COMMONWEALTH SHAREHOLDER SERVICES, INC.
1500 FOREST AVENUE, SUITE 223 * P.O. BOX 8687 * RICHMOND, VA 23229
(804) 285-8211 * FAX (804) 285-8251
VIA EDGAR
September 15, 2000
Filing Desk
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Reference: The World Funds, Inc.
Sand Hill Portfolio Manager Fund series
File Numbers: 811-8255 and 333-29289
Preliminary Proxy Material
----------------------------------------
Ladies and 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(a) under the Securities Exchange Act of 1934, is a preliminary
copy of the proxy statement, notice of meeting and form of proxy to be
furnished to shareholder of the above referenced Fund in connection with a
special meeting of shareholders.
At the special meeting, shareholder will vote to approve or disapprove a
new investment advisory agreement.
Please direct questions and comments relating to this filing to Steven
M. Felsenstein, Esq. at (215)988-7837.
Sincerely,
/s/John Pasco, III
-------------------
John Pasco, III
Enclosure
<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO._____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12.
THE WORLD FUNDS, INC.
------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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 WORLD FUNDS, INC.
1500 FOREST AVENUE, SUITE 223
RICHMOND, VIRGINIA 23229
(800) 527-9525
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
SAND HILL PORTFOLIO MANAGER FUND
TO BE HELD ________________________, 2000
To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the SAND
HILL PORTFOLIO MANAGER FUND series (the "Fund") of THE WORLD FUNDS, INC. (the
"Company"), will be held at 10:00 a.m. Eastern Time, on ________________, 2000,
at the offices of the Company, 1500 Forest Avenue, Suite 223, Richmond, VA
23229, for the following purposes:
1. To approve or disapprove a new Investment Advisory Agreement between The
World Funds, Inc. and Sand Hill Advisors, Inc., a Delaware corporation , on
behalf of the Sand Hill Portfolio Manager Fund series.
To consider and act upon any other business that may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on September 13, 2000 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO BE PRESENT, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
THE ENCLOSED PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID, RETURN ENVELOPE. YOUR
PROMPT RESPONSE WILL HELP TO AVOID THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION. WE ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD(S) PROMPTLY.
Dated: _______________, 2000 By Order of the Board of Directors,
Byron Parker, Esq., Secretary
<PAGE>
THE WORLD FUNDS, INC.
1500 FOREST AVENUE, SUITE 223
RICHMOND, VIRGINIA 23229
(800) 527-9525
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of THE WORLD FUNDS, INC. (the "Company"). The proxies
will be voted at the Special Meeting of Shareholders of the SAND HILL PORTFOLIO
MANAGER FUND series (the "Fund"). The Special Meeting will be held at 10:00
a.m., Eastern Time, on _____________, 2000, at the offices of the Company, 1500
Forest Avenue, Suite 223, Richmond, VA 23229, for the purposes set forth in the
accompanying Notice of Special Meeting.
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the meeting in accordance with the
instructions thereon. However, if no instructions are specified, shares will be
voted FOR Proposal No. 1 and according to the best judgement of the proxy
holders on all other matters. A proxy may be revoked at any time prior to the
time it is voted by written notice to the Secretary of the Fund at the address
shown above, by submission of a subsequent proxy or by attendance at the meeting
and voting in person. It is expected that this Proxy Statement and the
accompanying Notice of Special Meeting will be first mailed to shareholders on
or about ___________________, 2000.
In order to be approved by shareholders, Proposal No. 1 must be approved
by the holders of a majority of the outstanding voting securities of the Fund,
as defined in the Investment Company Act of 1940, as amended, (the "1940 Act")
as the lesser of (i) 67% or more of such shares present at the meeting if
holders of more than 50% of the outstanding shares are present in person or by
proxy; or (ii) more than 50% of the outstanding shares.
A proxy may indicate that all or a portion of the shares represented
thereby are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in street
name on certain proposals in the absence of instructions from the beneficial
owner. Shares that are not voted with respect to a specific proposal will be
considered as not present and entitled to vote on such proposal, even though
such shares will be considered present for purposes of determining a quorum and
voting on other proposals. Abstention on a specific proposal will be considered
as present, but not as voting in favor of such proposal. Because Proposal 1
requires the affirmative vote of a specified percentage of shares, both the
non-voting of shares and abstentions on that proposal will have the effect of
votes against that proposal..
At the close of business on the record date, September 13, 2000, there
were 1,197,488.577 shares of the Fund outstanding, each of which shares will be
entitled to one vote at the meeting. The costs of the Special Meeting, and of
this solicitation, will be borne by the Adviser. The solicitation will be
largely by mail but may include, without cost to the Company, telephonic or oral
communications by regular employees of the Adviser and by Commonwealth
Shareholder Services, Inc., the Fund's Administrator. The address of the Fund's
Administrator and principal underwriter, First Dominion Capital Corp., is 1500
Forest Avenue, Suite 223, Richmond, VA 23229.
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 NO. 1
APPROVAL OF A NEW ADVISORY AGREEMENT
BACKGROUND
Sand Hill Advisors, Inc., a California corporation (the "Adviser"), has
served as the investment adviser to the Fund since the formation of the Fund.
The Adviser entered into an agreement (the "Transaction") with Boston Private
Financial Holdings, Inc. ("BPFH") for the sale and purchase of substantially all
of the assets of the Adviser. At the closing of the transaction, BPFH
contributed such assets to a wholly-owned subsidiary Sand Hill Advisors, Inc., a
Delaware corporation (the "New Adviser"). The closing of the Transaction
occurred on August 31, 2000. The New Adviser conducts the business previously
conducted by the Adviser.
Under the 1940 Act, consummation of the Transaction constitutes a change
in control of the Adviser and, because the change in control operates as an
"assignment" (as defined in the 1940 Act) of the Old Advisory Agreement, the
Transaction resulted in the automatic termination of the Investment Advisory
Agreement dated as of August 19, 1997 between the Fund and the Adviser (the "Old
Advisory Agreement").
In anticipation of this automatic termination, an interim advisory
agreement (the "Interim Advisory Agreement") between the Company and the New
Adviser on behalf of the Fund was approved by the Board of Directors of the
Company for the benefit of the Fund. The Interim Advisory Agreement took effect
at the time the Old Advisory Agreement terminated due to the change of control.
The Interim Advisory Agreement, described in detail below, cannot continue for
more than 150 days.
Therefore, the New Advisory Agreement is being submitted for the approval
of Shareholders of the Fund. Under the New Advisory Agreement, the New Adviser
will continue to provide investment advisory services to the Fund under the same
terms and conditions as the Old Advisory Agreement.
The Board recommends that the stockholders of the Company ratify the
continued service by the New Adviser under the New Advisory Agreement. The
effective date of the New Advisory Agreement will be upon approval of the
holders of a majority of the outstanding voting securities of the Fund, and will
continue after its initial term of two years only if continued from year to year
by the Board or the shareholders of the Fund, and in any event, by a majority of
the Directors of the Fund that are not interested persons.
In the event that the New Advisory Agreement is not approved by the
shareholders, the Board of Directors of the Company will have to determine what
additional steps are in the interest of the Fund and its shareholders. The New
Adviser also has informed the Fund that it will consider its options, including
whether it would continue as the Adviser to the Fund, if the New Advisory
Agreement is not approved. The outcome of any such action cannot be determined
at this time.
Under the Interim Advisory Agreement, from the termination date of the Old
Advisory Agreement through the date of approval by shareholders of the New
Advisory Agreement, fees for the provision of advisory services will be accrued
at the rate permitted under the Interim Advisory Agreement and under 1940 Act
Rule 15a-4, and will be held in an interest-bearing escrow account with the
Fund's custodian bank until the date of approval of the New Advisory Agreement
by shareholders of the Fund. Upon receipt of such approval, the fees held in
escrow, together with any interest thereon, will be paid to the New Adviser. In
the event that the shareholders do not approve the New Advisory Agreement, then
the New Adviser will be paid the lesser of costs incurred while performing under
the contract, or the amount in escrow, in either case with interest thereon.
The New Adviser may not agree to continue to provide services to the Fund
if the New Advisory Agreement is not ratified. Because the Fund is a single
series of one mutual fund, the Board believes that it is unlikely that another
investment adviser could be engaged on the terms and conditions under which the
Adviser provides services. The Board would need to consider how the Fund could
continue operations in the event the New Adviser were not to continue and
another adviser could not be found to serve on terms acceptable to the Fund.
Terms of the Interim Advisory Agreement. The terms of the Interim Advisory
Agreement, are substantially identical to the terms of the Old Advisory
Agreement, except for:
(i) the effective date;
(ii) the 150-day termination date in the absence of shareholder
approval;
(iii) the provision to escrow fees payable under the agreement; and
(iv) the provision that the agreement may be terminated with 10
calendar days' written notice to the Adviser.
Terms of the New Advisory Agreement. The advisory fee rates payable under
the New Advisory Agreement are identical to those payable under the Old Advisory
Agreement. Under each Advisory Agreement, the monthly compensation paid to the
Adviser, and payable to the New Adviser, is accrued daily at an annual rate of
1% on the first $100 million of average daily net assets of the Fund and 0.75%
on average daily net assets of the Fund over $100 million. 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 ratio of total annual fund operating expenses (excluding certain items such
as brokerage costs, taxes, interest, or extraordinary expenses) at 1.90% through
December 31, 2000. Pursuant to the Investment Advisory Agreement, the Adviser
received $178,818 for the period ended August 31, 2000.
A copy of the Old Advisory Agreement pursuant to which the Adviser has
been providing services is attached to this Proxy Statement as Exhibit A. The
following summary of the Old Advisory Agreement is qualified in its entirety by
reference to this exhibit. The New Advisory Agreement has the same terms, and
the New Adviser will operate in the same manner. The New Advisory Agreement will
have the same terms regarding its termination as the Old Advisory Agreement, and
will continue after its initial term of two years only if continued from year to
year by the Board or the shareholders of the Fund, and in any event, by a
majority of the Directors of the Fund that are not interested persons.
Pursuant to each Advisory Agreement, the respective Adviser will, subject
to supervision and review by the Board, furnish the Fund with investment advice.
Under each Advisory Agreement, the Adviser furnishes at its own expense all
necessary services, office space, equipment and clerical personnel for servicing
the investments of the Fund. Each Adviser provides investment advisory
facilities and executive and supervisory personnel for managing the investments
and effecting the portfolio transactions of the Fund. In addition, each Adviser
pays the salaries all Fund officers who are affiliated with the Adviser.
Board Deliberations. As described above, the Old Advisory Agreement
terminated automatically on the date of the Transaction, which was August 31,
2000. The terms of each Advisory Agreement and the provision of services
thereunder were reviewed by the Board, including all of the Directors who are
not "interested persons" (as that term is defined in the 1940 Act) of the
Advisers (the "Non-Interested Directors"). In considering whether to approve the
continued provision of services by the Adviser and payment therefor under the
terms of the New Advisory Agreement and a recommendation that the shareholders
of the Fund approve the New Advisory Agreement, the Board considered the
following factors:
(i) the representation of the New Adviser that it would
continue under the terms of the New Advisory Agreement to provide
investment advisory and other services to the Fund of at least the
scope and quality previously provided to the Fund by the Adviser
under the Old Advisory Agreement;
(ii) the substantially identical terms and conditions contained in the
Interim Advisory Agreement and the New Advisory Agreement, including
the fact that the fees paid would be unchanged from the Old Advisory
Agreement; and
(iii) the representation of the New Adviser that in the event of any
material change in the personnel and procedures of the New Adviser,
the Board would be consulted for the purpose of assuring itself that
the services provided to the Fund would not be diminished in scope or
quality.
(iv) the benefit to the Fund of maintaining continuity of investment
advisory services for the Fund, and the belief of the Board that such
continuity was advantageous to the Fund as it would minimize any
potential expense and disruption involved in restructuring the
portfolio in the event of a change of adviser.
Based on the foregoing factors, each of which was deemed important by the
Directors, the Board has concluded that approval of the New Advisory Agreement
is in the best interest of the Fund and its shareholders. The Board considered
the confluence of all the factors mentioned above in arriving at its decision to
approve the New Advisory Agreement and to recommend its approval by
shareholders, and no one factor was given any greater weight than any of the
others.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND APPROVE THE NEW ADVISORY AGREEMENT WITH THE NEW ADVISER
FOR TWO YEARS FOLLOWING THE DATE OF SHAREHOLDER APPROVAL.
General Information. The address of the Adviser is 3000 Sand Hill Road,
Building 3, Suite 150, Menlo Park, California 94025-7116. The Old Advisory
Agreement was initially effective for a period of two years from August 19,
1997. Under its terms it could be renewed annually thereafter, provided such
continuance was approved annually by the Company's Board of Directors or the
vote of a majority of the outstanding voting securities of the Fund; and the
vote of a majority of the Directors who are not parties to the Advisory
Agreement or "interested persons" of the Fund or the Adviser, cast in person at
a meeting called for the purpose of voting on such approval.
The continuance of the Old Advisory Agreement was last approved by the
Board for the period ending September 30, 2000.
Information Concerning the Adviser and the Transaction. As set forth in
the Transaction Agreement, certain key personnel of the Adviser are now employed
by the New Adviser under employment agreements. The New Adviser has continued to
operate with the same investment personnel and officers as the Adviser, and the
same persons who were responsible for the investment policies of the Adviser
continue to direct the investment policy of the New Adviser. The New Adviser's
method of operation and business location will be unchanged from that of the
Adviser. The Transaction Agreement provided that the Adviser sold to BPFH
substantially all of the assets of the Adviser, including advisory
relationships, customer lists, books and records. The purchase price was payable
in a combination of cash and 258,395 shares of common stock ("Common Stock") of
BPFH. The cash portion of the purchase price was approximately $8,600,297.50
million. The Common Stock would have a value of $3,439.883.00 based on the
August 31, 2000 Nasdaq Stock Market closing sale price for the Common Stock. In
addition, BPFH has agreed to make additional deferred purchase price payments,
which may exceed $4,959.360.00 million if certain revenue targets are achieved
over the next 4 years.
The Transaction is intended to comply with the provisions of Section 15(f)
of the 1940 Act. Under that provision, not less than 75% of the members of the
Board of the Company must be directors that are not interested persons of the
Adviser or the New Adviser, and there must not be imposed upon the Fund any
undue burden as that term is defined in Section 15(f). The Fund has agreed to
continue to conduct its business in compliance with the terms of that section.
Portfolio Transactions. Each of the Advisory Agreements give the New
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
New 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 New 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 New Adviser makes a
purchase or sale decision, the New 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.
Allocation of Brokerage. The Fund may authorize the New Adviser, when
placing Fund transactions, to allocate a portion of the Fund's brokerage to
persons or firms providing the New Adviser with investment recommendations,
statistical, research or similar services useful to the New 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 New 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 New 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 New
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 a remaining maturity 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 New anticipates that the average annual
portfolio turnover rate of the Fund will generally not exceed 100%.
Principal Executive Officer and Directors of the New Adviser. The following
are the names, addresses and principal occupations of the principal executive
officer and each director of the New Adviser:
Name and Address Principal Occupation
----------------- --------------------
Timothy L. Vaill Director, Chairman of the Board
Ten Post Office Square Mr. Vaill is a Director and Chairman of the Board of
Boston, MA 02109 Sand Hill Advisors, Inc. He is Chairman and Chief
Executive Officer of Boston Private Financial
Holdings and President and Chief Executive Officer
of its banking subsidiary, Boston Private Bank &
Trust Company, where he has been since January 1,
1993. He is also Chairman of the Board of Westfield
Capital Management Company, an investment
management subsidiary, and RINET Company, a financial
planning subsidiary. Mr. Vaill serves on the
Board of Directors of the Schreiber Corporation, the
Junior Achievement Foundation, the Boston Ten
Point Coalition and the New England Aquarium. He
is also Chairman of the Board of Trustees of Bay
State College in Boston.
Gary K. Conway Director, Chief Executive Officer
3000 Sand Hill Road Mr. Conway has been a Director and the President
Building 3, Suite 150 of Sand Hill Advisors, Inc. since 1982. He became
Menlo Park, CA 94025 its Chief Executive Officer in 2000.
Jane H. Williams Director, President, Treasurer
3000 Sand Hill Road Ms. Williams has been a Director and Executive
Building 3, Suite 150 Vice President of Sand Hill Advisors, Inc. since 1982.
Menlo Park, CA 94025 She became its President and Treasurer in 2000.
Rowland R. Foster Director, Vice President
3000 Sand Hill Road Mr. Foster is a Director and Vice President of Sand
Building 3, Suite 150 Hill Advisors, Inc. since 1988.
Menlo Park, CA 94025
Ms. Jane E. Creighton Director, Vice President
3000 Sand Hill Road Ms. Creighton is a Director and Vice President of
Building 3, Suite 150 Sand Hill Advisors, Inc. since 1984.
Menlo Park, CA 94025
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table provides certain information as of September 13, 2000,
the record date for the meeting, with respect to those persons known to the Fund
to be the owners of more than 5% of the outstanding shares of the Fund:
NUMBER OF SHARES PERCENTAGE
NAMES AND ADDRESSES BENEFICIALLY OWNED OF FUND
------------------- ------------------ ------------
Charles Schwab & Co., Inc. 103,920.984 8.678%
101 Montgomery Street
San Francisco, CA 94104
Harry J. Kaplan Co. MPP & PSP 72,988.073 6.095%
444 Castro Street
Mountain View, CA 94104
MANAGEMENT OWNERSHIP
As of September 13, 2000, the Officers and Directors of the Fund
beneficially owned the following amounts of the Fund's outstanding shares:
NUMBER OF SHARES PERCENTAGE
NAMES AND ADDRESSES BENEFICIALLY OWNED OF FUND
------------------- ------------------ -----------
Paul Dickinson 235.239 0.020%
1500 Forest Avenue, Suite 223
Richmond, VA 23229
John Pasco, III 2,000.000 0.167%
1500 Forest Avenue, Suite 223
Richmond, VA 23229
William Poist 134.114 0.011%
1500 Forest Avenue, Suite 223
Richmond, VA 23229
Jane Williams 11,713.244 0.978%
3000 Sand Hill Road
Building 3, Suite 150
Menlo Park, CA 94025
INFORMATION ABOUT THE COMPANY
The Company was organized as a Maryland corporation in May, 1997. The Company is
an open-end, management investment company (commonly known as a "mutual fund"),
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Sand Hill Portfolio Manager Fund (the "Fund") is a separate series of
the Company. The Fund is the successor to predecessor series of the same name in
another investment company. The Company, the Fund and its business are described
in its Prospectus and Statement of Additional Information, and in its most
recent annual and semi-annual reports. A copy of the Fund's Annual Report for
the fiscal year ended August 31, 1999 was mailed to shareholders on or about
October 30, 1999 and a copy of the Fund's Semi-Annual Report for the period
ended February 29, 2000 was mailed to shareholders on or about April 29, 2000.
COPIES OF THE FUND'S MOST RECENT ANNUAL REPORT, AND THE MOST RECENT
SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT ARE AVAILABLE, WITHOUT CHARGE,
BY CONTACTING THE COMPANY AT 1500 FOREST AVENUE, SUITE 223, RICHMOND, VA 23229
OR BY CALLING (800) 527-9525.
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, management may propose to adjourn the meeting
to solicit votes to establish a quorum for the Meeting. In that event, the
persons named as proxy may vote 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 September 13, 2000, 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, 1,197,488.577 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% or more 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.
Costs of Solicitation. The New 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 New Adviser will bear the
expenses of any such solicitation.
SHAREHOLDER PROPOSALS
The Company does not hold annual or regular meetings of shareholders. A
shareholder proposal intended to be presented at any subsequent meeting of the
shareholders of the Company must be received by the Company a reasonable time
before the Directors makes the solicitation relating to such meeting in order to
be included in the Company's proxy statement and forms of proxy relating to that
meeting.
Any Shareholder who would like to submit a proposal for consideration at a
future shareholder meeting may do so by submitting the proposal in writing to
the Secretary of The World Funds at 1500 Forest Avenue, Suite 223, Richmond, VA
23229.
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SAND HILL PORTFOLIO MANAGER FUND a series of THE WORLD FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS ________________, 2000
The undersigned hereby revokes all previous proxies for shares and appoints John
Pasco, III and Darryl S. Peay, and each of them proxies of the undersigned, with
full power of substitution, to vote all shares of the Sand Hill Portfolio
Manager Fund which the undersigned is entitled to vote at the Fund's Special
Meeting of Shareholders to be held at the offices of the Fund, 1500 Forest
Avenue, Richmond, VA, at 10:00 a.m. Eastern Time on the ____ day of________,
2000, including any adjournments thereof, upon such business as may legally be
brought before the Meeting.
PLEASE SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED IN
FAVOR OF PROPOSAL NO. 1 AND WITHIN THE DISCRETION OF THE PROXYHOLDERS AS TO ANY
OTHER ITEMS WHICH MAY PROPERLY COME BEFORE THE MEETING.
No. 1. To approve a new Investment Advisory Agreement between
The World Funds, Inc. and Sand Hill Advisors, Inc., a
Delaware corporation, on behalf of the Sand Hill
Portfolio Manager Fund series.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion on any other matters that may properly come
before the meeting or any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED HEREON
AND, IN THE ABSENCE OF SPECIFICATION, WILL BE VOTED FOR PROPOSAL NO. 1 AND
ACCORDING TO THE BEST JUDGMENT OF THE PROXY HOLDERS ON ALL OTHER MATTERS.
Please sign below exactly as name appears. When shares are held by two or more
persons, all of them should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by a duly authorized officer. If a
partnership, please sign partnership name by authorized person. Receipt of
Notice of Special Meeting of Shareholders and Proxy Statement is hereby
acknowledged.
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Signature Signature (Joint Owner)
Dated: __________________________________, 2000
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO BE PRESENT, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED SELF-ADDRESSED, POSTAGE PAID ENVELOPE IN ORDER TO
AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION. WE ASK YOUR COOPERATION IN
MAILING THIS PROXY PROMPTLY.
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EXHIBIT A
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INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated this of August 19, 1997 by
and between THE WORLD FUNDS, INC., a Maryland corporation (herein called the
"Fund"), and SAND HILL ADVISORS, INC. a California Corporation (the "Adviser") 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 Adviser 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 Adviser 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 Adviser to act as the adviser to
the SAND HILL PORTFOLIO MANAGER FUND series of the Fund (the "Portfolio") for
the period and on the terms set forth in this Agreement. The Adviser accepts
such appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Duties of the Adviser. The Fund employs the Adviser 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 Adviser'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 Adviser's discharge of the foregoing
responsibilities.
The Adviser 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 Adviser 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 Adviser 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 Adviser 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 Adviser 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 Adviser may direct any transaction of the Portfolio to a broker
which is affiliated with the Adviser 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 Adviser. For the services to be rendered by the Adviser
under this Agreement, the Portfolio shall pay to the Adviser, and the Adviser
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% on the first $100 million of assets; and 0.75% on assets over $100
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 Adviser 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 Adviser 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 Adviser, as provided in
paragraph 4 herein;
l) Costs of recordkeeping (other than investment records
required to be maintained by the Adviser), 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 Adviser 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 Adviser. The services of the Adviser to the Fund are not to be
deemed exclusive, and the Adviser 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 Adviser to
serve as the investment Adviser of other series of the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act, the
Adviser 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 Adviser 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 Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Adviser hereunder. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Adviser 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 "Adviser" shall include
directors, officers, employees and other corporate agents of the Adviser as well
as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund are
or may be interested in the Adviser (or any successor thereof) as directors,
officers, or shareholders, or otherwise; directors, officers, agents, and
shareholders of the Adviser are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Adviser (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
Adviser 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 Adviser's Name. The Adviser hereby authorizes the Fund to use the
name "SAND HILL PORTFOLIO MANAGER 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 "Sand Hill Portfolio Manager
Fund" or any derivation thereof unless the Adviser 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 Adviser 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 Adviser at: 3000 Sand Hill Road
Building Three, Suite 150
Menlo Park, CA 94025-7111
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.
SAND HILL ADVISORS, INC.
BY: /s/ Gary K. Conway
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Gary K. Conway
President
THE WORLD FUNDS, INC.
BY: /s/ John Pasco, III
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John Pasco, III
Chairman
