SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PBHG ADVISOR FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required.
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(1)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
5) Total fee paid:
_____________________________________________________________________________
/ / Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
PBHG ADVISOR FUNDS, INC.
Dear Shareholder:
The accompanying Proxy Statement contains three important proposals for
your consideration as a shareholder of Analytic Defensive Equity Fund, Analytic
Enhanced Equity Fund, Analytic Master Fixed Income Fund or Analytic Short-Term
Government Fund (the "Analytic Funds"). These proposals are part of a plan to
make the Analytic Funds part of the UAM Fund Family, with the same Board of
Directors, many of the same officers and with generally the same service
providers as other funds in the UAM Fund Family. The UAM Fund Family currently
consists of over 45 investment portfolios with approximately $3.5 billion in net
assets.
Your Board of Directors has unanimously recommended the approval of the
following three proposals: the approval of a new investment advisory agreement
between each of the Analytic Funds and Analytic Investors, Inc. ("Analytic"),
the election of seven new directors to succeed the current directors and the
ratification of the current independent public accountants of the Analytic Funds
- --PricewaterhouseCoopers LLP.
The PBHG Advisor Funds, Inc. (the "Advisor Funds") was organized early last
year as part of a new mutual fund family sponsored by Pilgrim Baxter &
Associates, Ltd. ("PBA"). The Advisor Funds were targeted to clients of
financial intermediaries, such as brokers and dealers who charge a commission or
fee for their service. As part of this marketing strategy, the Analytic Funds
were reorganized into corresponding Advisor Funds. After their reorganization,
PBA served as investment adviser and Analytic served as sub-adviser to the
Analytic Funds. Both PBA and Analytic are wholly-owned subsidiaries of United
Asset Management Corporation.
In late 1998, PBA decided to change its marketing strategy and focus
exclusively on its traditional funds -- The PBHG Funds, Inc. and PBHG Insurance
Series, Inc. Given this decision, PBA and Analytic have recommended to your
Board of Directors that the Analytic Funds become part of the UAM Fund Family.
Your Board of Directors has considered PBA and Analytic's recommendations
and the three proposals before you today and believe they are all in your best
interests. Although the Analytic Funds will no longer be part of the PBHG Family
of Funds, these Funds, and hence your investment, will continue to benefit from
Analytic's distinctive investment philosophy. In addition, the front-end sales
load and the 12b-1 fees on your shares, which have been waived since October
1998 and January 1999, respectively, will be eliminated. As part of the UAM Fund
Family, you will be able to freely exchange your shares for Institutional Class
Shares of other UAM Funds. This exchange privilege should provide you with a
wide range of fund choices to meet your investment needs.
The enclosed materials provide more information about the proposals. Please
read this information carefully and call John Zerr, Secretary of the Advisor
Funds, at (610) 647-4100 if you have any questions.
Your vote is important no matter how many shares you own. Voting your
shares early will help us avoid follow-up mailings and telephone solicitations.
After reviewing the enclosed materials, we ask that you vote FOR each of
the items listed in the Proxy Statement. You may vote by telephone, by mail, in
person or through the proxy solicitor's website.
<TABLE>
<S> <C>
Sincerely, Sincerely,
/s/ Harold J. Baxter /s/ Harindra de Silva
- ------------------------ ------------------------
Harold J. Baxter Harindra de Silva
Chairman of the Board President
PBHG Advisor Funds, Inc. Analytic Investors, Inc.
</TABLE>
<PAGE>
PROXY Q&A
Q: What is happening?
A: We are requesting your vote in order to make the Analytic Funds part of the
UAM Fund Family. You are being asked to vote on the election of new directors,
the approval of new investment advisory agreements and the ratification of
independent public accountants. The Board of Directors of the PBHG Advisor
Funds, Inc. (the "Advisor Funds") has unanimously approved these proposed
transactions (the "Proposed Transactions").
Q: Why are the Analytic Funds undergoing the Proposed Transactions?
A: Pilgrim Baxter & Associates, Ltd. ("PBA") has decided to focus exclusively
on its traditional funds -- The PBHG Funds, Inc. and PBHG Insurance Series, Inc.
In light of this decision, PBA and Analytic Investors, Inc. ("Analytic") have
recommended to your Board of Directors that the Analytic Funds become part of
the UAM Fund Family. The UAM Fund Family currently has over 45 investment
portfolios with approximately $3.5 billion in net assets.
Q: How did the Analytic Funds come to be part of the PBHG Advisor Funds, Inc.,
and who are the current adviser and sub-adviser to the Funds?
A: As you know, predecessors to the Analytic Funds were reorganized as separate
series of the Advisor Funds in July 1998. As part of that reorganization, PBA
became the investment adviser, and Analytic became the sub-adviser, to the
Analytic Funds. As sub-adviser, Analytic retained day-to-day management over the
Analytic Funds' investments and portfolio operations. The reorganization was
part of PBA's marketing strategy focusing on the clients of financial
intermediaries such as brokers and dealers who charge a commission or fee for
their service.
Q: Is there going to be a change in the investment strategies used by the
Analytic Funds?
A: No. Analytic will continue to be responsible for the day-to-day management
of the Analytic Funds, and you will continue to benefit from Analytic's unique
investment philosophy.
Q: Will the sales charges and expenses of the Analytic Funds remain the same?
A: The front-end sales charge and 12b-1 fees on your Fund shares, which have
been waived since October 1998 and January 1999, respectively, will be
eliminated. The investment advisory fee paid by each Analytic Fund will remain
the same. In addition, Analytic has agreed that, through the end of 1999, the
total operating expenses (including transfer agency fees but excluding taxes,
interest, brokerage commissions, capitalized expenditures and extraordinary
expenses) of each Fund will be capped (through the use of fee waivers and
expense reimbursements) at a lower percentage than is currently in place.
Q: Whom should shareholders call if they have questions?
A: Contact John Zerr, Secretary of the Advisor Funds, at (610) 647-4100.
<PAGE>
PBHG ADVISOR FUNDS, INC.
P.O. BOX 419229
KANSAS CITY, MO 64141-6229
1 (888) 800-2685
------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 5, 1999
------------------------------
Dear Shareholder:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of PBHG Advisor Funds, Inc., a Maryland corporation (the "Company"),
will be held on April 5, 1999, at 10:00 a.m. (Eastern Time) at the offices of
Ballard Spahr Andrews & Ingersoll, LLP, 800 Hudson Square, 5th Floor, Camden, NJ
08102-1115. At the Meeting, you and the other shareholders of the Company will
be asked to consider and vote on the following matters:
1. To approve a new investment advisory agreement between each of the
Analytic Defensive Equity Fund, the Analytic Enhanced Equity Fund, the
Analytic Master Fixed Income Fund and the Analytic Short-Term Government
Fund and Analytic Investors, Inc., as discussed in Part I of the attached
Proxy Statement. (Each investment advisory agreement will be voted on only
by shareholders of the relevant Fund.)
2. To elect seven Directors to the Board of Directors of the Company,
as discussed in Part II of the attached Proxy Statement.
3. To ratify or reject the selection by the Board of Directors of
PricewaterhouseCoopers LLP as independent public accountants to the Company
for the fiscal year ending December 31, 1999, as discussed in Part III of
the attached Proxy Statement.
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on February 19, 1999, are
entitled to notice of, and to vote at, the Meeting. Regardless of whether you
plan to attend the Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD so that a quorum will be present and the maximum number of
shares may be voted. Your vote is important no matter how many shares you own.
You can vote easily and quickly at the proxy solicitors' web site, by toll-free
telephone, by mail or in person. You may change your vote by written notice to
the Company, by submission of a subsequent proxy, or by voting in person at the
Meeting.
By Order of the Board of Directors,
John M. Zerr
Secretary
Wayne, Pennsylvania
March 1, 1999
<PAGE>
PBHG ADVISOR FUNDS, INC.
P.O. BOX 419229
KANSAS CITY, MO 64141-6229
1 (888) 800-2685
------------------------------
PROXY STATEMENT
------------------------------
This Proxy Statement is being provided to the shareholders of PBHG Advisor
Funds, Inc., a Maryland corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors" or the "Directors"). The proxies are to be used at a Special Meeting
of Shareholders (the "Meeting") to be held at the offices of Ballard Spahr
Andrews & Ingersoll, LLP, 800 Hudson Square, 5th Floor, Camden, NJ 08102-1115,
on April 5, 1999, at 10:00 a.m. (Eastern Time), and any adjournment(s) thereof,
for action upon the matters set forth in the Notice of the Special Meeting of
Shareholders. This Proxy Statement and the enclosed form of proxy are expected
to be mailed to shareholders on or about March 1, 1999.
The Company currently consists of the following series of shares: the
Analytic Defensive Equity Fund, the Analytic Enhanced Equity Fund, the Analytic
Master Fixed Income Fund and the Analytic Short-Term Government Fund (together,
the "Funds").
All shares represented by each properly signed proxy received prior to the
Meeting will be voted at the Meeting. If a shareholder of record specifies how
the proxy is to be voted on any of the business matters to come before the
Meeting, it will be voted in accordance with the specification. If no
specification is made, the proxy will be voted FOR approval of the new
investment advisory agreement for the Fund of which you are a shareholder
(Proposal 1), FOR the election of the nominees for Director (Proposal 2) and FOR
the ratification of PricewaterhouseCoopers LLP as independent public accountants
for the Funds (Proposal 3). The proxy may be revoked by a shareholder of record
at any time prior to its use by written notice to the Company, by submission of
a subsequent proxy or by voting in person at the Meeting.
All shareholders of record at the close of business on February 19, 1999,
the record date for the determination of shareholders entitled to vote at the
Meeting (the "Record Date"), are entitled to one vote for each dollar (and each
fractional dollar thereof) of net asset value of shares of the Company held on
such date. As of that date, there were issued and outstanding the following
number of shares of each Fund:
<TABLE>
<CAPTION>
SHARES ISSUED
NAME OF FUND AND OUTSTANDING NET ASSETS
- ------------ --------------- -----------
<S> <C> <C>
Analytic Defensive Equity Fund.................... 4,854,388 57,607,354
Analytic Enhanced Equity Fund..................... 3,140,879 34,141,771
Analytic Master Fixed Income Fund................. 580,711 5,598,179
Analytic Short-Term Government Fund............... 448,446 4,505,762
--------- -----------
Total........................................ 9,024,424 101,853,066
</TABLE>
Shareholders of each Fund will vote separately by Fund on Proposal 1
(approval of a new investment advisory agreement). Shareholders of all Funds
will vote as a single class on Proposal 2 (election of Directors) and Proposal 3
(ratification of the independent public accountants).
The presence at the Meeting, in person or by proxy, of the holders of 30%
of the shares of each Fund entitled to be voted (for a Fund-by-Fund vote, such
as Proposal 1), or of the Company (for a Company-wide vote, such as Proposals 2
and 3) shall be necessary and sufficient to constitute a quorum for the
transaction of business. For purposes of determining the presence of a quorum,
abstentions, withheld votes or broker "nonvotes" will be counted as present.
Broker "nonvotes" occur when the Company receives a proxy from a broker or
nominee who does not have discretionary power to vote on a particular matter and
the broker or nominee has not received instructions from the
1
<PAGE>
beneficial owner or other person entitled to vote the shares represented by the
proxy. With respect to each Fund, Proposal 1 requires the approval of a
"majority of the outstanding voting securities" of such Fund, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). Abstentions and
broker "nonvotes" will have the effect of a vote against Proposal 1. See
"Proposal 1 -- Required Vote." With respect to Proposals 2 and 3, all four Funds
of the Company will vote together as a single class. Proposal 2 requires a
plurality vote for election of each Director, and Proposal 3 requires a majority
of the votes cast at the Meeting for approval. Abstentions and broker nonvotes
will not be counted in favor of or against, and will have no other effect on the
voting on, Proposals 2 and 3 except to help establish a quorum. See "Proposal 2
- -- Required Vote" and "Proposal 3 -- Required Vote."
The solicitation will be made primarily by mail, but may be supplemented by
telephone calls, telegrams, personal interviews and other communications by
officers, employees and agents of Analytic Investors, Inc. and its affiliates.
Authorization to execute proxies may be obtained telephonically or by
electronically transmitted instructions. The Company has retained Automatic Data
Processing, Inc., 51 Mercedes Way, Edgewood, New York 11717 to aid in the
solicitation of proxies. The costs of retaining Automatic Data Processing, Inc.,
which are anticipated to be approximately $10,400, and other expenses incurred
in connection with the solicitation of proxies and the holding of the Meeting,
will be borne by Pilgrim Baxter & Associates, Ltd. and Analytic Investors, Inc.
and not by the Company.
Those persons who are known to be the beneficial owners of more than five
percent of the shares of any of the Funds as of February 19, 1999 are as
follows:
<TABLE>
<CAPTION>
BENEFICIAL PERCENT
NAME OF FUND NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF FUND
- ------------ ------------------------------------ ---------- -------
<S> <C> <C> <C>
Analytic Defensive Equity Fund Charles Schwab & Co., Inc. 817,387 16.83%
Special Custody Account For
Benefit of Customers
101 Montgomery St.
San Francisco, CA 94204
Analytic Defensive Equity Fund LaSalle National Bank 475,998 9.80%
Metz Banking Pension Trust
Dated July 1, 1997
c/o Mutual Funds 18th Floor
135 S. LaSalle St.
Chicago, IL 60603
Analytic Enhanced Equity Fund Charles Schwab & Co., Inc. 1,614,874 51.46%
Special Custody Account For
Benefit of Customers
101 Montgomery St.
San Francisco, CA 94204
Analytic Enhanced Equity Fund Analytic Investors, Inc. 273,114 8.70%
Investment Manager for Prison
Law Office
700 S. Flower St., Suite 2400
Los Angeles, CA 90017
Analytic Enhanced Equity Fund National Financial Services, Corp. 351,158 11.29%
For Exclusive Benefit
of Customers
Attn: Mutual Funds
200 Liberty Street
New York, NY 10281
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL PERCENT
NAME OF FUND NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF FUND
- ------------ ------------------------------------ ---------- -------
<S> <C> <C> <C>
Analytic Master Fixed Income Analytic Investors, Inc. 90,091 15.58%
Fund For the Benefit of Mountain Grove
Cemetary Association
700 S. Flower St., Suite 2400
Los Angeles, CA 90017
Analytic Master Fixed Income Tucker Anthony, Inc. 66,176 11.45%
Fund VMEP NHC Pension
Attn: Stephen T. Monahan
4 Landmark Square
Stamford, CT 06901
Analytic Master Fixed Income SEI Trust Company Custodian 51,508 8.91%
Fund IRA R/O R. Borzilleri
Attn: Stephen Monahan
4 Landmark Square
Stamford, CT 06901
Analytic Master Fixed Income Analytic Investors, Inc. 51,238 8.86%
Fund Investment Manager for Prison
Law Office
700 S. Flower St., Suite 2400
Los Angeles, CA 90017
Analytic Master Fixed Income SEI Trust Company Custodian 34,526 5.97%
Fund IRA R/O Greg McMurran
2116 Westwood Ave.
Santa Ana, CA 92706
Analytic Master Fixed Income Charles Schwab & Co., Inc. 33,779 5.84%
Fund Special Custody Account For
Benefit of Customers
101 Montgomery St.
San Francisco, CA 94204
Analytic Short-Term Government Analytic Investors, Inc. 212,672 47.16%
Fund Investment Manager for Southern
Baptist Foundation
700 S. Flower St., Suite 2400
Los Angeles CA 90017
Analytic Short-Term Government Analytic Investors, Inc. 66,040 14.65%
Fund Investment Manager for Prison
Law Office
700 S. Flower St., Suite 2400
Los Angeles, CA 90017
Analytic Short-Term Government Analytic Investors, Inc. 64,061 14.21%
Fund For the Benefit of Mountain Grove
Cemetary Association
700 S. Flower St., Suite 2400
Los Angeles, CA 90017
</TABLE>
3
<PAGE>
I. APPROVAL OF
THE NEW INVESTMENT ADVISORY AGREEMENTS
(PROPOSAL 1)
Introduction. Pilgrim Baxter & Associates, Ltd. ("PBA"), a Delaware
corporation, 825 Duportail Road, Wayne, PA 19087, and a wholly-owned subsidiary
of United Asset Management Corporation ("UAM"), One International Place, Boston,
MA 02110, currently acts as investment adviser to each Fund pursuant to an
investment advisory agreement entered into by the Company and PBA (the "Current
Advisory Agreement").
Analytic Investors, Inc. ("Analytic"), a California corporation, 700 South
Flower St., Suite 2400, Los Angeles, CA 90017, currently a wholly-owned
subsidiary of UAM, acts as investment sub-adviser to each Fund pursuant to a
sub-advisory agreement entered into by and between the Company, PBA and Analytic
(the "Current Sub-Advisory Agreement"). Prior to July 20, 1998, Analytic was a
direct, wholly-owned subsidiary of UAM. During the period from July 20, 1998 to
December 31, 1998, Analytic was a wholly-owned subsidiary of PBA, and thus an
indirect, wholly-owned subsidiary of UAM. Effective January 1, 1999, PBA
transferred all of the capital stock of Analytic to UAM, causing Analytic to
again become a direct, wholly-owned subsidiary of UAM.
PBA and Analytic have served as the only investment adviser and
sub-adviser, respectively, to each Fund since the Company's inception. However,
prior to the Company's inception, Analytic served as investment adviser to the
predecessors of the Funds (the "Predecessor Funds"), a stand alone group of
funds.
The Funds and several other investment portfolios ("Other Funds") were
organized last year as part of a new mutual fund family sponsored by PBA and
targeted to the clients of financial intermediaries, such as brokers and dealers
who charge a commission or fee for their service. As part of this strategy, the
Predecessor Funds were reorganized into the corresponding Funds of the Company.
PBA decided in late 1998 to change this marketing strategy and focus on its
traditional clients and products. As part of this change, the Other Funds were
liquidated. As a result of PBA's decision, PBA and Analytic have recommended to
the Directors that the Funds become associated with another mutual fund family,
known as the UAM Funds. The UAM Funds consist of over 45 separate investment
portfolios and have approximately $3.5 billion in net assets as of December 31,
1998. Although the Company will be considered part of the UAM Funds because of a
shared board of directors (if the Nominees are elected), certain shared officers
and certain shared service providers, the Company will remain a separate
corporate entity. Also, in order to attempt to strengthen the association of the
Funds with the UAM Funds, the name of the Company may be changed to identify the
Company more closely with the UAM Funds.
With the consent of the Board, PBA will resign as investment adviser to the
Funds prior to their becoming part of the UAM Funds, if shareholders approve new
investment advisory arrangements. Accordingly, you are now being asked to
approve new investment advisory agreements (the "New Advisory Agreements")
between the Company and Analytic. The annual management fee rate set forth in
the New Advisory Agreements is identical to the annual management fee rate set
forth in the Current Advisory Agreement. Analytic has informed the Company and
the Directors that it anticipates no material changes in the investment
philosophy, policies or strategies of the Funds if the New Advisory Agreements
are approved. Analytic will continue to operate from offices in Los Angeles,
California, with the same personnel providing investment advisory services to
the Funds.
If the New Advisory Agreements are approved, Analytic will become the
investment adviser of the Funds instead of their sub-adviser and will have
certain additional oversight duties currently provided by PBA. As a result, the
parties and individuals who currently provide compliance and various corporate
functions for the Funds would change. It is also anticipated that the nominees
for director, if elected, would change a number of the other current service
providers to align the Funds more closely with the UAM Funds. The expected
changes in service providers are summarized in the table below.
4
<PAGE>
<TABLE>
<CAPTION>
ROLE CURRENT SERVICE PROVIDER ANTICIPATED SERVICE PROVIDER*
- ---- ------------------------ -----------------------------
<S> <C> <C>
Administrator..................... PBHG Fund Services UAM Fund Services, Inc.
Sub-Administrator................. SEI Fund Resources Chase Global Funds Services
Company
Transfer and Dividend-Paying
Agent........................... DST Systems, Inc. UAM Fund Services, Inc.
Sub-Transfer Agent................ None DST Systems, Inc.
Distributor....................... PBHG Fund Distributors UAM Fund Distributors, Inc.
</TABLE>
- ------------------
* Certain of these service providers provided services to the Predecessor Funds.
It is expected that if Chase Global Funds Services Company does not become the
sub-administrator, SEI Fund Resources would continue to perform those
services.
Analytic, UAM and PBA have agreed to indemnify the Funds and the Company's
directors and officers against certain amounts incurred arising out of omissions
or misstatements in this Proxy Statement or in certain materials provided to the
directors in connection with their review and approval of the New Advisory
Agreements.
Additional Information Concerning the Current Advisory and Sub-Advisory
Agreements. Under the Current Advisory Agreement, PBA is responsible for the
overall management of the operations of the Funds, while Analytic, subject to
the supervision of PBA and the Board of Directors of the Company, is responsible
for selecting and managing the investment portfolio of each Fund. The Current
Advisory Agreement for the Company was signed on April 1, 1998, and approved by
the sole shareholder of the Analytic Enhanced Equity, Analytic Master Fixed
Income and Analytic Short-Term Government Funds on April 9, 1998, and by the
sole shareholder of the Analytic Defensive Equity Fund on June 4, 1998 in
connection with the organization of those Funds. The Current Sub-Advisory
Agreement was signed on July 20, 1998 and approved by the sole shareholder of
the Analytic Enhanced Equity, Analytic Master Fixed Income and Analytic
Short-Term Government Funds on April 9, 1998, and by the sole shareholder of the
Analytic Defensive Equity Fund on June 4, 1998, in connection with the
organization of those Funds.
5
<PAGE>
Certain Comparative Estimated Expense Information. In order to assist you
in understanding the proposal, the following tables summarize the estimated
expenses to be borne by the Funds during the fiscal year ending December 31,
1999, assuming each of the Current Advisory Agreement and the New Advisory
Agreements were in effect during the period.
<TABLE>
<CAPTION>
ANALYTIC ENHANCED EQUITY FUND ANALYTIC DEFENSIVE EQUITY FUND
----------------------------- -------------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT* AGREEMENTS AGREEMENT* AGREEMENTS
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Management Fees............ 0.60% 0.60% 0.60% 0.60%
12b-1 Fees**............... 0.25% None 0.25% None
Other Expenses............. 1.52% 0.67% 1.21% 0.60%
Total Expenses***..... 2.37% 1.27% 2.06% 1.20%
</TABLE>
- ------------------
* Amounts payable to Analytic as a management fee, as sub-adviser to the
Analytic Enhanced Equity Fund and the Analytic Defensive Equity Fund, would
be 0.40% with respect to each such Fund. Each such fee would be payable to
Analytic from PBA's monthly advisory fee received from such Fund.
** Effective January 25, 1999, PBHG Fund Distributors, the Company's current
distributor and a wholly-owned subsidiary of PBA, has voluntarily agreed to
waive its right to receive 12b-1 fees from the Funds.
*** FEES AND EXPENSES AFTER WAIVERS AND REIMBURSEMENTS. For each Fund, the
ratios stated in the table above are higher than the expenses you would
actually pay as an investor in the Fund. PBHG Fund Distributors has agreed
to waive its right to receive 12b-1 fees payable to it. In addition, due to
certain expense limits, PBA has agreed to waive its fees and reimburse the
Fund for certain expenses, and Analytic, if the New Advisory Agreements are
approved, has agreed to waive its fees and reimburse the Fund. As a result,
the Funds are expected to incur no greater than the following total
operating expenses during the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
ANALYTIC ENHANCED EQUITY FUND ANALYTIC DEFENSIVE EQUITY FUND
----------------------------- -------------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Actual Expenses............ 1.16% 0.99% 1.16% 0.99%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ANALYTIC MASTER ANALYTIC SHORT-TERM
FIXED INCOME FUND GOVERNMENT FUND
------------------------------- -------------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT(1) AGREEMENTS AGREEMENT(1) AGREEMENTS
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Management Fees.......... 0.45% 0.45% 0.30% 0.30%
12b-1 Fees(2)............ 0.25% None 0.25% None
Other Expenses........... 1.98% 2.74% 2.67% 2.43%
Total Expenses(3)... 2.68% 3.19% 3.22% 2.73%
</TABLE>
- ------------------
(1) Amounts payable to Analytic as a management fee, as sub-adviser to the
Analytic Master Fixed Income Fund and the Analytic Short-Term Government
Fund, would be 0.25% and 0.10%, respectively, from each such Fund. Each such
fee would be payable to Analytic from PBA's monthly advisory fee received
from such Fund.
(2) Effective January 25, 1999, PBHG Fund Distributors, the Company's current
distributor and a wholly-owned subsidiary of PBA, has voluntarily agreed to
waive its right to receive 12b-1 fees from the Funds.
(3) FEES AND EXPENSES AFTER WAIVERS AND REIMBURSEMENTS. For each Fund, the
ratios stated in the table above are higher than the expenses you would
actually pay as an investor in the Fund. PBHG Fund Distributors has agreed
to waive its right to receive 12b-1 fees payable to it. In addition, due to
certain expense limits, PBA has agreed to waive its fees and reimburse the
Fund for certain expenses, and Analytic, if the New Advisory Agreements are
approved, has agreed to waive its fees and reimburse the Fund. As a result,
the Funds are expected to incur no greater than the following total
operating expenses during the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
ANALYTIC MASTER ANALYTIC SHORT-TERM
FIXED INCOME FUND GOVERNMENT FUND
---------------------------- ----------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Actual Expenses.............. 1.01% 0.80% 0.86% 0.60%
</TABLE>
7
<PAGE>
Examples
The examples below assume you invest $10,000 in each Fund for the periods
shown and then redeem all of your shares at the end of those periods. The
examples also assume that you earned a 5% return on your investment each year
and that you paid the total operating expenses stated above throughout the
period of your investment. The examples reflect the estimated gross expense
ratios of such Funds. Although your actual costs may be higher or lower, based
on these assumptions your costs would be:*
<TABLE>
<CAPTION>
ANALYTIC ENHANCED EQUITY FUND ANALYTIC DEFENSIVE EQUITY FUND
------------------------------ ------------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
1 Year....................... $240 $129 $209 $122
3 Years...................... $739 $403 $646 $381
</TABLE>
<TABLE>
<CAPTION>
ANALYTIC MASTER ANALYTIC SHORT-TERM
FIXED INCOME FUND GOVERNMENT FUND
---------------------------- ----------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
1 Year....................... $271 $322 $325 $276
3 Years...................... $832 $983 $992 $847
</TABLE>
- ------------------
* EXPENSES AFTER WAIVERS AND REIMBURSEMENTS. For each Fund, the expenses stated
in the examples above are higher than the expenses you would actually pay as
an investor in the Fund under the conditions set forth in the examples. PBHG
Fund Distributors has agreed to waive its right to receive 12b-1 fees payable
to it. In addition, due to certain expense limits, PBA has agreed to waive its
fees and reimburse the Fund for certain expenses, and Analytic, if the New
Advisory Agreements are approved, has agreed to waive its fees and reimburse
the Fund. As a result, you would be expected to incur no greater than the
following costs if the fee waivers and expense reimbursements were to remain
in effect for the periods presented below:
<TABLE>
<CAPTION>
ANALYTIC ENHANCED EQUITY FUND ANALYTIC DEFENSIVE EQUITY FUND
------------------------------ ------------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
1 Year....................... $118 $101 $118 $101
3 Years...................... $368 $315 $368 $315
</TABLE>
<TABLE>
<CAPTION>
ANALYTIC MASTER ANALYTIC SHORT-TERM
FIXED INCOME FUND GOVERNMENT FUND
---------------------------- ----------------------------
CURRENT NEW CURRENT NEW
ADVISORY ADVISORY ADVISORY ADVISORY
AGREEMENT AGREEMENTS AGREEMENT AGREEMENTS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
1 Year....................... $103 $ 82 $ 88 $ 61
3 Years...................... $322 $255 $274 $192
</TABLE>
Pursuant to an Expense Limitation Agreement with each Fund, PBA currently
waives that portion, if any, of the annual management fees payable by the
Company and pays that portion of expenses of each Fund to the extent necessary
to ensure that the "Total Expenses" of each Fund (exclusive of taxes, class
related expenses (such as 12b-1 fees and transfer agency fees), interest,
brokerage commissions, capitalized expenditures and extraordinary expenses) do
not exceed, as a percentage of daily net assets, on an annualized basis: 0.82%
of the Analytic Defensive Equity Fund and the Analytic
8
<PAGE>
Enhanced Equity Fund; 0.67% of the Analytic Master Fixed Income Fund; and 0.52%
of the Analytic Short-Term Government Fund. In addition, effective January 25,
1999, PBHG Fund Distributors, the Company's current distributor and a
wholly-owned subsidiary of PBA, has voluntarily agreed to waive its right to
receive 12b-1 fees from the Funds. Accordingly, the "Total Expenses" of each
Fund after giving effect to PBA's waiver of management fees and reimbursement of
certain expenses and PBHG Fund Distributors' waiver of 12b-1 fees would be as
follows:
<TABLE>
<S> <C>
Analytic Defensive Equity Fund.............................. 1.16%
Analytic Enhanced Equity Fund............................... 1.16%
Analytic Master Fixed Income Fund........................... 1.01%
Analytic Short-Term Government Fund......................... 0.86%
</TABLE>
PBA's contractual fee waiver/expense reimbursement arrangement for each
Fund will remain in effect for the current fiscal year or until the New Advisory
Agreements are approved, whichever occurs first. However, as provided in the
Expense Limitation Agreements, if prior to the date of the Meeting a Fund's
assets are greater than $75 million and its "Total Expenses" do not exceed the
limits previously noted, the Board of Directors may elect to reimburse PBA for
any fees it waived or expenses it reimbursed on that Fund's behalf during the
previous two fiscal years. It is unlikely that PBA will receive any
reimbursement from the Funds prior to the Meeting and the reimbursement
provision will terminate upon the approval of the New Advisory Agreements.
It is proposed that the 12b-1 Plan of each Fund will be terminated if
Analytic becomes the investment adviser to the Funds. In addition, if the New
Advisory Agreements are approved by shareholders, Analytic has agreed to waive
its fees or assume other expenses at least for the remainder of the current
fiscal year to the extent necessary to ensure that the "Total Expenses" of each
Fund (exclusive of taxes, interest, brokerage commissions, capitalized
expenditures and extraordinary expenses, but inclusive of transfer agency fees)
do not exceed, as a percentage of daily net assets, on an annualized basis:
0.99% for the Analytic Defensive Equity Fund and the Analytic Enhanced Equity
Fund; 0.80% for the Analytic Master Fixed Income Fund; and 0.60% for the
Analytic Short-Term Government Fund. Assuming the approval of the New Advisory
Agreements, the "Total Expenses" borne by a shareholder in each Fund after all
applicable fee waivers would be LOWER than the "Total Expenses" currently borne
by such shareholders. Analytic's fee waiver/expense reimbursement arrangement
for each Fund may not be terminated by Analytic for the rest of the current
fiscal year and may be terminated at any time at the option of the Fund.
9
<PAGE>
For the fiscal period ended December 31, 1998, advisory fees paid to PBA
pursuant to the Current Advisory Agreement (both before (gross) and after (net)
the voluntary fee reduction and expense reimbursements described above) and to
Analytic pursuant to the Current Sub-Advisory Agreement were as follows:(1)
<TABLE>
<CAPTION>
ANALYTIC
PBA PBA NET
FUND GROSS FEES NET FEES(2) FEES(3)
- ---- ---------- ----------- --------
<S> <C> <C> <C>
Analytic Defensive Equity Fund...................... $105,594 $ (6,918) $28,694
Analytic Enhanced Equity Fund....................... $ 67,396 $(39,965) $ 0
Analytic Master Fixed Income Fund................... $ 10,391 $(22,567) $ 0
Analytic Short-Term Government Fund................. $ 5,012 $(30,576) $ 0
</TABLE>
- ------------------
(1) As of the date of this Proxy Statement, the Company had not been in
operation for one full year. The Analytic Enhanced Equity Fund, the Analytic
Master Fixed Income Fund and the Analytic Short-Term Government Fund
commenced operations on July 27, 1998. Prior to that date, the predecessors
to such Funds, the Analytic Enhanced Equity Portfolio, the Analytic Master
Fixed Income Portfolio and the Analytic Short-Term Government Portfolio,
were all series of the Analytic Series Fund. The Analytic Defensive Equity
Fund commenced operations on August 31, 1998. Prior to that date, the Fund's
predecessor, the Analytic Defensive Equity Portfolio, was a series of the
Analytic Optioned Equity Fund, Inc.
(2) During the fiscal period ended December 31, 1998, PBA's wholly-owned
subsidiary, PBHG Fund Services, received fees from the Company in the amount
of $205,408 for certain administrative services provided to the Company
pursuant to an Administrative Services Agreement between the Company and
PBHG Fund Services and $29,997 for certain shareholder services provided to
the Company pursuant to a Shareholder Services Agreement between the Company
and PBHG Fund Services. During that same period, PBHG Fund Distributors, the
Company's distributor, received 12b-1 fees from the Company in the amount of
$88,546. In addition, during that same period, the Company reimbursed PBA
$4,200 for providing certain legal services to the Company.
(3) Each such fee is paid to Analytic from PBA's monthly net advisory fee from
such Fund.
Comparison of the New Advisory Agreements and the Current Advisory
Agreement and Current Sub-Advisory Agreement. The description of the New
Advisory Agreements set forth herein is qualified in its entirety by the
provisions of the Form of New Advisory Agreement, which is attached hereto as
Exhibit A.
Under the New Advisory Agreements, similar to the Current Advisory
Agreement and Current Sub-Advisory Agreement, subject to the supervision of the
Directors and officers of the Company and the policies set forth in the
Prospectus, Analytic will furnish continuously an investment program for, and
will make investment decisions on behalf of, the Funds and place all orders for
the purchase and sale of portfolio securities. Although the duties relating to
portfolio management, such as specific requirements relating to methods of
research, are not explicitly set forth in the New Advisory Agreements,
consistent with current practice in the UAM Funds, Analytic's duties are
expected to be substantially similar to the combined portfolio management duties
of PBA and Analytic under the Current Advisory and Current Sub-Advisory
Agreements, respectively. The New Advisory Agreements also differ from the
Current Advisory Agreement in that the New Advisory Agreements do not explicitly
contemplate or permit Analytic to delegate any of its duties to a sub-adviser.
In connection with providing advisory services to the Funds, both the New
Advisory Agreements and the Current Advisory Agreement and Current Sub-Advisory
Agreement direct the adviser to seek, in placing orders with brokers or dealers,
the best price and execution available, except to the extent it may be permitted
to pay higher brokerage commissions for brokerage and research services as
described below. The determination of what may constitute best price and
execution by a broker-dealer in effecting a securities transaction involves a
number of considerations, including, without limitation, the overall net
economic result to a Fund (involving price paid or received and any commissions
and other costs paid), the efficiency with which the transaction is effected,
the ability to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute
10
<PAGE>
possibly difficult transactions in the future and the financial strength and
stability of the broker. Because of such factors, a broker-dealer effecting a
transaction may be paid a commission higher than that charged by another
broker-dealer. Most of the foregoing are judgment considerations.
As permitted by the New and Current Advisory and Sub-Advisory Agreements
and Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"Act"), and subject to such policies as the Directors of the Company may
determine, the adviser or sub-adviser may pay an unaffiliated broker or dealer
that provides "brokerage and research services" (as defined in the Act) to the
adviser an amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction. Analytic may consider the receipt of
research services as a factor in selecting brokers to effect portfolio
transactions for the Funds and will receive such services from brokers who are
expected to handle a substantial amount of a Fund's portfolio transactions.
Research services may include a wide variety of analyses and reports on such
matters as economic developments, industries, companies, securities and
portfolio strategy. Analytic will not necessarily use such research in servicing
the Company; other clients of Analytic may therefore benefit.
Although the New Advisory Agreements and Current Advisory and Sub-Advisory
Agreements all require the adviser or sub-adviser to render regular reports to
the Board and furnish any information the Board requests, the Current Advisory
Agreement also requires PBA to notify the Company immediately of certain
specified material developments. Under the Current Advisory Agreement, PBA is
also required to comply with the Prospectus of each Fund and applicable law.
While the New Advisory Agreements and the Current Sub-Advisory Agreement do not
expressly require the notifications above, under such Agreements the adviser or
sub-adviser, as the case may be, is required to comply with the Prospectus of
each Fund and applicable law. Although not required by the New Advisory
Agreements, Analytic has undertaken to notify the Company in the event any of
the material developments specified in the Current Advisory Agreement occur.
With regard to expenses, the New Advisory Agreements differ in several
respects from the Current Advisory Agreement. Although both Agreements require
the adviser to provide the Company with office facilities, equipment, personnel
and other services at the request of the Directors, under the New Advisory
Agreements such services and facilities are billed to the Company at Analytic's
cost while under the Current Advisory Agreement they are provided free of
charge; however, the Company is not expected to require any such services or
facilities for the foreseeable future, and, thus, there would be no difference
in cost to each Fund in this regard. In addition, unlike the requirements of the
Current Advisory Agreement, Analytic is not directed to provide at its own
expense the resources necessary for complying with state reporting requirements
and providing communications to stockholders (other than communications such as
prospectuses, statements of additional information, supplements thereto and
proxies, which costs under the Current Advisory and Sub-Advisory Agreements and
the New Advisory Agreements are borne by each Fund). As a result of the
differences outlined in this paragraph, these expenses will be borne by each
Fund, but these differences are not expected to result in a material increase in
any Fund's expenses.
The Current Advisory Agreement provides that each Fund pays all of its
expenses which are not specifically assumed by PBA under the terms of the
Current Advisory Agreement, and that agreement provides examples of such
expenses which are not assumed by PBA. The New Advisory Agreements take a
consistent approach, indicating that each Fund will bear all of its expenses not
expressly assumed by Analytic. However, unlike the Current Advisory Agreement,
the New Advisory Agreements do not set forth examples of the expenses to be paid
by the Fund. The Current Sub-Advisory Agreement does not address allocation of
expenses, because those matters are addressed in the Current Advisory Agreement.
Each New Advisory Agreement provides that it will continue in effect from
its initial effective date for an initial term of two years or until the date of
the first meeting of the shareholders of the Fund, and, if approved by a
majority of the outstanding voting securities of a Fund, thereafter only so long
as such continuance is approved at least annually by (i) the Directors or (ii) a
vote of a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the relevant Fund, provided that in either event the continuance is
also approved by a majority of the Directors who are not "interested persons"
(as defined in the 1940 Act) of any party to the Agreement. The Current Advisory
11
<PAGE>
Agreement is substantially similar, but there is no reference to the first
shareholder meeting. Like the Current Advisory Agreement, each New Advisory
Agreement automatically terminates on assignment and is terminable without
penalty by the Company on not less than 60 days' notice. Unlike the Current
Advisory Agreement, which allows for termination by the adviser on 60 days'
notice, the New Advisory Agreements provide for a 90 day notice period. The New
Advisory Agreements may only be amended by an affirmative vote of (i) a majority
of Directors who are not interested persons of any party to such Agreement and
(ii) the holders of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the relevant Fund. The Current Advisory Agreement is
substantially similar, but also requires a separate vote of the majority of all
Directors.
The New Advisory Agreements and the Current Advisory and Sub-Advisory
Agreements are substantially similar with respect to the standards under which
the adviser or sub-adviser, as the case may be, is subject to liability to the
Company or to any shareholder of the Company. The only differences among such
standards in the three Agreements are that: (i) unlike the Current Advisory
Agreement, in each New Advisory Agreement Analytic would also be expressly
liable for any loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services and (ii) although the Current
Sub-Advisory Agreement provides for liability for a breach of fiduciary duty
with respect to the receipt of compensation, it does not expressly state that
Analytic is liable for a mistake of law.
Board Deliberations. The current Directors have unanimously determined
that the proposed New Advisory Agreements are in the best interest of the
shareholders of each of the Funds and recommend their approval by such
shareholders at the Meeting.
At a meeting of the Directors held on January 25, 1999, Analytic proposed
that the Funds terminate their Current Advisory Agreement with PBA and enter
into New Advisory Agreements with Analytic, subject to shareholder approval.
Analytic indicated that certain administrative services currently provided by
PBA would be provided by UAM Fund Services, Inc., a wholly-owned subsidiary of
UAM, and by certain other wholly-owned subsidiaries of UAM (together, the "UAM
Service Affiliates"). This change in administrative services was not proposed
for approval by the current Directors, but may be approved by the new Directors
assuming they are elected.
The Directors reviewed the future prospects of the Funds in light of the
desire of PBA to resign and Analytic's intention to continue to provide
investment advisory services to the Funds and assume the overall
responsibilities for the management of the Funds.
During the course of their review and deliberation of the proposal, the
Directors evaluated the potential benefits and detriments to the Funds and their
shareholders. The Directors requested and received from Analytic and the UAM
Service Affiliates written materials containing relevant information about
Analytic and the UAM Service Affiliates and the proposed New Advisory
Agreements, including fee and expense information. In addition, the Directors
reviewed Analytic's investment decision-making process, brokerage allocation
methodology, portfolio securities allocation procedures, information about the
management of Analytic and the biographies of each portfolio manager,
comparative fee schedules, performance information, Analytic's code of ethics
and policies to detect and prevent insider trading, balance sheet and income
statement of Analytic, Form ADV and a detailed comparison of the Current
Advisory and Current Sub-Advisory Agreements with the New Advisory Agreements.
Representatives of Analytic and the UAM Service Affiliates reviewed the
foregoing information with the Directors and reviewed their current plans to
change certain service providers as described elsewhere in this proxy statement.
At a second meeting of the Board of Directors held on February 23, 1999,
PBA, Analytic and the UAM Service Affiliates provided the Directors with
additional information. The Directors also met with a nominee for director who
would not be considered an interested person of the Company, PBA or Analytic.
The Directors' primary consideration in approving the proposed New Advisory
Agreements was to maintain continuity of investment management for the Funds;
further, the Directors placed substantial weight on the fact that Analytic had
been the sub-adviser of the Funds and the investment adviser of the Predecessor
Funds and thereby had substantial experience in managing the Funds in a manner
which is consistent with the Funds' investment objectives and policies. Based
upon their evaluation of all of the information presented to them, and in light
of their duties under federal and state law, the Board of Directors of the Funds
unanimously determined that the proposed New
12
<PAGE>
Advisory Agreements are in the best interest of each of the Funds and their
respective shareholders and recommended their approval by shareholders of each
of the Funds at the Meeting.
Additional information concerning Analytic. The table below provides
certain information concerning each person who serves on the board of directors
and as a principal executive officer of Analytic.
<TABLE>
<CAPTION>
NAME/ADDRESS PRINCIPAL OCCUPATION
- ------------ --------------------
<S> <C>
Roger G. Clarke Director, Analytic Investors, Inc. President,
50 East North Temple Street Ensign Peak Advisors
Salt Lake City, UT 84150
Michael Flinn Director, Analytic Investors, Inc. President,
1325 4th Avenue, Suite 1900 The Flinn Company
Seattle, WA 98101
Harindra de Silva President, Analytic Investors, Inc.
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
Marie Nastasi Arlt Chief Operating Officer, Analytic Investors,
700 S. Flower Street, Suite 2400 Inc.
Los Angeles, CA 90017
Gregory McMurran Chief Investment Officer, Analytic Investors,
700 S. Flower Street, Suite 2400 Inc.
Los Angeles, CA 90017
Robert Bannon Managing Director, Analytic Investors, Inc.
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
</TABLE>
Analytic also acts as portfolio manager to the Growth Portfolio (the
"Portfolio"), a series of The Fulcrum Trust. The Portfolio has similar
investment objectives and policies to those of the Analytic Enhanced Equity
Fund. As of December 31, 1998, the Portfolio had assets of approximately $4.7
million. For the one-year period beginning September 15, 1998, pursuant to a
limitation agreement between the manager (the "Manager") of the Portfolio,
Allmerica Financial Investment Management Services, Inc., and Analytic, Analytic
receives as its fee for acting as portfolio manager to the Portfolio, the lesser
of (i) 0.80% of the average daily net assets of the Portfolio, and (ii) the
Performance Fee (as defined and more fully described below). After September 15,
1999, for its services as portfolio manager to the Portfolio, Analytic will
receive a monthly fee (the "Performance Fee") on the Portfolio's average daily
net assets which fee is calculated using the Portfolio's performance versus the
S&P 500 Index over the prior twelve months. The Performance Fee payable to
Analytic on an annual basis may vary from 0.00% to 4.00%, depending on the
Portfolio's performance against the S&P 500 Index. In any annual period in which
the Portfolio's performance, for example, equaled that of the S&P 500 Index,
Analytic would receive a fee equal to 1.50% of the average daily net assets of
the Portfolio.
Required Vote. Approval of each New Advisory Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the relevant Fund, which means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of such Fund or (2)
67% or more of the shares of such Fund present at the meeting if more than 50%
of the outstanding shares of such Fund are represented at the meeting in person
or by proxy. If the shareholders of any Fund do not approve the New Advisory
Agreement, the existing investment advisory arrangements with PBA and Analytic
will remain in effect with respect to such Fund and the Directors will take such
further action as they may deem to be in the best interests of the shareholders
of such Fund.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF EACH NEW ADVISORY AGREEMENT.
13
<PAGE>
II. ELECTION OF DIRECTORS
(PROPOSAL 2)
The current Directors, none of whom will continue to serve after the
Meeting, have nominated and proposed the election at the Meeting of the
following seven nominees (the "Nominees"): Nancy J. Dunn, James P. Pappas, John
T. Bennett, Jr., Philip D. English, William A. Humenuk, Norton H. Reamer and
Peter M. Whitman, Jr. The Nominees compose the current board of directors of the
UAM Funds. None of the Nominees currently serves as Director of the Company, and
Messrs. Pappas, Reamer and Whitman are interested persons of the Company and
Analytic.
The term of office of each person elected as a Director will be until the
next meeting held for the purpose of electing Directors and until such person's
successor is elected and qualified (or until such Director's earlier retirement,
resignation, death or disqualification). The Nominees have agreed to serve as
Directors if elected. If any of the Nominees should be unavailable for election
at the time of the Meeting (which is not presently anticipated), the persons
named as proxies may vote for another person in their discretion. The principal
occupations and business experience for the last five years of each Nominee,
Director and officer are as indicated in the table below.
NOMINEES, DIRECTORS AND OFFICERS INFORMATION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME AND AGE POSITION WITH THE COMPANY DURING THE PAST FIVE YEARS
- ------------ ------------------------- --------------------------
<S> <C> <C>
PROPOSED NEW DIRECTORS
John T. Bennett, Jr. (70)......... Nominee President of Squam Investment
Management Company, Inc. and Great
Island Investment Company, Inc.;
President of Bennett Management
Company from 1988 to 1993.
Philip D. English (50)............ Nominee President and Chief Executive
Officer of Broventure Company,
Inc.; Chairman of the Board of
Chektec Corporation and Cyber
Scientific, Inc.
William A. Humenuk (56)........... Nominee Executive Vice President and Chief
Administrative Officer of Philip
Services Corp.; formerly, a
Partner in the Philadelphia office
of the law firm Dechert Price &
Rhoads.
Norton H. Reamer (64)*............ Nominee Chief Executive Officer and
Chairman of the Board of UAM;
Director, Partner or Trustee of
each of the Investment Companies
of the Eaton Vance Group of Mutual
Funds.
Peter M. Whitman, Jr. (55)*....... Nominee Chairman and Chief Investment
Officer of Dewey Square Investors
Corporation since 1988; Director
and Chief Executive Officer of
H.T. Investors, Inc., formerly a
subsidiary of Dewey Square.
Nancy J. Dunn (47)................ Nominee Vice President for Finance and
Administration and Treasurer of
Radcliffe College since 1991.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME AND AGE POSITION WITH THE COMPANY DURING THE PAST FIVE YEARS
- ------------ ------------------------- --------------------------
<S> <C> <C>
James P. Pappas (46)*............. Nominee Senior Vice President of UAM
Investment Services, Inc. and UAM
Trust Company since January 1996;
Vice President of UAM Fund
Distributors, Inc. since December
12, 1995; formerly a Director and
Chief Operating Officer of CS
First Boston Investment Management
from 1993-1995.
CURRENT DIRECTORS
John R. Bartholdson (54).......... Director (since 1998) Chief Financial Officer and
Director, the Triumph Group, Inc.
(manufacturing) since 1992.
Harold J. Baxter (52)*............ Chairman of the Board and Chairman, Chief Executive Officer
Director and Director, Pilgrim Baxter &
(since 1998) Associates, Ltd. since April 1995.
Trustee, PBHG Fund Services since
May 1996. Chairman, Chief
Executive Officer and Director,
Pilgrim Baxter Value Investors,
Inc. ("Value Investors"), since
June 1996. Trustee, PBHG Fund
Distributors since January 1998.
Director, UAM since 1996.
Jettie M. Edwards (52)............ Director (since 1998) Consultant, Syrus Associates since
1986. Trustee, Provident
Investment Counsel Trust
(investment company) since 1992.
Trustee, EQ Advisors Trust
(investment company) since 1997.
Albert A. Miller (63)............. Director (since 1998) Principal and Treasurer, JK
Equipment Exporters since 1995.
Advisor and Secretary, the
Underwoman Shoppes Inc. (retail
clothing stores) since 1980.
Merchandising Group Vice
President, R.H. Macy & Co.,
1958-1995 (retired).
CURRENT OFFICERS**
Gary L. Pilgrim (58).............. President (since 1998) President, Chief Investment
Officer and Director, Pilgrim
Baxter & Associates, Ltd. since
1982. Trustee, PBHG Fund Services
since May 1996. Director, Value
Investors since June 1996.
Kathryn L. Stanton (40)........... Vice President, Assistant Vice President and Assistant
Secretary (both since 1998) Secretary of SEI and SEI
Investments Mutual Funds Services
since 1994 and SEI Investments
since 1996. Associate, Morgan,
Lewis & Bockius LLP (law firm),
1989-1994.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME AND AGE POSITION WITH THE COMPANY DURING THE PAST FIVE YEARS
- ------------ ------------------------- --------------------------
<S> <C> <C>
Todd Cipperman (33)............... Vice President, Assistant Vice President and Assistant
Secretary (both since 1998) Secretary of SEI and SEI
Investments Mutual Funds Services
since 1995 and SEI Investments
since 1996. Associate, Dewey
Ballantine (law firm) 1994-1995.
Associate, Winston & Strawn (law
firm) 1991-1994.
Michael J. Harrington (30)........ Vice President Director of Fund Services, Pilgrim
(since 1998) Baxter & Associates, Ltd. since
1994. Vice President, PBHG Fund
Services since May 1996. Vice
President, PBHG Fund Distributors
since January 1998. Account
Manager, SEI, 1991-1994.
Lee T. Cummings (35).............. Treasurer, Chief Financial Director of Mutual Fund
Officer and Controller Operations, Pilgrim Baxter &
(all since 1998) Associates, Ltd. since 1996.
Treasurer, PBHG Fund Services
since May 1996. President, PBHG
Fund Distributors since December
1998. Investment Accounting
Officer, Delaware Group of Funds,
1994-1996. Vice President,
Fund/Plan Services, Inc.,
1992-1994.
Brian F. Bereznak (37)............ Vice President Trustee and President, PBHG Fund
(since 1998) Services since May 1996. Chief
Operating Officer, Pilgrim Baxter
& Associates, Ltd., from 1993
through 1996. Vice President,
Pilgrim Baxter & Associates, Ltd.
since 1989. Director, Value
Investors June 1996 to October
1997.
John M. Zerr (36)................. Vice President and Secretary General Counsel and Secretary,
(both since 1998) Pilgrim Baxter & Associates, Ltd.,
since November 1996. General
Counsel and Secretary, Value
Investors since November 1996.
General Counsel and Secretary,
PBHG Fund Services since November
1996. General Counsel and
Secretary, PBHG Fund Distributors
since January 1998. Vice President
and Assistant Secretary, Delaware
Management Company, Inc. and the
Delaware Group of Funds,
1995-1996. Associate, Ballard
Spahr Andrews & Ingersoll (law
firm), 1987-1995.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME AND AGE POSITION WITH THE COMPANY DURING THE PAST FIVE YEARS
- ------------ ------------------------- --------------------------
<S> <C> <C>
Meghan M. Mahon (30).............. Vice President and Assistant Counsel, Pilgrim Baxter &
Secretary (since 1998) Associates, Ltd. since April 1998.
Assistant Vice President,
Assistant Secretary and Counsel,
Delaware Management Company, Inc.
and the Delaware Group of Funds
1997-1998. Associate, Drinker
Biddle & Reath LLP (law firm)
1994-1997. Associate, McAleese,
McGoldrick & Susanin (law firm)
1993-1994.
</TABLE>
- ------------------
* Nominee/Director who is an "interested person" (as defined in the 1940 Act)
of the Company, PBA or Analytic. Mr. Baxter is an "interested person" by
reason of being Chairman and Chief Executive Officer of PBA and a Director of
UAM. Mr. Reamer would be an "interested person" by reason of being Chief
Executive Officer and Chairman of the Board of UAM. Mr. Whitman would be an
"interested person" by reason of being Chairman and Chief Executive Officer
of Dewey Square Investors Corporation, an affiliate of UAM. Mr. Pappas would
be an "interested person" by reason of being Senior Vice President of UAM
Investment Services, Inc. and UAM Trust Company and a Principal of UAM Fund
Distributors, Inc., affiliates of UAM. As a result of these affiliations,
Messrs. Baxter, Reamer, Whitman and Pappas may have an interest in the
approval of Proposal 1.
** If the New Advisory Agreements are approved, the current officers of the
Company are expected to resign immediately after the Meeting and the new
officers of the Company are expected to be certain current officers of the
UAM Funds, as well as certain employees of Analytic.
The principal occupations of the Nominees, Directors, and officers for the
last five years have been with the employers as shown above, although in some
cases they have held different positions with such employers. The mailing
address of each of the Directors and officers is c/o Pilgrim Baxter &
Associates, Ltd., 825 Duportail Road, Wayne, PA 19087. The mailing address of
each of the Nominees is c/o UAM Fund Services, Inc., 211 Congress Street, 4th
Floor, Boston, MA 02116.
As of February 19, 1999, no Director, officer or Nominee owned greater than
1% of the outstanding shares of any Fund. In addition, as of February 19, 1999,
the Directors and officers beneficially owned as a group less than 1% of the
outstanding shares of each Fund.
As of February 19, 1999, those securities of UAM that are known to be
beneficially owned by the Directors, officers, and Nominees are:(1)
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF PERCENTAGE
NAME(2) ISSUED SHARES SHARES ISSUABLE(3) TOTAL OWNERSHIP
- ------- ------------- ------------------ --------- ----------
<S> <C> <C> <C> <C>
Harold J. Baxter............... 0 888,440 888,440 1.4%
Gary L. Pilgrim................ 0 888,440 888,440 1.4%
Norton H. Reamer(4)............ 2,149,996 237,613 2,387,609 3.8%
</TABLE>
- ------------------
(1) Unless otherwise noted, these individuals have sole voting and investment
power over all shares listed. Where applicable, ownership is subject to
community property laws. In accordance with SEC rules, the percentage listed
in the final column is calculated for each individual by treating his
issuable shares as outstanding.
(2) In addition, Brian F. Bereznak, Michael J. Harrington, James P. Pappas and
Peter M. Whitman, Jr. each own, and upon issuance of any shares issuable
upon exercise of warrants or options would own, less than 1% of the
outstanding shares of capital stock of UAM.
(3) The column headed "Number of Shares Issuable" lists, unless otherwise noted,
shares issuable upon the exercise of warrants or stock options within the
next 60 days.
(4) The column headed "Number of Shares Issuable" lists: (a) shares issuable
upon the exercise of warrants or stock options within the next 60 days; (b)
amounts allocated to this individual's account in UAM's Deferred
Compensation Plan as notional shares; and (c) shares subject to deferred
delivery under UAM's Stock Option Deferral Plan. Notional shares under UAM's
Deferred Compensation Plan and shares subject to deferred delivery under
UAM's Stock Option Deferral Plan are evidenced by a bookkeeping entry.
Holders of these shares have no voting or investment power.
17
<PAGE>
The Board of Directors met seven times during the fiscal period ended
December 31, 1998. The Company has a standing audit committee, composed of
Messrs. Bartholdson and Miller and Ms. Edwards, which is responsible for the
selection of the Company's auditors and monitoring the audit process and its
results. Messrs. Bartholdson and Miller and Ms. Edwards attended two audit
committee meetings that were held during the fiscal period ended December 31,
1998. The Company has a standing nominating and compensation committee, also
composed of Messrs. Bartholdson and Miller and Ms. Edwards, which is responsible
for the selection and nomination of individuals to serve as Director of the
Company and for setting the compensation to be paid to each Director by the
Company for services as a Director. No nominating and compensation committee
meetings were held during the fiscal period ended December 31, 1998. The
nominating committee will consider nominees recommended by stockholders. Such
recommendations should be submitted in writing to John M. Zerr, Secretary to the
Company, PBHG Advisor Funds, 825 Duportail Road, Wayne, PA 19087.
The Company paid $14,500 to each Director who is not an "interested person"
of the Company for the fiscal period ending December 31, 1998, which includes
$1,000 for each Board meeting and $500 for each committee meeting attended. The
following table sets forth the amount of the compensation paid by the Company
during its fiscal period ended December 31, 1998, to the persons who currently
serve as Directors:
COMPENSATION TABLE FOR CURRENT DIRECTORS*
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM COMPANY &
NAME OF PERSON, POSITION FROM COMPANY** FUND COMPLEX***
- ------------------------ -------------- ---------------
<S> <C> <C>
John R. Bartholdson................... $14,500 $71,333
Director
Harold J. Baxter...................... None None
Director
Jettie M. Edwards..................... $14,500 $71,333
Director
Albert A. Miller...................... $14,500 $71,333
Director
</TABLE>
- ------------------
* As of the date of this Proxy Statement, the Company had not been in
operation for one full year. The Analytic Enhanced Equity Fund, the Analytic
Master Fixed Income Fund and the Analytic Short-Term Government Fund each
commenced operations on July 27, 1998, and the Analytic Defensive Equity
Fund commenced operations on August 31, 1998. As a result, the compensation
from the Company stated in the Table reflects only the period between July
27, 1998 and December 31, 1998. The compensation from the Fund Complex --
the Company, The PBHG Funds, Inc. and PBHG Insurance Series, Inc. --
reflects the entire fiscal year.
** The Company does not currently provide any pension or retirement benefits
for its Directors.
*** Reflects total payments received during 1998 from the Fund Complex. As of
December 31, 1998, there were two companies (consisting of 21 portfolios) in
the Fund Complex in addition to the Company and its portfolios.
18
<PAGE>
It is expected that the Company will pay each Director elected at the
Meeting $2,617 for the fiscal year ending December 31, 1999, which includes
$2,000 (which amount is allocated among all UAM Funds) and $150 per portfolio or
fund for each Board meeting attended. The following table sets forth the amount
of the compensation estimated to be paid by the Company during its fiscal year
ending December 31, 1999, to the Nominees (assuming they had been elected as of
January 1, 1999):
ESTIMATED COMPENSATION TABLE FOR NOMINEES
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM COMPANY &
NAME OF PERSON, POSITION FROM COMPANY(1) FUND COMPLEX(2)
- ------------------------ --------------- ---------------
<S> <C> <C>
John T. Bennett, Jr.................. $2,617 $38,000
Nominee
Philip D. English.................... $2,617 $38,000
Nominee
William A. Humenuk................... $2,617 $38,000
Nominee
Norton H. Reamer..................... None None
Nominee
Peter M. Whitman, Jr................. None None
Nominee
Nancy J. Dunn........................ $2,617 $38,000
Nominee
James P. Pappas...................... None None
Nominee
</TABLE>
- ------------------
(1) The UAM Funds do not currently provide pension or retirement benefits to its
directors or trustees, and currently it is not expected that the Company
would provide such benefits to the Nominees.
(2) Reflects total payments received during 1998 from the Fund Complex -- the
UAM Funds. As of December 31, 1998, there were three companies (consisting
of 46 portfolios) in the Fund Complex.
Required Vote. The election of Directors of the Company will be by a
plurality of the shares of the Company (all four Funds of the Company voting
together as a single class) present at the Meeting in person or by proxy, if a
quorum is present. Shares represented by duly executed proxies will be voted for
the election of the persons named herein as Nominees, unless such authority has
been withheld in accordance with the instructions on the form of proxy. If no
instructions are made, the proxy will be voted for such Nominees.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR ELECTION OF
EACH OF THE NOMINEES.
19
<PAGE>
III. RATIFICATION OF ACCOUNTANTS
(PROPOSAL 3)
The Board of Directors has selected PricewaterhouseCoopers LLP as the
auditors for the Company for the fiscal year ending December 31, 1999 subject to
removal by a majority of the outstanding shares of the Company. Upon the
reasonable request of any stockholder of the Company, representatives of
PricewaterhouseCoopers LLP will attend the meeting, and will, as they see fit,
make a statement and/or respond to appropriate questions.
Required Vote. The ratification of the selection of PricewaterhouseCoopers
LLP as the independent public accountants for the Company will require a
majority of the votes cast (all four Funds of the Company voting together as a
single class) at the Meeting in person or by proxy, if a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY.
20
<PAGE>
IV. OTHER INFORMATION
Information Regarding the Company's Administrator. The Company's
administrator is PBHG Fund Services, located at 825 Duportail Road, Wayne, PA
19087. It is currently expected that the administrator will be replaced shortly
after the Meeting by UAM Fund Services, Inc., located at 211 Congress Street,
Boston, MA 02110.
Information Regarding the Company's Sub-Administrator. The Company's
sub-administrator is SEI Fund Resources ("SEI"), located at One Freedom Valley
Road, Oaks, PA 19456. It is currently expected that the Company's
sub-administrator will either continue to be SEI or that SEI will be replaced
shortly after the Meeting by Chase Global Funds Services Company, located at 73
Tremont Street, Boston, MA 02108.
Information Regarding the Company's Custodian. The Company's custodian is
First Union National Bank, located at 530 Walnut Street, Philadelphia, PA 19106.
Information Regarding the Company's Distributor. The Company's distributor
is PBHG Fund Distributors, located at 825 Duportail Road, Wayne, PA 19087. It is
currently expected that the distributor will be replaced shortly after the
Meeting by UAM Fund Distributors, Inc., located at 211 Congress Street, Boston,
MA 02110.
Information Regarding the Company's Independent Public Accountant. The
Company's independent public accountant is PricewaterhouseCoopers LLP, located
at 2400 Eleven Penn Center, Philadelphia, PA 19103.
Information Regarding the Company's Transfer, Sub-Transfer and
Dividend-Paying Agent. The Company's transfer and dividend-paying agent is DST
Systems, Inc., located at P.O. Box 419534, Kansas City, MO 64141-6534. It is
currently expected that the transfer and dividend-paying agent will become,
shortly after the Meeting, UAM Fund Services, Inc., located at 211 Congress
Street, Boston, MA 02110. DST Systems, Inc. is expected to become the Company's
sub-transfer agent shortly after the Meeting.
Other Business. As of the date of this Proxy Statement, the Directors know
of no business to come before the Meeting other than as set forth in the Notice
of the Special Meeting of Shareholders. However, if any other matters properly
come before the Meeting, it is their intention that proxies that do not contain
specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named in the enclosed form of proxy.
Adjournment. In the event that sufficient votes in favor of any of the
proposals set forth in the Notice of the Special Meeting of Shareholders are not
received by the time scheduled for the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting after the date set for the
original Meeting to permit further solicitation of proxies with respect to any
such proposals. In addition, if, in the judgment of the persons named as
proxies, it is advisable to defer action on one or more proposals, the persons
named as proxies may propose one or more adjournments of the Meeting for up to
120 days from the record date. Any such adjournments will require either (i) the
affirmative vote of a majority of the votes cast on the question in person or by
proxy at the session of the Meeting or (ii) the approval of any officer entitled
to preside or act as secretary of the Meeting to be adjourned, as permitted by
the Company's By-Laws. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those proxies required to
be voted against any of such proposals. The costs of any additional solicitation
and of any adjourned session will be borne by PBA and Analytic. Any proposals
for which sufficient favorable votes have been received by the time of the
Meeting will be acted upon and such action will be final regardless of whether
the Meeting is adjourned to permit additional solicitation with respect to any
other proposal.
21
<PAGE>
Annual Report. The Company's Annual Report to Shareholders is being mailed
to shareholders with this proxy. Additional copies of the Annual Report may be
obtained without charge from the Company by writing to P.O. Box 419229, Kansas
City, MO 64141-6229, or by calling toll-free (888) 800-2685.
Date of Receipt of Shareholders' Proposals for Subsequent Meetings of
Shareholders. The Company's Articles of Incorporation and By-Laws do not
provide for annual meetings of shareholders, and the Company currently does not
intend to hold any annual meetings. Shareholder proposals for inclusion in the
Company's proxy statement for any special meeting must be received by the
Company a reasonable period of time before the Company begins to print and mail
its proxy materials. The timely submission of a proposal does not guarantee its
inclusion.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A
QUORUM IS PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL OR IN PERSON. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, IF YOU
CHOOSE TO VOTE BY MAIL.
MARCH 1, 1999
22
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
[NAME OF COMPANY]
NAME OF PORTFOLIO
AGREEMENT made this ____ day of ___________, 1999 by and between [Name of
Company], a Maryland corporation (the "Fund"), and Analytic Investors, Inc., a
California corporation (the "Adviser").
1. DUTIES OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund's [Name of Portfolio] (the "Portfolio") for the
period and on such terms as set forth in this Agreement. The Fund employs the
Adviser to manage the investment and reinvestment of the assets of the
Portfolio, to continuously review, supervise and administer the investment
program of the Portfolio, to determine in its discretion the securities to be
purchased or sold and the portion of the Portfolio's assets to be held
uninvested, to provide the Fund 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 concerning the Adviser's discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Directors of the Fund, and in compliance with the objectives, policies and
limitations set forth in the Portfolio's prospectus and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, 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.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the brokers
or dealers that will execute the purchases and sales of securities of the
Portfolio and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Subject to
policies established by the Board of Directors of the Fund, the Adviser may also
be authorized to effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty created
by this Agreement or otherwise. The Adviser will promptly communicate to the
officers and Directors of the Fund such information relating to portfolio
transactions as they may reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the
Adviser in monthly installments, an advisory fee calculated by applying the
following annual percentage rate to the Portfolio's average daily net assets for
the month: ________%.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current fiscal month as a percentage of the
total number of days in such month.
4. OTHER SERVICES. At the request of the Fund, the Adviser in its
discretion may make available to the Fund office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the Fund
at the Adviser's cost.
A-1
<PAGE>
5. REPORTS. The Fund and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. STATUS OF 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.
7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940, as amended
("1940 Act"), the Adviser shall not be subject to any liability whatsoever to
the Fund, or to any shareholder of the Fund, for any error or judgment, mistake
of law or any other act or omission in the course of, or connected with,
rendering services hereunder including, without limitation, for any losses that
may be sustained in connection with the purchase, holding, redemption or sale of
any security on behalf of the Portfolio.
8. PERMISSIBLE INTERESTS. Subject to and in accordance with the Articles
of Incorporation of the Fund and the Articles of Incorporation of the Adviser,
Directors, officers, agents and shareholders of the Fund are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Fund as Directors, officers,
agents, shareholders or otherwise; and the Adviser (or any successor) is or may
be interested in the Fund as a shareholder or otherwise; and the effect of any
such interrelationships shall be governed by said Articles of Incorporation and
the provisions of the 1940 Act.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall continue until the earlier of _____________, 200_ or the
date of the first annual or special meeting of the shareholders of the Portfolio
and, if approved by a majority of the outstanding voting securities of the
Portfolio, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Directors of the Fund or (c) by vote of a majority of the
outstanding voting securities of the Portfolio; provided however, that if the
shareholders of the Portfolio fail to approve the Agreement as provided herein,
the Adviser may continue to serve in such capacity in the manner and to the
extent permitted by the 1940 Act and rules thereunder. This Agreement may be
terminated by the Portfolio at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser. This Agreement may be terminated by the Adviser
at any time, without the payment of any penalty, upon 90 days' written notice to
the Fund. This Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the other party at the
principal office of such party.
As used in this Section 9, the terms "assignment", "interested persons",
and "a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by vote of a majority
of those members of the Board of Directors of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) for changes
or amendments requiring shareholder approval pursuant to the 1940 Act or other
applicable law, by vote of a majority of the outstanding voting securities of
the Portfolio.
A-2
<PAGE>
11. SEVERABILITY. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this ____ day of __________, 1999.
<TABLE>
<S> <C>
ANALYTIC INVESTORS, INC. [NAME OF COMPANY]
By By
-------------------------------- ------------------------------
[Name] [Name]
[Title] [Title]
</TABLE>
A-3
<PAGE>
SEI INVESTMENT DISTRIBUTION CO.
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
PBHG ADVISOR FUNDS, INC.
ANALYTIC DEFENSIVE EQUITY FUND
P.O. Box 419229
Kansas City, MO 64141-8229
The undersigned hereby appoints Harold J. Baxter and John M. Zerr, and each
of them, as proxies of the undersigned (the "Proxies"), each with full power to
appoint his substitute, and hereby authorizes each of them to represent and vote
all the shares of common stock of PBHG Advisors Funds, Inc. (the "Company") held
of record as of February 19, 1999 at the Special Meeting of Shareholders to be
held at the offices of Ballard Spahr Andrews & Ingersoll, LLP, 800 Hudson
Square, 5th Floor, Camden, NJ 06102-1115 on April 5, 1999, at 10:00 a.m.
(Eastern Time), and at any and all of the adjourment(s) or postponement(s)
thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. WHEN PROPERLY
EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTE
FOR APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT, FOR ELECTION OF THE
DIRECTORS AND FOR RATIFICATION OF THE SELECTION OF THE INDEPENDENT PUBLIC
ACCOUNTANTS. In their discretion, the Proxies are each authorized to vote upon
such other business as may properly come before the meeting and any adjournments
or postponements of the meeting unless otherwise prohibited by the undersigned.
A shareholder wishing to vote in accordance with the Board of Directors'
recommendation need only sign and date this proxy and return it in the envelope
provided.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of A Special Meeting of Shareholders and the Proxy Statement with respect
thereto and hereby revoke(s) any proxy or proxies heretofore given. This proxy
may be revoked at any time before it is exercised.
PLEASE VOTE, DATE AND SIGN BELOW AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name(s) appear(s) on this proxy card. When shares are
held by joint tenants, both should sign. When signing as executor,
administrator, attorney, trustee, or guardian, please give the appropriate and
complete title. When signing as an officer of a corporation, please indicate the
corporation name and the office held by the authorized signing officer. When
signing on behalf of a partnership, please sign the partnership name and the
name of the authorized person signing.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
<TABLE>
<S> <C> <C>
ANADEF KEEP THIS PORTION FOR YOUR RECORDS
- ---------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ANALYTIC DEFENSIVE EQUITY FUND
For address changes and/or comments, please check / /
this box and write them on the back where indicated.
Vote On Directors For Withhold For All To withhold authority to vote, mark
All All Except "For All Except" and write the nominee's
2. To elect as directors the nominees listed: number on the line below.
01) John T. Bennett, Jr., 02) Philip D. English, / / / / / /
03) William A. Humenuk, 04) Norton H. Reamer, ________________________________________
05) Peter M. Whitman, Jr., 06) Nancy J. Dunn,
07) James P. Pappas
Vote On Proposals For Against Abstain
1. To approve the new investment advisory agreement between your Fund and Analytic Investors, Inc. / / / / / /
3. To ratify the selection by the Board of Directors of PricewaterhouseCoopers LLP as independent
public accountants for the fiscal year ending December 31, 1999. / / / / / /
______________________________________________ ______________________________________________
______________________________________________ ______________________________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
</TABLE>
