SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant X
---
Filed by a party other than the registrant_
Check the appropriate box:
Preliminary proxy statement
- ---
X Definitive proxy statement
- ---
Definitive additional materials
- ---
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- ---
Pilgrim America Masters Series, Inc.
- ------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Pilgrim America Masters Series, Inc.
- ------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transactiion computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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__ Fee paid previously with preliminary materials
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__ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identifying the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
Pilgrim America Masters Series, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
November 10, 1997
Dear Shareholder:
Your Board of Directors has called a Special Meeting of Shareholders of
the Pilgrim America Masters MidCap Value Fund (the "Fund") of Pilgrim America
Masters Series, Inc. (the "Company") to be held on December 18, 1997 to
consider a proposal to approve a new Portfolio Management Agreement between
Pilgrim America Investments, Inc. (the "Investment Manager"), and Cramer
Rosenthal McGlynn, LLC to provide sub-advisory services to the Fund.
This meeting is required because a proposed reorganization of CRM
Advisors, LLC, the Fund's current Portfolio Manager, will cause the current
Portfolio Management Agreement to terminate on the date of the reorganization,
which is scheduled for January 2, 1998. Upon completion of the reorganization,
the approval of a new Portfolio Management Agreement will allow the same people
who currently manage the Fund to continue to manage the Fund. In addition, the
new Portfolio Management Agreement will have substantially the same terms as
the current Portfolio Management Agreement between the Investment Manager and
CRM Advisors, LLC. The Investment Management fees paid by the Fund to the
Investment Manager will not change.
After careful consideration, the Board of Directors unanimously approved
this proposal and recommends that shareholders vote "FOR" the proposal.
Your vote is important regardless of the number of shares you own. In
order to avoid the added cost of follow-up solicitations and possible
adjournments, please take a few minutes to read the proxy statement and cast
your vote. It is important that your vote be received by no later than December
17, 1997.
The Company is using Shareholder Communications Corporation, a
professional proxy solicitation firm, to assist shareholders in the voting
process. As the date of the meeting approaches, if we have not already heard
from you, you may receive a telephone call from Shareholders Communications
reminding you to exercise your right to vote.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
/s/ Robert W. Stallings
ROBERT W. STALLINGS,
President and Chairman of the Board
<PAGE>
Pilgrim America Masters Series, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(800) 331-1080
Notice of Special Meeting of Shareholders to be Held on December 18, 1997
To the Shareholders:
A Special Meeting of Shareholders of the Pilgrim America Masters MidCap
Value Fund (the "Fund") of Pilgrim America Masters Series, Inc. (the "Company")
will be held on Thursday, December 18, 1997 at 10:00 a.m., local time, at the
offices of the Company, 40 North Central Avenue, Suite 1200, Phoenix, Arizona
85004 for the following purposes:
1. To approve a new Portfolio Management Agreement between Pilgrim
America Investments, Inc. and Cramer Rosenthal McGlynn, LLC, the successor
to the current Portfolio Manager;
2. To transact such other business as may properly come before the
Special Meeting of Shareholders or any adjournments thereof.
Shareholders of record at the close of business on November 3, 1997 are
entitled to notice of, and to vote at, the meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Directors
/s/ James Hennessy
JAMES M. HENNESSY, Secretary
November 10, 1997
<PAGE>
Pilgrim America Masters Series, Inc.
PROXY STATEMENT
Special Meeting of Shareholders to be held on December 18, 1997
This Proxy Statement is furnished by the Board of Directors of Pilgrim
America Masters Series, Inc. (the "Company") in connection with the solicitation
of voting instructions for use at the Special Meeting of Shareholders (the
"Meeting") of the Pilgrim America Masters MidCap Value Fund (the "Fund") to be
held on December 18, 1997, at 10:00 a.m., local time, at the offices of the
Company, 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004 for the
purposes set forth below and in the accompanying Notice of Special Meeting. At
the Meeting, the shareholders of the Fund will be asked:
1. To approve a new Portfolio Management Agreement between Pilgrim
America Investments, Inc. and Cramer Rosenthal McGlynn, LLC, the successor
to the current Portfolio Manager;
2. To transact such other business as may properly come before the
Special Meeting of Shareholders or any adjournments thereof.
Solicitation of Proxies
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about November 12, 1997.
Shareholders of the Fund whose shares of Common Stock are held by nominees,
such as brokers, can vote their proxies by contacting their respective nominee.
In addition to the solicitation of proxies by mail, officers of the Company and
employees of Pilgrim America Investments, Inc. ("PAII" or the "Investment
Manager"), Investment Manager to the Fund, and its affiliates, without
additional compensation, may solicit proxies in person or by telephone,
telegraph, facsimile, or oral communication. The Company has retained
Shareholder Communications Corporation, a professional proxy solicitation firm,
to assist with any necessary solicitation of proxies. As the meeting date
approaches, certain shareholders of the Fund may receive a telephone call from
the professional proxy solicitation firm asking the shareholder to vote. The
costs associated with such solicitation will be paid by CRM Advisors, LLC.
A shareholder may revoke the accompanying proxy at any time prior to its
use by filing with the Company a written revocation or duly executed proxy
bearing a later date. In addition, any shareholder who attends the Meeting in
person may vote by ballot at the Meeting, thereby canceling any proxy
previously given. The persons named in the accompanying proxy will vote as
directed by the proxy, but in the absence of voting directions in any proxy
that is signed and returned, they intend to vote FOR each of the proposals and
may vote in their discretion with respect to other matters not now known to the
Board of the Company that may be presented at the Meeting.
Voting Rights
The proposals in this proxy statement affect only the Fund, which is one
of three series of the Company. As a result, the Board of Directors of the
Company is soliciting votes only from shareholders of the Fund.
Each share of each class of the Common Stock, $.001 par value, of the Fund
(the "Common Stock") is entitled to one vote. Shareholders of the Fund at the
close of business on November 3, 1997 (the "Record Date") will be entitled to
be present and give voting instructions for the Fund at the Meeting with
respect to their shares of Common Stock owned as of such Record Date. As of
November 3, 1997, there were 4,227,363 shares of Common Stock outstanding and
entitled to vote as of such record date, representing total net assets of
$64,152,200.
A majority of the outstanding shares of the Fund on the Record Date,
represented in person or by proxy, must be present to constitute a quorum for
the transaction of the Fund's business at the Meeting.
Approval of Proposal 1 requires a "Majority Vote." For purposes of this
requirement, a "Majority Vote" shall mean a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), i.e., (i) 67% or more of the shares of the Fund
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present at the Meeting, if more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of the outstanding
shares of the Fund, whichever is less.
If a quorum is not present at the Meeting, or if a quorum is present but
sufficient votes to approve any or all 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. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of the Proposals
that are the subject of the Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of those shares represented at the Meeting in person or by
proxy. A shareholder vote may be taken on one or more of the Proposals in this
proxy statement prior to any adjournment if sufficient votes have been received
with respect to a Proposal. If a shareholder abstains from voting as to any
matter, or if a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on a matter, then the shares represented by such abstention
or non-vote shall, with respect to matters to be determined by a majority of
the votes cast on such matter, be deemed present at the Special Meeting for
purposes of determining a quorum, but shall not be deemed represented at the
Special Meeting for purposes of calculating the vote with respect to such
matter. With respect to matters requiring the affirmative vote of a majority of
the total shares outstanding, an abstention or broker non-vote will be
considered present for purposes of determining the existence of a quorum, and
will have the effect of a vote against such matters.
To the knowledge of the Fund, as of September 30, 1997, no current
Director of the Fund owns 1% or more of outstanding shares of the Fund and the
officers and Directors of the Fund own, as a group, less than 1% of the shares
of the Fund. To the knowledge of the Fund, as of September 30, 1997, no person
owned beneficially more than 5% of the outstanding shares of the Fund.
Expenses
CRM Advisors, LLC has agreed to pay the expenses of the Fund in connection
with this Notice and Proxy Statement and the Meeting, including the printing,
mailing, solicitation and vote tabulation expenses, legal fees, and out of
pocket expenses.
The Investment Manager
PAII, whose address is 40 North Central Avenue, Suite 1200, Phoenix,
Arizona 85004, is the Investment Manager of the Fund.
The Principal Underwriter
Pilgrim America Securities, Inc., whose address is 40 North Central
Avenue, Suite 1200, Phoenix, Arizona 85004, is the Distributor for the Fund.
PROPOSAL NO. 1
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
Shareholders of the Fund are being asked to approve a new portfolio
management agreement (the "New Agreement") between Pilgrim America Investments,
Inc. (the "Investment Manager") and Cramer Rosenthal McGlynn, LLC (the "New
Adviser") for New Adviser to serve as the Fund's Portfolio Manager. Approval of
the New Agreement is required because the current Portfolio Management
Agreement (the "Current Agreement") between the Investment Manager and CRM
Advisors, LLC (the "Current Adviser") will be terminated by a reorganization of
the Current Adviser, which is described below.
The same people who currently manage the Fund will continue to manage the
Fund under the New Agreement. In addition, the terms of the New Agreement will
be substantially the same as the terms of the Current Agreement, which was last
approved by the Company's Board of Directors, including a majority of the
Directors who were not parties to the Current Agreement or interested persons
of such parties, at a meeting held on May 5, 1997. The Current Agreement was
approved by the then sole shareholder of the Fund on June 27, 1995.
2
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Summary of Transaction Leading to the New Agreement
Gerald B. Cramer, Ronald H. McGlynn, Edward J. Rosenthal, Fred M. Filoon,
Jay B. Abramson, Arthur J. Pergament and Eugene A. Trainor III (each a
"Principal" and collectively, the "Principals") together own all of the
outstanding limited liability company interests in Current Adviser, and all of
the outstanding common shares of Cramer, Rosenthal, McGlynn, Inc. ("CRM"), a
registered investment adviser under the Investment Advisers Act of 1940, and
CRM Management, Inc. ("Management"), a general partner in several investment
partnerships and the managing member of two limited liability companies. On
October 31, 1997, the Principals, CRM, Management and New Adviser entered into
various agreements with WT Investments, Inc. ("WTI"), an indirectly
wholly-owned subsidiary of Wilmington Trust Corporation ("WTC"), pursuant to
which:
1. WTI will purchase 88.93% of the ownership interests in Current
Adviser from certain Principals;
2. WTI will purchase certain assets of CRM for cash;
3. New Adviser, a newly-formed Delaware limited liability company,
will sell to WTI a 24% interest in New Adviser in exchange for (a) the
ownership interests in Current Adviser that WTI will purchase, (b) the
assets of CRM that WTI will purchase, and (c) cash;
4. The Principals will exchange the remainder of their ownership
interests in Current Adviser for an interest in New Adviser;
5. CRM will contribute to New Adviser substantially all of its assets,
including its investment advisory contracts, subject to substantially all
of its liabilities in exchange for an ownership interest in New Adviser;
6. As a result of the foregoing transactions, the Principals and CRM
(which is owned by the Principals) together will own 76% of New Adviser,
while WTI will own 24% of New Adviser;
7. CRM and Messrs. Abramson, Pergament and Trainor will have the right
to sell their ownership interests in New Adviser to WTC, subject to certain
restrictions;
8. WTI will be required to buy the ownership interest of any Principal
who dies, becomes disabled or retires, and WTI may also purchase the
ownership interest of any Principal, and the ownership interest of CRM
attributable to that Principal, whose employment with New Adviser is
otherwise terminated or who has sought to exercise options to sell more
than 50% of his highest direct and indirect interest in New Adviser.
The foregoing transactions are scheduled to take place on or around
January 2, 1998. As a result of these transactions, Current Adviser will become
a wholly-owned subsidiary of New Adviser. Current Adviser will then be merged
or liquidated into New Adviser. If, in the future, WTI, WTC or their affiliates
acquire additional ownership interests in New Adviser through the means
described above or otherwise, WTI may own a controlling block (as defined in
the Investment Company Act of 1940 (the "1940 Act")), or have actual control,
of New Adviser. The transaction is subject to several conditions, and if not
met, the transaction may not occur. In the event that the transaction does not
occur, the Current Agreement with the Current Adviser would not terminate and
the Current Adviser could continue to render advisory services to the Fund.
The change in ownership interests resulting from these transactions is
deemed by the Rules under the 1940 Act to be an assignment of the Current
Agreement. The Current Agreement provides for its automatic termination upon an
assignment. Accordingly, the New Agreement between the Investment Manager and
New Adviser is proposed for approval by shareholders of the Fund. A form of the
New Agreement is attached as Exhibit A to this proxy statement.
Current Adviser and New Adviser have advised the Fund that the same
investment advisory and other personnel who work for the Current Adviser and
its affiliate CRM are expected to work for the New Adviser after the
transaction, and that the same persons responsible for management of the Fund
under the Current Agreement will continue to be responsible under the New
Agreement. Neither Current
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Adviser nor New Adviser anticipate that the transaction will cause any
reduction in the quality of services now provided to the Fund, or have any
adverse effect on New Adviser's ability to fulfill its obligations to the
Funds.
The New Agreement was approved by the Company's Board of Directors,
including a majority of the Directors who were not interested persons of the
parties to the New Agreement, at a meeting held on November 3, 1997.
If the New Agreement is approved by the Fund's shareholders, it will
remain in effect, unless earlier terminated, for an initial term expiring on
May 1, 1998 and will continue in effect thereafter for successive twelve-month
periods, provided that each such continuance is specifically approved at least
annually (i) by the Company's Board of Directors or by the vote of a majority
of the outstanding voting securities of the Fund, and, in either case, (ii) by
a majority of the Company's Directors who are not parties to the New Agreement
or interested persons of any such party (other than as Directors of the
Company).
If the Shareholders of the Fund do not approve the New Agreement, the
Investment Manager will manage the portfolio of the Fund. Thereafter, the
Investment Manager would either negotiate a new portfolio management agreement
for the Fund with another investment advisory organization or make other
appropriate arrangements. If the Investment Manager retains another Portfolio
Manager, the new portfolio management agreement would be subject to approval by
the Directors and Shareholders of the Fund.
WTC is a bank and thrift holding company organized under the laws of
Delaware. WTC holds all of the outstanding capital stock of Wilmington Trust
Company, a Delaware chartered bank and trust company engaged in commercial
banking and trust activities since 1903. WTC directly owns two other financial
institutions, Wilmington Trust of Pennsylvania, a Pennsylvania-chartered bank
and trust company acquired in 1993 and Wilmington Trust FSB, a
Federally-chartered savings bank organized in 1994. Through its direct and
indirect subsidiaries, WTC engages in residential, commercial and construction
lending, deposit taking, insurance, investment advisory and broker-dealer
services and mutual fund administration. On September 30, 1997, WTC, together
with its subsidiaries, had total assets of over $5.9 billion. Wilmington Trust
Company, the largest subsidiary of WTC, is among the nation's largest personal
trust companies and holds approximately $95 billion in a fiduciary capacity.
The Terms of the New Agreement
On November 3, 1997, a majority of the Board of Directors, including a
majority of the Directors who are not parties to the New Agreement or
interested persons of such parties, approved the New Agreement. The terms of
the New Agreement are substantially the same as those of the Current Agreement.
The New Agreement, like the Current Agreement, requires New Adviser to
provide, subject to the supervision of the Investment Manager, a continuous
investment program for the Fund and to determine the composition of the assets
of the Fund, including determination of the purchase, retention, or sale of the
securities, cash, and other investments for the Fund, in accordance with the
Fund's investment objectives, policies and restrictions. New Adviser will also
provide investment research and analysis. The terms of the New Agreement
obligate New Adviser to manage the Fund in accordance with applicable laws and
regulations.
Portfolio Management Fee. Under the New Agreement, the Investment Manager
(not the Fund) will pay the New Adviser a portfolio management fee, payable
monthly, at an annual rate of .50% of the Fund's average daily net assets. The
fee to be paid by the Investment Manager under the New Agreement is the same as
the fee paid under the Current Agreement. During the fiscal year ended June 30,
1997, the Investment Manager paid portfolio management fees to Current Adviser
of $193,080. Pursuant to the Investment Management Agreement, the Fund pays the
Investment Manager a fee at an annual rate of 1% of the Fund's average daily
net assets.
Liability of the New Adviser. Like the Current Agreement, the New
Agreement provides that New Adviser is not subject to liability for to any
damages, expenses, or losses to the Fund connected with or arising out of any
investment advisory services rendered under the New Agreement, except by reason
of willful misfeasance, bad faith, or gross negligence in the performance of
New Adviser's duties or by reason of reckless disregard of its obligations and
duties under the New Agreement.
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Termination. The termination provisions of the New Agreement are the same
as those of the Current Agreement. The New Agreement will terminate
automatically in the event of its assignment. In addition, it may be terminated
by the Investment Manager upon sixty days' written notice to New Adviser and
the Fund, by New Adviser upon sixty days' written notice to the Investment
Manager and the Fund, and by the Fund, upon the vote of a majority of the
Fund's Board of Directors or a majority of the outstanding voting shares of the
Fund, upon sixty days' written notice to the Investment Manager and the New
Adviser.
Information About New Adviser
New Adviser is a limited liability company organized under the laws of the
State of Delaware on September 23, 1997. It will operate as a successor
registered investment adviser under the Investment Advisers Act of 1940
pursuant to the current registrations of CRM and Current Adviser, and after the
transactions described above are completed it will file an application to
become a registered investment adviser. Although as a new entity New Adviser
has no previous experience managing an investment company, the principal
shareholders and portfolio managers of New Adviser have over 180 years
experience in portfolio management of the Fund through Current Adviser and of
private investment accounts through CRM, which has managed investments in small
and mid capitalization companies for over twenty-four years. As of this date,
CRM has over $3.5 billion of assets under management.
New Adviser's current principal executive officers and managers and their
principal occupations are listed below.
<TABLE>
<CAPTION>
Name Position with New Adviser and Principal Occupation
- ---- --------------------------------------------------
<S> <C>
Gerald B. Cramer ......... Chairman
Edward J. Rosenthal ...... Vice Chairman
Ronald H. McGlynn ......... Manager, President and Chief Executive Officer
Jay B. Abramson ............ Executive Vice President and Director of Research
Fred M. Filoon ............ Senior Vice President
Eugene A. Trainor III ...... Senior Vice President and Chief Financial Officer
Arthur J. Pergament ...... Senior Vice President
</TABLE>
New Adviser will be managed by a board of managers consiting of five
managers. Certain Principals, individually and collectively, CRM and WTI will
have the right to designate managers depending upon each party's ownership
interest in New Adviser. The remaining managers will be elected by a majority
vote of the members of New Adviser. Initially, the board of managers of New
Adviser is expected to consist of Messrs. Cramer and McGlynn, one designee of
WTI and two other individuals selected by CRM. If WTI or its affiliates acquire
a majority of the ownership interests of New Adviser as a result of the
exercise of the options described above or otherwise, WTI will be able to elect
a majority of the board of managers.
Accounts managed by CRM hold an interest in Pilgrim America Capital
Corporation ("PACC"), which is the parent company of the Investment Manager. As
of October 13, 1997, the equity interest in PACC held by accounts managed by
CRM is 19.894%, which makes CRM, together with its accounts under management,
PACC's largest shareholder. After the restructuring, New Adviser will be the
successor to CRM and, as a result, will manage the same accounts that currently
have substantial holdings in PACC.
Evaluation By the Board of Directors
In determining whether or not it was appropriate to approve the New
Agreement and to recommend approval to shareholders, the Board of Directors,
including the Directors who are not interested persons of the Investment
Manager or New Adviser, considered various matters and materials provided by
New Adviser and Current Adviser. Information considered by the Directors
included, among other things, the following: (1) the Current Adviser's
representation that the same persons responsible for management of the Fund
under the Current Agreement will continue to manage the Fund under the New
Agreement; (2)
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that the compensation to be received by New Adviser under the New Agreement is
the same as the compensation paid under the Current Agreement; (3) the fairness
of such compensation; (4) the nature and quality of the services to be
rendered; (5) the results achieved by Current Adviser for the Fund; (6) the
personnel, operations and financial condition, and investment management
capabilities, methodologies, and performance of New Adviser; and (7) the terms
and provisions of the New Agreement and Current Agreement.
The Board of Directors also considered the terms of the New Agreement and
the possible effects of the transaction upon New Adviser and its ability to
provide services to the Fund. The Board of Directors considered the skills and
capability of personnel who will be associated with New Adviser.
Based upon its review, the Board has determined that, by approving the New
Agreement, the Fund can best be assured that services from Current Adviser and
New Adviser will be provided without interruption. The Board believes that
retaining New Adviser to serve as portfolio manager of the Fund is in the best
interests of the Fund and its shareholders. Accordingly, after consideration of
the above factors, and such other factors and information it considered
relevant, the Board of Directors unanimously approved the New Agreement and
voted to recommend its approval by the Fund's shareholders.
Vote Required
The proposal to approve the new Portfolio Management Agreement requires
approval by a Majority Vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 1.
6
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GENERAL INFORMATION
Other Matters to Come Before the Meeting
The Company's management does not know of any matters to be presented at
the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxyholders will vote
thereon in accordance with their best judgment.
Executive Officers of the Company
The following persons currently are principal executive officers of the
Company:
<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Company for the Last Five Years
---- ------------- -----------------------
<S> <C> <C>
Robert W. Stallings Chairman of the Board, Chairman, Chief Executive Officer and President
(Age 48) Chief Executive Officer of Pilgrim America Group, Inc. ("PAGI") (since
and President (since December 1994); Chairman, PAII (since December
April 1995) 1994); Director (since December 1994) and Chair-
man (since November 1995), Pilgrim America
Securities, Inc. ("PASI"); Chairman, Chief Execu-
tive Officer and President of Pilgrim Government
Securities Income Fund, Inc., Pilgrim America
Investment Funds, Inc. and Pilgrim America Bank
and Thrift Fund, Inc. (since April 1995). Chairman
and Chief Executive Officer of Pilgrim America
Prime Rate Trust (since April 1995). Chairman and
Chief Executive Officer of Pilgrim America Capital
Corporation (formerly, Express America Holdings
Corporation) ("PACC") (since August 1990).
James R. Reis Executive Vice Director, Vice Chairman (since December 1994),
(Age 40) President (since April Executive Vice President (since April 1995), and
1995), Treasurer, Treasurer (since September 1996), PAGI and PAII;
Assistant Seretary, Director (since December 1994), Vice Chairman
Principal Accounting (since November 1995) and Assistant Secretary
Officer (since May (since January 1995) of PASI; Executive Vice
1997) President, Treasurer, Assistant Secretary and
Principal Accounting Officer of most of the other
funds in the Pilgrim America Group of Funds;
Chief Financial Officer (since December 1993),
Vice Chairman and Assistant Secretary (since
April 1993) and former President (May 1991-
December 1993), PACC; Vice Chairman (since
April 1993) and former President (May 1991-
December 1993), Express America Mortgage
Corporation.
Stanley D. Vyner Executive Vice Executive Vice President (since August 1996),
(Age 47) President (since PAGI; President and Chief Executive Officer
August 1996) (since August 1996), PAII; Executive Vice Presi-
dent (since July 1996) of most of the funds in the
Pilgrim America Group of Funds. Formerly Chief
Executive Officer (November 1993-December
1995), HSBC Asset Management Americas, Inc.,
and Chief Executive Officer, and Actuary (May
1986-October 1993), HSBC Life.
</TABLE>
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<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Company for the Last Five Years
---- ------------- -----------------------
<S> <C> <C>
James M. Hennessy Senior Vice President Senior Vice President and Secretary (since April
(Age 48) and Secretary (since 1995), PACC, PAGI, PASI and PAII. Senior Vice
April 1995) President and Secretary of each of the funds in the
Pilgrim America Group of Funds. Formerly Senior
Vice President, Express America Mortgage
Corporation (June 1992-August 1994) and
President, Beverly Hills Securities Corp. (January
1990-June 1992).
Robert S. Naka Vice President (since Vice President, PAII (since April 1997) and PAGI
(Age 34) May 1997) and Asst. (since February 1997). Vice President and
Secretary (since July Assistant Secretary of each of the funds in the
1996) Pilgrim America Group of Funds. Formerly
Assistant Vice President, PAGI (August 1995-
February 1997). Formerly Operations Manager,
Pilgrim Group, Inc. (April 1992-April 1995).
</TABLE>
Shareholder Proposals
Proposals of shareholders must be received by the Company a reasonable
time prior to the mailing of the proxy materials for a meeting of shareholders.
The submission by a shareholder of a proposal for inclusion in the proxy
statement does not guarantee that it will be included. Shareholder proposals
are subject to certain regulations under the federal securities laws.
Reports to Shareholders
The Company will furnish, without charge, a copy of the Annual Report and
the most recent Semi-Annual Report regarding the Company on request. Requests
for such reports should be directed to Pilgrim America at 40 North Central
Avenue, Suite 1200, Phoenix, Arizona 85004 or to the Company at (800) 331-1080.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
/s/ James Hennessy
JAMES M. HENNESSY, Secretary
November 10, 1997
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
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EXHIBIT A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 2nd day of January, 1998 between Pilgrim America
Investments, Inc., a Delaware corporation (the "Manager"), and Cramer Rosenthal
McGlynn, LLC, a Delaware limited liability company (the "Portfolio Manager").
WHEREAS, Pilgrim America Masters Series, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company;
WHEREAS, the Fund is authorized to issue separate series, each of which
will offer a separate class of shares of common stock, each series having its
own investment objective or objectives, policies, and limitations;
WHEREAS, the Fund currently proposes to offer shares in three series, may
offer shares of additional series in the future, and currently intends to offer
shares of additional series in the future;
WHEREAS, pursuant to an Investment Management Agreement, dated June 8,
1995 (the "Management Agreement"), which was last renewed by the Board of
Directors of the Fund on May 5, 1997, a copy of which has been provided to the
Portfolio Manager, the Fund has retained the Manager to render advisory,
management, and administrative services with respect to each of the Fund's
series; and
WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Portfolio Manager to furnish
investment advisory services to one or more of the series of the Fund, and the
Portfolio Manager is willing to furnish such services to the Fund and the
Manager;
NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Manager and the
Portfolio Manager as follows:
1. Appointment. The Manager hereby appoints the Portfolio Manager to
act as the investment adviser and manager to the Pilgrim America Masters
MidCap Value Fund series of the Fund (the "Series") for the periods and on
the terms set forth in this Agreement. The Portfolio Manager accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Fund designates one or more series (other than the
Series) with respect to which the Manager wishes to retain the Portfolio
Manager to render investment advisory services hereunder, it shall notify
the Portfolio Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Manager in writing, whereupon
such series shall become a Series hereunder, and be subject to this
Agreement.
2. Portfolio Management Duties. Subject to the supervision of the
Fund's Board of Directors and the Manager, the Portfolio Manager will
provide a continuous investment program for the Series' portfolio and
determine in its discretion the composition of the assets of the Series'
portfolio, including determination of the purchase, retention, or sale of
the securities, cash, and other investments contained in the portfolio. The
Portfolio Manager will provide investment research and conduct a continuous
program of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that shall be
purchased, entered into, sold, closed, or exchanged for the Series, when
these transactions should be executed, and what portion of the assets of
the Series should be held in the various securities and other investments
in which it may invest. To the extent permitted by the investment policies
of the Series, the Portfolio Manager shall make decisions for the Series as
to foreign currency matters and make determinations as to and execute and
perform foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement in
accordance with the Series' investment objective or objectives, policies,
and restrictions as stated in the Fund's Registration Statement filed with
the Securities and Exchange Commission ("SEC"), as amended, copies of which
shall be sent to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
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(a) The Portfolio Manager will not take any action that would
cause the Series to fail to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code.
(b) The Portfolio Manager will conform with the 1940 Act and all
rules and regulations thereunder, all other applicable federal and
state laws and regulations, with any applicable procedures adopted by
the Fund's Board of Directors of which the Portfolio Manager has been
sent a copy, and the provisions of the Registration Statement of the
Fund filed under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as supplemented or amended, of which the Portfolio Manager
has received a copy.
(c) The Portfolio Manager will vote all proxies solicited by or
with respect to the issuers of securities in which assets of the
Series are invested. The Portfolio Manager will maintain appropriate
records detailing its voting of proxies on behalf of the Fund and will
provide to the Fund at least annually a report setting forth the
proposals voted on and how the Series' shares were voted since the
prior report, including the name of the corresponding issuers.
(d) On occasions when the Portfolio Manager deems the purchase or
sale of a security to be in the best interest of the Series as well as
of other investment advisory clients of the Portfolio Manager or any
of its affiliates, the Portfolio Manager may, to the extent permitted
by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of its
other clients where such aggregation is not inconsistent with the
policies set forth in the Registration Statement. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Portfolio
Manager in a manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to the
Fund and to such other clients, subject to review by the Manager and
the Fund's Board of Directors.
(e) In connection with the purchase and sale of securities for
the Series, the Portfolio Manager will arrange for the transmission to
the custodian and portfolio accounting agent for the Series on a daily
basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or other
numbers that identify securities to be purchased or sold on behalf of
the Series, as may be reasonably necessary to enable the custodian and
portfolio accounting agent to perform its administrative and
recordkeeping responsibilities with respect to the Series. With
respect to portfolio securities to be settled through the Depository
Trust Company, the Portfolio Manager will arrange for the prompt
transmission of the confirmation of such trades to the Fund's
custodian and portfolio accounting agent.
(f) The Portfolio Manager will assist the custodian and portfolio
accounting agent for the Fund in determining or confirming, consistent
with the procedures and policies stated in the Registration Statement
for the Fund, the value of any portfolio securities or other assets of
the Series for which the custodian and portfolio accounting agent
seeks assistance from or identifies for review by the Portfolio
Manager. The parties acknowledge that the Portfolio Manager is not a
custodian of Series' assets and will not take possession or custody of
such assets.
(g) The Portfolio Manager will make available to the Fund and the
Manager, promptly upon request, all of the Series' investment records
and ledgers maintained by the Portfolio Manager (which shall not
include the records and ledgers maintained by the custodian or
portfolio accounting agent for the Fund) as are necessary to assist
the Fund and the Manager to comply with requirements of the 1940 Act
and the Investment Advisers Act of 1940 (the "Advisers Act"), as well
as other applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any information
or reports in connection with such services in respect to the Series
which may be requested in order to ascertain whether the operations of
the Fund are being conducted in a manner consistent with applicable
laws and regulations.
(h) The Portfolio Manager will provide reports to the Fund's
Board of Directors for consideration at meetings of the Board on the
investment program for the Series and the issuers and securities
represented in the Series' portfolio, and will furnish the Fund's
Board of Directors
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with respect to the Series such periodic and special reports as the
Directors and the Manager may reasonably request. The Portfolio
Manager will provide the Manager, no later than the 20th day following
the end of each of the first three fiscal quarters of the Series and
the 45th day following the end of the Series' fiscal year, a letter to
shareholders (to be subject to review and editing by the Manager)
containing a discussion of those factors referred to in Item 5A(a) of
1940 Act Form N-1A in respect of both the prior quarter and the fiscal
year to date.
3. Broker-Dealer Selection. The Portfolio Manager is authorized to
make decisions to buy and sell securities and other investments for the
Series' portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in
effecting a security transaction will be to obtain the best execution for
the Series, taking into account the factors specified in the prospectus
and/or statement of additional information for the Fund, and determined in
consultation with the Manager, which include price (including the
applicable brokerage commission or dollar spread), the size of the order,
the nature of the market for the security, the timing of the transaction,
the reputation, the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of execution, and the
execution capabilities and operational facilities of the firm involved, and
the firm's risk positioning a block of securities. Accordingly, the price
to the Series in any transaction may be less favorable than that available
from another broker-dealer if the difference is reasonably justified, in
the judgment of the Portfolio Manager in the exercise of its fiduciary
obligations to the Fund, by other aspects of the portfolio execution
services offered. Subject to such policies as the Fund's Board of Directors
may determine and consistent with Section 28(e) of the Securities Exchange
Act of 1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Series to pay a
broker-dealer for effecting a portfolio investment transaction in excess of
the amount of commission another broker-dealer would have charged for
effecting that transaction, if the Portfolio Manager determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Portfolio Manager's or the Manager's overall responsibilities with respect
to the Series and to their respective other clients as to which they
exercise investment discretion. The Portfolio Manager will consult with the
Manager to the end that portfolio transactions on behalf of the Series are
directed to broker-dealers on the basis of criteria reasonably considered
appropriate by the Manager. To the extent consistent with these standards,
the Portfolio Manager is further authorized to allocate the orders placed
by it on behalf of the Series to the Portfolio Manager if it is registered
as a broker-dealer with the SEC, to an affiliated broker-dealer, or to such
brokers and dealers who also provide research or statistical material, or
other services to the Series, the Portfolio Manager, or an affiliate of the
Portfolio Manager. Such allocation shall be in such amounts and proportions
as the Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said allocation
regularly to the Fund's Board of Directors indicating the broker-dealers to
which such allocations have been made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio Manager has
reviewed the Registration Statement for the Fund, with supplements thereto,
filed or to be filed with the SEC that contain disclosure about the
Portfolio Manager, and represents and warrants that, with respect to the
disclosure about the Portfolio Manager, such Registration Statement and
supplements contain, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Portfolio Manager further represents and
warrants that it will take the steps necessary to become a duly registered
investment adviser under the Advisers Act no later than the effective date
of this Agreement. The Portfolio Manager will provide the Manager with a
copy of the Portfolio Manager's Form ADV, Part II at the time the Form ADV
is filed with the SEC.
5. Expenses. During the term of this Agreement, the Portfolio Manager
will pay all expenses incurred by it and its staff and for their activities
in connection with its portfolio management duties
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under this Agreement, except as provided in Section 11. The Manager or the
Fund shall be responsible for all the expenses of the Fund's operations.
6. Compensation. For the services provided, the Manager will pay the
Portfolio Manager a monthly fee, in arrears, equal to 1|M/12 of .50% of the
Series' average daily net assets during the month. Payment of the fee will
be due on the 10th day of the following month. The fee will be
appropriately prorated to reflect any portion of a calendar month that this
Agreement is not in effect among the parties. In accordance with the
provisions of the Management Agreement, the Manager is solely responsible
for the payment of fees to the Portfolio Manager, and the Portfolio Manager
agrees to seek payment of its fees solely from the Manager; provided,
however, that if the Fund fails to pay the Manager all or a portion of the
management fee under said Management Agreement when due, and the amount
that was paid is insufficient to cover the Portfolio Manager's fee under
this Agreement for the period in question, then the Portfolio Manager may
enforce against the Fund any rights it may have as a third-party
beneficiary under the Management Agreement and the Manager will (i) not be
obligated to pay to the Portfolio Manager the deficiency until actually
collected from the Fund and (ii) take all steps appropriate under the
circumstances to collect the amount due from the Fund.
7. Compliance.
(a) The Portfolio Manager agrees that it shall immediately notify
the Manager and the Fund (1) in the event that the SEC has censured
the Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as an
investment adviser; or has commenced proceedings or an investigation
that may result in any of these actions, or (2) upon having a
reasonable basis for believing that the Series has ceased to qualify
or might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code. The Portfolio Manager
further agrees to notify the Manager and the Fund immediately of any
material fact known to the Portfolio Manager respecting or relating to
the Portfolio Manager that is not contained in the Registration
Statement or prospectus for the Fund (which describes the Series), or
any amendment or supplement thereto, or of any statement contained
therein that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured the
Manager or the Fund; placed limitations upon either of their
activities, functions, or operations; suspended or revoked the
Manager's registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these
actions, or (2) upon having a reasonable basis for believing that the
Series has ceased to qualify or might not qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code.
8. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Portfolio Manager hereby agrees that all
records which it maintains for the Series are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon
the Fund's or the Manager's request, although the Portfolio Manager may, at
its own expense, make and retain a copy of such records. The Portfolio
Manager further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act and to preserve the records required by Rule 204-2 under
the Advisers Act for the period specified in the Rule.
9. Cooperation; Confidentiality. Each party to this Agreement agrees
to cooperate with the other party and with all appropriate governmental
authorities having the requisite jurisdiction (including, but not limited
to, the SEC) in connection with any investigation or inquiry relating to
this Agreement or the Fund. Subject to the foregoing, the Portfolio Manager
shall treat as confidential all information pertaining to the Fund and
actions of the Fund, the Manager and the Portfolio Manager, and the Manager
shall treat as confidential and use only in connection with the Series all
information furnished to the Fund or the Manager by the Portfolio Manager,
in connection with its duties under the agreement except that the aforesaid
information need not be treated as confidential if required to be disclosed
under applicable law, if generally available to the public through means
other than by disclosure by the Portfolio Manager or the Manager, or if
available from a source other than the Manager, Portfolio Manager or this
Fund.
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10. Representations Respecting Portfolio Manager. The Manager agrees
that neither the Manager, nor affiliated persons of the Manager, shall give
any information or make any representations or statements in connection
with the sale of shares of the Series concerning the Portfolio Manager or
the Series other than the information or representations contained in the
Registration Statement, prospectus, or statement of additional information
for the Fund's shares, as they may be amended or supplemented from time to
time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved in advance by the
Portfolio Manager, except with the prior permission of the Portfolio
Manager. The parties agree that in the event that the Manager or an
affiliated person of the Manager sends sales literature or other
promotional material to the Portfolio Manager for its approval and the
Portfolio Manager has not commenced within 10 days, the Manager and its
affiliated persons may use and distribute such sales literature or other
promotional material.
11. Additional Covenants of the Portfolio Manager.
(a) The Portfolio Manager will make available Gerald Cramer or
Edward Rosenthal to accompany representatives of the Fund's
distributor for six (6) days per year of "road show" marketing/due
diligence presentations to dealers and potential dealers in the Fund's
shares, the timing and location (within the United States) of such six
presentations to be chosen by the Manager following consultation with
the Portfolio Manager. The Portfolio Manager may substitute a senior
member of its firm for Mr. Cramer or Mr. Rosenthal, if such individual
is reasonably acceptable to the Manager. The Manager will reimburse
the Portfolio Manager, or cause the Fund's distributor to reimburse
the Portfolio Manager, for the reasonable out-of-pocket expenses
incurred by the Portfolio Manager in assisting in such presentations.
(b) During the term of this Agreement and during the six-month
period beginning the date that this Agreement terminates, neither the
Portfolio Manager nor any of the Portfolio Manager's affiliates will
serve or act as an investment adviser or sub-investment adviser to any
other SEC-registered open-end investment company or series thereof
having investment objectives similar to those of the Series. The
Portfolio Manager shall not be bound by this covenant with respect to
the period following the termination of this Agreement in the event
the termination is not voluntarily effected by the Portfolio Manager,
and shall not be bound by this covenant for any period in the event
that the Portfolio Manager does not receive compensation for its
services from the Manager or the Fund as required by the terms of this
agreement.
12. Control. Notwithstanding any other provisions of the Agreement, it
is understood and agreed that the Fund shall at all times retain the
ultimate responsibility for and control of all functions performed pursuant
to this Agreement and has reserved the right to reasonably direct any
action hereunder taken on its behalf by the Portfolio Manager.
13. Liability. Except as may otherwise be required by the 1940 Act or
the rules thereunder or other applicable law, and subject to the applicable
provisions of Paragraph 2(f) of this Agreement (which deal with
non-investment advisory services), the Manager agrees that the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act controls the
Portfolio Manager (1) shall bear no responsibility and shall not be subject
to any liability for any act or omission respecting any series of the Fund
that is not a Series hereunder, and (2) shall not be liable for, or subject
to any damages, expenses, or losses in connection with, any act or omission
connected with or arising out of any services rendered under this
Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Portfolio Manager's duties, or by
reason of reckless disregard of the Portfolio Manager's obligations and
duties under this Agreement.
14. Duration and Termination.
(a) This Agreement shall become effective on the date first
indicated above, subject to the condition that the Fund's Board of
Directors, including a majority of those Directors who are not
interested persons (as such term is defined in the 1940 Act) of the
Manager or the Portfolio Manager, and the shareholder(s) of the
Series, shall have approved this Agreement. Unless terminated as
provided herein, this Agreement shall remain in full force and effect
until May 1,
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1988 and continue on an annual basis thereafter with respect to each
Series covered by this Agreement; provided that such annual
continuance is specifically approved each year by (a) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of each Series, and (b)
the vote of a majority of those Directors who are not parties to this
Agreement or interested persons (as such term is defined in the 1940
Act) of any such party to this Agreement cast in person at a meeting
called for the purpose of voting on such approval. However, any
approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a Series shall be
effective to continue this Agreement with respect to such Series
notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Series or
(ii) that this agreement has not been approved by the vote of a
majority of the outstanding shares of the Fund, unless such approval
shall be required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated with
respect to any Series covered by this Agreement: (a) by the Manager at
any time without penalty, upon sixty (60) days' written notice to the
Portfolio Manager and the Fund, (b) at any time without payment of any
penalty by the Fund, by the Fund's Board of Directors or a majority of
the outstanding voting securities of each Series, upon sixty (60)
days' written notice to the Manager and the Portfolio Manager, or (c)
by the Portfolio Manager upon requisite notice, as provided below, at
any time after two years from the date of this agreement; and
requisite notice for these purposes shall be three (3) months written
notice unless the Fund or the Manager requests additional time to find
a replacement for the Portfolio Manager, in which case the Portfolio
Manager shall allow the additional time requested by the Fund or
Manager shall allow the additional time requested by the Fund or
Manager not to exceed three (3) additional months beyond the initial
three-month notice period (however, in the event that such additional
time is requested, the covenant described in Section 11(b) of this
agreement shall apply as if the agreement terminates at the end of the
initial three (3) month period); provided further, however, that the
Portfolio Manager may terminate this Agreement at any time without
penalty, effective upon written notice to the Manager and the Fund, in
the event either the Portfolio Manager (acting in good faith) or the
Manager ceases to be registered as an investment adviser under the
Advisers Act or otherwise becomes legally incapable of providing
investment management services pursuant to its respective contract
with the Fund, or in the event the Manager becomes bankrupt or
otherwise incapable of carrying out its obligations under this
Agreement, or in the event that the Portfolio Manager does not receive
compensation for its services form the Manager or the Fund as required
by the terms of this agreement. In the event of termination for any
reason, all records of each Series for which the Agreement is
terminated shall promptly be returned to the Manager or the Fund, free
from any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. This Agreement shall automatically
terminate in the event of its assignment (as such term is described in
the 1940 Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or Paragraphs
numbered 2(g), 8, 9, 10, 11(b), 12, 13 and 16 of this Agreement shall
remain in effect, as well as any applicable provision of this Section
numbered 14 and, to the extent that only amounts are owed to the
Portfolio Manager as compensation for services rendered while the
agreement was in effect, Section 6.
(b) Notices.
Any notice must be in writing and shall be sufficiently
given (1) when delivered in person, (2) when dispatched by
telegram or electronic facsimile transfer (confirmed in writing
by postage prepaid first class air mail simultaneously
dispatched), (3) when sent by internationally recognized
overnight courier service (with receipt confirmed by such
overnight courier service), or (4) when sent by registered or
certified mail, to the other party at the address of such party
set forth below or at such other address as such party may from
time to time specify in writing to the other party.
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If to the Fund:
Pilgrim America Masters Series, Inc.
40 North Central Avenue, Suite 1200
Phoenix, AZ 85004
Attention: James M. Hennessy
If to the Portfolio Manager:
Cramer Rosenthal McGlynn, LLC
520 Madison Avenue
New York, NY 10022
Attention: Gerald B. Cramer
15. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement
shall be effective until approved by an affirmative vote of (i) the holders
of a majority of the outstanding voting securities of the Series, and (ii)
the Directors of the Fund, including a majority of the Directors of the
Fund who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
16. Use of Name.
(a) It is understood that the name "Pilgrim America Investments,
Inc." or any derivative thereof (including the name "Pilgrim" and the
phrase "Pilgrim America") or logo associated with that name is the
valuable property of the Manager and/or its affiliates, and that the
Portfolio Manager has the right to use such name (or derivative or
logo) only with the approval of the Manager and only so long as the
Manager is Manager to the Fund and/or the Series. Upon termination of
the Management Agreement between the Fund and the Manager, the
Portfolio Manager shall forthwith cease to use such name (or
derivative or logo).
(b) It is understood that the name "Cramer Rosenthal McGlynn,
LLC" or any derivative thereof or logo associated with that name is
the valuable property of the Portfolio Manager and its affiliates and
that the Fund and/or the Series have the right to use such name (or
derivative or logo) in offering materials of the Fund with the
approval of the Portfolio Manager and for so long as the Portfolio
Manager is a portfolio manager to the Fund and/or the Series. Upon
termination of this Agreement, the Manager shall forthwith cause the
Fund to cease to use such name (or derivative or logo).
17. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of
the SEC thereunder, and without regard for the conflicts of laws
principle thereof. The term "affiliate" or "affiliated person" as used
in this Agreement shall be "affiliated person" as defined in Section
2(a)(3) of the 1940 Act.
(b) The Manager and the Portfolio Manager acknowledge that the
Fund enjoys the rights of a third-party beneficiary under this
Agreement, and the Manager acknowledges that the Portfolio Manager
enjoys the rights of a third party beneficiary under the Management
Agreement.
(c) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(d) To the extent permitted under Section 13 of this Agreement,
this Agreement may only be assigned by any party with the prior
written consent of the other parties.
(e) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby, and to this extent,
the provisions of this Agreement shall be deemed to be severable.
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(f) Nothing herein shall be construed as constituting the
Portfolio Manager as an agent or co-partner of the Manager, or
constituting the Manager as an agent or co-partner of the Portfolio
Manager.
(g) This agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PILGRIM AMERICA INVESTMENTS, INC.
By: ------------------------------------
------------------------------------
Title
CRAMER ROSENTHAL McGLYNN, LLC
By: ------------------------------------
------------------------------------
Title
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PILGRIM AMERICA FUNDS
PILGRIM AMERICA MASTERS
MIDCAP VALUE FUND
P.O. BOX 419368
KANSAS CITY, MO 64141
PILGRIM AMERICA MASTERS MIDCAP VALUE FUND,
a series of
PILGRIM AMERICA MASTERS SERIES, INC.
The undersigned owner of Common Stock, par value $.001 per share (the ACommon
Stock@) of the Pilgrim America Masters MidCap Value Fund (the AFund@) hereby
instructs Robert W. Stallings or James M. Hennessy (Proxies) to vote the shares
of the Common Stock held by him at the Special Meeting of Shareholders of the
Fund to be held at 10:00 a.m., local time, on December 18, 1997 at 40 North
Central Avenue, Suite 1200, Phoenix, Arizona 85004 and at any adjournment
thereof, in the manner directed below with respect to the matters referred to in
the Proxy Statement for the meeting, receipt of which is hereby acknowledged,
and in the Proxies= discretion, upon such other matters as may properly come
before the meeting or any adjournment thereof.
Please vote, sign and date this voting instruction and return it in the enclosed
envelope.
These voting instructions will be voted as specified. If no specification is
made, this voting instruction will be voted FOR all proposals.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
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
PILGRIM AMERICA MASTERS MIDCAP VALUE FUND, a series of
PILGRIM AMERICA MASTERS SERIES, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
Vote On Proposals
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<TABLE>
<S> <C> <C> <C>
1. To approve a new Portfolio Management Agreement For Against Abstain
between Pilgrim America Investments, Inc. and Cramer
Rosenthal McGlynn, LLC, the successor to the current / / / / / /
Portfolio Manager
2. To transact such other business as may properly
come before the Special Meeting of Shareholders or any
adjournments thereof / / / / / /
</TABLE>
This voting instruction shall be signed exactly as your name(s) appears hereon.
If as an attorney, executor, guardian or in some representative capacity or as
an officer of a corporation, please add titles as such. Joint owners must each
sign.
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date