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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
GAM Funds, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
<PAGE>
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Checkbox 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
CB Draft 2/13/98
GAM FUNDS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of
GAM Funds, Inc.
A Special Meeting of Shareholders of GAM FUNDS, INC. (the
"Company") will be held on March 31, 1998 at 11:00 A.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 Cooper & 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 ___, 1998 Gordon E. Swartz
Secretary
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
<PAGE>
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. TELEPHONE VOTING ALSO
WILL BE OFFERED TO SHAREHOLDERS OWNING STOCK THROUGH CERTAIN BANKS AND BROKERS.
<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 March 31, 1998 at
11:00 A.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 23, 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.
<PAGE>
-2-
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". Roland
Weiser and George Landau do not at present receive any other compensation from
any affiliate of the Company, including any other fund in the GAM group of
funds.
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.
<PAGE>
-3-
<TABLE>
<CAPTION>
SHARES OF GAM FUNDS, INC.,
BENEFICIALLY OWNED DIRECTLY OR
INDIRECTLY AS OF DECEMBER 31, 1997
NAME AND YEAR
POSITION WITH FIRST INTER PACIFIC
THE COMPANY OF PRINCIPAL OCCUPATIONS BECAME NATIONAL GLOBAL BASIN
EACH NOMINEE DURING PAST FIVE YEARS IRECTOR FUND FUND FUND
------------ ---------------------- ------- ---- ----- ----
<S> <C> <C> <C> <C>
Gilbert de Botton
Director and President
(age 63)(1)(2)
Chairman, Global Asset Management Limited, 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.
1984 139,047 119,829 209,942
31.7% 62.0% 87.8%
George W. Landau
Director
(age 77)
President, Americas Society and the Council of the Americas,
1985-1993; Chairman, Latin America Advisory Board of
Coca-Cola International, 1988 to present.
1994
Roland Weiser
Director
(age 66)(3)
Chairman, Intervista, business consulting, 1984 to present.
1988 34 1,058 651
0.0% 0.6% 0.3%
Robert J. McGuire,
Director
(age 62)
Attorney/Consultant, Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C., 1998
to present; President/Chief Operating Officer, Kroll Associates 1989-1997.
Directors and Officers
of the Company as a
Group
</TABLE>
<TABLE>
<CAPTION>
NAME AND
POSITION WITH
THE COMPANY OF PRINCIPAL OCCUPATIONS
EACH NOMINEE DURING PAST FIVE YEARS
------------ ---------------------- NORTH
EUROPE AMERICA
FUND FUND
---- ----
<S> <C> <C>
Gilbert de Botton
Director and President
(age 63)(1)(2)
Chairman, Global Asset Management Limited, investment adviser, 1983 to present; 155,903 12,060
Chairman, Global Asset Management (U.K.) Limited, holding company, 1983 to 91.2% 44.4%
present; Vice Chairman, Global Asset Management (USA) Inc., investment adviser,
1989 to present.
George W. Landau
Director
(age 77)
President, Americas Society and the Council of the Americas,
1985-1993; Chairman, Latin America Advisory Board of
Coca-Cola International, 1988 to present.
Roland Weiser
Director
(age 66)(3)
Chairman, Intervista, business consulting, 1984 to present.
Robert J. McGuire, 659 0
Director 0.4%
(age 62)
Attorney/Consultant, Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C., 1998
to present; President/Chief Operating Officer, Kroll Associates 1989-1997.
Directors and Officers 156,562 12,060
of the Company as a 91.6% 44.4%
Group
</TABLE>
[TO BE UPDATED}
<PAGE>
-4-
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, or
by employee benefit plans for the benefit of employees 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 [431 shares of GAM International Fund, 690 shares of GAM
Global Fund, 524 shares of GAM Pacific Basin Fund, 659 shares of GAM Europe
Fund, and 67 shares of GAM North America Fund] owned by Mr. Weiser's spouse
and children, which may be deemed to be beneficially owned by Mr. Weiser.
Mr. Weiser disclaims beneficial ownership of such shares.
<PAGE>
-5-
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 Exhibit
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 Investment Company of 1940, as amended (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 Exhibit 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 Exhibit A to this Proxy Statement) which reads as follows:
<PAGE>
-6-
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.
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 Exhibit 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 Exhibit A to this Proxy Statement) which reads as follows:
<PAGE>
-7-
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.
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.
A. SHORT SALES
The Company is proposing the deletion of current fundamental investment
restriction 3 in the Company's Statement of Additional Information (see Exhibit
A to this Proxy Statement) and substituting the following non-fundamental
investment restriction:
<PAGE>
-8-
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 Exhibit
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
<PAGE>
-9-
be able to amend its investment restrictions in response to any future changes
in SEC rules and policies and market developments.
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 overbroad 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.
<PAGE>
-10-
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND AS INDEPENDENT ACCOUNTANTS
FOR THE COMPANY
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.
<TABLE>
<CAPTION>
Inter- Pacific North
national Global Basin Europe America Total
<S> <C> <C> <C> <C> <C> <C>
Gilbert de Botton1 139,047 119,829 209,942 155,903 12,060 636,781
12 St. James's Place 31.7% 62.0% 87.8% 91.2% 44.4% 59.6%
London SW1A 1NX
England
Brown University -- -- 24,414 9,843 -- 34,256
c/o Norstar Trust Co. -- -- 10.2% 5.8% -- 3.2%
One East Ave.
Rochester, NY 14638
Caxton Partners 2,905 4,943 9,073 12,654 -- 29,575
101 Morgan Lane 0.7% 2.6% 3.8% 7.4% -- 2.8%
Plainsboro, NJ 08536
Demvest Equities 4,994 -- 12,796 4,317 -- 22,107
119 East 63rd St. 1.1% -- 5.4% 2.5% -- 2.1%
New York, NY 10021
Fayez Sarofim & Co. 853 4,535 -- -- 14,332 19,720
Two Houston Center 0.2% 2.3% -- -- 52.8% 1.8%
Suite 2907
Houston TX 77010
- --------
1 See footnote (2) on page 4 above.
</TABLE>
<PAGE>
-11-
<TABLE>
<CAPTION>
Inter- Pacific North
national Global Basin Europe America Total
<S> <C> <C> <C> <C> <C> <C>
Gordon P. Getty 51,221 45,064 -- -- -- 96,285
c/o Marc E. Leland 11.7% 23.3% -- -- -- 9.0%
Watergate 500 Ste. 953
600 New Hampshire Ave. N.W.
Washington, DC 20037
Gordon P. Getty -- 19,806 28,380 24,513 -- 72,698
Family Trust -- 10.2% 11.9% 14.3% -- 6.8%
600 New Hampshire Ave., N.W.
Suite 953
Washington, D.C. 20037
Esmond Harmsworth 5,124% -- 8,881 8,610 -- 22,614
359 Beacon Street 1.2% -- 3.7% 5.0% -- 2.1%
Boston, MA 02116
Helen Hotze Haas Unitrust 5,240 8,579 9,781 10,519 -- 34,119
Bank of New York 1.2% 4.4% 4.1% 6.2% -- 3.2%
706 Madison Avenue
New York, NY 10016
S. Klein Decl. Trust 2,981 2,674 4,545 4,883 1,800 16,883
c/o Rothschild Bank AG 0.7% 1.4% 1.9% 2.9% 6.6% 1.6%
Zollikerstrasse 181
8034 Zurich
Switzerland
Doris J. Lockhart 1,613 -- 2,257 2,597 1,662 8,129
2 Hayes Mews 0.4% -- 0.9% 1.5% 6.1% 0.8%
London, W1X 7R5
England
Lone Star Industries 38,096 -- -- -- -- 38,096
c/o Northern Trust Co. 8.7% -- -- -- -- 3.6%
P.O. Box 92956
Chicago, IL 60675
Long Island University 15,963 -- -- -- -- 15,963
University Center 3.6% -- -- -- -- 1.5%
Brookville, NY 11548
MAC & Co. 25,591 -- -- -- -- 25,591
Mellon Bank 5.8% -- -- -- -- 2.4%
P.O. Box 320
Pittsburgh, PA 15230
</TABLE>
<PAGE>
-12-
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Georges Marciano Trust 21,564 19,865 28,041 -- -- 69,471
9756 Wilshire Blvd. 4.9% 10.3% 11.7% -- -- 6.5%
Beverly Hills, CA 90212
Memorial Sloan Kettering 5,730 21,352 -- -- -- 27,082
1245 York Avenue 1.3% 11.0% -- -- -- 2.5%
New York, NY 10021
Nadart 28,646 -- -- -- -- 28,646
c/o Harry G. Rooks 6.5% -- -- -- -- 2.7%
8400 West Park Drive
McLean, VA 22102
All officers and 139,084 120,893 210,593 156,562 12,060 639,191
directors2 31.7% 62.5% 88.0% 91.6% 44.4% 59.8%
[TO BE UPDATED]
- -------- 2 Includes shares which may be deemed to be owned beneficially by Mr.
de Botton as described in footnote (2) on page 4 above.
</TABLE>
<PAGE>
-13-
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; and
Senior Vice President-Finance, J&W Seligman & Co. Inc., prior to 1991.
Gordon E Swartz (age 50) who has served as Secretary and Compliance
Officer 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 in 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.
<PAGE>
-14-
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.
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.
<PAGE>
-15-
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 ___, 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.
