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 October 26, 1999 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 approve or disapprove the proposed Investment Advisory Contract
between the Company and the Investment Advisor, GAM International Management
Limited;
2. For GAM Pacific Basin Fund shareholders only, to change the fundamental
investment restriction of GAM Pacific Basin Fund to permit GAM Pacific Basin
Fund to invest more than 25% of the value of its total assets in a single
sector; and
3. 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 September 29, 1999 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.
September ___, 1999 Joseph J. Allessie
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
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.
QUESTIONS AND ANSWERS
Please find below a brief overview of some matters affecting GAM Funds,
Inc. which require shareholder vote. We encourage you to read the full text of
the enclosed Proxy Statement and to vote your shares.
Why is my proxy being solicited?
The shareholders of Global Asset Management Limited ("GAML"), an indirect
parent company of the investment advisor to GAM Funds, Inc., have agreed to sell
their interest in GAML to UBS AG. UBS AG is the largest banking corporation in
Switzerland. To ensure that the current investment advisor, GAM International
Management Limited, may continue to serve as investment advisor, we are seeking
shareholder approval of a new investment advisory contract.
In addition, for shareholders of GAM Pacific Basin Fund, we are seeking
shareholder approval to modify one of the investment restrictions to allow GAM
Pacific Basin Fund to invest more than 25% of its assets in the finance sector.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THESE PROPOSALS.
How will the proposals affect my Fund?
The sale of GAML to UBS AG will not affect the investment objectives or
restrictions of your Fund. The proposed investment advisory contract will
involve the same parties on identical terms with those of the current investment
advisory contract, except that the dates of effectiveness and termination will
be different.
Approval of the proposal to change one of the investment restrictions of
GAM Pacific Basin Fund will not affect any Fund other than GAM Pacific Basin
Fund and will not change any other investment restriction of the GAM Pacific
Fund.
Will the proposals result in a change of advisory fees?
No, there will be no change in the advisory fees of any of the Funds.
What are the benefits of the proposals?
The Board of Directors anticipates that the proposed sale of GAML to UBS AG
may have several benefits to GAM Funds, Inc., including, greater financial
strength, better distribution facilities, and synergies of financial products.
Approval of the proposed investment advisory contract will allow GAM Funds, Inc.
to take advantage of these benefits.
<PAGE>
As for the modification of the investment restriction for GAM Pacific Basin
Fund, the Board believes that permitting GAM Pacific Basin Fund to invest a
significant portion of its assets in the finance sector will allow GAM Pacific
Basin Fund to take advantage of significant growth opportunities in that area.
Is GAM Funds, Inc. paying for the costs of this solicitation?
No, GAM Funds, Inc. is not paying for the costs of this solicitation.
How do I vote?
You may exercise your vote by any of the following means:
1) by returning the enclosed proxy card in the addressed envelope
2) [by calling the toll-free telephone number that appears on your proxy
card]
3) by voting in person at the shareholders meeting.
Whom should I contact with questions?
If you have any questions, please feel free to contact ____________.
<PAGE>
GAM FUNDS, INC.
135 East 57th Street
New York, New York 10022
PROXY STATEMENT
Introduction
Shareholders Meeting
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 October 26, 1999
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 ______, 1999. The Company currently consists of
seven Series, GAM International Fund, GAM Global Fund, GAM Pacific Basin Fund,
GAM Japan 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".
Proxy
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 not be paid by the Company.
Shareholders
On September 29, 1999, 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: _________ shares of GAM
International Fund, _________ shares of GAM Global Fund, _________ shares of GAM
Pacific Basin Fund, _________ shares of GAM Japan Capital Fund, __________
shares of GAM Europe Fund, _________ shares of GAM North America Fund and
__________ shares of GAMerica Capital Fund. Each whole share is entitled to one
vote and any
<PAGE>
fractional shares entitled to a fractional vote. Taken together,
these shares constituted all of the Company's outstanding securities as of
________, 1999.
PROPOSAL ONE: APPROVAL OR DISAPPROVAL OF THE PROPOSED INVESTMENT ADVISORY
AGREEMENT BETWEEN THE COMPANY AND THE INVESTMENT ADVISOR
The first proposal to be submitted at the Special Meeting of Shareholders
of the Company is to approve or disapprove of the investment advisory contract
(the "Advisory Contract") between the Company and the Investment Advisor, GAM
International Management Limited ("GIML"). GIML acts as investment adviser to
GAM International Fund, GAM Global Fund, GAM Pacific Basin Fund, GAM Japan
Capital Fund, GAMerica Capital Fund and GAM Europe Fund and as co-investment
adviser with Fayez Sarofim & Co. ("Sarofim") to GAM North America Fund. The
Advisory Contract will be identical to the existing investment advisory contract
between the Company and GIML, except for the date of termination, and a copy of
this Advisory Agreement is set forth as Exhibit A hereto. The reason for the
required approval is the change of control of GIML, which may be deemed to have
resulted in an assignment of the Advisory Contract, as defined in the Investment
Company Act of 1940 (the "1940 Act").
GIML
GIML maintains its principal executive office at 12 St. James's Place,
London SW1A 1NX, England. GIML was organized as a corporation under the laws of
the United Kingdom in March 1984. An audited balance sheet of GIML as of March
31, 1999 is set forth as Exhibit B to this Proxy Statement. An unaudited balance
sheet of GIML as of June 30, 1999 is set forth as Exhibit C to this Proxy
Statement. GIML represents that there has been no material adverse change in the
financial condition of GIML since the date of the unaudited balance sheet.
GIML is a wholly-owned subsidiary of Global Asset Management (U.K.)
Limited, 12 St. James's Place, London, SW1A 1NX, England, a holding company.
Global Asset Management (U.K.) Limited is wholly owned by GAM Admin B.V.,
Buitenhofdreed 270, 2625 RE Delft, the Netherlands, which is wholly owned by
Global Asset Management GAM Sarl. Global Asset Management GAM Sarl is wholly
owned by Greenpark Management N.V., Kaya Flamboyan 96, Curacao, Netherlands
Antilles, which is wholly owned by GAML, 45 Reid Street, Hamilton, Bermuda. GAML
is in turn owned by three shareholders: Lorelock S.A., 53rd Urbanizacion
Obarrio, Torre Bancosur, 16th Floor, Panama, Republic of Panama, which is
controlled by a discretionary trust of which Mr. de Botton, a Director and
President of the Company, may be deemed to be a beneficiary; St James's Place
Corporate Investments Limited, 27 St. James's Place, London SW1A 1NR, England,
an international diversified financial services company; and Sage Holdings
Limited. St. James's Place Corporate Investments Limited controls, individually
and collectively and directly and indirectly, a number of subsidiaries which
provide financial services and investment management services for various
investment companies, among others, and which are involved internationally in
various financial service businesses.
<PAGE>
Transaction
Pursuant to a Stock Purchase Agreement dated as of September 14, 1999 among
the shareholders of GAML and UBS AG ("UBS"), UBS will take over complete and
effective control of GAML (the "Transaction"). Since GIML is a wholly owned
indirect subsidiary of GAML, the Transaction will result in UBS's acquisition of
effective control of GIML.
The 1940 Act requires that all investment advisory contracts with
registered investment companies have a provision resulting in the automatic
termination of the investment advisory contract where the investment advisor
attempts to assign such contract without the approval of the shareholders of the
registered investment company. As required by the 1940 Act, the Advisory
Contract with GIML provides for such an automatic termination in the event of an
"assignment." The 1940 Act defines "assignment" to include any indirect or
direct transfer of an investment advisory contract. Because the change in
control of GIML could be deemed an indirect transfer of the investment advisory
contract, the Transaction may be deemed to have resulted in an "assignment" of
the Advisory Contract between the Company and GIML.
Consequently, the Board is seeking shareholder approval of the proposed
Advisory Contract between GIML and the Company on the same terms as the current
investment advisory contract.
Directors of GIML
The directors of GIML and their principal occupations are as follows:
Name Title and Principal Occupation
Gilbert M. de Botton Chief Executive Officer of GIML, Director
of GAML and Chairman of Global Asset
Management (U.K.) Ltd.
Jean-Philippe Cremeres Investment Director, GIML
Gordon D. Grender Investment Manager of GIML
Paul S. Kirkby Investment Director, Global Asset Management
(H.K.) Ltd.
Alan McFarlane Managing Director (Institutional), GAML
David J. Miller Finance Director of Global Asset Management
(U.K.) Ltd.
Denis Graham Raeburn Managing Director, GAML and Global Asset
Management (U.K.) Ltd.
Count Ulric E. von Rosen President, Bonnier Medical Division of
Bonnier Medical Group, Sweden
<PAGE>
UBS
UBS is a banking corporation organized under the laws of Switzerland and is
the largest banking corporation in Switzerland. UBS operates in over 50
countries in the world and has a total of over 48,000 employees. In the United
States, UBS operates branches in Stamford, Chicago, New York, Los Angeles, San
Francisco, Miami, and Houston. UBS also maintains direct and indirect
subsidiaries in the United States, including Warburg Dillon Read LLC, an
investment bank and a broker-dealer; UBS Brinson Inc. and Brinson Partners Inc.,
investment advisors; and Warburg Dillon Read Futures Inc., a futures commission
merchant. UBS's core businesses can be divided into five categories: private
banking, private and corporate services, investment banking, institutional asset
management and private equity. UBS is one of the world's leading financial
services group with over five million customers and $1 trillion of client assets
under management.
Information Concerning the Advisory Contract
The Advisory Contract, which is set forth as Exhibit A to this Proxy
Statement, requires GIML to conduct and maintain a continuous review of the
portfolios of each Series of the Company and, except with respect to GAM North
America Fund, to make all decisions regarding purchases and sales of securities
and other investments on behalf of each Series, subject to review by the Board
of Directors. With respect to GAM North America Fund, GIML shall provide to
Sarofim recommendations as to the purchase and sale of securities, portfolio
reviews, and investment research and advice with respect to the securities and
investment of GAM North America Fund. GIML renders its services to each Series
from outside the United States.
Expenses. GIML is required to pay all of its own costs and expenses,
including those for furnishing such office space, office equipment, office
personnel and office services as may be required in performing the duties
required under the Advisory Contract. GIML is not required to furnish any
overhead facilities for the Company, including daily pricing or trading desk
facilities. The Company pays for all expenses of its operation, including office
space and equipment, trading desk facilities, employee compensation, fees and
expenses of directors, interest, taxes, fees and commissions of every kind,
expenses of issue, repurchase or redemption of shares, registering or qualifying
shares for sale, insurance, association membership dues, all charges of
custodians (including fees as custodian and for maintaining books, performing
portfolio valuations and rendering other services to the Company), transfer
agents, registrars, auditors and legal counsel, expenses of preparing, printing
and distributing prospectuses, proxy materials, reports and notices to
shareholders, and all other costs incident to the Company's existence as a
corporation. Included in the expenses of registering or qualifying shares for
sale, which the Company bears, are the printing costs, legal fees and other
expenses relating to the preparation and filing with the Securities and Exchange
Commission (the "SEC") and other relevant authorities of the Company's
registration statement and the production and filing of the definitive
prospectus and statement of additional information for each Series. All expenses
which benefit a specific Series will be charged to that Series, and all expenses
which are deemed to benefit all Series equally shall be charged in equal parts
to each Series.
<PAGE>
Fees. For its services to each Series other than GAM North America Fund,
GIML receives a quarterly fee of 0.25% of the average daily net assets of each
Series during the quarter preceding each payment, equivalent to an annual fee of
1.0% of that Series' average daily net assets during the year. For its services
to GAM North America Fund, GIML receives a quarterly fee of 0.125% of the
average daily net assets of GAM North America Fund during the quarter preceding
each payment, equivalent to an annual fee of 0.5% of GAM North America Fund's
average daily net assets during the year. The rate of the advisory fee paid by
each Series is higher than for most investment companies. The actual advisory
fee paid by each Series with respect to the period ended December 31, 1998 and
the total net assets of each Series as of such date are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
International Global Pacific Basin Japan Europe North America GAMerica
------------- ------ ------------- ----- ------ ------------- --------
Advisory Fee: $26,355,350 $1,287,387 $207,532 $280,165 $513,908 $160,274 $84,838
Total Net Assets: $2,988,201,239 $169,772,206 $18,457,712 $24,272,851 $52,231,891 $19,478,278 $13,644,844
</TABLE>
Each Series' expense ratio can be expected to be higher than those of
investment companies investing in domestic securities since the cost of
maintaining custody of foreign securities and the rate of advisory fee paid by
each Series are higher than those for most investment companies investing in
domestic securities.
Indemnification. The Advisory Contract provides that GIML is not liable for
any losses resulting from its acts or omissions in the course of rendering
services under the Advisory Contract in the absence of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or reckless
disregard of its obligations under the Advisory Contract. The Advisory Contract
permits GIML to render services to other persons or organizations and to engage
in other activities.
Termination. The Advisory Contract will terminate automatically in the
event of its assignment, as such term is defined under the 1940 Act, and may be
terminated with respect to each Series at any time without payment of any
penalty on 60 days' written notice, with the approval of a majority of the
directors of the Company in office at the time or by vote of a majority of the
outstanding shares of that Series (as defined in the 1940 Act).
Information Regarding Portfolio Transactions
Purchase and sale orders will usually be placed with brokers who are
selected by GIML on behalf of each Series of the Company, other than GAM North
America Fund, on the basis of their ability to achieve "best execution" of such
orders. "Best execution" means prompt and reliable execution at the most
favorable securities price, taking into account the other provisions hereinafter
set forth. The determination of what may constitute best execution and price in
the execution of a securities transaction by a broker involves a number of
considerations, including, without limitation: the overall direct net economic
result to each Series (involving both price paid or received and any commissions
and other costs paid), the efficiency with which the transaction is effected,
the ability to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute possible difficult
transactions in the future, and the
<PAGE>
financial strength and stability of the broker. Such considerations are
judgmental and are weighed by GIML and the Company in determining the overall
reasonableness of brokerage commissions.
GIML is authorized to allocate brokerage and principal business to brokers
who have provided brokerage and research services for any Series or for other
accounts for which GIML exercises investment discretion to cause any Series to
pay a commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting that transaction, if GIML in
recommending or making the allocation in question determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker. In demonstrating that
such determinations were made in good faith, GIML shall be prepared to show that
all commissions were allocated and paid for purposes contemplated by the
Company's brokerage policy; that commissions were not allocated or paid for
products or services which were readily and customarily available and offered to
the public on a commercial basis; and that the commissions paid were within a
reasonable range.
Research services provided by brokers to the Company or GIML consist of
that which brokerage houses customarily provide to institutional investors and
include statistical and economic data and research reports on particular
companies and industries. Research furnished by brokers through whom the Company
effects securities transactions may be used by GIML for any of its accounts, and
not all such research may be used by GIML for the Company. When execution of
portfolio transactions is allocated to brokers trading on exchanges outside the
United States with fixed brokerage commission rates, account may be taken of
various services provided by the broker, including quotations for daily pricing
of foreign securities held in the portfolio of a Series and trading desk
services for the Company.
Purchases and sales of portfolio securities within the United States other
than on a securities exchange shall be executed with primary market makers
acting as principal except where, in the judgment of GIML, better prices and
execution may be obtained on a commission basis or from other sources.
Portfolio transactions executed by brokers which may be deemed to be
affiliated with the Company will be in accordance with procedures adopted by the
Company, pursuant to Rule 17e-1 under the 1940 Act, to ascertain that the
brokerage commissions paid to such brokers are fair, reasonable, usual and
customary compared to the commission, fee or other remuneration received by
other brokers in connection with comparable transactions involving similar
securities being purchased or sold during a comparable period of time. The Board
of Directors of the Company will review these procedures at least annually and
will determine at least quarterly that all brokerage commissions paid to such
brokers during the preceding quarter were paid in compliance with such
procedures. The Company has not used affiliated brokers in the past and
currently does not intend to do so in the future.
During the fiscal year ended December 31, 1998, GAM International Fund paid
$6,155,942 for brokerage commissions, GAM Global Fund paid $385,674 for
brokerage commissions, GAM Pacific Basin Fund paid $109,176 for brokerage
commissions, GAM Europe Fund paid $407,460 for brokerage commissions, GAM North
America Fund paid $20,784 for
<PAGE>
brokerage commissions, GAM Japan Capital Fund paid $53,902 for brokerage
commissions, and GAMerica Capital Fund paid $11,605 for brokerage commissions.
Special Requirements
Section 15 of the 1940 Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated person may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the 1940 Act, the term "unfair burden" includes any arrangements during the two
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any interested person of such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services), or from any person in connection
with the purchase or sale or other property to, or on behalf of the investment
company (other than fees for bona fide brokerage and principal underwriting
services). The Board has not been advised by GIML of any circumstances arising
from the Transaction that might result in an unfair burden being imposed on the
Company.
The second condition is that, during the three year period immediately
following the Transaction, at least 75% of the members of the Board of Directors
of the Company must not be "interested persons" of the Company (after the
Transaction) or the predecessor investment adviser within the meaning of the
1940 Act. After the Transaction, 75% of the directors of the Company will not be
"interested persons" of GIML or any of its affiliates.
Recommendation of the Board
At meetings of the Board held on September 22 and 29, 1999, the Board,
including all of the directors who are not interested directors, considered the
continuance of GIML as investment advisor to GAM International Fund, GAM Global
Fund, GAM Pacific Basin Fund, GAM Japan Fund, GAM Europe Fund, and GAMerica Fund
and as co-advisor to GAM North America Fund upon the acquisition by UBS of
effective control of GIML. The Board obtained from GIML and UBS such information
as it deemed reasonably necessary to make such a decision. It considered such
factors as the continuity of management of GIML and the autonomy to be retained
by companies in the GAM group; the nature, scope and quality of services
provided to the Company by GIML; the quality of personnel of GIML; and the
potential impact of the Transaction on the quality of services provided by GIML.
Particular emphasis was placed on the potential synergies of a combination of
the products offered by the Company and those of UBS, the additional resources
of UBS, the breadth of the distribution facilities of UBS and the reputation of
UBS for delivering quality services in the area of asset management.
Those members of the Board who are not interested directors met alone with
their independent counsel to discuss the information provided to them and the
advisability of continuing to have GIML serve as investment adviser to the
company.
<PAGE>
[Add description of issues raised at September 29 Board meeting.]
Approval of the Investment Advisory Contract
The current advisory contract between GIML and the Company was originally
approved by the shareholders of GAM International Fund on February 14, 1986, by
the shareholders of GAM Global Fund on March 30, 1987, by the shareholders of
GAM Pacific Basin Fund on July 25, 1988, by the shareholders of GAM Europe Fund
and GAM North America Fund on March 29, 1990. At a meeting of the Board of
Directors held on February 25, 1994, the Board of Directors approved an amended
and restated advisory contract on behalf of GAM Global Fund, GAM International
Fund, GAM Pacific Basin Fund, GAM North America and GAM Europe Fund. This
amended and restated advisory contract was approved by the shareholders of GAM
Global Fund, GAM International Fund, GAM Pacific Basin Fund, GAM North America
Fund and GAM Europe Fund on April 14, 1994 and by the board of directors of GAM
Japan Capital Fund (prior to the issuance of shares of such Series) on February
25, 1994, and by the board of directors of GAMerica Capital Fund (prior to the
issuance of shares of such Series) on December 15, 1994.
At the Special Meeting, the Advisory Contract will be submitted for
approval of the shareholders of the Company, each Series voting separately as a
class. Approval of the Advisory Contract with respect to each Series requires
the affirmative vote of the holders of a majority of the outstanding shares of
such Series. A majority of the outstanding shares of each Series is defined
under the 1940 Act as the lesser of (a) 67% of the shares of the Series present
at a meeting if the holders of more than 50% of such Series' outstanding shares
are present in person or by proxy or (b) more than 50% of the Series'
outstanding shares.
If the proposed Advisory Contract between the Company and GIML is approved
by the shareholders of a Series, such Contract will be effective as to that
Series as of October 26, 1999 and will terminate on October 26, 2000. If the
proposed Advisory Contract is not approved by the shareholders of a Series and
the Transaction is consummated, then the existing Advisory Contract will be
terminated automatically with respect to such Series. In the event of such a
termination, the Board would then make arrangements for the management of the
Company's investments as it believes appropriate and in the best interests of
the Shareholders of such Series.
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE NON-INTERESTED
DIRECTORS, RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSED INVESTMENT
ADVISORY AGREEMENT.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Shares of GAM Funds, Inc.,
Beneficially Owned Directly or
Indirectly by Directors and Officers
as of [December 31, 1998] [TO BE UPDATED]
Name and Year
Position with First Inter Pacific North
the Company of Principal Occupations Became national Global Basin Europe America
Each Nominee During Past Five Years Director Fund Fund Fund Fund Fund
------------ ---------------------- -------- ---- ----- ---- ---- ----
Gilbert de Botton Chairman, Global Asset Management Limited, 1984 139,047 119,829 209,942 155,903 12,060
Director and President investment adviser, 1983 to present; Chairman, 31.7% 62.0% 87.8% 91.2% 44.4%
(age 63)(1)(2) 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 the Council
Director of the Americas, 1985-1993; Chairman, Latin 1994
(age 77) America Advisory Board of Coca-Cola
International, 1988 to present.
Roland Weiser Chairman, Intervista, business consulting, 1988 34 1,058 651 659 0
Director 1984 to present. 0.0% 0.6% 0.3% 0.4%
(age 66)(3)
Robert J. McGuire, Attorney/Consultant, Morvillo, Abramowitz,
Director Grand, Iason & Silberberg, P.C., 1998 to
present; President/Chief (age 62) Operating
Officer, Kroll Associates 1989-1997.
Directors and Officers 139,084 120,891 210,593 156,562 12,060
of the Company as a 31.7% 62.5% 88.0% 91.6% 44.4%
Group
[TO BE UPDATED}
</TABLE>
<PAGE>
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>
PROPOSAL TWO: APPROVAL OR DISAPPROVAL OF CHANGING ONE FUNDAMENTAL INVESTMENT
RESTRICTION FOR GAM PACIFIC BASIN FUND
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 July 28, 1999 the Board of Directors approved the
change of one of the Company's fundamental investment restrictions for GAM
Pacific Basin Fund as described below.
The text of the proposed change in the investment restriction 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.
Proposed Change
The Company is proposing to change the current fundamental investment
restriction 4 for GAM Pacific Basin Fund in the Company's Statement of
Additional Information (see Exhibit A to this Proxy Statement) which reads as
follows:
"Each Fund may not: ...
[4.] Concentrate more than 25% of the value of its total assets in any one
industry (including securities of non-United States governments)."
Proposed Change. The Board of Directors proposes changing Restriction 4 so
that it would read in its entirety as follows:
"[4] "Each Fund may not: ... Concentrate more than 25% of the value of its
total assets in any one industry (including securities of non-United States
governments) except for GAM Pacific Basin Fund which may concentrate more than
25% of the value of its total assets in the Finance Sector, as such sector is
defined in the Morgan Stanley Capital International ("MSCI") Indices."
Commentary: Restriction 4 limits investments in any one industry to 25% of
the total assets of each of the funds. The proposed change would allow GAM
Pacific Basin Fund to invest more than 25% of its total assets in the Finance
Sector as defined by MSCI up to a limit to be established by the Board of
Directors of the Company at its discretion. GAM Pacific Basin Fund would not be
permitted to invest more than 25% of its total assets in any sector other than
the Finance Sector. MSCI classifies the universe of companies into eight
sectors: energy, materials, capital equipment, consumer goods, services,
multi-industry, gold mines, and finance. The Finance Sector is comprised of four
industries: banking, financial services, insurance and real estate.
<PAGE>
The primary purpose behind proposing the modification of this policy is to
permit GAM Pacific Basin Fund to take advantage of opportunities in companies in
the financial services industry, including banks, brokerage firms, insurance
companies and real estate companies. The Fund's investment advisor and Board of
Directors believe that companies in the Financial Sector will present
significant growth opportunities as the economies of Asia and the Pacific Basin
recover. The Investment Advisor and the Board of Directors note that this change
in the fundamental investment restriction will permit GAM Pacific Basin Fund to
concentrate its assets in a single sector in order to permit GAM Pacific Basin
Fund to profit from this expected growth. While the proposed change to this
investment restriction will eliminate a limitation on the concentration of
assets in the Finance Sector, GAM Pacific Basin Fund's investment advisor will,
of course, consider carefully all investments in the Finance Sector.
The Board of Directors believes that investors in the GAM Pacific Basin
Fund will benefit from this proposed change in the fundamental investment
objective in two ways. First, GAM Pacific Basin Fund will have increased
flexibility to respond to new developments and changing trends in the Pacific
Basin marketplace. Second, GAM Pacific Basin Fund will have the opportunity to
take advantage of a sector which the Fund's investment advisor and Board of
Directors believe offers a number of attractive investment opportunities.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR CHANGING THE
FOREGOING INVESTMENT RESTRICTION.
SUPPLEMENTAL INFORMATION
Principal Holders of Securities [TO BE UPDATED]
As of [____________, 1999], the following persons may be deemed to own
beneficially more than 5% of the outstanding shares of any Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Inter- Pacific North
national Global Basin Europe America Total
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
- --------------------------------------------------------------------------------
1 See footnote (2) on page 4 above.
<PAGE>
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
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
<PAGE>
MAC & Co. 25,591 -- -- -- -- 25,591
Mellon Bank 5.8% -- -- -- -- 2.4%
P.O. Box 320
Pittsburgh, PA 15230
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%
</TABLE>
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 5).
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.
Joseph Allessie (age 34), General Counsel, Corporate Secretary and
Compliance Officer since 1999 and whose principal occupation during the past
five years was a Regulatory Officer for the State of New Jersey, Department of
Law and Public Safety, Bureau of Securities from 1993 until 1999.
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.
- --------------------------------------------------------------------------------
2 Includes shares which may be deemed to be owned beneficially by Mr. de
Botton as described in footnote (2) on page 4 above.
<PAGE>
John L. Hogan, (40) Assistant Treasurer and who has been Assistant Manager,
Brown Brothers Harriman & Co. since 1995. Prior to 1995, Mutual Fund
Administration Supervisor at New England Funds, L.P.
Global Asset Management (USA) Inc., GAM Investments Inc. and GAM Services
Inc. are all controlled by GAML, which also controls GIML.
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 Advisory Contract between the Company and
GIML (Proposal 1) will require the affirmative vote of a majority of all votes
cast at the Special Meeting. Approval of the proposal to change one fundamental
investment restriction for GAM Pacific Basin Fund in order to permit the
investment of more than 25% of the assets of GAM Pacific Basin Fund in the
Financial Sector up to a limit to be set by the Board of Directors of the
Company at its discretion (Proposal 2) 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. 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>
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: ________, 1999
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.
<PAGE>
PROXY
PROXY SOLICITED BY BOARD OF DIRECTORS FOR
SPECIAL MEETING TO BE HELD ON _____________________, 1999.
The undersigned hereby appoints __________, _________________, and
____________, or any of them, as the undersigned's proxy or proxies, with full
power of substitution, to vote all shares of Common Stock of GAM Funds, Inc.
which the undersigned is entitled to vote at the Special Meeting of Stockholders
to be held at 135 East 57th Street, 25th Floor, New York, New York, on October
26, 1999 at 11:00 a.m., local time, and any adjournments thereof, as fully as
the undersigned could if personally present, upon the proposals set forth below,
revoking any proxy or proxies heretofore given.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW, BUT
IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3,
AND IN THE DISCRETION OF THE PROXY HOLDER WITH RESPECT TO ANY OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
Proposal 1: Approval of the Investment Advisory Agreement: Approval of the
Investment Advisory Agreement between GAM Funds, Inc. and GAM International
Management Limited.
For Against Abstain
--- --- ---
Proposal 2: (For GAM Pacific Basin Fund shareholders only) Approval of
Change in Investment Restriction for GAM Pacific Basin Fund: Approval of the
change in investment restrictions to allow GAM Pacific Basin Fund to concentrate
more than 25% of its assets in the Finance Sector.
For Against Abstain
--- --- ---
Proposal 3: Discretionary Authority: In his or her discretion, the proxy is
authorized to vote upon such other business as may properly come before the
Special Meeting.
For Against Abstain
--- --- ---
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
Please Sign Here and Return Promptly
Signature: ____________________ Dated:__________
Signature: ____________________
Please sign exactly as your name or names appear on your share
certificates. For joint accounts, each owner should sign. When signing as
executor, administrator, attorney, trustee or guardian, etc., please give
your full title.
