18464 Federal Register / Vol. 63, No. 72 /Wednesday, April 15, 1998 / Notices

1The Board considered, among other things, that

subsequent to the Transaction, the Adviser

personnel serving the Portfolios would do so from

a department of First American National Bank, a

subsidiary of First American. Since it was

subsequently determined that the Adviser will

remain a separately organized operating subsidiary

of First American and will serve the Portfolios as

such, the Board will meet on or about May 12, 1998

to reaffirm its findings and approvals.

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23107; 812–11086]

DG Investor Series, et al.; Notice of

Application

April 9, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 15(a) of the Act.

SUMMARY OF APPLICATION: The requested

order would permit the implementation,

without prior shareholder approval, of

new advisory (‘‘New Management

Agreement’’) and sub-advisory

agreements (‘‘New Sub-Advisory

Agreements’’) (collectively, the ‘‘New

Agreements’’) for a period of up to 120

days following the date of a change in

control of ParkSouth Corporation (the

‘‘Adviser’’) (but in no event later than

September 30, 1998) (the ‘‘Interim

Period’’). The order also would permit

the Adviser and Subadvisers to receive

all fees earned under the New

Agreements during the Interim Period

following shareholder approval.

APPLICANTS: Adviser, Womack Asset

Management (‘‘Womack’’), Bennett

Lawrence Management, LLC

(‘‘Bennett’’), Lazard Asset Management,

a division of Lazard Freres & Co. LLC

(‘‘Lazard’’), and DG Investor Series (the

‘‘Trust’’).

FILING DATE: The application was filed

on April 9, 1998.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

April 29, 1998, and should be

accompanied by proof of service on

applicants in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Trust, Advisor, Womack, Bennett, and

Lazard, c/o Timothy S. Johnson, Esq.,

Federated Investors, 5800 Corporate

Drive, Pittsburgh, Pennsylvania 15237–

7010.

FOR FURTHER INFORMATION CONTACT:

John K. Forst, Attorney Advisor, at (202)

942–0569, or Mary Kay Frech, Branch

Chief, at (202) 942–0564 (Office of

Investment Company Regulation,

Division of Investment Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicants’ Representations

1. The Trust is a Massachusetts

business trust registered under the Act

as an open-end management investment

company. The Trust currently offers

nine series: DG Equity Fund, DG

Opportunity Fund (‘‘Opportunity

Fund’’), DG Mid Cap Fund (‘‘Mid Cap

Fund’’), DG International Equity Fund

(‘‘International Equity Fund’’), DG

Limited Term Government Income

Fund, DG Government Income Fund,

DG Municipal Income Fund, DG Prime

Money Market Fund, and DG Treasury

Money Market Fund (each a

‘‘Portfolio’’). The assets of the Trust are

managed by the Adviser pursuant to an

investment management contract

between the Adviser and the Trust on

behalf of each Portfolio (the ‘‘Existing

Management Agreement’’). Womack

provides investment advisory services

to the Opportunity Fund pursuant to a

separate agreement with the Adviser.

Bennett provides investment advisory

services to the Mid Cap Fund pursuant

to a separate agreement with the

Adviser. Lazard provides investment

advisory services to the International

Equity Fund pursuant to a separate

agreement with the Adviser (collectively

the existing Womack, Bennett and

Lazard sub-advisory agreements are the

‘‘Existing Sub-Advisory Agreements’’).

The Adviser, Womack, Bennett, and

Lazard are investment advisers

registered under the Investment

Advisers Act of 1940.

2. On December 7, 1997, Deposit

Guaranty Corporation (‘‘DGC’’),

corporate parent of the Adviser, and

First American Corporation (‘‘First

American’’) entered into an agreement

and plan of merger, whereby DGC will

be merged with and into First American,

a bank holding company (the

‘‘Transaction’’). As a result of the

Transaction, the Adviser will become a

wholly-owned subsidiary of First

American. Applicants expect

consummation of the Transaction on

April 30, 1998.

3. Applicants believe that the

Transaction will result in an assignment

of the Existing Management Agreement

and could be deemed to result in an

assignment of the Existing Sub-Advisory

Agreements (together, the Existing

Management Agreement and Existing

Sub-Advisory Agreements are the

‘‘Existing Agreements’’). Applicants

request an exemption to permit (i) the

implementation, during the Interim

Period, prior to obtaining shareholder

approval, of the applicable New

Agreements, and (ii) the Adviser and

Subadvisers to receive from each

Portfolio all fees earned under the New

Agreement during the Interim Period, as

applicable, if, and to the extent, the New

Management Agreement and applicable

New Sub-Advisory Agreement are

approved by the shareholders of each

Portfolio. The requested exemption

would cover the Interim Period

beginning on the date the Transaction is

consummated and continuing through

the earlier of 120 days or the date on

which the applicable New Agreements

are approved or disapproved by the

shareholders of each relevant Portfolio,

but in no event later than September 30,

1998. Applicants state that the New

Agreements will be identical in

substance to the respective Existing

Agreements.

4. On February 26, 1998, the Trust’s

board of trustees, including a majority of

members who are not ‘‘interested

persons’’ of the Trust, as that term is

defined in section 2(a)(19) of the Act

(the ‘‘Independent Trustees’’) (the

‘‘Board’’), held in-person meetings to

evaluate whether the terms of the New

Agreements are in the best interests of

the relevant Portfolios and their

shareholders and to approve the New

Agreements.1 Applicants expect

shareholders of each of the Portfolios to

meet on or about July 15, 1998 (the

‘‘Meetings’’). Applicants expect that

proxy materials for the Meetings will be

mailed on or about May 15, 1998.

5. Applicants propose to enter into an

escrow arrangement with an unaffiliated

financial institution. The fees payable to

the Adviser and Subadvisers during the

Interim Period under the New

Agreements will be paid into an

interest-bearing escrow account

maintained by the escrow agent. The

escrow agent will release the amounts

held in the escrow account (including

any interest earned): (a) To the Adviser

and applicable Subadviser only upon
Federal Register / Vol. 63, No. 72 /Wednesday, April 15, 1998 / Notices 18465

approval of the relevant New

Agreement(s) by the shareholders of the

relevant Portfolio; or (b) to the

appropriate Portfolio if the Interim

Period has ended and its relevant New

Agreement(s) have not received the

requisite shareholder approval. Before

any such release is made, the

Independent Trustees of the Trust will

be notified.

Applicants’ Legal Analysis

1. Section 15(a) of the Act provides,

in pertinent part, that it is unlawful for

any person to serve as an investment

adviser to a registered investment

company, except pursuant to a written

contract that has been approved by the

vote of a majority of the outstanding

voting securities of the investment

company. Section 15(a) further requires

the written contract to provide for its

automatic termination in the event of its

‘‘assignment.’’ Section 2(a)(4) of the Act

defines ‘‘assignment’’ to include any

direct or indirect transfer of a contract

by the assignor, or of a controlling block

of the assignor’s outstanding voting

securities by a security holder of the

assignor.

2. Applicants state that, following the

completion of the Transaction, control

of the Adviser will transfer to First

American. Applicants believe, therefore,

that the Transaction will result in an

assignment of the Existing Management

Agreement and could be deemed to

result in an assignment of the Existing

Sub-Advisory Agreements and that the

Existing Agreements will terminate

according to their terms.

3. Rule 15a–4 under the Act provides,

in pertinent part, that if an investment

advisory contract with a registered

investment company is terminated by

an assignment, the adviser may

continue to serve for 120 days under a

written contract that has not been

approved by the company’s

shareholders, provided that: (a) The new

contract is approved by that company’s

board of directors (including a majority

of the non-interested directors); (b) the

compensation to be paid under the new

contract does not exceed the

compensation that would have been

paid under the contract most recently

approved by the company’s

shareholders; and (c) neither the adviser

nor any controlling person of the

adviser ‘‘directly or indirectly receives

money or other benefit’’ in connection

with the assignment. Applicants state

that because of the benefits to DGC, the

Adviser’s parent, arising from the

Transaction, applicants can not rely on

rule 15a–4.

4. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that such

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. Applicants

believe that the requested relief meets

this standard.

5. Applicants note that the timing of

the Transaction was determined by DGC

and First American and arose primarily

out of business considerations unrelated

to the Trust. Applicants believe that

allowing the Adviser and Subadvisers to

continue to provide investment advisory

services to the Portfolios during the

Interim Period, thereby avoiding any

interruption in services to the Portfolios,

is in the best interests of the Portfolios

and their shareholders and is in keeping

with the spirit of the provisions of rule

15a–4 and with the purposes of section

15 of the Act.

6. Applicants submit that the scope

and quality of services provided to each

Portfolio during the Interim Period will

not be diminished. During the Interim

Period, each Portfolio would operate

under the New Management Agreement

and, if applicable, a New Sub-Advisory

Agreement each of which is anticipated

to be identical in substance to the

relevant Existing Agreement, except for

its effective date and escrow provisions.

Applicants submit that they are not

aware of any material changes in the

personnel who will provide investment

management services during the Interim

Period. Accordingly, each Portfolio

should receive, during the Interim

Period, the same investment advisory

services, provided in the same manner,

at the same fee levels, and by

substantially the same personnel as

before the closing of the Transaction.

Applicants’ Conditions

Applicants agree as conditions to the

issuance of the exemptive order

requested by the application that:

1. The New Management Agreement

and New Sub-Advisory Agreements will

have substantially the same terms and

conditions as the Existing Management

Agreement and Existing Sub-Advisory

Agreements, except for their effective

dates and escrow provisions.

2. Fees earned by the Adviser and

Subadvisers in respect of the New

Management Agreement and New SubAdvisory Agreements during the Interim

Period will be maintained in an interestbearing escrow account, and amounts in

the account (including interest earned

on such paid fees) will be paid (a) to the

Adviser and Subadvisers in accordance

with the New Management Agreement

and New Sub-Advisory Agreements,

only after the requisite shareholder

approvals are obtained, or (b) to the

respective Portfolio, in the absence of

such approvals with respect to such

Portfolio.

3. The Trust will hold meetings of

shareholders to vote on approval of the

New Management Agreement and New

Sub-Advisory Agreements on or before

the 120th day following the termination

of the Existing Management Agreement

and Existing Sub-Advisory Agreements

(but in no event later than September

30, 1998).

4. Either the Adviser or the

Subadvisers will bear the costs of

preparing and filing the application, and

costs relating to the solicitation of

shareholder approval of the Portfolios

necessitated by the Transaction.

5. The Adviser and Subadvisers will

take all appropriate steps so that the

scope and quality of advisory and other

services provided to the Portfolios

during the Interim Period will be at least

equivalent, in the judgment of the

Board, including a majority of the

independent Trustees, to the scope and

quality of services previously provided.

If personnel providing material services

during the Interim Period change

materially, the Adviser and Subadviser

will apprise and consult with the Board

to assure that the Trustees, including a

majority of the Independent Trustees of

the Trust, are satisfied that the services

provided will not be diminished in

scope or quality.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10028 Filed 4–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23106; 812–10780]

Reich & Tang Distributors, Inc., et al.;

Application

April 8, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

SUMMARY OF APPLICATION: Applicants

Reich & Tang Distributors, Inc. (the

‘‘Sponsor’’) and Equity Series Trust,

Asset Allocation Trust (Series 1 and

Subsequent Series) (the ‘‘Trust’’) request

an order: (a) Under section 12(d)(1)(J) of

the Act that would permit each series of