<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ARK Funds
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
<PAGE> 2
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
<PAGE> 3
ARK FUNDS
INTERNATIONAL EQUITY SELECTION PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
June __, 2000
Dear Shareholder:
The Board of Trustees ("Board") of the ARK Funds ("Trust") has voted to
amend the investment policies of the International Equity Selection Portfolio
("Portfolio"), a series of the Trust. As you are aware, the Portfolio currently
seeks to achieve its investment objective of long-term capital appreciation by
investing primarily in shares of mutual funds that purchase common stock and
other equity securities of companies located outside of the United States. Under
the proposal approved by the Board, the Portfolio would redeem its investments
in the mutual fund companies and directly invest primarily in the securities of
non-U.S. issuers.
The Board believes that the proposed change in investment policy would
benefit the Portfolio and its shareholders. By investing directly in equity
securities of foreign markets, the Portfolio would be more efficient to manage
and administer. Shareholders will be asked to approve a change in the
Portfolio's investment policy whereby the Portfolio would invest primarily in
the securities of companies located in countries other than the United States.
Shareholders will also be asked to approve a related increase in the investment
advisory fee payable by the Portfolio and an investment subadvisory contract.
Accordingly, a special meeting of shareholders ("Meeting") will be held
on July 10, 2000. Attached are the Notice and Proxy Statement for the Meeting,
which describe the proposals on which you are being asked to vote. THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THESE PROPOSALS.
Your vote is important. Please take a moment now to sign and return
your proxy card(s) in the enclosed postage-paid envelope. If we do not hear from
you after a reasonable amount of time, you may receive a telephone call from our
proxy solicitor, [____], reminding you to vote your shares.
Thank you for your attention to this matter and for your continued
investment in the Portfolio.
Very truly yours,
William H. Cowie, Jr.
Chairman of the Board
<PAGE> 4
ARK FUNDS
INTERNATIONAL EQUITY SELECTION PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 10, 2000
To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the
International Equity Selection Portfolio (the "Portfolio") of ARK Funds (the
"Trust") will be held at 3:00 p.m. Eastern time on July 10, 2000 at Allfirst
Trust Company N.A., 25 S. Charles Street, 16th Floor, Baltimore, Maryland, for
the following purposes:
1. To approve a change in investment policy whereby the
Portfolio would seek its investment objective by investing directly in
the securities of companies located in countries other than the United
States, rather than in shares of mutual funds investing in these
companies.
2. To approve an increase in the investment advisory fee
payable by the Portfolio to Allied Investment Advisors, Inc.
3. To approve an investment subadvisory contract with AIB
Govett, Inc.
4. To consider and act upon any other business that may
properly come before the meeting and any adjournments thereof.
Shareholders of record of the Portfolio as of the close of business on
May 17, 2000 are entitled to notice of and to vote at the meeting and any
adjournments thereof.
By Order of the Board of Trustees,
Thomas R. Rus
Secretary
June ___, 2000
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
2
<PAGE> 5
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
ANY SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED FORM OF PROXY, DATE AND SIGN IT,
AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
TO AVOID THE ADDITIONAL EXPENSE TO THE TRUST OF FURTHER SOLICITATION,
WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY, NO MATTER HOW LARGE OR
SMALL YOUR HOLDINGS MAY BE.
3
<PAGE> 6
ARK FUNDS
INTERNATIONAL EQUITY SELECTION PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 10, 2000
This proxy statement is being furnished to shareholders in connection
with the solicitation of proxies by the Board of Trustees ("Board") of ARK Funds
(the "Trust"). These proxies are to be used at the Special Meeting of
Shareholders of the Trust's International Equity Selection Portfolio
("Portfolio") and at any adjournment thereof ("Meeting") to be held at 3:00 p.m.
Eastern time on July 10, 2000 at Allfirst Trust Company N.A., 25 S. Charles
Street, 16th Floor, Baltimore, Maryland. The purpose of the Meeting and the
matters to be acted upon are set forth in the accompanying Notice of Special
Meeting of Shareholders.
The close of business on May 17, 2000 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
Meeting. As of the record date, the Portfolio had 226,957 Retail Class A and
3,105,605 Institutional Class shares outstanding and entitled to vote.
Each share will be entitled to one vote for each proposal at the
Meeting. It is expected that the Notice of Special Meeting of Shareholders,
Proxy Statement and form of Proxy will first be mailed to shareholders on or
about June ___, 2000.
The Trust's most recent Annual Report has previously been sent to
shareholders and may be obtained without charge by calling toll-free
1-888-4ARK-FUND or by writing to ARK Funds, P.O. Box 8525, Boston, MA
02266-8525.
If the accompanying form of Proxy is properly executed and returned,
shares represented by it will be voted at the Meeting, or any adjournments
thereof, in accordance with the instructions on the Proxy. However, if no
instructions are specified, shares will be voted FOR all proposals. A Proxy may
be revoked at any time prior to the time it is voted by written notice to the
Secretary of the Trust, by execution of a subsequent Proxy or by attendance at
the Meeting. If sufficient votes to approve one or more of the proposed items
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 the votes cast,
provided a quorum is present. In such case, the persons named as proxies will
vote those Proxies, which they are entitled to vote for any such item in favor
of such an adjournment, and will vote those Proxies required to be voted against
any such item against any
4
<PAGE> 7
such adjournment. In the event that the Meeting is adjourned, the same
procedures will apply at a later Meeting date.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and with respect to which the broker does not
have discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present but will not be voted for or against any adjournment. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment.
In addition, abstentions and broker non-votes will not be counted as votes cast
for purposes of determining whether sufficient votes have been received to
approve a proposal, and therefore abstentions and broker non-votes effectively
will be a vote against any proposal where the required vote is a percentage of
the shares present.
Information about persons who, to the knowledge of management, owned
beneficially more than 5% of the outstanding shares of the Portfolio as of the
record date is set forth in Exhibit A. To the knowledge of management, the
executive officers and Trustees of the Trust, as a group, owned less than 1% of
the outstanding shares of the Portfolio as of May 17, 2000.
PROPOSAL NO. 1:
APPROVAL OF A CHANGE IN INVESTMENT POLICY WHEREBY THE
PORTFOLIO WOULD INVEST PRIMARILY IN THE SECURITIES OF COMPANIES
LOCATED IN COUNTRIES OTHER THAN THE UNITED STATES, RATHER THAN
IN SHARES OF MUTUAL FUNDS INVESTING IN THESE COMPANIES.
BACKGROUND
The Portfolio currently seeks to achieve its investment objective of
long-term capital appreciation by operating as a "fund of funds" whereby the
Portfolio invests primarily in the shares of other mutual funds ("underlying
funds"). The portfolios of the underlying funds consist primarily of equity
securities of non-U.S. issuers. Under normal market conditions, the Portfolio
normally invests at least 65% of its total assets in underlying funds that are
international equity funds. International equity funds are those investment
companies which invest primarily in equity securities of companies located in
three or more countries outside the United States.
DESCRIPTION OF CHANGE IN INVESTMENT POLICY
The Board believes that changing the Portfolio's investment policy
would be beneficial to the Portfolio and its shareholders. Under the proposal,
the Fund would redeem its investments in the underlying funds and directly
invest primarily in the securities of non-U.S. issuers. This increased
investment flexibility may enable the Portfolio to improve its performance.
However, there can be no assurance that the proposal will lead to better
performance. Control over individual equity selection would thus move directly
to portfolio managers employed by the Portfolio's investment advisor or
subadvisor.
5
<PAGE> 8
The proposed change would not involve any change to the Portfolio's
name or investment objective. In order to effect the proposal, however,
shareholders of the Portfolio need to approve certain changes to the Portfolio's
operations. These changes are (1) the approval of a change in investment policy
whereby the Portfolio would invest primarily in the securities of companies
located in countries other than the United States, rather than in shares of
mutual funds investing in these companies, described in this Proposal 1; (2) the
approval of an increase in the investment advisory fee payable by the Portfolio
to Allied Investment Advisors, Inc., which is described in Proposal 2; and (3)
the approval of an investment subadvisory contract with AIB Govett, Inc., which
is described in Proposal 3.
BOARD CONSIDERATIONS
At a meeting on December 10, 1999, the Board determined that it would
be in the best interest of the Portfolio and its shareholders to change the
investment policy of the Portfolio from a fund of funds to a direct investment
structure whereby the Portfolio would directly invest in the securities of
non-U.S. issuers. During this meeting, the anticipated effects of the proposal
on the Portfolio were described, including the potential improvement in the
Portfolio's performance and marketability. In connection with its review of the
proposal, the Board considered the performance of the Portfolio, the potentially
beneficial impact of the restructuring on the Portfolio and its shareholders;
comparative information about other funds and their fees and expenses; and the
likely costs associated with the restructuring (including shareholder
solicitation costs and brokerage costs related to the Portfolio's initial
investments in equity securities).
The Board noted that changing the investment policy of the Portfolio
would result in a more simple structure, which would greatly enhance the
Portfolio's ability to manage the direct investment of its assets in particular
industries and issuers in which the underlying funds were invested.
Additionally, as the Portfolio is currently structured, there is no uniformity
of investment analysis and management style on the underlying fund level because
each underlying fund performs these functions differently. The proposed change
in investment policy would promote uniformity of analysis and management style
because analysis and management would occur on the Portfolio level. As a result,
the Portfolio would have an increased need for direct investment management
services. The Board also considered that investors generally prefer to invest in
an individually managed Portfolio rather than a fund of funds. An individually
managed Portfolio is better able to manage issuer and industry diversification
and selection.
The Board considered each of the foregoing factors. Based upon these
considerations, the Board, including its members who are not interested persons
of the Portfolio (as that term is defined in the 1940 Act) ("Independent
Trustees"), unanimously approved the proposed change in the Portfolio's
investment policy whereby the Portfolio would invest primarily in the securities
of companies located in countries other than the United States and recommended
approval by the shareholders.
VOTE REQUIRED
Approval of Proposal 1 requires the affirmative vote of the holders of
the lesser of (1) 67% or more of the shares of the Portfolio present at the
Meeting, if the holders of more than 50% of the
6
<PAGE> 9
outstanding Portfolio shares are present or represented by proxy at the Meeting,
or (2) more than 50% of the outstanding shares of the Portfolio entitled to vote
at the Meeting.
THE BOARD RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 1.
PROPOSAL NO. 2:
APPROVAL OF AN INCREASE IN THE INVESTMENT ADVISORY FEE PAYABLE
BY THE PORTFOLIO TO ALLIED INVESTMENT ADVISORS, INC.
Shareholders are being asked to approve an amendment to the Investment
Advisory Agreement between Allied Investment Advisors, Inc. ("AIA") and the
Trust with respect to the Portfolio. The amendment will authorize an increase in
the AIA's fee with respect to advisory services provided to the Portfolio. Under
the proposed restructuring explained in Proposal 1, to the extent that the
Portfolio directly invests all of its assets in the securities of non-U.S.
issuers, and not in other mutual funds, the Portfolio would have an increased
need for direct investment management services by AIA. For this reason, the
Trust's current advisory agreement's compensation schedule with respect to the
Portfolio would be revised to increase the advisory fee paid on behalf of the
Portfolio, from an annual rate of 0.65% of the Portfolio's average daily net
assets to an annual rate of 1.00% of the Portfolio's average daily net assets.
Under the Trust's current arrangement, AIA has contractually agreed to waive its
advisory fees and/or reimburse the Portfolio to the extent necessary to ensure
that the Portfolio's total annual operating expenses do not exceed 1.14% for
Retail Class A shares and 0.97% for Institutional Class Shares. In addition, AIA
is voluntarily waiving a portion of the fees in order to keep total operating
expenses from exceeding 1.05% for Retail Class A Shares and 0.94% for
Institutional Class Shares. AIA has agreed to continue this contractual expense
limitation on the Portfolio's total annual operating expenses should the
Portfolio invest all of its assets in the securities of non-U.S. issuers as
proposed. AIA may discontinue all or part of the voluntary waivers at anytime.
A description of the proposed amendment to the advisory agreement is
provided below under "The Proposed Amendment to the Investment Advisory
Agreement." A summary of the Board's considerations is provided below under
"Board Considerations."
CURRENT INVESTMENT ADVISORY AGREEMENT
AIA currently serves as investment advisor to the Portfolio pursuant to
an Investment Advisory Agreement between the Trust and AIA dated February 12,
1998 ("Advisory Agreement"). The Advisory Agreement was approved by the
shareholders of the Portfolio on or about February 4, 1998. Pursuant to the
Advisory Agreement, with the Trust, AIA, subject to the control and supervision
of the Trust's Board and in conformance with the stated investment objectives
and policies of the Portfolio, actively manages the investment and reinvestment
of the assets of the Portfolio. In this regard, it is the responsibility of AIA
to make investment decisions for the Portfolio and to place the Portfolio's
purchase and sales orders or, subject to any approvals required by the 1940 Act,
to delegate its duty to make investment decisions and to place purchase and
sales orders to one or more investment subadvisors with respect to some or all
of the Portfolio's assets. In the event of such a delegation, AIA is obligated
to monitor the
7
<PAGE> 10
activities of the subadvisors, review the activities of the subadvisors to
ensure compliance with applicable investment objectives and guidelines, render
such reports to the Board as may be requested and provide to the subadvisors
such advice as they may reasonably request. AIA has not exercised its authority
to delegate certain duties with respect to all of the Portfolio's assets.
Under the Advisory Agreement, AIA bears all expenses incurred by it in
performing its duties as investment advisor. The Trust bears all expenses, not
specifically assumed by AIA, incurred in the conduct of its operations,
including, without limitation, the following: (a) the cost (including brokerage
commissions) of securities purchased or sold by the Portfolio and any losses
incurred in connection therewith; (b) fees payable to, and expenses incurred on
behalf of the Trust by, AIA; (c) expenses of organizing the Trust; (d) filing
fees and expenses relating to the registration and qualification of the Trust's
shares and the Trust under federal and/or state securities laws and maintaining
such registrations and qualifications; (e) fees and salaries payable to the
Trust's trustees and officers; (f) taxes (including any income or franchise
taxes) and governmental fees; (g) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds; (h) any costs, expenses or losses
arising out of a liability of or claim for damages or other relief asserted
against the Trust for violation of any law; (i) legal, accounting and auditing
expenses, including legal fees of special counsel at any time retained for those
members of the Board who are not interested persons of the Trust and expenses
relating to the use of consulting services by the Trust provided that the use of
such services is approved by the Trust's trustees; (j) charges of custodians,
transfer agents and other agents; (k) costs of preparing share certificates; (l)
expenses of setting in type and printing prospectuses and supplements thereto
for existing shareholders, reports, shareholder reports, and proxy materials;
(m) costs of mailing prospectuses, statements of additional information and
supplements thereto to existing shareholders as well as shareholder reports and
proxy material; (n) any extraordinary expenses (including fees and disbursements
of counsel) incurred by the Trust; (o) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (p) costs of mailing and tabulating proxies and costs of
shareholders and trustees meetings; and (q) the cost of investment company
literature and other publications provided by the Trust to its trustees and
officers. All expenses are allocated among the Trust's portfolios in accordance
with the Trust's Agreement and Declaration of Trust and the provisions of the
1940 Act.
The Advisory Agreement provides that, with respect to the Portfolio,
neither AIA nor its personnel shall not be liable for any error of judgment or
mistake of law or for any act or omission in the performance of its duties to
the Portfolio, except a loss resulting from the willful misfeasance, bad faith
or gross negligence of AIA in the performance of its duties or from reckless
disregard by it of its obligations and duties under the Advisory Agreement. It
also provides that AIA may render services to others.
The Advisory Agreement continues in effect for a period of one year
from the date of the Agreement, and thereafter for successive one-year periods,
only if each renewal is specifically approved by (a) a vote of a majority of
those members of the Board who are not parties to the 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; and (b) all of the
members of the Board or by vote of the holders of a majority of the outstanding
voting securities of the Trust. The Advisory Agreement is terminable with
respect to a Portfolio without penalty on 60 days'
8
<PAGE> 11
written notice when authorized either by a vote of the shareholders of the
Portfolio or by a vote of a majority of the trustees, or by AIA, on 60 days'
written notice, and will terminate automatically in the event of its assignment.
As compensation for the services rendered by AIA under the Advisory
Agreement, the Trust pays AIA, monthly, an advisory fee calculated by applying
an annual rate equal to 0.65% of the Portfolio's average daily net assets. AIA
-- and not the Trust -- is solely responsible for paying the fees of any
subadvisors to whom AIA delegates any duties as described above. AIA has
contractually agreed to waive its advisory fees and reimburse the Portfolio's
operating expenses to the extent necessary to ensure that the Portfolio's total
operating expenses do not exceed 1.14% for Retail Class A shares and 0.97% for
Institutional Class shares until August 31, 2001. Any waivers and/or
reimbursements will have the effect of lowering the overall expense ratio for
the Portfolio and increasing its overall return to investors at the time any
such amounts are waived and/or reimbursed.
PROPOSED AMENDMENT TO THE ADVISORY AGREEMENT
The amended Advisory Agreement will be identical to the current
Advisory Agreement described above with the exception of the proposed revision
to the compensation schedule. Under the proposed amendment, the Advisory
Agreement's compensation schedule would be revised to increase the advisory fee
paid under the agreement from an annual rate of 0.65% of the Portfolio's average
daily net assets to an annual rate of 1.00% of the Portfolio's average daily net
assets. The Board of Trustees has approved the proposed increase in connection
with the portfolio-restructuring proposal described under Proposal 1.
Set forth below are tables which show the fees and expenses for the
Portfolio for the current fiscal year and a pro forma adjustment thereof which
reflects the restructuring of the Portfolio from a fund of funds to a direct
investment structure. The Portfolio's current structure is subject to a
limitation in the 1940 Act that restricts the maximum sales charge applicable
to the Portfolio's shares to 1.50% of the offering price. If the proposed
change in the investment policy of the Portfolio is implemented this
restriction would no longer be applicable. In such case, the maximum sales
charge applicable to the Portfolio's shares would be increased so that it is
comparable to the sales charges applicable to the Retail Class A Shares of the
Trust's other equity portfolios. This increase is reflected in the table below.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
CURRENT PRO FORMA CURRENT PRO FORMA
RETAIL RETAIL INSTITUTIONAL INSTITUTIONAL
CLASS A CLASS A CLASS CLASS
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 1.50% 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value) None None None None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and other Distributions (as a percentage of offering price) None None None None
</TABLE>
9
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
Redemption Fee (as a percentage of amount redeemed, if
applicable) None None None None
Exchange Fee None None None None
</TABLE>
ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM PORTFOLIO ASSETS)
<TABLE>
<CAPTION>
CURRENT PRO FORMA CURRENT PRO FORMA
RETAIL RETAIL INSTITUTIONAL INSTITUTIONAL
CLASS A (1) CLASS A (2) CLASS (1) CLASS (2)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory Fees 0.65% 1.00% 0.65% 1.00%
Distribution (12b-1) Fees 0.40% 0.40% None None
Other Expenses 0.40% 0.45% 0.40% 0.45%
----- ----- ----- -----
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 1.45% 1.85% 1.05% 1.45%
Fee Waivers and Expense Reimbursements 0.31% 0.35% 0.08% 0.05%
----- ----- ----- -----
TOTAL NET OPERATING EXPENSES 1.14% 1.50% 0.97% 1.40%
===== ===== ===== =====
</TABLE>
-----------------
(1) Currently, AIA has agreed to contractually waive fees and reimburse
expenses in order to keep total operating expenses from exceeding 1.14% for
Retail Class A and 0.97% for Institutional Class Shares until August 31, 2001.
The Portfolio's total actual annual operating expenses for the most recent
fiscal year were less than the amount shown above because AIA is waiving a
portion of the fees in order to keep total operating expenses at a specified
level. AIA may discontinue all or part of these waivers at any time. With these
fee waivers, the Portfolio's actual total operating expenses are as follows:
<TABLE>
<S> <C>
International Equity Selection Portfolio - Retail Class A (Current) 1.05%
International Equity Selection Portfolio - Institutional Class (Current) 0.94%
</TABLE>
(2) If the changes to the Portfolio's investment objectives and policies are
approved by the shareholders and implemented, AIA has agreed contractually to
waive fees and reimburse expenses in order to keep total operating expenses from
exceeding 1.50% for Retail Class A and 1.40% for Institutional Class Shares
until August 31, 2001.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and
Portfolio expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Portfolio would
be:
<TABLE>
<CAPTION>
CURRENT PRO FORMA CURRENT PRO FORMA
RETAIL CLASS A RETAIL CLASS A INSTITUTIONAL CLASS INSTITUTIONAL CLASS
<S> <C> <C> <C> <C>
1 Year $264 $300 $ 99 $143
3 Years $572 $681 $326 $445
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
CURRENT PRO FORMA CURRENT PRO FORMA
RETAIL CLASS A RETAIL CLASS A INSTITUTIONAL CLASS INSTITUTIONAL CLASS
<S> <C> <C> <C> <C>
5 Years $ 901 $1,087 $ 572 $ 770
10 Years $1,833 $2,220 $1,275 $1,690
</TABLE>
This Example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
For the fiscal year ended April 30, 2000, the aggregate fees paid by
the Trust to AIA with, respect to the Portfolio, were approximately $223,000 of
which approximately $34,000 was waived. If the proposed fee (after waivers)
had been in effect during the same year, AIA would have received [$___________],
which equals a [____%] increase.
INFORMATION ABOUT AIA
AIA is a wholly-owned subsidiary of Allfirst Bank (formerly, First
National Bank of Maryland). AIA was organized in 1995 and provides investment
management and advisory services to individuals, corporate and institutional
clients, pension plans, common and collective trust funds, and mutual funds. As
of March 31, 2000, AIA had approximately $14.7 billion in assets under
management. AIA's principal business address is 100 E. Pratt Street, Baltimore,
MD 21202.
The following is a list of the directors and principal executive
officers of AIA. The business address of each individual listed below is 100 E.
Pratt Street, Baltimore, MD 21202.
PRINCIPAL
NAME POSITION WITH AIA OCCUPATION
---- ----------------- ----------
BOARD CONSIDERATIONS
On December 10, 1999, the Board, including the Independent Trustees,
unanimously approved, subject to the required shareholder approval described
herein, an amendment to the Compensation Schedule of the Advisory Agreement
between AIA and the Trust with respect to the Portfolio. In determining to
recommend the amended Advisory Agreement to shareholders,
11
<PAGE> 14
the Board considered, among other factors, that the proposed increase
superficially appears disadvantageous to the Portfolio's shareholders.
Currently, the Portfolio is a fund of funds that invests only in other mutual
funds. As such, the investment advisory fee paid at the Portfolio level is in
addition to the investment advisory fees paid with respect to each of the
Portfolio's mutual fund holdings. A similar analysis applies to the other fees
that may be charged by the underlying funds. Under the proposed change in
investment policy described under Proposal 1, the Portfolio will invest directly
in foreign securities, and thus collapse the two levels of fees into one
(eliminating the fee paid to the underlying funds). The Board also considered
that while the net investment advisory and/or distribution expenses would
decline due to the collapse of the two fee levels into one, other expenses such
as custody fees or transaction expenses may be relatively higher. When such a
change in investment policy is contemplated, an increase in these fees is
expected as a result of increased direct investment in foreign securities. The
Board reasoned that the change in the actual cost structure could be
advantageous to the Portfolio's shareholders.
The Board also considered a number of other factors relating to the
proposed fee increase, including the following: (1) the nature, quality and
scope of the services provided by AIA; (2) AIA's investment performance; (3) the
mutual-fund related revenues and expenses of AIA; (4) whether the Portfolio and
its shareholders benefit from any economies of scale; (5) the investment
advisory fees payable by comparable investment companies; and (6) the current
expense ratio of the Portfolio as compared to the anticipated pro forma expense
ratio of the Portfolio.
In particular, the Board considered that, as the Portfolio is currently
structured, the investment advisors of the underlying funds determine in which
securities the funds will invest. Under the restructuring, this function will be
performed by AIA (or a subadvisor). Thus, an increase in the investment advisory
fee is warranted based on the additional duties to be performed by AIA (or a
subadvisor) as well as the fact that the Portfolio will be managed individually
rather than as a fund of funds. Additionally, the Board noted that the higher
fee is comparable to investment advisory fees paid by other international equity
funds in the Portfolio's peer group.
After consideration of these and other relevant factors, the Board
determined that the proposed amendment to the Advisory Agreement was in the best
interests of the Portfolio and its shareholders. Based on this determination,
the Board, including its Independent Trustees, unanimously approved the proposed
amendment to the Advisory Agreement and recommended approval by the
shareholders.
VOTE REQUIRED
Approval of Proposal 2 requires the affirmative vote of the holders of
the lesser of (1) 67% or more of the shares of the Portfolio present at the
Meeting, if the holders of more than 50% of the outstanding Portfolio shares are
present or represented by proxy at the Meeting, or (2) more than 50% of the
outstanding shares of the Portfolio entitled to vote at the Meeting. The
proposed amendment to the Advisory Agreement is completely contingent upon the
approval of Proposal 1 and will not become effective unless Proposal 1 is
approved. If Proposal 1 is not approved, AIA will continue to perform its duties
under the current advisory agreement and the Portfolio will continue to invest
in other mutual funds, until the Board decides what further action to take with
12
<PAGE> 15
respect to the Portfolio.
THE BOARD RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 2.
PROPOSAL NO. 3:
APPROVAL OF AN INVESTMENT SUBADVISORY CONTRACT WITH AIB GOVETT, INC.
INTRODUCTION
The Board and AIA propose that AIB Govett, Inc. ("AIB Govett") be
appointed subadvisor of the Portfolio. AIB Govett is an affiliate of AIA, since
both companies are indirect subsidiaries of Allied Irish Banks, plc ("AIB"). The
proposed retention of AIB Govett is based primarily on the desire of the Board
and AIA to have AIB Govett manage the Portfolio following the restructuring
described under Proposal 1. AIB Govett has been a global money manager for over
60 years with an emphasis on capital growth through investments and a solid
track record in global money management. If AIB Govett is approved as
subadvisor, AIA will allocate all of the Portfolio's assets to AIB Govett
subject to the oversight of the Board. AIB Govett will provide day-to-day
management services and make investment decisions on behalf of the Portfolio in
accordance with its investment policies. AIB Govett will utilize a portfolio
management team under the supervision of John Murray and Eileen Fitzpatrick,
Joint Chief Investment Officers of AIB Govett, to manage the Portfolio's
investments.
At a meeting held on December 10, 1999, the Board determined that it
would be in the best interest of the Portfolio and its shareholders to retain
AIB Govett as the Portfolio's investment subadvisor. In making this decision,
the Board considered, among other factors, the expertise that AIB Govett offers
in providing portfolio management services to other international equity
portfolios. The Board also considered the experience of the persons supervising
the management team, and the financial strength and quality of services offered
by AIB Govett.
Accordingly, the Board unanimously voted that (1) subject to
shareholder approval, AIB Govett be appointed as subadvisor to the Portfolio,
and (2) the proposed investment subadvisory agreement between AIA and AIB Govett
("Subadvisory Agreement") be approved and submitted for shareholder approval.
These decisions included the unanimous approval of the Independent Trustees of
the Trust.
DESCRIPTION OF SUBADVISORY AGREEMENT
Under the Subadvisory Agreement, AIB Govett will manage the investment
of the Portfolio and will be responsible for placing all orders for the purchase
and sale of portfolio securities, subject to the supervision of the Board and
AIA. As compensation for AIB Govett's services and for expenses borne by AIB
Govett under the Subadvisory Agreement, AIB Govett will be paid a monthly
subadvisory fee by AIA (not by the Trust) at an annual rate equal to [____]% of
the
13
<PAGE> 16
Portfolio's average daily net assets.
The Subadvisory Agreement provides that AIB Govett will not be liable
for against any error of judgment or mistake of law or for any losses suffered
by the Portfolio or AIA in connection with the matters to which the Subadvisory
Agreement relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security,
except that AIB Govett may be held liable to the extent that such losses
resulted from AIB Govett's willful misfeasance, bad faith or gross negligence or
by reason of the reckless disregard by AIB Govett of its duties.
If approved by shareholders, the Subadvisory Agreement would be
executed promptly by AIA and AIB Govett and become effective on or about July
10, 2000. Unless sooner terminated, it would remain in effect for one year
following its effective date. Thereafter, it would continue automatically for
successive annual periods, provided that it is specifically approved at least
annually (1) by a vote of a majority of the Independent Trustees and (2) by the
vote of a majority of the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio. The Trust may terminate the proposed
Subadvisory Agreement, without penalty, by a vote of the Board or a majority of
its outstanding voting securities of the Portfolio, on 60 days' written notice
to AIB Govett. AIA may at any time terminate the Subadvisory Agreement upon 60
days' written notice to AIB Govett, without penalty. AIB Govett may at any time
terminate the Subadvisory Agreement upon 60 days' written notice to AIA and the
Trust. The Subadvisory Agreement automatically will terminate without penalty in
the event of its assignment. For the Subadvisory Agreement, see Exhibit C.
INFORMATION ABOUT AIB GOVETT
AIB Govett is registered as an investment advisor under the Investment
Advisers Act of 1940, as amended ("Advisers Act"). AIB Govett is a wholly owned
subsidiary of AIB Asset Management Holdings Limited ("AIBAMH") which is a
majority-owned subsidiary of AIB. AIB owns 85.5% of AIBAMH and is Ireland's
largest banking and financial services institution. AIB Govett and its
affiliates AIB Govett Asset Management Limited and AIB Investment Managers
Limited are part of a broad network of offices worldwide, with principal offices
located in London, Dublin, San Francisco, and Singapore. These offices are
supported by a global network of investment/research offices in Baltimore,
Budapest, Rio de Janeiro, and Poznan. AIB Govett serves as investment subadvisor
to two other U.S. mutual fund portfolios. AIBAMH had, as of March 31, 2000,
approximately $16.97 billion under management, primarily in non-U.S. funds. For
a list of investment companies having a similar investment policy to the
Portfolio which are subadvised by AIB Govett, including AIB Govett's rates of
compensation, see Exhibit B. AIB Govett is located at 250 Montgomery Street,
Suite 1200, San Francisco, CA 94104. AIBAMH's principal business address is
[____________________].
The names, titles, and principal occupations of the directors and
executive officers of AIB Govett are set forth in the following table:
14
<PAGE> 17
<TABLE>
<CAPTION>
NAME POSITION WITH AIB GOVETT PRINCIPAL OCCUPATION
---- ------------------------ --------------------
<S> <C> <C>
Keith E. Mitchell Managing Director and President Business Development and Client
Service
Colm Doherty Chairman Head of AIB Capital Markets-
Investment Banking
Noel McEnvoy Director Chief Executive Officer-AIB Asset
Management Holdings Limited
John Murray Joint Chief Investment Officer
Eileen Fitzpatrick Joint Chief Investment Officer
Colin Kreidewolf Senior Vice President, Chief
Financial Officer
Paul Runge Senior Vice President
Lee Cook Senior Vice President
</TABLE>
The principal business address of each person listed above is 250
Montgomery Street, Suite 1200, San Francisco, CA 94104.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board approved the appointment of AIB Govett as investment
subadvisor to the Portfolio and recommends that shareholders approve the
proposed Subadvisory Agreement. In approving the Subadvisory Agreement, the
Board analyzed the factors discussed above and other factors that would affect
positively or negatively the provision of portfolio management services.
The Board recommends that AIB Govett be retained as investment
subadvisor to the Portfolio. If Proposal 3 is not approved by shareholders, AIA
will continue as the Portfolio's investment advisor and will have investment
discretion with respect to 100% of the Portfolio's assets. The Trustees would
then consider whether any other arrangements for the provision of investment
advisory services are appropriate and in the best interests of the Portfolio's
shareholders.
VOTE REQUIRED
Approval of Proposal 3 requires the affirmative vote of the holders of
the lesser of (1) 67% or more of the shares of the Portfolio present at the
Meeting, if the holders of more than 50% of the outstanding Portfolio shares are
present or represented by proxy at the Meeting, or (2) more than 50% of the
outstanding shares of the Portfolio entitled to vote at the Meeting. The
retention of AIB Govett, as investment subadvisor to the Portfolio, is
completely contingent upon the approval of Proposals 1 and 2, and will not
become effective unless those proposals are approved. If Proposals 1 and 2 are
not approved, AIA will continue to perform its duties under the current advisory
agreement and the Portfolio will continue to invest in other mutual funds, until
the Board decides
15
<PAGE> 18
what further action to take with respect to the Portfolio.
THE BOARD RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 3.
GENERAL INFORMATION
DISTRIBUTION, ADMINISTRATIVE AND TRANSFER AGENCY SERVICES
SEI Investments Distribution Co., One Freedom Valley Drive, Oaks, PA
19456, serves as the distributor of the Portfolio's shares. SEI Investments
Mutual Funds Services, One Freedom Valley Drive, Oaks, PA 19456, serves as the
Portfolio's administrator. Allfirst Trust Company N.A., 25 South Charles Street,
Baltimore, MD 21201, also provides administrative services to the Portfolio
pursuant to a sub-administration agreement with SEI Investments Mutual Funds
Services. The Portfolio's transfer agent is SEI Investments Management
Corporation, One Freedom Valley Drive, Oaks, PA 19456. SEI Investments
Management Corporation has subcontracted transfer agency services to State
Street Bank and Trust Company, One Heritage Drive, North Quincy, MA 02171.
SOLICITATION OF PROXIES
The Trust will request brokerage firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
held of record by such persons. The Trust may reimburse such brokerage firms,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to the solicitation of
proxies by mail, certain officers and regular agents of the Trust, who will
receive no additional compensation for their services, may use their efforts, by
telephone or otherwise, to request the return of proxies. The costs associated
with such solicitation and the Meeting will be borne by [______].
The Trust has retained [_____________], a professional proxy
solicitation firm, to assist in the solicitation of proxies. You may receive a
telephone call from this firm concerning this proxy solicitation. The Trust
estimates that [____] will be paid fees of approximately [___________]. In
addition, [____] will be paid for its expenses incurred; the amount of these
expenses will depend on the nature and extent of the services provided in
connection with the solicitation.
OTHER BUSINESS
The Board does not know of any matters to be presented at the Meeting
other than those as set forth herein, but should any other matter requiring a
vote of shareholders arise, including any question as to an adjournment of the
Meeting, the persons named as proxies in the enclosed Proxy will vote thereon
according to their best judgment in the interests of the Portfolio.
16
<PAGE> 19
SHAREHOLDER PROPOSALS
A shareholder's proposal intended to be presented at any subsequent
meeting of shareholders of the Portfolio must be received by the Trust a
reasonable time before the Board of Trustees makes the solicitation relating to
such meeting, in order to be included in the Portfolio's proxy statement and
form of proxy relating to such meeting. Shareholders should send their written
proposals to the Secretary of the Trust, One Freedom Valley Drive, Oaks, PA
19456. Shareholder proposals that are submitted in a timely manner will not
necessarily be included in the Portfolio's proxy materials. Inclusion of such
proposals is subject to limitations under the federal securities laws. Normally,
there will be no annual meeting of shareholders in any year, except as required
under the 1940 Act.
Dated: June __, 2000
17
<PAGE> 20
EXHIBIT A
5% Shareholders of International Equity Selection Portfolio
<TABLE>
<CAPTION>
Name and Address Percent of
of Shareholder Class of Shares Number of Shares Portfolio
-------------- --------------- ---------------- ---------
<S> <C> <C> <C>
</TABLE>
18
<PAGE> 21
EXHIBIT B
FEE CHART FOR COMPARABLE FUNDS
SUBADVISED BY
AIB GOVETT
<TABLE>
<CAPTION>
ADVISORY FEE TOTAL AVERAGE NET ASSETS FOR THE
FUND (BASED ON AVERAGE DAILY NET ASSETS) MOST RECENTLY COMPLETED FISCAL YEAR
---- ----------------------------------- -----------------------------------
<S> <C> <C>
Govett International Equity Fund 1.50% 21,100,000
Govett Securities & Investments
Limited-International Equity
Portfolio-Jersey Channel Islands 1.50% 17,400,000
</TABLE>
19
<PAGE> 22
EXHIBIT C
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of _________ __, 2000 by and between Allied
Investment Advisors, Inc., a Maryland corporation (the "Adviser"), AIB Govett,
Inc., a Maryland corporation (the "Sub-Adviser"), and ARK Funds, a Massachusetts
business trust (the "Trust"), on behalf of its International Equity Selection
Portfolio (the "Fund");
WHEREAS, the Adviser is the investment adviser for each of the
portfolios of the Trust, an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for the Fund;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to provide
------------
certain sub-investment advisory services to the Fund for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Adviser has furnished the Sub-Adviser
----------------------
with copies properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed
with the Secretary of State of the Commonwealth of Massachusetts on
March 19, 1993, and all amendments and supplements thereto or
restatements thereof (such Declaration, as presently in effect and as
it shall from time to time be amended or restated, is herein called the
"Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Sub-Adviser and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), (File No.
33-53690) and under the 1940 Act (File No. 811-7310), as filed with the
Securities and Exchange Commission ("SEC") and all amendments thereto
insofar as such Registration Statement and such amendments relate to
the Fund; and
20
<PAGE> 23
(e) The Trust's most recent prospectus and Statement of
Additional Information for the Fund (such prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto, are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time
with copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Trust's Board of
-----------
Trustees and the Adviser, the Sub-Adviser will furnish an investment program in
respect of, and make investment decisions for, all assets of the Fund and place
all orders for the purchase and sale of securities, all on behalf of the Fund.
In the performance of its duties, the Sub-Adviser will satisfy its fiduciary
duties to the Fund (as set forth in Section 8, below), and will monitor the
investments of the Fund, and will comply with the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund. The Sub-Adviser
and the Adviser will each make its officers and employees available to the other
from time to time at reasonable times to review investment policies of the Fund
and to consult with each other regarding the investment affairs of the Fund. The
Sub-Adviser shall also make itself available to the Board of Trustees at such
times as the Board of Trustees shall reasonably request.
The Sub-Adviser represents and warrants that it is in
compliance with all applicable rules and regulations of the SEC pertaining to
its investment advisory activities and agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will conform with all applicable rules and regulations of
the SEC pertaining to its investment advisory activities;
(c) will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any
broker or dealer. In placing orders with brokers or dealers, the
Sub-Adviser will attempt to obtain the best combination of prompt
execution of orders in an effective manner and at the most favorable
price. Consistent with this obligation, when the execution and price
offered by two or more brokers or dealers are comparable, the
Sub-Adviser may, in its discretion, purchase and sell portfolio
securities to and from brokers and dealers who provide the Sub-Adviser
with research, analysis, advice and other services. In no instance will
portfolio securities be purchased from or sold to any affiliated person
of either the Trust, the Adviser, or the Sub-Adviser, except as may be
permitted under the 1940 Act;
(d) will report regularly to the Adviser and will make
appropriate persons available for the purpose of reviewing at
reasonable times with representatives of the Adviser and the Board of
Trustees the management of the Fund, including, without limitation,
review of the investment strategies of the Fund, the performance of the
Fund in relation to standard industry indices, interest rate
considerations and general
21
<PAGE> 24
conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Adviser;
(e) will maintain books and records with respect to the Fund's
securities transactions and will furnish the Adviser and the Trust's
Board of Trustees such periodic and special reports as the Board of
Trustees or the Adviser may request; and
(f) will act upon instructions from the Adviser not
inconsistent with the fiduciary duties hereunder.
The Sub-Adviser shall have the right to execute and deliver,
or cause its nominee to execute and deliver, all proxies and notices of meetings
and other notices affecting or relating to the securities of the Fund.
4. Books and Records. In compliance with the requirements of Rule 31a-3
------------------
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund, on behalf of the Trust, are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records upon
the Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser will
---------
pay all expenses incurred by it in connection with its activities under this
Agreement.
6. Compensation. For the services to be provided by the Sub-Adviser
-------------
pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee
as set forth on the Fee Schedule attached to this Agreement.
7. Services to Others. The Adviser understands, and has advised the
-------------------
Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the future
act, as an investment adviser to fiduciary and other managed accounts, and as
investment adviser, sub-investment adviser, and/or administrator to other
investment companies. The Adviser has no objection to the Sub-Adviser's acting
in such capacities, provided that whenever the Fund and one or more other
investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed by the Sub-Adviser to be equitable to each
company. The Adviser recognizes, and has advised the Trust's Board of Trustees,
that in some cases this procedure may adversely affect the size of the position
that the Fund may obtain in a particular security. In addition, the Adviser
understands, and has advised the Trust's Board of Trustees, that the persons
employed by the Sub-Adviser to assist in the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of the
Sub-Adviser or any of its affiliates to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature so long as
its services under this Agreement are not impaired thereby.
22
<PAGE> 25
8. Limitation of Liability of Sub-Adviser. The Sub-Adviser shall not be
---------------------------------------
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or the Adviser in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of the Fund, except a loss resulting from the willful misfeasance, bad
faith or gross negligence of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. Duration and Termination. This Agreement will become effective as of
-------------------------
the date hereof provided that it has been approved by vote of a majority of the
outstanding voting securities of the Fund in accordance with the requirements
under the 1940 Act, and, unless sooner terminated as provided herein, will
continue in effect for successive periods of 12 months, each ending on the day
preceding the anniversary of the Agreement's effective date of each year,
provided that such continuation is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not interested persons of the Trust, the Sub-Adviser, or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) by the vote of a majority of the Trust's Board of Trustees or, as to each
Fund, by the vote of the holders of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to
the Fund at any time, without the payment of any penalty, by the Adviser, by
vote of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund on sixty (60) days' written notice to
the Sub-Adviser and by the Sub-Adviser on sixty (60) days' written notice to the
Adviser and the Trust. This Agreement will terminate automatically upon
termination of the investment advisory agreement between the Trust and the
Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" have the
same meaning of such terms in the 1940 Act).
10. Amendment of this Agreement. No material provision of this
----------------------------
Agreement may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
11. Miscellaneous. The captions in this Agreement are included for
--------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
The names "ARK Funds" and "Trustees of ARK Funds" refer respectively to
the Trust created by, and the Trustees, as trustees but not individually or
personally, acting from time to time under, the Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "ARK Funds" entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only the
assets of the
23
<PAGE> 26
Trust. Persons dealing with a Fund must look solely to the assets of the Trust
belonging to the Fund for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
ALLIED INVESTMENT ADVISORS, INC.
By:______________________________
Name:____________________________
Title:___________________________
AIB GOVETT, INC.
By:______________________________
Name:____________________________
Title:___________________________
ARK FUNDS
By:______________________________
Name:____________________________
Title:___________________________
24
<PAGE> 27
ARK FUNDS
INTERNATIONAL EQUITY SELECTION PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PA 19456
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
JULY 10, 2000
This Proxy is Solicited on Behalf of the Board of Trustees of ARK Funds
The undersigned Shareholder(s) of the ARK International Equity Selection
Portfolio ("the Portfolio") hereby appoint(s) James Foggo, Laurie Brooks and
Timothy Barto, each of them (with full power of substitution), the proxy or
proxies of the undersigned to attend the Special Meeting of Shareholders ("the
Meeting") of the Portfolio to be held on Monday, July 10, 2000, and any
adjournment thereof, to vote all of the shares of the Portfolio that the signer
would be entitled to vote on the proposals set forth below if personally present
at the Meeting and on any matters brought before the Meeting, as is set forth in
the Notice of Special Meeting of Shareholders. Said proxies are directed to vote
or refrain from voting pursuant to the Proxy Statement as checked below.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED HEREIN BY THE SIGNING
SHAREHOLDER(S). IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR THE PROPOSAL.
PLEASE DATE, SIGN AND RETURN PROMPTLY
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
ARK INTERNATIONAL EQUITY SELECTION PORTFOLIO
<TABLE>
<S> <C> <C> <C>
1. To approve a change in investment policy FOR AGAINST ABSTAIN
whereby the Portfolio would invest directly
in the securities of companies located in
countries other than the United States, rather
than in shares of mutual funds investing in
these companies.
2. To approve an increase in the investment advisory fee FOR AGAINST ABSTAIN
payable by the Portfolio to Allied Investment Advisors,
Inc.
3. To approve an investment subadvisory FOR AGAINST ABSTAIN
contract with AIB Govett, Inc.
4. To transact such other business as may properly come
before the Special Meeting or any adjournment thereof.
</TABLE>
The undersigned acknowledges receipt with this proxy of a copy of the
Notice of Special Meeting of Shareholders and the Proxy Statement of the Board
of Trustees.
Your signature(s) on this proxy should be exactly as your name or names
appear on this proxy. If the shares are held jointly, each holder should sign.
If signing is by attorney, executor, administrator, trustee or guardian, please
print your full title below the signature.
Date ------------
-------------------------------------------------------------
Shareholder sign here Co-owner sign here
