<PAGE> 1
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE PAYDEN & RYGEL INVESTMENT GROUP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(l) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identifying the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
The Payden & Rygel Investment Group
333 South Grand Avenue, 32nd Floor
Los Angeles, California 90071
October 9, 1998
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
the Payden & Rygel Global Balanced Fund, Payden & Rygel International Equity
Fund and Payden & Rygel European Growth & Income Fund (each, a "Fund"), each of
which is a separate series of The Payden & Rygel Investment Group (the
"Company"), to be held at the at the above address on Monday, November 9, 1998,
at 10:00 a.m., Pacific Time.
AT THIS MEETING, THE SHAREHOLDERS OF EACH FUND WILL BE ASKED TO RATIFY A
NEW SUB-ADVISORY AGREEMENT FOR THAT FUND, SUBSTITUTING METZLER-PAYDEN, LLC
("METZLER/PAYDEN") FOR SCOTTISH WIDOWS INVESTMENT MANAGEMENT LIMITED AS
SUB-ADVISER TO THE FUND. METZLER/PAYDEN IS A JOINT VENTURE BETWEEN PAYDEN &
RYGEL, WHICH IS THE ADVISER TO EACH FUND, AND METZLER ASSET MANAGEMENT GMBH, AN
AFFILIATE OF B. METZLER SEEL. SOHN & CO. HOLDING AG ("METZLER") OF FRANKFURT,
GERMANY, A MAJOR GERMAN FINANCIAL INSTITUTION. THE BOARD OF TRUSTEES OF THE
COMPANY HAS CONCLUDED THAT APPOINTING METZLER/PAYDEN AS SUB-ADVISER TO EACH FUND
WOULD BE IN THE BEST INTEREST OF EACH FUND AND ITS SHAREHOLDERS AND RECOMMENDS
THAT YOU VOTE "FOR" THE PROPOSAL ON THE PROXY CARD INCLUDED WITH YOUR PROXY
STATEMENT.
The change will not affect the advisory fees paid by each of the Funds,
and we believe that it will permit closer integration of, and oversight by, the
Adviser to each of the Funds, Payden & Rygel, in the investment process for each
Fund. Details of the proposal are contained in the accompanying Proxy Statement,
which we urge you to read. Your prompt response will ensure that your shares are
counted at the meeting, that a quorum is present at the meeting to conduct
business and that the expense of additional solicitation of proxies from
shareholders can be avoided.
Your continued support is appreciated.
Sincerely,
Joan A. Payden
Chairman and Chief Executive Officer
PLEASE FILL IN, DATE, SIGN AND
PROMPTLY MAIL THE ENCLOSED PROXY
<PAGE> 3
THE PAYDEN & RYGEL INVESTMENT GROUP
(A MASSACHUSETTS BUSINESS TRUST)
333 South Grand Avenue, 32nd Floor, Los Angeles, California 90071
NOTICE OF A SPECIAL MEETING OF THE SHAREHOLDERS
PAYDEN & RYGEL GLOBAL BALANCED FUND
PAYDEN & RYGEL INTERNATIONAL EQUITY FUND
PAYDEN & RYGEL EUROPEAN GROWTH & INCOME FUND
TO BE HELD ON MONDAY, NOVEMBER 9, 1998
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of each of the Payden & Rygel Global Balanced Fund, Payden & Rygel
International Equity Fund and Payden & Rygel European Growth & Income Fund
(each, a "Fund"), each of which is a separate series of The Payden & Rygel
Investment Group (the "Company"), will be held at the Company's offices at 333
South Grand Avenue, 32nd Floor, Los Angeles, California 90071, on Monday,
November 9, 1998, at 10:00 a.m. (Pacific Time). The Meeting will be held for the
following purposes:
1. To ratify a new Sub-Advisory Agreement with respect to each Fund; and
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on September 30,
1998, as the record date for the determination of shareholders of each Fund
entitled to receive notice of and to vote at the Meeting or any adjournment
thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE POSTAGE
PREPAID ENVELOPE PROVIDED WITH THE PROXY STATEMENT. YOUR PROXY IS REVOCABLE AND
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT THAT YOU ATTEND THE
MEETING.
By Order of the Board of Trustees,
Edward S. Garlock, Secretary
October 9, 1998
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IMPORTANT
YOU MAY HELP AVOID THE EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A
QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED
AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
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<PAGE> 4
THE PAYDEN & RYGEL INVESTMENT GROUP
333 SOUTH GRAND AVENUE, 32ND FLOOR, LOS ANGELES, CALIFORNIA 90071
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
PAYDEN & RYGEL GLOBAL BALANCED FUND
PAYDEN & RYGEL INTERNATIONAL EQUITY FUND
PAYDEN & RYGEL EUROPEAN GROWTH & INCOME FUND
NOVEMBER 9, 1998
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The enclosed Proxy is being solicited by the Board of Trustees of The
Payden & Rygel Investment Group, (the "Company") for use at the Special Meeting
of Shareholders (the "Meeting") of each of the Payden & Rygel Global Balanced
Fund, Payden & Rygel International Equity Fund and Payden & Rygel European
Growth & Income Fund (each, a "Fund"), each of which is a separate series of the
Company, to be held at the Company's principal office at 333 South Grand Avenue,
32nd Floor, Los Angeles, California 90071, on Monday. November 9, 1998, at 10:00
a.m. (Pacific Time), or at any adjournment or adjournments thereof.
Every properly executed Proxy returned in time to be voted at the
Meeting will be voted as specified with respect to the proposal to ratify a new
Sub-Advisory Agreement (the "Proposal"). If no specification is made, the Proxy
will be voted in favor of the proposal. Anyone giving a Proxy may revoke it
prior to its exercise by filing with the Company a written notice of revocation,
by delivering a duly executed Proxy bearing a later date, or by attending the
Meeting and voting in person.
The cost of the Proxies and related material will be borne by each Fund.
In addition to solicitation by mail, Proxies may be solicited by telephone,
telegram or otherwise and by officers and employees of the Funds' adviser,
Payden & Rygel (the "Adviser"), the Funds' distributor, Payden & Rygel
Distributors, or the Company, in each case without additional compensation.
The Proxy Statement and the accompanying form of Proxy are first being
mailed to shareholders on or about October 9, 1998.
A shareholder's interest in any of the Funds is represented by shares of
beneficial interest ("Shares") issued by the Company with respect to that Fund.
At the close of business on September 30, 1998, the record date fixed by the
Board of Directors for the determination of shareholders of each Fund entitled
to notice of and to vote at the Meeting, the outstanding Shares of each Fund
were as follows:
<PAGE> 5
<TABLE>
<CAPTION>
Fund Shares Outstanding
- ---- ------------------
<S> <C>
Payden & Rygel Global Balanced Fund
Payden & Rygel International Equity Fund
Payden & Rygel European Growth & Income Fund
</TABLE>
For each Fund, each outstanding Share of the Fund is entitled to one vote for
each full Share of stock and a fractional vote for each fractional Share of
stock.
As of the record date, the following persons owned of record more than
5% of the outstanding Shares of one or more of the Funds. The Company has no
information regarding the beneficial ownership of such Shares:
Payden & Rygel Global Balanced Fund
[Shareholder name and address, number of shares, percentage ownership]
Payden & Rygel International Equity Fund
[Shareholder name and address, number of shares, percentage ownership]
Payden & Rygel European Growth & Income Fund
[Shareholder name and address, number of shares, percentage ownership]
As of the record date, no other person owned of record more than 5% of the
outstanding Shares of any of the Funds. As of the record date, the officers and
directors of the Company as a group beneficially owned approximately: % of the
outstanding Shares of the Payden & Rygel Global Balanced Fund, % of the
outstanding Shares of the Payden & Rygel International Equity Fund, and % of
the outstanding Shares of the Payden & Rygel European Growth & Income Fund.
If a quorum is not present at the Meeting, or if a quorum is present but
sufficient votes to approve the Proposal are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the approval of a
majority of those Shares represented at the Meeting in person or by proxy. The
persons named as proxies will vote those proxies that they are entitled to vote
FOR the Proposal in favor of any such adjournment, and will vote those proxies
required to be voted AGAINST the Proposal against any such adjournment.
2
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THE PROPOSAL - TO RATIFY THE NEW SUB-ADVISORY AGREEMENT
At the Meeting, the shareholders of each of the Funds will be asked to
ratify a new sub-advisory agreement (the "New Agreement") which has been
approved by the Board of Trustees and became effective with respect to each Fund
on October 1, 1998, subject to ratification by the shareholders of the Fund. The
New Agreement substitutes Metzler-Payden, LLC ("Metzler/Payden") for Scottish
Widows Investment Management Limited ("SWIM") as Sub-adviser to the Funds. As
described in greater detail below under "Background Information," Metzler/Payden
is a joint venture between Payden & Rygel, the Adviser to each of the Funds, and
Metzler Asset Management GmbH, an affiliate of B. Metzler seel. Sohn & Co.
Holding AG ("Metzler") of Frankfurt, Germany, a major German financial
institution. Based on its consideration of a number of factors, as described
below, the Board of Trustees of the Company is proposing that the shareholders
of each Fund ratify the New Agreement. The New Agreement is attached as Exhibit
A to this Proxy Statement.
The terms of the New Agreement are identical in all material respects to
the existing Subadvisory Agreement between the Adviser and SWIM, dated December
5, 1996 (the "1996 Agreement"), for the Payden & Rygel Global Balanced Fund and
the Payden & Rygel International Equity Fund, and the existing Subadvisory
Agreement between the Adviser and SWIM, dated June 27, 1997 (the "1997
Agreement"), for the Payden & Rygel European Growth & Income Fund, except for
its effective date and the fees to be paid Metzler/Payden by the Adviser.
Further information concerning the New Agreement is found below under
"Background Information."
The 1996 Agreement was approved by the initial shareholder of the Global
Balanced Fund and the International Equity Fund on December 5, 1996. The 1997
Agreement was approved by the initial shareholder of the European Growth &
Income Fund on June 27, 1997.
At a meeting held on September 3, 1998, and called for the purpose of
voting on such actions, the Board of Trustees of the Company, including a
majority of the Trustees who are not "interested persons" of the Company as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")
approved (a) substituting Metzler/Payden for SWIM as Sub-adviser to each of the
Funds, effective October 1, 1998, and (b) the New Agreement with Metzler/Payden
with respect to each of the Funds, subject to the ratification of the New
Agreement by the respective shareholders of each of the Funds.
In connection with their approval of the New Agreement, the Board of
Trustees considered management's and the Adviser's recommendation to approve the
change in Sub-adviser, as well as its determination that each of the Funds would
achieve a number of benefits by making such change. Such benefits include closer
integration of, and oversight by, Payden & Rygel of the investment process for
each of the Funds; a more stable, long-term partner for the investment
management of each of the Funds; and the potential increase in the asset base of
each Fund by taking advantage of potential investors introduced by Metzler.
Based on the consideration of these benefits, as well as such other factors as
the quality of the professional
3
<PAGE> 7
personnel engaged in Metzler/Payden's investment advisory business, and the fact
that there will be no change in the fee paid by each Fund for the investment
advisory services provided by the Adviser and Metzler/Payden, the Board of
Trustees concluded that substituting Metzler/Payden in place of SWIM as
Sub-adviser to each Fund would be in the best interest of each Fund and its
shareholders.
REQUIRED VOTE. As approved by the Board of Trustees on September 3,
1998, and as permitted by the regulations under the 1940 Act, Metzler/Payden has
been acting as Sub-adviser to each of the Funds pursuant the New Agreement since
October 1, 1998. However, the regulations under the 1940 Act provide that
Metzler/Payden's continued service as Sub-adviser for each of the Funds requires
the affirmative vote of a "majority of the outstanding voting securities" of the
Fund no later than January 29, 1999. Under the 1940 Act, this means approval by
the lesser of (a) 67% or more of the voting securities of the Fund present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy thereat, or (b) more than 50% of the
outstanding voting securities of the Fund.
Approval of the New Agreement with respect to each Fund is not
conditioned on approval of the New Agreement by the other Funds. If the
shareholders of a Fund do not ratify the New Agreement, the Board of Trustees
will take such further action as it may deem to be in the best interests of the
shareholders, which may include re-proposing the New Agreement to the
shareholders of the Fund, direct management of the Fund by Payden & Rygel, or
retention of another Sub-adviser.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS RATIFICATION OF THE NEW AGREEMENT
WITH METZLER/PAYDEN.
--------------------------------------
BACKGROUND INFORMATION
DESCRIPTION OF THE NEW AGREEMENT. Under the terms of the New Agreement,
Metzler/Payden will provide each of the Funds with portfolio management services
subject to the supervision and direction of the Adviser and the Company's Board
of Trustees and in accordance with the policies stated in the Company's SEC
Registration Statement and governing securities laws and regulations. These
services include investment research and management, determination of what
securities to purchase, retain or sell, and placement of orders for execution of
transactions.
Sub-adviser Compensation.. Each of the Funds pays the Adviser a monthly
fee at the following annual rate: International Equity Fund - 0.60% of the first
$1 billion of average daily net assets of the Fund, and 0.40% thereafter; Global
Balanced Fund - 0.50% of the first $1 billion of average daily net assets of the
Fund, and 0.40% thereafter; and European Growth & Income Fund - 0.50% of the
first $2 billion of average daily net assets of the Fund, and 0.40% thereafter.
Under the 1996 Agreement and the 1997 Agreement, the Adviser paid SWIM (a) for
each of the International Equity Fund and Global Balanced Fund, 0.40% of the
first $1 billion of the average daily net assets of the Fund's assets allocated
to SWIM, and 0.30% thereafter, and (b) for the
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<PAGE> 8
European Growth & Income Fund, 50% of the advisory fee earned and received by
the Adviser. Such fees were correspondingly reduced on a pro rata basis by any
reduction in the advisory fee paid to the Adviser as a result of any voluntary,
statutory or regulatory limitation on investment company expenses. The aggregate
compensation paid to SWIM by the Adviser with respect to each of the Funds for
the fiscal year ending October 31, 1997 pursuant to the 1996 Agreement and the
1997 Agreement was as follows: International Equity Fund - $________, ________;
Global Balanced Fund - $__,____; European Growth & Income Fund - $__,____. All
of these fees were paid by the Adviser and were not separate expenses of any of
the Funds.
Under the New Agreement, the Adviser will pay to Metzler/Payden with
respect to each Fund as compensation for Metzler/Payden's services to each Fund
during the term of the New Agreement a monthly fee at the following annual
rates:
(a) For the period from October 1, 1998 through the shareholder vote at
the Meeting: The same fee which would have been paid to SWIM.
(b) For the period following the shareholder vote at the Meeting: 100%
of the advisory fee earned and received by the Adviser for the Fund
in question. Such fees will be paid by the Adviser (and not by the
Company) and will be correspondingly reduced on a pro rata basis by
any reduction in the fees paid to the Adviser as a result of any
voluntary, statutory or regulatory limitation on investment company
expenses.
Pursuant to its terms, the New Agreement commenced on October 1, 1998,
with the termination of SWIM and the appointment of Metzler/Payden as
Sub-adviser by the Board of Trustees of the Company. Assuming shareholder
ratification of the New Agreement at the Meeting, the New Agreement will remain
in effect for an initial two-year period and will continue in full force and
effect for periods of one year thereafter so long as such continuance with
respect to each of the Funds is approved at least annually (a) by either the
Trustees of the Company, or by vote of a majority of the outstanding voting
Shares (as defined in the 1940 Act) of such Fund, and (b) in either event by the
vote of a majority of the Trustees of the Company who are not parties to the New
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The New Agreement may be terminated at any time without penalty by the
Company or the Adviser on 60 days' prior written notice or by Metzler/Payden on
120 days' prior written notice. The New Agreement will terminate automatically
in the event of its "assignment" (as defined in the 1940 Act).
INFORMATION REGARDING THE PROPOSED SUB-ADVISER. Metzler-Payden, LLC is
located at 333 South Grand Avenue, 31st Floor, Los Angeles, California 90071. It
is a joint venture between Payden & Rygel, the Adviser to the Funds, and Metzler
Asset Management GmbH, an affiliate of B. Metzler seel. Sohn & Co. Holding AG
("Metzler") of Frankfurt, Germany, a major German financial institution. It is
owned 50% by Payden & Rygel and 50% by MP&R Ventures, Inc. a Metzler affiliate.
Metzler Asset Management is one of the leading investment managers in
Germany, managing assets totaling over DM11 billion for institutional clients
and mutual funds, including
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<PAGE> 9
European equity and balanced funds. The Adviser has served as the investment
adviser to each of the Funds since their inception and has more than $27 billion
in assets under management, including over $5 billion in global securities.
Employees of the Adviser and of one or more of the Metzler affiliates serve in
equal numbers on Metzler/Payden's Investment Policy Committee, and based on SEC
regulation and practice, are deemed to be associated persons of Metzler/Payden.
In addition, their employees provide investment advisory and other services on
behalf of Metzler/Payden. The Investment Policy Committee is responsible for
setting the broad investment parameters or policies applicable to each of the
firm's clients, including the Funds. Metzler/Payden does not currently act as
investment adviser to any other investment company.
Retention of Metzler/Payden did not change the investment process
applicable to the European Growth & Income Fund, and did not significantly
change the investment process applicable to the Global Balanced Fund.
With respect to the International Equity Fund, the Adviser and
Metzler/Payden have shifted the investment process somewhat from the previous,
primarily bottom up, approach. The selection of the European stock segment of
the Fund's portfolio, which currently constitutes approximately 70% of the total
portfolio, will continue to utilize a bottom up approach. The remainder of the
portfolio, which currently consists primarily of Asian stocks, will now be
constructed using a top down approach and will be implemented primarily with the
use of World Equity Benchmark Shares ("WEBS"), as well as individual stock
selection. WEBS, which are already used to a limited extent in the European
Growth & Income Fund, are similar to Standard & Poor's Depositary Receipts
(SPDRs) currently used by some of the Company's other portfolios. WEBS are
issued in a number of country specific Index Series by an investment company.
The investment objective of each of the Index Series is to seek to provide
investment results that correspond generally to the price and yield performance
of publicly traded securities in the aggregate in particular markets, as
represented by the particular equity series index, e.g., the MSCI Japan Index.
This is similar to the process currently employed by the Adviser for the Global
Balanced Fund, although the process is implemented there with futures.
Metzler/Payden will pay expenses incurred by it in providing services to
the Fund, except for costs payable by any of the Funds or the Adviser, and its
advisory fees will not be a separate expense of any of the Funds.
Metzler/Payden will hold the Adviser and the Company harmless from any
liability arising from its portfolio management responsibilities to each of the
Funds which may be based on its gross negligence, willful misconduct or bad
faith in the performance of its duties, or reckless disregard of its obligations
and duties under the New Agreement, or based on any untrue statement or omission
of a material fact required to be stated in the Company's Registration or Proxy
Statements or other regulatory filings, if such statement or omission was made
in reliance upon information furnished by Metzler/Payden for inclusion in such
regulatory filings.
The name, position with Metzler/Payden and principal occupation of each
executive officer and director of Metzler/Payden are set forth in the following
table. The business address of these individuals is as follows: Ms. Payden and
Messrs. Weiner and Matthews, 333 South Grand Avenue, 31st Floor, Los Angeles,
California 90071; Messrs. Enste and Baur, Grosse
6
<PAGE> 10
Gallusstrasse 18, 60311 Frankfurt am Main, Germany; and Mr. Neal, 1201 Third
Avenue, 14th Floor, Seattle, Washington 98101.
<TABLE>
<CAPTION>
Position with
Name Metzler/Payden Principal Occupation
- ---- -------------- --------------------
<S> <C> <C>
Joan A. Payden Chairman President, Payden & Rygel; Chairman,
and Director CEO and Trustee, The Payden & Rygel
Investment Group
Norbert F. J. Enste Vice Chairman Principal, B. Metzler seel. Sohn & Co.
and Director Holdings KGaA (a German bank)(since
January 1997); Chairman, Supervisory
Board, Metzler Investment GmbH (an
investment management company)(since
January 1996)
Scott J. Weiner President, CEO Senior Vice President, Payden & Rygel
and Director
Bernd Baur Director Managing Director and Chief Investment
Officer, Metzler Investment GmbH (an
investment management company)
Brian W. Matthews Director Senior Vice President, Payden & Rygel
James L. Neal Director Vice President, Metzler North American
Corporation
</TABLE>
Pursuant to the terms of the joint venture agreement between Payden & Rygel and
Metzler Asset Management GmbH, each of the joint venture partners selects
one-half of the individuals for election to the Board of Directors of
Metzler/Payden.
FUND ADVISER, ADMINISTRATOR AND DISTRIBUTOR. Payden & Rygel, the Adviser
to each of the Funds is located at 333 South Grand Avenue, 32nd Floor, Los
Angeles, California 90071. Joan Payden, Christopher Orndorff and John Isaacson,
who are directors of the Trust, are also principals of the Adviser.
Treasury Plus, Inc., a wholly owned subsidiary of the Adviser, serves as
the Administrator to each of the Funds, and the Shares of each of the Funds are
distributed through Payden & Rygel Distributors, which is also a wholly owned
subsidiary of the Adviser. Treasury Plus, Inc. and Payden & Rygel Distributors
are both located at the same address as the Adviser. For providing
administrative services to each of the Funds, the Administrator receives a
monthly fee at the annual rate of 0.06% of the daily net assets of each Fund.
For the fiscal year ending October 31, 1997, the Administrator received the
following compensation from the Funds:
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<PAGE> 11
International Equity Fund - $__,___; Global Balanced Fund - $__,____; European
Growth & Income Fund - $__,____.
COMPANY REPORTS. A shareholder may obtain a copy of the Company's Annual
Report for the period ended October 31, 1997, or of its Semi-Annual Report for
the period ended April 30, 1998, without charge, by writing The Payden & Rygel
Investment Group, 333 South Grand Avenue, 32nd Floor, Los Angeles, California
90071, or by calling 1-800-572-9336.
SHAREHOLDER PROPOSALS. The Company is not required, and does not intend,
to hold annual or other periodic meetings of shareholders. Shareholders wishing
to submit proposals for consideration for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
Secretary of the Company at the address set forth on the cover of this Proxy
Statement so that they will be received by the Company in a reasonable period of
time prior to any such meeting, as determined by the Board of Directors, and
must satisfy all other legal requirements.
OTHER MATTERS TO COME BEFORE THE MEETING. The Directors do not intend to
present any other business at the Meeting, nor are they aware that any
shareholder intends to do so. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying proxy card
will vote on any other matter properly brought before the Meeting in accordance
with the views of management.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY BALLOT
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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<PAGE> 12
EXHIBIT A
THE PAYDEN & RYGEL INVESTMENT GROUP
SUB-ADVISORY AGREEMENT BY AND BETWEEN
PAYDEN & RYGEL AND METZLER-PAYDEN, LLC
This Sub-advisory Agreement is made as of October 1, 1998, by and
between Payden & Rygel, a California corporation (the "Adviser"), and
Metzler-Payden, LLC, a limited liability company organized under the laws of
Delaware (the "Sub-adviser").
WHEREAS, the Adviser has by separate contract agreed to serve as the
investment adviser to the Payden & Rygel European Growth & Income Fund, Payden &
Rygel International Equity Fund and Payden & Rygel Global Balanced Fund (each a
"Fund," and collectively the "Funds"), each of which is an investment portfolio
of The Payden & Rygel Investment Group (the "Trust"), a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company consisting of one or more
investment series of shares, each having its own assets and investment policies;
WHEREAS, the Adviser's contract with the Trust allows it to delegate
certain investment advisory services for the Trust with respect to each of the
Funds to other parties; and
WHEREAS, the Adviser desires to retain the Sub-adviser to perform
certain investment advisory services for the Trust with respect to each of the
Funds, and the Sub-adviser is willing to perform such services;
WHEREAS, pursuant to Section 15 of the 1940 Act and Rule 15a-4 pursuant
to the 1940 Act, the appointment of the Sub-adviser and the effectiveness of
this Agreement are subject to the approval of a majority of the outstanding
shares of each Fund at a special shareholders meeting (the "Shareholder Vote");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and supervision of
the Board of Trustees of the Trust and the Adviser, the Sub-adviser
will, at its expense, continuously furnish to each of the Funds an
investment program for such portion, if any, of Fund assets that is
allocated to it by the Adviser from time to time. With respect to such
assets, the Sub-adviser will make investment decisions and will place
all orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Sub-adviser will act in the best
interests of each such Fund and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act, (ii) the terms
of this Agreement, (iii) the investment objective, policies, and
restrictions of each such Fund as stated in the then-current
Registration Statement of the Trust, and (iv) such other guidelines as
the Trustees or Adviser may establish. The Adviser shall be responsible
for providing the Sub-adviser with current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 1. At such
times as may be reasonably requested by the Board or the Adviser, the
Sub-adviser will provide them with economic and investment
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analysis and reports, and make available to the Board any economical,
statistical, or investment services, normally available to similar
investment company clients of the Sub-adviser.
(b) Availability of Personnel. The Sub-adviser, at its expense,
will make available to the Trustees and the Adviser at reasonable times
its portfolio managers and other appropriate personnel in order to
review investment policies of each such Fund and to consult with the
Trustees and the Adviser regarding the investment affairs of each such
Fund, including economic, statistical, and investment matters relevant
to the Sub-adviser's duties hereunder, and will provide periodic reports
to the Trustees and the Adviser relating to the portfolio strategies it
employs.
(c) Salaries and Facilities. The Sub-adviser, at its expense,
will pay for all salaries of personnel and facilities required for it to
execute its duties under this Agreement.
(d) Compliance Reports. The Sub-adviser, at its expense, will
provide the Adviser with reasonable compliance reports relating to its
duties under this Agreement as may be agreed to upon by such parties
from time to time.
(e) Valuation. The Sub-adviser, at its expense, will provide the
Trust's custodian with market price information relating to the assets
of each of the Funds at such times as the parties hereto may agree upon
from time to time.
(f) Executing Portfolio Transactions. The Sub-adviser will place
orders pursuant to its investment determinations for each of the Funds
either directly with the issuer or through other brokers. In the
selection of brokers and the placement of orders for the purchase and
sale of portfolio investments for the Fund, the Sub-adviser shall use
its best efforts to obtain for each of the Funds the most favorable
price and execution available. In using its best efforts to obtain the
most favorable price and execution available, the Sub-adviser, bearing
in mind each such Fund's best interests as all times, shall consider all
factors it deems relevant, including by way of illustration, price, the
size of the transaction, the nature of the market for the security, the
amount of the commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and
financial stability of the broker involved and the quality of service
rendered by the broker in other transactions. In no instance will
portfolio securities of each such Fund be purchased from or sold to the
Sub-adviser or any affiliated person of the Sub-adviser. The Trust
agrees that any entity or person associated with the Adviser or the
Sub-adviser which is a member of a national securities exchange is
authorized to effect any transaction on such exchange for the account of
the Trust which is permitted by Section 11(a) of the Securities Exchange
Act of 1934, as amended, and the Trust consents to the retention of
compensation for such transactions.
(g) Expenses. The Sub-adviser shall not be obligated to pay any
expenses of or for the Trust or for any of the Funds not expressly
assumed by the Sub-adviser pursuant to this Agreement.
2. BOOKS AND RECORDS. Pursuant to Rule 31a-3 under the 1940 Act, the
Sub-adviser agrees that: (a) all records it maintains for the Trust are the
property of the Trust; (b) it will surrender promptly to the Trust or the
Adviser any such records upon the Trust's or Adviser's request; (c) it will
maintain for the Trust the records that the Trust is required to maintain
pursuant to Rule 31a-1 insofar as such records relate to the investment affairs
of each of the Funds; and (d) it will preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records it maintains for the Trust.
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<PAGE> 14
3. OTHER AGREEMENTS. The Sub-adviser and persons controlled by or
under common control with the Sub-adviser have and may have advisory, management
service or other agreements with other organizations and persons, and may have
other interests and businesses. Nothing in this Agreement is intended to
preclude such other business relationships.
4. COMPENSATION. Each of the Funds pays to the Adviser a monthly fee
(the "Advisory Fee") at the following annual rate: International Equity Fund -
0.60% of the first $1 billion of average daily net assets of the portfolio, and
0.40% thereafter; Global Balanced Fund - 0.50% of the first $1 billion of
average daily net assets of the portfolio, and 0.40% thereafter; and European
Growth & Income Fund - 0.50% of the first $2 billion of average daily net assets
of the portfolio, and 0.40% thereafter. The Adviser will pay to the Sub-adviser
as compensation for the Sub-adviser's services rendered pursuant to this
Agreement a sub-advisory fee for each Fund equal to:
(a) For the period from October 1, 1998 through the Shareholder
Vote:
(i) For each of the International Equity Fund and the
Global Balanced Fund: 0.40% of the first $1 billion of the
average daily net assets of the Fund's portfolio allocated to
the Sub-adviser, and 0.30% thereafter;
(ii) For the European Growth & Income Fund: 50% of the
Advisory Fee earned and received by the Adviser. Such fees shall
be paid by the Adviser (and not by the Trust) and shall be
correspondingly reduced on a pro rata basis by any reduction in
the fees paid to the Adviser as a result of any voluntary,
statutory or regulatory limitation on investment company
expenses.
(b) For the period following the Shareholder Vote: For each of
the Funds, 100% of the Advisory Fee earned and received by the Adviser
for the Fund in question. Such fees shall be paid by the Adviser (and
not by the Trust) and shall be correspondingly reduced on a pro rata
basis by any reduction in the fees paid to the Adviser as a result of
any voluntary, statutory or regulatory limitation on investment company
expenses.
Such fees shall be payable monthly, at one-twelfth of the above rate, within 15
business days after the end of such month. If the Sub-adviser shall serve for
less than the whole of a month, the compensation as specified shall be prorated.
5. AMENDMENT OF AGREEMENT. This Agreement shall not be materially
amended unless the Adviser and Sub-adviser mutually agree to amend, and that
such amendment is approved by the affirmative vote of a majority of the
outstanding shares of each of the Funds, if required by the 1940 Act, and by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the members of the Board of Trustees who are not
interested persons of the Trust, the Adviser or the Sub-adviser (the
"Independent Trustees"). The Sub-adviser agrees to notify the Adviser of any
anticipated change in control of the Sub-adviser within a reasonable time prior
to such change.
6. DURATION AND TERMINATION OF THE AGREEMENT. This Agreement shall
become effective upon its execution; provided, however, that this Agreement
shall not become effective unless it first has been approved (a) by a vote of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by an affirmative vote of a majority of the
outstanding voting shares of each Fund. This Agreement shall remain in full
force and effect continuously thereafter as follows:
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<PAGE> 15
(a) By vote of a majority of the (i) Independent Trustees, or
(ii) outstanding voting shares of each Fund, the Trust may at any time
terminate this Agreement without the payment of penalty, by providing
not more than 60 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Adviser and the Sub-adviser.
(b) This Agreement will terminate automatically without payment
of any penalty, unless, within two years after its initial effectiveness
and at least annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the shareholders
of each Fund by the affirmative vote of a majority of the outstanding
shares of such Fund, and (ii) a majority of the Independent Trustees, by
vote cast in person at a meeting called for the purpose of voting on
such approval. If the continuance of this Agreement is submitted to the
shareholders of such Fund for their approval and such shareholders fail
to approve such continuance as provided herein, the Sub-adviser may
continue to serve hereunder in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
(c) The Adviser may at any time terminate this Agreement without
the payment of any penalty by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Sub-adviser, and the Sub-adviser may at any time without the payment of
any penalty, terminate this Agreement by not less than 90 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Adviser.
(d) This Agreement automatically and immediately shall terminate
without the payment of any penalty, in the event of its assignment or if
the Investment Management Agreement between the Adviser and the Trust
shall terminate for any reason.
Upon termination of this Agreement, the duties of the Adviser delegated to the
Sub-adviser under this Agreement automatically shall revert to the Adviser.
7. NOTIFICATION OF THE ADVISER. The Sub-adviser promptly shall notify
the Adviser in writing of the occurrence of any of the following events:
(a) the Sub-adviser shall fail to be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and under
the laws of any jurisdiction in which the Sub-adviser is required to be
registered as an investment adviser in order to perform its obligations
under this Agreement.
(b) the Sub-adviser shall have been served or otherwise have
notice of any action, suit, or proceeding, inquiry, or investigation at
law or in equity, before or by any court, public board or body,
involving the affairs of the Trust or any Portfolio; or
(c) any other occurrence that might affect the ability of the
Sub-adviser to provide the services provided for under this Agreement.
8. DEFINITIONS. For the purposes of this Agreement, the terms "vote
of a majority of the outstanding shares," "affiliated person," "control,"
"interested person," and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and references to annual approvals by the Board of
Trustees shall be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder.
9. LIABILITY OF THE SUB-ADVISER. In the absence of its willful
misfeasance, bad faith, negligence, or disregard of its obligations and duties
hereunder, the Sub-adviser shall not be subject to
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<PAGE> 16
any liability to the Adviser, the Trust or their directors, Trustees, officers,
or shareholders, for any act or omission in the course of, or connected with,
rendering services hereunder. However, the Sub-adviser shall indemnify and hold
harmless such parties from any and all claims, losses, expenses, obligations and
liabilities (including reasonable attorneys fees) which arise or result from
Sub-adviser's willful misfeasance, bad faith, negligence, or disregard of its
obligations and duties hereunder.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California, without giving effect to the conflicts of
laws principles thereof, and in accordance with the 1940 Act. To the extent that
the applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
12. MISCELLANEOUS. The captions in this agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
agreement is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, Payden & Rygel, and Metzler-Payden, LLC have each
caused this instrument to be signed in duplicate on its behalf by its duly
authorized representative, all as of the day and year first above written.
Attest: PAYDEN & RYGEL
By:______________________ By:________________________
Attest: METZLER-PAYDEN, LLC
By:______________________ By:________________________
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<PAGE> 17
PROXY CARD
[TOP PORTION]
[THE LANGUAGE IS THE SAME FOR EACH PROXY CARD, EXCEPT FOR THE FUND NAME.]
[NAME AND ADDRESS
OF LOCATION TO RETURN
PROXIES]
[PAYDEN & RYGEL INTERNATIONAL EQUITY FUND] (THE "FUND")
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF THE PAYDEN & RYGEL INVESTMENT GROUP
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF THE FUND ON MONDAY, NOVEMBER 9, 1998.
The undersigned hereby appoints Shirley T. Hosoi and Gregory P. Brown, and each
of them, attorneys and proxies for the undersigned, with full power of
substitution and revocation to represent the undersigned and to vote on behalf
of the undersigned all shares of the Fund which the undersigned is entitled to
vote at the Special Meeting of Shareholders (the "Meeting") to be held at 333
South Grand Avenue, 32nd Floor, Los Angeles, California 90071, on Monday,
November 9, 1998 at 10:00 a.m. (Pacific Time), and of any adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of the Special Meeting
of Shareholders and the accompanying Proxy Statement and hereby instructs the
attorneys and proxies to vote the shares as indicated on this Proxy Card. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the Meeting. The undersigned hereby revokes any proxy
previously given.
PLEASE SIGN AND DATE THE PROXY CARD, RETURN THE BOTTOM PORTION OF THIS PROXY
CARD WITH YOUR VOTE IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING. YOU MAY, NEVERTHELESS, VOTE IN PERSON IF YOU DO SO ATTEND. PLEASE
RETAIN THE TOP PORTION OF THE PROXY CARD.
Please indicate your vote by an "X" in the box below. This proxy, if properly
executed, will be voted in the manner directed by the shareholder. If no
direction is made, a duly executed proxy will be voted FOR the proposal.
TO VOTE, MARK BLOCKS BELOW IN BLUE OF BLACK INK AS FOLLOWS: [x]
<PAGE> 18
PROXY CARD
[BOTTOM PORTION]
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
[PAYDEN & RYGEL INTERNATIONAL EQUITY FUND] (THE "FUND")
THE BOARD OF TRUSTEES OF THE PAYDEN & RYGEL INVESTMENT GROUP RECOMMENDS A VOTE
"FOR" THE FOLLOWING PROPOSAL:
<TABLE>
<S> <C> <C> <C>
1. Ratification of the Sub-Advisory Agreement By and FOR AGAINST ABSTAIN
Between Payden & Rygel and Metzler-Payden, LLC, [ ] [ ] [ ]
dated October 1, 1998, with respect to the Fund
</TABLE>
Your signature(s) on this Proxy should be exactly as your name(s) appears on
this Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
- ---------------------------------------- ------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
