WPCD
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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X Deinitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Vontobel Funds, Inc.
(Name of Registrant as Specified In ItsCharter)
(Name of Person(s) Filing Proxy Statement, if other thanthe
Registrant)
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X No fee required.
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VONTOBEL FUNDS, INC.
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
SAND HILL PORTFOLIO MANAGER FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on
[July 11, 1997 ]
Notice To Shareholders:
A special meeting of shareholders (the "Meeting") of SandHill Portfolio
Manager Fund (the "Fund") of Vontobel Funds, Inc. (the "Company")will be
held at 10:00 a.m. local time, on July 11, 1997, at the office of
the Company at 1500 Forest Avenue, Richmond, Virginia, for thefollowing
purposes:
1. To approve or disapprove an Agreement and Plan ofReorganization (the
"Plan") pursuant to which the Fund will transfer all of itsassets to
a newly-created series (the "New Fund") of The World Funds,Inc. (the
"World Funds"), in exchange for shares of common stock ofthe New
Fund, as set forth in the accompanying Proxy Statement,
including authorization for the directors of the Company tovote
shares of the New Fund acquired in the reorganization asprovided in
the Plan.
2. To transact such other business as may properly come beforethe Meeting.
Shareholders of record at the close of business on May 30, 1997 areentitled
to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OFDIRECTORS
John Pasco, III
Chairman June 17, 1997
Richmond, Virginia
IMPORTANT
Whether or not you plan to attend the meeting, please mark yourvoting
instructions on the enclosed proxy and promptly date, sign andreturn it
in the enclosed envelope. No postage is required if mailed in theUnited
States. We ask your cooperation in helping the Fund by mailingyour proxy
promptly. 1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
804-285-8211
___________________________
SAND HILL PORTFOLIO MANAGER FUND
___________________________
PROXY STATEMENT
Special Meeting of Shareholders
to be held on
July 11, 1997
This Proxy Statement is furnished in connection with thesolicitation of
proxies on behalf of the Board of Directors of Vontobel Funds, Inc.(the
"Company") to be used at the Special Meeting of the Shareholders ofthe Sand
Hill Portfolio Manager Fund (the "Fund"), to be held at 10:00 a.m.local time
on July 11, 1997, at the offices of the Company at 1500 Forest
Avenue, Richmond, Virginia, and at any adjournment thereof (suchmeeting and
any adjournment being referred to as the "Meeting"), for thepurposes set
forth in the accompanying Notice of Meeting.
Proxies will be voted in accordance with the instructionscontained
thereon. If no instruction is given, proxies that are signed andreturned
will be voted in favor of the proposals. A shareholder may revokehis or
her proxy at any time before it is exercised by delivering awritten notice
to the Fund expressly revoking such proxy, by executing andforwarding to
the Fund a subsequently dated proxy, or by attending the Meetingand voting
in person. This proxy statement and the accompanying form of proxyare being
first sent to shareholders on or about June 18, 1997. In the eventthat
at the time the Meeting is called to order a quorum is not presentin person
or by proxy, the meeting may be adjourned to a later date to permitthe Fund
to obtain a quorum. In the event a quorum is present butsufficient votes
adjourned to solicit additional votes. In that event, only thoseproxies
that have been received which would be voted to approve theproposal will be
voted in favor of an adjournment, and those proxies that have beenreceived
which would be voted against the proposals will be voted againstthe
adjournment.
As of the close of business on May 30, 1997, the record datefixed by the
Board of Directors for the determination of shareholders of theFund entitled
to notice of and to vote at the Meeting (the "Record Date"),563,722.387
shares of the Fund were outstanding. Each share is entitled to onevote.
The vote of the holders of a "majority of the outstandingvoting
securities" of the Fund, as defined in the 1940 Act, representedat the
meeting in person or by proxy, is required for the approval of eachproposal
("1940 Act Majority Vote"). A 1940 Act Majority Vote means thevote of (a)
at least 67% of the shares of the Fund present in person or byproxy, 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 isless.
Under Maryland law, abstentions and broker non-votes will beincluded 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 countedfor purposes
of determining whether the proposals have been approved. No otherbusiness may
properly come before the Meeting.
The cost of solicitation, including preparing and mailingthe proxy
materials, will be borne by the Fund's shareholder servicing agent,which
expects to be reimbursed for such costs by Vontobel USA Inc., whichserves
as investment advisor to other series of the Company. In additionto investment
advisor may solicit proxies by telephone, telegraph andpersonal
interviews. It is not anticipated that any of the foregoingpersons will be
specially engaged for that purpose.
PRINCIPAL SHAREHOLDERS
As of the Record Date, the following are known by theCompany to be
beneficial owners of more than five percent of the Fund'soutstanding shares:
Number of Shares Percentage
Name & Address Beneficially Owned ofFund
National Financial Services 143,286.581 25.418%
One World Financial Ceter
200 Liberty St., 4th Floor
New York, N.Y. 10281-1003
Arthur & Anna Kull 48,851.210 8.666%
280 West Harvest Rund
Idaho Falls, ID 83404
Marianne Conley 33,880.832 6.010%
4860 Valley Forge Lane
Plymouth, MN 55442
TOTAL 226,018.623 40.094%
As of the Record Date, the Directors and executive officersof the
Company, as a group, beneficially owned less than 1% of the Fund's
outstanding shares.
Item 1. APPROVAL OR DISAPPROVAL OF THE PROPOSED
REORGANIZATION
On May 13, 1997, the Board of Directors of the Companyapproved an the
Fund, and The World Funds, Inc. (the "World Funds"), on behalfof the
Sand Hill Portfolio Manager Fund (the "New Fund), a series of theWorld
Funds. The Plan provides for the transfer of all of the assets
of the Fund to the New Fund solely in exchange for shares of commonstock of
the New Fund and the assumption by the New Fund of all of theliabilities of
the Fund, followed by the pro-rata distribution of those shares, onthe
closing date, to the holders of the Fund's shares (the"Reorganization").
The Company will liquidate the Fund promptly after theReorganization.
A copy of the Plan is attached hereto as Exhibit A.
The New Fund will operate as a registered, open-endmanagement investment
company with the same investment objective, policies andrestrictions as the
Fund and, subject to approval by its Board of Directors andshareholders,
will enter into an investment advisory agreement with Sand HillAdvisors,
Inc. (the "Advisor") identical in all material respects to theFund's
existing investment advisory agreement with the Advisor. Furthermore, the New
Fund intends to enter into administration, custody, distribution,pricing
and transfer agency agreements with the Fund's current serviceproviders on
substantially the same terms as the Fund's existing agreements.
Reasons for the Reorganization
When the Fund was organized, it was one of four series of aregistered
investment company called The World Funds, Inc. Two of the serieswere
advised by Vontobel USA Inc. ("VUSA"), and one series was advisedby Newport
Fund Management, Inc. In the intervening period, that investmentcompany
has changed its name to Vontobel Funds, Inc. to reflect the factthat six of
the seven series presently in operation or in organization areadvised by
VUSA.
Due to the increase in the number of series of the Company managed by
VUSA (the "Vontobel Series"), management of the Fundconsidered
whether the efforts and attention applied to administrative andmarketing
efforts on behalf of the Fund may be overshadowed by thecorresponding
efforts on behalf of the Vontobel Series. Management concludedthat, despite
efforts to avoid any adverse effect on the Fund, it would be in the
interest of shareholders of the Fund to become a part of a fund inwhich one
other group did not have a dominating role. They concluded that itwould be
more efficient from an administrative standpoint to establish aseparate
entity to focus on the needs of the Fund without the distractionsarising
from operating the Vontobel Series.
Furthermore, management believes that reorganizing the Fundinto an
entity separate from the Vontobel Series may open up additionaldistribution
channels for the New Fund's shares. For example, the New Fundmight be able
to take advantage of different marketing opportunities without the
constraints which may be associated with being a series of theCompany.
Background
The Fund is a series of the Company, an open-end, seriesinvestment
company currently comprised of the Fund and four other series, andhas two
additional series "in registration" at the present time. TheCompany is a
corporation organized under the laws of the State of Marylandpursuant to
Articles of Incorporation filed in October 1983. The Advisor hasserved
as the investment advisor of the Fund since the Fund's inception inJanuary
1995.
Procedures for the Reorganization
If approved by shareholders, the Reorganization will beaccomplished in
the following manner: (i) the Company, on behalf of the Fund, willassign,
deliver and otherwise transfer all of the Fund's assets free andclear of
(ii) the New Fund, in exchange for the Fund's assets, will assumeall of the
Fund's liabilities and will issue to the Fund a number of full andfractional
shares of beneficial interest in the New Fund ("New Fund Shares")equal to
the number of Fund shares then outstanding which are held by theFund's
shareholders; and (iii) the Fund will distribute to each of itsshareholders
a number of full and fractional New Fund Shares equal to the numberof full
and fractional Fund shares held by that shareholder. Thereafter,the Company
will take all necessary steps to terminate the Fund promptlypursuant to the
provisions of the laws of the State of Maryland, and the Fund willnot
conduct any business except in connection with its liquidation.
Subject to approval by shareholders, it is expected that the
Reorganization will be made effective at 4:00 p.m., Eastern time,on or about
July 31, 1997, or at such later time and date as theparties may
mutually agree (the "Closing Date"). The Closing Date shall not beearlier
than the date of effectiveness of the New Fund's registrationstatement under
the Securities Act of 1993, as amended. At any time before theReorganization
is effective, the Company and the World Funds may agree toterminate the
Reorganization, and, if the Reorganization has not been madeeffective by
October 1, 1997, the Plan will automatically terminate on that date
unless a later date is agreed to by both the Company and the WorldFunds.
Upon approval of the Reorganization, the World Funds willissue the New
Fund Shares referred to in clause (ii) above. Pursuant to thePlan, and
prior to the distribution of such shares of the New Fund to theshareholders
of the Fund, the President of the Company, as the agent of theshareholders
of the Fund, will execute a Consent of Sole Shareholder: (a)approving the
election of the four directors of the Company listed herein asdirectors of the
Fund and Sand Hill Advisors, Inc. (see Approval of InvestmentAdvisory
Agreement for the New Fund below), and (c) ratifying the selectionof the
firm of Tait, Weller & Baker to serve as the independentaccountants for the
World Funds.
Following the execution of the consent, an open accountwould be
established on the records of the New Fund in the name of eachshareholder
of the Fund. The transfer agent will record in such account thenumber of
New Fund Shares equal to the number of shares of the Fund owned ofrecord by
the shareholder at the Closing Date. Certificates, if any, forshares
of the Fund issued prior to the Reorganization would represent thesame number
of outstanding shares of the New Fund following the Reorganization.
Shareholders with certificates should continue to safeguard them,as it will
be necessary to present such certificates for any transfer,exchange or
redemption. In the interest of economy and convenience,certificates
representing the New Fund Shares will not be physically issued.
The New Fund Shares that would be issued to the shareholdersof the Fund
would have no asset-based sales charge or distribution or servicefee under
Rule 12b-1 and would not be subject to any deferred sales charge on
redemption. Dividends and distributions payable on New Fund Sharesto
shareholders electing to have such dividends and distributionsreinvested
would be reinvested without a sales charge in additional New FundShares.
Subject to approval by its Board of Directors andshareholders, the New
Fund will enter into an investment advisory agreement with theAdvisor (see
Approval of Investment Advisory Agreement for the New Fund below). The fee
payable to the Advisor under such management agreement and theterms and
conditions of the agreement will be the same as those provided inexisting
investment advisory agreement with the Advisor. Theinvestment
advisory fees will continue to be payable at a rate of 1.00% perannum of the
first $100 million of the New Fund's average daily net assets and0.75% per
annum of average daily net assets over $100 million.
The New Fund also will enter into servicing arrangementswith the
entities which presently provide such services to the Company forthe Fund.
It will execute an administrative services agreement withCommonwealth
Shareholder Services, Inc., a custodian agreement with Star Bank,a
distribution agreement with First Dominion Capital Corp., a fundaccounting
agreement with Star Bank, a fund expense agreement withCommonwealth Shareholder
Services, Inc. and a transfer agency and dividend disbursing agentagreement
with Fund Services, Inc., in each case with substantially identicalterms and
conditions as the Fund's existing agreements with such serviceproviders.
The World Funds will also continue to make available toshareholders the
retirement vehicles which are now available to shareholders in theFund.
Comparison of the Fund and the New Fund
Both the Company and the World Funds are corporations dulyorganized
under the laws of the State of Maryland. The funds are both governed by the
provisions of the Maryland General Corporation Law and the funds'respective
Articles of Incorporation and By-Laws, which are substantially thesame in
all material respects. Each fund has been authorized by its Boardof
Directors to establish separate series of shares and, pursuant tosuch
authority, the Company established the Fund and the World Fundsestablished
the New Fund.
Each of the Company and the World Funds is managed under thedirection
comprised of four of the five individuals who presently comprisethe
Company's Board of Directors. Mr. Henry Schlegel, who has servedas a
Director of the Company since February 1997, is an officer of VUSA,the
advisor to the Vontobel Series. He has indicated that his serviceon the Board
of the World Funds following the Reorganization would beinconsistent with
the purposes of the Reorganization. The remaining four directorshave served
s Directors of the Company for periods commencing prior to theorganization
of the Fund.
The Company is registered under the 1940 Act as an open-end,management
investment company, and the World Funds has filed registration andother
forms to be registered under the 1940 Act as an open-end,management
investment company. The Reorganization will not be implemented andcompleted
if such registration is not in effect. In conducting theiroperations
as registered investment companies, both funds are subject to theprovisions of
the 1940 Act and rules and regulations of the U.S. Securities andExchange
Commission thereunder.
The investment objective both of the Fund and of the NewFund is to
maximize total return consistent with allocating portfolioinvestments among
equity securities, debt securities and short term investments. Each fund
seeks to achieve its objective by investing in a mix of assetclasses and
markets throughout the world and is subject to identical investmentpolicies
and limitations. The Reorganization provides for the New Fund tobe managed by
the Advisor using the same portfolio management strategies andtechniques
that the Advisor employs in managing the Fund.
The expenses of operating the New Fund are not anticipatedto be
materially different from those of the Fund. The principal cost ofoperating
upon the assets in the Fund. This fee will be payable by the NewFund at the
same rate as the Fund, and therefore will not change as a result ofthe
Reorganization. General costs of operating the Company, which arepresently
assumed by all series of the Company, will be paid by the New Fund.
Shareholders of the New Fund will have voting rights thatare identical
to the voting rights of the Fund's shareholders. They will havethe right to
vote at regular and special meetings of the World Funds and the NewFund, as
and when held, for, among other things, election of directors,changes in
fundamental investment objectives, policies or restrictions;
ratification of the selection by the Directors of the independentaccountants;
and such additional matters relating to the World Funds or the NewFund as
may be required by law to be submitted to shareholders. If, at anytime,
less than a majority of the Directors holding office have beenelected by
shareholders, the Directors then in office will call ashareholders' meeting
for the purpose of electing a Board of Directors. At any meetingof
shareholders called for such purpose by at least 10% of the holdersof the
World Fund's outstanding shares, a Director may be removed by avote of two-
thirds of the World Fund's outstanding shares. Like shares ofseries of the
Company, each whole share of the World Funds is entitled to onevote with each
fraction being entitled to a proportionate fractional vote. Neither fund has
cumulative voting rights with respect to the election of Directors.
Shareholders of the Fund may obtain copies of the Companyand World
Funds' Articles of Incorporation and By-Laws without charge uponwritten
request to the Secretary of the Company and the World Funds.
Waiver of Investment Restriction
The Fund has a fundamental investment restriction, which maynot be
changed without shareholder approval, under which it may not own
of the outstanding voting securities of any one issuer.
Such restriction would otherwise prohibit the purchase bythe Fund of
the initial shares of the New Fund, which is necessary to completethe
Reorganization (see Procedures for the Reorganization above). Accordingly, a
vote for the Fund's Reorganization will be deemed also a vote toauthorize
the Company to acquire all of the voting shares of the New Fund tothe
extent (and only to the extent) necessary to carry out the Fund's
Reorganization n the manner described above. Such purchase of theshares
will be made only for the purpose of completing the Reorganizationand the
temporary waiver of the restriction will have no effect thereafter.
Federal Income Tax Consequences
It is anticipated that the Reorganization contemplated underthe Plan
will be tax-free for federal tax purposes for the Company, theWorld Funds
and their respective shareholders. It is a condition of the Planthat the
Company and the World Funds receive an opinion of Stradley, Ronon,Stevens &
Young, LLP substantially to the effect that for federal income taxpurposes:
(i) the acquisition of the assets and assumption of the liabilitiesof the Fund
by the New Fund in return for New Fund Shares followed by thedistribution of
such shares to Fund shareholders will constitute a "reorganization"within
the meaning of Section 368(a)(1)(F) of the Internal Revenue Code(the
"Code"), and the Fund and the New Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;(ii) no gain
or loss will be recognized by the Fund upon the exchange of itsassets for
New Fund Shares and the assumption by the New Fund of theliabilities of the
Fund; (iii) the tax basis of the assets of the Fund received by theNew Fund
will be the same as the tax basis of such assets in the hands ofthe
Fund immediately prior to the transfer; (iv) the New Fund's holdingperiod for
the assets acquired from the Fund will include the period during
assets were held
by the Fund; (v) no gain or loss will berecognized by the
New Fund upon the receipt of the assets of the Fund in exchange forNew Fund
Shares and the assumption by the New Fund of the liabilities of theFund;
(vi) no gain or loss will be recognized by the shareholders of theFund upon
the receipt of New Fund Shares in exchange for their shares in theFund as
part of the transaction; (vii) the basis of the New Fund Sharesreceived by
the shareholders of the Fund will be the same as the basis of theshares of
the Fund exchanged therefor; and (viii) the holding period of theNew Fund
Shares received by the shareholders of the Fund will include theholding period
of the shares of the Fund exchanged therefor, provided that at thetime of
the exchange the shares of the Fund were held as capital assets;and as to
such other matters as the Company and the World Funds mayreasonably request.
Approval of the Election of Four Directors of the New Fund
By voting in favor of the Plan, shareholders of the Fundwill be
authorizing the Board of Directors of the Company, acting throughthe
Chairman of the Company on behalf of the shareholders of the NewFund, to
vote New Fund Shares issued in connection with the Reorganizationin favor
of the election of the following four nominees as directors of theNew
Fund: John Pasco, III, Samuel Boyd, Jr. William E. Poist and PaulM.
Dickinson. Certain information concerning the nominees is setforth below.
Each of the nominees has agreed to serve if elected, and if any ofthe
nominees is unavailable to serve for any reason, the persons namedas proxies
will vote for a substitute nominee selected by the Company's Boardof
Directors. The Company currently knows of no reason why any of thenominees
listed below would be unable or unwilling to serve if elected. Allof the
nominees are currently directors of the Company.
Directors and Executive Officers is set forth below:
Nominees for Director
Name and Position
with the New Fund 5 Years
Age Owned Beneficially
May 15, 1997 Beneficially
May 15, 1997 Chairman, Director and
Treasurer
Commonwealth Shareholder
Services, Inc., the Company's
Administrator, since 1985.
Director, President and
Treasurer of Commonwealth
Capital Management, Inc. (a
registered Investment Advisor)
since 1983. Director and
shareholder of Fund Services,
Inc., the Company's Transfer
and Disbursing Agent, since
1987 and shareholder of
Commonwealth Fund
Accounting, Inc. which provides
bookkeeping services to Star
Bank. Mr. Pasco is also a
certified public accountant.
