<PAGE> 1
As filed with the Securities and Exchange Commission on May 27, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. ___ / /
(Check Appropriate Box or Boxes.)
THE GOVETT FUNDS, INC.*
(Exact Name of Registrant as Specified in Charter)
250 Montgomery Street, Suite 1200
San Francisco, California 94104
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (800) 731-1755
Alice L. Schulman
AIB Govett, Inc.
250 Montgomery Street, Suite 1200
San Francisco, California 94104
(Name and Address of Agent for Service)
Copies to:
Regina M. Pisa, P.C. Alan C. Porter, Esq.
Goodwin, Procter & Hoar LLP Piper & Marbury L.L.P.
One Exchange Place 1200 Nineteenth Street, N.W.
Boston, MA 02109-2881 Washington, DC 20036-2430
It is proposed that this filing will become effective on June 26, 1998 pursuant
to Rule 488.
No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-1A (File No. 33-53690).
* Relating only to shares of Govett International Equity Fund.
<PAGE> 2
THE GOVETT FUNDS, INC.
CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item No. Heading
- -------- -------
<S> <C>
1. Beginning of Registration Statement and
Outside Front Cover Page of Prospectus............................... Cover Page
2. Beginning and Outside Back Cover Page
of Prospectus........................................................ Table of Contents
3. Fee Table, Synopsis Information, and
Risk Factors......................................................... Summary; Risk Factors
4. Information About the Transaction.................................... Summary; Risk Factors;
Information Relating to the
Proposed Reorganization
5. Information About the Registrant..................................... Summary; Risk Factors;
Additional Information About the
Acquiring Fund
6. Information About the Company
Being Acquired....................................................... Summary; Risk Factors;
Additional Information About the
Acquired Fund
7. Voting Information................................................... Summary; Information Relating to
Voting Matters
8. Interest of Certain Persons and Experts.............................. Additional Information About the
Acquiring Fund; Additional
Information About the Acquired
Fund
9. Additional Information Required for Reoffering
by Persons Deemed to be Underwriters................................. Not Applicable
</TABLE>
<PAGE> 3
ARK FUNDS
Oaks, Pennsylvania 19456
_______ __, 1998
Dear Shareholder:
On January 16, 1998, the Board of Trustees of ARK Funds met to consider
and approve a proposal for reorganizing the ARK International Equity Portfolio
with Govett International Equity Fund. After carefully studying the merits of
the proposal, the Board determined that the reorganization is in the best
interests of shareholders.
Since the Board has approved the proposed reorganization, you and your
fellow shareholders are being asked to approve the proposal at a Special Meeting
of shareholders to be held at First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland on _____ __, 1998. A proxy card is enclosed for use
in the Special Meeting. This card represents shares you held as of the record
date, _____ __, 1998. IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
If the shareholders of the ARK International Equity Portfolio approve
the proposed reorganization and certain other conditions are satisfied, you will
be able to continue your investment program through ownership of shares of
Govett International Equity Fund, a mutual fund having similar investment
objectives and policies and whose investment adviser is an affiliate of AIB
Investment Managers Limited, the ARK International Equity Portfolio's investment
adviser.
I encourage you to review the attached materials in detail. Some of
your questions may be answered on the next page. Some important facts about the
proposed reorganization are outlined below.
- The reorganization will not affect the value of your account. There
will be no sales charges in connection with the reorganization.
- Neither the ARK International Equity Portfolio nor its shareholders
will be required to pay any federal income tax as a result of the
reorganization.
Because the Board believes the reorganization is in the best interests
of all shareholders, we encourage you to vote for the proposal. Should you have
any additional questions, we invite you to call ARK Funds toll free at
1-800-ARK-FUND.
Sincerely,
William H. Cowie, Jr.
Chairman of the Board
<PAGE> 4
Q. WHY HAVE I RECEIVED THIS PACKAGE?
A. ARK Funds has entered into an Agreement and Plan of Reorganization with The
Govett Funds, Inc. Under the agreement, the ARK International Equity Portfolio
will be combined with, and your ARK International Equity Portfolio shares will
be exchanged for shares of, Govett International Equity Fund. The Board of ARK
Funds has approved the proposed reorganization. You, as a shareholder of the ARK
International Equity Portfolio, are now being asked to approve the proposal.
Q. WHY IS THE REORGANIZATION BEING PROPOSED?
A. The Board of ARK Funds believes that combining the ARK International Equity
Portfolio and Govett International Equity Fund could result in more efficient
operations. In the current competitive environment, the ARK International Equity
Portfolio is too small to manage on a cost effective basis, and the shareholders
can benefit from the larger asset base resulting from a combination of the two
funds. In addition, the ARK International Equity Portfolio and Govett
International Equity Fund have similar investment objectives and policies as
described in more detail in the Prospectus/Proxy Statement.
Q. HOW WILL THIS AFFECT ME AS AN ARK FUNDS SHAREHOLDER?
A. You will become a shareholder of Govett International Equity Fund, a mutual
fund whose investment objectives and policies are similar to those of the ARK
International Equity Portfolio. As a Govett shareholder you will have access to
the array of fund portfolios offered by The Govett Funds, Inc., although you no
longer will be able to exchange your shares into other ARK Funds portfolios.
There will be no sales charges in connection with this transaction. The shares
of Govett International Equity Fund you receive will have a total net asset
value equal to the value of the ARK International Equity Portfolio shares you
held immediately prior to the transaction.
Q. WILL THE REORGANIZATION RESULT IN ANY TAXES?
A. Neither the ARK International Equity Portfolio nor its shareholders will be
expected to pay any federal income tax as a result of the reorganization.
Q. WILL THE INVESTMENT ADVISER CHANGE?
A. Yes. AIB Investment Managers Limited currently serves as investment adviser
to the ARK International Equity Portfolio. AIB Govett, Inc. serves as investment
manager and AIB Govett Asset Managers Limited serves as investment subadviser to
Govett International Equity Fund and will continue as investment manager and
subadviser following the transaction. AIB Govett, Inc. and AIB Govett Asset
Managers Limited are affiliates of AIB Investment Managers Limited.
<PAGE> 5
Q. HOW DOES THE BOARD OF ARK FUNDS RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of ARK Funds unanimously recommends
that you vote "FOR" the proposed reorganization.
Q. HOW DO I CONTACT YOU?
A. If you have any questions, call ARK Funds toll free at 1-800-ARK-FUND, Monday
through Friday, 8:00 a.m. to 8:00 p.m. (Eastern Time), or Saturday and Sunday,
9:00 a.m. to 4:00 p.m. (Eastern Time).
PLEASE VOTE.
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN.
- 2 -
<PAGE> 6
ARK FUNDS
Oaks, Pennsylvania 19456
NOTICE IS HEREBY GIVEN that a Special Meeting of the shareholders of
the ARK International Equity Portfolio will be held at First National Bank of
Maryland, 25 South Charles Street, Baltimore, Maryland, on _______ __, 1998 at
10 o'clock a.m., Eastern Time, for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Agreement"),
between ARK Funds and The Govett Funds, Inc. ("Govett Funds"),
and the transactions contemplated thereby, including: (a) the
transfer of all the assets of the ARK International Equity
Portfolio (the "Acquired Fund") of ARK Funds to, and the
assumption of the stated liabilities of the Acquired Fund by,
Govett International Equity Fund of Govett Funds (the
"Acquiring Fund"), in exchange for shares of the Acquiring
Fund; (b) the distribution of the Acquiring Fund shares so
received by the Acquired Fund pro rata to shareholders of the
Acquired Fund; and (c) the termination of the Acquired Fund.
ITEM 2. To transact such other business as may properly come before
the meeting and any adjournment thereof.
The proposed reorganization and related matters are described in the
attached Prospectus/Proxy Statement. A copy of the Reorganization Agreement is
attached to the Prospectus/Proxy Statement as Appendix A.
Only shareholders of record on _______ __, 1998 of the ARK
International Equity Portfolio are entitled to notice of and to vote at the
Special Meeting and any adjournment thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD. THIS IS IMPORTANT TO ENSURE A
QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY SUBMITTING A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
EXECUTED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
Kathryn L. Stanton
Secretary
_______ __, 1998
<PAGE> 7
PROSPECTUS/PROXY STATEMENT
Dated _______ __, 1998
THE GOVETT FUNDS, INC.
3200 Horizon Drive
King of Prussia, PA 19406-0903
Telephone 1-800-821-0803
ARK FUNDS
Oaks, Pennsylvania 19456
Telephone 1-800-ARK-FUND
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of ARK Funds in connection with
the Special Meeting of shareholders of the ARK International Equity Portfolio
(the "Meeting") to be held at First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland, on _______ __, 1998 at 10 o'clock a.m., Eastern
Time, at which shareholders of the ARK International Equity Portfolio will be
asked to consider and approve the Agreement and Plan of Reorganization dated as
of _______ __, 1998 (the "Reorganization Agreement"), by and between ARK Funds
and The Govett Funds, Inc. ("Govett Funds") providing for the reorganization
(the "Reorganization") of the ARK International Equity Portfolio (the "Acquired
Fund") with and into Govett International Equity Fund (the "Acquiring Fund").
ARK Funds and Govett Funds are open-end, series, management investment
companies whose investment advisers are majority-owned by Allied Irish Banks,
p.l.c. In approving the Reorganization Agreement and the transactions
contemplated thereby, the ARK Funds' Board of Trustees considered, among other
things, that the Acquired Fund and Acquiring Fund have similar investment
objectives and policies, that the investment advisers of the Acquired Fund and
the Acquiring Fund are affiliated, that the Reorganization would constitute a
tax-free reorganization, that combining the assets of the Acquired Fund with the
Acquiring Fund could result in more efficient operations, and that the interests
of shareholders of the Acquired Fund would not be diluted as a result of the
Reorganization.
This Prospectus/Proxy Statement constitutes the prospectus for the
shares of the Acquiring Fund that have been registered with the Securities and
Exchange Commission (the "SEC") and are to be issued in connection with the
Reorganization, and the proxy statement of ARK Funds for the Meeting.
The Reorganization Agreement provides that the Acquired Fund will
transfer its assets to the Acquiring Fund and that the Acquiring Fund will
assume the stated liabilities of the Acquired Fund. In exchange for the transfer
of assets and assumption of stated liabilities, the Acquired Fund will receive
Institutional Class shares of the Acquiring Fund. The Acquired Fund will then
<PAGE> 8
make a liquidating distribution of such Acquiring Fund shares to its
shareholders, so that a shareholder of the Acquired Fund at the time of the
Reorganization will receive Institutional Class shares of the Acquiring Fund
with the same aggregate net asset value as the shareholder had in the Acquired
Fund immediately prior to the Reorganization. Following the consummation of the
Reorganization, the Acquired Fund will be terminated as described in the
Reorganization Agreement.
This Prospectus/Proxy Statement sets forth the information that a
shareholder should know before voting on the Reorganization Agreement (and
related transactions) and should be retained for future reference. The
Institutional Class Prospectus dated April 17, 1998, as supplemented May 22,
1998, of Govett Funds, which describes the Acquiring Fund, accompanies this
Prospectus/Proxy Statement. Additional information is contained in: (i) the
Statement of Additional Information dated _______ __, 1998, relating to this
Prospectus/Proxy Statement; (ii) the Statement of Additional Information dated
April 17, 1998, of Govett Funds; (iii) the Govett Funds' Annual Report for the
fiscal year ended December 31, 1997; (iv) the Retail Class and Institutional
Class Prospectuses and the Statement of Additional Information of ARK Funds,
each dated February 13, 1998; and (v) the ARK Funds' Annual Report for the
fiscal year ended April 30, 1997 and Semi-Annual Report for the six months ended
October 31, 1997. Each of these documents is on file with the SEC and is
available without charge upon request by writing or calling either Govett Funds
or ARK Funds at their respective addresses or telephone numbers set forth above.
The information relating to the Acquiring Fund contained in the Govett Funds'
Institutional Class Prospectus, dated April 17, 1998, as supplemented May 22,
1998, and Statement of Additional Information, dated April 17, 1998, and Annual
Report for the fiscal year ended December 31, 1997 is incorporated herein by
reference.
This Prospectus/Proxy Statement is expected to be first sent to
shareholders on or about _______ __, 1998.
SHARES OF GOVETT FUNDS AND ARK FUNDS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE SECURITIES OF GOVETT FUNDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY ARK FUNDS OR GOVETT FUNDS.
- 2 -
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY......................................................................... 1
Board Consideration........................................................ 1
Federal Income Tax Consequences............................................ 1
Overview of Acquired Fund and Acquiring Fund............................... 1
Management and Arrangements with Service Providers..................... 2
Comparative Fee Tables................................................. 2
Expense Ratios -- Acquired Fund........................................ 4
Expense Ratios -- Acquiring Fund....................................... 5
Purchases.............................................................. 6
Exchanges.............................................................. 7
Dividends and Distributions............................................ 7
Redemption Procedures.................................................. 7
Voting Information......................................................... 7
RISK FACTORS.................................................................... 8
Investment Objectives and Policies......................................... 8
Investment Practices....................................................... 8
Risks...................................................................... 10
Investment Limitations..................................................... 11
Other Information.......................................................... 12
INFORMATION RELATING TO THE PROPOSED REORGANIZATION............................. 13
Description of the Reorganization Agreement................................ 14
Capitalization............................................................. 15
Federal Income Tax Consequences............................................ 16
INFORMATION RELATING TO VOTING MATTERS.......................................... 16
General Information........................................................ 16
Shareholder Approval....................................................... 17
Quorum..................................................................... 19
Annual Meetings............................................................ 19
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND................................. 19
ADDITIONAL INFORMATION ABOUT THE ACQUIRED FUND.................................. 19
OTHER BUSINESS.................................................................. 20
SHAREHOLDER INQUIRIES........................................................... 20
Appendix A...................................................................... 1
Appendix B...................................................................... 1
</TABLE>
<PAGE> 10
SUMMARY
The following is a summary of certain information relating to the
Reorganization, the parties thereto, and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Prospectus/Proxy Statement, the Statement of Additional Information
relating to this Prospectus/Proxy Statement, the Institutional Class Prospectus
and Statement of Additional Information of Govett Funds, the Retail Class and
Institutional Class Prospectuses and the Statement of Additional Information of
ARK Funds, and the Reorganization Agreement attached to this Prospectus/Proxy
Statement as Appendix A. ARK Funds' Annual Report and most recent Semi-Annual
Report may be obtained without charge by calling 1-800-ARK-FUND.
BOARD CONSIDERATION. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, the Board of Trustees of ARK Funds, and the Board of
Directors of Govett Funds, including in each case the trustees/directors who are
not "interested persons" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act"), have determined that the Reorganization is in
the best interests of shareholders of the Acquired Fund and the Acquiring Fund,
respectively, and that the interests of existing shareholders of the Acquired
Fund and the Acquiring Fund, respectively, will not be diluted as a result of
the Reorganization. See "Information Relating to the Proposed Reorganization."
FEDERAL INCOME TAX CONSEQUENCES. Shareholders of the Acquired Fund will
not recognize any gain or loss for federal income tax purposes as a result of
their receipt of Institutional Class shares of the Acquiring Fund. The Acquired
Fund will not incur any federal income taxes as a result of the Reorganization,
and the Acquiring Fund will not recognize gain or loss for federal tax purposes
on its issuance of shares in the Reorganization. See "Information Relating to
the Proposed Reorganization - Federal Income Tax Consequences."
OVERVIEW OF ACQUIRED FUND AND ACQUIRING FUND.
Investment Objectives and Policies
The Acquired Fund seeks long-term growth of capital as its investment
objective. The Acquiring Fund seeks long-term capital appreciation by investing
primarily in equity securities of companies located throughout the world as its
investment objective. For both funds, however, dividend income is incidental to
this primary objective. Each fund invests in equity securities of companies
located outside of the United States. The countries in which the Acquired Fund
and Acquiring Fund invest, and the percentage applicable to investment of fund
assets in each country, are similar but not identical. The Acquiring Fund
typically invests in equity securities listed on recognized foreign securities
exchanges, but it may hold securities which are not so listed. In comparison,
the Acquired Fund's investments primarily focus on the equity securities of
well-established companies with large market capitalizations.
<PAGE> 11
To the extent there are differences in the policies and restrictions of
the funds, shareholders should consider those differences. See "Risk Factors"
below for a further description of the similarities and differences between the
investment objectives, policies and limitations of the Acquired Fund and the
Acquiring Fund and the prospectuses of the ARK Funds and Govett Funds, which are
incorporated herein by reference.
Management and Arrangements with Service Providers
Responsibility for the management and supervision of Ark Funds and the
Acquired Fund rests with the ARK Funds' Board of Trustees. The investment
adviser to the Acquired Fund is AIB Investment Managers Limited. SEI Investments
Distribution Co. serves as the distributor of the shares of the Acquired Fund
under a distribution plan for the Retail Class. Administrative services are
provided by SEI Fund Resources. FMB Trust Company, National Association, serves
as custodian for the securities and cash of the Acquired Fund and custodial
services for foreign securities are provided by Bankers Trust Company. The
Retail Class and the Institutional Class of the Acquired Fund are each subject
to a shareholder services plan. All shareholder services fees for the Retail
Class and the Institutional Class are currently being waived.
Responsibility for the management and supervision of Govett Funds and
the Acquiring Fund rests with the Govett Funds' Board of Directors. The
investment manager to the Acquiring Fund is AIB Govett, Inc. and its subadviser
is AIB Govett Asset Management Limited. Administrative services are provided by
Chase Global Funds Services Company. FPS Broker Services, Inc. is the
distributor and principal underwriter for shares of the Acquiring Fund. The
Chase Manhattan Bank serves as the global custodian. Additional services are
provided to the Acquiring Fund by FPS Services, Inc. The Institutional Class of
the Acquiring Fund is not subject to any distribution or shareholder services
fees.
See Appendix B for more information regarding arrangements with service
providers of the Acquired Fund and the Acquiring Fund.
Comparative Fee Tables
The tables set forth below show (a) shareholder transaction
expenses and estimated annual operating expenses for the Acquired Fund (or the
relevant class thereof) as of December 31, 1997, and for the Institutional Class
of the Acquiring Fund are based on operating expense information for Class A
shares for the fiscal year ended December 31, 1997, adjusted for estimated class
specific expenses, in each case restated to reflect expenses the Acquiring Fund
expects to incur during the current fiscal year, and (b) pro forma information
for the Acquiring Fund assuming the Reorganization had taken place on December
31, 1997 for the year then ended. Unless otherwise noted, the information in the
expense table and the example reflects voluntary fee waivers and/or
reimbursements. The assumption in the example of a 5% annual return is required
by the SEC for all mutual funds, and is not a prediction of any fund's future
performance. THE EXAMPLE
- 2 -
<PAGE> 12
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF ANY
FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
Pro Forma
ARK ARK Govett Govett
International International Equity International International
Equity Portfolio Portfolio Equity Fund Equity Fund
(Retail Class) (Institutional Class) (Institutional Class) (Institutional Class)
-------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
Maximum sales load imposed on 4.75% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None
redemptions
Redemption Fee None None None None
Exchange Fee None None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage
of average net assets)
Advisory Fee (after waivers) (1) 0.38% 0.38% 0.58% 0.73%
12b-1 Fee (after waivers) (2) 0.00% N/A N/A N/A
Shareholder Services Fee (after
waivers) (3) 0.00% 0.00% 0.00% 0.00%
Other Expenses (after waivers) (4) 1.17% 1.17% 1.17% 1.02%
Total Operating Expenses (after
waivers) (5) 1.55% 1.55% 1.75% 1.75%
</TABLE>
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, imposition of any applicable sales charge,
reinvestment of all dividends, and redemption of the shares after the number of
years indicated:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ARK International Equity Portfolio $45 $77 $112 $209
(Retail Class)
ARK International Equity Portfolio 16 49 84 185
(Institutional Class)
Govett International Equity Fund 18 55 95 206
(Institutional Class)
</TABLE>
- 3 -
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
Pro Forma Govett International Equity Fund 18 55 95 206
(Institutional Class)
</TABLE>
- ----------
(1) Absent waivers, advisory fees would be 0.80%, 0.80%, 1.00% and 1.00%,
respectively.
(2) Absent waivers, 12b-1 fees would be 0.40% for the Retail Class of the ARK
International Equity Portfolio.
(3) Absent waivers, shareholder services fees would be 0.15% and 0.15% for the
Retail Class and Institutional Class of the ARK International Equity Portfolio,
respectively.
(4) Other Expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees, brokerage
commissions and other capital items and advisory, 12b-1 and shareholder services
fees.
(5) Absent fee waivers, total operating expenses would be 2.52%, 2.12%, 2.17%
and 2.02%, respectively.
Expense Ratios -- Acquired Fund
The following table sets forth (a) the ratios of operating expenses to
average net assets of the Retail Class and Institutional Class of the Acquired
Fund for the fiscal year ended April 30, 1997, (i) after fee waivers and expense
reimbursements, and (ii) absent fee waivers and expense reimbursements, and (b)
the annualized ratios of operating expenses to average net assets of the Retail
Class and Institutional Class of the Acquired Fund for the six months ended
October 31, 1997, (i) after fee waivers and expense reimbursements, and (ii)
absent fee waivers and expense reimbursements.
- 4 -
<PAGE> 14
FISCAL YEAR ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Waivers Absent Fee Waivers
and Expense Reimbursements and Expense Reimbursements
-------------------------- --------------------------
Retail Class* Institutional Class* Retail Class* Institutional Class*
------------ ------------------- ------------ -------------------
<S> <C> <C> <C>
1.77% 1.55% 2.50% 1.91%
</TABLE>
- ------------
* Commenced operations on November 1, 1996. Figures presented are annualized.
SIX MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Absent Fee
Waivers and Expense Reimbursements* Waivers and Expense Reimbursements*
---------------------------------- ----------------------------------
Retail Class Institutional Class Retail Class Institutional Class
------------ ------------------- ------------ -------------------
<S> <C> <C> <C>
1.55% 1.55% 2.45% 1.99%
</TABLE>
- ------------
* Annualized.
Expense Ratios -- Acquiring Fund
The following table sets forth the ratios of operating expenses to
average net assets of the Institutional Class of the Acquiring Fund based on
operating expense information for Class A shares for the fiscal year ended
December 31, 1997, adjusted for estimated class specific expenses, (i) after fee
waivers and expense reimbursements, and (ii) absent fee waivers and expense
reimbursements.
FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Waivers Absent Fee Waivers
and Expense Reimbursements and Expense Reimbursements
-------------------------- --------------------------
Institutional Class Institutional Class
------------------- -------------------
<S> <C>
1.75% 2.17%
</TABLE>
- 5 -
<PAGE> 15
Purchases
Institutional Class shares of the Acquiring Fund may be sold only to
certain eligible investors, including, Acquired Fund shareholders. Institutional
Class shares may be purchased at their net asset value without a sales charge
determined as of the close of the regular trading session of the New York Stock
Exchange (normally 4:00 p.m. Eastern Time). Share purchases may be made Monday
through Friday, except on certain holidays. The minimum investment amount
required to purchase Institutional Class shares of the Acquiring Fund is being
waived for all Acquired Fund shareholders in the Reorganization. Shareholders of
the Acquired Fund may reinvest their dividends in Institutional Class shares of
the Acquiring Fund but additional Share purchases of Institutional Class shares
may only be made by Acquired Fund shareholders who are otherwise eligible to
purchase Institutional Class shares. The following minimum investments apply to
Institutional Class shares of the Acquiring Fund unless they are waived:
<TABLE>
<CAPTION>
Institutional Class
-------------------
<S> <C>
To open an account $500,000
To add to an account $ 0
Minimum account balance $ 0
</TABLE>
Shares of the Acquired Fund may be sold on a continuous basis at net
asset value plus any applicable sales charge. Retail Class shares are sold
through qualified securities brokers and other financial institutions. The
maximum sales charge applicable to the Retail Class of the Acquired Fund is
4.75%. A portion of the sale charge is being waived so that investors are
currently subject to a maximum sale charge of 3.00%. The waiver may be
discontinued at any time. Institutional Class shares of the Acquired Fund are
sold to individuals, institutions and other entities that have established
trust, custodial or money management relationships with the First National Bank
of Maryland or its affiliates. Institutional Class shares may be purchased by
eligible investors at their net asset value without a sales charge. Purchases
may be made Monday through Friday, except on certain holidays. The net asset
value of the Acquired Fund is calculated as of the close of regular trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time). The following
minimum investments apply to purchases of shares of the Acquired Fund unless
they are waived:
<TABLE>
<CAPTION>
Retail Class Institutional Class
------------ -------------------
<S> <C> <C>
To open an account $500 $100,000
To add to an account 500 N/A
Minimum account balance 500 250,000*
</TABLE>
- ---------------
- 6 -
<PAGE> 16
*An Institutional Class shareholder of the Acquired Fund must, within six
months, reach and maintain an aggregate balance of $250,000.
Exchanges
All or a portion of the Institutional Class shares of the Acquiring
Fund may be exchanged on any business day at their net asset value for
Institutional Class shares of one or more of the other Govett Funds. Currently,
shares of the Acquired Fund may be exchanged at their net asset value, plus any
sales charge differential, for the shares of the same class of the other ARK
Funds portfolios. After the Reorganization, Acquired Fund shareholders may only
exchange their Acquiring Fund shares for shares of the same class of the Govett
Funds.
Dividends and Distributions
The Acquired Fund declares and pays any dividends from net investment
income annually. Net realized capital gains, if any, are distributed by the
Acquired Fund at least annually. Holders of shares of the Acquired Fund may
elect to have their dividends and distributions automatically reinvested in
additional shares of the same class at the net asset value next determined after
payment, to receive their dividends and distributions in cash, or to receive a
combination of additional shares and cash. If a shareholder fails to select an
option, all dividends and distributions are reinvested in additional shares.
The Acquiring Fund declares and pays any dividends from net investment
income at least annually. Net realized capital gains, if any, are distributed by
the Acquiring Fund at least annually. Dividends and distributions are
automatically reinvested in additional shares of the same class on the payment
dates at the net asset value as of the payable date of the dividend or
distribution, unless cash payments are requested in writing. Acquired Fund
shareholders may reinvest their dividends in Institutional Class shares of the
Acquiring Fund.
Redemption Procedures
The shares of the Acquired Fund and the Acquiring Fund are redeemable
on any business day at a price equal to the net asset value of the shares the
next time it is calculated after receipt of a redemption request in good order.
VOTING INFORMATION. This Prospectus/Proxy Statement is being furnished
in connection with the solicitation of proxies by the Board of Trustees of ARK
Funds in connection with the Meeting. Only shareholders of record at the close
of business on _______ __, 1998 will be entitled to notice of and to vote at the
Meeting. Each share or fraction thereof is entitled to one vote or fraction
thereof. Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no instruction is made, the
persons named as proxies will vote in favor of each proposal set forth in the
Notice of Meeting. Proxies may be revoked at any time before they are exercised
by submitting a written notice of revocation or a subsequently executed proxy,
or by attending the Meeting and voting in person. For additional information,
including a description of the shareholder vote required for approval of the
- 7 -
<PAGE> 17
Reorganization Agreement and transactions contemplated thereby, see "Information
Relating to Voting Matters."
RISK FACTORS
The following discussion summarizes some of the more significant
similarities and differences in the investment objectives, policies, practices,
and risk factors of the Acquired Fund and the Acquiring Fund and is qualified by
reference to the more complete information about each fund contained in the
prospectuses and statements of additional information of ARK Funds and Govett
Funds.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective and
policies of the Acquired Fund are similar to those of the Acquiring Fund. There
are, however, certain differences.
The Acquired Fund seeks long-term growth of capital as its investment
objective. The Acquiring Fund seeks long-term capital appreciation by investing
primarily in equity securities of companies located throughout the world as its
investment objective. For both funds, however, dividend income is incidental to
this primary objective. Each of the funds invests in equity securities of
companies located outside of the United States. Under normal circumstances, each
fund invests at least 65% of the value of its total assets in foreign equity
securities. Each fund invests in companies in at least three countries other
than the United States. The countries in which the Acquired Fund and Acquiring
Fund invest and the percentage restrictions relating to fund assets invested in
each country are similar but not identical. The Acquiring Fund typically invests
in equity securities listed on recognized foreign securities exchanges, but it
may hold securities which are not so listed. In comparison, the Acquired Fund's
investments primarily focus on the equity securities of well-established
companies with large market capitalizations.
For a more complete description of the investment objectives and
policies of the Acquired Fund and Acquiring Fund, see the prospectuses of ARK
Funds and Govett Funds, respectively.
INVESTMENT PRACTICES. The Acquired Fund and the Acquiring Fund follow
similar principal investment practices. These practices are as follows, with
certain differences noted.
Depositary Receipts The funds may invest in sponsored and unsponsored
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts (GDRs"), and similar global instruments to the extent
that they may invest in the underlying securities. A U.S. or foreign bank or
trust company typically "sponsors" these depositary instruments, which evidence
ownership of underlying securities issued by a U.S. or foreign corporation.
Unsponsored programs are organized independently and without the cooperation of
the issuer of the underlying securities. As a result, information about the
issuer may not be as readily available or as current as for sponsored depositary
instruments, and prices may be more volatile than if they were sponsored by the
issuers of the underlying securities.
- 8 -
<PAGE> 18
Investment in Debt Securities and Commercial Paper. The Funds may
invest in debt obligations convertible into equity securities. The Acquiring
Fund may invest in non-convertible debt securities. At least 75% of the
Acquiring Fund's total assets invested in non-convertible debt securities other
than commercial paper must be rated, at the time of purchase, at least in the A
category by Standard & Poor's or Moody's or, if unrated, determined to be of
comparable quality by the fund's investment manager. The Acquiring Fund's
commercial paper investments must, at the time of purchase, be rated at least
Prime -2 by Moody's or A-2 by Standard & Poor's or, if unrated, determined to be
of comparable quality by the fund's investment manager. The subsequent downgrade
of a debt security to a level below the investment grade required by the fund
will not require an immediate sale of that security, but the adviser will
consider the circumstances of the downgrade in determining whether to hold that
security, including causes of the downgrade, local market conditions, and
general economic trends. The Acquired Fund does not have a stated restriction
regarding rating of debt securities or commercial paper.
Temporary Strategies. To retain flexibility to respond promptly to
adverse changes in market and economic conditions, a fund may use temporary
defensive strategies. Under such a strategy, a fund may hold cash (either U.S.
dollars, foreign currencies or multinational currency units), and/or invest any
portion of all of its assets in short-term, high quality debt securities. For
debt obligations other than commercial paper, such instruments must be rated, at
the time of purchase, at least AAA by Standard & Poor's or Aaa by Moody's. For
commercial paper, such investments must be rated, at the time of purchase, at
least A-2 by Standard & Poor's or Prime-2 to Moody's. If such investments are
unrated, a fund's adviser must have determined that they are of comparable
quality to the required ratings for each type of investment. It is impossible to
predict when or for how long a fund's adviser may use such temporary strategies.
Hedging Strategies. The funds may use certain hedging strategies to
attempt to reduce the overall level of investment and currency risk normally
associated with their investments, although there can be no assurance that such
efforts will succeed. Among the types of transactions which may be used are:
forward currency contracts, writing of covered put and call options, purchase of
put and call options on currencies and equity and debt securities, stock index
futures and options thereon, interest rate or currency futures and options
thereon, and securities futures and options thereon. It is currently intended
that the Acquiring Fund will not place more than 5% of its net assets at risk in
any one of these transactions or securities. It is currently intended that the
Acquired Fund, under normal conditions, will not hedge more than 25% of its
total assets by selling futures, writing calls, and buying puts. In addition,
the Acquired Fund will not buy futures or write puts where the value of the
underlying investment exceeds 25% of its total assets or buy calls with a value
exceeding 5% of its total assets.
Repurchase Agreements and Overnight Time Deposits. Each fund may enter
into repurchase agreements, in which the fund acquires a high grade liquid debt
security from a U.S. bank, broker-dealer or other financial institution that
simultaneously agrees to repurchase the security at a specified time and price.
Repurchase agreements are collateralized, in an amount at least equal to the
current value of the loaned securities, plus any accrued interest, by cash,
letters of credit, U.S. Government securities, or, in the case of the Acquiring
Fund only, other high
- 9 -
<PAGE> 19
grade liquid debt securities at the Acquiring Fund's custodian (or designated
subcustodian), segregated from other fund assets. In segregating such assets,
the fund's custodian either places them in a segregated account or separately
identifies them and makes them unavailable for investment by the fund. The
Acquiring Fund may also invest in overnight time deposits placed at competitive
interest rates with creditworthy banks, including with the fund's global
custodian.
Investments in Other Investment Companies. Emerging and developing
markets countries often limit foreign investments in equity securities of
issuers in such countries. As a result, the funds may be able to invest in such
countries solely or primarily through open- or closed-end investment companies.
Each fund may invest in such companies to the extent permitted under the 1940
Act. A fund may not invest in any investment companies managed by its investment
adviser or any of its affiliates. Investments in investment companies may
involve a duplication of certain expenses, such as management and administrative
expenses.
RISKS.
Market Risk. Equity and bond markets outside the U.S. have
significantly outperformed U.S. markets from time to time. Consequently,
investments in foreign securities may provide greater long-term investment
returns than would be available from investing solely in U.S. securities.
Nevertheless, each fund's portfolio is subject to market risk -- the possibility
that stock prices will decline over short, or even extended, periods -- to a
greater degree than domestic investments, as a result of a variety of factors
that can affect stock prices.
For example, there may be less information publicly available about
foreign companies, and less government regulation and supervision of foreign
stock exchanges, securities dealers and publicly traded companies than is
available about comparable U.S. entities. Accounting, auditing and financial
reporting standards, practices and requirements are not uniform and may be less
rigorous than U.S. standards. Securities of some foreign companies are less
liquid, and their prices are more volatile, than securities of comparable U.S.
companies. Trading settlement practices in some markets may be slower or less
frequent than in the U.S., which could affect liquidity of a fund's portfolio.
Trading practices abroad may offer less protection to investors. In some foreign
countries, any or all of expropriation, nationalization, and confiscation are
risks to which non-U.S. securities may be subject. A foreign governments limits
on the repatriation of distributions and profits and on removal of securities,
property or other assets from that country may affect a fund's liquidity and the
value of its assets. Political or social instability, including war or other
armed conflict, or diplomatic developments also could affect U.S. investors.
Currency Risk. International investors are also exposed to currency
risk, if the U.S. dollar value of securities denominated in other currencies is
adversely affected by exchange rate movements. Currency risk could affect the
value of a fund's investments, the value of dividends and interest earned by a
fund, and gains which may be realized.
- 10 -
<PAGE> 20
Foreign Taxation Risk. Some foreign governments levy brokerage taxes,
increasing the cost of securities subject to the tax and reducing the realized
gain (or increasing the realized loss) on such securities when they are sold.
Foreign governments may withhold taxes from dividends or interest paid. Such
taxes lower a fund's net asset value.
Investing in Emerging Markets Risk. The risks of investing in foreign
securities are intensified if the investments are in emerging or developing
markets. In general, these markets may offer special investment opportunities
because their securities markets, industries and capital structure are growing
rapidly, but investments in these countries involve special risks not present in
the U.S. or in mature foreign markets, such as Germany or the United Kingdom,
for example. Settlement of securities trades may be subject to extended delays,
so that a fund may not receive securities purchased or the proceeds of sales of
securities on a timely basis. Emerging markets generally have smaller, less
developed trading markets and exchanges, which may affect liquidity, so that a
fund may not be able to dispose of those securities quickly and at a reasonable
price. These markets may also experience greater volatility, which can
materially affect the value of a fund's portfolio holdings and, therefore, its
net asset value. Emerging market countries may have relatively unstable
governments. In such an environment the risk of nationalization of business or
of prohibitions on repatriation of assets is greater than in more stable,
developed political and economic circumstances. The economy of a developing
market country may be predominantly based on only a few industries, and it may
be highly vulnerable to changes in local or global trade conditions. The legal
and accounting systems, and mechanisms for protecting property rights, may not
be as well developed as those in more mature economies. In addition, some
emerging markets countries have general or industry-specific restrictions on
foreign ownership that may limit or eliminate the fund's opportunities to
acquire desirable securities. Historically, the Acquiring Fund has invested a
greater percentage of its assets in emerging markets than the Acquired Fund.
INVESTMENT LIMITATIONS. Neither the Acquired Fund nor the Acquiring
Fund may change its fundamental investment limitations without the affirmative
vote of the holders of a majority of its outstanding voting securities (as
defined in the 1940 Act). However, investment limitations that are not
fundamental policies may be changed by the ARK Funds' Board of Trustees or the
Board of Directors of Govett Funds, as the case may be, and without shareholder
approval. The investment limitations of the Acquired Fund and the Acquiring Fund
are similar, but not identical. For additional information regarding the
investment limitations of the Acquired Fund and the Acquiring Fund, see their
respective statements of additional information. Below are certain investment
limitations that apply to the Acquired Fund and the Acquiring Fund.
Concentration of Investments. Neither the Acquiring Fund nor the
Acquired Fund may purchase any securities which would cause more than 25% of the
total assets of such fund to be invested in the securities of companies whose
principal business activities are in the same industry. With respect to 75% of
its assets, neither fund may invest in securities of any one issuer if
immediately after, and as a result of such investment, more than 5% of the total
assets of the fund, taken at market value, would be invested in the securities
of such issuer. These
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<PAGE> 21
limitations do not apply to investments in obligations issued or guaranteed by
the U.S. Government or its agencies and instrumentalities. Each of these
policies is a fundamental policy of the funds.
Loans. As a fundamental policy, neither the Acquiring Fund nor Acquired
Fund may make loans, except that a fund may under certain and similar conditions
(a) purchase or hold debt instruments; (b) enter into repurchase agreements; and
(c) engage in securities lending.
Diversification of Investments. As a fundamental policy, neither the
Acquiring Fund nor the Acquired Fund may acquire more than 10% of the voting
securities of any one issuer (except, with respect to the Acquired Fund, for
securities issued or guaranteed by the United States, its agencies or
instrumentalities).
Restricted and Illiquid Securities and Warrants. As a non-fundamental
policy, the Acquired Fund may not invest more than 15% of its net assets in
securities restricted as to resale or in illiquid securities. The Acquiring Fund
does not have a fundamental or non-fundamental policy that addresses restricted
or illiquid securities. The Acquired Fund, as a non-fundamental policy, may not
purchase a security if, as a result, more than 10% of that fund's net assets
would be invested in warrants, or more than 2% of its assets would be invested
in warrants not listed on the American Stock Exchange or the New York Stock
Exchange. The Acquiring Fund has a similar, non-fundamental policy but permits
investments only up to 5% of the net assets of the fund.
Issuing Senior Securities or Borrowing Money. Neither the Acquiring
Fund nor the Acquired Fund may borrow or issue senior securities. The funds may
under limited conditions (a) borrow money from banks and may enter into reverse
repurchase agreements and (b) borrow money or pledge assets in an amount not to
exceed 33 1/3% of its total assets for temporary or emergency purposes. Each of
these policies are fundamental. Neither the Acquiring Fund nor the Acquired Fund
will purchase any securities for its portfolio at any time at which its
borrowings equal or exceed 5% of its total assets. This policy is fundamental to
the Acquiring Fund and non-fundamental to the Acquired Fund.
OTHER INFORMATION. ARK Funds and Govett Funds are registered as
open-end management investment companies under the 1940 Act. Currently ARK Funds
offers twenty-one investment portfolios (including the Acquired Fund) and Govett
Funds offers six investment portfolios (including the Acquiring Fund).
ARK Funds is organized as a Massachusetts business trust and is subject
to the provisions of its declaration of trust and bylaws. Govett Funds is
organized as a Maryland corporation and is subject to the provisions of its
charter and bylaws.
- 12 -
<PAGE> 22
Shares of ARK Funds and Govett Funds: (i) are entitled to one vote for
each full share held and a proportionate fractional vote for each fractional
share held; (ii) will vote in the aggregate and not by class or series, except
as otherwise expressly required by law or when class voting is permitted by the
respective boards of trustees/directors; and (iii) are entitled to participate
equally in the dividends and investment income and in the net distributable
assets of the respective class and series of such fund on liquidation. In
addition, shares of ARK Funds and Govett Funds have no preemptive rights and
only such conversion and exchange rights as the respective boards may grant in
their discretion. When issued for payment as described in their prospectuses,
shares of the Acquired Fund and the Acquiring Fund are fully paid and
non-assessable, except, in the case of the Acquired Fund, as required under
Massachusetts law.* Neither ARK Funds nor Govett Funds is required under
applicable law to hold annual shareholder meetings and each intends to do so
only if required by the 1940 Act. Shareholders have the right to remove
trustees/directors. To the extent required by law, ARK Funds and Govett Funds
will assist in shareholder communications in such matters.
The foregoing is only a summary. Shareholders may obtain copies of the
declaration of trust and bylaws of ARK Funds or the charter and bylaws of Govett
Funds upon written request at the addresses shown on the cover page of this
Prospectus/Proxy Statement.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
ARK Funds and Govett Funds have entered into the Reorganization
Agreement which provides that the Acquired Fund is to be acquired by the
Acquiring Fund. Significant provisions of the Reorganization Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix A to this Prospectus/Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The Reorganization
Agreement provides that on the Closing Date (as defined in the Reorganization
Agreement), the Acquiring Fund will acquire the assets and assume the stated
liabilities of the Acquired Fund. In exchange for the transfer of assets and
assumption of stated liabilities of the Acquired Fund, Govett Funds will issue
to the Acquired Fund, at the Closing, a number of full and fractional
Institutional Class shares of the Acquiring Fund. The number of shares so issued
will have an aggregate net asset
- ----------
* Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
trust. However, the declaration of trust of ARK Funds disclaims shareholder
liability for acts or obligations of ARK Funds and requires notice of such
disclaimer be given in each agreement, obligation or instrument entered
into or executed by ARK Funds or its trustees. The declaration of trust
also provides for indemnification out of the trust property for losses and
expenses of any shareholder held personally liable for the obligations of
the trust. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is considered remote since it is limited
to circumstances in which a disclaimer is ineffectual and the trust itself
would be unable to meet its obligations.
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<PAGE> 23
value equal to the value of the net assets of the Acquired Fund. In determining
the value of the assets of the Acquired Fund, each security will be priced in
accordance with the policies and procedures of the Acquiring Fund as described
in its then current prospectus and statement of additional information and in
accordance with applicable provisions of the 1940 Act.
The Reorganization Agreement provides that the Acquired Fund will
declare a dividend on or prior to the Closing Date in order to distribute to its
shareholders all of its investment company taxable income earned, and all of its
net capital gains realized, up to and including the Closing Date.
The Acquired Fund will liquidate and distribute pro rata to its
shareholders within two business days after the Closing Date the Acquiring
Fund shares to be received by the Acquired Fund at the Closing. All of the
issued and outstanding shares of the Acquired Fund will then be canceled on the
books of ARK Funds and will thereafter represent only the right to receive
Institutional Class shares of the Acquiring Fund, and the Acquired Fund's
transfer books will be closed permanently. After the Closing Date, the Acquired
Fund will not conduct any business other than related to its termination and ARK
Funds will effect the termination of the Acquired Fund.
The expenses incurred by ARK Funds and Govett Funds in connection with
the Reorganization will be borne by First Maryland Bancorp.
The consummation of the Reorganization is subject to certain
conditions. The Reorganization will be contingent upon the approval of the
Reorganization Agreement and the transactions contemplated thereby by the
shareholders of the Acquired Fund. In addition, the Reorganization will be
contingent upon: (a) the receipt of certain legal opinions described in the
Reorganization Agreement (see Appendix A attached hereto); (b) the continuing
accuracy of the representations and warranties in the Reorganization Agreement;
and (c) the performance in all material respects of the agreements in the
Reorganization Agreement. If these conditions are satisfied, the Closing Date of
the Reorganization is expected to be _____________, 1998.
ARK Funds and Govett Funds may mutually agree to terminate the
Reorganization Agreement at or prior to the Closing Date. In addition, either
ARK Funds or Govett Funds may waive the other party's breach of a provision or
failure to satisfy a condition of the Reorganization Agreement.
The Board of Trustees of ARK Funds has determined that the
Reorganization is in the best interests of the Acquired Fund and its
shareholders and has approved of the Reorganization Agreement. In approving the
Reorganization Agreement and the transactions contemplated thereby, the board
considered the following factors, among others: (a) the similarity of the
investment objectives and policies of the Acquired Fund and the Acquiring Fund;
(b) the fact that the investment advisers of the Acquired Fund and the Acquiring
Fund are under common control; (c) the fact that shareholder interests would not
be diluted in the Reorganization; (d) the
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<PAGE> 24
status of the Reorganization as a tax-free reorganization; and (e) that
combining the assets of the Acquired Fund with the Acquiring Fund would result
in more efficient operations.
After consideration of the foregoing factors and other relevant
information, the Board of Trustees of ARK Funds unanimously approved the
Reorganization Agreement and directed that it be submitted to the shareholders
for approval. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
REORGANIZATION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
At a meeting held on January 27, 1998 the Board of Directors of Govett
Funds approved the Reorganization Agreement, finding that the of the
Reorganization is in the best interests of the Acquiring Fund and its
shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of the Reorganization.
CAPITALIZATION. Because the Acquired Fund will be combined in the
Reorganization with the Acquiring Fund, the total capitalization of the
Acquiring Fund after the Reorganization is expected to be greater than the
current capitalization of the Acquired Fund. The following table sets forth as
of December 31, 1997: (a) the capitalization of the Acquired Fund and the
Acquiring Fund, and (b) the pro forma capitalization of the Acquiring Fund as
adjusted to give effect to the Reorganization. If consummated, the
capitalizations of the Acquired Fund and Acquiring Fund are likely to be
different at the Closing Date as a result of daily share purchase and redemption
activity.
<TABLE>
<CAPTION>
Pro Forma
ARK International ARK International Govett International Govett International
Equity Portfolio Equity Portfolio Equity Fund Equity Fund
(Retail Class) (Institutional Class) (Institutional Class)(1) (Institutional Class)(1)
-------------- --------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Total Net Assets 772,095 2,482,955 124 3,255,174
Shares Outstanding 76,706 246,354 11 297,276
Net Asset Value 10.07 10.08 10.95 10.95
Per Share
</TABLE>
- ------------------
(1) The information shown for the Govett International Equity Fund reflects
amounts for the Institutional Class only. The aggregate total net assets for the
Govett International Equity Fund and Pro Forma Govett International Equity Fund
are $13,952,347 and $17,207,397, respectively.
FEDERAL INCOME TAX CONSEQUENCES. The consummation of the Reorganization
is conditioned upon the receipt of an opinion of Piper & Marbury L.L.P.
substantially to the effect that for federal income tax purposes: (a) the
transfer of the assets of the Acquired Fund, and the assumption by the Acquiring
Fund of the stated liabilities of the Acquired Fund, in exchange for
Institutional Class shares of the Acquiring Fund, and the distribution of such
shares to the shareholders of the Acquired Fund, as provided in the
Reorganization Agreement, will constitute
- 15 -
<PAGE> 25
a "reorganization" within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), and, with respect to such
reorganization, the Acquired Fund and the Acquiring Fund will each be considered
"a party to a reorganization" within the meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by the Acquired Fund as a result of such
transactions; (c) no gain or loss will be recognized by the Acquiring Fund as a
result of such transactions; (d) no gain or loss will be recognized by the
shareholders of the Acquired Fund on the distribution to them by the Acquired
Fund of Institutional Class shares of the Acquiring Fund in exchange for their
Acquired Fund shares of any class; (e) the adjusted tax basis of Acquiring fund
shares received by each shareholder of the Acquired Fund will be the same as the
aggregate basis of the shareholder's Acquired Fund shares immediately prior to
the transaction; (f) the adjusted tax basis of the assets of the Acquired Fund
in the hands of the Acquiring Fund will be the same as the basis of such assets
of the Acquired Fund in the hands of the Acquired Fund immediately prior to the
exchange; (g) a shareholder's holding period for Acquiring Fund shares will be
determined by including the period for which the shareholder held the shares of
the Acquired Fund exchanged therefor, provided that the shareholder held such
shares of the Acquired Fund as a capital asset; and (h) the holding period of
the Acquiring Fund with respect to the assets of the Acquired Fund will include
the period for which such assets were held by the Acquired Fund.
ARK Funds and Govett Funds have not sought a tax ruling from the
Internal Revenue Service (the "IRS"), but are acting in reliance upon the
opinion of counsel discussed above. In rendering their opinion, such counsel
will rely as to certain factual matters on certificates of officers of ARK Funds
and Govett Funds. The opinion of counsel is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. Shareholders should consult
their own advisers concerning the potential tax consequences to them, including
state and local income taxes.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Prospectus/Proxy Statement is being provided
in connection with the solicitation of proxies by the Board of Trustees of ARK
Funds in connection with the Meeting. Solicitation of proxies will occur
principally by mail, but officers and service contractors of ARK Funds may also
solicit proxies by telephone, telegraph, or personal interview. Any shareholder
giving a proxy may revoke it at any time before it is exercised by submitting to
ARK Funds a written notice of revocation or a subsequently executed proxy, or by
attending the Meeting and voting in person.
Only shareholders of the Acquired Fund of record at the close of
business on _______ __, 1998 will be entitled to vote at the Meeting. On that
date, there were outstanding and entitled to be voted: _____ Retail Class shares
and _____ Institutional Class shares of the Acquired Fund. Each share or
fractional share is entitled to one vote or fraction thereof.
- 16 -
<PAGE> 26
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting or any adjournment
thereof. For information on adjournments of the Meeting, see "Quorum" below.
SHAREHOLDER APPROVAL. The Reorganization Agreement (and the
transactions contemplated thereby) are being submitted for approval at the
Meeting in accordance with the provisions of the declaration of trust and bylaws
of ARK Funds. Under the declaration of trust, the Reorganization must be
approved by a "Majority Shareholder Vote" of the Acquired Fund, which means the
vote (a) of 67% or more of the shares of the Acquired Fund present at the
Meeting, if the holders of more than 50% of the shares of the Acquired Fund are
present in person or represented by proxy, or (b) of more than 50% of the shares
of the Acquired Fund, whichever is the less.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted in determining whether a quorum is present for purposes of convening the
Meeting. With respect to the Reorganization, abstentions and broker non-votes
will have the same effect as votes cast against the proposal.
The vote of the shareholders of the Acquiring Fund is not being
solicited because their approval or consent is not necessary for the
Reorganization to be consummated.
As of April 30, 1998, First National Bank of Maryland ("First
National") and its affiliates held of record, but not beneficially, ____% of the
shares of the Acquired Fund. For purposes of the 1940 Act, any person who owns
directly or through one or more controlled companies more than 25% of the voting
securities of a company is presumed to "control" such company. Under this
definition, First National and its affiliates may be deemed to be controlling
persons of the Acquired Fund.
As of April 30, 1998, the following persons beneficially owned of
record 5% or more of the shares of the Acquired Fund:
<TABLE>
<CAPTION>
Percentage of
Name/Address Outstanding Shares
------------ ------------------
<S> <C>
AIB Investment Managers Limited %
for the benefit of the Sisters of
St. Joseph of Orange
c/o Orla Kavanah
AIB Investment Managers Limited
Investment House
Percy Place
Dublin 4, Ireland
</TABLE>
- 17 -
<PAGE> 27
As of April 30, 1998, the trustees and officers of ARK Funds, as a
group, owned less than 1% of the outstanding shares of the Acquired Fund.
Upon consummation of the Reorganization, First National and the
above-mentioned 5% shareholders of the Acquired Fund will own the following
percentage of shares of the Acquiring Fund:
<TABLE>
<CAPTION>
Percentage of
Name/Address Outstanding Shares
------------ ------------------
<S> <C>
[Name] %
[Address]
</TABLE>
As of April 30, 1998, the following persons beneficially owned of
record 5% or more of the shares of the Acquiring Fund:
<TABLE>
<CAPTION>
Name/Address Shares Owned
------------ ------------
<S> <C>
Michael E. Pichichero 5.74%
332 Landing Road
Rochester, New York 14610-3535
</TABLE>
As of April 30, 1998, the directors and officers of Govett Funds, as a
group, owned less than 1% of the outstanding shares of the Acquiring Fund.
Upon consummation of the Reorganization, the above-mentioned holders of
the Acquiring Fund will own the following percentages of shares of the Acquiring
Fund:
<TABLE>
<CAPTION>
Percentage of
Name/Address Outstanding Shares
------------ ------------------
<S> <C>
[Name] %
[Address]
</TABLE>
QUORUM. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Reorganization Agreement and the transactions contemplated thereby
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. If a quorum is present, the
persons named as proxies will vote in favor of such adjournments if they
determine that adjournment and additional solicitation is reasonable and in the
best interest of shareholders of the Acquired Fund. A quorum is
- 18 -
<PAGE> 28
constituted by the presence in person or by proxy of the holders of more than
50% of the shares of the Acquired Fund entitled to vote at the Meeting.
ANNUAL MEETINGS. ARK Funds does not intend to hold annual meetings of
shareholders for the election of trustees and other business unless and until
such time as less than a majority of the trustees holding office have been
elected by shareholders, at which time the trustees then in office will call a
shareholders' meeting for the purpose of electing trustees. Shareholders have
the right to call a meeting of shareholders to consider the removal of one or
more trustees or to act on other matters, and such meetings will be called when
requested in writing by the holders of record of 10% or more of ARK Funds'
outstanding shares. To the extent required by law, ARK Funds will assist in
shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND
Additional information about the Acquiring Fund is included in the
Prospectus of Govett Funds which accompanies this Prospectus/Proxy Statement and
is incorporated by reference herein. Additional information may also be obtained
from the Statement of Additional Information of Govett Funds and the Annual
Report for the fiscal year ended December 31, 1997, which have been filed with
the SEC. Copies of the Statement of Additional Information and Annual Report may
be obtained without charge by calling 1-800-821-0803. Govett Funds is subject to
certain informational requirements of the Securities Exchange Act of 1934 and
the 1940 Act, as applicable, and in accordance with such requirements files
reports, proxy statements, and other information with the SEC. These materials
may be inspected and copied at the Public Reference Facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained from the Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. at rates prescribed
by the SEC or from the SEC's Web site (http://www.sec.gov).
ADDITIONAL INFORMATION ABOUT THE ACQUIRED FUND
Additional information about the Acquired Fund is included in the
Retail Class and Institutional Class Prospectuses of ARK Funds which are
incorporated by reference herein. Additional information may also be obtained
from the Statement of Additional Information of ARK Funds, the Annual Report for
the fiscal year ended April 30, 1997, and the Semi-Annual Report for the six
months ended October 31, 1997, which have been filed with the SEC. Copies of the
Prospectuses, Statement of Additional Information, Annual Report, and
Semi-Annual Report may be obtained without charge by calling ARK Funds at
1-800-ARK-FUND. ARK Funds is subject to certain informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, as applicable, and in
accordance with such requirements files reports, proxy statements, and other
information with the SEC. These materials may be inspected and copied at the
public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the SEC's Regional Offices at 7 World Trade
Center, 13th Floor, New York, New
- 19 -
<PAGE> 29
York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained from the
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. at rates
prescribed by the SEC or from the SEC's Web site (http://www.sec.gov).
OTHER BUSINESS
The Board of Trustees of ARK Funds knows of no other business to be
brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to ARK Funds in writing at the
address on the cover page of this Prospectus/Proxy Statement or by telephoning
1-800-ARK-FUND.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- 20 -
<PAGE> 30
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") made as of
_____ __, 1998, by and between The Govett Funds, Inc., a Maryland corporation
("Govett Funds"), for and on behalf of Govett International Equity Fund (the
"Acquiring Fund") and ARK Funds, a Massachusetts business trust ("ARK Funds"),
for and on behalf of the ARK International Equity Portfolio (the "Acquired
Fund").
W I T N E S S E T H:
WHEREAS, the parties hereto desire that the assets and stated
liabilities of the Acquired Fund be transferred to, and be acquired and assumed
by, the Acquiring Fund in exchange for shares of the Acquiring Fund which shall
thereafter be distributed to the shareholders of the Acquired Fund, all upon the
terms and conditions hereinafter set forth (the "Reorganization"); and
WHEREAS, the parties intend that, in connection with the
Reorganization, the Acquired Fund will be terminated as described in this
Agreement; and
WHEREAS, the parties wish to enter into a definitive agreement setting
forth the terms and conditions of the foregoing transactions and to adopt this
Agreement as a "plan of reorganization" within the meaning of Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
ARTICLE I
TRANSFER OF ASSETS IN EXCHANGE FOR SHARES; ASSUMPTION
OF LIABILITIES; LIQUIDATION OF ACQUIRED FUND
Subject to the terms and conditions of this Agreement, the parties
agree to effect the following transactions in respect of the Reorganization:
1.1 Transfer of Acquired Fund Assets; Issuance of Acquiring Fund
Shares. At the Closing (as defined in Section 1.5), the Acquired Fund shall
transfer to the Acquiring Fund all of the assets of the Acquired Fund, in
exchange for and against delivery of a number of Institutional Class shares
(including fractional shares) of the Acquiring Fund having an aggregate net
asset value equal to the value of the assets of the Acquired Fund so transferred
(the "Acquiring Fund Shares"), in each case determined and adjusted as provided
in Section 1.3, and the assumption of the stated liabilities of the Acquired
Fund as provided in Section 1.4. Portfolio securities of the Acquired Fund shall
be delivered to The Chase Manhattan Bank, the custodian for the Acquiring
<PAGE> 31
Fund (the "Custodian"), on the Closing Date (as defined in Section 1.5), duly
endorsed in proper form for transfer and in such condition as to constitute good
delivery thereof, in accordance with the custom of brokers, and shall be
accompanied by all necessary stock transfer stamps, if any, or a check for the
appropriate purchase price thereof. If the Acquired Fund shall be unable to make
timely delivery of any portfolio securities as herein required, the Acquiring
Fund may, in the exercise of its reasonable discretion, waive such delivery,
provided that the Acquired Fund has timely delivered such documents, including
assignment and escrow agreements, due bills, confirmation slips and the like, as
may reasonably be requested by the Acquiring Fund and the Custodian. Cash of the
Acquired Fund shall be delivered by the Acquired Fund on the Closing Date and
shall be in the form of currency or a wire transfer in federal funds, payable to
the order of "The Chase Manhattan Bank, as custodian for The Govett Funds, Inc."
At the Closing, the Acquiring Fund shall issue and deliver to the Acquired Fund
a confirmation evidencing the Acquiring Fund Shares credited to the account of
the Acquired Fund, or provide satisfactory evidence that the Acquiring Fund
Shares have been credited to the Acquired Fund's account on the books of the
Acquiring Fund. It is expressly agreed that no sales charge will be imposed upon
issuance of the Acquiring Fund Shares or their distribution to shareholders of
the Acquired Fund as provided in Section 1.6.
1.2 Acquired Fund Assets. The assets of the Acquired Fund to be
acquired by the Acquiring Fund hereunder shall consist of all property of the
Acquired Fund, including, without limitation, all cash, securities, commodities
and futures interests, dividends or interest receivable, and any deferred or
prepaid expenses shown as an asset on the statement of assets and liabilities of
the Acquired Fund delivered pursuant to Section 2.5.
1.3 Valuation. The value of the assets of the Acquired Fund to be
acquired by the Acquiring Fund shall be computed as of the close of regular
trading on the New York Stock Exchange, Inc. (the "Exchange") on the Closing
Date, using the valuation policies and procedures set forth in the then-current
prospectus and statement of additional information of the Acquiring Fund. The
valuation of such assets shall be subject to review by the Acquired Fund and to
such adjustments, if any, as may be agreed to by the Acquiring Fund. The
aggregate net asset value of the Acquiring Fund Shares shall be computed using
the net asset value per share of the Acquiring Fund as of the close of regular
trading on the Exchange on the Closing Date. The share transfer books of the
Acquired Fund shall be permanently closed as of the close of business on the
business day immediately preceding the Closing Date and no transfer of shares of
the Acquired Fund shall thereafter be made on such books. The Acquired Fund
shall only accept purchase orders or redemption requests received prior to the
close of regular trading on the Exchange on the business day immediately
preceding the Closing Date; purchase orders or redemption requests received
thereafter shall be deemed to be orders to purchase or requests for redemption
of shares of the Acquiring Fund, as the case may be, and shall be executed at
the net asset value per share determined as set forth in the then-current
prospectus and statement of additional information of the Acquiring Fund,
provided that the Reorganization is consummated.
1.4 Acquired Fund Liabilities. At the Closing, the Acquiring Fund shall
assume all liabilities, expenses, costs, charges and reserves of the Acquired
Fund reflected on the statement of assets and liabilities of the Acquired Fund
delivered pursuant to Section 2.5. The Acquiring
A-2
<PAGE> 32
Fund shall assume only such liabilities of the Acquired Fund and shall not
assume any other liabilities, whether absolute or contingent, known or unknown,
accrued or unaccrued.
1.5 Closing; Closing Date. The closing of the Reorganization shall take
place beginning after 5:30 p.m. on _____________, 1998, at the offices of Piper
& Marbury L.L.P., 36 South Charles Street, Baltimore, Maryland, or at such other
time and place as may be agreed upon by the parties. In the event that on such
date (i) the Exchange is closed or trading thereon is restricted, or (ii)
trading or the reporting of trading on the Exchange or elsewhere is disrupted so
that accurate appraisal of the value of the assets of the Acquired Fund or the
aggregate net asset value of the Acquiring Fund Shares is impractical, the
Reorganization shall be postponed until the business day next following the day
on which trading shall have been fully resumed and reporting shall have been
restored, or such other day as may be agreed upon by the parties. The closing of
the Reorganization is referred to herein as the "Closing" and the date on which
the Closing shall take place is referred to herein as the "Closing Date."
1.6 Distribution of Acquiring Fund Shares. As soon after the Closing as
is conveniently practicable, and in any event within two business days
thereafter, the Acquired Fund shall distribute pro rata to its shareholders of
record as of the close of business on the business day immediately preceding the
Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund Shares
received by it hereunder. The Acquired Fund shall accomplish such distribution
by delivering a written instruction, signed by the principal executive officer
of ARK Funds and certified by an authorized signatory of ______________________,
the transfer agent of ARK Funds, to FPS Services, Inc., the transfer agent of
Govett Funds (the "Transfer Agent"), directing the Transfer Agent to open
accounts on the books of the Acquiring Fund in the names of the Acquired Fund
Shareholders and transfer to such accounts the respective pro rata interest, in
full and fractional (to three decimal places) shares, of each such shareholder
in the Acquiring Fund Shares then credited to the account of the Acquired Fund
on the books of the Acquiring Fund. The Acquiring Fund agrees to instruct the
Transfer Agent to comply with such instruction. All issued and outstanding
shares of the Acquired Fund and all certificates, if any, indicating ownership
of such shares shall simultaneously be canceled on the books of the Acquired
Fund, although from and after the Closing each certificate which theretofore
represented shares of the Acquired Fund shall evidence ownership of the
Acquiring Fund Shares on the basis hereinabove set forth. No redemption or
repurchase of any Acquiring Fund Shares credited to Acquired Fund Shareholders
and represented by unsurrendered certificates shall be permitted until such
certificates have been surrendered for cancellation. The Acquiring Fund shall
not issue certificates representing Acquiring Fund Shares in connection with
such distribution. Promptly after the distribution described above, the
Acquiring Fund shall cause appropriate notification to be mailed to the Acquired
Fund Shareholders informing each such shareholder of the number of Acquiring
Fund Shares credited to his account and confirming the registration thereof in
his name. All distributions on the Acquiring Fund Shares shall be paid to the
Acquired Fund Shareholders in cash or invested in additional shares of the
Acquiring Fund at the net asset thereof on the respective payment dates in
accordance with instructions previously given by such shareholders to the
transfer agent of ARK Funds; provided that such instructions have been given to
the Transfer Agent and such instructions are consistent with the current
prospectus and statement of additional information of the Acquiring Fund.
A-3
<PAGE> 33
1.7 Payment of Transfer Taxes. Govett Funds shall not be liable for any
transfer taxes payable upon the issuance of Acquiring Fund Shares, nor shall it
be required to issue any Acquiring Fund Shares in a name other than the name of
an Acquired Fund Shareholder unless all transfer taxes payable upon issuance of
such shares have been paid.
1.8 Liquidation, Termination of Acquired Fund. As soon as conveniently
practicable after the distribution required pursuant to Section 1.6 has been
made, ARK Funds shall, in accordance with applicable law, make all filings and
take all such other action as may be necessary to effect a complete liquidation
and termination of the Acquired Fund.
1.9 Reporting. Any reporting obligation of the Acquired Fund is and
shall remain the responsibility of ARK Funds up to and including the Closing
Date and such later dates on which the Acquired Fund is terminated and ARK Funds
is deregistered under the Investment Company Act of 1940, as amended (the "1940
Act").
ARTICLE II
COVENANTS AND AGREEMENTS
2.1 Conduct of Business. After the date of this Agreement and on or
prior to the Closing Date, the Acquired Fund and the Acquiring Fund will conduct
their respective businesses only in the ordinary course, it being understood
that such ordinary course of business shall include the declaration and payment
of customary dividends and distributions.
2.2 Shareholders' Meeting. ARK Funds shall call, convene and hold a
meeting of shareholders of the Acquired Fund as soon as practicable in
accordance with applicable law, for the purpose of approving this Agreement and
the transactions herein contemplated, and for such other purposes as may be
necessary or desirable, and the trustees of the ARK Funds shall, subject to the
exercise of their fiduciary duties, recommend a favorable vote thereon. ARK
Funds shall solicit the proxies of shareholders of the Acquired Fund to vote on
the matters to be acted upon at such meeting.
2.3 Registration Statement; Prospectus/Proxy Statement. ARK Funds shall
prepare preliminary proxy materials to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), relating to the meeting of shareholders referred to in
Section 2.2, in the form of a prospectus/proxy statement and related statement
of additional information included in the registration statement on Form N-14 of
Govett Funds filed with the Commission under the Securities Act of 1933, as
amended (the "1933 Act"), in connection with this Agreement. Such registration
statement in the form in which it shall become effective and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date,
such registration statement as amended, is referred to herein as the
"Registration Statement." The prospectus/proxy statement and related statement
of additional information in the form first filed
A-4
<PAGE> 34
with the Commission pursuant to Rule 497(c) under the 1933 Act is referred to
herein as the "Prospectus/Proxy Statement." ARK Funds and Govett Funds will each
use its best efforts to cause the Registration Statement to become effective
under the 1933 Act as soon as practicable and agree to cooperate in such
efforts. Upon effectiveness of the Registration Statement, ARK Funds will cause
the Prospectus/Proxy Statement to be delivered to shareholders of the Acquired
Fund entitled to vote on this Agreement and the transactions herein contemplated
at least 20 business days prior to the date of the shareholders meeting called
pursuant to Section 2.2 in accordance with applicable law.
2.4 Information. Throughout the period prior to the Closing, ARK Funds
and Govett Funds shall furnish to one another, and the other's accountants,
legal counsel and other representatives, all such information concerning the
Acquired Fund or the Acquiring Fund and their businesses and properties as may
reasonably be requested by the other, or by such representatives.
2.5 Financial Statements. At the Closing, ARK Funds shall deliver to
Govett Funds a statement of assets and liabilities of the Acquired Fund,
together with a schedule of portfolio investments as of the Closing Date,
together with related statement of operations and statement of changes in net
assets for the period commencing on May 1, 1998 and ending on the Closing Date.
These financial statements shall be prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
covered by such statements. ARK Funds shall also deliver to Govett Funds on or
before the Closing Date the detailed tax-basis accounting records for each
security to be transferred to the Acquiring Fund hereunder, which shall be
prepared in accordance with the requirements for specific identification tax-lot
accounting and clearly reflect the bases used for determination of gain and loss
realized on the partial sale of any security to be transferred to the Acquiring
Fund. As promptly as practicable thereafter, ARK Funds shall furnish Govett
Funds, in such form as is reasonably satisfactory to Govett Funds, a statement
of the earnings and profits of the Acquired Fund for federal income tax
purposes, which statement shall be certified by the treasurer of ARK Funds.
2.6 Final Dividend. On or before the Closing Date, ARK Funds shall
declare and pay a dividend or dividends on the shares of the Acquired Fund
which, together with all previous dividends, shall have the effect of
distributing to shareholders of the Acquired Fund all of the Acquired Fund's
investment company taxable income for the final taxable period of the Acquired
Fund (computed without regard to any deduction for dividends paid) and all of
its net capital gains realized in the final taxable period of the Acquired Fund
(after reduction for any capital loss carry-forward).
2.7 Other Necessary Action. ARK Funds and Govett Funds shall each take
all necessary corporate or other action and use its best efforts to complete all
filings and obtain all governmental and other consents and approvals required
for consummation of the transactions contemplated by this Agreement.
A-5
<PAGE> 35
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of ARK Funds. ARK Funds hereby
represents and warrants to Govett Funds as follows:
(a) ARK Funds is a business trust duly organized and validly existing
in good standing under the laws of the Commonwealth of Massachusetts and has
full corporate power to conduct its business as it is now being conducted and to
own the properties and assets it now owns. ARK Funds is qualified to transact
business as a foreign corporation in all jurisdictions in which it conducts any
business or owns any properties or assets, except where the failure to be so
qualified does not cause a material adverse effect on the Acquired Fund.
(b) ARK Funds is registered with the Commission pursuant to Section 8
of the 1940 Act as an open-end management investment company.
(c) The audited financial statements of the Acquired Fund for the
fiscal year ended April 30, 1998, delivered to Govett Funds by ARK Funds have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods covered by such statements, and
fairly present the financial position and results of operations of the Acquired
Fund at the dates of such statements and for the periods covered thereby.
(d) Since April 30, 1998, the Acquired Fund has not incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business, and there has not
been any material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or other), earnings,
business or properties of the Acquired Fund (other than changes in the ordinary
course of business, including, without limitation, dividends and distributions
in the ordinary course ).
(e) There is no litigation, proceeding or governmental investigation
pending or, to the knowledge of ARK Funds, threatened against or relating to the
Acquired Fund, the properties or business of the Acquired Fund, or this
Agreement.
(f) The Acquired Fund has qualified and elected to be treated as a
regulated investment company under Subchapter M of the Code for each of its
taxable years. All federal and other tax returns and reports of the Acquired
Fund required by law to have been filed with the proper taxing authority have
been filed with the proper taxing authority, and all federal and other taxes
payable pursuant to such returns and reports have been paid so far as due, or
provision has been made for the payment thereof, and, to ARK Funds' knowledge,
no such return is currently under audit and no assessment has been asserted with
respect to any such return.
(g) KPMG Peat Marwick LLP, who have certified the financial statements
of the Acquired Fund to be filed with the Commission as part of the Registration
Statement, are, to the
A-6
<PAGE> 36
knowledge of ARK Funds, independent public auditors as required by the 1933 Act
and the rules and regulations of the Commission thereunder.
(h) ARK Funds has full power and authority to execute, deliver and
carry out the terms of this Agreement on behalf of the Acquired Fund. The
execution, delivery and performance of this Agreement by ARK Funds, and the
consummation of the transactions contemplated hereby, have been duly authorized
by its board of trustees, and this Agreement constitutes a valid and legally
binding obligation of ARK Funds, enforceable against ARK Funds in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
exercise of judicial discretion in accordance with general principles of equity.
No other proceedings on the part of the ARK Funds or the shareholders of the
Acquired Fund (other than as contemplated in Section 4.1(a)) are necessary to
authorize this Agreement and the transactions contemplated hereby.
(i) ARK Funds is not in default under any agreement, lease, contract,
indenture, or other instrument or obligation to which it is a party or by which
it or any of its properties or assets are bound and which default is of material
significance in respect of the business or financial condition of the Acquired
Fund. The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or violate or result in a breach of any of the terms or
provisions of, or constitute a default under, any agreement or other instrument
to which ARK Funds is a party, or the declaration of trust or bylaws of ARK
Funds, or any statute, order, rule or regulation of any court or of any
governmental or other regulatory body having jurisdiction, applicable to the
Acquired Fund.
(j) ARK Funds has good and marketable title to the assets of the
Acquired Fund to be transferred to the Acquiring Fund pursuant to this
Agreement, and, subject to the approval of shareholders of the Acquired Fund,
has full right, power and authority to sell, assign, transfer and deliver such
assets hereunder, and upon delivery and payment for such assets, the Acquiring
Fund will acquire good and marketable title thereto, free and clear of all
liens, mortgages, pledges, encumbrances, charges, claims and equities, and
subject to no restrictions on the transfer thereof, except as disclosed to
Govett Funds prior to the Closing.
(k) Neither ARK Funds nor, to the knowledge of ARK Funds, any Acquired
Fund Shareholder has any present intention of redeeming or otherwise disposing
of the Acquiring Fund Shares after the Closing Date, except as provided pursuant
to and in accordance with the terms of this Agreement.
(l) No authorization, consent or approval of any governmental or other
public body or authority or any other person is necessary for the execution and
delivery of this Agreement by ARK Funds on behalf of the Acquired Fund or the
consummation of any transactions contemplated hereby by ARK Funds, other than as
shall be obtained at or prior to the Closing.
3.2 Representations and Warranties of Govett Funds. Govett Funds hereby
represents and warrants to ARK Funds as follows:
(a) Govett Funds is a corporation duly organized and validly existing
in good standing under the laws of the State of Maryland and has corporate power
to conduct its business as it is now being conducted and to own the properties
and assets it now owns. Govett Funds is qualified to transact business in all
jurisdictions in which it conducts any business or owns any
A-7
<PAGE> 37
properties or assets, except where the failure to be so qualified does not cause
a material adverse effect on the Acquiring Fund.
(b) Govett Funds is registered with the Commission pursuant to Section
8 of the 1940 Act as an open-end management investment company.
(c) The authorized capitalization of Govett Funds consists of
3,000,000,000 shares of Common Stock, par value $.00001 per share, of which
250,000,000 shares have been classified as a series designated the Govett
International Fund and further classified as Class A, Class B, Institutional
Class and Class D shares of such series. All of the issued and outstanding
shares of the Acquiring Fund have been duly and validly issued and are fully
paid and non-assessable. The Acquiring Fund Shares to be issued and delivered
pursuant to this Agreement have been duly authorized for issuance and, when
issued and delivered as provided herein, will be validly issued, fully paid and
non-assessable.
(d) The current prospectus and statement of additional information of
the Acquiring Fund comply in all material respects with the applicable
requirements of the 1933 Act and the 1940 Act and the applicable rules and
regulations of the Commission thereunder and do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) The audited financial statements for the fiscal year ended December
31, 1997 of the Acquiring Fund delivered to ARK Funds by Govett Funds have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods covered by such statements, and
fairly present the financial position and results of operations of the Acquiring
Fund at the dates of such statements and for the periods covered thereby.
(f) Since January 1, 1998, the Acquiring Fund has not incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business, and there has not
been any material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or other), earnings,
business or properties of the Acquiring Fund (other than changes in the ordinary
course of business, including, without limitation, dividends and distributions
in the ordinary course).
(g) There is no litigation, proceeding or governmental investigation
pending or, to the knowledge of Govett Funds, threatened against or relating to
the Acquiring Fund, the properties or business of the Acquiring Fund, or this
Agreement.
(h) The Acquiring Fund has qualified and elected to be treated as a
regulated investment company under Subchapter M of the Code for each of its
taxable years. All federal and other tax returns and reports of the Acquiring
Fund required by law to have been filed with the proper taxing authority have
been filed with the proper taxing authority, and all federal and other taxes
payable pursuant to such returns and reports have been paid so far as due, or
provision has been
A-8
<PAGE> 38
made for the payment thereof, and, to Govett Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return.
(i) Coopers & Lybrand L.L.P., who have certified the financial
statements of the Acquiring Fund to be filed with the Commission as part of the
Registration Statement, are, to the knowledge of Govett Funds, independent
public auditors as required by the 1933 Act and the rules and regulations of the
Commission thereunder.
(j) Govett Funds has full power and authority to execute, deliver and
carry out the terms of this Agreement on behalf of the Acquiring Fund. The
execution, delivery and performance of this Agreement by Govett Funds, and the
consummation of the transactions contemplated hereby, have been duly authorized
by its board of directors, and this Agreement constitutes a valid and legally
binding obligation of Govett Funds, enforceable against Govett Funds in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and the exercise of judicial discretion in accordance with general
principles of equity. No other proceedings on the part of Govett Funds are
necessary to authorize this Agreement and the transactions contemplated hereby.
(k) Govett Funds is not in default under any agreement, lease,
contract, indenture, or other instrument or obligation to which it is a party or
by which it or any of its properties or assets are bound and which default is of
material significance in respect of the business or financial condition of the
Acquiring Fund. The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or violate or result in a
breach of any of the terms or provisions of, or constitute a default under, any
agreement or other instrument to which Govett Funds is a party, or the charter
or by-laws of Govett Funds, or any statute, order, rule or regulation of any
court or of any governmental or other regulatory body having jurisdiction
applicable to the Acquiring Fund.
(l) No authorization, consent or approval of any governmental or other
public body or authority or any other person is necessary for the execution and
delivery of this Agreement by Govett Funds on behalf of the Acquiring Fund or
the consummation of any transactions contemplated hereby by Govett Funds, other
than as shall be obtained at or prior to the Closing.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Obligations of ARK Funds. The obligations
of ARK Funds to consummate the Reorganization shall be subject, at its election,
to the performance by Govett Funds of all of the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, to the
following further conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been duly approved by the requisite affirmative vote of the shareholders of the
Acquired Fund.
(b) Govett Funds shall have furnished to ARK Funds a certificate of
Govett Funds, signed by the principal executive officer and the principal
financial officer of Govett Funds, dated the Closing Date, to the effect that:
A-9
<PAGE> 39
(i) the representations and warranties of Govett Funds in
this Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing Date
(except representations and warranties that speak to a specific date,
which shall be true and correct as of such date) and Govett Funds has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing;
(ii) since the date of the most recent financial statements
of the Acquiring Fund included in the Registration Statement, there has
been no material adverse change in the condition (financial or other),
earnings, business or properties of the Acquiring Fund (other than
changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course, except
as set forth in or contemplated in the Registration Statement; and
(iii) The Registration Statement and Prospectus/Proxy
Statement comply in all material respects with the applicable
requirements of the 1933 Act, the 1934 Act and the 1940 Act and the
applicable rules and regulations of the Commission thereunder; and the
Prospectus/Proxy Statement (and any supplement thereto) does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that Govett Funds makes no representations or
warranties as to the information contained in or omitted from the
Prospectus/Proxy Statement (or any supplement thereto) in reliance upon
and in conformity with information relating to the Acquired Fund or ARK
Funds and furnished to Govett Funds by ARK Funds specifically for use
in connection with the Prospectus/Proxy Statement (or any supplement
thereto).
(iv) the Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to Govett Fund's knowledge,
threatened.
(c) Prior to the Closing Date, Govett Funds shall have furnished to ARK
Funds such further information, certificates and documents, including certified
copies of the proceedings of its board of directors, as ARK Funds may reasonably
request.
4.2 Conditions Precedent to Obligations of Govett Funds. The
obligations of Govett Funds to consummate the Reorganization shall be subject,
at its election, to the performance by ARK Funds of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, to the following further conditions:
(a) ARK Funds shall have furnished to Govett Funds a certificate of ARK
Funds, signed by the principal financial officer of ARK Funds, dated the Closing
Date, to the effect that the unaudited financial statements of the Acquired Fund
delivered to Govett Funds pursuant to
A-10
<PAGE> 40
Section 2.5 have been prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods covered by such
statements and fairly present the financial position and results of operations
of the Acquired Fund at the dates of such statements and for the periods covered
thereby.
(b) ARK Funds shall have furnished to Govett Funds a certificate of ARK
Funds, signed by the principal executive officer and the principal financial
officer of ARK Funds, dated the Closing Date, to the effect that:
(i) the representations and warranties of ARK Funds in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
(except representations and warranties that speak to a specific date,
which shall true and correct as of such date) and ARK Funds has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing; and
(ii) since the date of the most recent financial statements
of the Acquired Fund included in the Registration Statement, there has
been no material adverse change in the condition (financial or other),
earnings, business or properties of the Acquired Fund (other than
changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course, except
as set forth in or contemplated in the Registration Statement.
(iii) The Prospectus/Proxy Statement will comply, on the
date it became effective with the Securities and Exchange Commission
and on the Closing Date, in all material respects with the applicable
requirements of the 1933 Act, the 1934 Act and the 1940 Act and the
applicable rules and regulations of the Commission thereunder; and the
Prospectus/Proxy Statement (and any supplement thereto) does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that ARK Funds make no representations or warranties
as to the information contained in or omitted from the Prospectus/Proxy
Statement (or any supplement thereto) in reliance upon and in
conformity with information relating to the Acquiring Fund or Govett
Funds and furnished to ARK Funds by Govett Funds specifically for use
in connection with the Prospectus/Proxy Statement (or any supplement
thereto).
(c) Govett Funds shall have received (i) a certificate of an authorized
signatory of the Custodian stating that the portfolio securities, cash and other
assets of the Acquired Fund have been delivered as provided in Section 1.1 and
(ii) a certificate of an authorized signatory of the Transfer Agent stating that
its records contain the names and addresses of the Acquired Fund Shareholders
and the number and percentage of ownership of the Acquiring Fund Shares to be
distributed to each such shareholder as provided in Section 1.1.
A-11
<PAGE> 41
(d) Prior to the Closing Date, ARK Funds shall have furnished to Govett
Funds such further information, certificates and documents, including certified
copies of the proceedings of its board of trustees and shareholders, as Govett
Funds may reasonably request.
4.3 Other Conditions Precedent. The obligations of the parties hereto
to consummate the Reorganization shall be subject to the fulfillment, prior to
or at the Closing, of each of the following conditions:
(a) ARK Funds and Govett Funds shall have received a legal opinion or
opinions from Piper & Marbury, L.L.P. satisfactory to the parties and their
counsel, to the effect that, if the transactions contemplated by this Agreement
are consummated in accordance with the terms hereof, for federal income tax
purposes:
(i) the transfer by the Acquired Fund of its assets to the
Acquiring Fund solely in exchange for shares of the Acquiring Fund and
the assumption by the Acquiring Fund of the stated liabilities of the
Acquiring Fund as herein provided, and the distribution of such shares
to the shareholders of the Acquired Fund, as provided in this
Agreement, will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Code and each such Fund will be "a party to
the reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Acquired Fund
on the transfer of its assets to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption of the stated liabilities of
the Acquired Fund, and no gain or loss will be recognized by the
Acquired Fund on the distribution of the Acquiring Fund Shares to the
Acquired Fund Shareholders;
(iii) no gain or loss will be recognized by the Acquiring
Fund upon the receipt of the assets of the Acquired Fund in exchange
for the Acquiring Fund Shares and the assumption of the stated
liabilities of the Acquired Fund;
(iv) the adjusted tax basis of each asset of the Acquired
Fund in the hands of the Acquiring Fund will be the same as the
adjusted tax basis of such asset in the hands of the Acquired Fund
immediately prior to the Reorganization;
(v) the holding period of each asset of the Acquired Fund in
the hands of the Acquiring Fund will include the holding period of such
asset in the hands of the Acquired Fund immediately prior to the
Reorganization;
(vi) no gain or loss will be recognized by the Acquired Fund
Shareholders upon the receipt of the Acquiring Fund Shares (including
fractional shares) by such shareholders, provided that such
shareholders receive solely Acquiring Fund Shares (including fractional
shares) in exchange for their shares of the Acquired Fund;
A-12
<PAGE> 42
(vii) the adjusted basis of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund
Shareholder will be the same as the adjusted tax basis of the shares of
the Acquired Fund surrendered immediately prior to the Reorganization;
and
(viii) the holding period of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund
Shareholder will include the holding period of the shares of the
Acquired Fund surrendered in exchange therefor, provided that such
shares were held as a capital asset in the hands of the Acquired Fund
Shareholder on the date of the exchange.
(b) ARK Funds and Govett Funds shall have received a legal opinion or
opinions, as may be mutually satisfactory to the parties and their counsel.
(c) All state securities law and all other governmental approvals
necessary or advisable in the opinion of counsel to consummate the transactions
contemplated by this Agreement shall have been received and shall not contain
any provision which is unduly burdensome.
(d) No suit, action or other proceeding against ARK Funds or Govett
Funds or their respective officers or directors/trustees shall be threatened or
pending before any court or governmental agency in which it will be, or it is,
sought to restrain or prohibit any of the transactions contemplated by this
Agreement or to obtain damages or other relief in connection with this Agreement
or the transactions contemplated hereby.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned any time prior to the Closing
(notwithstanding any approval of this Agreement and the transactions herein
contemplated by the shareholders of the Acquired Fund):
(i) by mutual written consent of the parties duly authorized
by or on behalf of their respective boards of directors/trustees;
(ii) by either party at any time after September 30, 1998, if
the Closing has not occurred on or prior to such date; or if there
shall be any law or regulation that makes consummation of the
transactions contemplated by this Agreement illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining a
party from consummating the transactions herein contemplated is entered
and such judgment, injunction, order or decree shall become final and
nonappealable; or
A-13
<PAGE> 43
(iii) by ARK Funds if the shareholders of the Acquired Fund
shall have voted upon and not approved this Agreement and the
transactions herein contemplated.
The party desiring to terminate this Agreement pursuant to clause (ii) or (iii)
shall give notice of such termination to the other party in the manner specified
in Section 6.1.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests and other communications to a
party hereunder shall be in writing (including facsimile or similar writing),
addressed to such party and given at or sent to the following address:
(a) in the case of Govett Funds:
The Govett Funds, Inc.
250 Montgomery Street, Suite 1200
San Francisco, CA 94104
Attention: Secretary
Facsimile: (415) 263-1880
with a copy to:
Regina M. Pisa, P.C.
Goodwin, Procter & Hoar LLP
One Exchange Place
Boston, MA 02109-2881
Facsimile: (617) 523-1231
(b) in the case of ARK Funds:
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
Attention: Secretary
Facsimile: (610) 676-1040
with a copy to:
Alan C. Porter, Esq.
Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, DC 20036-2430
A-14
<PAGE> 44
Facsimile: (202) 223-2085
or such other address or facsimile number as either party may hereafter specify
for the purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section 6.1 and the
appropriate answer back is received, or (ii) if given by any other means, when
delivered at the address specified in this Section 6.1.
6.2 Amendments; Waivers. Any provision of this Agreement may be amended
or waived prior to the Closing if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by each party or, in the case
of a waiver, by the party against which the waiver is to be effective; provided
that after the adoption of this Agreement by the shareholders of the Acquired
Fund, no such amendment or waiver shall, without the further approval of such
shareholders, alter or change any of the terms or conditions of this Agreement
if such alteration or change would adversely affect the shareholders of the
Acquired Fund.
6.3 Successors. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided that no party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the
other party hereto.
6.4 Broker's or Finder's Fees. The parties represent and warrant to
each other that the transactions contemplated by this Agreement have been
negotiated directly between them, without the intervention of any person as a
result of any action by them in such a manner as to give rise to a valid claim
for a brokerage commission, finder's fee or like payment.
6.5 Expenses. The parties hereby acknowledge that First Maryland
Bancorp will pay all expenses incurred in connection with entering into and
carrying out the transactions contemplated by this Agreement, whether or not the
transactions contemplated hereby are consummated. Such expenses include, without
limitation, (i) expenses associated with the preparation and filing of the
Registration Statement; (ii) fees and expenses for registration or qualification
of the Acquiring Fund Shares under the 1933 Act and state securities or "blue
sky" laws; (iii) fees and disbursements of legal counsel and accountants; and
(iv) postage, printing and proxy solicitation costs.
6.6 Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of Maryland.
6.7 Survival. The covenants, agreements, representations and warranties
of the parties contained herein shall not survive, and shall be extinguished by,
the Closing.
6.8 Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
A-15
<PAGE> 45
6.9 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise, understanding, condition or
warranty other than as set forth herein has been made or relied upon by either
party hereto.
6.10 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
6.11 Parties in Interest. Nothing expressed or implied herein is
intended or shall be construed to confer upon any person, other than the parties
hereto, any rights or remedies under or by reason of this Agreement or the
transactions contemplated hereby.
6.12 Limitation of Liability. (a) A copy of the declaration of
trust of ARK Funds is on file with the Secretary of State of the Commonwealth of
Massachusetts, and it is expressly agreed that this instrument is executed on
behalf of ARK Funds by the officers thereof in such capacities, and not
individually, and that the obligations of this instrument are not binding upon
any of the trustees, officers or shareholders of ARK Funds personally, but are
binding only upon the assets and property of ARK Funds.
(b) The parties specifically acknowledge and agree that any
liability under this Agreement, or in connection with the transactions herein
contemplated hereby to the Acquiring Fund or the Acquired Fund, shall be
discharged only out of the assets of the Acquiring Fund or Acquired Fund, as the
case may be, and that no other series of Govett Funds or ARK Funds shall be
liable with respect thereto.
* * *
A-16
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
THE GOVETT FUNDS, INC.
ATTEST:
By ____________________________________
_________________________
ARK FUNDS
ATTEST:
By ____________________________________
________________________
A-17
<PAGE> 47
Appendix B
ARRANGEMENTS WITH SERVICE PROVIDERS
Acquired Fund
AIB Investment Managers Limited ("AIBIM") serves as the investment
adviser to the Acquired Fund and is entitled to receive an investment advisory
fee, which are accrued daily and paid monthly, from the Acquired Fund at the
annual rate described in the fee tables in the Prospectus/Proxy Statement; see
"Comparative Fee Tables". See "Management" in the Prospectus of ARK Funds which
is incorporated herein by reference for additional information regarding AIBIM.
SEI Investments Distribution Co., a wholly-owned subsidiary of SEI
Investments Company, serves as the distributor for the shares of the Acquired
Fund.
Pursuant to the provisions of a distribution plan for the Retail Class
of the Acquired Fund adopted in accordance with Rule 12b-1 under the 1940 Act,
the Acquired Fund may pay a fee to its distributor of up to 0.75% of the average
net assets of the Retail Class of the Acquired Fund. The Board of Trustees has
approved a distribution fee rate for the Retail Class of the Acquired Fund of
0.40%. The distributor may use these distribution fees to compensate securities
dealers and others selling Retail Class shares of the Acquired Fund. Currently,
the distributor is voluntarily waiving all distribution fees for the Retail
Class of the Acquired Fund.
Under shareholder services plans the Acquired Fund may pay shareholder
services fees to investment professionals at an annual rate of up to 0.25% of
the average net assets of the Retail or Institutional Class shares attributable
to their customers for providing ongoing shareholder support services to their
customers with accounts in such class. The Board of Trustees has approved an
annual shareholder services fee rate of 0.15% for the Retail Class and 0.06% for
the Institutional Class. All shareholder services fees for the Retail Class and
the Institutional Class are currently being waived.
SEI Fund Resources ("SFR") provides administrative services to the
Acquired Fund. SEI Investments Financial Management Corporation, a wholly-owned
subsidiary of SEI Investments, is the owner of all beneficial interest in SFR.
For its services, SFR receives a fee, which is calculated daily and paid
monthly, at the annual rate of 0.13% of the aggregate average net assets of the
Acquired Fund. SFR may voluntarily waive all or a portion of its fee from time
to time in its sole discretion. Pursuant to a separate agreement with SFR, FMB
Trust Company, National Association performs sub-administration services on
behalf of the Acquired Fund, for which it receives a fee from SFR at the annual
rate of up to 0.0275% of the Acquiring Fund's aggregate daily net assets. See
"Management" in the Prospectus of ARK Funds which is incorporated herein by
reference for additional information about SFR.
FMB Trust Company, National Association serves as custodian for the
securities and cash of the Acquired Fund. Foreign securities are held by foreign
banks participating in a network coordinated by Bankers Trust Company, which
serves as sub-custodian for the Acquired Fund. SFR provides transfer agent and
related services for the Acquired Fund and has
<PAGE> 48
subcontracted the transfer agency services to State Street Bank and Trust
Company which maintains shareholder accounts and records for the Acquired Fund.
Acquiring Fund
Pursuant to an investment management contract with Govett Funds, and
subject to such policies as the Board of Directors of Govett Funds may
establish, AIB Govett, Inc. ("AIB Govett") provides the Acquiring Fund with
day-to-day management services and makes investment decisions on its behalf in
accordance with the Acquiring Fund's investment policies. Subject to the
supervision of the Board, AIB Govett also oversees the Acquiring Fund's
operations. For these investment management services, the Acquiring Fund pays a
fee monthly to AIB Govett based upon the average net assets of the Acquiring
Fund, as determined at the close of business of each business day during the
month, at the annual rate of 1% of the average daily net assets of the Acquiring
Fund. From its investment management fee, AIB Govett, Inc. pays AIB Govett Asset
Management Limited to provide certain investment subadvisory services for the
Acquiring Fund.
The Institutional Class of Acquiring Fund is not subject to any 12b-1
distribution fees or shareholder services fees.
FPS Broker Services, Inc. is the distributor and principal underwriter
for the Acquiring Fund.
Chase Global Funds Services Company provides administration and
accounting services for the Acquiring Fund. The Chase Manhattan Bank serves as
the Acquiring Fund's global custodian. FPS Services, Inc., a former affiliate of
the Acquiring Fund's distributor, provides transfer agent, shareholder services
agent, and dividend disbursement services to the Acquiring Fund.
B-2
<PAGE> 49
THE GOVETT FUNDS, INC.
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
Item No. Heading
- -------- -------
<S> <C>
10. Cover Page........................................................... Cover Page
11. Table of Contents.................................................... Table of Contents
12. Additional Information About the Registrant.......................... Statement of Additional
Information of The Govett Funds,
Inc. dated April 17, 1998
13. Additional Information About the Company
Being Acquired....................................................... Statement of Additional
Information of ARK Funds dated
February 13, 1998
14. Financial Statements................................................. Cover Page
</TABLE>
<PAGE> 50
THE GOVETT FUNDS, INC.
250 Montgomery Street
San Francisco, California 94104
ARK FUNDS
Oaks, Pennsylvania 19456
STATEMENT OF ADDITIONAL INFORMATION
(Special Meeting of Shareholders of ARK Funds)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Prospectus/Proxy Statement dated _______ __,
1998 for the Special Meeting of shareholders of ARK Funds to be held on _______
__, 1998. Copies of the Prospectus/Proxy Statement may be obtained without
charge by calling ARK Funds at 1-800-ARK-FUND. Unless otherwise indicated,
capitalized terms used herein and not otherwise defined have the same meanings
as are given to them in the Prospectus/Proxy Statement.
Further information about the Acquiring Fund is contained in and
incorporated by reference to the Govett Funds' Statement of Additional
Information dated April 17, 1998, a copy of which is included herewith. The
audited financial statements and related independent auditor's report for the
Acquiring Fund contained in the Annual Report for the fiscal year ended December
31, 1997 are hereby incorporated herein by reference. No other parts of the
Annual Report are incorporated by reference herein.
Further information about the Acquired Fund is contained in and
incorporated by reference to the ARK Funds' Statement of Additional Information
dated February 13, 1998, copies of which are included herewith. The audited
financial statements and related independent auditor's report for the Acquired
Fund contained in the Annual Report for the fiscal year ended April 30, 1997 and
unaudited financial statements for the six months ended December 31, 1997 are
hereby incorporated herein by reference. No other parts of the Annual Report or
Semi-Annual Report are incorporated by reference herein.
The date of this Statement of Additional Information is _______ __,
1998.
<PAGE> 51
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information................................................. 1
Pro Forma Financial Statements...................................... 2
</TABLE>
<PAGE> 52
GENERAL INFORMATION
The shareholders of the ARK International Equity Portfolio of ARK Funds
(the "Acquired Fund") are being asked to approve or disapprove the Agreement and
Plan of Reorganization dated as of _______ __, 1998 (the "Reorganization
Agreement"), between ARK Funds and The Govett Funds, Inc. ("Govett Funds") and
the transactions contemplated thereby. The Reorganization Agreement contemplates
the transfer of the assets to, and the assumption of the stated liabilities of
the Acquired Fund to the Govett International Equity Fund of Govett Funds (the
"Acquiring Fund"), in exchange for full and fractional Institutional Class
shares of the Acquiring Fund (the "Reorganization"). The Acquiring Fund shares
received by the Acquired Fund will have an aggregate net asset value equal to
the aggregate net asset value of the shares of the Acquired Fund that are
outstanding at the Closing Date (as defined in the Reorganization Agreement).
Following the exchange, the Acquired Fund will make a liquidating
distribution of the Acquiring Fund shares to its shareholders. Each shareholder
owning shares of the Acquired Fund at the Closing Date will receive shares of
the Acquiring Fund of equal value, plus the right to receive any unpaid
dividends and distributions that were declared before the Closing Date on shares
in the Acquired Fund.
The Special Meeting of shareholders of ARK Funds to consider the
Reorganization Agreement and the related transactions will be held at [time],
Eastern Time, on _______ __, 1998, at First National Bank of Maryland, 25 South
Charles Street, Baltimore, Maryland. For further information about the
transaction, see the Prospectus/Proxy Statement.
Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling, or distributing securities such as shares
of the Acquiring Fund, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer agent,
or custodian to such an investment company or from purchasing shares of such a
investment company as agent for and upon the order of customers. Banks and bank
affiliates which agree to provide shareholder support services are subject to
such banking laws and regulations. Should legislative, judicial, or
administrative action prohibit or restrict the activities of any such banks or
bank affiliates, including AIB Govett or its affiliates in connection with its
services to the Acquiring Fund, Govett Funds might be required to alter
materially or discontinue its arrangements with such companies and change its
method of operation. It is anticipated, however, that any resulting change in
Govett Funds' method of operation would not affect the Acquiring Fund's net
asset value per share or result in financial loss to any shareholder.
<PAGE> 53
PRO FORMA FINANCIAL STATEMENTS
Govett International Equity Fund
ARK International Equity Portfolio
Introduction to Proposed Reorganization
December 31, 1997
The accompanying unaudited Pro Forma Combining Schedule of Portfolio
Investments, Statement of Assets and Liabilities, and Statement of Operations
reflect the accounts of Govett International Equity Fund and ARK International
Equity Portfolio at December 31, 1997 for the year then ended. These statements
have been derived from each fund's books and records utilized in calculating
daily net asset value at December 31, 1997.
-2-
<PAGE> 54
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- --------------------------------------------------- --------------------------------- -------------------------------------------
GOVETT ARK GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY EQUITY COMBINED EQUITY EQUITY COMBINED
FUND PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
- --------------------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
ARGENTINA - 1.58%
7,000 - 7,000 Telefonica de Argentina ADR $ 260,750 $ - $ 260,750
----------- ----------- -----------
AUSTRALIA - 0.17%
- 1,966 1,966 National Australia Bank - 27,449 27,449
----------- ----------- -----------
AUSTRIA - 0.94%
4,500 - 4,500 Radex-Heraklith 154,970 - 154,970
----------- ----------- -----------
BRAZIL - 2.61%
7,750 - 7,750 Eletrobras ADR 197,913 - 197,913
2,000 - 2,000 Telebras ADR 232,875 - 232,875
----------- ----------- -----------
430,788 - 430,788
----------- ----------- -----------
CHINA - 0.01%
7,000 - 7,000 China North Industries 1,960 - 1,960
----------- ----------- -----------
CROATIA - 0.78%
7,770 - 7,770 Pliva GDR 128,788 - 128,788
----------- ----------- -----------
CZECH REPUBLIC - 0.70%
30,400 - 30,400 Prazske Pivovary 115,960 - 115,960
----------- ----------- -----------
DENMARK - 1.06%
3,000 - 3,000 Spar Nord Holdings 175,025 - 175,025
----------- ----------- -----------
FRANCE - 5.18%
- 320 320 Accor SA - 59,511 59,511
- 560 560 AXA-UAP - 43,343 43,343
1,000 - 1,000 Cap Gemini Sogeti 81,997 - 81,997
2,300 - 2,300 Christian Dior 235,790 - 235,790
2,000 621 2,621 Compagnie Generale des Eaux 279,139 86,694 365,833
- 153 153 Groupe SEB - 21,334 21,334
- 450 450 Total B Compgne - 48,986 48,986
----------- ----------- -----------
596,926 259,868 856,794
----------- ----------- -----------
GERMANY - 9.46%
3,000 - 3,000 Adidas 396,898 - 396,898
- 900 900 Bayer - 33,401 33,401
4,300 - 4,300 Daimler Benz 303,566 - 303,566
- 700 700 Deutsche Bank AG - 48,960 48,960
- 174 174 Mannesmann - 87,358 87,358
2,000 - 2,000 S.A.P. AG-Vorzug 649,490 - 649,490
- 650 650 VEBA - 44,271 44,271
----------- ----------- -----------
1,349,954 213,990 1,563,944
----------- ----------- -----------
GREECE - 0.25%
6,770 - 6,770 Sfakianakis 40,516 - 40,516
----------- ----------- -----------
HONG KONG - 2.44%
- 2,606 2,606 Cheung Kong - 17,068 17,068
114,000 - 114,000 Guangdong Investment 75,764 - 75,764
5,000 1,574 6,574 Hong Kong & Shanghai Bank Holdings 123,242 40,319 163,561
113,000 - 113,000 Hong Kong Ferry Holdings 131,243 - 131,243
327 - 327 Jardine Strategic Holdings 863 - 863
- 2,736 2,736 Swire Pacific A - 15,007 15,007
----------- ----------- -----------
331,112 72,394 403,506
----------- ----------- -----------
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 55
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- --------------------------------------------------- --------------------------------- -------------------------------------------
GOVETT ARK GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY EQUITY COMBINED EQUITY EQUITY COMBINED
FUND PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
- --------------------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HUNGARY - 2.73%
19,000 - 19,000 Euronet Services ADR $ 147,250 $ - $ 147,250
1,000 - 1,000 Gedeon Richter GDR 105,000 - 105,000
30,000 - 30,000 Scala Business Solutions 199,501 - 199,501
----------- ----------- -----------
451,751 - 451,751
----------- ----------- -----------
INDIA - 2.09%
19,000 - 19,000 State Bank of India GDR 345,800 - 345,800
----------- ----------- -----------
ITALY - 4.35%
40,000 - 40,000 Bulgari 203,505 - 203,505
- 11,800 11,800 ENI SPA - 66,942 66,942
2,750 - 2,750 Gucci Group ADR 115,156 - 115,156
40,000 - 40,000 Simint 290,560 - 290,560
- 6,810 6,810 Telecom Italia SPA - 43,525 43,525
----------- ----------- -----------
609,221 110,467 719,688
----------- ----------- -----------
JAPAN - 10.85%
- 3,090 3,090 Asahi Diamond Industrial - 13,471 13,471
- 2,000 2,000 Asahi Glass - 9,500 9,500
4,000 - 4,000 Bridgestone 86,760 - 86,760
7,000 - 7,000 Canon 163,096 - 163,096
- 3,000 3,000 Fujitsu - 32,179 32,179
34,000 - 34,000 Furukawa Electric 145,668 - 145,668
5,000 1,000 6,000 Honda Motor 183,560 36,699 220,259
16,000 - 16,000 Koito Manufacturing 63,767 - 63,767
4,000 - 4,000 Matsumotokiyoshi 153,286 - 153,286
5,000 - 5,000 Matsushita Communication 133,359 - 133,359
8,000 2,000 10,000 Matsushita Electric Industries 117,111 29,268 146,379
- 5,000 5,000 Mitsubishi Heavy Industries - 20,840 20,840
8,000 - 8,000 Mitsui Fudosan 77,256 - 77,256
900 - 900 Nichiei 95,880 - 95,880
7,000 - 7,000 Nomura Securities 93,351 - 93,351
6,000 - 6,000 Omron 93,811 - 93,811
- 300 300 Orix - 20,916 20,916
- 1,000 1,000 Shimachu - 15,706 15,706
- 1,200 1,200 Shinki Co. - 17,469 17,469
- 400 400 Sony Corp - 35,550 35,550
- 2,000 2,000 Sumitomo Electric - 27,276 27,276
9,000 - 9,000 Taiyo Yuden 62,426 - 62,426
- 2,000 2,000 Tokio Marine & Fire Ins. - 22,679 22,679
- 1,000 1,000 Toppan Printing - 13,025 13,025
- 1,000 1,000 Toyota Motor Corp - 28,655 28,655
----------- ----------- -----------
1,469,331 323,233 1,792,564
----------- ----------- -----------
MALAYSIA - 0.08%
- 6,000 6,000 MNI Holdings - 8,185 8,185
- 22,000 22,000 Multi-Purpose Holdings - 5,663 5,663
----------- ----------- -----------
- 13,848 13,848
----------- ----------- -----------
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 56
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- --------------------------------------------------- --------------------------------- -------------------------------------------
GOVETT ARK GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY EQUITY COMBINED EQUITY EQUITY COMBINED
FUND PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
- --------------------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MEXICO - 2.06%
134,000 - 134,000 Controladora Comercial Mexicana $ 173,236 $ - $ 173,236
11,200 - 11,200 Controladora de Farmacias 5,836 - 5,836
4,000 - 4,000 Metalclad Corp. 4,375 - 4,375
2,800 - 2,800 Telefonos de Mexico ADR 156,975 - 156,975
----------- ------------ -----------
340,422 - 340,422
----------- ------------ -----------
NETHERLANDS - 7.78%
- 3,570 3,570 ABN AMRO Holdings - 69,555 69,555
- 1,158 1,158 Ahold - 30,215 30,215
6,000 - 6,000 Cap Gemini 204,473 - 204,473
8,750 1,079 9,829 ING Groep 368,530 45,451 413,981
- 480 480 Royal Dutch Petro - 26,351 26,351
16,000 3,160 19,160 VNU Ver Ned Uitg Bezit 451,360 89,155 540,515
----------- ------------ -----------
1,024,363 260,727 1,285,090
----------- ------------ -----------
NORWAY - 1.65%
18,000 - 18,000 Provida 229,088 - 229,088
2,000 - 2,000 Tandberg 42,785 - 42,785
----------- ------------ -----------
271,873 - 271,873
----------- ------------ -----------
POLAND - 1.14%
9,880 - 9,880 Krosno 62,784 - 62,784
11,279 - 11,279 Zaklady Elektrod Weglowych 124,789 - 124,789
----------- ------------ -----------
187,573 - 187,573
----------- ------------ -----------
RUSSIA - 5.20%
7,000 - 7,000 Mosenergo ADR 261,707 - 261,707
35,000 - 35,000 Surgutneftegaz ADR 357,742 - 357,742
43,500 - 43,500 Trade House GUM ADR 239,920 - 239,920
----------- ------------ -----------
859,369 - 859,369
----------- ------------ -----------
SINGAPORE - 0.78%
20,600 - 20,600 Overseas Union Bank 79,019 - 79,019
23,000 - 23,000 Sembawang Shipyard 49,242 - 49,242
----------- ------------ -----------
128,261 - 128,261
----------- ------------ -----------
SLOVAKIA - 0.14%
3,000 - 3,000 SES AS 23,615 - 23,615
----------- ------------ -----------
SPAIN - 1.62%
50,000 - 50,000 Corp. Financiera Reunida, 267,476 - 267,476
(COFIR) ----------- ------------ -----------
SWEDEN - 2.03%
- 817 817 Atlas Copco, CL A - 24,395 24,395
- 414 414 Electrolux AB - 28,739 28,739
- 941 941 Ericsson (B) - 35,388 35,388
5,000 - 5,000 Oxigene Europe AB 89,422 - 89,422
20,000 - 20,000 PartnerTech AB 148,616 - 148,616
- 298 298 Sandvik AB Sanb.LI - 8,522 8,522
----------- ------------ -----------
238,038 97,044 335,082
----------- ------------ -----------
SWITZERLAND - 7.57%
- 13 13 ABB - ASEA Brown Boveri - 16,331 16,331
- 25 25 Alusuisse-Lonza, REG - 24,012 24,012
- 320 320 Credit Suisse, REG - 59,511 59,511
- 44 44 Nestle SA - 65,938 65,938
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 57
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- --------------------------------------------------- --------------------------------- -------------------------------------------
GOVETT ARK GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY EQUITY COMBINED EQUITY EQUITY COMBINED
FUND PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
- --------------------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SWITZERLAND (CONTINUED)
213 35 248 Novartis $ 345,642 $ 56,788 $ 402,430
- 9 9 Roche Holdings - 89,372 89,372
280 - 280 Sairgroup 383,430 - 383,430
1,300 - 1,300 SMH 175,351 - 175,351
- 24 24 UBS - 34,701 34,701
----------- ------------ -----------
904,423 346,653 1,251,076
----------- ------------ -----------
THAILAND - 0.03%
- 3,000 3,000 Finance One - F - - -
30,000 - 30,000 National Finance & Securities 5,545 - 5,545
----------- ------------ -----------
5,545 - 5,545
----------- ------------ -----------
UNITED KINGDOM - 17.06%
- 13,700 13,700 ASDA Group - 39,930 39,930
- 3,019 3,019 B.A.T. - 27,463 27,463
- 1,157 1,157 Barclays Bank - 30,739 30,739
- 3,000 3,000 Bass - 46,527 46,527
7,300 - 7,300 BOC Group 120,081 - 120,081
13,000 - 13,000 British Airport Authority 106,388 - 106,388
- 4,200 4,200 British Airways - 38,621 38,621
- 5,117 5,117 British Petroleum - 67,218 67,218
16,000 - 16,000 British Telecommunications 125,811 - 125,811
17,626 - 17,626 Carlton Communications 136,135 - 136,135
- 4,130 4,130 Cookson Group - 13,258 13,258
4,500 - 4,500 General Accident 78,016 - 78,016
- 5,707 5,707 General Electric - 36,969 36,969
- 2,000 2,000 GKN - 40,952 40,952
- 2,600 2,600 Glaxo Wellcome - 61,478 61,478
- 3,017 3,017 Granada Group - 46,072 46,072
8,800 - 8,800 Harvey Nichols 27,476 - 27,476
10,000 - 10,000 Legal & General Group 87,424 - 87,424
8,900 5,894 14,794 Lloyds TSB Group 115,102 76,167 191,269
22,000 4,299 26,299 Marks & Spencer 216,555 42,284 258,839
- 3,700 3,700 National Power - 36,453 36,453
- 1,895 1,895 National Westminster - 31,412 31,412
- 5,443 5,443 Prudential Corp - 65,602 65,602
- 3,267 3,267 Railtrack Group - 51,875 51,875
- 4,000 4,000 Royal & Sun Alliance - 40,263 40,263
5,500 - 5,500 RTZ 67,696 - 67,696
- 114 114 Severn Trent - 1,831 1,831
23,100 7,419 30,519 Shell Transport & Trading 167,025 53,602 220,627
13,501 - 13,501 Thames Water 201,118 - 201,118
- 4,500 4,500 TI Group - 34,286 34,286
- 5,474 5,474 Vodafone Group - 39,460 39,460
- 2,204 2,204 Yorkshire Water - 17,516 17,516
10,000 2,234 12,234 Zeneca Group 351,174 78,392 429,566
----------- ------------ -----------
1,800,001 1,018,370 2,818,371
----------- ------------ -----------
TOTAL COMMON STOCKS - 92.32%
(COST $10,128,912 AND
$2,526,782, RESPECTIVELY, FOR A
TOTAL OF $12,655,694) $12,513,811 $ 2,744,043 $15,257,854
----------- ------------ -----------
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 58
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
- --------------------------------------------------- --------------------------------- -------------------------------------------
GOVETT ARK GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY EQUITY COMBINED EQUITY EQUITY COMBINED
FUND PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
- --------------------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Preferred Stocks
FINLAND - 1.72%
4,000 - 4,000 Oy Nokia AB $ 283,987 $ - $ 283,987
----------- ------------ -----------
GERMANY - 2.53%
63 - 63 Daimler Benz Conv 6,111 - 6,111
- 140 140 GEA AG - 45,847 45,847
200 - 200 Porsche 335,751 - 335,751
- 96 96 SAP - 31,182 31,182
----------- ------------ -----------
341,862 77,029 418,891
----------- ------------ -----------
RUSSIA - 1.24%
6,600 - 6,600 Lukoil Holding ADR 204,860 - 204,860
----------- ------------ -----------
TOTAL PREFERRED STOCKS - 5.50%
(COST $604,014 AND $80,318,
RESPECTIVELY, FOR A
TOTAL OF $684,332) 830,709 77,029 907,738
----------- ------------ -----------
WARRANTS AND RIGHTS
MALAYSIA - 0.01%
8,750 - 8,750 Commerce Asset Holding Warrants,
expire 03/16/02 1,260 - 1,260
----------- ------------ -----------
TOTAL WARRANTS AND RIGHTS - .01%
(COST $5,308) 1,260 - 1,260
----------- ------------ -----------
PRINCIPAL AMOUNT
- ---------------------------------------------------
UNITED STATES - 2.17%
$ - $ 95,000 $ 95,000 US Treasury Bill, Discount,
1/2/98 maturity - 95,000 95,000
- 265,000 265,000 US Treasury Bill, Discount,
1/22/98 maturity - 264,250 264,250
----------- ------------ -----------
TOTAL U.S. TREASURY BILLS -
2.17% (COST $359,200) - 359,250 359,250
----------- ------------ -----------
TOTAL INVESTMENTS 100.00%
(COST $10,738,234 AND
$2,966,300, RESPECTIVELY,
FOR A TOTAL OF $13,704,534) $13,345,780 $ 3,180,322 $16,526,102
=========== ============ ===========
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 59
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GOVETT ARK
INTERNATIONAL INTERNATIONAL PRO FORMA
EQUITY FUND EQUITY PORTFOLIO COMBINED
----------- ---------------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value - (see accompanying Schedule of
Investments) $ 13,345,780 $ 3,170,322 $ 16,516,102
Cash 291,942 (498) 291,444
Foreign currency, at value 419,772 -- 419,772
Receivable from:
Securities sold -- 5,033 5,033
Net open forward currency contracts 32,164 89,549 121,713
Fund shares sold 11,691 97 11,788
Dividends and interest 27,698 12,733 40,431
Other assets 12,449 10,015 22,464
------------ ------------ ------------
Total assets 14,141,496 3,287,251 17,428,747
------------ ------------ ------------
LIABILITIES:
Payable for:
Fund shares repurchased 87,175 87,175
Distributions declared -- 14,399 14,399
Deferred foreign country taxes 212 212
Investment manager 11,942 11,942
Accrued expenses and other liabilities 89,820 17,802 107,622
------------ ------------ ------------
Total liabilities 189,149 32,201 221,350
------------ ------------ ------------
Net assets $ 13,952,347 $ 3,255,050 $ 17,207,397
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in-capital $ 11,045,187 $ 3,020,313 $ 14,065,500
Undistributed net investment income (loss) (57,234) (22,250) (79,484)
Accumulated net realized gain (loss) on investments and
foreign currency transactions 335,009 (36,965) 298,044
Net unrealized appreciation (depreciation) on
investments, forward currency contracts 2,629,385 293,952 2,923,337
and net other assets (net of accrued foreign country
tax unrealized appreciation)
------------ ------------ ------------
Net assets (consists of $ 13,952,223 and $ 3,255,174 in
Retail and Institutional Class, respectively in the
proforma combined) $ 13,952,347 $ 3,255,050 $ 17,207,397
============ ============ ============
Shares outstanding 1,279,859 76,706 1,279,859
============ ============ ============
Net Asset Value and redemption price per Retail Class
share (a) $ 10.90 $ 10.07 $ 10.90
============ ============ ============
Offering price per share (net asset value divided by
95.05%, 97% and 95.05%, respectively) $ 11.47 $ 10.38 $ 11.47
============ ============ ============
Shares outstanding 11 246,354 297,333
============ ============ ============
Net Asset Value and redemption price per Institutional
Class share (a) $ 10.95 $ 10.08 $ 10.95
============ ============ ============
Offering price per share $ 10.95 $ 10.08 $ 10.95
============ ============ ============
Cost of investments $ 10,738,234 $ 2,986,300 $ 13,724,534
Cost of foreign currency $ 429,133 $ -- $ 429,133
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 60
GOVETT INTERNATIONAL EQUITY FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GOVETT ARK
INTERNATIONAL INTERNATIONAL
EQUITY EQUITY PRO FORMA
FUND PORTFOLIO ADJUSTMENTS COMBINED
---- --------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest* $ 1,367 $ 19,442 $ 20,809
Dividends* 343,751 63,557 407,308
--------- --------- --------- ---------
Total investment income 345,118 82,999 -- 428,117
========= ========= --------- ---------
EXPENSES:
Management fee 216,129 29,715 7,430(b) 253,274
Custody and administration fees 95,477 17,733 1,404(c) 114,614
12b-1 fee Class A/Retail Class 108,102 2,038 110,140
Professional fees 53,534 29 (29)(e) 53,534
Transfer agency fee 95,656 80 95,736
Registration and filing fees 25,955 7,401 33,356
Directors' fees and expenses 27,625 72 (72)(e) 27,625
Amortization of organization costs 226 226
Other 28,791 15,805 (15,805)(e) 28,791
--------- --------- --------- ---------
Total expenses 651,495 72,873 (7,072) 717,296
--------- --------- --------- ---------
Less: Expenses reimbursable and fees waived by
the Manager (110,750) (15,267) 7,398(d) (118,619)
--------- --------- --------- ---------
Net operating expenses 540,745 57,606 326 598,677
--------- --------- --------- ---------
Interest and other non-operating expenses 23,478 23,478
--------- --------- --------- ---------
Net investment income (loss) (219,105) 25,393 (326) (194,038)
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS):
Investment transactions 344,772 277,405 622,177
Foreign Currency transactions 198,029 (27,732) 170,297
--------- --------- --------- ---------
Net realized gain 542,801 249,673 792,474
--------- --------- --------- ---------
Net unrealized appreciation (depreciation) on:
Investments 37,198 (39,434) (2,236)
Foreign currency transactions (127,338) 88,797 (38,541)
--------- --------- --------- ---------
Net unrealized appreciation (depreciation) during
the period (90,140) 49,363 (40,777)
--------- --------- --------- ---------
Net realized and unrealized gain 452,661 299,036 751,697
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ 233,556 $ 324,429 (326) $ 557,659
--------- ========= ========= =========
*Net of foreign taxes withheld of $ 24,690 $ 5,041 $ 29,731
</TABLE>
See accompanying notes to the pro forma combining financial statements
<PAGE> 61
GOVETT INTERNATIONAL EQUITY FUND
NOTES TO THE PRO FORMA COMBINING FINANCIAL STATEMENTS
DECEMBER 31,1997
(Unaudited)
Pro Forma Financial information is intended to provide shareholders of Govett
International Equity Fund and ARK International Equity Portfolio with
information about the proposed merger by indicating how the merger might have
affected the information had the merger been consummated for the year ended
December 31, 1997.
The pro forma combining statement of assets and liabilities and results as of
December 31, 1997 and statement of operations for the year ended December 31,
1997 have been prepared to reflect the merger of Govett International Equity
Fund and ARK International Equity Portfolio after giving effect to pro forma
adjustments described in the notes below.
(a) The acquisition by Govett International Equity Fund of ARK International
Equity Portfolio and the issuance of Govett International Equity Fund's
Institutional Class shares with a net asset value equal to the net asset
value of all of the outstanding shares of ARK International Equity
Portfolio's Retail and Institutional Class shares in exchange for all
outstanding shares of ARK International Equity Portfolio.
(b) Investment advisory fees were adjusted to reflect the application of the
fee structure in effect as of December 31, 1997 for Govett International
Equity Fund (1.00% of average net assets).
(c) Administration fees were adjusted to reflect the application of the fee
structure in effect as of December 31, 1997 for Govett International Equity
Fund (.12% of average net assets subject to a $500,000 minimum charge on
The Govett Funds as a whole).
(d) Waiver of investment advisory fees was adjusted to reflect the advisor's
commitment to voluntarily waive fees in excess of 2.50% and 1.75% for
Govett International Equity Fund's Retail and Institutional Class,
respectively.
(e) Actual expenses incurred by the individual funds, for various expenses
included on a pro forma basis, were reduced to reflect estimated savings
arising from the merger.
<PAGE> 62
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article VIII of the Articles of Incorporation filed as Exhibit 1
to the Registration Statement is incorporated herein by
reference. The Registrant has a liability under which the
Registrant and its directors, officers and affiliated persons
are insured against certain liabilities.
ITEM 16. EXHIBITS
(1) Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit 1 to the
Registration Statement on Form N-1A (File Nos.
33-37783 and 811-6229) ("Form N-1A").
(2) By-Laws of the Registrant are incorporated by
reference to Exhibit 2 to the Registrant's Form
N-1A.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is
included in Part A.
(5) Not applicable.
(6) (a) Investment Management Agreement dated December
24, 1997, between the Registrant and AIB Govett,
Inc. is incorporated by reference to Exhibit 5a to
Registrant's Form N-1A.
(b) Investment Subadvisory Contract dated December 24,
1997 between AIB Govett, Inc. and AIB Govett Asset
Management Limited is incorporated by reference to
Exhibit 5b to Registrant's Form N-1A.
(7) Distribution Agreement dated February 28, 1997,
between the Registrant and FPS Broker Services,
Inc. is incorporated herein by reference to Exhibit
6 to Registrant's Form N-1A.
(8) Not applicable.
(9) Custodian Agreement dated December 16, 1991,
between the Registrant and The Chase Manhattan Bank
is incorporated herein by reference to Exhibit 8 to
Registrant's Form N-1A.
<PAGE> 63
(10) (a) Distribution Plan and Service Plan is incorporated
herein by reference on Exhibit 15 to Registrant's
Form N-1A.
(b) Rule 18f-3 Plan is incorporated herein by reference
to Exhibit 18 to Registrant's Form N-1A.
(11) Opinion and consent of legal counsel is
incorporated herein by reference to Exhibit 10 to
Registrant's Form N-1A.
(12) Form of opinion and consent of Piper & Marbury
L.L.P. as to tax matters.**
(13) Transfer Agency and Service Agreement dated
February 28, 1997, between the Registrant and FPS
Services, Inc. is incorporated herein by reference
to Exhibit 9 to Registrant's Form N-1A.
(14) (a) (1) Consent of Price Waterhouse LLP, independent
auditors of the Registrant.*
(2) Consent of Coopers & Lybrand L.L.P.,
independent auditors of the Registrant.*
(b) Consent of KPMG Peat Marwick LLP, independent
auditors of ARK Funds.*
(15) Not applicable.
(16) Powers of Attorney of Directors of the Registrant
is incorporated herein by reference to
Post-Effective Amendment No. 22 to Registrant's
Form N-1A.
(17) (a) Form of Proxy Card.*
(b) Prospectus of the Registrant dated April 17, 1998,
Institutional Class Prospectus as supplemented May
22, 1998, is incorporated herein by reference to
Post-Effective Amendment No. 22 to Registrant's
Form N-1A.
(c) Statement of Additional Information of the
Registrant dated April 17, 1998 is incorporated
herein by reference to Post-Effective Amendment No.
22 to Registrant's Form N-1A.
(d) Prospectus of ARK Funds dated February 13, 1998 is
incorporated herein by reference to Post-Effective
Amendment No. 17 to ARK Funds' Registration
Statement on Form N-1A.
-2-
<PAGE> 64
(e) Statement of Additional Information of the ARK
Funds dated February 13, 1998 is incorporated
herein by reference to Post-Effective Amendment No.
17 to ARK Funds' Registration Statement on Form
N-1A.
(f) Annual Report of The Govett Funds, Inc. for the
fiscal year ended December 31, 1997 is incorporated
herein by reference to the Registrant's filing with
the SEC pursuant to Rule 30b-2 under the Investment
Company Act of 1940.
(g) Annual Report of the ARK Funds for the fiscal year
ended April 30, 1997 is incorporated herein by
reference to Registrant's filing with the SEC
pursuant to Rule 30b-2 under the Investment Company
Act of 1940.
(h) Semi-Annual Report of the ARK Funds for the six
months ended October 31, 1997 is incorporated
herein by reference to Registrant's filing with the
SEC pursuant Rule 30b-2 under the Investment
Company Act of 1940.
- -----------------------
* Filed herewith.
** To be filed by amendment.
-3-
<PAGE> 65
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
<PAGE> 66
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant in the City of San Francisco, and
State of California on the 27th day of May, 1998.
THE GOVETT FUNDS, INC.
By: /s/ SIR VICTOR GARLAND
-------------------------------------
Sir Victor Garland, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacity on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ ELLIOTT L. ATAMIAN
- ----------------------------------
Elliott L. Atamian * Director
/s/ PATRICK CUNNEEN
- ----------------------------------
Patrick Cunneen * Chairman, Director
/s/ SIR VICTOR GARLAND
- ----------------------------------
Sir Victor Garland President, Director
/s/ COLIN KREIDEWOLF
- ----------------------------------
Colin Kreidewolf Treasurer (Principal Financial and
Accounting Officer)
/s/ JAMES M. OATES
- ----------------------------------
James M. Oates * Director
/s/ FRANK R. TERZOLO
- ----------------------------------
Frank R. Terzolo * Director
*By: /s/ ALICE L. SCHULMAN May 27, 1998
----------------------
Alice L. Schulman,
Attorney-in-Fact
</TABLE>
-2-
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses/Proxy
Statement and Statement of Additional Information constituting parts of this
registration statement on Form N-14 (the "Registration Statement") of our report
dated February 21, 1997, relating to the statement of changes in net assets for
the year ended December 31, 1996 and the financial highlights for each of the
four years ended December 31, 1996 appearing in the December 31, 1997 Annual
Report of The Govett Funds, Inc., which are also incorporated by reference into
the Registration Statement. We also consent to the reference to us under the
heading "Financial Highlights" in the Institutional Class Shares Prospectuses of
The Govett Funds, Inc. dated April 17, 1998, incorporated by reference into the
Prospectus/Proxy Statement.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
May 26, 1998
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this registration
statement on Form N-14 (the "Registration Statement") of our report dated
February 20, 1998, relating to the financial statements and financial highlights
for the year ended December 31,1997 appearing in the December 31, 1997 Annual
Report to Shareholders of The Govett Funds, Inc., which are also incorporated by
reference into the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 26, 1998
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
ARK Funds
We consent to the use of our report dated June 6, 1997, incorporated herein by
reference in this Registration Statement on Form N-14.
KPMG Peat Marwick LLP
Boston, Massachusetts
May 27, 1998
<PAGE> 1
Exhibit 17(a)
ARK FUNDS
ARK INTERNATIONAL EQUITY PORTFOLIO
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
This proxy is solicited on behalf of the Board of Trustees of ARK Funds
for use at a Special Meeting of the Shareholders of the ARK International Equity
Portfolio to be held on _______, 1998 at __ o'clock a.m.
(Eastern Time) at 25 South Charles Street, Baltimore, Maryland.
The undersigned hereby appoints _______________ and ______________, and
each of them, attorneys and proxies of the undersigned each with the power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the above-referenced Special Meeting of Shareholders, and at any adjournment
thereof, casting votes according to the number of shares of the series which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present, hereby
revoking any prior proxy to vote at such Special Meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
You are encouraged to specify your choices by marking the appropriate
box, SEE REVERSE SIDE. The Proxies cannot vote your shares unless you sign and
return this card.
(continued and to be SIGNED on the other side)
FOLD AND DETACH HERE
-3-
<PAGE> 2
Please mark your
vote as in this example
|X|
ARK INTERNATIONAL EQUITY PORTFOLIO
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Prospectus/Proxy Statement dated ____________, 1998.
1. To approve an Agreement and Plan of Reorganization (the "Reorganization
Agreement"), between the ARK International Equity Portfolio (the "Acquired
Fund") and Govett International Equity Fund (the "Acquiring Fund"), and the
transactions contemplated thereby, including: (a) the transfer of all of
the assets and stated liabilities of the Acquired Fund to the Acquiring
Fund in exchange for shares of the Acquiring Fund; (b) the distribution of
the Acquiring Fund shares so received by an Acquired Fund pro rata to
shareholders of the Acquired Fund; and (c) the termination of the Acquired
Fund.
FOR AGAINST ABSTAIN
| | | | | |
2. To consider and act upon such other business as may properly come before
the Special Meeting and any adjournments thereof.
FOR AGAINST ABSTAIN
| | | | | |
This Proxy, if properly executed, will be voted in accordance with the
undersigned's direction as set forth herein. If no direction is made, this
Proxy will be voted FOR Proposal 1. This Proxy may be revoked in writing
prior to its exercise. The undersigned hereby revokes any proxies
heretofore given to vote upon or act with respect to such shares.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR HEREON. CORPORATE OR
PARTNERSHIP PROXIES SHOULD BE SIGNED IN FULL
CORPORATE OR PARTNERSHIP NAME BY AN
AUTHORIZED OFFICER. JOINT OWNERS SHOULD
EACH SIGN PERSONALLY, WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE YOUR FULL TITLE AS SUCH.
Dated:
--------------------------------------,
1998
--------------------------------------------
Signature
--------------------------------------------
Signature (see note above)
IMPORTANT: PLEASE SIGN, DATE AND RETURN
PROMPTLY.
FOLD AND DETACH HERE
THIS PROXY CARD IS ONLY VALID WHEN SIGNED AND DATED.
-4-
