SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)
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[ ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
IAI Investment Funds III, Inc.
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<PAGE>
[PRELIMINARY COPY]
IAI DEVELOPING COUNTRIES FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 1998
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of IAI
Investment Funds III, Inc., on behalf of its portfolio known as IAI Developing
Countries Fund (the "Fund"), will be held at 10:00 a.m. Central Time, on
Wednesday, September 23, 1998, on the thirty-seventh floor of U.S. Bank Place,
601 Second Avenue South, Minneapolis, Minnesota. The purposes of the meeting are
as follow:
1. To consider and vote upon the liquidation and dissolution of
the Fund pursuant to the provisions of the Plan of Liquidation
and Dissolution of the Fund. A vote in favor of the Plan of
Liquidation and Dissolution will be considered a vote in favor
of an amendment to the Amended and Restated Articles of
Incorporation of IAI Investment Funds III, Inc. required to
effect the proposed liquidation and dissolution.
2. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
Shareholders of record on August 12, 1998 are the only persons entitled
to notice of and to vote at the meeting and any adjournments thereof. Your
attention is directed to the attached Proxy Statement.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL
IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
SAVE THE FUND FURTHER SOLICITATION EXPENSE. A stamped return envelope is
enclosed for your convenience.
William C. Joas
Secretary
___________, 1998
<PAGE>
[PRELIMINARY COPY]
IAI DEVELOPING COUNTRIES FUND
3700 U.S. BANK PLACE
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402
(612) 376-2700; (800) 945-3863
SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 23, 1998
The enclosed proxy is solicited by the Board of Directors of IAI
Investment Funds III, Inc., on behalf of its portfolio known as IAI Developing
Countries Fund (the "Fund"), in connection with a special meeting of
shareholders of the Fund to be held September 23, 1998, and any adjournments
thereof. The costs of solicitation, including the cost of preparing and mailing
the Notice of Meeting of Shareholders and this Proxy Statement, will be paid by
Investment Advisers, Inc., the Fund's investment adviser and manager ("IAI").
Mailing of the Notice of Meeting of Shareholders and this Proxy Statement will
take place on approximately August 21, 1998. Representatives of IAI may, without
cost to the Fund, solicit proxies on behalf of management of the Fund by means
of mail, telephone or telegraph. The address of IAI is that of the Fund as
provided above.
A proxy may be revoked before the meeting by giving written notice of
revocation to the Secretary of the Fund, or by delivery of a duly executed proxy
bearing a later date or by attending and voting at the meeting. Unless revoked,
proxies that have been returned without instructions will be voted in favor of
the liquidation and dissolution of the Fund in accordance with the
recommendation of the Fund's Board of Directors. In instances where a choice is
specified by the shareholder in the proxy, those proxies will be voted in
accordance with the shareholder's choice. Abstentions will be counted as present
for purposes of determining whether a quorum of shares is present at the
meeting, but will be counted as a vote "against" the proposal to liquidate and
dissolve the Fund. Under the Rules of the New York Stock Exchange, if a proposal
is considered "non-discretionary," then brokers who hold Fund shares in street
name for customers are not authorized to vote on such proposal on behalf of
their customers who have not furnished the broker specific voting instructions.
If a broker returns a "non-vote" proxy, indicating a lack of authority to vote
on a proposal, then the shares covered by such non-vote shall be deemed present
at the meeting for the purpose of determining a quorum but shall not be deemed
to be represented at the meeting for purposes of calculating the vote with
respect to such proposal. So far as the Board of Directors is aware, no matter
other than that described in this Proxy Statement will be acted upon at the
meeting. Should any other matters properly come before the meeting calling for a
vote of shareholders, it is the intention of the persons named as proxies in the
enclosed proxy to act upon such matters according to their best judgment.
Only shareholders of record on August 12, 1998 may vote at the meeting
or any adjournment thereof. As of that date, the Fund had _______________ common
shares, par value of $.01, issued and outstanding. Each shareholder is entitled
to one vote for each share held. Under Minnesota law, no shareholder will be
entitled to exercise any dissenters rights or appraisal rights with respect to
the liquidation and dissolution of the Fund. A quorum of shares is required to
take action at the meeting. Ten percent of the shares entitled to vote at the
meeting, represented in person or by proxy, will constitute a quorum of shares
at the meeting.
No person, to the knowledge of Fund management, was the beneficial
owner of more than 5% of the voting shares of any Fund as of August 12, 1998,
except: [information to be provided].
In the event that sufficient votes are not received in favor of the
proposal to liquidate and dissolve the Fund, the persons named as proxies may
propose one or more adjournments of the meeting. Any adjournment would require a
vote in favor of the adjournment by the holders of a majority of the
<PAGE>
shares present (in person or by proxy) at the meeting or any adjournment
thereof. The persons named as proxies will vote all shares that have voted for
the proposal in favor of adjournment; shares voted against the proposal will be
voted against adjournment.
A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT IS AVAILABLE TO
SHAREHOLDERS UPON REQUEST. IF YOU WOULD LIKE TO RECEIVE A COPY, PLEASE CONTACT
THE FUND AT 3700 U.S. BANK PLACE, MINNEAPOLIS, MINNESOTA 55402, OR CALL
800-945-3863 OR 612-376-2700, AND ONE WILL BE SENT, WITHOUT CHARGE, BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
APPROVAL OF THE PLAN OF LIQUIDATION AND DISSOLUTION
INTRODUCTION
At a meeting held May 13, 1998, the Board of Directors considered and
approved IAI's recommendation that the Fund be liquidated and dissolved. The
Board also directed IAI to prepare a Plan of Liquidation and Dissolution of the
Fund ("Liquidation Plan") to be submitted for shareholder approval. A copy of
the Liquidation Plan is attached as Exhibit A to this Proxy Statement. A vote in
favor of the Liquidation Plan will be considered a vote in favor of an amendment
to the Amended and Restated Articles of Incorporation of IAI Investment Funds
III, Inc. required to effect the proposed liquidation and dissolution. A copy of
the Articles of Amendment to the Amended and Restated Articles of Incorporation
is included in Exhibit A to this Proxy Statement. If Fund shareholders approve
the Liquidation Plan, IAI will sell the Fund's portfolio securities and other
assets, pay creditors or establish reserves for such payments and distribute the
net proceeds of such sales in cash, pro rata in accordance with Fund holdings.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
LIQUIDATION PLAN.
BACKGROUND
The Fund is represented by Series B common shares of IAI Investment
Funds III, Inc., an open-end diversified management investment company is a
Minnesota corporation. The Fund commenced operations on February 10, 1995. The
Fund's investment objective is to provide shareholders long-term capital
appreciation. The Fund sought to achieve its objective by investing primarily in
equity securities of companies domiciled or otherwise having substantial
operations in developing countries. At the end of January 1998 after almost
three years of operations, the Fund had net assets of less than $8 million. In
fact, the Fund's net assets had decreased by almost one-third during its most
recent fiscal year. IAI recommended that the Fund be liquidated and dissolved.
Some of the reasons for liquidation were: (1) the Fund's assets had decreased by
more than one-third in the last year; (2) as a result of its smaller size, the
Fund cannot maintain the level of investment diversification which IAI desires;
(3) the Fund's smaller size results in increased transaction costs which reduce
the return to shareholders; and (4) the Fund's specialized focus of investing in
developing countries no longer fits into IAI's marketing strategy. IAI believes
that it would be in the best interest of Fund shareholders to approve the
liquidation and dissolution of the Fund. Accordingly, IAI has recommended
liquidating the Fund's assets and distributing the proceeds to Fund
shareholders.
At its May 13, 1998 meeting, the Fund's Board of Directors agreed with
IAI's recommendation. Accordingly, the Fund's Board of Directors, including all
of the Directors who are not "interested persons" of the Fund, as defined in the
Investment Company Act of 1940, unanimously adopted resolutions declaring that
the proposed liquidation and dissolution was in the best interests of the Fund
and its shareholders, approving the Liquidation Plan and Articles of Amendment
proposed by IAI, and
<PAGE>
directing IAI to formally prepare such Liquidation Plan and amendment and submit
them for shareholder approval.
DESCRIPTION OF THE LIQUIDATION PLAN AND RELATED TRANSACTIONS
If the Liquidation Plan is approved by the Fund's shareholders, as of
3:00 p.m. Central time on the day of approval, the Fund will cease to carry on
its business and will proceed to sell all of its portfolio securities and other
assets for cash at one or more public or private sales and at such prices and on
such terms and conditions as IAI determines to be reasonable and in the best
interests of the Fund and its shareholders. IAI anticipates that the aggregate
of such prices, net of the Fund's liabilities, will approximate the Fund's net
asset value on such date, subject to market changes during the period in which
portfolio securities are sold. That same day, the Fund will file Articles of
Amendment to its Amended and Restated Articles of Incorporation reflecting the
dissolution of the Fund with the Minnesota Secretary of State in accordance with
Minnesota Law. The Fund then will apply its assets to the payment, satisfaction
and discharge of all existing debts and obligations of the Fund, and distribute
in one or more payments the remaining assets among the shareholders of the Fund,
with each shareholder receiving his or her proportionate share of each
liquidation distribution in cash. Upon such filing, the Fund will be statutorily
dissolved and will cease to exist, and no shareholder will have any interest
whatsoever in the Fund. IAI will bear the expenses of liquidation of the Fund
consistent with the terms of its Management Agreement with Fund, which provides
that except for brokerage commissions and other expenditures in connection with
the purchase and sale of portfolio securities, interest expense, and, subject to
the specific approval of a majority of the disinterested directors of a Fund,
taxes and extraordinary expenses, IAI will pay all of the Fund's costs and
expenses.
If the Liquidation Plan is adopted, IAI currently estimates that the
liquidation distributions will be paid to shareholders during October 1998.
However, the exact date of the liquidation distributions will depend on the time
required to liquidate the Fund's assets. The Fund may, if deemed appropriate,
hold back sufficient assets to deal with any disputed claims or other contingent
liabilities which may then exist against the Fund. Any amount that is held back
relating to any such claim will be deducted pro rata from the net assets
distributable to shareholders and held until the claim is settled or otherwise
determined. IAI does not anticipate, however, that it will be necessary to hold
back any assets to deal with disputed claims or other contingent liabilities. In
the event that claims are not adequately provided for or are brought after
dissolution by previously unknown creditors or claimants, Fund directors and
officers could be held personally liable. In addition, claims possibly could be
pursued against shareholders to the extent of distributions received by them in
liquidation.
The Fund does not currently intend to create a trust to administer
liquidation distributions; however, in the event the Fund is unable to
distribute all of its assets pursuant to the Liquidation Plan because of its
inability to locate shareholders to whom liquidation distributions are payable,
the Fund may create a liquidating trust with a financial institution and deposit
any remaining assets of the Fund in such trust for the benefit of the
shareholders that cannot be located. The expenses of any such trust will be
charged against the liquidation distributions held therein.
As soon as practicable after the distribution of all of the Fund's
assets in complete liquidation, the officers of the Fund will close the books of
the Fund and prepare and file, in a timely manner, any and all required income
tax returns and other documents and instruments.
Prior to completion of the liquidation, the Fund will send to its
shareholders of record a letter of transmittal form for the purpose of
exchanging each shareholder's Fund shares for liquidation distributions.
Shareholders whose shares are held in the name of their broker or other
financial institution will receive their distributions through their nominee
firms. No amount will be distributed
<PAGE>
by the Fund to a shareholder of record unless and until such shareholder
delivers to the Fund a signed letter of transmittal form.
FEDERAL INCOME TAX CONSEQUENCES
PAYMENT BY THE FUND OF LIQUIDATION DISTRIBUTIONS TO SHAREHOLDERS WILL
BE A TAXABLE EVENT. BECAUSE THE INCOME TAX CONSEQUENCES FOR A PARTICULAR
SHAREHOLDER MAY VARY DEPENDING ON INDIVIDUAL CIRCUMSTANCES, EACH SHAREHOLDER IS
URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE FEDERAL, STATE AND
LOCAL TAX CONSEQUENCES OF RECEIPT OF A LIQUIDATING DISTRIBUTION.
The Fund currently qualifies, and intends to continue to qualify
through the end of the liquidation period, for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended, so that
it will be relieved of federal income tax on any investment company taxable
income or net capital gain (the excess of net long-term capital gain over net
short-term capital loss) from the sale of its assets.
The payment of liquidation distributions will be a taxable event to
shareholders. Each shareholder will be viewed as having sold his or her Fund
shares for an amount equal to the liquidation distribution(s) he or she
receives. Each shareholder will recognize gain or loss in an amount equal to the
difference between (a) the shareholder's adjusted basis in the Fund shares, and
(b) such liquidation distribution(s). The gain or loss will be capital gain or
loss to the shareholder if the Fund shares were capital assets in the
shareholder's hands and generally will be long-term if the Fund shares were held
for more than one year at the time of the liquidation distribution.
As of January 31, 1998, the Fund had $311,000 in net capital loss
carryforwards that could be used to offset current or future capital gains. If
the liquidation and dissolution of the Fund is approved and any capital gains
are realized, the Fund will be able to use a portion of its net capital loss
carryforwards to offset such gains. Any remaining capital loss carryforwards
that are not used to offset capital gains realized upon liquidation will be
lost, and the benefit of such capital loss carryforwards will not pass through
to shareholders. If the Fund did not liquidate, it is possible that sufficient
capital gains could be generated in the future to use the entire amount of the
Fund's capital loss carryforwards.
The Fund generally will be required to withhold tax at the rate of 31%
with respect to any liquidation distribution paid to individuals and certain
other non-corporate shareholders who have not previously certified to the Fund
that their social security number or taxpayer identification number provided to
the Fund is correct and that the shareholder is not subject to backup
withholding.
The foregoing summary is generally limited to the material federal
income tax consequences to shareholders who are individual United States
citizens and who hold shares as capital assets. It does not address the federal
income tax consequences to shareholders who are corporations, trusts, estates,
tax-exempt organizations or non-resident aliens. This summary does not address
state or local tax consequences. Shareholders are urged to consult their own tax
advisers to determine the extent of the federal income tax liability they would
incur as a result of receiving a liquidation distribution, as well as any tax
consequences under any applicable state, local or foreign laws.
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the Fund have been audited by
KPMG Peat Marwick LLP, independent auditors, whose report thereon appears in the
Fund's annual report to shareholders for the year ended January 31, 1998.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
meeting and available to respond to appropriate questions, and they will have
the opportunity to make a statement if they desire to do so. Financial
statements for the year ended January 31, 1998 are contained in the Fund's
audited annual report to shareholders for such periods.
<TABLE>
<CAPTION>
Years ended January 31, Period from
----------------------- February 10, 1995#
1998 1997 to January 31, 1996
---- ---- -------------------
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value:
Beginning of period $ 10.38 $ 10.56 $ 10.00
Operations:
Net investment income 0.06 0.05 --
Net realized and unrealized
gains (losses) (2.41) 0.46 0.83
------------ ------------ ------------
Total from operations (2.35) 0.51 0.83
------------ ------------ ------------
Distributions to
shareholders from:
Net investment income (0.16) (0.06) --
Net realized gains (0.69) (0.63) (0.27)
------------ ------------ ------------
Total distributions (0.85) (0.69) (0.27)
------------ ------------ ------------
Net asset value:
End of period $ 7.18 $ 10.38 $ 10.56
============ ============ ============
Total investment return * (23.13%) 5.22% 8.53%
Net assets at end of period
(000's omitted) $ 7,943 $ 11,982 $ 7,357
Ratios:
Expenses to average net assets ** 2.00% 2.00% 2.15%++
Net investment income to average
net assets ** 0.49% 0.52% 0.04%++
Average brokerage commission
rate *** $ 0.0041 $ 0.0057 n/a
Portfolio turnover rate (excluding
short-term securities) 71.7% 61.0% 41.9%
</TABLE>
# Commencement of operations
* Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of all distributions
at net asset value.
** The Fund's adviser voluntarily waived $17,765 and $45,293 in expenses
for the year ended January 31, 1997 and the period ended January 31,
1996. If the Fund had been charged these expenses, the ratio of
expenses to average daily net assets would have been 2.17% and 3.42%,
<PAGE>
respectively, and the ratio of net investment income (loss) to average
daily net assets would have been 0.35% and (1.23%), respectively.
**** Beginning in fiscal 1997, the Fund is required to disclose an average
brokerage commission rate. The comparability of rates between domestic
and foreign equities may be affected by the fact that commission rates
per share can vary significantly among foreign countries.
++ Annualized
REQUIRED VOTE
The affirmative vote of a majority of the Fund's shares entitled to
vote at the meeting is required to approve the Liquidation Plan and Articles of
Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
OF THE LIQUIDATION PLAN AND ARTICLES OF AMENDMENT.
William C. Joas
Secretary
Dated: _____________, 1998
<PAGE>
EXHIBIT A
PLAN OF LIQUIDATION AND DISSOLUTION
OF IAI DEVELOPING COUNTRIES FUND
(a) As of 3:00 p.m. of the date of approval of this Plan of Liquidation
and Dissolution by the shareholders of IAI Developing Countries Fund (the
"Fund"), represented by the Series B Common Stock of IAI Investment Funds III,
Inc., the Fund will cease to carry on its business. As soon thereafter as
possible, the proper officers of the Fund shall perform such acts, execute and
deliver such documents, and do all things as may be reasonably necessary or
advisable to complete the liquidation and dissolution of the Fund, including,
but not limited to, the following: (i) sell all of the portfolio securities and
any and all other property and assets of the Fund for cash at one or more public
or private sales and at such prices and on such terms and conditions as such
officers shall determine to be reasonable and in the best interests of the Fund
and its shareholders; (ii) to the extent possible, prosecute, settle or
compromise all claims or actions of the Fund or to which the Fund is subject;
(iii) file Form 966 with the Internal Revenue Service, together with certified
copies of the directors' and shareholders' resolutions approving this Plan; and
(iv) execute in the name and on behalf of the Fund those contracts of sale,
deeds, assignments, notices and other documents as in the judgment of such
officers may be necessary, desirable or convenient in connection with the
carrying out of the liquidation and dissolution of the Fund. (All references in
this Plan of Liquidation and Dissolution to the "proper officers of the Fund"
shall include, where appropriate, proper officers of the Fund's investment
adviser, acting on behalf of the Fund.)
(b) The proper officers of the Fund then shall apply the assets of the
Fund to the payment, satisfaction and discharge of all existing debts and
obligations of the Fund and distribute in one or more payments the remaining
assets among the shareholders of the Fund, with each shareholder receiving his
or her proportionate share of each payment. All expenses of the liquidation and
dissolution of the Fund, except for brokerage commissions and other expenditures
in connection with the purchase and sale of portfolio securities, interest
expense, and, subject to the specific approval of a majority of the
disinterested directors of a Fund, taxes and extraordinary expenses, if any,
will be borne by Investment Advisers, Inc.
(c) The proper officers of the Fund may, if such officers deem it
appropriate, establish a reserve to meet any contingent liabilities of the Fund,
including all claims or actions to which the Fund is subject, and any amount
that is placed in such reserve shall be deducted from the net assets
distributable to shareholders until the contingent liabilities have been settled
or otherwise determined and discharged.
(d) In the event the Fund is unable to distribute all of the net assets
distributable to shareholders because of the inability to locate shareholders to
whom liquidation distributions are payable, the proper officers of the Fund may
create in the name and on behalf of the Fund a liquidation trust with a
financial institution and, subject to applicable abandoned property laws,
deposit any remaining assets of the Fund in such trust for the benefit of the
shareholders that cannot be located. The expenses of any such trust shall be
charged against the assets held therein.
(e) On the date of approval of this Plan of Liquidation and Dissolution
by Fund shareholders, the proper officers of the Fund shall file Articles of
Amendment to the Amended and Restated Articles of Incorporation, in the form
attached hereto, reflecting the dissolution of the Fund with the Secretary of
State of the State of Minnesota in accordance with Minnesota law.
<PAGE>
ATTACHMENT TO PLAN OF LIQUIDATION AND DISSOLUTION
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
IAI INVESTMENT FUNDS III, INC.
The undersigned officer of IAI Investment Funds III, Inc. (the
"Corporation"), a corporation subject to the provisions of Chapter 302A of the
Minnesota Statutes, hereby certifies that the Corporation's Board of Directors
and shareholders, at meetings held May 13, 1998 and September 23, 1998,
respectively, adopted the resolutions hereinafter set forth; and such officer
further certifies that the amendments to the Corporation's Amended and Restated
Articles of Incorporation set forth in such resolutions were adopted pursuant to
said Chapter 302A.
WHEREAS, the Corporation is registered as an open-end management
investment company (i.e., a mutual fund) under the Investment Company Act of
1940 and offers its shares to the public in several series, each of which
represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series B shares of the Corporation (also known as the "IAI Developing
Countries Fund") that the assets belonging to such series be liquidated; and
WHEREAS, the Corporation wishes to provide for the pro rata
distribution of the proceeds of such liquidation received by it to holders of
shares of the Corporation's IAI Developing Countries Fund and the simultaneous
cancellation and retirement of the outstanding shares of the Corporation's IAI
Developing Countries Fund; and
WHEREAS, the Corporation has approved a Plan of Liquidation and
Dissolution providing for the foregoing transactions; and
WHEREAS, the Plan of Liquidation and Dissolution requires that, in
order to bind all holders of shares of the Corporations IAI Developing Countries
Fund, to the foregoing transactions, and in particular to bind such holders to
the cancellation and retirement of the outstanding shares of the Corporation's
IAI Developing Countries Fund, it is necessary to adopt an amendment to the
Corporation's Amended and Restated Articles of Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that Section 5(a) of the Corporation's
Amended and Restated Articles of Incorporation be, and the same hereby is,
amended as set forth below.
5.(a) Ten billion (10,000,000,000) of the Shares may be issued by the
Corporation in a series designated "Series A Common Shares." The remaining
9,990,000,000,000 Shares authorized by this Article 5 shall initially be
undesignated Shares (the "Undesignated Shares"). Any series of the Shares shall
be referred to herein individually as a "Series" and collectively herein,
together with any further series from time to time created by the Board of
Directors, as "Series." The Undesignated Shares may be issued in such Series
with such designations, preferences and relative, participating, optional or
other special rights, or qualifications, limitations or restrictions thereof, as
shall be stated or expressed in a resolution or resolutions providing for the
issue of any Series as may be adopted from time to time by the Board of
Directors of the Corporation pursuant to the authority hereby vested in the
Board of Directors. Each Series of Shares which the Board of Directors may
establish, as provided herein, may evidence, if the Board of Directors shall so
determine by resolution, an interest in a
<PAGE>
separate and distinct portion of the Corporation's assets, which shall take the
form of a separate portfolio of investment securities, cash and other assets.
Authority to establish such separate portfolios is hereby vested in the Board of
Directors of the Corporation, and such separate portfolios may be established by
the Board of Directors without the authorization or approval of the holders of
any Series of Shares of the Corporation. Such investment portfolios in which
Shares of the Series represent interests are also hereinafter referred to as
"Series".
(1) As of 3:00 p.m. Central time on the date upon which these Articles
of Amendment are filed with the Minnesota Secretary of State, the assets
belonging to such shares, and the Special Liabilities, General Assets and
General Liabilities associated with such assets, shall be sold. For purposes of
the foregoing, "assets belonging to," "Special Liabilities," "General Assets"
and "General Liabilities" have the meanings set forth in Article 7(b), (c) and
(d) of the Corporation's Amended and Restated Articles of Incorporation.
(2) All issued and outstanding Series B Common Shares shall
simultaneously be canceled on the books of the Series and retired. From and
after this time, the Series B Common Shares canceled and retired pursuant to
paragraph 5(a)(1) above shall have the status of Undesignated Shares.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on __________,
1998.
IAI INVESTMENT FUNDS III, INC.
By
-------------------------------------
William C. Joas, Secretary
Dated: _________, 1998
<PAGE>
IAI DEVELOPING COUNTRIES FUND
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints William C. Joas, Susan J. Haedt and Steven G.
Lentz, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
IAI Developing Countries Fund (the "Fund"), held by the undersigned at a special
meeting of shareholders of the Fund to be held on September 23, 1998, and at any
adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED TO VOTE AS FOLLOWS:
1. To vote: FOR ________ AGAINST ________ ABSTAIN ________ approval of
the Plan of Liquidation and Dissolution and related Articles of Amendment.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTER. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE
ITEM. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE-NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:____________________________, 1998
________________________________________
________________________________________
IMPORTANT: Please date and sign this
Proxy. If the stock is held jointly,
signature should include both names.
Executors, administrators, trustees,
guardians, and others signing in a
representative capacity should give
their full title as such.
