COMMONWEALTH SHAREHOLDER SERVICES, INC.
1500 FOREST AVENUE, SUITE 223, RICHMOND, VA 23229
(804) 285-8211 * (800) 527-9525 * FAX (804) 285-8251
FILED VIA EDGAR
November 30, 1999
Filing Desk
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Reference: The World Funds, Inc.
Third Millennium Russia Fund series
File Numbers: 333-29289 and 811-8255
Definitive Proxy Material
Gentlemen:
Transmitted herewith for electronic filing via the EDGAR system on behalf of
The World Funds, Inc., please find enclosed, pursuant to the requirements of
Rule 14a-6(b) under the Securities Exchange Act of 1934, is a definitive copy
of the proxy statement, notice of meeting and form of proxy to be furnished to
shareholder of the above reference Fund in connection with a meeting of
shareholders on December 21, 1999. The definitive proxy materials will be sent
to shareholders on November 30, 1999.
At the meeting, shareholder will vote to approve or disapprove a new Investment
Advisory Agreement between the World Funds and Third Millennium Investment
Advisors LLC on behalf of the Fund.
Please direct questions and comments relating to this filing to Steve
Felsenstein, Esq. at (215) 564-8000.
Sincerely,
/s/ John Pasco, III
John Pasco, III
<PAGE>
THE WORLD FUNDS, INC.
THIRD MILLENNIUM RUSSIA FUND
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
NOTICE OF MEETING OF SHAREHOLDERS
A Meeting of Shareholders of the Third Millennium Russia Fund series (the
"Fund") of The World Funds, Inc. (the "World Funds") will be held in the World
Funds' offices at 1500 Forest Avenue, Suite 223, Richmond, Virginia 23229 at
10:00 a.m. local time, on December 21, 1999 for the following
purposes:
1. To approve or disapprove a new Investment Advisory Agreement between the
World Funds and Third Millennium Investment Advisors LLC on behalf of the
Fund; and
2. To transact any other business that may properly come before the Meeting
or any adjournment of the Meeting.
Shareholders of record at the close of business on October 28, 1999 are entitled
to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/John Pasco, III
John Pasco, III
Chairman
November 30, 1999
Richmond, Virginia
IMPORTANT
Whether or not you plan to attend the Meeting, please mark your voting
instructions on the enclosed proxy and promptly date, sign and return it in the
enclosed envelope. If you return your proxy and later decide to attend the
Meeting, you can revoke your proxy at the Meeting. No postage is required if
mailed in the United States. We ask your cooperation in helping the Fund save
the expense of follow-up mailings and telephone calls by mailing your proxy
promptly.
THE WORLD FUNDS, INC.
THIRD MILLENNIUM RUSSIA FUND
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
PROXY STATEMENT
Dated November 30, 1999
This proxy statement is being furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of The World Funds, Inc. The
proxies will be used at a meeting of shareholders (the "Meeting") of the Third
Millennium Russia Fund (the "Fund"). The Meeting will be held on December 21,
1999 for the purposes set forth in the Notice of Meeting. The Meeting will be
held at 1500 Forest Avenue, Suite 223, Richmond, Virginia 23229 at 10:00 a.m.,
or at such later time or date made necessary by adjournment.
The approximate date on which this proxy statement and the form of proxy are
first being sent to shareholders of the Fund (the "Shareholders") is November
30, 1999.
The Fund is a series of The World Funds, Inc. (the "World Funds") which is an
open-end management investment company that was organized as a Maryland
corporation on May 9, 1997.
Your vote is important. Please call 800-527-9525 if you have any questions about
this proxy statement or form of proxy. You may vote by mail, by facsimile or in
person.
PROPOSAL
Proposal 1: To approve an Investment Advisory Agreement between the Fund
and Third Millennium Investment Advisors LLC.
Third Millennium Investment Advisors LLC (the "Adviser") is the investment
adviser to the Fund. The Adviser has determined to restructure its business in
the manner, and for the reasons, described below. Under the Investment Company
Act of 1940, as amended (the "1940 Act"), which governs the conduct of the
business of the Fund, this restructuring will cause the present investment
advisory agreement between the World Funds and the Adviser on behalf of the Fund
to terminate. The Board has determined that it would be in the best interest of
Shareholders for the Fund to continue to have the services of the Adviser, and
therefore has recommended that the Shareholders of the Fund approve a new
investment advisory agreement between the World Funds and the Adviser on behalf
of the Fund, with the same terms as the present investment advisory agreement,
except for the new date of effectiveness.
Discussion
The Board is responsible for the general supervision of the business of the
Fund. The Directors act as fiduciaries for Shareholders under the laws of the
State of Maryland. The World Funds employs Third Millennium Investment Advisors
LLC (the "Adviser") to provide the Fund with investment advice and to conduct
the Fund's on-going business. The present address of the Adviser is 1185 Avenue
of the Americas, New York, New York 10036. The Adviser manages the investments
of the Fund pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") between the World Funds and the Adviser on behalf of the Fund.
The Advisory Agreement is effective for a period of two years from September 21,
1998. It may be renewed annually thereafter, provided such continuance is
approved annually by: (1) the World Funds' Board of Directors or the vote of a
majority of the outstanding voting securities of the Fund; and (2) the vote of a
majority of the Directors who are not parties to the Advisory Agreement or
"interested persons" of the World Funds or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement was last submitted to a vote of the Shareholders on September 18,
1998, when there were two Shareholders of the Fund at the Fund's inception. The
purpose for submitting the Advisory Agreement to shareholder vote at that time
was to obtain approval of the Advisory Agreement for the first time prior to its
effectiveness as required by the 1940 Act.
In July, 1999, an agreement (the "Transaction Agreement") was entered into by
shareholders of the Adviser, providing for the sale of forty percent of the
membership interests of the Adviser to James L. Melcher (the "Transaction").
Such purchase agreement is conditional upon approval by shareholders. Forty
percent of the membership interests of the Adviser will continue to be owned by
Third Millennium Corporation, Mountain Lake, P.O. Box 832, Lake Wales, Florida
33859, of which John T. Connor, Jr. will continue to be the Chairman of the
Board and he and his wife will continue to be the sole shareholders. Each of the
remaining four members in interest of the Adviser holds five percent of the
membership interests in the Adviser.
Consummation of the Transaction will constitute a change of control of the
Adviser and an "assignment," as that term is defined in the 1940 Act, of the
Advisory Agreement. As required by the 1940 Act, the Advisory Agreement provides
for the agreement's automatic termination in the event of an assignment of the
agreement. In anticipation of this automatic termination, a new investment
advisory agreement (the "New Agreement") between the World Funds and the Adviser
on behalf of the Fund is being submitted for the approval of Shareholders of the
Fund. Subject to approval of the Shareholders of the Fund, the New Agreement
will become effective and be dated as of the effective date of the change in
control of the Adviser, which will occur shortly after the Shareholders of the
Fund approve the New Agreement. A copy of the form of the Advisory Agreement is
attached hereto as Exhibit A. THE NEW AGREEMENT FOR THE FUND WILL CONTAIN IN ALL
MATERIAL RESPECTS THE SAME TERMS AS THE TERMS IN THE ADVISORY AGREEMENT AT THE
TIME OF CONSUMMATION OF THE TRANSACTION, except that the New Agreement will have
a new effective date. The New Agreement will be effective for a period of two
years from the new effective date and may be renewed annually thereafter in the
same manner as the Advisory Agreement as described above.
The effectiveness of the Transaction Agreement and the completion of the
proposed change of control of the Adviser are conditioned, unless waived by the
parties to the Transaction Agreement, upon the approval of the Shareholders of
the Fund of a new investment advisory agreement for the Fund with the Adviser on
terms substantially identical to those of the Advisory Agreement currently in
effect. The Transaction is also intended to comply with the provisions of
Section 15(f) of the 1940 Act, and the Fund has agreed to continue to conduct
its business in compliance with the terms of that section.
Under both the Advisory Agreement, and the New Agreement, the Adviser provides
the Fund with investment management services, subject to the supervision of the
Board, and with office space, and pays the ordinary and necessary office and
clerical expenses relating to investment research, statistical analysis,
supervision of the Fund's portfolio and certain other costs. The Adviser also
bears the cost of fees, salaries and other remuneration of the World Funds'
directors, officers or employees who are officers, directors, or employees of
the Adviser. The Fund is responsible for all other costs and expenses, such as,
but not limited to, brokerage fees and commissions in connection with the
purchase and sale of securities, legal, auditing, bookkeeping and record keeping
services, custodian and transfer agency fees and fees and other costs of
registration of the Fund's shares for sale under various state and Federal
securities laws. Under both the Advisory Agreement and the New Agreement, the
monthly compensation paid to the Adviser is accrued daily at an annual rate of
1.75% on the first $125 million of average net assets of the Fund; 1.50% on
average net assets of the Fund in excess of $125 million and not more than $250
million; and 1.25% on average net assets of the Fund over $250 million. These
fees are higher than fees charged by many other investment companies, but are
comparable to the fees paid by other investment companies with investment
policies and objectives similar to those of the Fund. The fee is paid to the
Adviser monthly, within five (5) business days after the end of the month. The
Adviser has undertaken to waive its fees to which it is entitled under the
Advisory Agreement or the New Agreement or to reimburse Fund expenses to hold
the total annual fund operating expenses (excluding certain items such as
brokerage costs, taxes, interest, or extraordinary expenses) at 2.75% for a
period of two years from the inception of the Fund on September 21, 1998.
The Adviser has assembled an Advisory Committee to assist the Adviser in
evaluating the securities market environment and to provide the portfolio
manager with specific industry and company recommendations for their
consideration. The following persons are members of the Advisory Committee:
E. Wayne Nordberg, retired in September, 1998, from Lord, Abbott & Co.,
where he was a Partner since 1988, most recently in charge of Equity
Investments, and before that, in charge of Equity Research. A Member of
the Financial Analysts Federation and the New York Society of Security
Analysts, he received his BA in Economics from Lafayette College.
Oleg Yachnik, President and founder of OLMA, Moscow, Russia, ranked by
Kommersant Daily among the top 25 Russian financial companies. Mr. Yachnik
received a PhD in 1982 from Bauman Moscow High Technical College and is a
member, since 1996, of the Board of Directors of NAUFOR (the
self-regulatory brokers' association) and of the RTS (Russian Trading
System), as well as a member, since 1996, of the governing committee of
MICEX (the Moscow Currency Exchange).
Alexander Pevnitsky, General Director of the brokerage company "Pride,"
which is located in Novosibirsk, Russia and is ranked seventh among
regional brokers in Russia. He received a PhD in mathematics and economics
from Novosibirsk State University.
Yury Bovkun, General Director of "Pride Holding," ranked by Kommersant
Daily fifth among the regional financial firms in Russia. He is a member
of the Board of Directors of the RTS.
Jim Melcher is President of Balestra Capital, an asset management firm
located at 1185 Avenue of the Americas, New York, N.Y. He is a graduate of
Columbia University and is a registered investment adviser.
John T. Connor, Jr. is Chairman of the Adviser, Vice President of the
World Funds and a portfolio manager of the Fund. Since 1993, Mr.
Connor has been Chairman of ROSGAL, a Russian
financial company licensed by the Ministry of Finance of the Russian
Federation, and of its affiliate, Rosgal Insurance, an insurance company
separately licensed by the Ministry of Finance. Both companies have their
principal business offices on the same premises in Moscow, Russia. A Phi
Beta Kappa, highest honors graduate of Williams College, and a graduate of
Harvard Law School, Mr. Connor previously chaired the pension committee of
a NYSE-listed company and authored the lead article in an American Bar
Association journal on "Russia's Securities Markets" (Fall 1996).
Alexei Moskvin, ROSGAL's Director of Equity Investment and a portfolio
manager of the Fund. Mr. Moskvin received a PhD in 1985 from Novosibirsk
State University and holds a Financial Broker and Money Manager
Certificate granted by the Ministry of Finance of the Russian Federation.
The Fund's portfolio managers are John T. Connor, Jr. and Alexei
Moskvin. In addition, the Adviser may retain the services of other
full-time professionals in portfolio management. The portfolio managers
operate under the supervision of the Investment Committee, which is
comprised of the two portfolio managers and Mr. Melcher. Each of the
above named individuals, except Mr. Nordberg, is a principal, officer
or employee of the Adviser.
The Adviser has also established a Consultant Committee. The Consultant
Committee is comprised of former U.S. Ambassador to the Soviet Union Jack F.
Matlock, Jr. and Professor Marvin Zonis. The Consultant Committee will be
responsible for providing the Advisory Committee and the portfolio managers with
periodic updates on political and macroeconomic conditions and trends in Russia
and their potential implications for the overall investment climate in Russia.
These updates will enhance the Adviser's ability to oversee and invest the
assets of the Fund.
Ambassador Matlock is currently the George F. Kennan Professor at the
Institute for Advanced Study in Princeton, New Jersey. Ambassador in
Moscow for four years under Presidents Reagan and Bush, and he earlier
served in the Reagan White House as Special Assistant to the President for
National Security Affairs and served three previous tours of duty in
Moscow for a total of eleven years duty in the Soviet Union. His book,
Autopsy on an Empire, was published by Random House in 1995 and he has
written extensively on Russia's modern history and politics. He is a summa
cum laude graduate of Duke University.
Marvin Zonis is a Professor at the Chicago Business School where he
teaches International Political Economy and is the Principal in an
international consulting firm bearing his name. Marvin Zonis + Associates
created the Political Stability Index, the first useful quantitative model
for assessing country risk. The index is used with clients to manage risk
in political, economic and investment decisions. It also serves as the
basis for preparing Country Analysis Reports, daily analyses of changing
risk profiles in the major developed and emerging markets. He was educated
at Yale University and Harvard Business School and received his PhD in
Political Science from MIT.
Transactions in Shares of the Adviser
Since the formation of the Adviser, Mr. Connor has acquired membership interests
in the Adviser previously held by two separate individuals, from Charles Wilkes
and Patrick Price, and a portion of the membership interests in the Adviser held
by firms affiliated with Messrs. Yachnik, Pevnitsky and Bovkun. Also, during
this period, Mr. Connor transferred a portion of such membership interests to
Mr. Jonas Ferris, former Vice President and Marketing Director of the Adviser
and currently a Consultant to the Adviser. None of such transactions resulted in
a change of control of the Adviser, as that term is defined in the 1940 Act.
Portfolio Transactions
Both the existing Advisory Agreement and the New Agreement give the Adviser the
authority to place orders for the Fund pursuant to its investment determinations
either directly with the issuer or with any broker or dealer. The Adviser may
allocate brokerage to an affiliated dealer in accordance with written policies
and procedures adopted by the Board of Directors.
It is the policy of the Adviser, in placing orders for the purchase and sale of
the Fund's securities, to seek to obtain the best price and execution, taking
into account such factors as price, commissions (where applicable, which are
negotiable in the case of U.S. national securities exchange transactions but
which are generally fixed in the case of foreign exchange transactions), size of
order, difficulty of execution and skill required of the executing broker or
dealer. After the Adviser makes a purchase or sale decision, the Adviser
arranges for execution of the transaction in a manner deemed to provide the best
price and execution for the Fund. Exchange-listed securities are generally
traded on their principal exchange unless another market offers a better result.
Securities traded only in the over-the-counter market may be executed on a
principal basis with primary market makers in such securities except for fixed
price offerings and except where the Fund may obtain better prices or executions
on a commission basis or by dealing with other than a primary market maker.
The Fund may authorize the Adviser, when placing Fund transactions, to allocate
a portion of the Fund's brokerage to persons or firms providing the Adviser with
investment recommendations, statistical, research or similar services useful to
the Adviser's investment decision making process. The term "investment
recommendations, statistical, research or similar services" means advice as to
the value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities, and furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, and portfolio strategy. The Fund also
may authorize the Adviser to cause the Fund to pay a commission higher than that
charged by another broker in consideration of such research services. Such
services are one of the many ways the Adviser can keep abreast of the
information generally circulated among institutional investors by
broker-dealers. While this information is useful in varying degrees, its value
is indeterminable. Such services received on the basis of the Fund's
transactions may be used by the Adviser for the benefit of other clients, and
the Fund may benefit from such transactions effected for the benefit of other
clients.
While there is no formula, agreement or undertaking to do so, and when it can be
done consistent with the policy of obtaining best price and execution, the Fund
may consider sales of its shares as a factor in the selection of brokers to
execute portfolio transactions. Except for implementing the policy stated above,
there is no intention to place portfolio transactions with particular brokers or
dealers or groups thereof.
Average annual portfolio turnover rate is the ratio of the lesser of sales or
purchases to the monthly average value of the portfolio securities owned during
the year, excluding from both the numerator and the denominator all securities
with maturities at the time of acquisition of one year or less. A higher
portfolio turnover rate involves greater transaction expenses to the Fund and
may result in the realization of net capital gains, which would be taxable to
Shareholders when distributed. Purchases and sales are made for the Fund's
portfolio whenever necessary, in the Adviser's opinion, to meet the Fund's
investment objective. The Adviser anticipates that the average annual portfolio
turnover rate of the Fund will generally not exceed 150%.
Fees Paid to Adviser by the Fund
The Fund has paid no fees to the Adviser for the period from inception of the
Fund, on September 21, 1998, through the audited annual report dated August 31,
1999, nor has the Fund paid any fees to the Adviser since September 1, 1999.
For the period ended August 31, 1999, the Advisor waived fees of $12,305 and
reimbursed expenses of $79,740.
Principal Executive Officer and Directors of the Adviser
The following are the names, addresses and principal occupations of the
principal executive officer and each director of the Adviser:
Name and Address Principal Occupation
---------------- ----------------------
John T. Connor, Jr. President and Portfolio
1185 Avenue of the Americas Manager of the Adviser
New York, NY 10036
James L. Melcher President, Balestra Capital;
1185 Avenue of the Americas Member of the Adviser
New York, NY 0036
Recommendation
The Board of Directors has voted to approve the New Agreement as discussed
above, and recommends that you vote FOR Proposal 1.
PRINCIPAL SHAREHOLDERS
As of October 28, 1999, the following persons owned of record, or beneficially,
more than five percent of the Fund's outstanding shares of common stock, par
value $0.01 per share:
Number of Shares
Owned of Record or
Name and Address Beneficially Owned Percentage of Fund
---------------- ------------------- -------------------
Donaldson, Lufkin Jenrette 55,562.744 68.209%
Securities Corporation, Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Barry J. Hershey 10,152.284 12.463%
381 Garfield Road
Concord, MA 01742
TOTAL: 65,715.028 80.672%
As of October 28, 1999, the Directors and executive officers of the World Funds
beneficially owned the following amounts of the Fund's outstanding shares of
common stock, par value $0.01 per share:
Number of Shares
Name Beneficially Owned Percentage of Fund
----- ------------------- -------------------
Samuel Boyd 394.633 0.484%
John Connor 2,600.000 3.192%
Paul Dickinson 166.237 0.204%
Mary Pasco 500.000 0.614%
William Poist 166.237 0.204%
TOTAL: 3,827.107 4.698%
OTHER BUSINESS
The Board does not intend to present any other business at the Meeting. The
Meeting is a special meeting of the Shareholders of the Fund, and will consider
only the substantive matters identified in the Notice of the Meeting. If any
other matter properly comes before the Meeting, however, the persons named as
proxies will vote on the matter in accordance with their judgment.
VOTING INFORMATION AND ADJOURNMENT
Your proxy will be voted in accordance with the instructions you specify on the
enclosed proxy card. If you sign and return your proxy card but do not provide
us with specific instructions, your proxy will be voted IN FAVOR of Proposal 1.
You may revoke your proxy at any time before it is exercised at the Meeting by
(i) delivering a written notice to the Fund expressly revoking your proxy, (ii)
executing and forwarding to the Fund a subsequently-dated proxy, or (iii)
attending the Meeting and voting in person.
In the event that, at the time the Meeting is called to order, a quorum is not
present in person or by proxy, those proxies that have been received will be
voted to adjourn the Meeting to a later date. Also, in the event that sufficient
votes in favor of Proposal 1 set forth in the Notice of Meeting and proxy
statement are not received by the time scheduled for the Meeting, the named
proxies may move one or more adjournments of the Meeting to permit further
solicitation of proxies with respect to Proposal 1. Any such adjournment will
require the affirmative vote of a majority of the shares present in person or by
proxy at the Meeting. In the event of a vote on any such adjournment, proxies
that are required to be voted against Proposal 1 will be voted against an
adjournment, and all other proxies that have been received will be voted for an
adjournment. Abstentions and broker non-votes will be counted for the purpose of
determining a quorum.
As of the close of business on October 28, 1999, the record date fixed by the
Board for the determination of Shareholders of the Fund entitled to notice of
and to vote at the Meeting, 81,456.701 shares of the Fund were outstanding. Each
Shareholder will be entitled to one vote for each share of the Fund held on the
Record Date and a fractional vote corresponding to each fractional share held at
that time.
The vote of the holders of a "majority of the outstanding voting securities" of
the Fund, as defined in the 1940 Act, represented at the meeting in person or by
proxy, is required for the approval of Proposal 1. Specifically, Proposal 1 must
be approved by a vote of (a) at least 67% of the shares of the Fund present in
person or by proxy, if more than 50% of the shares of the Fund are represented
at the meeting, or (b) more than 50% of the outstanding shares of the Fund,
whichever is less. Under Maryland law, abstentions and broker non-votes will be
included for purposes of determining whether a quorum is present at the Meeting,
but will be treated as votes not cast, and therefore would not be counted, for
purposes of determining whether Proposal 1 has been approved.
The Adviser will bear the entire cost of preparing, printing and mailing this
proxy statement, the proxies and any additional material that may be furnished
to Shareholders of the Fund. In addition to this solicitation by mail,
solicitation may be undertaken by mail, telephone, telegraph or personal contact
and the Adviser will bear the expenses of any such solicitation.
ANNUAL REPORT
A copy of the Fund's Audited Annual Report, for the period ended August 31,
1999, has been provided to all Shareholders of record, and is incorporated by
reference into this proxy statement. Copies of the Annual Report are available
at no cost upon request by contacting The World Funds, Inc. at 1500 Forest
Avenue, Suite 223, Richmond, Virginia 23229 or by calling 800-527-9525.
SHAREHOLDER PROPOSALS
Under Maryland law, neither the World Funds or the Fund is required to hold
annual shareholder meetings. Any Shareholder who would like to submit a proposal
for consideration at future shareholder meetings may do so by submitting the
proposal in writing to the Secretary of the World Funds at 1500 Forest Avenue,
Suite 223, Richmond, Virginia 23229.
Investment Adviser
Third Millennium Investment Advisors LLC
1185 Avenue of the Americas, 32nd Floor
New York, N.Y. 10036
Principal Underwriter
First Dominion Capital Corp.
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
Administrator
Commonwealth Shareholder Services, Inc.
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
<PAGE>
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE ON PROPOSAL 1
AS MARKED. IF NOT MARKED, THE PROXIES WILL VOTE "FOR" PROPOSAL 1, AND AS THEY
SEE FIT ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING. IF YOU DO
NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE COMPLETE AND MAIL THIS CARD
AT ONCE IN THE ENCLOSED ENVELOPE.
THE WORLD FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
December 21, 1999
The undersigned hereby constitutes and appoints John Pasco, III and Darryl S.
Peay, or any of them, with power of substitution, as proxies to appear and vote
all of the shares of stock standing in the name of the undersigned on the record
date at the Meeting of Shareholders of Third Millennium Russia Fund to be held
at 1500 Forest Avenue, Richmond, Virginia on the 21st day of December, 1999 at
10:00 a.m. local time, or at any postponement or adjournment thereof; and the
undersigned hereby instructs said proxies to vote as indicated on this proxy
card.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE
ITEM. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED TO APPROVE
PROPOSAL 1. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF THESE
MATTERS. THIS PROXY IS SOLICITED ON BEHALF OF THE FUND'S BOARD OF
DIRECTORS.
1. To approve a new Investment Advisory Agreement between The World
Funds, Inc. and Third Millennium Investment Advisors LLC on behalf of
Third Millennium Russia Fund.
2. To transact such other business as may properly come before the Meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
------------------------- ------------------------- ------------,1999
SIGNATURE SIGNATURE DATE
(JOINT OWNER)
PLEASE DATE AND SIGN NAME OR NAMES TO AUTHORIZE THE VOTING OF YOUR
SHARES AS INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT
OWNERS, ALL JOINT OWNERS SHOULD SIGN. PERSONS SIGNING AS AN
EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated this of ____________, 1999
by and between THE WORLD FUNDS, INC., a Maryland corporation (herein called the
"Fund"), and THIRD MILLENNIUM INVESTMENT ADVISORS LLC, a Delaware Limited
Liability Company (the "Advisor") a registered investment adviser under the
Investment Advisers Act of 1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Fund desires to retain the Advisor to furnish investment advisory
and management services to certain portfolios of the Fund, subject to the
control of the Fund's Board of Directors, and the Advisor is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be bound, it is agreed between the parties hereto as
follows:
1. Appointment. The Fund hereby appoints the Advisor to act as the adviser to
the THIRD MILLENNIUM RUSSIA FUND series of the Fund (the "Portfolio") for
the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to furnish the services herein set
forth, for the compensation herein provided.
2. Duties of the Advisor. The Fund employs the Advisor to manage the
investments and reinvestment of the assets of the Portfolio, and to
continuously review, supervise, and administer the investment program
of the Portfolio, to determine in its discretion the securities to be
purchased or sold, to provide the Fund and Commonwealth Shareholder
Services, Inc. (the "Administrator") with records concerning the
Advisor's activities which the Fund is required to maintain, and to
render regular reports to the Fund's Officers and Board of Directors
and to the Administrator concerning the Advisor's discharge of the
foregoing responsibilities.
The Advisor shall discharge the foregoing responsibilities subject to the
control of the Fund's Board of Directors and in compliance with such
policies as the Board may from time to time establish, and in compliance
with the objectives, policies, and limitations for the Portfolio as set
forth in its Prospectus and Statement of Additional Information, as
amended from time to time, and applicable laws and regulations. The Fund
will instruct each of its agents and contractors to co-operate in the
conduct of the business of the Portfolio.
The Advisor accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings, and
equipment and the personnel required by it to perform the services on the
terms and for the compensation provided herein.
3. Portfolio Transactions. The Advisor is authorized to select the
brokers and dealers that will execute the purchases and sales of
portfolio securities for the Portfolio and is directed to use its
best efforts to obtain the best price and execution for the
Portfolio's transactions in accordance with the policies of the
Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Advisor will
promptly communicate to the Fund and to the Administrator such
information relating to portfolio transactions as they may reasonably
request.
It is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Fund or be in
breach of any obligation owing to the Fund under this Agreement, or
otherwise, by reason of its having directed a securities transaction on
behalf of the Fund to an unaffiliated broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or as
described from time to time by the Portfolio's Prospectus and Statement of
Additional Information. Subject to the foregoing, the Advisor may direct
any transaction of the Portfolio to a broker which is affiliated with the
Advisor in accordance with, and subject to, the policies and procedures
approved by the Board of Directors of the Fund pursuant to Rule 17e-1
under the 1940 Act. Such brokerage services are not deemed to be provided
under this Agreement.
4. Compensation of the Advisor. For the services to be rendered by the
Advisor under this Agreement, the Portfolio shall pay to the Advisor, and
the Advisor will accept as full compensation a fee, accrued daily and
payable within five (5) business days after the last business day of each
month, at an annual rate of 1.75% on the first $125 million of assets;
1.50% on assets in excess of $125 million and not more than $250 million;
and 1.25% on assets over $250 million.
All rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this Agreement.
5. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with the management of the Fund.
Notwithstanding the foregoing, the Portfolio shall pay the expenses and
costs of the Portfolio for the following:
a) Taxes;
b) Brokerage fees and commissions with regard to portfolio transactions;
c) Interest charges, fees and expenses of the custodian of the securities;
d) Fees and expenses of the Fund's transfer agent and the Administrator;
e) Its proportionate share of auditing and legal expenses;
f) Its proportionate share of the cost of maintenance of corporate
existence;
g) Its proportionate share of compensation of directors of the
Fund who are not interested persons of the Advisor as that
term is defined by law;
h) Its proportionate share of the costs of corporate meetings;
i) Federal and State registration fees and expenses incident to the sale
of shares of the Portfolio;
j) Costs of printing and mailing Prospectuses for the Portfolio's
shares, reports and notices to existing shareholders;
k) The Advisory fee payable to the Advisor, as provided in paragraph
4 herein;
l) Costs of recordkeeping (other than investment records required to be
maintained by the Advisor), and daily pricing;
m) Distribution expenses in accordance with any Distribution Plan as and
if approved by the shareholders of the Portfolio; and
n) Expenses and taxes incident to the failure of the Portfolio to
qualify as a regulated investment company under the provisions of the
Internal Revenue Code of 1986, as amended, unless such expenses
and/or taxes arise from the negligence of another party.
6. Reports. The Fund and the Advisor agree to furnish to each other, if
applicable, current information required for the preparation by such
parties of prospectuses, statements of additional information, proxy
statements, reports to shareholders, certified copies of their financial
statements, and to furnish to each other such other information and
documents with regard to their affairs as each may reasonably request.
7. Status of the Advisor. The services of the Advisor to the Fund are not to
be deemed exclusive, and the Advisor shall be free to render similar
services to others so long as its services to the Fund are not impaired
thereby. Pursuant to comparable agreements, the Fund may also retain the
services of the Advisor to serve as the investment advisor of other series
of the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act,
the Advisor hereby agrees that all records which it maintains for the Fund
are the property of the Fund, and further agrees to surrender promptly to
the Fund any of such records upon the Fund's request. The Advisor further
agrees to preserve for the periods prescribed by the 1940 Act, and the
rules or orders thereunder, the records required to be maintained by the
1940 Act.
9. Limitation of Liability of Advisor. The duties of the Advisor shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Advisor hereunder. The
Advisor shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the
performance of this Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or
negligence on the part of the Advisor in the performance of its duties
or from reckless disregard by it of its obligations and duties
under this Agreement. (As used in this Paragraph 9, the term
"Advisor" shall include directors, officers, employees and other
corporate agents of the Advisor as well as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund
are or may be interested in the Advisor (or any successor thereof) as
directors, officers, or shareholders, or otherwise; directors,
officers, agents, and shareholders of the Advisor are or may be
interested in the Fund as directors, officers, shareholders or
otherwise; and the Advisor (or any successor) is or may be interested
in the Fund as a shareholder or otherwise. In addition, brokerage
transactions for the Fund may be effected through affiliates of the
Advisor if approved by the Fund's Board of Directors, subject to the
rules and regulations of the Securities and Exchange Commission,
and the policies and procedures adopted by the Fund.
11. License of Advisor's Name. The Advisor hereby authorizes the Fund to use
the name "Third Millennium Russia Fund" for the Portfolio. The Fund agrees
that if this Agreement is terminated it will promptly redesignate the name
of the Portfolio to eliminate any reference to the name "Third Millennium
Russia Fund" or any derivation thereof unless the Advisor waives this
requirement in writing.
12. Duration and Termination.This Agreement shall become effective on the
date first above written subject to its approval by the
shareholders of the Portfolio and unless sooner terminated as
provided herein, shall continue in effect for two (2) years from that
date. Thereafter, this Agreement shall be renewable for successive
periods of one year each, provided such continuance is specifically
approved annually (a) by the vote of a majority of those members of the
Fund's Board of Directors who are not parties to this Agreement
or interested persons of any such party (as that term is defined in the
1940 Act), cast in person at a meeting called for the purpose of voting
on such approval, and (b) by vote of either the Board of
Directors or of a majority of the outstanding voting securities (as
that term is defined in the 1940 Act) of the Portfolio.
Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written
notice, without the payment of any penalty, provided that termination
must be authorized either by vote of the Fund's Board of Directors or
by vote of a majority of the outstanding voting securities of the
Portfolio or by the Advisor on sixty (60) days written notice. This
Agreement will automatically terminate in the event of its assignment
(as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No material amendment
of this Agreement shall be effective until approved by vote of the holders
of a majority of the Portfolio's outstanding voting securities (as defined
in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the address stated below, or at such other address as either
party may advise in writing:
a) To the Fund at: 1500 Forest Avenue, Suite 223
Richmond, VA 23229
b) To the Advisor at: 515 Madison Avenue, 24th Floor
New York, N.Y. 10022
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their construction
or effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby. This Agreement shall
be binding and shall inure to the benefit of the parties hereto and
their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
State of Maryland, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of which,
when so executed, shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THIRD MILLENNIUM INVESTMENT ADVISORS LLC
BY: ____________________________________________
John T. Connor, Jr.
Chairman
THE WORLD FUNDS, INC.
BY:_____________________________________________
John Pasco, III
Chairman
