 1998, DSI is now paid) an advisory fee by the Portfolio
calculated at an annual rate of the average daily net asset of 0.85% of
first $200 million; 0.75% of next $300 million; 0.60% of next $500
million; 0.55 of next $1 billion; and 0.40% of average net assets over
and above $2 billion. For the fiscal year ended December 31, 1997, EISI
was paid $98,908 in advisory fees by the Portfolio.
If the BIIL Agreement is approved by the shareholders of the 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 THAT YOU VOTE "FOR" THE PROPOSAL.
DISCUSSION OF THE PROPOSAL. 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.
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 BIIL. 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 Sub-Advsory Agreement.
In determining whether it was appropriate to approve the BIIL Agreement
for the Portfolio and to recommend approval to Shareholders, the Board
of Trustees, including the Trustees who are not interested persons of
DSI, EISI or BIIL considered various matters and materials provided by
DSI and BIIL. Information considered by the Trustees included, among
other things, the following: (1) the compensation to be received from
DSI (not the Trust) by BIIL for its investment advisory services and
the fairness and reasonableness of such compensation, and that the fee
under the BIIL Agreement is the same as that under the Current
Sub-Advsory Agreement; (2) the nature and the quality of the investment
advisory services expected to be rendered under the BIIL Agreement; (3)
tthe background and prior experience of BIIL; (4) the financial
condition of BIIL; and (5) the common goals and likely working
relationship between DSI and BIIL.
In light of the circumstances, the Trustees concluded that the terms of
the BIIL Agreement are fair and reasonable. Accordingly, the Board of
Trustees, including the Trustees who are not interested persons of any
party to the BIIL Agreement, recommends the approval of the BIIL
Agreement among the Trust, DSI and BIIL.
ADDITIONAL INFORMATION ABOUT THE TRUST
OUTSTANDING SHARES. As of the Record Date, the Portfolio had
1,218,652.467 shares outstanding.
SHARHOLDERS OF THE PORTFOLIO. 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
Equitable Life and Director of many Equitable Life affiliates. Prior to
January 1998, he served as Executive Vice President and Chief Financial
Officer Equitable of Iowa Companies and many 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 and Director since
January 1998; Executive Vice President and Secretary, DSI since 1993,
General Counsel since July 1996 and Director since January 1998;
Assistant Secretary, Equitable Life 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.
OFFICERS OF THE ADVISER. The principal executive officers of DSI and
their ages and principal occupations are set forth following.
The directors and officers of DSI have, during the past year, had
substantial affiliations with Golden American, Equitable Life and their
affiliates. Unless otherwise stated all officers of DSI have a
principal business address of 1001 Jefferson Street, Suite 400,
Wilmington, Delaware 19801. Except for Mr. Kendall, all directors of
DSI are employees of Equitable Life or one of its affiliates and many
serve as directors to affiliated companies. Equitable Life's principal
business address 909 Loccust Street, Des Moines, Iowa 50306.
<TABLE>
<S> <C> <C>
Name Position With Adviser Other
Affiliations
Beth B. Neppl Director Vice President
of Human Resources of
EICI
subsidiaries.
Terry L. Kendall Director Director, and
Chief Executive Officer,
Golden
American Life
Insurance
Company;
President,
Director, and
Chief
Executive
Officer, BT
Variable,
Inc., 1993 to
present;
Executive Vice
President,
Equitable of
Iowa
Companies
since August,
1996.
Myles R. Tashman Director, Executive Vice Director,
Executive Vice President, General
President, Secretary and Counsel, and
Secretary of Golden American
General Counsel Life Insurance
Company, Inc., and First
Golden
American
Insurance
Company of New
York.
R. Lawrence Roth Director President of
VESTAX Capital Corporation
James R. McInnis President Executive Vice
President of Golden
American Life
Insurance
Company and
First Golden
American Life
Insurance
Company of New
York.
Barnett Chernow Executive Vice President Executive Vice
President of Golden American
Life Insurance
Company and
First Golden
American Life
Insurance
Company of New
York;
Vice President
of Equitable
Life Insurance
Company of
Iowa and USG
Annuity & Life
Company.
Susan K. Wheat Treasurer Treasurer of
Locust Street Securities, Inc.
</TABLE>
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 Equitable Life or 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 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.
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.
By Order of the Board of Trustees
____________________________
Myles R. Tashman, Secretary
April 6, 1998
Wilmington, Delaware
<PAGE>
VOTING INSTRUCTION/PROXY [Contract Number]
THE EQUI-SELECT SERIES TRUST
THIS VOTING INSTRUCTION IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF
THE EQUI-SELECT SERIES TRUST (THE "TRUST). The Board of Trustees of the Trust
recommends that you vote FOR the proposal. 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.
[Name of Contract Owner]
[Name of Joint Owner] PLEASE VOTE BY MARKING ONE BOX NEXT TO
[Address 1] THE PROPOSAL. SIGN BELOW EXACTLY
[Address 2] LISTED HERE AND DATE THIS VOTING
[Address 3] INSTRUCTION, THEN RETURN IT PROMPTLY IN
[City], [State] [Zip Code] THE ENCLOSED ENVELOPE
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 a separate account of a participating
insurance company hereby instructs that the shares of the named Series of
the Trust attributable to his or her Contract be voted at the Meeting of
Shareholders of the Trust to be held on April 28, 1998, at 10:00 a.m., local
time, at 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.
UNITS PROPOSAL FOR AGAINST ABSTAIN
To approve a new Sub-Advisory Agreement
with respect to the International Fixed
Income Portfolio among the Trust, DSI / / / / / /
and Baring International Investment
Ltd.
This voting instruction will be voted as specified. If this voting
instruction is signed , but NO SPECIFICATION IS MADE, THIS VOTING INSTRUCTION
WILL BE VOTED FOR THE PROPOSAL. If this voting instruction is not returned
properly executed, such votes will be cast by the 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 International Fixed
Income Portfolio.
PLEASE VOTE BY MARKING ONE BOX NEXT TO THE PROPOSAL. SIGN EXACTLY AS LISTED
BELOW AND DATE THIS VOTING INSTRUCTION, THEN 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;
A-1
<PAGE>
(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.
A-2
<PAGE>
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 securities of the Portfolio or by the
Trustees of the Trust; provided, that in either event such continuance is
also approved annually by the vote, cast in person at a meeting called for the
purpose of voting 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
A-3
<PAGE>
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.
A-4
<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:_______________________________
A-5
<PAGE>
SCHEDULE A
PORTFOLIO LISTING
INTERNATIONAL FIXED INCOME PORTFOLIO
A-6
<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
A-7
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<CIK> 0000923494
<NAME> EQUI-SELECT SERIES TRUST
<SERIES>
<NUMBER> 003
<NAME> INTERNATIONAL FIXED INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 11,192,763
<INVESTMENTS-AT-VALUE> 11,071,016
<RECEIVABLES> 264,892
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 834,394
<TOTAL-ASSETS> 12,170,302
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37,274
<TOTAL-LIABILITIES> 37,274
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,283,996
<SHARES-COMMON-STOCK> 1,165,908
<SHARES-COMMON-PRIOR> 987,794
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (14,895)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,443)
<ACCUM-APPREC-OR-DEPREC> (121,747)
<NET-ASSETS> 12,133,028
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 677,553
<OTHER-INCOME> 0
<EXPENSES-NET> 186,212
<NET-INVESTMENT-INCOME> 491,341
<REALIZED-GAINS-CURRENT> (4,594)
<APPREC-INCREASE-CURRENT> (396,460)
<NET-CHANGE-FROM-OPS> 90,287
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (527,603)
<DISTRIBUTIONS-OF-GAINS> (84,057)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 574,229
<NUMBER-OF-SHARES-REDEEMED> (519,578)
<SHARES-REINVESTED> 123,463
<NET-CHANGE-IN-ASSETS> 1,386,247
<ACCUMULATED-NII-PRIOR> 89,168
<ACCUMULATED-GAINS-PRIOR> 14,407
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 98,908
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 213,028
<AVERAGE-NET-ASSETS> 11,638,249
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> (0.35)
<PER-SHARE-DIVIDEND> (0.47)
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.41
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
