SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by 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 Sec. 240.14a-11(c) or Sec.
240.14a-12
LEHMAN BROTHERS LATIN AMERICA GROWTH FUND, INC.
(Name of Registrant as Specified In Its Charter)
CHRISTINE PASTELIS RITCH
ASSISTANT SECRETARY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box.)
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
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*Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identity the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or schedule and the date of
its filing.
1) Amount Previously Paid:
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LEHMAN BROTHERS LATIN AMERICA GROWTH FUND, INC.
3 World Financial Center
New York, New York 10285
Dear Stockholder:
We are writing to you in connection with the upcoming
Special Meeting of Stockholders. The attached Notice of Meeting and
Proxy Statement describe the pending sale of the portion of Lehman
Brothers Global Asset Management Limited, the Fund's Investment Adviser,
relating to its investment advisory agreement with the Fund to IDS
International Inc., a subsidiary of American Express Company.
As we announced in the Fund's recent semi-annual report, Mr.
Ian King, the Fund's portfolio manager since its inception, joined IDS
in June. One of our paramount goals has been to provide the Fund and
our other clients with high quality investment advisory services. We
believed that the interests of the Fund's shareholders would best be
served by providing for continuity in the management of the Fund's
portfolio. Accordingly, the Fund's Board of Directors approved an
interim sub-advisory arrangement with IDS, effective with Mr. King
joining IDS, under which IDS has been providing day-to-day management of
the Fund's assets with Mr. King continuing to act as the Fund's
portfolio manager.
It is now proposed that, in accordance with applicable legal
requirements, the Fund's stockholders approve a new investment advisory
agreement with IDS under which IDS will take the place of LBGAM as the
Fund's investment adviser. We strongly believe that, after necessary
approvals are obtained, IDS will continue to provide the same level of
service to the Fund and its stockholders.
The Fund's Board of Directors carefully considered these
matters and has unanimously recommended that you approve them.
As Chairman and President of the Fund, respectively, we
fully support this recommendation and urge you to return your proxy card
without delay. We greatly appreciate your support for the Fund since
its inception last November.
ANDREW D. GORDON KIRK D. HARTMAN
Chairman of the Board of Directors President
July __, 1995
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be
of assistance to you and avoid the time and expense involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it
appears in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name
of the party signing should conform exactly to a name shown in the
registration.
3. All Other Accounts: The capacity of the individual
signing the proxy card should be indicated unless it is reflected in the
form of registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. John Doe, Treasurer
(2) ABC Corp. John Doe
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. John B. Smith
/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
LEHMAN BROTHERS LATIN AMERICA GROWTH FUND, INC.
3 World Financial Center
New York, New York 10285
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
___________ __, 1995
To the Stockholders:
A Special Meeting of Stockholders of Lehman Brothers Latin America
Growth Fund Inc. (the "Fund") will be held at 3 World Financial Center, New
York, New York 10285, __ floor, on Thursday, September 28, 1995, at 9:30 a.m.,
for the purposes of considering and voting upon:
1. The approval of a new Investment Advisory Agreement
between the Fund and IDS International Inc. ("IDS") containing the same terms
and conditions, including the fee charged to the Fund, as the Fund's existing
Investment Advisory Agreement with Lehman Brothers Global Asset Management
Limited ("LBGAM") and ratification of the Sub-Investment Advisory Agreement
(the "Sub-Advisory Agreement") among LBGAM, IDS and the Fund, pursuant to
which IDS has acted as sub-investment adviser to the Fund since June 16, 1995.
(Proposal 1)
2. The approval of an amendment to the Fund's charter to
change the name of the Fund to "Latin America Growth Fund, Inc." (Proposal 2)
3. Any other business that may properly come before the
meeting.
This Special Meeting of Stockholders is being called because
LBGAM, on July 6, 1995, entered into an agreement with IDS to sell the portion
of its investment management business relating to its Investment Advisory
Agreement with the Fund to IDS. Accordingly, a new Investment Advisory
Agreement with IDS, to replace the existing Investment Advisory Agreement with
LBGAM, and a change in the Fund's name to "Latin America Growth Fund", both of
which will become effective upon the consummation of the sale, are proposed.
In addition, stockholders are being asked to ratify the Sub-Advisory
Agreement.
The close of business on July 24, 1995 has been fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors,
Patricia L. Bickimer
Secretary
TO AVOID UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU to
indicate voting instructions on the enclosed proxy, date and sign it and
return it promptly in the envelope provided, no matter how large or how small
your holdings may be.
LEHMAN BROTHERS LATIN AMERICA GROWTH FUND, INC.
3 World Financial Center
New York, New York 10285
PROXY STATEMENT
This proxy statement is furnished in connection with a
solicitation by the Board of Directors of the Lehman Brothers Latin America
Growth Fund, Inc. (the "Fund") of proxies to be used at the Special Meeting of
Stockholders of the Fund to be held at 3 World Financial Center, New York, New
York 10285, __ floor, on Thursday, September 28, 1995 at 9:30 a.m. (and at any
adjournment or adjournments thereof) for the purposes set forth in the
accompanying Notice of Special Meeting of Stockholders. This proxy statement
and the accompanying form of proxy are first being mailed to stockholders on
or about ____________ __, 1995. Stockholders who execute proxies retain the
right to revoke them by written notice received by the Secretary of the Fund
at any time before they are voted. Unrevoked proxies will be voted in
accordance with the specifications thereon and, unless specified to the
contrary, will be voted FOR Proposals 1 and 2. The close of business on July
24, 1995 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting. Each
stockholder is entitled to one vote for each full share and an appropriate
fraction of a vote for each fractional share held. On the record date there
were 4,007,169 shares outstanding.
In the event that a quorum is not present at the Special Meeting,
or in the event that a quorum is present but sufficient votes to approve
either of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a
majority of those shares represented at the meeting in person or by proxy.
The persons named as proxies will vote those proxies which they are entitled
to vote FOR or AGAINST any such proposal in their discretion. A stockholder
vote may be taken on one or more of the proposals in this proxy statement
prior to any such adjournment if sufficient votes have been received for
approval. Under the By-Laws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of record of a majority of the
outstanding shares of Common Stock of the Fund entitled to vote at the
meeting.
At June 1, 1995, no person owned of record or, to the knowledge of
management, beneficially owned more than 5% of the Fund's outstanding shares.
At June 1, 1995, directors and officers of the Fund as a group beneficially
owned less than 1% of the outstanding shares of the Fund.
A copy of the Fund's initial semi-annual report for the period
November 7, 1994 through April 30, 1995 may be obtained without charge by
writing to The Shareholder Services Group, Inc., 53 State Street, Boston,
Massachusetts 02109, or calling 1-800-331-1710.
Proposal 1: Approval of the IDS Agreement and Ratification of the Sub-Advisory
Agreement.
At the meeting, stockholders will be asked to approve a new
Investment Advisory Agreement (the "IDS Agreement") between the Fund and IDS
International Inc. ("IDS") and to ratify IDS's having acted as interim sub-
investment adviser since June 16, 1995 pursuant to a sub-investment advisory
agreement (the "Sub-Advisory Agreement") among Lehman Brothers Global Asset
Management Limited ("LBGAM"), the Fund's current investment adviser, IDS and
the Fund. The approval will become effective upon the closing of the
Acquisition (as described below). A copy of the IDS Agreement is set forth as
Exhibit A to this proxy statement, and a copy of the Sub-Advisory Agreement is
set forth as Exhibit B to this proxy statement.
The Acquisition
On June 14, 1995, Lehman Brothers Holdings Inc., LBGAM's parent
company, announced that an agreement in principle had been reached to sell the
portion of LBGAM's investment management business related to the Fund to IDS.
On June 14, 1995, the Board of Directors of the Fund approved IDS's acting as
a sub-investment adviser for the Fund pursuant to the Sub-Advisory Agreement,
on an interim basis, to provide continuity of management of the Fund's
portfolio in light of the decision by Mr. Ian King, portfolio manager of the
Fund since its inception, to leave LBGAM and join IDS on June 16, 1995.
Effective as of July 6, 1995, LBGAM and IDS entered into an Asset
Purchase Agreement (the "Purchase Agreement") which provides for the purchase
by IDS of the portion of the investment management business of LBGAM related
to the Fund. The proposed purchase of assets pursuant to the Purchase
Agreement is referred to in this proxy statement as the "Acquisition". The
Purchase Agreement provides that LBGAM will receive an initial cash payment of
$600,000 at the closing of the Acquisition plus for three years thereafter an
additional monthly payment equal to approximately one-third of the advisory
fees received by IDS from the Fund. The consummation of the Acquisition is
subject to certain conditions, including approval by the Fund's stockholders
of the IDS Agreement and the change in the Fund's name to "Latin America
Growth Fund, Inc.", as discussed below under Proposal 2. The closing of the
Acquisition is scheduled to occur on the day on which the required approval of
the stockholders of the Fund is obtained or on such later date as may be
mutually agreed to by the parties.
IDS has informed the Board of Directors of the Fund that,
following the consummation of the Acquisition, the business of the Fund will
be operated in substantially the same manner as at present. IDS has
represented that it will provide the same level of management services as
those which had been provided by LBGAM. Mr. King began employment with IDS on
June 16, 1995, and has since that date continued to act as portfolio manager
for the Fund under the Sub-Advisory Agreement. IDS has represented that it
intends to have Mr. King remain as portfolio manager following approval of the
IDS Agreement and that no changes are expected in the investment policies of
the Fund as a result of the Acquisition.
It is anticipated that subsequent to the consummation of the
Acquisition, Andrew D. Gordon, Chairman of the Fund and Kirk D. Hartman,
President of the Fund, each of whom is also an officer and employee of LBGAM's
U.S. affiliates, Lehman Brothers Global Asset Management Inc. and Lehman
Brothers Inc., will resign from their respective positions with the Fund. In
addition, it is anticipated that subsequent to the consummation of the
Acquisition and subject to the requirements of Section 15(f) of the Investment
Company Act of 1940, as amended (the "1940 Act"), Peter L. Lamaison, Director,
President and Chief Executive of IDS will be appointed to the Board to replace
Mr. Gordon. Mr. Gordon and Mr. Hartman are both shareholders of Lehman
Brothers Holdings Inc., the ultimate parent of LBGAM, and American Express
Company, the ultimate parent of IDS.
LBGAM Agreement
On October 24, 1994, the Board of Directors, including a majority
of the independent directors of the Fund approved the current Investment
Advisory Agreement with LBGAM (the "LBGAM Agreement"), effective for an
initial two-year period. The LBGAM Agreement was submitted for approval and
approved by the Fund's sole stockholder by written consent on October 27,
1994, prior to the public offering of the Fund's Common Stock. Under the
LBGAM Agreement, LBGAM is paid a monthly fee by the Fund at the annual rate of
1.25% of the value of the Fund's average daily net assets. The aggregate fee
paid by the Fund under the LBGAM Agreement from the commencement of the Fund's
operations until June 30, 1995 was $412,516.
The LBGAM Agreement provides for its automatic termination in the
event of its assignment. The consummation of the Acquisition will result in
an "assignment" as that term is used in the 1940 Act and consequently in the
termination of the LBGAM Agreement. In order for IDS to serve as investment
adviser to the Fund after the consummation of the Acquisition, a new
investment advisory agreement between IDS and the Fund must be approved (1) by
a majority of the Fund's directors who are not parties to the new agreement or
interested persons (as defined in the 1940 Act) of those parties and (2) by a
majority of the outstanding voting securities of the Fund.
Interim Sub-Investment Advisory Agreement
Since June 16, 1995, when Mr. King joined IDS, IDS has acted as
sub-investment adviser to the Fund pursuant to the Sub-Advisory Agreement.
The Board of Directors of the Fund approved the Sub-Advisory Agreement on June
14, 1995. It is being proposed that stockholders of the Fund ratify the Sub-
Advisory Agreement at the meeting.
Under the Sub-Advisory Agreement, IDS has had since June 16, 1995
day-to-day responsibility for providing investment advisory services to the
Fund, subject to the supervision and direction of the Fund's directors and in
consultation with LBGAM. In consideration of IDS's services, LBGAM pays IDS
from the investment advisory fees that it receives from the Fund a monthly fee
at a rate equal to 1.125% of the value of the Fund's average daily net assets.
From June 16, 1995 to June 30, 1995, the aggregate fee paid by LBGAM to IDS
under the Sub-Advisory Agreement was $23, 164. The total amount of investment
advisory fees paid by the Fund was not changed by the Sub-Advisory Agreement.
The Sub-Advisory Agreement terminates on the earlier of October
14, 1995 or the termination of the LBGAM Agreement. In addition, the Sub-
Advisory Agreement may be terminated upon 60 days' notice by the Fund's Board
of Directors, the Fund's stockholders, LBGAM or IDS. In addition, the Sub-
Advisory Agreement may be terminated by LBGAM without notice in the event that
Mr. King ceases to act as the Fund's primary portfolio manager.
Related Board Action
The Board of Directors of the Fund, including all of the directors
who are not parties to the IDS Agreement or interested persons of those
parties, at a meeting held on July 7, 1995 approved, and directed that there
be submitted to the stockholders at a duly called Special Meeting, the
proposed IDS Agreement. The IDS Agreement is described below and is included
as Exhibit A to this proxy statement. The Board of Directors also approved
for submission to stockholders a change in the name of the Fund to "Latin
America Growth Fund, Inc." If the IDS Agreement is approved by the Fund's
stockholders, the IDS Agreement will take effect upon the consummation of the
Acquisition.
In considering whether to approve the IDS Agreement and submit it
to stockholders for their approval, the Board of Directors considered a number
of factors, including the business organization, financial resources and
personnel of IDS and its affiliates, and their anticipated effect upon the
Fund. In addition, the directors reviewed the skills and capability of Mr.
King and the representation that there would be continuity in the investment
advisory services provided to the Fund by Mr. King as an employee of IDS.
Under Section 15(f) of the 1940 Act, an investment adviser to an
investment company may receive "any amount or benefit" in connection with a
sale of any interest in such investment adviser which results in an assignment
of the investment advisory contract with the investment company, provided two
conditions are met: (1) the transaction does not impose an "unfair burden" on
the investment company and (2) for a three-year period following the
transaction, 75% of the members of the investment company's board of directors
are not "interested persons" (as defined in the 1940 Act) of either the
predecessor or successor investment adviser. LBGAM has advised the Fund's
Board of Directors that it is not aware of any arrangement, express or
implied, as part of the Acquisition that would constitute an "unfair burden"
on the Fund within the meaning of Section 15(f), and IDS has agreed in the
Purchase Agreement to use its best efforts to assure compliance with Section
15(f).
Description of IDS and the IDS Agreement
The terms of the IDS Agreement and the LBGAM Agreement are
identical except for the date and term of the Agreement, the replacement of
LBGAM with IDS as the Fund's investment adviser and reflection of the change
in the name of the Fund to Latin America Growth Fund, Inc. The IDS Agreement
provides that, subject to the supervision of the Board of Directors of the
Fund, IDS shall have general responsibility for the investment advisory
services provided to the Fund, and shall, among other things, manage the
Fund's portfolio in accordance with the Fund's investment objective, policies
and restrictions, make investment decisions for the Fund, place orders to
purchase and sell securities and employ portfolio managers and securities
analysts to provide research services to the Fund.
The IDS Agreement will remain in effect for twelve months from the
date of its execution and thereafter will continue for periods of one year if
such continuance is specifically approved at least annually by (1) the Board
of Directors of the Fund or a vote of a majority of the Fund's outstanding
securities and (2) by a majority of those directors of the Fund who are not
parties to the IDS Agreement or interested persons of any such party. The IDS
Agreement also provides for its termination, without the payment of any
penalty, on 60 days' written notice to the other party to the IDS Agreement by
the acting party and that it will terminate in the event of its assignment.
IDS is a wholly-owned subsidiary of American Express Financial
Corporation, which is in turn a wholly-owned subsidiary of American Express
Company. Through its offices in Minneapolis, London, Hong Kong and Singapore,
IDS provides a full range of equity and fixed income investment advisory
services for its institutional clients.
The names, positions with IDS and principal occupation of each
executive officer and director of IDS are set forth in the following tables.
Position with IDS and
Name Principal Occupation
Peter J. Anderson Director, Chairman of the
Board
William H. Dudley Director
Mark S. Hays Executive Vice President
Paul C. Hopkins Executive Vice President and
Chief Investment Officer
Peter L. Lamaison Director, President and
Chief Executive
Stephen W. Roszell Director
Elizabeth X.Q. Tran Executive Vice President
Wesley W. Wadman Executive Vice President
William N. Westhoff Director
The principal business address of IDS and Messrs. Hays, Hopkins,
Lamaison and Wadman is 11th Floor, Dashwood House, 69 Old Broad Street, London
EC2M 1QS. The principal business address of American Express Financial
Corporation and Messrs. Anderson, Dudley, Roszell and Westhoff is 80 South 8th
Street, IDS Tower, Minneapolis, Minnesota 55440-0010. The principal business
address of Ms. Tran is 35th Floor, One Pacific Place, 88 Queensway, Hong Kong.
The principal business address of American Express Company is American Express
Tower, World Financial Center, 200 Vesey Street, New York, New York 10285.
If approval of the IDS Agreement is not obtained, LBGAM will
continue to act as the investment adviser to the Fund pursuant to the LBGAM
Agreement.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED" DIRECTORS, UNANIMOUSLY
RECOMMEND THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF THE IDS AGREEMENT AND
THE RATIFICATION OF THE SUB-ADVISORY AGREEMENT.
Required Vote
In accordance with the requirements of the 1940 Act, the
affirmative vote of (a) 67% or more of the shares of the Fund present at the
Special Meeting, if more than 50% of the then outstanding shares are present
or represented by proxy, or (b) more than 50% of the then outstanding shares
of the Fund, whichever is less, is required for approval of the IDS Agreement.
Proposal 2: Approval of an amendment to the Fund's charter to change the name
of the Fund to "Latin America Growth Fund, Inc."
At the meeting, stockholders will be asked to approve a change in
the Fund's name to "Latin America Growth Fund, Inc." The Board of Directors
of the Fund unanimously approved the change of the Fund's name at a meeting
held on July 7, 1995 and directed that the name change be submitted to
stockholders. The approval would become effective upon the closing of the
Acquisition.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE CHANGE IN THE FUND'S NAME TO "LATIN AMERICA GROWTH FUND, INC."
Required Vote
The affirmative vote of at least 66-2/3% of the outstanding shares
of the Fund is required to approve the change in the Fund's name to "Latin
America Growth Fund, Inc."
Additional Information
Description of LBGAM
LBGAM is a wholly-owned subsidiary of Lehman Brothers Holdings
Plc., which is in turn a wholly-owned subsidiary of Lehman Brothers U.K.
Holdings Limited, which is in turn a wholly owned subsidiary of Lehman
Brothers U.K. Holdings (Delaware) Inc., which is in turn a wholly owned
subsidiary of Lehman Brothers Holdings Inc. ("Holdings"), a public company.
Prior to May 31, 1994, LBGAM was an indirect subsidiary of American Express
Company through American Express Company's ownership of a majority of the
voting stock of Holdings.
The names, positions with LBGAM and principal occupation of each
executive officer and director of LBGAM are set forth in the following table.
Position with LBGAM and
Name Principal Occupation
Peter Barbieri Director
Pauline Barrett Director and Chief Investment
Officer
Philip Howard Director
Laura Panayotou Company Secretary
The principal business address of Lehman Brothers Holdings Plc.,
Lehman Brothers U.K. Holdings Limited and Mr. Howard is One Broadgate, London,
EC2M 7HA England. The principal business address of LBGAM, Ms. Barrett and
Ms. Panayotou is Two Broadgate, London EC2M 7HA England. The principal
business address of Lehman Brothers U.K. Holdings (Delaware) Inc., Holdings
and Mr. Barbieri is 3 World Financial Center, 200 Vesey Street, New York, New
York 10285.
Administration
The Shareholder Services Group, Inc. ("TSSG") serves as the Fund's
administrator. TSSG's address is One Exchange Place, BOS 425, 53 State
Street, Boston, Massachusetts 02109.
Other Business
The Board of Directors of the Fund does not know of any other
matter which may come before the meeting. If any other matter properly comes
before the meeting, it is the intention of the persons named in the proxy to
vote the proxies in accordance with their judgment on that matter.
Proposals to be Submitted by Stockholders
All proposals by stockholders of the Fund which are intended to be
presented at the Fund's initial Annual Meeting of Stockholders to be held in
1996 must be received by the Fund for inclusion in the Fund's proxy statement
and proxy relating to that meeting no later than ________________ __, 1995.
Expenses of Proxy Solicitation
The costs of preparing, assembling and mailing material in
connection with this solicitation of proxies will be borne by LBGAM. Proxies
may also be solicited personally by officers of the Fund and by regular
employees of LBGAM, TSSG or their affiliates, or other representatives of the
Fund or by telephone or telegraph, in addition to the use of mails. Brokerage
houses, banks and other fiduciaries may be requested to forward proxy
solicitation material to their principals to obtain authorization or the
execution of proxies, and they will be reimbursed by LBGAM for out-of-pocket
expenses incurred in this connection. ________________ has been retained to
assist in the solicitation of proxies at a fee to be paid by LBGAM and
estimated at $______, plus disbursements.
Notification Regarding Brazilian Investors
The Fund is not intended to be an investment vehicle for Brazilian
residents. Accordingly, Brazilian residents are encouraged not to purchase
shares in the Fund.
____________ __, 1995
LATIN AMERICA GROWTH FUND, INC.
INVESTMENT ADVISORY AGREEMENT
_______________, 1995
IDS International Inc.
11th Floor Dashwood House
69 Old Broad Street
London, England EC2M1QS
Ladies and Gentlemen:
The Latin America Growth Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, confirms its agreement with
IDS International Inc. (the "Advisor") regarding investment advisory services
to be provided by the Advisor to Fund. The Advisor agrees to provide services
upon the following terms and conditions:
1. Investment Description; Appointment.
The Fund employs its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
the Fund's Articles of Amendment and Restatement dated August 1, 1994, as
amended from time to time (the "Articles of Amendment and Restatement"), in
the prospectus (the "Prospectus") describing the Fund which was filed with the
Securities and Exchange Commission as part of the Fund's Registration
Statement on Form N-2, as amended from time to time, and in the manner and to
the extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Prospectus and the Articles of Amendment and
Restatement have been or will be submitted to the Advisor. The Fund desires
to employ and appoints the Advisor to act as the Fund's investment adviser.
The Advisor accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Advisor.
Subject to the supervision and direction of the Board of Directors
of the Fund, the Advisor will have responsibility for the investment advisory
services provided to the Fund and will exercise this responsibility in
accordance with the Articles of Amendment and Restatement, the Investment
Company Act of 1940 and the Investment Advisers Act of 1940, as the same may
from time to time be amended, and with the Fund's investment objective and
policies as stated in the Prospectus relating to the Fund as from time to time
in effect, as such objective and policies may be amended from time to time.
In connection therewith, the Advisor will, among other things, (a) manage the
Fund's portfolio in accordance with the Fund's investment objective, policies
and restrictions as stated in the Prospectus, as such objective, policies and
restrictions may be amended from time to time; (b) make investment decisions
for the Fund; (c) place orders to purchase and sell securities on behalf of
the Fund; (d) employ professional portfolio managers and securities analysts
who provide research services to the Fund; (e) participate in the formulation
of the Fund's investment policies; (f) analyze economic trends affecting the
Fund; and (g) monitor the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Act of 1934) that are provided to
the Fund and may be considered in selecting brokers or dealers to execute
particular transactions. In providing those services, the Advisor will
conduct a continual program of investment, evaluation and, if appropriate,
sale and reinvestment of the Fund's assets. In addition, the Advisor will
furnish the Fund with whatever statistical information the Fund may reasonably
request with respect to the instruments that the Fund may hold or contemplate
purchasing.
3. Information Provided to the Fund.
The Advisor will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from
time to time with whatever information the Advisor believes is appropriate for
this purpose.
4. Standard of Care.
The Advisor will exercise its best judgment in rendering the
services described in paragraph 2 of this Agreement. The Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates,
except that nothing in this Agreement may be deemed to protect or purport to
protect the Advisor against any liability to the Fund or to shareholders of
the Fund to which the Advisor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Advisor's reckless disregard of its obligations
and duties under this Agreement ("disabling conduct"). The Fund will
indemnify the Advisor against, and hold it harmless from, any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses), including any amounts paid in satisfaction of judgments, in
compromise or as fines or penalties, not resulting from disabling conduct by
the Advisor. Indemnification shall be made only following: (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the Advisor was not liable by reason of disabling conduct, or
(ii) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the Advisor was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Fund who
are neither "interested persons" of the Fund nor parties to the proceeding
("disinterested non-party directors"), or (b) an independent legal counsel in
a written opinion. The Advisor shall be entitled to advances from the Fund
for payment of the reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the manner and to the
fullest extent permissible under law. Prior to any such advance, the Advisor
shall provide to the Fund a written affirmation of its good faith belief that
the standard of conduct necessary for indemnification by the Fund has been met
and a written undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at
least one of the following additional conditions shall be met: (a) the
Advisor shall provide a security in form and amount acceptable to the Fund for
its undertaking; (b) the Fund is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party
directors, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Fund at the
time the advance is proposed to be made, that there is reason to believe that
the Advisor will ultimately be found to be entitled to indemnification.
5. Compensation.
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Advisor on the first business day of each
month a fee for the previous month at the annual rate of 1.25% of the value of
the Fund's average daily net assets. The fee for the period from the date of
this Agreement to the end of the month during which such day occurs will be
prorated according to the proportion that the period bears to the full monthly
period. Upon any termination of this Agreement before the end of a month, the
fee for such part of that month will be prorated according to the proportion
that the period bears to the full monthly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Advisor, the value of the Fund's net assets will be computed at
the times and in the manner specified in the Prospectus, as such times and
manner may be modified from time to time.
6. Expenses.
The Advisor will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will be
responsible for all of the Fund's other expenses and liabilities, including
but not limited to: costs incurred in connection with the Fund's
organization; investment advisory and administration fees; fees for necessary
professional and brokerage services; fees for any pricing service; the costs
of regulatory compliance; the costs associated with maintaining the Fund's
legal existence; and the costs of corresponding with shareholders of the Fund.
7. Services to Other Companies or Accounts.
(a) The Fund understands that the Advisor now acts, will continue
to act and may act in the future as investment adviser to fiduciary and other
managed accounts, and may act in the future as investment adviser to other
investment companies, and the Fund has no objection to the Advisor or Sub-
Investment Advisor so acting, provided that whenever the Fund and one or more
fiduciary and other managed accounts or other investment companies advised by
the Advisor have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
by the Advisor to be equitable to each. The Fund recognizes that in some
cases this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or disposed of by the Fund.
(b) The Fund understands that the persons employed by the Advisor
to assist in the performance of the Advisor'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 Advisor or any
affiliate of the Advisor to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
8. Term of Agreement.
(a) This Agreement will become effective as of the date first
written above and will continue for an initial two-year term and will continue
thereafter so long as the continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund or (ii) a vote of a
"majority" (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on the approval.
(b) This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors of the Fund or by vote of holders of
a majority of the Fund's outstanding voting securities, or upon 60 days'
written notice, by the Advisor.
(c) This Agreement will terminate automatically in the event of
its "assignment" (as defined in the 1940 Act).
9. Representation by the Fund.
The Fund represents that a copy of the Articles of Incorporation
are on file with the Secretary of the State of Maryland.
10. Limitation of Liability.
The execution and delivery of this Agreement have been authorized
by the Board of Directors of the Fund.
11. Governing Law.
This agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
12. Notices.
Any notice hereunder shall be in writing and shall be delivered in
person or be telefax or facsimile (followed by delivery in person) to the
parties at the addresses set forth below.
If to the Fund:
Latin America Growth Fund, Inc.
__________________________
__________________________
If to the Advisor:
IDS International Inc.
11th Floor Dashwood House
69 Old Broad Street
London, England EC2M1QS
13. Counterparts.
This agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
LATIN AMERICA GROWTH FUND, INC.
By:_________________________________
Name:
Title:
Accepted:
IDS INTERNATIONAL INC.
By: ____________________________
Name:
Title:
SUB-INVESTMENT ADVISORY AGREEMENT
LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT LIMITED
Two Broadgate, 7th Floor
London EC2M 7HA, United Kingdom
June 16, 1995
IDS International Inc.
3100 IDS Tower
IDS Tower 10
Minneapolis, MN 55440
Re: Lehman Brothers Latin America Growth Fund, Inc.
Ladies and Gentlemen:
The undersigned ("LBGAM") serves as the investment adviser to
Lehman Brothers Latin America Growth Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, pursuant to an investment
advisory agreement dated October 24, 1994 (the "LBGAM Advisory Agreement").
LBGAM hereby confirms its agreement with you ("IDS") and the Fund (but only
with respect to paragraphs 2, 4, 6, 7, 8, 9 and 10) regarding sub-investment
advisory services to be provided by IDS to the Fund. IDS agrees to provide
such services upon the following terms and conditions:
1. Investment Description; Appointment.
The Fund employs its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
the Fund's Articles of Amendment and Restatement dated August 1, 1994, as
amended from time to time (the "Articles of Amendment and Restatement"), in
the prospectus (the "Prospectus") describing the Fund filed with the
Securities and Exchange Commission as part of the Fund's registration
statement on Form N-2, as amended from time to time, and in the manner and to
the extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Prospectus and the Articles of Amendment and
Restatement have been or will be submitted to IDS. LBGAM desires to employ
and appoints IDS to act as the Fund's sub-investment adviser. IDS accepts the
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Sub-Investment Adviser.
Subject to the supervision and direction of the Board of Directors
of the Fund and in consultation with LBGAM, IDS will have day-to-day
responsibility for the investment advisory services provided to the Fund and
will exercise this responsibility in accordance with the Articles of Amendment
and Restatement, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, as the same may from time to time be amended, and with
the Fund's investment objective and policies as stated in the Prospectus
relating to the Fund as from time to time in effect. In connection therewith,
IDS will, among other things, (a) manage the Fund's portfolio in accordance
with the Fund's investment objective, policies and restrictions as stated in
the Prospectus; (b) make investment decisions for the Fund; (c) place orders
to purchase and sell securities on behalf of the Fund; (d) employ Mr. Ian King
as the Fund's primary portfolio manager and such other professional portfolio
managers as it deems appropriate in connection with rendering the services
described in this paragraph and employ securities analysts who provide
research services to the Fund; (e) participate in the formulation of the
Fund's investment policies; (f) analyze economic trends affecting the Fund;
and (g) monitor the brokerage and research services (as those terms are
defined in section 28(e) of the Securities Act of 1934) that are provided to
the Fund and may be considered in selecting brokers or dealers to execute
particular transactions. In providing those services, IDS will conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, IDS will furnish the Fund or
LBGAM with whatever statistical information the Fund or LBGAM may reasonably
request with respect to the instruments that the Fund may hold or contemplate
purchasing.
3. Information Provided to the Fund and LBGAM.
IDS will keep the Fund and LBGAM informed of developments
materially affecting the Fund, and will, on its own initiative, furnish the
Fund and LBGAM from time to time with whatever information IDS believes is
appropriate for this purpose.
4. Standard of Care.
IDS will exercise its best judgment in rendering the services
described in paragraph 2 of this Agreement. IDS will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except that
nothing in this Agreement may be deemed to protect or purport to protect IDS
against any liability to the Fund or to shareholders of the Fund to which IDS
would otherwise be subject by reason of wilful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of IDS's
reckless disregard of its obligations and duties under this Agreement
("disabling conduct"). The Fund will indemnify IDS against, and hold it
harmless from, any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses), including any amounts paid
in satisfaction of judgments, in compromise or as fines or penalties, not
resulting from disabling conduct by IDS. Indemnification shall be made only
following: (i) a final decision on the merits by a court or other body before
whom the proceeding was brought that IDS was not liable by reason of disabling
conduct, or (ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that IDS was not liable by
reason of disabling conduct by (a) the vote of a majority of a quorum of
directors of the Fund who are neither "interested persons" of the Fund nor
parties to the proceeding ("disinterested non-party directors"), or (b) an
independent legal counsel in a written opinion. IDS shall be entitled to
advances from the Fund for payment of the reasonable expenses incurred by it
in connection with the matter as to which it is seeking indemnification in the
manner and to the fullest extent permissible under law. Prior to any such
advance, IDS shall provide to the Fund a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by the Fund
has been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met:
(a) IDS shall provide a security in form and amount acceptable to the Fund for
its undertaking; (b) the Fund is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party
directors, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Fund at the
time the advance is proposed to be made, that there is reason to believe that
IDS will ultimately be found to be entitled to indemnification.
5. Compensation.
In consideration of the services to be rendered by IDS pursuant to
this Agreement, LBGAM will pay IDS a monthly fee at a rate equal to 1.125% of
the value of the Fund's average daily net assets. Each such payment shall be
made promptly after payment to LBGAM of its monthly fee payable by the Fund
pursuant to the LBGAM Advisory Agreement, and, if such fee payable to LBGAM is
not paid in full when due for any reason, then LBGAM may deduct from the fees
payable to IDS for the same period an amount equal to the same proportion of
IDS' fee that the amount withheld from LBGAM bears to LBGAM's fee, with
restitution to IDS if, as and when the amount withheld from LBGAM's fee is
paid to LBGAM by the Fund.
The fee for the period from the date this Agreement becomes effective to
the end of the month during which this Agreement becomes effective will be
prorated according to the proportion that the period bears to the full monthly
period. Upon any termination of this Agreement before the end of a month, the
fee for such part of that month will be prorated according to the proportion
that the period bears to the full monthly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to IDS, the value of the Fund's net assets will be computed at the
times and in the manner computed for the purpose of determining fees payable
to LBGAM under the LBGAM Advisory Agreement.
6. Expenses.
IDS will bear all expenses in connection with the performance of
its services under this Agreement. LBGAM will be responsible for all expenses
in connection with the performance by it of its services under the LBGAM
Advisory Agreement. The Fund will be responsible for all of the Fund's other
expenses and liabilities, including but not limited to: costs incurred in
connection with the Fund's organization; investment advisory and
administration fees; fees for necessary professional and brokerage services;
fees for any pricing service; the costs of regulatory compliance; the costs
associated with maintaining the Fund's legal existence; and the costs of
corresponding with shareholders of the Fund.
7. Services to Other Companies or Accounts.
(a) The Fund and LBGAM understand that IDS now acts, will
continue to act and may act in the future as investment adviser to fiduciary
and other managed accounts, and may act in the future as investment adviser or
sub-investment adviser to other investment companies, and the Fund and LBGAM
have no objection to IDS so acting, provided that whenever the Fund and one or
more fiduciary and other managed accounts or other investment companies
advised by IDS have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
by IDS to be equitable to each. The Fund and LBGAM recognize that in some
cases this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or disposed of by the Fund.
(b) The Fund and LBGAM understand that the persons employed by
IDS to assist in the performance of IDS'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 IDS or any affiliate of IDS
to engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
8. Term of Agreement.
(a) This Agreement will become effective on the date of this
Agreement and will terminate upon the earlier of (i) the 120th day following
the date of this Agreement and (ii) the termination of the LBGAM Advisory
Agreement.
(b) This Agreement is terminable, without penalty, upon 60 days'
written notice, by (i) the Board of Directors of the Fund, (ii) vote of
holders of a majority of the Fund's outstanding voting securities, (iii) LBGAM
or (iv) IDS. In addition, this Agreement is terminable, without penalty or
prior notice, by LBGAM in the event that Mr. Ian King ceases to act as the
Fund's primary portfolio manager.
(c) This Agreement will terminate automatically in the event of
its "assignment" (as defined in the 1940 Act).
9. Representation by the Fund.
The Fund represents that a copy of the Articles of Incorporation
are on file with the Secretary of State of the State of Maryland.
10. Limitation of Liability.
The execution and delivery of this Agreement have been authorized
by the Board of Directors of the Fund.
11. Governing Law.
This agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
12. Notices.
Any notice hereunder shall be in writing and shall be delivered in
person or by telex or facsimile (followed by delivery in person) to the
parties at the addresses set forth below.
If to the Fund:
Lehman Brothers Latin America Growth Fund, Inc.
3 World Financial Center
New York, NY 10285
If to LBGAM:
Lehman Brothers Global Asset Management Limited
Two Broadgate, 7th Floor
London EC2M 7HA, United Kingdom
If to IDS:
IDS International Inc.
3100 IDS Tower 10
Minneapolis, MN 55440
13. Counterparts.
This agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
LEHMAN BROTHERS GLOBAL
ASSET MANAGEMENT LIMITED
By: /s/ Peter C. Barbieri _
Name: Peter C. Barbieri
Title: Director
Accepted:
IDS INTERNATIONAL INC.
By: /s/ Peter Lamaison _
Name: Peter Lamaison
Title: President
Lehman Brothers Latin America Growth
Fund, Inc. hereby acknowledges and
agrees to the provisions of paragraphs
2,4,6,7,8,9 and 10 of this Agreement.
LEHMAN BROTHERS LATIN AMERICA GROWTH
FUND, INC.
By: /s/ Andrew Gordon _
Name: Andrew Gordon
Title: President
LEHMAN BROTHERS LATIN AMERICA GROWTH FUND, INC. PROXY SOLICITED BY THE BOARD
OF DIRECTORS
The undersigned holder of shares of Common Stock of Lehman Brothers Latin
America Growth Fund, Inc., a Maryland corporation (the "Fund"), hereby
appoints Andrew Gordon, Patricia Bickimer and Christine Pastelis Ritch, and
each of them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on
behalf of the undersigned all shares of Common Stock which the undersigned is
entitled to vote at the Special Meeting of Stockholders of the Fund to be held
at the offices of the Fund at 3 World Financial Center, 200 Vesey Street, New
York, New York 10285 at 9:30 a.m., on September 28, 1995, and any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Special
Meeting and Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in
person or by substitute (or, if only one shall be so present, then that one)
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
NOTE: Please sign
exactly as your name appears on this
Proxy. If joint owners,
EITHER may sign this Proxy.
When signing as
attorney, executor, administrator,
trustee, guardian or
corporate officer, please give your
full title.
DATE:
Signature(s)
(Title(s), if applicable)
PLEASE SIGN, DATE
AND RETURN
PROMPTLY IN THE ENCLOSED
ENVELOPE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT FOR *
AGAINST * ABSTAIN *
AND RATIFICATION OF THE SUB-INVESTMENT ADVISORY
AGREEMENT
2. APPROVAL OF AN AMENDMENT TO THE FUND'S CHARTER ` FOR *
AGAINST * ABSTAIN *
CHANGING THE NAME OF THE FUND
The Board of Directors recommends that the shareholders vote "FOR" approval of
the new advisory agreement between the Fund and IDS International Inc. and
ratification of the sub-investment advisory agreement among Lehman Brothers
Global Asset Management Limited, IDS International Inc. and the Fund; and vote
"FOR" approval of an amendment to the Fund's charter changing the name of the
Fund
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