SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / 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 240.14a-11(c) or 240.14a-12
GAM Funds, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
GAM FUNDS, INC.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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TO THE SHAREHOLDERS OF GAM FUNDS, INC.
A Special Meeting of Shareholders of GAM FUNDS, INC. (the "Company") will
be held on April 9, 1998 at 2:00 P.M., at the offices of the Company on the 25th
Floor, 135 East 57th Street, New York, New York, for the following purposes:
1. To elect directors;
2. To eliminate the Funds' fundamental investment restrictions with
respect to (a) investments in issuers with an operating history of less
than three years, (b) investments in issuers in which officers and
directors of the Company or its investment adviser own more than certain
specified percentages of the securities of such issuer and (c) investments
in interests in oil, gas or other mineral exploration or development
programs (EACH RESTRICTION WILL BE VOTED ON SEPARATELY);
3. To change from fundamental to non-fundamental the Funds' investment
restrictions with respect to (a) short sales of securities and (b)
investments in illiquid securities;
4. To ratify or reject the selection of Coopers & Lybrand LLP as
independent accountants for the Company for its fiscal year ending December
31, 1998; and
5. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The subjects referred to above are discussed in detail in the Proxy
Statement attached to this notice. Each shareholder is invited to attend the
Special Meeting of Shareholders in person. Shareholders of record at the close
of business on February 9, 1998 are entitled to receive notice of and to vote at
the meeting. Whether or not you intend to be present at the meeting, we urge you
to fill in, sign and promptly return the enclosed proxy or use the toll-free
telephone number on the proxy card to vote your shares in order that the meeting
may be held and a maximum number of shares may be voted, and avoid the added
expense of a second mailing to unvoted proxies.
February 28, 1998 Gordon E. Swartz
Secretary
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
PLEASE DATE, SIGN AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR
YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. PLEASE
MAIL YOUR PROXY PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY
OF FURTHER SOLICITATION. IF YOU ARE A SHAREHOLDER OF RECORD, YOU MAY USE THE
TOLL-FREE NUMBER ON THE PROXY CARD TO VOTE YOUR SHARES. IF YOUR SHARES ARE HELD
IN THE NAME OF A BANK OR OTHER HOLDER OF RECORD, YOU WILL RECEIVE INSTRUCTIONS
THAT YOU MUST FOLLOW IN ORDER FOR YOUR SHARES TO BE VOTED.
<PAGE>
GAM FUNDS, INC.
135 EAST 57TH STREET
NEW YORK, NEW YORK 10022
PROXY STATEMENT
INTRODUCTION
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of GAM Funds, Inc., a Maryland corporation (the "Company"), for use at a Special
Meeting of Shareholders (the "Special Meeting") to be held on April 9, 1998 at
2:00 P.M. at the offices of the Company on the 25th Floor, 135 East 57th Street,
New York, New York, and any adjournments thereof, for the purposes set forth in
the accompanying Notice of Special Meeting of Shareholders. This proxy statement
and enclosed form of proxy are expected to be mailed to shareholders of record
commencing on or about February 28, 1998. The Company currently consists of
eight Series, GAM International Fund, GAM Global Fund, GAM Pacific Basin Fund,
GAM Japan Capital Fund, GAM Asian Capital Fund, GAM Europe Fund, GAM North
America Fund and GAMerica Capital Fund, which are referred to herein both
individually and collectively as the "Series".
Any proxy given pursuant to such solicitation and received in time for the
Special Meeting will be voted as specified in such proxy. If no instructions are
given, proxies will be voted FOR all of the matters specified in the proxy. The
enclosed proxy is revocable by you at any time prior to the exercise thereof by
submitting a written notice of revocation or subsequently executed proxy to the
Secretary of the meeting. Signing and mailing the proxy will not affect your
right to give a later proxy or to attend the Special Meeting and vote your
shares in person.
In addition to the solicitation of proxies by mail, the Company may
utilize the services of its officers, who will not receive any compensation
therefor, to solicit proxies by telephone, by telegraph and in person. The
Company may also request brokers, custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of shares of record. The cost of
soliciting proxies will be paid by the Company.
On February 9, 1998, the date for determination of shareholders entitled
to receive notice of and to vote at the Special Meeting and any adjournments
thereof, there were issued and outstanding the following numbers of shares of
each of the respective Series of the Company: 65,653,036.472 shares of GAM
International Fund, 3,936,047.129 shares of GAM Global Fund, 2,401,381.875
shares of GAM Pacific Basin Fund, 3,919,927.845 shares of GAM Japan Capital
Fund, 146,770.724 shares of GAM Asian Capital Fund, 2,992,190.134 shares of GAM
Europe Fund, 1,060,528.446 shares of GAM North America Fund and 327,845.264
shares of GAMerica Capital Fund. Each whole share is entitled to one vote and
any fractional shares entitled to a fractional vote. Taken together, these
shares constituted all of the Company's outstanding securities as of February 9,
1998.
1
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Four directors, constituting the entire Board of Directors, are proposed
to be elected at the Special Meeting, to hold office until the next special or
annual meeting and until their successors shall have been duly elected and
qualified. If authority is granted in the accompanying proxy to vote for the
election of directors, it is the intention of the persons named in the
accompanying proxy to vote at the Special Meeting for the election of the
nominees named on page 3 as the entire Board of Directors. If any of the
nominees are unavailable to serve as directors, the persons named in the proxy
will vote the proxies for such other persons as they, in their discretion, may
choose. The Company presently knows of no reason why any of the nominees listed
on the table on page 3 will be unable to serve if elected. Each person listed on
the table on page 3 has consented to being named in this Proxy Statement and has
indicated a willingness to serve as a director if elected.
The table on page 3 contains information on the nominees and their
beneficial ownership of shares of the Company.
During the fiscal year ended December 31, 1997, there were four regular
meetings of the Board of Directors. Each director attended at least 75% of the
Board meetings except for Robert J. McGuire, who was not a director during the
fiscal year ended December 31, 1997. There are no audit, nominating or
compensation committees of the Board of Directors.
Each independent director of the Company receives annual compensation from
the Company of $5,000 per year plus $500 for each meeting of the Board of
Directors attended. Each director is reimbursed by the Company for travel
expenses incurred in connection with attendance at Board of Directors meetings.
The interested Directors of the Company do not receive any compensation from the
Company. Mr. de Botton is a director who is an "interested person". George
Landau does not at present receive any other compensation from any affiliate of
the Company, including any other fund in the GAM group of funds. Roland Weiser
serves as director on another fund in the GAM group of funds for which he is
paid $1,000 per year. No other compensation from any other affiliate is received
by him.
2
<PAGE>
COMPENSATION TABLE
The following table sets forth the fiscal year ended December 31, 1997,
compensation paid by the Fund to the Directors.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(5)
(3) TOTAL
PENSION OR (4) COMPENSATION
RETIREMENT ESTIMATED FROM
(2) BENEFITS ANNUAL FUND AND FUND
AGGREGATE ACCRUED BENEFITS COMPLEX
(1) COMPENSATION AS PART OF UPON PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES RETIREMENT DIRECTORS1
- ------------------------------ ------------ ------------- ---------- -------------
Gilbert de Botton.............. $0 $0 $0 $0
Director and President
George W. Landau............... $7,000 $0 $0 $7,000
Director
Roland Weiser.................. $7,000 $0 $0 $8,000
Director2
Robert J. McGuire3 ............ $0 $0 $0 $0
Director
</TABLE>
There have been no purchases or sales of securities of GAM International
Management Limited and Fayez Sarofim & Co., which serve as investment advisers
to the Company, or the parents or subsidiaries of either, since the beginning of
the most recently completed fiscal year by any director or nominee for election
as a director of the Company.
There are no material pending legal proceedings to which any director or
nominee for director or affiliated person of such director or nominee is a party
adverse to the Company or any of its affiliated persons or has a material
interest adverse to the Company or any of its affiliated persons.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES.
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1 Includes all compensation from service as director on the board of directors
of investment companies in the Fund Complex.
2 Mr. Weiser is a director of one additional investment company in the GAM Fund
Complex.
3 Mr. McGuire did not serve as a director in the previous year and therefore did
not receive compensation from the Fund complex.
3
<PAGE>
SHARES OF GAM FUNDS, INC.,
BENEFICIALLY OWNED DIRECTLY OR INDIRECTLY
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NAME AND YEAR
POSITION WITH FIRST PACIFIC
THE COMPANY OF PRINCIPAL OCCUPATIONS BECAME INTERNATIONAL GLOBAL BASIN
EACH NOMINEE DURING PAST FIVE YEARS DIRECTOR FUND FUND FUND
- ---------------------- ------------------------- -------- ---------- ------ ------
Gilbert de Botton Chairman, Global Asset 1984 1,162,343 398,448 247,130
Director and President Management Limited, 1.85% 11.42% 10.37%
(age 63) (1)(2) investment adviser, 1983
to present; Chairman, Global
Asset Management (U.K.)
Limited, holding company,
1983 to present; Vice
Chairman, Global Asset
Management (USA) Inc.,
investment adviser, 1989
to present.
George W. Landau President, Americas Society 1994 0 0 0
Director (age 77) and the Council of the
Americas, 1985-1993; Chairman,
Latin America Advisory
Board of Coca-Cola International,
1988 to present.
Roland Weiser Chairman, Intervista, business 1988 0 3,191 0
Director consulting, 1984 to present. .09%
(age 66)(3)
Robert J. McGuire, Attorney/Consultant, Morvillo, 0 0 0
Director Abramowitz, Grand, Iason &
(age 62) Silberberg, P.C., 1998 to present;
President/Chief Operating Officer,
Kroll Associates 1989-1997.
DIRECTORS AND OFFICERS 1,162,343 401,639 247,130
OF THE COMPANY AS A 1.85% 11.51% 10.37%
GROUP
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NAME AND
POSITION WITH NORTH
THE COMPANY OF PRINCIPAL OCCUPATIONS EUROPE AMERICA JAPAN GAMERICA
EACH NOMINEE DURING PAST FIVE YEARS FUND FUND CAPITAL CAPITAL
- ---------------------- ------------------------- ------ ------- ------ -------
Gilbert de Botton Chairman, Global Asset 1,410,373 234,852 644,395 259,863
Director and President Management Limited, 45.36% 37.11% 17.56% 95.80%
(age 63) (1)(2) investment adviser, 1983 to
present; Chairman, Global
Asset Management (U.K.)
Limited, holding company,
1983 to present; Vice
Chairman, Global Asset
Management (USA) Inc.,
investment adviser, 1989 to present.
George W. Landau President, Americas Society and 0 0 0 0
Director (age 77) the Council of the Americas,
1985-1993; Chairman, Latin America
Advisory Board of Coca-Cola
International, 1988 to present.
Roland Weiser Chairman, Intervista, business 6,546 1,795 0 2,176
Director (age 66)(3) consulting, 1984 to present. .21% .28% .80%
Robert J. McGuire, Attorney/Consultant, Morvillo, 0 0 0 0
Director Abramowitz, Grand, Iason &
(age 62) Silberberg, P.C., 1998 to present;
President/Chief Operating Officer,
Kroll Associates 1989-1997.
DIRECTORS AND OFFICER 1,416,919 236,647 644,395 262,039
OF THE COMPANY AS A GROUP 45.57% 37.39% 17.56% 96.60%
</TABLE>
NOTES TO TABLE
(1) Mr. de Botton is an "interested person" of the Company, as defined in the
Investment Company Act of 1940 (the "1940 Act"). Lorelock S.A., which is
controlled by a discretionary trust of which Mr. de Botton is a potential
beneficiary, owns approximately 70% of the voting securities of Global Asset
Management Ltd., which controls GAM International Management Limited (the
"Adviser") through its wholly-owned subsidiaries. Mr. de Botton is also a
director of other investment funds organized outside the United States
in the GAM group of funds.
(2) All shares indicated as owned beneficially by Mr. Gilbert de Botton,
President and Director of the Company, are owned of record by clients, or
custodians or nominees for clients, of the Adviser and its affiliates.
Entities controlled by Global Asset Management Ltd. may be deemed to have
investment or voting power over such shares. Mr. de Botton is the Chairman
of Global Asset Management Ltd. and may be a beneficiary of a discretionary
trust which indirectly owns approximately 70% of the voting securities
of Global Asset Management Ltd. As a result, Mr. de Botton may be deemed to
have shared voting or investment power over such shares. Mr. de Botton
disclaims beneficial ownership of such shares.
(3) Does not include 1,720 shares of GAM International Fund, 2,729 shares of GAM
Global Fund, 6,701 shares of GAM Europe Fund, 2,147 shares of GAM North
America Fund and 2,953 shares of GAMerica Capital Fund owned by Mr. Weiser's
wife, which may be deemed to be beneficially owned by Mr. Weiser. Mr. Weiser
disclaims beneficial ownership of such shares.
5
<PAGE>
PROPOSAL TWO
APPROVAL OR DISAPPROVAL OF ELIMINATION OF CERTAIN OF THE COMPANY'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Company has adopted fundamental investment restrictions that govern
generally the operations of the Funds. Investment restrictions that are deemed
fundamental may not be changed without a vote of the outstanding shares of the
Company. The Company's current investment restrictions are set forth in Appendix
A to this Proxy Statement.
At a meeting held on January 28, 1998, the Board of Directors approved the
elimination of certain of the Company's fundamental investment restrictions as
described below. The proposed elimination of these investment restrictions is
not expected to affect materially the current operations of the Funds.
A number of the Company's fundamental investment restrictions were adopted
by the Company when it commenced operations in order to comply with various
state blue sky regulations. One of the provisions of the National Securities
Markets Improvements Act, which was enacted in 1996, is the federal preemption
of substantive state regulation of securities issued by investment companies
registered with the Securities and Exchange Commission ("SEC") under the 1940
Act. As a result of this new law, states may no longer impose their own
investment restrictions or require additional disclosure in offering documents
as a condition of registration in that state. Management of the Company believes
that the existing investment restrictions that are proposed to be eliminated may
inhibit effective portfolio management without any concomitant benefit to the
Company or its shareholders. Moreover, management believes that the investment
restrictions will be modernized by the proposed deletions and will be more
consistent with more recently organized mutual funds.
Approval of the proposed elimination of each of these investment
restrictions will require a separate vote of shareholders, and it is therefore
possible that elimination of one or more of the investment restrictions will be
approved but the elimination of all of them will not be approved. See
"Additional Information" for the vote required for approval. The text of each
investment restriction that is proposed to be eliminated is set forth below,
followed by a brief commentary. The text of all the Company's investment
restrictions is set forth in Appendix A to this Proxy Statement.
A. INVESTMENTS IN "UNSEASONED" ISSUERS
The Company is proposing the elimination of current fundamental investment
restriction 5 in the Company's Statement of Additional Information (see Appendix
A to this Proxy Statement) which reads as follows:
Each Fund may not:
Invest more than 10% of the value of its total assets in securities of
companies which, with their predecessors, have a record of less than three
years' continuous operation.
6
<PAGE>
COMMENTARY: Restriction 5 limits investment in "unseasoned" issuers to 10%
of a Fund's total assets. This limitation was required by certain state blue sky
statutes at the time of the Company's formation but is no longer required. Since
unseasoned issuers do not have as long an operating history as more mature
issuers, they may present a greater risk of investment than more mature issuers.
While the proposed deletion of this investment restriction eliminates any legal
restriction on investing in unseasoned issuers, each Fund's advisor will, of
course, consider carefully all investments in recently organized companies.
B. PURCHASE OF SECURITIES OF ISSUERS IN WHICH OFFICERS OR DIRECTORS OF THE
COMPANY OR ITS INVESTMENT ADVISER OWN MORE THAN A SPECIFIED PERCENTAGE OF
THE SECURITIES OF SUCH ISSUER
The Company is proposing the elimination of current fundamental investment
restriction 6 in the Company's Statement of Additional Information (see Appendix
A to this Proxy Statement) which reads as follows:
Each Fund may not:
Purchase or retain the securities of any issuer if any of the officers or
directors of the Company or its investment adviser owns individually more than
1/2 of 1% of the securities of such issuer and together such officers and
directors owning more than 1/2 of 1% own more than 5% of the securities of such
issuer.
COMMENTARY: Restriction 6 limits investments by the Funds in companies in
which an officer or director of the Company or one of its investment advisers is
also an investor. This limitation was imposed by certain state blue sky statutes
at the time of the Company's formation but is no longer required. The
restriction was intended to protect against potential conflicts of interest
involving officers and directors of the Company and the investment adviser.
However, the provisions of the 1940 Act and the rules adopted by the SEC, which
impose substantial restrictions on the extent to which the Funds may engage in
transactions with entities related to officers or directors of the Company and
its investment advisers, are sufficient to protect the interests of
shareholders.
C. INVESTMENTS IN INTERESTS IN OIL, GAS OR OTHER MINERAL EXPLORATION OR
DEVELOPMENT PROGRAMS
The Company is proposing the elimination of current fundamental investment
restriction 12 in the Company's Statement of Additional Information (see
Appendix A to this Proxy Statement) which reads as follows:
Each Fund may not:
Invest in interests in oil, gas or other mineral exploration or
development programs (including leases), although it may invest in the
securities or companies which invest in or sponsor such programs.
7
<PAGE>
COMMENTARY: The Company's current fundamental investment restriction 12 in
the Company's Statement of Additional Information prohibits investments in oil,
gas or other mineral exploration or development programs. This prohibition was
required by certain state blue sky statutes in effect at the time of the
Company's formation but is no longer required to be as broad. None of the Funds
has any current intention to invest in interests in oil, gas or other mineral
exploration or development programs. Current fundamental investment restriction
16 separately prohibits investments in commodities or commodity futures
contracts, except that each Fund may enter into forward foreign exchange
contracts and may invest up to 5% of its net assets in initial margin or
premiums for futures contracts or options on futures contracts.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELIMINATION OF EACH OF THE FOREGOING
FUNDAMENTAL INVESTMENT RESTRICTIONS.
PROPOSAL THREE
APPROVAL OR DISAPPROVAL OF CHANGING THE STATUS OF CERTAIN INVESTMENT
RESTRICTIONS FROM FUNDAMENTAL TO NON-FUNDAMENTAL
As discussed above, a number of the Company's fundamental investment
restrictions were adopted by the Company when it was formed in order to comply
with various state blue sky regulations. Recent federal legislation has
substantially eliminated the states' authority to regulate investment companies
and, accordingly, certain investment restrictions are no longer required.
The investment restrictions listed below are not required to be stated as
fundamental investment restrictions. Changing the status of these investment
restrictions from fundamental to non-fundamental would provide flexibility in
the future if the Board of Directors determine that revisions were appropriate
as a result of changes in investment, industry or regulatory conditions since a
non-fundamental investment restriction may be revised by the Board of Directors
without shareholder approval. Changing the status of the following investment
restrictions from fundamental to non-fundamental would enable the Company to
avoid the expense of a shareholder solicitation in the event the Board of
Directors wanted to revise them.
The Company is not requesting a separate vote on the change of each
investment restriction described below to a non-fundamental investment
restriction. If you do not wish to approve the change of either of the two
investment restrictions, you should vote "AGAINST" this proposal.
A. SHORT SALES
The Company is proposing the deletion of current fundamental investment
restriction 3 in the Company's Statement of Additional Information (see Appendix
A to this Proxy Statement) and substituting the following non-fundamental
investment restriction:
8
<PAGE>
Each Fund may not:
Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions.
COMMENTARY: The Company's current fundamental investment restriction 3 was
required by certain state blue sky statutes at the time of the Company's
inception but is no longer required. The proposed restriction is
non-fundamental. At the present time, the Company uses certain derivative
instruments as a substitute for short sales of equity and debt securities. The
Board of Directors may in the future decide to change this investment
restriction in order to permit the Funds to enter into short sales of equity and
debt securities for investment purposes.
A short sale is a transaction in which the Company sells a security which
it does not own at the time of sale in anticipation of a decline in the market
value of that security and future repurchase of that security at a lower price.
In order to complete such a transaction, the Company must borrow the security in
order to make delivery to the buyer. The Company is then obligated to replace
the security borrowed by purchasing it at the market price at the time of
replacement. Until the security is replaced, the Company is required to pay to
the lender any dividends or interest which accrue during the period of the loan.
The Company may also have to pay a premium in order to borrow securities.
A short sale will result in a gain if the price of the securities sold
short is greater at the time of the short sale than at the time at which
securities are repurchased to replace the shares borrowed. A short sale will
result in a loss if the price of the security initially sold is less than the
price paid to repurchase the security. Any gain is decreased, and any loss is
increased, by the amount of any premium, dividend, interest and brokerage
commissions which the Company may be required to pay with respect to the
borrowed securities.
B. INVESTMENT IN ILLIQUID SECURITIES
The Company is proposing the deletion of current fundamental investment
restriction 13 in the Company's Statement of Additional Information (see
Appendix A to this Proxy Statement) and substituting the following
non-fundamental investment restriction:
Each Fund may not:
Invest more than 15% of the Fund's net assets in securities which cannot
be readily resold to the public because of legal or contractual restrictions or
because there are no market quotations readily available or in other "illiquid"
securities (including non-negotiable deposits with banks and repurchase
agreements of a duration of more than seven days).
COMMENTARY: Fundamental investment restriction 13 is required by the SEC
under the 1940 Act. The SEC has modified its position restricting investments by
mutual funds in illiquid securities in recent years, and has indicated recently
that it is continuing to review its restrictions in this area. Accordingly,
management of the Company desires to have maximum flexibility to be able to
amend its investment restrictions in response to any future changes in SEC rules
and policies and market developments.
9
<PAGE>
An open-end investment company, including each of the Funds, may not hold
a significant amount of illiquid securities because these securities may be
difficult to value accurately and because it is possible that the Company would
have difficulty liquidating such securities if necessary in order to satisfy in
a timely manner requests to redeem shares of the Fund. The securities markets
are evolving, however, and new types of instruments have developed that make
each Fund's current policies on illiquid investments overly broad and
unnecessarily restrictive. In addition, the markets for some types of securities
are almost exclusively institutional -- repurchase agreements, commercial paper,
many types of municipal securities and some corporate bonds and notes. These
instruments are often exempt from registration under the U.S. securities laws or
sold in transactions not requiring registration. Consequently, institutional
investors depend on the issuer's ability to honor a demand for repayment in less
than seven days or on an efficient institutional market in which the
unregistered security can readily be resold. Management believes that the
existence of legal or contractual restrictions on resale to the general public
does not necessarily determine the liquidity of these investments.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR CHANGING THE STATUS OF EACH OF THE FOREGOING
INVESTMENT RESTRICTIONS FROM FUNDAMENTAL TO
NON-FUNDAMENTAL.
PROPOSAL FOUR
SELECTION OF INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP ("Coopers & Lybrand"), 1301 Avenue of the Americas,
New York, New York 10019, independent accountants for the Company since 1996,
has examined and reported on the Company's financial statements for the fiscal
year ended December 31, 1997. In connection therewith, Coopers & Lybrand has
reviewed certain filings of the Company with the SEC and provided consultation
on matters related to accounting and financial reporting. Coopers & Lybrand has
also provided non-audit services in preparing the Company's federal and state
corporate tax returns.
At a meeting held on January 28, 1998, the Board of Directors, including a
majority of the directors who are not interested persons of the Company,
selected Coopers & Lybrand to act as independent accountants for the Company for
the fiscal year ending December 31, 1998, subject to ratification or rejection
of the selection by the shareholders of the Company as required under the 1940
Act. The Company is advised that neither the firm of Coopers & Lybrand nor any
of its members has any direct or indirect material financial interest in the
Company.
A representative of Coopers & Lybrand is expected to attend the Special
Meeting and will have the opportunity to make a statement if he or she desires
and to respond to questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND AS INDEPENDENT ACCOUNTANTS
FOR THE COMPANY
10
<PAGE>
SUPPLEMENTAL INFORMATION
PRINCIPAL HOLDERS OF SECURITIES
As of December 31, 1997, the following persons may be deemed to own
beneficially more than 5% of the outstanding shares of any Fund. Unless
otherwise noted all shares are Class A Shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PACIFIC NORTH JAPAN ASIAN GAMERICA
INTERNATIONAL GLOBAL BASIN EUROPE AMERICA CAPITAL CAPITAL CAPITAL
------------ ------ ------ ------- -------- ------- ------- --------
Gilbert de Botton 398,448 247,130 1,410,373 234,852 644,395 259,863
12 St. James's Place 11.42% 10.37% 45.36% 37.11% 17.56% 95.80%
London SW1A 1NX
England1
Naidot & Co. 243,590
c/o Bessemer Trust Co. 6.98%
100 Woodbridge Center Drive
Woodbridge, NJ 07095
FTC & Co. 296,239
Attn: Datalynx 12.43%
PO Box 173736
Denver, CO 80217
National City TRSTE 249,986 385,933
JDR&P GAM Inv. 2 DEF BEN 10.49% 12.41%
Attn: Trust Mutual Funds 617444906
PO Box 94777
Cleveland, Ohio
</TABLE>
- --------
1 See footnote (2) on page 5 above.
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PACIFIC NORTH JAPAN ASIAN GAMERICA
INTERNATIONAL GLOBAL BASIN EUROPE AMERICA CAPITAL CAPITAL CAPITAL
------------ ------ ------ ------- -------- ------- ------- --------
Key Trust Co of OH NA Cust. 109,136(D)
University Orthopaedic Assoc. 66.31%
Pension Plan
PO Box 94870
Cleveland, Ohio
Fayez Sarofim & Co. 161,638
PO Box 52830 25.54%
Houston, TX 77052-2830
Resources Trust Company 588,918 99,541 607,699
for The Exclusive Benefit 18.94% 15.73% 16.56%
Of Various Customers of IMS
PO Box 3865
Englewood, CO 80155-3865
NFSC FEBO X08-088536 260,515
Abdulla Omaran & Latifa Omran 7.10%
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
NFSC FEBO X03-152595 229,253
Ola Omran 6.25%
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
Merrill Lynch Special 393,918(D) 15,031(D) 229,476
Custody a/c for Exclusive 11.26% 7.38% 6.25%
Benefit of Cust. of MLPF & S
Attn: GAM Funds Service Team
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Mark E. Gilbert 17,905
Advantage Account 8.54%
155 Howe Street
Martinez, CA 94553
Rauscher Pierce Refenes 72,710
Inc. FBO Anthony J. Hernett 34.67%
1515 Spring Hill Lane
Villanova, PA 19085
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PACIFIC NORTH JAPAN ASIAN GAMERICA
INTERNATIONAL GLOBAL BASIN EUROPE AMERICA CAPITAL CAPITAL CAPITAL
------------ ------ ------ ------- -------- ------- ------- --------
Sam W. Klein TRSTE 19,278
FBO The S. Klein 1973 7.11%
Declaration of TRST
U/A Dtd 1973
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn: M. Steiger2
Post & Co. a/c 974792 16,043
c/o Bank of NY 5.91%
Mutual Fund Reorg Dept.
PO Box 1066
Wall Street Station
New York, NY 102682
Jan I Shrem & 31,795
Mitsuko Shrem JT TEN 11.72%
c/o Rothschilds Bank AG
Zollickstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger2
Rothschild Bank 15,152
c/o Rothschilds Bank AG 5.59%
Zollickstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Bankers Trust Company 18,611
FBO 2448842424 6.86%
PO Box 9005
Church Street Station
New York, NY 100082
Royal Life Insurance Int'l Ltd. 15,313(D)
FBO Acct. 6511 7.52%
Royal Court, Castletown
Isle of Man, British Isle
IM9 1RA
</TABLE>
- --------
2 Includes shares which may be deemed to be owned beneficially by Mr. de Botton
as described in footnote (2) on page 5 above.
13
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, all of whom serve at the pleasure
of the Board of Directors, and their principal occupations during the past five
years are as follows:
Gilbert de Botton, President and Chairman of the Board (see page 3).
Kevin J. Blanchfield (age 43), who has served as Vice President of the
Company since December 1993, who was elected as Treasurer in 1997 and whose
principal occupations during the last five years have been Senior Vice
President-Finance and Administration, Lazard Freres & Co., 1991 to 1993.
Gordon E Swartz (age 50) who has served as Secretary since 1997 and whose
principal occupations during the past five years were Attorney/Consultant for
Financial Markets International in 1996 and 1997; Vice President and Counsel for
Natwest Bancorp from 1994 to 1996 and Senior Associate Counsel and Vice
President of The Chase Manhattan Bank NA from 1990 to 1994.
John L. Hogan (age 30) who was elected Assistant Treasurer in 1996 and
whose principal occupations during the past five years have been Assistant
Manager, Fund Reporting Manager at Brown Brothers Harriman since 1995 and Mutual
Fund Administration Supervisor at New England Funds, L.P. from 1988 to 1995.
Teresa B. Riggin (age 38) who was elected Assistant Secretary in 1994 and
whose principal occupations during the past five years have been Vice
President-Administration and Assistant Secretary of Global Asset Management
(USA) Inc., Assistant Secretary of GAM Services Inc. and GAM Investments Inc.
since 1994; and Vice President at Lazard Freres & Co. from 1992 to 1994.
Catherine M. Vacca (age 40) who was elected Assistant Secretary in 1996
and whose principal occupation during the past five years has been Deputy
Manager, Fund Administration Manager at Brown Brothers Harriman since 1995; and
Vice President and Director of Compliance at the Boston Company from 1988 to
1995.
Global Asset Management (USA) Inc., GAM Investments Inc., GAM Services
Inc., Global Asset Management GAM (Schweiz) AG, Global Asset Management (H.K.)
Limited, Global Asset Management (Asia) Limited and Global Asset Management
(U.K.) Limited are all controlled by Global Asset Management Ltd., which also
controls GAM International Management Ltd.
SHAREHOLDER PROPOSALS
The Company does not ordinarily hold annual meetings of shareholders. Any
shareholder desiring to submit proposals for inclusion in a proxy statement for
a subsequent shareholder meeting should send written proposals to the Company at
GAM Funds, Inc., 135 East 57th Street, New York, New York 10022, and be received
at a reasonable time prior to the date of the meeting of shareholders to be
considered for inclusion in the materials for the meeting.
14
<PAGE>
ADDITIONAL INFORMATION
The presence in person or by proxy of the holders of a majority of the
outstanding voting shares of the Company is required to constitute a quorum for
the Special Meeting. Approval of the election of Directors of the Company
(Proposal 1) will require the affirmative vote of a plurality of the votes cast
at the Special Meeting. Approval of the proposal to eliminate the Funds'
fundamental investment restrictions with respect to (a) investments in issuers
with an operating history of less than three years, (b) investments in issuers
in which officers and directors of the Company or its investment adviser own
more than certain specified percentages of the securities of such issuer and (c)
investments in interests in oil, gas or other mineral exploration or development
programs (Proposal 2) and the proposal to change from fundamental to
non-fundamental the Funds' investment restrictions with respect to (a) short
sales of securities and (b) investments in restricted securities (Proposal 3)
will require the affirmative vote of the holders of a majority of the
outstanding shares of the Company. A majority of the outstanding shares of a
company is defined under the 1940 Act as the lesser of (a) 67% of the shares of
the company present at a meeting if the holders of more than 50% of such
company's outstanding shares are present in person or by proxy or (b) more than
50% of the company's outstanding shares. Ratification of the selection of
Coopers & Lybrand as independent accountants (Proposal 4) will require the
affirmative vote of a majority of the votes cast at the Special Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (i.e., proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of each proposal.
OTHER MATTERS
Management does not know of any matters to be presented at the Special
Meeting other than those stated and described in this Proxy Statement. If any
other business should come before the meeting, the proxies will vote thereon in
accordance with their best judgment.
If you cannot attend the Special Meeting in person, please complete and
sign the enclosed proxy and return it in the envelope provided or use the
toll-free telephone number in the proxy card to vote your shares so that the
meeting may be held and action taken on the matters described herein with the
greatest possible number of shares participating.
Dated: February 28, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.
15
<PAGE>
APPENDIX A
FUNDAMENTAL INVESTMENT RESTRICTIONS. Each Fund has adopted certain investment
restrictions which cannot be changed without approval by holders of a majority
of its outstanding voting shares. As defined in the Investment Company Act of
1940, as amended (the "Act"), this means the lesser of (a) 67% or more of the
shares of the Fund at a meeting where more than 50% of the outstanding shares
are present in person or by proxy or (b) more than 50% of the outstanding shares
of the Fund.
In accordance with these restrictions, each Fund may not:
1. With respect to 75% of its total assets, invest more than 5% of its total
assets in any one issuer (other than the United States government, its agencies
and instrumentalities) or purchase more than 10% of the voting securities, or
more than 10% of any class of securities, of any one issuer. (For this purpose
all outstanding debt securities of an issuer are considered as one class, and
all preferred stocks of an issuer are considered as one class.)
2.Invest for the purpose of exercising control or management of another company.
3. Make short sales of securities or purchase any securities on margin, except
for such short-term credits as are necessary for the clearance of transactions.
4. Invest in real estate (including real estate limited partnerships), although
a Fund may invest in marketable securities which are secured by real estate and
securities of companies which invest or deal in real estate.
5. Invest more than 10% of the value of its total assets in securities of
companies which, with their predecessors, have a record of less than three
years' continuous operation.
6. Purchase or retain the securities of any issuer if any of the officers or
directors of the Company or its investment adviser owns individually more than
1/2 of 1% of the securities of such issuer and together such officers and
directors owning more than 1/2 of 1% own more than 5% of the securities of such
issuer.
7. Concentrate more than 25% of the value of its total assets in any one
industry (including securities of non-United States governments).
8. Make loans, except that this restriction shall not prohibit (1) the purchase
of publicly distributed debt securities in accordance with a Fund's investment
objectives and policies, (2) the lending of portfolio securities, and (3)
entering into repurchase agreements.
A-1
<PAGE>
9. Borrow money, except from banks for temporary emergency purposes and, in no
event, in excess of 33 1/3% of its total assets at value or cost, whichever is
less; or pledge or mortgage its assets or transfer or assign or otherwise
encumber them in an amount exceeding the amount of the borrowing secured
thereby.
10. Underwrite securities issued by others except to the extent the Company may
be deemed to be an underwriter, under the Federal securities laws, in connection
with the disposition of its portfolio securities.
11. Purchase securities of other investment companies, except (a) in connection
with a merger, consolidation, reorganization or acquisition of assets or (b) a
Fund may purchase securities of closed-end investment companies up to (i) 3% of
the outstanding voting stock of any one investment company (including for this
purpose investments by any other series of the Company), (ii) 5% of the total
assets of the Fund with respect to any one investment company and (iii) 10% of
the total assets of the Fund in the aggregate.
12. Invest in interests in oil, gas or other mineral exploration or development
programs (including leases), although it may invest in the securities of
companies which invest in or sponsor such programs.
13. Invest more than 15% of the Fund's net assets in securities which cannot be
readily resold to the public because of legal or contractual restrictions or
because there are no market quotations readily available or in other "illiquid"
securities (including non-negotiable deposits with banks and repurchase
agreements of a duration of more than seven days).
14. Participate on a joint or a joint and several basis in any trading account
in securities.
15. Issue senior securities (as defined in the Act), other than as set forth in
paragraph 9 above and except to the extent that foreign currency forward
contracts may be deemed to constitute a senior security.
16. Invest in commodities or commodity futures contracts, except that each Fund
may enter into forward foreign exchange contracts and may invest up to 5% of its
net assets in initial margin or premiums for futures contracts or options on
futures contracts.
If a percentage restriction (other than the restriction on borrowing in
paragraph 9) is adhered to at the time of investment, a subsequent increase or
decrease in the percentage beyond the specified limit resulting from a change in
value or net assets will not be considered a violation. Whenever any investment
policy or investment restriction states a maximum percentage of a Fund's assets
which may be invested in any security or other property, it is intended that
such maximum percentage limitation be determined immediately after and as a
result of the acquisition of such security or property.
A-2
<PAGE>
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 A, B, C, 3 AND 4
- --------------------------------------------------------------------------------
Please mark ---------
your votes as X
indicated in ---------
this example
- --------------------------------------------------------------------------------
TO VOTE FOR ALL ITEMS AS RECOMMENDED BY THE BOARD, MARK THIS BOX / /
PLEASE SIGN, DATE AND RETURN THIS PROXY (NO ADDITIONAL VOTE IS NECESSARY)
- --------------------------------------------------------------------------------
1. Election of Directors - NOMINEES For Withhold For all
Except
01 Gilbert de Botton 02 Roland Weiser
03 George W. Landau 04 Robert J. McGuire / / / / / /
- --------------------------------------------------
Except Nominee(s) written above
2. Proposal to eliminate the Company's fundamental
investment restrictions with respect to:
(a) investments in issuers with an operating
history of less than three years; / / / / / /
(b)investments in issuers in which officers and
directors of the Company or its investment / / / / / /
adviser own more than certain specified
percentages of the securities of such issuer;
(c) investments in interests in oil, gas or
other mineral exploration or development / / / / / /
programs.
3. Proposal to change the status from fundamental
to non-fundamental of the Company's investment / / / / / /
restrictions with respect to short sales and
investment in illiquid securities
4. Proposal to ratify the selection of Coopers &
Lybrand LLP as the independent accountants for / / / / / /
the Company for its fiscal year ending December
31, 1998.
================================================================================
*** IF YOU WISH TO VOTE BY TELEPHONE, PLEASE
READ THE INSTRUCTIONS BELOW ***
================================================================================
Signature(s) should be exactly as name or names appearing on this proxy. If
stock is held jointly, each holder should sign. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title.
DATE / / 1998
------------------------------------------------------------
- ------------------------------------------------
Signature(s)
- ------------------------------------------------
Signature(s)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE
QUICK --- EASY --- IMMEDIATE
- --------------------------------------------------------------------------------
Your telephone or internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: CALL TOLL FREE ON A TOUCH-TONE TELEPHONE 1-888-457-2959 ANYTIME
THERE IS NO CHARGE FOR THIS CALL.
You will be asked to enter a Control Number located in the box
in the lower right of this form.
- --------------------------------------------------------------------------------
OPTION A: To vote as the Board of Directors recommends on ALL proposals:
Press 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OPTION B: If you choose to vote on each item separately, press 0. You will hear
these instructions:
- --------------------------------------------------------------------------------
Item 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to
the instructions
Item 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0. The instructions are the same for all remaining
items to be voted.
When asked, you must confirm your vote by pressing 1.
IF YOU VOTE BY PHONE - DO NOT MAIL THE PROXY CARD
THANK YOU FOR VOTING
CALL -- TOLL FREE -- ON A TOUCH TONE TELEPHONE
1-888-457-2959 -- ANYTIME
There is NO CHARGE to you for this call.
================================================================================
CONTROL NUMBER
================================================================================
<PAGE>
GAM FUNDS, INC.
PROXY - SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of GAM Funds, Inc., a Maryland corporation (the
"Company"), hereby appoints Teresa B. Riggin and Kevin J. Blanchfield, and each
of them, the true and lawful proxies of the undersigned with full power of
substitution, to vote on behalf of the undersigned all shares of the Company
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Company to be held on April 9, 1998 at 2:00 P.M. and at any adjournments
thereof, hereby revoking any proxy heretofore given with respect to such shares,
and the undersigned authorizes and instructs said proxies to vote as indicated
on the reverse side hereof.
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS HEREIN, BUT WHERE SPECIFICATIONS ARE NOT INDICATED, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2 THROUGH 4,
AND IN THE DISCRETION OF THE PROXIES NAMED HEREIN WITH RESPECT TO ALL OTHER
MATTERS (INCLUDING WITHOUT LIMITATION, ADJOURNMENTS) PROPERLY COMING BEFORE THE
MEETING, ALL IN ACCORDANCE WITH THE PROXY STATEMENT OF THE COMPANY, RECEIPT OF
WHICH IS HEREBY ACKNOWLEDGED. (THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE THE
MEETING.)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
