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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/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 Section 240.14a-11(c) or Section
240.14a-12
The Govett 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[LOGO]
JANUARY 12, 1996
Dear Shareholder:
As you may know, Govett & Company Limited, the parent company of John Govett
& Co. Limited ("John Govett" or the "Manager"), the investment adviser to each
of the series (individually a "Fund", and together the "Funds") of The Govett
Funds, Inc. (the "Company"), has recently sold John Govett and certain other
affiliates of Govett & Company Limited to John Govett Holdings Limited, an
affiliate of Allied Irish Banks plc ("AIB"), a multinational banking group based
in Dublin, Ireland (the "Sale"). We believe that combining John Govett with the
substantial resources and existing asset management operations of AIB will have
the potential to offer shareholders even greater fund management resources.
Enclosed are proxy materials which detail several proposals that will affect
your Fund(s). While all the proposals deserve your attention, the first proposal
relates directly to the Sale and seeks your approval of a new investment
management contract between your Fund and the Manager as an affiliate of AIB. In
addition, shareholders of the Govett Smaller Companies Fund will be asked to
approve a new subadvisory contract between the Manager and Berkeley Capital
Management (formerly named Govett Asset Management Company). As a result of the
Sale, the Manager's continuing role as adviser to your Fund(s) will be
conditional on this proposal being approved by shareholders.
In the course of representing and protecting your interests, your Fund's
independent directors have evaluated the Sale. An overview of their evaluation
is included in the proxy statement. IT IS NOT ANTICIPATED THAT THE SALE WILL
RESULT IN ANY SUBSTANTIVE CHANGE IN THE WAY YOUR FUND(S) ARE MANAGED, NOR WILL
THE NEW MANAGEMENT CONTRACTS RESULT IN ANY INCREASE IN THE ADVISORY FEE RATE
SCHEDULE CURRENTLY IN EFFECT. After careful consideration of the implications of
the Sale and each of the specific proposals described in the proxy statement,
the Board of Directors of the Company unanimously recommends that you vote FOR
each proposal.
Your vote is important, and we strongly urge you to vote promptly. You may
cast your vote by marking the enclosed proxy card, signing it and returning it
in the postage-paid envelope provided, or you may attend the
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shareholder meeting on Friday, February 23, 1996 at 10:00 a.m., Pacific Time, in
the Boardroom at the offices of the Company, 650 California Street, San
Francisco, California.
To assure that our shareholder service representatives can continue to
respond quickly to your calls for account service, we have retained an outside
firm that specializes in proxy solicitation to assist us with any necessary
follow-up. If we have not received your vote as the meeting date approaches, you
may receive a telephone call from the Company's proxy solicitor to ask that you
send in your vote. We hope that their telephone call does not inconvenience you.
Please take a few moments and complete your proxy card and mail it in the
postage-paid envelope enclosed. We appreciate your prompt action.
Sincerely,
Kevin J.T. Pakenham
CHAIRMAN
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THE GOVETT FUNDS, INC.
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
FRIDAY, FEBRUARY 23, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of the
following series of The Govett Funds, Inc. (the "Company"), will be held on
Friday, February 23, 1996 at 10:00 a.m., Pacific Time, in the Boardroom at the
offices of the Company at 650 California Street, San Francisco, California:
<TABLE>
<S> <C>
Govett Emerging Markets Fund Govett Smaller Companies Fund
Govett Global Income Fund Govett Pacific Strategy Fund
Govett Latin America Fund Govett International Equity Fund
</TABLE>
This Special Meeting will be held for the following purposes:
1.A. To consider and vote on approval of a new Investment Management
Contract between the Company, on behalf of each Fund, and John Govett &
Co. Limited ("John Govett"), to take effect as to a Fund upon the
approval by shareholders of the applicable Fund. (FOR EACH FUND)
1.B. To consider and vote on approval of a new Investment Subadvisory
Agreement between John Govett, as investment manager to the Govett
Smaller Companies Fund, and Berkeley Capital Management (formerly named
Govett Asset Management Company), as subadviser to such Fund, to take
effect as to such Fund upon the approval by shareholders of the Govett
Smaller Companies Fund. (FOR THE SMALLER COMPANIES FUND ONLY)
2. To elect five Directors to the Board of Directors of the Company. (FOR
ALL FUNDS)
3. To ratify the selection of Price Waterhouse LLP as independent auditors
of the Company for the current fiscal year end. (FOR ALL FUNDS)
4. To transact such other business as may properly come before the Special
Meeting.
Shareholders of record as of the close of business on Friday, January 12,
1996 are entitled to notice of, and to vote at, the Special Meeting.
By Order of the Board of Directors,
Alice L. Schulman
SECRETARY
January 12, 1996
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THE GOVETT FUNDS, INC.
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
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PROXY STATEMENT
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SOLICITATION AND VOTING OF PROXIES
INTRODUCTION
This Proxy Statement, Notice of Special Meeting and accompanying proxy card
are being furnished on behalf of the Board of Directors of The Govett Funds,
Inc., a Maryland corporation (the "Company"), for use at the Special Meeting of
Shareholders of Govett Emerging Markets Fund, Govett Smaller Companies Fund,
Govett Global Income Fund, Govett Pacific Strategy Fund, Govett Latin America
Fund and Govett International Equity Fund, each a series of the Company
(individually a "Fund", and together the "Funds"), to be held on Friday,
February 23, 1996, or at any adjournment thereof (the "Meeting"). This Proxy
Statement, Notice of Special Meeting and accompanying proxy card will first be
mailed to shareholders of the Funds on or about January 13, 1996.
The most recent annual and semiannual reports for the Company have
previously been sent to shareholders and are available upon request without
charge by calling (800) 634-6838.
If the accompanying proxy card is executed properly and returned, your
shares will be voted at the Meeting in accordance with the instructions on the
proxy card. However, if no instructions are specified, shares will be voted for
the election of each of the nominees to the Board of Directors and for each of
the other proposals. Shareholders may revoke a proxy at any time prior to the
time it is voted by writing to the Secretary of the Company, submitting a later
dated proxy, or by attending and voting at the Meeting.
In the event that sufficient votes to approve any proposal are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote all shares that they
are entitled to vote with respect to each proposal for the proposed adjournment,
unless directed to disapprove the item, in which case such shares will be voted
against the proposed adjournment. A vote may be taken on any one of the
proposals in this Proxy Statement for a Fund prior to any adjournment if
sufficient votes have been received for approval.
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RECORD DATE
The close of business on January 12, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting (the "Record Date"). Shareholders are entitled to cast one vote for each
share held in his or her name as of the Record Date. Fractional shares are
entitled to a proportionate fractional vote. As of the close of business on
December 15, 1995, there were issued and outstanding shares of the Govett
Emerging Markets Fund, shares of the Govett Smaller Companies Fund,
shares of the Govett Global Income Fund, shares of the Govett Pacific
Strategy Fund, shares of the Govett Latin America Fund, and shares of
the Govett International Equity Fund. Shareholders who, to the knowledge of the
Company, owned beneficially greater than 5% of any Fund's total outstanding
shares as of December 15, 1995 are listed in Exhibit A.
QUORUM AND VOTE REQUIRED
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Company is required to constitute a quorum at the
Meeting. With respect to proposals that must be voted on separately by one or
more Funds, these quorum requirements apply to each Fund separately.
As set forth in Proposals 1.A and 1.B, approval of the New Investment
Management Contract (as defined below) with respect to a Fund (with shares of
each Fund voting as a separate class) and approval of the New Investment
Subadvisory Agreement (as defined below) with respect to the Govett Smaller
Companies Fund will require the affirmative vote of the holders of the lesser of
either (a) 67% or more of the applicable Fund's shares present at the Meeting if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy, or (b) more than 50% of the outstanding shares of the
applicable Fund.
Shareholders have cumulative voting rights with respect to the election of
Directors (Proposal 2). Each shareholder may (a) cumulate his or her votes and
give one candidate a number of votes equal to the number of Directors to be
elected, multiplied by the number of votes to which the shareholder's shares are
normally entitled, or (b) distribute the votes among as many candidates as the
shareholder sees fit; provided, however, that no shareholder is entitled to
cumulate votes for a candidate unless the candidate or candidates' names have
been placed in nomination prior to the voting. The election of each Director to
the Board under Proposal 2 will require the vote of the holders of a majority of
the shares (with shares of all Funds voting as a single class) present at the
Meeting.
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The ratification of Price Waterhouse LLP as independent auditors for the
Company, as set forth in Proposal 3, will require the affirmative vote of a
majority of the shares of the Company cast in person or by proxy (with shares of
all Funds voting as a single class).
Shares held by shareholders present in person or represented by proxy at the
Meeting will be counted both for the purpose of determining the presence of a
quorum and for calculating the votes cast on the issues before the Meeting. For
purposes of determining a quorum for transacting business at the 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 person 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. Under Maryland law, abstentions do not
constitute a vote "for" or "against" a matter and will be disregarded in
determining the "votes cast" for purposes of Proposals 2 and 3, but will be
included in determining the number of shares outstanding and the number of
shares present for purposes of Proposal 1 (which requires a vote based on the
total votes entitled to be cast, not the votes actually cast). Broker non-votes
will be treated the same as abstentions. For this reason, abstentions and broker
non-votes will have the effect of a "no" vote for purposes of obtaining the
requisite approval for Proposal 1 and will have no effect on the outcome of
Proposals 2 and 3.
PROXY SOLICITATION AND EXPENSES
Proxy solicitations will be made primarily by mail, but proxy solicitations
also may be made by telephone, telegraph or personal interviews conducted by
officers and employees of John Govett & Co. Limited, the Funds' investment
manager ("John Govett" or the "Manager") and its affiliates and Applied Mailing
Systems, Inc., a proxy solicitation firm that has been engaged to assist in
proxy solicitation at an estimated cost of $ .
The cost of soliciting proxies, including the fees of Applied Mailing
Systems, Inc., and all expenses incurred by the Funds relating to the Meeting,
relating to the meetings of the Board of Directors at which the proposals
described in this Proxy Statement were considered, and relating to the
transactions contemplated by the Sale (as defined below in Proposals 1.A and
1.B), including the fees and expenses of counsel to the Funds and counsel to the
disinterested Directors, will be borne by Govett & Company Limited, the former
parent company of John Govett, and by John Govett Holdings Limited, the new
parent company of John Govett, and not by the Company. John Govett Holdings
Limited will also reimburse brokerage firms and others for their expenses in
forwarding proxy materials to the beneficial owners and soliciting them to
execute the proxies.
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PROPOSALS 1.A AND 1.B
APPROVAL OF (A) A NEW INVESTMENT MANAGEMENT
CONTRACT ON BEHALF OF EACH FUND, AND (B) A NEW SUBADVISORY AGREEMENT ON BEHALF
OF THE GOVETT SMALLER COMPANIES FUND
John Govett has served as investment manager of the Funds pursuant to an
investment management contract dated December 16, 1991, as amended (the "Current
Investment Management Contract"). Berkeley Capital Management (formerly named
Govett Asset Management Company and referred to herein as the "Subadviser") has
served as subadviser to the Govett Smaller Companies Fund pursuant to an
investment subadvisory agreement dated August 20, 1993 between Govett Asset
Management Company and John Govett (the "Current Investment Subadvisory
Agreement"). On December 7, 1995, Govett & Company Limited (the Manager's former
parent company) entered into a sale and purchase agreement (the "Sale
Agreement") with John Govett Holdings Limited, an affiliate of Allied Irish
Banks plc ("AIB"), pursuant to which John Govett Holdings Limited would acquire
John Govett and certain of its affiliates (the "Sale"). The closing of the Sale
occurred on December 29, 1995. As a result of the Sale, the Manager became an
indirect subsidiary of AIB.
As required by the Investment Company Act of 1940, as amended ("1940 Act"),
the Current Investment Management Contract and the Current Investment
Subadvisory Agreement each terminates automatically in the event of its
"assignment", as defined in the 1940 Act. Completion of the Sale on December 29,
1995 constituted an assignment, under the 1940 Act, of the Current Investment
Management Contract and the Current Investment Subadvisory Agreement.
Accordingly, (i) a new investment management contract to take effect for each
Fund upon the approval by shareholders of the relevant Fund is being proposed
for approval by each Fund, even though such Contract will be substantially
identical to, and essentially a continuation of, the Current Investment
Management Contract; and (ii) a new investment subadvisory agreement to take
effect for the Govett Smaller Companies Fund upon the approval by shareholders
of that Fund is being proposed for approval by that Fund, even though the new
investment subadvisory agreement will be essentially a continuation of the
Current Investment Subadvisory Agreement, as modified in certain significant
respects as described below.
Prior to shareholder approval of the New Investment Management Contract, the
Manager has undertaken, and John Govett Holdings Limited has agreed to cause the
Manager, to satisfy the Manager's obligations and duties to the Funds under the
Current Investment Management Contract by taking
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all appropriate steps so that the scope and quality of the Manager's advisory
and other services provided to the Funds during the period between the Sale and
the receipt of such shareholder approval (the "Interim Period") will be
equivalent to the scope and quality of the services previously provided by the
Manager under the Current Investment Management Contract. The Subadviser and
Govett & Company Limited have made similar undertakings regarding the
subadvisory arrangements for the Govett Smaller Companies Fund. The Manager and
the Subadviser have each agreed that neither of them will be paid any advisory
fees by the Funds with respect to the advisory services they will provide to the
Funds during the Interim Period.
In addition, the Manager has agreed with the Company that during the Interim
Period it will continue to honor all of the terms and conditions of the Current
Investment Management Contract. John Govett Holdings Limited has agreed with the
Company that it will be responsible to the Company for any failure by the
Manager during the Interim Period to provide such services or to honor all of
the terms and conditions imposed upon the Manager pursuant to the Current
Investment Management Contract. Similarly, the Subadviser has agreed with the
Manager and the Company that during the Interim Period it will continue to honor
all of the terms and conditions of the Current Investment Subadvisory Agreement.
Govett & Company Limited has agreed with the Company that it will be responsible
to the Manager and the Govett Smaller Companies Fund for any failure by the
Subadviser during the Interim Period to provide such services or to honor all of
the terms and conditions imposed upon the Subadviser pursuant to the Current
Investment Subadvisory Agreement.
At a meeting held on December 11, 1995, the Board of Directors of the
Company (including the Directors who are not parties to the Current Investment
Management Contract, the proposed new investment management contract, the
Current Investment Subadvisory Agreement, or the proposed new investment
subadvisory agreement, or "interested persons" (as defined in the 1940 Act) of
any such party (the "Independent Directors")) unanimously approved, subject to
the required shareholder approval described herein, a new investment management
contract (the "New Investment Management Contract") between the Manager and the
Company, on behalf of each of the Funds, to take effect upon the approval by
shareholders of the applicable Fund. In recognition of the intent of the parties
to the Sale Agreement to close the Sale prior to shareholder approval, approval
by the Company's Board of Directors was also further subject to the conditions
that if the parties to the Sale Agreement closed the Sale prior to shareholder
approval, (i) the Company would be provided with written undertakings by John
Govett and John Govett Holdings Limited as described above, and (ii) the
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Funds would not be obligated to pay any advisory fees or other compensation to
John Govett with respect to such advisory services provided by John Govett to
the Funds during the Interim Period. A form of the New Investment Management
Contract is attached to this Proxy Statement as Exhibit B, and its description
set forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit B.
Similarly, at the meeting held on December 11, 1995, the Board of Directors
of the Company, including the Independent Directors, unanimously approved,
subject to the required shareholder approval described herein, a new investment
subadvisory agreement (the "New Investment Subadvisory Agreement") between the
Manager, as manager of the Govett Smaller Companies Fund, and the Subadviser to
take effect upon the approval by shareholders of the Govett Smaller Companies
Fund. Such approval was also further subject to the conditions that if the
parties to the Sale Agreement closed the Sale prior to such shareholder
approval, (i) the Company would be provided with written undertakings by the
Subadviser and Govett & Company Limited as described above, and (ii) the Govett
Smaller Companies Fund would not be obligated to pay any advisory fees or other
compensation to the Manager or the Subadviser with respect to such advisory
services provided by the Subadviser to the Govett Smaller Companies Fund during
the Interim Period. A form of the New Investment Subadvisory Agreement is
attached to this Proxy Statement as Exhibit C, and its description set forth in
this Proxy Statement is qualified in its entirety by reference to Exhibit C.
THE SALE
The closing of the Sale occurred on December 29, 1995. Pursuant to the Sale
Agreement, John Govett Holdings Limited, an indirect, newly-formed
majority-owned subsidiary of AIB, acquired all of the outstanding capital shares
of John Govett for L50 million. John Govett Holdings Limited has represented
that it does not intend to make any significant changes in the way the Manager
conducts its business. The investment advisory and administrative services that
the Manager currently provides to the Funds are expected to continue essentially
unchanged. To facilitate this continuity, John Govett Holdings Limited has
entered into employment contracts with each of Messrs. Kevin J.T. Pakenham,
Peter S.L. Pejacsevich, Charles A. Fowler and Brian M. Lee, who are all officers
and directors of John Govett. Mr. Pakenham is a nominee for Director of the
Company. Pursuant to these contracts, which may be terminated by either party on
six-months' notice, Messrs. Pakenham, Pejacsevich, Fowler and Lee are expected
to continue to be involved in providing services to the Funds to substantially
the same extent to which each has historically been involved.
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The Company intends to adhere to the provisions of Section 15(f) of the 1940
Act. Section 15(f) of the 1940 Act provides that when a change in control of an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any 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. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of any 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 of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such
compensation arrangements are contemplated in the Sale. Govett & Company Limited
and John Govett Holdings Limited have agreed in the Sale Agreement to, and have
each represented to the Board of Directors of the Company that, they will to use
their best efforts to ensure that the Sale will not cause the imposition of an
unfair burden on any of the Funds.
The second condition is that during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" of the investment
adviser or predecessor investment adviser within the meaning of the 1940 Act.
Govett & Company Limited and John Govett Holdings Limited have agreed in the
Sale Agreement to, and have each represented to the Board of Directors of the
Company that, they will to use their best efforts to ensure that the second
condition is met. The current nominees for election to the Board of Directors of
the Company, as described below under Proposal 2 of this Proxy Statement, meet
this condition of Section 15(f).
THE NEW AND CURRENT INVESTMENT MANAGEMENT CONTRACTS
The Current Investment Management Contract with respect to the International
Equity Fund, the Emerging Markets Fund and the Global Income Fund was approved
by the initial shareholder of those Funds on November 26, 1991. The Investment
Management Contract with respect to the Smaller Companies Fund was approved by
the initial shareholder of the Smaller Companies Fund on December 28, 1992. The
Investment Management Contract with respect to the Pacific Strategy Fund was
approved by the initial shareholder of that Fund on December 15, 1993. The
Investment Management Contract with respect to the Latin America Fund was
approved by
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the initial shareholder of that Fund on March 4, 1994. The Current Investment
Management Contract was last renewed by the Board of Directors on November 17,
1995.
If the proposed New Investment Management Contract is approved by
shareholders, the Manager, as a subsidiary of John Govett Holdings Limited, will
continue to serve as investment manager to each Fund. The terms and conditions
of the proposed New Investment Management Contract are identical in all respects
to those of the Current Investment Management Contract, except for the effective
and termination dates.
Under the New Investment Management Contract and the Current Investment
Management Contract, and subject to such policies as the Board of Directors may
establish, John Govett provides the Funds (except the Govett Smaller Companies
Fund) with day-to-day management services and makes investment decisions on
their behalf in accordance with each Fund's respective investment policies.
Subject to the supervision of the Board of Directors, John Govett also oversees
the Funds' operations. For these investment management and administrative
services, the Funds pay fees monthly to John Govett based upon their respective
average net assets, as determined at the close of each business day during the
month, at an annual rate 1% of the average daily net assets of each Fund (0.75%
for the Global Income Fund).
The New Investment Management Contract, if approved by shareholders of the
relevant Fund, will continue in effect for a two-year period following such
approval. Subsequently, the New Investment Management Contract will be subject
to annual approval by the Board of Directors and by the Independent Directors,
or to approval by the relevant Fund's shareholders. The New Investment
Management Contract may be terminated as to any Fund, without penalty, by the
Board of Directors or by the shareholders of the relevant Fund upon 60 days'
written notice to the Manager or by the Manager upon 60 days' written notice to
the Fund. The New Investment Management Contract will also terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
The New Investment Management Contract and the Current Investment Management
Contract provide that the Manager will, subject to the supervision of the Board
of Directors, provide a continuous investment program for each of the Funds,
including the provision of investment research and management with respect to
all assets of the Funds purchased, sold or held in the portfolios, and the
selection of brokers and dealers through which securities transactions for the
Funds will be executed. The Manager has agreed at all times to act in accordance
with the investment objective, policies and restrictions of each Fund as stated
in the Fund's
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current registration statement as it may be amended from time to time, as well
as with all applicable rules of the Securities and Exchange Commission (the
"Commission").
Both the Current Investment Management Contract and the New Investment
Management Contract state that the Manager will oversee the computation of each
Fund's net asset value in accordance with procedures described in the Fund's
registration statement or as more frequently requested by the Board of
Directors. The Manager also provides various administrative services under each
Contract, subject to the supervision of the Board of Directors.
Like the Current Investment Management Contract, the New Investment
Management Contract provides that in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of its obligations and duties
under the agreement, the Manager shall not be liable to the Funds or to any
shareholder of the Funds for any act or omission in the course of, or connected
with, rendering advice or services under the agreement or for any losses that
may be sustained in the purchase, holding, redemption, or sale of any security.
The Manager, Van Kampen American Capital Distributors, Inc., the distributor
of the Funds' shares (the "Distributor"), and certain of their respective
affiliates have agreed to share management fees, distribution and service fees,
excess Fund expenses, and sales charges related to the sale of Fund shares.
These arrangements are not expected to change as a result of the Sale.
THE NEW AND CURRENT INVESTMENT SUBADVISORY AGREEMENTS
The Manager has entered into an Investment Subadvisory Agreement whereby the
Subadviser provides day-to-day investment advisory services to the Govett
Smaller Companies Fund. Under the subadvisory arrangements, the Subadviser
furnishes an investment program and makes investment decisions for the Govett
Smaller Companies Fund, subject to the supervision of the Manager and the Board
of Directors of the Company. For the services provided under the subadvisory
arrangements, the Manager pays to the Subadviser, out of the investment advisory
fee received by the Manager with respect to the Govett Smaller Companies Fund,
an annual fee, computed daily and paid monthly, equal to 0.50% of the Govett
Smaller Companies Fund's average daily net assets. The Govett Smaller Companies
Fund does not compensate the Subadviser directly for its subadvisory services.
The subadvisory fee payable to the Subadviser will be reduced proportionately if
the advisory fee paid to the Manager with respect to the Govett Smaller
Companies Fund is reduced as a result of applicable state expense limitations.
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Under the New Investment Subadvisory Agreement, the fee payable by the
Manager to the Subadviser will be equal to the difference, if any, between the
investment advisory and management fees actually received by the Manager, and
all revenue actually received by the Manager under the agreement between the
Manager and the Distributor (excluding any amounts payable to the Distributor by
the Manager), with respect to the Govett Smaller Companies Fund and 0.10% of
such Fund's average daily net assets. The New Investment Advisory Agreement may
be terminated, without the payment of any penalty by the Govett Smaller
Companies Fund, by the Company's Board of Directors or by the shareholders of
the Fund upon 60 days' written notice. In addition, under the New Investment
Subadvisory Agreement, the Manager is required to pay the Subadviser a cash fee
(the "Termination Payment" ) if under certain circumstances the Subadviser no
longer serves as the subadviser to the Govett Smaller Companies Fund. If an
affiliated person (as defined in the 1940 Act) of either the Manager or AIB (in
either case, an "Advisory Affiliate") serves as a successor subadviser the Fund,
the Termination Payment shall be equal to the greater of (i) $5 million and (ii)
150 percent of the total amount of the subadvisory fees received by Subadviser
with respect to the Fund during the 12-month period immediately before the
termination of the agreement. If an Advisory Affiliate does not serve as a
successor subadviser to the Fund, the Termination Payment shall be equal to the
greater of (i) $3.5 million and (ii) the total amount of the subadvisory fees
received by Subadviser with respect to the Fund during the 12-month period
immediately before the termination of the agreement. The Termination Payment is
not payable under the New Investment Subadvisory Agreement if (u) an Advisory
Affiliate does not serve as the investment adviser to the Fund at the time the
New Investment Subadvisory Agreement is terminated; (v) the New Investment
Subadvisory Agreement is terminated because of Subadviser's willful misfeasance,
bad faith or gross negligence; (w) the New Investment Subadvisory Agreement is
terminated because the Fund's performance is in the bottom quartile, as measured
by Lipper Analytical Services, Inc., for four consecutive quarters; (x) the
Subadviser or its subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that: (i) causes the
Subadviser to be disqualified to serve as the subadvisor to the Fund under
Section 9(a) of the 1940 Act and the Commission does not grant an exemptive
order under Section 9(c) thereof or (ii) causes the Commission to revoke or
suspend the registration of the Subadviser as an investment adviser with the
Commission; (y) the Subadviser materially breaches the New Investment
Subadvisory Agreement and such material breach is not cured within twenty (20)
calendar days after written notice thereof from the Manager to Subadviser; or
(z) the Subadviser voluntarily terminates the New Investment Subadvisory or the
Agreement is
10
<PAGE>
assigned within the meaning of Section 15(a) of the 1940 Act and such assignment
or successor subadvisory agreement with the Subadviser is not approved by the
shareholders of the Fund.
ADVISORY FEES
The fees under the New Investment Management Contract are the same as the
fees under the Current Investment Management Contract for the respective Funds,
and the fees under the New Investment Subadvisory Agreement are the same as the
fees under the Current Investment Subadvisory Agreement, except as described
above. Except for the differences in the New Investment Subadvisory Agreement
described above, which do not change the fee payable by the Govett Smaller
Companies Fund, the only difference in the proposed arrangements will be that
the new arrangements will be set forth in an investment management contract or
investment subadvisory agreement dated the date of shareholder approval, whereas
the arrangements in effect prior to the Sale are set forth in the investment
management contract and investment subadvisory agreement that bear earlier
dates.
John Govett has agreed under each of the Current Investment Management
Contract and the New Investment Management Contract, and the Subadviser has
agreed under the New Investment Subadvisory Agreement, to limit each Fund's
total operating expenses to the extent required under applicable state law. This
expense limitation does not cover brokerage commissions for securities or other
assets (such commissions are generally considered part of the cost of the
asset), taxes (if any) paid by the Fund, or extraordinary expenses, such as
litigation and indemnification expenses.
In addition, the Manager has agreed to reduce its management fees, and the
Distributor has agreed to pay certain Fund operating expenses, through at least
December 31, [1996] to the extent necessary to limit total annual Fund operating
expenses attributable to Class A shares to the lesser of the percentages listed
below or the maximum allowed by the most stringent state expense limitation.
<TABLE>
<CAPTION>
EXPENSE GUARANTEE
NAME OF FUND RATE
- - -------------------------------------- ------------------
<S> <C>
Govett Emerging Markets Fund 2.50%
Govett Smaller Companies Fund 1.95%
Govett Global Income Fund 1.75%
Govett Pacific Strategy Fund 2.50%
Govett Latin America Fund 2.50%
Govett International Equity Fund 2.50%
</TABLE>
11
<PAGE>
The unaudited table below lists the net assets of each Fund as of December
31, 1995, and the advisory fees accrued or paid by each Fund to John Govett
during the last fiscal year of each Fund.
<TABLE>
<CAPTION>
FEE FOR LAST
FISCAL YEAR
NET ASSETS AS OF (NET OF
DECEMBER 31, 1995 EXPENSE
(MILLIONS) LIMITATION)
------------------ --------------
<S> <C> <C>
Govett Emerging Markets Fund....................
Govett Smaller Companies Fund...................
Govett Global Income Fund.......................
Govett Pacific Strategy Fund....................
Govett Latin America Fund.......................
Govett International Equity Fund................
</TABLE>
If the New Investment Management Contract is not approved by a Fund's
shareholders, the Board of Directors will promptly consider such actions as it
determines to be appropriate, which could include seeking to enter into a new
advisory arrangement for such Fund with John Govett or another qualified
investment adviser, subject to approval by the Fund's shareholders. If the New
Investment Subadvisory Agreement is not approved by the Govett Smaller Companies
Fund's shareholders, the Board of Directors will promptly consider such actions
as it determines to be appropriate, which could include seeking to enter into a
new subadvisory arrangement for the Govett Smaller Companies Fund with the
Subadviser or another qualified investment adviser, subject to approval by the
shareholders of the Govett Smaller Companies Fund.
INFORMATION ABOUT JOHN GOVETT & CO. LIMITED
John Govett is a United Kingdom-based investment management company whose
investment management activities originated in the 1920's. John Govett was
incorporated in London, England, in 1955, and from 1986 to December 29, 1995 was
a wholly-owned subsidiary of Govett & Company Limited, a Jersey, Channel Islands
corporation whose ordinary shares are listed on the London Stock Exchange and
NASDAQ.
The principal executive officers of John Govett and their principal
occupations are listed below. The business address of these persons and of
12
<PAGE>
Govett & Company Limited and John Govett is Shackleton House, 4 Battle Bridge
Lane, London, U.K. SE1 2HR. John Govett is registered under the Investment
Advisers Act of 1940.
<TABLE>
<CAPTION>
NAME POSITION WITH JOHN GOVETT AND PRINCIPAL OCCUPATION
- - ------------------------ -------------------------------------------------------
<S> <C>
Kevin J.T. Pakenham Co-Chairman, Chief Executive and Director
Charles A. Fowler Co-Chairman and Director
Peter S.L. Pejacsevich Director and Chief Investment Officer
Brian M. Lee Director and Chief Operating Officer
</TABLE>
John Govett acts as investment subadviser to the following U.S. mutual funds
registered with the Commission that have similar investment objectives to the
Funds, for compensation at the annual subadvisory fee rates of those funds set
forth in the table below. The table also sets forth the net assets of those
other funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
(IN MILLIONS) ANNUAL
OTHER FUND WITH AT SEPTEMBER 30, SUBADVISORY
SIMILAR OBJECTIVES 1995 FEE RATE
- - ----------------------------------------------- -------------------- ------------
<S> <C> <C>
American Capital Global Equity Fund $ 146,757 0.50%
American Capital Global Government Income Fund 171,717 0.50%
American Capital Global Managed Assets Fund 24,605 0.50%
American Capital Life Investment Trust --
Global Equity Portfolio 2,203 0.50%
Lincoln Pacific Rim 11,306 0.80%
The Consulting Group Capital Markets --
Emerging Markets Equity Investments Portfolio 60,108 0.60%
</TABLE>
INFORMATION REGARDING AIB
The AIB Group of Companies provides a diverse range of banking, financial
and related services, principally in Ireland, the United States and the United
Kingdom. As of December 31, 1994, AIB Group was the largest Irish banking group
in terms of total assets and total deposits. As of , AIB Group had
approximately 321 branches in the Republic of Ireland, where it had more than
20% share of the total market for both Irish pounds loans and deposits.
As of , AIB Group operated from 87 branches and outlets in
Northern Ireland and was the third largest banking group there with over 20%
market share of loans and deposits of clearing banks. AIB Group in Britain
provides a full range of banking services through 37 branches and offices. In
the U.S., as of , through its wholly-owned subsidiary,
13
<PAGE>
First Maryland Bancorp, the Group operated from over 200 banking facilities
principally in Maryland, Pennsylvania, Delaware, and the District of Columbia.
On December 31, 1994, AIB Group had assets of $34.2 billion and employed
approximately 15,250 people on a full time equivalent basis.
AIB, the principal bank within AIB Group, is a publicly-held bank
headquartered in Bankcentre, Ballsbridge, Dublin 4, Ireland. AIB is the sole
owner of AIB Group Holdings Limited, U.K., Bankcentre - Britain, Uxbridge,
Middlesex UB8 1SA, which owns on a fully diluted basis 75% of John Govett
Holdings Limited, Shackleton House, 4 Battle Bridge Lane, London, U.K. SE1 2HR.
The remaining owners of John Govett Holdings Limited are individual members of
the management group and Govett Oriental Investment Trust, who own 20% and 5% on
a fully diluted basis of John Govett Holdings Limited, respectively. John Govett
Holdings Limited is the sole owner of John Govett & Co. Limited.
INFORMATION REGARDING THE SUBADVISER
The subadviser for the Govett Smaller Companies Fund is a registered
investment adviser whose principal office is located at 650 California Street,
28th Floor, San Francisco, CA 94108. Prior to the closing of the Sale, the
Subadviser was an affiliate of John Govett. The Subadviser has been engaged in
the investment management business since 1972, and as of November 30, 1995
managed approximately $2.4 billion in assets for both individual and
institutional clients. Its investment management activities include investments
in equities (ranging from small capitalization to large capitalization
companies) and a range of fixed income and asset allocation strategies.
EVALUATION BY THE BOARD OF DIRECTORS
The Board of Directors of the Company, including the Independent Directors,
has approved the New Investment Management Contract on behalf of each Fund and
the New Investment Subadvisory Agreement on behalf of the Govett Smaller
Companies Fund, and recommends that the New Investment Management Contract and
the New Investment Subadvisory Agreement be approved by shareholders of the
relevant Fund(s).
Upon commencement of negotiations by Govett & Company Limited to sell John
Govett, the Independent Directors formed a Committee on Administration, which
met separately and together with the full Board four times. Messrs. Atamian,
Garland, Oates, and Terzolo currently serve on this Committee. In the course of
their review, the Directors, including the Independent Directors, held due
diligence meetings at AIB's headquarters in Dublin, Ireland, met with senior AIB
management, and inspected AIB's facilities. The
14
<PAGE>
Independent Directors also retained special counsel to assist them in their
review of the Sale and its anticipated effect upon the Funds and their
shareholders.
The Board, including the Independent Directors, considered, among other
things, the structure of the Sale of John Govett to John Govett Holdings
Limited, including the fact that John Govett would be a separate indirect
subsidiary of AIB after the Sale, and the terms of the Sale Agreement and
related agreements, including the representations of both John Govett and the
John Govett Holdings Limited with respect to the Funds. In particular, the
Directors noted the parties agreements to use their best efforts to assure that
no unfair burden would be imposed on the Funds as a result of the Sale, as well
as the fact that the Sale would be conditioned upon approval of the New
Investment Management Contract and the New Investment Subadvisory Agreement by
the Company's Board of Directors.
The Board, including the Independent Directors, further considered whether
the Sale could enhance the investment advisory operations of John Govett and the
level and quality of services provided to the Funds and their shareholders, as
well as the commitments provided by AIB that substantially the same personnel at
John Govett who now provide advisory services to the Funds would continue to do
so after the Sale. In this regard, the Board noted that John Govett Holdings
Limited has entered into employment agreements with all key personnel of John
Govett who are involved with the Funds and has offered incentives to those
personnel to encourage them to remain with John Govett following the Sale. The
Board examined the experience of AIB with respect to management of its own
family of off-shore open-end funds and assessed AIB's historical performance in
the management of those funds. The Board also considered AIB's reputation,
integrity, financial responsibility and stability and AIB's compliance record.
The Board, including the Independent Directors, also considered the fact
that the advisory fees would remain the same under the New Investment Management
Contract as under the Current Investment Management Contract and the fact that
the terms of the New Investment Management Contract do not differ from those of
the Current Investment Management Contract. The Directors also focused on the
costs associated with the Sale and the representations of the parties that the
Funds and their shareholders would not bear such costs. In addition, the
Directors considered, based on the data available to it, John Govett's
historical profitability with respect to its management of the Funds as well as
its reasonably anticipated profitability as an indirect subsidiary of AIB after
the Sale. The Board considered similar factors in connection with its review of
the New Investment Subadvisory Agreement.
15
<PAGE>
With respect to the changes in the New Investment Subadvisory Agreement
requiring a payment by the Manager to the Subadviser in the event of the
Agreement's termination by the Manager (see "The New and Current Investment
Subadvisory Agreements"), the Directors considered that the New Investment
Subadvisory Agreement provided that no such payment would be borne by the Govett
Smaller Companies Fund and that the Agreement could be terminated by the
shareholders of that Fund and the Board of Directors without the payment of any
penalty by the Govett Smaller Companies Fund.
In addition, the Board considered during the course of its due diligence
process (i) the amount, significance and nature of any soft dollar benefits,
such as research, received or expected to be received by John Govett or the
Subadviser from brokers as a result of the Manager's relationship with each of
the Funds, or the Subadviser's relationship with the Smaller Companies Fund,
(ii) the fee and expense ratios of comparable mutual funds, (iii) the
performance of the Funds investments since commencement of operations, (iv) the
distinct investment objective and policies of each Fund, (v) the history,
reputation, qualification, and background of John Govett, the Subadviser and
AIB, as well as the qualifications of their personnel and their respective
financial conditions, (vi) John Govett's and the Subadviser's investment
performance record, and (vii) the benefits, if any, expected to be realized as a
result of John Govett's affiliation with AIB.
After considering these and other factors, the Directors, including the
Independent Directors, at a meeting held in person on December 11, 1995,
unanimously approved the proposed New Investment Management Contract with John
Govett and the New Investment Subadvisory Agreement with the Subadviser and
recommended their approval to shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
FOR APPROVAL OF THE NEW INVESTMENT MANAGEMENT CONTRACT FOR THEIR FUND, AND THAT
THE SHAREHOLDERS OF THE GOVETT SMALLER COMPANIES FUND VOTE FOR APPROVAL OF THE
NEW INVESTMENT SUBADVISORY AGREEMENT FOR THEIR FUND.
PROPOSAL 2
ELECTION OF DIRECTORS
In connection with the Sale described in Proposal 1, it is proposed that
shareholders vote on the election of the five nominees named below as Directors
of the Company. Each of the nominees has consented to be named and to serve if
elected. Proxies not indicating a contrary intent will be voted
16
<PAGE>
in favor of the election of the five nominees named below as Directors, to hold
office until the next meeting called for the purpose of electing Directors and
until their successors are elected and qualified.
The composition of the proposed Board satisfies the requirements of Section
15(f) of the 1940 Act. The requirements of Section 15 are described above in
Proposal 1 under the caption "The Proposed Sale".
Four incumbent and "non-interested" Directors (Messrs. Atamian, Garland,
Oates and Terzolo) are proposed for re-election at the meeting. In addition, the
Board of Directors has nominated Mr. Kevin J.T. Pakenham, the Chief Executive
and a director of John Govett, as an additional Director for election by the
shareholders to the Board of Directors.
The table below sets forth the names and certain additional information
about the nominees.
<TABLE>
<CAPTION>
SHARES OF THE COMPANY
DEEMED BENEFICIALLY OWNED ON
DECEMBER 15, 1995
----------------------------------------------------------------------------
NUMBER OF CLASS A SHARES/% OF CLASS
----------------------------------------------------------------------------
NAME OF DIRECTOR EMERGING SMALLER GLOBAL PACIFIC LATIN INTERNATIONAL
(YEAR FIRST SERVED AS MARKETS COMPANIES INCOME STRATEGY AMERICA EQUITY
DIRECTOR) FUND FUND FUND FUND FUND FUND
- - ---------------------------- ----------- ----------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Elliott L. Atamian..........
(1991)
Sir Victor Garland..........
(1991)
James M. Oates..............
(1991)
Kevin J.T. Pakenham *+......
(1991-1992; 1995)
Frank R. Terzolo............
(1991)
Directors and Officers as a
Group (9 persons)..........
</TABLE>
- - ------------------------------
* Individual who is deemed to be an interested person of the Company under the
1940 Act because of his affiliation with the Manager.
+ Mr. Pakenham is Chairman of the Company's Board of Directors.
(1) Less than 1%.
Elliott L. Atamian is a private investor, and has served on the Board of
Directors of Rogers Foam Corp. since 1989 and Brookline Savings Bank since 1978.
He was a Professor of Finance at Northeastern University from 1977 to 1991, and
served on the Board of Directors of certain mutual funds managed by John Hancock
Advisors, Inc. from 1972 to 1991. He is 76.
17
<PAGE>
Sir Victor Garland has been a private investor since 1984, and currently
serves as a director of a number of U.K. public companies. He is 61.
Kevin J.T. Pakenham graduated from Oxford University with an MA and Phil in
Economics. After working at Rothschild Intercontinental Bank, in 1975 he was
appointed Chief Economist at American Express Bank and, two years later, was
responsible for setting up their international asset management business. In
1983, he joined Foreign & Colonial Management as Managing Director. He joined
John Govett & Co. Limited as Chief Executive Officer in 1988. He is 48.
James M. Oates is currently Managing Director of The Wydown Group. From 1984
to 1994, he was President and Chief Executive Officer of Neworld Bancorp, Inc.
From 1983 to 1984, Mr. Oates was President and Chief Operating Officer of
Burgess & Leith, a financial services company. From 1977 to 1983, he was
President and Chief Operating Officer of Metro Bancholding Corporation. Mr.
Oates currently serves on the board of directors of Massachusetts Bankers
Association, Savings Bank Life Insurance Company, Stifel Financial Corporation,
Phoenix Mutual Funds, and Savings Bank Life Insurance Guarantee Fund. Effective
July 1995, Mr. Oates also serves as a member of the board of directors of
Investors Bank & Trust Company, the Company's administrator. He is 49.
Frank R. Terzolo is presently President and Chief Executive Officer of
Ameritrust Network, Inc., a company that designs and implements charitable
remainder trusts. From 1988 to 1989, he was President and Chief Executive
Officer of American Equities, and from 1984 to 1988, he was President and Chief
Operating Officer for Equitec Securities Co., a financial services company. He
is 62.
During the year ended December 31, 1995, the Board of Directors held
fourteen meetings. In addition to the Committee on Administration, the Board has
an Audit Committee and a Pricing Committee. Each Director attended at least 75%
of the meetings he was expected to attend during that year.
Messrs. Atamian, Garland, Oates and Terzolo currently serve on the Committee
on Administration. This Committee deals with various administrative matters
involving the Funds. This Committee met times during the year ended December
31, 1995. The Committee on Administration also considers nominees for election
as Director recommended by shareholders. Shareholders may submit recommendations
to the attention of the Committee on Administration c/o the Secretary of the
Company, 650 California Street, San Francisco, California 94108.
18
<PAGE>
The Audit Committee is currently comprised of Messrs. Atamian, Garland,
Oates and Terzolo. The Audit Committee reviews and evaluates the audit function,
including recommending to the full Board the independent auditors to be selected
for each Fund, reviewing all audit procedures and arrangements, and reviewing
the qualifications of key personnel performing audit work. The Audit Committee
of the Board of Directors held two meetings during 1995.
Mr. Atamian currently serves on the Pricing Committee. This Committee
reviews the application of Board-approved procedures and policies with respect
to pricing the Funds' shares. The Pricing Committee of the Board of Directors
held meetings during 1995.
The following table provides information concerning the aggregate
compensation paid to each of the incumbent Directors nominated for election for
services rendered to the Funds during the year ended December 31, 1995. The
Funds do not provide any pension or retirement benefits for the Directors.
19
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM
---------------------------------------------------------------------------------------------
GOVETT
GOVETT GOVETT GOVETT GLOBAL PACIFIC GOVETT LATIN GOVETT
EMERGING SMALLER INCOME STRATEGIES AMERICA INTERNATIONAL
NAME OF DIRECTOR MARKETS FUND COMPANIES FUND FUND FUND FUND EQUITY FUND
- - ------------------------- ------------- ----------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Elliott L. Atamian.......
Sir Victor Garland.......
James M. Oates...........
Kevin J.T. Pakenham......
Frank R. Terzolo.........
<CAPTION>
TOTAL
COMPENSATION
FROM ALL
NAME OF DIRECTOR FUNDS
- - ------------------------- --------------
<S> <C>
Elliott L. Atamian.......
Sir Victor Garland.......
James M. Oates...........
Kevin J.T. Pakenham......
Frank R. Terzolo.........
</TABLE>
20
<PAGE>
The executive officers of the Company, other than those nominated for
election as Director, are set forth below:
Colin Kreidewolf, Treasurer of the Company, joined John Govett in 1981. He
became a member of The Institute of Chartered Secretaries and Administrators in
England and Wales in 1986. Currently he is responsible for the management of the
U.K. and U.S. retail funds reporting functions at John Govett. He is 35.
Brian Lee, President of the Company, graduated from the University of Wales
in 1980 and qualified as a Chartered accountant with Deloitte Haskins & Sells in
1982. He joined John Govett in 1987 and was appointed Finance Director in 1991.
From November 1993 until January 1995, he was on secondment to Govett's life and
annuity company in the U.S. He is responsible for the financial control,
compliance and administrative functions at John Govett. He is 35.
Peter J. Moffat, Vice President of the Company, is Director, Compliance
Officer and Secretary of John Govett. He served previously at the Bank of
England, where he was involved in banking and financial market supervision, and
later as Compliance Officer for the London investment business of PaineWebber
and J.P. Morgan before joining John Govett in 1990. He is 48.
Alice L. Schulman, Secretary of the Company, is presently Liaison Compliance
Officer for John Govett resident in the US. From 1993 until she joined Berkeley
Capital Management in 1994, she was Compliance Officer at Wells Fargo Nikko
Investment Advisors. From 1989 to 1993, she was a compliance officer at the
Benham Group of Mutual Funds. Prior to 1989, she served in various compliance
administration functions at McKesson Corporation and Kaiser Aluminum & Chemical
Corporation. She is 45.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes cast at
the Meeting will be elected to the Board, provided that a quorum is present. If
any nominee should unexpectedly become unable to serve as Director, proxies will
be voted in the manner deemed most prudent by the persons designated as proxies.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE LISTED ABOVE.
21
<PAGE>
PROPOSAL 3
TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP
AS INDEPENDENT AUDITORS FOR THE
CURRENT FISCAL YEAR END
The Board of Directors has selected and recommends that shareholders ratify
the selection of Price Waterhouse LLP as independent auditors for the current
fiscal year end for the Company. In connection with its services as independent
auditors, Price Waterhouse LLP examines the Funds' financial statements,
Securities and Exchange Commission filings, and federal tax returns. Price
Waterhouse LLP has advised the Company that it has no direct or indirect
material ownership interest in the Funds. A representative of Price Waterhouse
LLP is expected to be present at the Meeting to respond to questions.
VOTE REQUIRED
Approval of Proposal 3 requires the affirmative vote of a majority of the
Company's shares cast in person or by proxy.
THE BOARDS OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3.
OTHER BUSINESS
Management of the Company knows of no other business to be presented at the
Meeting. If any additional matters should be properly presented, it is intended
that the enclosed proxy will be voted in accordance with the judgment of the
persons named in the accompanying proxy.
SHAREHOLDER PROPOSALS
The Company does not hold annual shareholder meetings. Shareholders who wish
to submit proposals for inclusion in a Proxy Statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of the
Company, 650 California Street, San Francisco, California 94108.
ADDITIONAL INFORMATION
The principal underwriter for each of the Funds is Van Kampen American
Capital Distributors, Inc., 2800 Post Oak Boulevard, Houston, Texas 77056. The
administrator for each of the Funds is Investors Bank & Trust Company, P.O. Box
1537, Boston, Massachusetts 02205. The shareholder services agent for each of
the Funds is ACCESS Shareholder Services, Inc., P.O. Box 418256, Kansas City,
Missouri 64141-9256.
22
<PAGE>
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO FILL IN,
DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
January 12, 1996
San Francisco, California
23
<PAGE>
EXHIBIT A
HOLDERS OF MORE THAN 5% OF ANY FUND'S SHARES
To the knowledge of the Company the following shareholders owned
beneficially greater than 5% of any Fund's outstanding shares as of December 15,
1995:
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OUTSTANDING
NAME AND ADDRESS OF SHAREHOLDER NAME OF FUND SHARES SHARES
- - ------------------------------------------ -------------- ----------- ---------------
<S> <C> <C> <C>
</TABLE>
24
<PAGE>
EXHIBIT B
INVESTMENT MANAGEMENT CONTRACT
CONTRACT made this day of , 1996 by and between The Govett Funds,
Inc. (the "Company"), a Maryland corporation, and John Govett & Co. Limited (the
"Manager"), a U.K. corporation.
WHEREAS, the Company is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the Manager is a registered Investment Adviser under the The
Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Company currently offers six classes of Common Stock, each
class representing interests in a separate investment portfolio, namely,
International Equity Fund, Emerging Markets Fund, Smaller Companies Fund,
Pacific Strategy Fund, Latin America Fund, and Global Income Fund; and may offer
additional classes of Common Stock from time to time (all such classes of stock
hereinafter collectively referred to as the "Portfolios");
WHEREAS, the Company desires to retain the Manager to render investment
advisory and administrative services to the Company and to each of the
Portfolios, subject to the approval of the shareholders in accordance with the
requirements of the Investment Company Act; and
WHEREAS, the Manager is willing to render such services under the terms of
this Contract:
1. APPOINTMENT OF MANAGER. The Company hereby appoints the Manager to act
as investment adviser and administrator to the Company and its Portfolios for
the period and on such terms as are set forth in this Contract. The Manager
hereby accepts such appointment and agrees to render the services herein set
forth for the compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER. Subject to the supervision of the
Company's Board of Directors ("Board"), the Manager will be responsible for
providing a continuous investment program for each of the Company's Portfolios,
including the provision of investment research and management with respect to
all securities and investments and cash equivalents purchased, sold or held in
the Portfolios and the selection of brokers and dealers through which securities
transactions for the respective Portfolios will be executed. In carrying out its
responsibilities under this Contract, the Manager will at all times act in
accordance with the investment objectives, policies and
25
<PAGE>
restrictions of each Portfolio as stated in the current Registration Statement
as it may be amended from time to time ("Registration Statement") as well as all
applicable rules and regulations of the Securities and Exchange Commission.
The Manager further agrees that it will:
(a) oversee the maintenance of all books and records with respect to the
securities transactions of each Portfolio and will furnish to the Board such
special reports as the Board may request from time to time; and
(b) oversee the computation of the net asset value and the net income of
each Portfolio in accordance with the procedures described in the
Registration Statement or as more frequently requested by the Board.
3. ORDERS AND COMMISSIONS. In placing orders with brokers and dealers, the
Manager shall obtain the most favorable execution of such orders. However, the
Manager may, in its discretion, purchase and sell portfolio securities to and
from brokers and dealers who provide the Manager with research, analysis, advice
and similar services, and the Manager may cause the Company to pay to those
brokers or dealers, in return for research and analysis, a higher commission or
spread than may be charged by other brokers or dealers, provided that the
Manager determines in good faith that such commission or spread is reasonable in
terms either of the particular transaction or of the overall responsibility of
the Manager to the Company and any other accounts with respect to which the
Manager exercises investment discretion. In no instance will securities be
purchased from or sold to the Manager or any affiliated person of the Manager
except in accordance with the rules and regulations promulgated by the
Securities and Exchange Commission pursuant to the Investment Company Act.
4. DUTIES AS ADMINISTRATOR. The Manager will assist in administering the
Company's affairs subject to the supervision of the Board and the following
understanding:
(a) The Manager will supervise the Company's operations as set forth
herein; provided, however, that nothing herein contained shall be deemed to
relieve or deprive the Board of its responsibility for and control of the
conduct of the Company's affairs;
(b) In all matters relating to the performance of this Contract, the
Manager will act in conformity with the Company's Articles of Incorporation,
Bylaws and Registration Statement and with the instructions and
26
<PAGE>
directions of the Board and will conform to and comply with the requirements
of the Investment Company Act and all other applicable Federal or state laws
and regulations;
(c) The Manager will provide the Company with such administrative and
clerical services as are deemed necessary or advisable by the Board,
including supervision of the maintenance of the Company's books and records
as provided above;
(d) The Manager will arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, statements of additional information,
proxy materials, tax returns and reports to the Company's stockholders and
the Securities and Exchange Commission; and
(e) The Manager will provide the Company with, or obtain for it,
adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationary supplies and
similar items.
5. DELEGATION. The Manager may delegate any of its duties as described in,
or derived from, the duties set forth in paragraphs 2 and 4 of this Contract,
provided that those duties set forth in paragraph 2 of this Contract may be
delegated by the Manager only pursuant to written agreements which satisfy the
requirements of the Investment Company Act and shall have been approved by the
Company's Board, and by the shareholders of each Portfolio to which such
agreement applies, in accordance with the provisions of the Investment Company
Act.
6. SERVICES NOT EXCLUSIVE. The services furnished by the Manager hereunder
are not to be deemed exclusive, and the Manager shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the Investment Company Act, the Manager hereby agrees that all records
which it maintains for the Company and/or the Portfolios are the property of the
Company and further agrees to surrender promptly to the Company any of such
records upon request by the Company. The Manager further agrees to preserve for
the periods prescribed by Rule 31a-2 under the Investment Company Act the
records required to be maintained by it pursuant to Rule 31a-1 under the
Investment Company Act.
8. EXPENSES OF THE COMPANY. All expenses shall be allocated among the
Portfolios in accordance with the Company's Articles of Incorporation and the
provisions of the Investment Company Act. During the term of this
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<PAGE>
Contract, the Company will bear all expenses, not specifically assumed by the
Manager, or another person, incurred in the conduct of its operations,
including, without limitation, responsibility for the following:
(a) the cost (including brokerage commissions) of securities purchased
or sold by the Portfolios and any losses incurred in connection therewith;
(b) fees payable to, and expenses incurred on behalf of the Company by,
the Manager (other than fees payable by the Manager pursuant to a delegation
of its duties provided in Paragraph 5 hereof);
(c) expenses of organizing the Company;
(d) filing fees and expenses relating to the registration and
qualification of the Company's shares and the Company under Federal and/or
state securities laws and maintaining such registrations and qualifications;
(e) fees and salaries payable to the Company's disinterested directors
and officers;
(f) taxes (including any income or franchise taxes) and governmental
fees;
(g) costs of any liability and other insurance, or fidelity bonds;
(h) any costs, expenses or losses arising out of any liability of, or
claim for damages or other relief asserted against, the Company for
violation of any law;
(i) legal, accounting and auditing expenses, including legal fees of
special counsel at any time retained for those directors who are not
interested persons of the Company and expenses relating to the use of
consulting services by the Company provided that the use of such services is
approved by the Company's directors;
(j) charges of custodians, transfer agents and other agents;
(k) costs of preparing share certificates;
(l) expenses of setting in type and printing prospectuses and
supplements thereto for existing shareholders, reports, shareholder reports,
and proxy materials;
(m) costs of mailing prospectuses, statements of additional information,
and supplements thereto to existing shareholders as well as shareholder
reports and proxy materials;
28
<PAGE>
(n) any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Company;
(o) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; and
(p) costs of mailing and tabulating proxies and costs of shareholders'
and directors' meetings.
The Company may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Manager and
acknowledged as otherwise payable by the Manager pursuant to this Contract, the
Company may reduce the fee payable to the Manager pursuant to this Contract by
such amount. To the extent that such deductions exceed the fee payable to the
Manager for any monthly payment period, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding monthly payment
dates.
9. EXPENSES OF THE MANAGER. The Manager will bear all expenses incurred by
it in performing its duties as investment adviser and administrator pursuant to
paragraphs 2 and 4 respectively, of this Contract, including, without
limitation, compensation payable to persons or organizations retained by the
Manager in accordance with paragraph 5 of the Contract. The Manager may, but is
not required to, voluntarily assume any portion or all of the expenses that the
Company is required to pay under paragraph 8 hereof. In addition, if the
expenses borne by the Company in any fiscal year exceed the applicable expense
limitations imposed by the securities regulations of any state in which shares
are registered or qualified for sale to the public, the Manager will reimburse
the Company for any excess up to the amount of the fee payable to it during that
fiscal year pursuant to this Contract.
10. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Contract, the Company will pay to the Manager a monthly fee
calculated at the rate of 1% per annum of the average daily net assets of each
Portfolio (0.75% for the Global Government Income Portfolio).
11. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Company or any of its Portfolios in connection with the matters to which
this Contract relates including, without limitation, losses that may be
sustained in connection with the purchase, holding, redemption, or sale of any
security on behalf of any Portfolio of the Company except a loss resulting from
the willful misfeasance, bad faith or gross negligence of the Manager in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Contract. Any person, even though also an officer,
29
<PAGE>
director, partner, employee, or agent of the Manager, who may be or become an
officer, director, employee or agent of the Company shall be deemed, when
rendering services to the Company or any of its Portfolios or acting in any
business of the Company or any of its Portfolios, to be rendering such services
to, or acting solely for, the Company or any of its Portfolios and not as an
officer, partner, employee, or agent or one under the control or direction of
the Manager even though paid by the Manager.
12. DURATION AND TERMINATION. This Contract shall become effective upon
the date first above written and, unless sooner terminated as provided herein,
shall continue in effect until the earlier of the second anniversary of its
effectiveness or the date on which the Company's first annual or special meeting
of shareholders is held subsequent to the effectiveness of the Registration
Statement. If at such annual or special meeting, this Contract is approved by a
majority of the outstanding voting securities of one or more Portfolios, this
Contract shall continue automatically with respect to such Portfolio(s) for
successive periods of twelve months each, so long as such continuance is
specifically approved with respect to such Portfolio(s) at least annually by (a)
the vote of a majority of those members of the Board who are not parties to this
Contract or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval; and (b) all of the members of
the Board or by vote of the holders of a majority of the outstanding voting
securities of such Portfolio(s).
Notwithstanding the foregoing, this Contract may be terminated with respect
to any Portfolio or the Company at any time, without the payment of any penalty
by the Company, upon the vote of the Board or the vote of a majority of the
outstanding voting securities of such Portfolio or the Company and on 60 days'
written notice to the Manager or by the Manager at any time, without the payment
of any penalty, on 60 days' written notice to the Company. As used in this
Contract, the terms "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meaning as such terms have in the
Investment Company Act.
In the event that this Contract shall not be approved in the manner provided
herein or shall have been terminated with respect to any Portfolio, the Manager
and the Company shall continue to be bound by the terms of this Contract with
respect to any other Portfolio provided that this Contract shall have been
approved in the manner contemplated herein with respect to such Portfolio.
This contract shall terminate automatically upon its assignment.
30
<PAGE>
13. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Contract shall be effective
until approved by vote of the holders of a majority of the outstanding voting
securities of the Portfolio(s) affected by such amendment.
14. NAME OF THE COMPANY. The Company may use the "The Govett Funds, Inc."
or any name derived from or using the words "Govett" or "John Govett" only for
so long as this Contract or any extension, renewal or amendment hereof remains
in effect. At such time as such an agreement shall no longer be in effect, the
Company will (to the extent that it lawfully can) cease to use such a name or
any other name connected with The Govett Funds, Inc.
15. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
law of the State of California. Any notice required or permitted to be given
under this Contract shall be in writing and delivered either personally, by
facsimile (confirming receipt by telephone), or by international air courier to
the parties as follows:
If to the Company:
The Govett Funds, Inc.
650 Montgomery Street, 28th Floor
San Francisco, CA
94108 Attn: Alice L. Schulman, Secretary
Tel: 415-249-0512
Fax: 415-392-3929
31
<PAGE>
If to the Manager:
John Govett & Co. Limited
Shackleton House
4 Battle Bridge Lane
London, SE1 2HR
England
Attn: Mr. Colin Kreidewolf, Treasurer
Tel: 44-71-378-7979
Fax: 44-71-638-3468
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<S> <C>
Attest: THE GOVETT FUNDS, INC.
- - ---------------------------- By: ----------------------------
Title:
Attest: JOHN GOVETT & CO. LIMITED
- - ---------------------------- By: ----------------------------
Title:
</TABLE>
32
<PAGE>
EXHIBIT C
SUBADVISORY AGREEMENT
THIS AGREEMENT (this "Agreement") is executed as of , 19 by
and between John Govett & Co. Limited, a U.K. corporation and registered
investment advisor ("Advisor"), and Berkeley Capital Management, a
California corporation and registered investment advisor ("Subadviser").
WHEREAS, Advisor is the investment advisor to The Govett Funds, Inc. (the
"Company"), an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), currently
consisting of a number of separate series;
WHEREAS, Advisor desires to retain Subadviser as Advisor's agent to furnish
investment advisory services with respect to the following series of the
Company: Govett Smaller Companies Fund (the "Fund"), and Subadviser is willing
to accept such appointment on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. APPOINTMENT. Advisor hereby appoints Subadviser to provide certain
sub-investment advisory services to the Fund for the period and on the terms set
forth in this Agreement. Subadviser hereby accepts such appointment and agrees
to furnish the services herein set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. Advisor has furnished Subadviser with true and
correct copies of each of the following:
(a) the Company's Articles of Incorporation, as filed with the Secretary
of State of the State of Maryland, and all amendments thereto or
restatements thereof;
(b) the Company's Bylaws and all amendments thereto;
(c) resolutions of the Company's Board of Directors authorizing the
appointment of Subadviser and approving this Agreement;
(d) the Company's Notification of Registration on Form N-8A under the
1940 Act, as filed with the Securities and Exchange Commission (the "SEC"),
and all amendments thereto;
33
<PAGE>
(e) the most recent post-effective amendment to the Company's
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended (the "1933 Act") (File No. 33-37783), and under the 1940 Act
relating to the Fund, as filed with the SEC; and
(f) the Company's current prospectus and statement of additional
information for the Fund (such prospectus and statement of additional
information, and all supplements thereto, are herein collectively referred
to as the "Prospectus").
Advisor will furnish Subadviser from time to time with copies of all
amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject always to the supervision of the Company's Board of
Directors and Advisor, Subadviser will furnish an investment program in respect
of, and make investment decisions for, all assets of the Fund and place all
orders for the purchase and sale of securities, all on behalf of the Fund. In
the performance of all its duties, Subadviser will satisfy its fiduciary duties
to the Fund (as set forth in Section 7, below), and will monitor the Fund's
investments, and will comply with the provisions of the Company's Articles of
Incorporation and Bylaws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund set forth in the
Prospectus or in other written form, as such objectives, policies and
restrictions may change from time to time. Each of Subadviser and Advisor will
make its officers and employees available to the other from time to time at
reasonable times to review investment policies of the Fund and to consult with
each other regarding the investment affairs of the Fund. Subadviser will report
to the Board of Directors and to Advisor with respect to the implementation and
results of such policies.
Subadviser further agrees that it:
(a) will use the same skill and care in providing the services it is
required to perform hereunder as it uses in providing services to other
fiduciary accounts for which it has investment discretion;
(b) will conform with all applicable rules and regulations of the SEC
and in addition will conduct its activities under this Agreement in
accordance with all applicable regulations of any governmental authority
with jurisdiction over Subadviser's investment advisory activities
hereunder;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with a broker or dealer. In placing
orders with brokers and dealers, Subadviser will attempt to obtain the best
combination of prompt execution of orders in an effective
34
<PAGE>
manner and at the most favorable price. Consistent with this obligation,
Subadviser may, in its discretion, purchase and sell portfolio securities
through brokers who provide Subadviser with research, analyses, advice and
similar services, and Subadviser may cause the Fund to pay to those brokers,
in return for such research and analyses, a higher commission or spread than
may be charged by other brokers, provided that Subadviser determines in good
faith that such commission is reasonable in terms of either the particular
transaction or Subadviser's overall responsibilities with respect to the
accounts as to which Subadviser exercises investment discretion. In no
instance will portfolio securities be purchased from or sold to Advisor,
Subadviser, or the Company's principal underwriter (or from or to any
affiliated person of any of the foregoing), or any affiliated person (as
defined in the 1940 Act) of the Company, Advisor or Subadviser, except as
may be permitted under the 1940 Act;
(d) will report regularly to Advisor and to the Company's Board of
Directors and will make appropriate persons available for the purpose of
reviewing with representatives of Advisor and the Board of Directors on a
regular basis at reasonable times the management of the Fund, including,
without limitation, review of the general investment strategy of the Fund,
the performance of the Fund in relation to standard industry indices,
interest rate considerations and general conditions affecting the
marketplace;
(e) will maintain books and records with respect to the Fund's
securities transactions and will furnish Advisor and the Board of Directors
with such periodic and special reports as the Board of Directors or Advisor
may request;
(f) will treat confidentially and as proprietary information of the
Company all records and other information relative to the Company or the
Fund, and will not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be withheld if Subadviser may
be subject to civil or criminal contempt proceedings for failure to comply
when requested to divulge such information by duly constituted authorities,
or when so requested by the Company; and
(g) will receive the research and recommendations of Advisor with
respect to the investment and reinvestment of the assets of the Funds.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Subadviser hereby agrees that all records
35
<PAGE>
which it maintains for the Fund are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. Subadviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act. Subadviser may only delegate its
responsibilities under this Section to affiliates that perform custody and/or
fund accounting services for the Fund upon prior written approval by the
Company.
5. EXPENSES. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased or sold for the Fund.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement for the Fund, Advisor will pay to Subadviser, out of
the advisory fees, any management fees and other revenue actually received by
Advisor with respect to the Fund, and Subadviser agrees to accept as full
compensation therefor a fee, computed daily and paid monthly in arrears, equal
to the difference, if any, between (a) all advisory and management fees actually
received by Advisor and all revenue actually received by Advisor under that
certain Master Agreement dated September 1, 1994 (the "Master Agreement") among
Advisor and various other parties (excluding all revenues payable to Van Kampen
American Capital Distributors, Inc. under the Master Agreement) with respect to
the Fund and (b) 0.10 percent per annum of the Fund's average daily net assets.
7. SERVICES TO OTHERS. Advisor understands, and has advised the Company's
Board of Directors, that Subadviser may in the future act as an investment
advisor to fiduciary and other managed accounts, and as investment advisor,
sub-investment advisor, and/or administrator to other investment companies.
Advisor has no objection to Subadviser acting in such capacities, provided that
on occasions when Subadviser deems the purchase or sale of a security to be in
the best interest of the Fund as well as other investment advisory clients of
Subadviser, Subadviser may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other advisory clients where such
aggregation is not inconsistent with the policies set forth in the Prospectus.
In such event, Subadviser shall allocate the securities so purchased or sold, as
well as the expenses incurred in the transaction, in a manner that is fair and
equitable in Subadviser's judgment in the exercise of Subadviser's fiduciary
obligations to the Fund and to such other advisory clients of Subadviser.
Advisor recognizes, and has advised the Company's Board of Directors, that the
persons employed by Subadviser to
36
<PAGE>
assist in Subadviser's duties under this Agreement will not devote their full
time to providing such services and nothing contained in this Agreement will be
deemed to limit or restrict the right of Subadviser or any of its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
8. LIMITATION OF LIABILITY. Advisor will not take any action against
Subadviser to hold Subadviser liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the performance of
Subadviser's duties under this Agreement, except for losses resulting from
Subadviser's willful misfeasance, bad faith, or negligence in the performance of
its duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as to
the Fund as of the date first written above, in accordance with the requirements
of the 1940 Act and the SEC, and, unless sooner terminated as provided herein,
will continue in effect until the first anniversary of the effective date of
this Agreement.
Thereafter, if not terminated, this Agreement will continue in effect for
the Fund for successive periods of twelve (12) months each ending on
of each year, provided such continuation is specifically approved
at least annually (a) by the vote of a majority of those members of the
Company's Board of Directors who are not interested persons of the Company,
Subadviser, or Advisor, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the vote of a majority of the Company's
Board of Directors or by the vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing (i) this Agreement may be
terminated as to the Fund at any time on sixty (60) days' written notice by the
vote of a majority of the Company's Board of Directors or by a vote of a
majority of the outstanding voting securities of the Fund without the payment of
any penalty by the Fund, and (ii) this Agreement may be terminated as to the
Fund at any time on sixty (60) days' written notice, subject to any Termination
Payment required by this Section 9, by Advisor or by Subadviser. This Agreement
will immediately terminate in the event of its assignment, or upon the
termination of Advisor's investment management contract with the Company with
respect to the Fund. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" have the
same meaning as given such terms by the 1940 Act.
If, at any time, Subadviser no longer serves as the subadvisor to the Fund,
except as provided below, Advisor shall pay Subadviser a cash fee (the
"Termination Payment") determined as follows:
37
<PAGE>
(a) RELATED SUCCESSOR SUBADVISER. If an affiliated person (as defined
in the 1940 Act) of either Advisor or Allied Irish Bank (in either case, an
"Advisory Affiliate") serves as a successor subadvisor to the Fund, the
Termination Payment shall be equal to the greater of (i) US $5 million and
(ii) 150 percent of the total amount of the subadvisory fees received by
Subadviser with respect to the Fund during the 12-month period immediately
before the termination of this Agreement.
(b) UNRELATED SUCCESSOR SUBADVISER. If an Advisory Affiliate does not
serve as a successor subadvisor to the Fund, the Termination Payment shall
be equal to the greater of (i) US $3.5 million and (ii) the total amount of
the subadvisory fees received by Subadviser with respect to the Fund during
the 12-month period immediately before the termination of this Agreement.
Advisor shall not be obligated to pay Subadviser the Termination Payment
under this Section 9 if:
(u) an Advisory Affiliate does not serve as the investment advisor to
the Fund at the time this Agreement is terminated;
(v) this Agreement is terminated because of Subadviser's willful
misfeasance, bad faith or gross negligence;
(w) this Agreement is terminated because the Fund's performance, as
measured by Lipper Analytical Services, Inc., has ranked in the bottom
quartile of its appropriate classification for four consecutive calendar
quarters;
(x) Subadviser or its subsidiaries, affiliates, directors, officers,
employees or agents engages in an action or omits to take an action that:
(i) causes Subadviser to be disqualified to serve as the subadvisor to the
Fund under Section 9(a) of the 1940 Act and the SEC does not grant an
exemptive order under Section 9(c) thereof or (ii) causes the SEC to revoke
or suspend the registration of Subadviser as an investment adviser with the
SEC;
(y) Subadviser materially breaches this Agreement and such material
breach is not cured within twenty (20) calendar days after written notice
thereof from Advisor to Subadviser; or
(z) Subadviser voluntarily terminates this Agreement or this Agreement
is assigned within the meaning of Section 15(a) of the 1940 Act and such
assignment or successor subadvisory agreement with Subadviser is not
approved by the shareholders of the Fund.
38
<PAGE>
Advisor shall make any Termination Payment payable to Subadviser within ten
(10) business days after the termination of this Agreement.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their constructions or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and will be governed by and
construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
JOHN GOVETT & CO. LIMITED
By:
---------------------------------------------------------------
Title:
BERKELEY CAPITAL MANAGEMENT
By:
---------------------------------------------------------------
Title:
39
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett Emerging Markets Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett Emerging Markets
Fund to be held at the offices of The Govett Funds, Inc. at 650 California
Street, San Francisco, California beginning at 10:00 a.m., Pacific Time, on
Friday, February 23, 1996, or at any adjournment thereof, with respect to
the matters set forth on the reverse side and described in the accompanying
Notice of Special Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a New Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett Emerging
Markets Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett Global Income Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett Global Income
Fund to be held at the offices of The Govett Funds, Inc. at 650 California
Street, San Francisco, California beginning at 10:00 a.m., Pacific Time, on
Friday, February 23, 1996, or at any adjournment thereof, with respect to
the matters set forth on the reverse side and described in the accompanying
Notice of Special Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a New Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett Global
Income Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett Latin America Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett Latin America
Fund to be held at the offices of The Govett Funds, Inc. at 650 California
Street, San Francisco, California beginning at 10:00 a.m., Pacific Time, on
Friday, February 23, 1996, or at any adjournment thereof, with respect to
the matters set forth on the reverse side and described in the accompanying
Notice of Special Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a New Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett Latin
America Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett Smaller Companies Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett Smaller
Companies Fund to be held at the offices of The Govett Funds, Inc. at 650
California Street, San Francisco, California beginning at 10:00 a.m., Pacific
Time, on Friday, February 23, 1996, or at any adjournment thereof, with
respect to the matters set forth on the reverse side and described in the
accompanying Notice of Special Meeting and Proxy Statement, receipt of which
is hereby acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a new Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett Smaller
Companines Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
1B. With respect to the proposal to approve a new Investment Subadvisory
Agreement between John Govett & Co. Limited and Govett Asset Management
Company.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett Pacific Strategy Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett Pacific Strategy
Fund to be held at the offices of The Govett Funds, Inc. at 650 California
Street, San Francisco, California beginning at 10:00 a.m., Pacific Time, on
Friday, February 23, 1996, or at any adjournment thereof, with respect to
the matters set forth on the reverse side and described in the accompanying
Notice of Special Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a New Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett Pacific
Strategy Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
THE GOVETT FUNDS, INC.
The Govett International Equity Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alice L. Schulman and Catherine Durso, or
either of them, proxy, with full power of substitution, to represent and
vote, as designated below, all shares of stock the undersigned is entitled
to vote at the Special Meeting of Shareholders of The Govett International
Equity Fund to be held at the offices of The Govett Funds, Inc. at 650
California Street, San Francisco, California beginning at 10:00 a.m., Pacific
Time, on Friday, February 23, 1996, or at any adjournment thereof, with
respect to the matters set forth on the reverse side and described in the
accompanying Notice of Special Meeting and Proxy Statement, receipt of which
is hereby acknowledged.
DATE:________________, 1996
(If this account is owned by more than one
person, all owners should sign. Persons
signing as executors, administrators,
trustees or in similar capacities should so
indicate.)
---------------------------------------------
---------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
- - --------------------------------------------------------------------------------
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1A. With respect to the proposal to approve a New Investment Management
Contract between The Govett Funds, Inc., on behalf of The Govett
International Equity Fund, and John Govett & Co. Limited.
FOR AGAINST ABSTAIN
/ / / / / /
2. / / GRANTING / / WITHHOLDING authority to vote for the election as
Directors of all of the nominees listed below.
Elliott L. Atamian, Sir Victor Garland, James M. Oates,
Kevin J.T. Pakenham, and Frank R. Terzolo
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
3. With respect to the proposal to ratify the selection of Price Waterhouse
LLP as independent auditors of the Fund for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
