1
As filed with the Securities and Exchange Commission on May 18, 2000
REGISTRATION NO. 33-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ___ POST-EFFECTIVE AMENDMENT NO. ___
(Check Appropriate Box or Boxes.)
-------------------------
ARK FUNDS*
(Exact Name of Registrant as Specified in Charter)
One Freedom Valley Drive
Oaks, PA 19456
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (610) 676-1000
Thomas R. Rus
Secretary
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
(Name and Address of Agent for Service)
Copies to:
Alan C. Porter, Esq. Regina M. Pisa, P.C.
Kirkpatrick & Lockhart LLP John Hunt, Esq.
1800 Massachusetts Avenue, N.W. Goodwin, Procter & Hoar LLP
2nd Floor One Exchange Place
Washington, DC 20036-1800 Boston, MA 02109-2881
No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-1A (File No. 33-53690).
-----------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to said Section 8(a),
may determine.
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* Relating only to shares of ARK Income Portfolio, ARK Small-Cap Equity
Portfolio, ARK International Equity Selection Portfolio, ARK International
Equity Portfolio, and ARK Emerging Markets Equity Portfolio.
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===============================================
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ARK FUNDS
CROSS REFERENCE SHEET
PART A
Item No. Heading
- -------- -------
1. Beginning of Registration Statement and
Outside Front Cover Page of Prospectus.................. Cover Page
2. Beginning and Outside Back Cover Page
of Prospectus........................................... Table of Contents
3. Fee Table, Synopsis Information, and Risk Factors....... Summary; Risk Factors
4. Information About the Transaction....................... Summary; Risk Factors;
Information Relating to
the Proposed
Reorganizations
5. Information About the Registrant........................ Summary; Risk Factors;
Additional Information
About the Acquiring Funds;
Prospectus and Annual and
Semi-Annual Reports for
the ARK Funds
(incorporated herein by
reference)
6. Information About the Company Summary; Risk Factors;
Being Acquired.......................................... Additional Information
About the Acquired Funds;
Prospectus and Annual
Report for the Govett
Funds (incorporated herein
by reference)
7. Voting Information...................................... Summary; Information
Relating to Voting Matters
8. Interest of Certain Persons and Experts................. Additional Information
About the Acquiring Funds;
Additional Information
About the Acquired Funds
9. Additional Information Required for Reoffering
by Persons Deemed to be Underwriters.................... Not Applicable
3
THE GOVETT FUNDS, INC.
San Francisco, California
June __, 2000
Dear Shareholder:
On November 10, 1999, the Board of Directors of The Govett Funds, Inc.
met to consider and approve a proposal for reorganizing the following Govett
Funds into the following ARK portfolios.
Acquired Fund Acquiring Fund
------------- --------------
Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
Govett International Equity Fund ARK International Equity Selection
Portfolio (or ARK International Equity
Portfolio, as discussed below)
After carefully studying the merits of the proposal, the Board
determined that the reorganization is in the best interests of shareholders.
Since the Board has approved the proposed reorganization, you and your
fellow shareholders are being asked to approve the proposal at a Special Meeting
of Shareholders to be held at 25 South Charles Street - 16th Floor, Baltimore,
Maryland 21201 on July 12, 2000. A proxy card is enclosed for use in the Special
Meeting. This card represents shares you held as of the record date, May 18,
2000. IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON AS POSSIBLE.
If the shareholders of your fund approve the proposed reorganization of
your fund and certain other conditions are satisfied, you will be able to
continue your investment program through ownership of shares of the
corresponding ARK Funds portfolio, each of which is a mutual fund having similar
investment objectives and policies to your Govett Fund(s). As an ARK Funds
shareholder, you will enjoy access, through the exchange privilege, to a much
larger family of funds than Govett Funds currently offers. Access to a larger
family of funds will provide you with a convenient way to diversify your
investments.
I encourage you to review the attached materials in detail. Some of your
questions may be answered on the next page. Some important facts about the
proposed reorganizations are outlined below.
- The reorganizations will not affect the value of your account. No
sales charges or redemption fees will be applied in connection
with the reorganizations, and
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- None of the Govett Funds nor their shareholders will recognize
any gain or loss for federal income tax purposes as a result of
the reorganizations.
Because the reorganizations apply to all Govett Funds (other than Govett
International Smaller Companies Fund), we have grouped the funds on one proxy
statement to reduce costs. If you hold shares in more than one fund, you will
receive a proxy card for each fund you own. Please vote each proxy card you
receive.
Because the Board believes that the reorganizations are in the best
interests of all shareholders, we encourage you to vote "for" the proposal.
Should you have any additional questions, we invite you to call The Govett
Funds, Inc. toll free at 1-800-821-0803.
Sincerely,
Keith E. Mitchell
Managing Director
AIB Govett, Inc.
5
Q. WHY HAVE I RECEIVED THIS PACKAGE?
A. The Govett Funds, Inc. has entered into an Agreement and Plan of
Reorganization with ARK Funds. Under the agreement, the Govett Global Income
Fund will be combined with the ARK Income Portfolio; Govett Smaller Companies
Fund will be combined with the ARK Small-Cap Equity Portfolio; Govett
International Equity Fund will be combined with the ARK International Equity
Selection Portfolio or, if proposed investment policy and other changes are not
implemented, the ARK International Equity Portfolio; and Govett Emerging Markets
Equity Fund will be combined with the ARK Emerging Markets Equity Portfolio
(which Portfolio will have nominal assets and liabilities before such
combination). Your Govett Fund shares will be exchanged for shares of the
corresponding ARK portfolio. The Board of Govett Funds has approved the proposed
reorganizations. You, as a shareholder of any one or more of the Govett Global
Income Fund, Govett Smaller Companies Fund, Govett International Equity Fund, or
Govett Emerging Markets Equity Fund, are now being asked to approve the
proposal.
Q. WHY ARE THE REORGANIZATIONS BEING PROPOSED?
A. The Board of Govett Funds believes that combining the Govett Funds with
the corresponding ARK portfolios could result in more efficient operations and
further growth of assets. Also, as a result of these transactions, shareholders
of the Govett Funds will become part of a larger mutual fund family with more
fund portfolios including some types of funds that the Govett Funds currently
does not offer. As an ARK Funds shareholder, you will have access to these
funds through the ARK Funds' exchange privilege. In addition, the Govett Funds
and the ARK portfolios with which they will be combining have similar
investment objectives as described in more detail in the Prospectus/Proxy
Statement.
Q. HOW WILL THIS AFFECT ME AS A GOVETT FUNDS SHAREHOLDER?
A. You will become a shareholder of an ARK Funds portfolio with similar
investment objectives and policies as the Govett Funds you currently hold. As an
ARK Funds shareholder, you will have access to the wide array of fund portfolios
offered by ARK Funds. There will be no sales charges or redemption fees applied
in connection with this transaction. The shares of the ARK Funds portfolio(s)
that you receive will have a total net asset value equal to the value of the
Govett Funds shares you held as of the closing date of the reorganizations.
Q. WILL THE REORGANIZATIONS RESULT IN ANY TAXES?
A. Neither the Govett Funds nor its shareholders will recognize any gain
or loss for federal income tax purposes as a result of the reorganizations.
Q. WILL THE INVESTMENT ADVISER CHANGE?
A. Yes. AIB Govett, Inc. currently serves as investment adviser to the
Govett Funds and AIB Govett Asset Management Limited serves as investment
subadviser. Allied Investment Advisors, Inc. serves as the investment adviser to
the ARK Funds. Allied Investment Advisors, Inc. will continue to serve as
investment adviser to the ARK Funds, including the ARK Income Portfolio, the ARK
Small-Cap Equity Portfolio, ARK Emerging Markets Equity Portfolio, and ARK
International Equity Selection Portfolio. AIB Govett, Inc. will serve as
investment
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subadviser to the ARK International Equity Selection Portfolio and
ARK Emerging Markets Equity Portfolio after the reorganizations.
Q. WHAT FUND(S) WILL I HOLD FOLLOWING THE REORGANIZATIONS?
A. Govett Fund shareholders will receive shares of the following
corresponding ARK portfolios.
Acquired Fund Acquiring Fund
------------- --------------
Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
Govett International Equity Fund ARK International Equity Selection
Portfolio(1)
(1) If proposed investment policy and other changes are not implemented,
shareholders of Govett International Equity Fund will receive shares of ARK
International Equity Portfolio.
Q. HOW DOES THE BOARD OF THE GOVETT FUNDS RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Govett Funds unanimously
recommends that you vote "FOR" the proposed reorganizations.
Q. HOW DO I CONTACT YOU?
A. If you have any questions, call Govett Funds toll free at
1-800-821-0803.
PLEASE VOTE.
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN.
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THE GOVETT FUNDS, INC.
3200 Horizon Drive
King of Prussia, PA 19406-0903
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of the
Govett Global Income Fund, Govett Smaller Companies Fund, Govett Emerging
Markets Equity Fund, and Govett International Equity Fund will be held at 25
South Charles Street - 16th Floor Baltimore, Maryland 21201 on July 12, 2000 at
3:00 p.m. EST, for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Agreement"),
between ARK Funds and The Govett Funds, Inc. ("Govett
Funds"), and the transactions contemplated thereby,
including: (a) the transfer of all the assets of the Govett
Global Income Fund, Govett Smaller Companies Fund, Govett
Emerging Markets Equity Fund, and Govett International Equity
Fund (collectively, the "Acquired Funds") of Govett Funds to,
and the assumption of the stated liabilities of each Acquired
Fund by, a corresponding portfolio of ARK Funds
(collectively, the "Acquiring Funds"), in exchange for shares
of such Acquiring Fund; (b) the distribution of the Acquiring
Funds shares so received by the Acquired Funds pro rata to
shareholders of the Acquired Funds; and (c) the termination
of the Acquired Funds.
ITEM 2. To transact such other business as may properly come before
the meeting and any adjournment thereof.
The proposed reorganizations and related matters are described in the
attached Prospectus/Proxy Statement. A copy of the Reorganization Agreement is
attached to the Prospectus/Proxy Statement as Appendix A.
Only shareholders of record on May 18, 2000 of the Govett Global Income
Fund, Govett Smaller Companies Fund, Govett Emerging Markets Equity Fund, and
Govett International Equity Fund, are entitled to notice of and to vote at the
Special Meeting and any adjournment thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD. THIS IS IMPORTANT TO ENSURE A
QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY SUBMITTING A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
EXECUTED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
John Hunt
Secretary
June __, 2000
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PROSPECTUS/PROXY STATEMENT
Dated June __, 2000
ARK FUNDS
Oaks, Pennsylvania 19456
Telephone 1-800-ARK-FUND
THE GOVETT FUNDS, INC.
3200 Horizon Drive
King of Prussia, PA 19406-0903
Telephone 1-800-821-0803
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of The Govett Funds, Inc.
("Govett Funds") in connection with the Special Meeting of Shareholders of the
Govett Global Income Fund, Govett Smaller Companies Fund, Govett Emerging
Markets Equity Fund, and Govett International Equity Fund (collectively, the
"Acquired Funds") (the "Meeting") to be held at 25 South Charles Street - 16th
Floor, Baltimore, Maryland 21201 on July 12, 2000 at 3:00 p.m. EST, at which
shareholders of the Acquired Funds will be asked to consider and approve the
Agreement and Plan of Reorganization dated as of May 17, 2000 (the
"Reorganization Agreement"), by and between ARK Funds and Govett Funds providing
for the reorganizations (the "Reorganizations") of the Acquired Funds with and
into the ARK Income Portfolio, ARK Small-Cap Equity Portfolio, ARK Emerging
Markets Equity Portfolio, and ARK International Equity Selection Portfolio or
ARK International Equity Portfolio (collectively, the "Acquiring Funds").
ARK Funds and Govett Funds are open-end, series, management investment
companies whose investment advisers and subadvisers are affiliated with Allied
Irish Banks, p.l.c. In approving the Reorganization Agreement and the
transactions contemplated thereby, the Govett Funds' Board of Directors
considered, among other things, that combining the assets of the Acquired Funds
with the Acquiring Funds could result in more efficient operations, that the
Acquired Funds and Acquiring Funds have similar investment objectives and
policies, that the investment advisers and subadvisers of the Acquired Funds and
the Acquiring Funds are affiliated, that the interests of shareholders of the
Acquired Funds would not be diluted as a result of the Reorganizations, and that
the Reorganizations would constitute tax-free reorganizations.
This Prospectus/Proxy Statement constitutes the proxy statement of the
Govett Funds for the Meeting and the prospectus for the shares of the ARK Funds
that have been registered with the Securities and Exchange Commission ("SEC")
and are to be issued in connection with the Reorganizations of the corresponding
Acquired Funds.
The Reorganization Agreement provides that each Acquired Fund will
transfer substantially all of its assets and stated liabilities to the Acquiring
Fund identified below:
Acquired Fund Acquiring Fund
------------- --------------
Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
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Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
Govett International Equity Fund ARK International Equity Selection
Portfolio or ARK International Equity
Portfolio
In exchange for the transfer of assets and liabilities, each Acquired
Fund will receive Retail Class A or Institutional Class shares, as applicable,
of the corresponding Acquiring Fund identified above. Each Acquired Fund will
then make a liquidating distribution to its shareholders of the Acquiring Fund
shares, so that a shareholder of an Acquired Fund at the time of the
Reorganizations will receive Retail Class A or Institutional Class shares, as
applicable, of the corresponding Acquiring Fund with the same aggregate net
asset value as the shareholder had in the Acquired Fund as of the closing date
of the Reorganizations. Following the Reorganizations, the Acquired Funds will
be terminated and deregistered as described in the Reorganization Agreement.
ARK Income Portfolio, ARK Small-Cap Equity Portfolio, and ARK
International Equity Selection Portfolio are currently conducting investment
operations as described in this Prospectus/Proxy Statement. ARK Emerging Markets
Equity Portfolio has recently been organized for the purpose of continuing the
investment operations of Govett Emerging Markets Equity Fund. ARK International
Equity Portfolio has been organized for the purpose of continuing the investment
operations of Govett International Equity Fund if certain changes to ARK
International Equity Selection Fund are not approved by its shareholders and
implemented prior to the proposed Reorganization. If those changes are not
approved, Govett International Equity Fund will be merged into ARK International
Equity Portfolio rather than ARK International Equity Selection Portfolio.
This Prospectus/Proxy Statement sets forth certain information that a
shareholder should know before voting on the Reorganization Agreement (and
related transactions) and should be retained for future reference. The Retail
Class A and Institutional Class Prospectus dated June ___, 2000 of ARK Funds,
which describes the Acquiring Funds (other than ARK Emerging Markets Equity
Portfolio and ARK International Equity Portfolio, which have nominal assets and
liabilities immediately prior to any reorganization), accompanies this
Prospectus/Proxy Statement. Additional information is contained in: (i) the
Statement of Additional Information dated June __, 2000, relating to this
Prospectus/Proxy Statement; (ii) the Statement of Additional Information dated
June __, 2000 of ARK Funds; (iii) the ARK Funds' Annual Report for the fiscal
year ended April 30, 1999 and Semi-Annual Report for the six months ended
October 31, 1999; (iv) the Class A Retail and Institutional Class Prospectus and
the Statement of Additional Information of Govett Funds, each dated May 1, 2000;
and (v) the Govett Funds' Annual Report for the fiscal year ended December 31,
1999. Each of these documents is on file with the SEC and is available without
charge upon request by writing or calling either ARK Funds or Govett Funds at
their respective addresses or telephone numbers set forth above. The information
relating to the Acquiring Funds contained in the ARK Funds' Prospectus dated
June ___, 2000, the Statement of Additional Information dated June __, 2000, the
Annual Report for the fiscal year ended April 30, 1999, and the Semi-Annual
Report for the six months ended October 31, 1999 is incorporated herein by
reference.
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This Prospectus/Proxy Statement is expected to be first sent to
shareholders on or about June __, 2000.
SHARES OF ARK FUNDS AND GOVETT FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY ARK FUNDS OR GOVETT FUNDS.
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TABLE OF CONTENTS
SUMMARY...............................................................................1
BOARD CONSIDERATION...............................................................1
REASONS FOR THE REORGANIZATIONS.......................................................1
FEDERAL INCOME TAX CONSEQUENCES...................................................1
OVERVIEW OF GOVETT FUNDS AND ARK FUNDS............................................1
Arrangements with Service Providers...........................................2
Comparative Fee Tables........................................................3
Expense Ratios -- Acquired Funds.............................................12
Expense Ratios -- Acquiring Fund.............................................12
Purchases....................................................................14
Exchanges....................................................................15
Dividends and Distributions..................................................15
Redemption Procedures........................................................16
VOTING INFORMATION...............................................................16
RISK FACTORS.........................................................................16
INFORMATION RELATING TO THE PROPOSED REORGANIZATION..................................20
DESCRIPTION OF THE REORGANIZATION AGREEMENT......................................20
CAPITALIZATION...................................................................22
FEDERAL INCOME TAX CONSEQUENCES..................................................23
INFORMATION RELATING TO VOTING MATTERS...............................................24
GENERAL INFORMATION..............................................................24
SHAREHOLDER APPROVAL.............................................................24
QUORUM...........................................................................25
ANNUAL MEETINGS..................................................................26
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND......................................26
ADDITIONAL INFORMATION ABOUT THE ACQUIRED FUND.......................................26
OTHER BUSINESS.......................................................................27
SHAREHOLDER INQUIRIES................................................................27
Appendix A...........................................................................28
AGREEMENT AND PLAN OF REORGANIZATION.............................................xx
Appendix B...........................................................................xx
Appendix C...........................................................................xx
Appendix D...........................................................................xx
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SUMMARY
The following is a summary of certain information relating to the
Reorganizations, the parties thereto, and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Prospectus/Proxy Statement, the Statement of Additional Information
relating to this Prospectus/Proxy Statement, the Retail Class A and
Institutional Class Prospectus and Statement of Additional Information of ARK
Funds, the Class A Retail Shares and Institutional Class Shares Prospectus and
the Statement of Additional Information of Govett Funds, and the Reorganization
Agreement attached to this Prospectus/Proxy Statement as Appendix A. Govett
Funds' Annual Report may be obtained without charge by calling 1-800-821-0803.
BOARD CONSIDERATION. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, the Board of Directors of Govett Funds, and the Board of
Trustees of ARK Funds, including in each case the directors/trustees who are not
"interested persons" of ARK Funds or the Govett Funds, within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act"), have determined that the Reorganizations are in the best interests of
shareholders of the Acquired Funds and the Acquiring Funds, respectively, and
that the interests of existing shareholders of the Acquired Funds and the
Acquiring Funds, respectively, will not be diluted as a result of the
Reorganizations. See "Information Relating to the Proposed Reorganizations."
REASONS FOR THE REORGANIZATIONS. The primary reasons for each of the
proposed Reorganizations are: (a) more efficient operations due to combining the
assets of the Acquired Funds with the Acquiring Funds; (b) the opportunity for
the shareholders of each Acquired Fund to participate in a larger family of
mutual funds through the exchange privilege offered by ARK Funds; (c) the
similarity of the investment objective and policies of each Acquired Fund and
the corresponding Acquiring Fund; (d) the fact that the investment advisers of
the Acquired Funds and the Acquiring Funds are under common control and there
would be a continuation of several of the same personnel and resources; (e) the
fact that shareholder interests would not be diluted in the proposed
Reorganizations; and (f) the status of each Reorganization as a tax-free
reorganization.
FEDERAL INCOME TAX CONSEQUENCES. Shareholders of each Acquired Fund will
not recognize any gain or loss for federal income tax purposes as a result of
their receipt of Retail Class A or Institutional Class shares of the
corresponding Acquiring Funds. The Acquired Funds and shareholders of each
Acquired Fund will not incur any material federal income taxes as a result of
the Reorganizations, and no Acquiring Fund will recognize gain or loss for
federal tax purposes on its issuance of shares in the Reorganizations. See
"Information Relating to the Proposed Reorganizations - Federal Income Tax
Consequences."
OVERVIEW OF GOVETT FUNDS AND ARK FUNDS.
Investment Objectives and Policies
The investment objectives and policies of Govett Emerging Markets Equity
Fund and ARK Emerging Markets Equity Portfolio are identical. In addition, the
investment objectives and policies of Govett International Equity Fund and those
of ARK International Equity Selection Portfolio (as revised, or alternatively
ARK International Equity Portfolio) are substantially similar.
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The investment objectives and policies of Govett Global Income Fund and
Govett Smaller Companies Fund are similar to those of ARK Income Portfolio and
ARK Small-Cap Equity Portfolio, respectively, as described below.
Govett Global Income Fund and ARK Income Portfolio. The investment goal
of the Govett Global Income Fund is high current income consistent with the
preservation of capital by investing primarily in debt securities. The secondary
goal is capital appreciation. The investment goal of the ARK Income Portfolio is
current income and capital growth. Under normal circumstances, the Govett Global
Income Fund invests at least 65% of its total assets in debt securities of
issuers located in at least three different countries, which may include the
United States. The Govett Global Income Fund may not invest more than 40% of its
total assets in any one country, other than the United States. Under normal
circumstances, at least 65% of the value of the ARK Income Portfolio's total
assets will be invested in fixed-income securities. The ARK Income Portfolio
normally invests in investment-grade debt securities (including convertible
securities) and unrated securities determined by the adviser to be of comparable
quality. The ARK Income Portfolio may also invest up to 15% of its total assets
in securities rated below investment grade ("junk bonds").
Govett Smaller Companies Fund and ARK Small-Cap Equity Portfolio. The
investment goal of Govett Smaller Companies Fund is long-term capital
appreciation by investing primarily in equity securities of smaller companies.
The investment goal of ARK Small-Cap Equity Portfolio is long-term capital
appreciation. Under normal circumstances, the Govett Smaller Companies Fund will
invest at least 65% of its total assets in common stock and other equity
securities of smaller companies. For this fund, a smaller company is a company
with a market capitalization no greater than $3 billion when the fund makes the
initial investment. Under normal circumstances, at least 65% of the value of the
ARK Small-Cap Equity Portfolio's total assets will be invested in equity
securities of companies with a market capitalization of $1.2 billion or less at
the time of investment.
See Appendix B for more information regarding the investment practices
of the Acquired Funds and the Acquiring Funds. For a more complete description
of the investment objectives and policies of the Acquired Funds and the
Acquiring Funds, see the prospectus and annual report of Govett Funds and the
prospectus and annual and semi-annual reports of ARK Funds, which are
incorporated herein by reference.
Management and Arrangements with Service Providers
Responsibility for the management and supervision of Govett Funds and
the Acquired Funds rests with the Govett Funds' Board of Directors. The
investment manager to the Acquired Funds is AIB Govett, Inc. ("AIB Govett") and
its subadviser is AIB Govett Asset Management Limited ("AIB Govett London").
Chase Global Funds Services Company provides administrative services. FPS Broker
Services, Inc. is the distributor and principal underwriter for shares of the
Acquired Funds. The Chase Manhattan Bank serves as the global custodian.
Additional services are provided to the Acquired Funds by FPS Services, Inc.
Responsibility for the management and supervision of ARK Funds and the
Acquiring Funds rests with the ARK Funds' Board of Trustees. The investment
adviser to the Acquiring Funds is Allied Investment Advisors, Inc. AIB Govett,
Inc. will perform subadvisory services for the ARK International Equity
Selection Portfolio and ARK Emerging Markets Portfolio. SEI Investments
Distribution Co. serves as the distributor of the shares of the Acquiring Funds.
2
14
Administrative services are provided by SEI Fund Resources. Allfirst Trust
Company, National Association, serves as custodian for the securities and cash
of the Acquiring Funds, and Deutsche Bank/Bankers Trust provides custodial
services for foreign securities. Under a distribution plan for Retail Class A,
Retail Class A and Institutional Class shares of the Acquiring Funds are each
subject to a shareholder services plan.
See Appendix C for more information regarding arrangements with service
providers of the Acquired Funds and the Acquiring Funds.
Comparative Fee Tables
The tables set forth below show (a) shareholder fees and estimated
annual operating expenses for each Acquired Fund for the fiscal year ended
December 31, 1999 and for each Acquiring Fund as of April 30, 1999 for its
fiscal year ended on such date, in each case restated to reflect expenses the
Acquired Funds and the Acquiring Funds, respectively, expect to incur during the
current fiscal year, and (b) pro forma information for each Acquiring Fund
assuming the Reorganization of such Acquiring Fund had taken place on October
31, 1999.
Annual operating expenses as of December 31, 1999 for Class A Retail
and Institutional Class of the Acquired Funds and for the Retail Class A and
Institutional Class of the Acquiring Funds are based on operating expense
information, adjusted for estimated class specific expenses, in each case
restated to reflect expenses the Acquiring Fund expects to incur during the
current fiscal year, and (b) pro forma information for the Acquiring Fund
assuming the Reorganization had taken place on December 31, 1999 for the year
then ended.
The assumption in the example of a 5% annual return is required by
the SEC for all mutual funds, and is not a prediction of any fund's future
performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OF ANY FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
3
15
PRO FORMA ARK
GOVETT GLOBAL INCOME ARK INCOME PORTFOLIO INCOME PORTFOLIO
-------------------- -------------------- ----------------
FUND
----
SHAREHOLDER FEES Class A Institutional Retail Institutional Retail Institutional
(fees paid directly from your Retail Class Class A Class Class A Class
investment) ------ ----- ------- ----- ------- -----
Maximum sales load imposed on
purchases None None
Deferred sales charges imposed on
redemptions None None
Redemption Fee 1.00%(1) 1.00%(1)
Exchange Fee 1.00%(1) 1.00%(1)
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Advisory Fee (before waiver)
12b-1 Fee/Shareholder Services
Fees (before waiver) 0.35% 0.00%
Other Expenses (before waiver) 3.41% 3.41%
Fee Waiver and Expense Requirement (2.16%) (2.16%)
Net Operating Expenses (after
waivers) 2.35%(2) 2.00%(2)
4
16
EXAMPLE
A shareholder would pay the following expenses on a $10,000 investment,
assuming a 5% annual return, reinvestment on all dividends and redemption of the
shares after the number of year indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Govett Global Income Fund
Class A Retail $238 $733 $1,255 $2,686
Institutional Class $203 $627 $1,078 $2,327
ARK Income Portfolio
Retail Class A
Institutional Class
Pro Forma ARK Income Portfolio
Retail Class A
Institutional Class
- --------------------------------
(1) Class A Retail and Institutional Class shares purchased after September
30, 1998 are subject to a redemption fee of 1% on shares sold within six months
of purchase, and shares of either class purchased after December 31, 1998 are
subject to an exchange fee of 1% on shares exchanged within six months of
purchase.
(2) The figures presented in this table are based on the gross expenses
incurred by Class A Retail shares of the fund during the year ended December
31, 1999. During that year, the Investment Manager paid or reimbursed the fund
for certain operating expenses. The actual total operating expenses paid by the
fund with respect to Class A Retail shares for 1999 were 1.75% of average daily
net assets. The Institutional Class shares had not been sold to the public as
of December 31, 1999. For the 2000 fiscal year, the Investment Manager has
agreed to pay and reimburse certain operating expenses to limit total annual
operating expenses to 2.35% of average daily net assets for Class A Retail
shares and to 2.00% of average daily net assets for Institutional Class shares.
[(3) (ARK Funds') Other Expenses have been reduced to reflect the voluntary
waiver of the administrative fee by the administrator. The administrator can
terminate these voluntary waivers and reimbursements at any time at their sole
discretion.]
5
17
PRO FORMA ARK
GOVETT SMALLER COMPANIES ARK SMALL-CAP EQUITY SMALL-CAP EQUITY
FUND PORTFOLIO PORTFOLIO
---- --------- ---------
SHAREHOLDER FEES Class A Institutional Retail Institutional Retail Institutional
(fees paid directly from your Retail Class Class A Class Class A Class
investment) ----- ----- ------- ----- ------- -----
Maximum sales load imposed on
purchases and reinvested dividends None None
Deferred sales charges imposed on
redemptions None None
Redemption Fee 1.00%(1) 1.00%(1)
Exchange Fee 1.00%(1) 1.00%(1)
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Advisory Fee (before waiver)
12b-1 Fee/Shareholder Services
Fees (before waiver) 0.35% 0.00%
Other Expenses (before waiver) 1.81% 1.81%
Fee Waiver and Expense
Reimbursement (0.81%) (0.81%)
Net Operating Expenses (after
waivers) 2.35%(2) 2.00%(2)
6
18
EXAMPLE
A shareholder would pay the following expenses on a $10,000 investment,
assuming a 5% annual return, reinvestment on all dividends and redemption of the
shares after the number of year indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Govett Smaller Companies Fund
Class A Retail $238 $733 $1,255 $2,686
Institutional Class $203 $627 $1,078 $2,327
ARK Small-Cap Equity Portfolio
Retail Class A
Institutional Class
Pro Forma ARK Small-Cap Equity Portfolio
Retail Class A
Institutional Class
- ---------------
(1) Class A Retail and Institutional Class shares purchased after September
30, 1998 are subject to a redemption fee of 1% on shares sold within six months
of purchase, and shares of either class purchased after December 31, 1998 are
subject to an exchange fee of 1% on shares exchanged within six months of
purchase.
(2) The figures presented in this table are based on the gross expenses
incurred by Class A Retail shares of the fund during the year ended December
31, 1999. During that year, the Investment Manager paid or reimbursed the fund
for certain operating expenses. The actual total operating expenses paid by the
fund with respect to Class A Retail shares for 1999 were 2.35% of average daily
net assets. The Institutional Class shares had not been sold to the public as
of December 31, 1999. For the 2000 fiscal year, the Investment Manager has
agreed to pay and reimburse certain operating expenses to limit total annual
operating expenses to 2.35% of average daily net assets for Class A Retail
shares and to 2.00% of average daily net assets for Institutional Class shares.
[(3) (ARK Funds') Other Expenses have been reduced to reflect the voluntary
waiver of the administrative fee by the administrator. The administrator can
terminate these voluntary waivers and reimbursements at any time at their sole
discretion.]
7
19
PRO FORMA ARK
GOVETT EMERGING MARKETS ARK EMERGING MARKETS EMERGING MARKETS
EQUITY FUND EQUITY PORTFOLIO EQUITY PORTFOLIO
----------- ---------------- ----------------
SHAREHOLDER FEES Class A Institutional Retail Institutional Retail Institutional
(fees paid directly from your Retail Class Class A Class Class A Class
investment) ------ ----- ------- ----- ------- -----
Maximum sales load imposed on
purchases and reinvested dividends None None
Deferred sales charges imposed on
redemptions None None
Redemption Fee 1.00%(1) 1.00%(1)
Exchange Fee 1.00%(1) 1.00%(1)
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Advisory Fee (before waiver)
12b-1 Fee/Shareholder Services
Fees (before waiver) 0.35% 0.00%
Other Expenses (before waiver) 2.96% 2.96%
Fee Waiver and Expense
Reimbursement (2.46%) (2.46%)
Net Operating Expenses (after
waivers) 1.85%(2) 1.50%(2)
8
20
EXAMPLE
A shareholder would pay the following expenses on a $10,000 investment,
assuming a 5% annual return, reinvestment on all dividends and redemption of the
shares after the number of year indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Govett Emerging Markets Equity Fund
Class A Retail $188 $582 $1,001 $2,169
Institutional Class $153 $474 $818 $1,791
ARK Emerging Markets Equity Portfolio
Retail Class A
Institutional Class
Pro Forma ARK Emerging Markets Equity Portfolio
Retail Class A
Institutional Class
- ---------
(1) Class A Retail and Institutional Class shares purchased after September
30, 1998 are subject to a redemption fee of 1% on shares sold within six months
of purchase, and shares of either class purchased after December 31, 1998 are
subject to an exchange fee of 1% on shares exchanged within six months of
purchase.
(2) The figures presented in this table are based on the gross expenses
incurred by Class A Retail shares of the fund during the year ended December
31, 1999. During that year, the Investment Manager paid or reimbursed the fund
for certain operating expenses. The actual total operating expenses paid by the
fund with respect to Class A Retail shares for 1999 were 1.85% of average daily
net assets. The Institutional Class shares had not been sold to the public as
of December 31, 1999. For the 2000 fiscal year, the Investment Manager has
agreed to pay and reimburse certain operating expenses to limit total annual
operating expenses to 1.85% of average daily net assets for Class A Retail
shares and to 1.50% of average daily net assets for Institutional Class shares.
9
21
ARK INTERNATIONAL PRO FORMA ARK
GOVETT INTERNATIONAL EQUITY EQUITY SELECTION INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO SELECTION PORTFOLIO(1)
--------- --------- -----------------------
SHAREHOLDER FEES Class A Institutional Retail Institutional Retail Institutional
(fees paid directly from your Retail Class Class A Class Class A Class
investment) ------ ----- ------- ----- ------- -----
Maximum sales load imposed on
purchases and reinvested dividends None None
Deferred sales charges imposed on
redemptions None None
Redemption Fee 1.00%(2) 1.00%(2)
Exchange Fee 1.00%(2) 1.00%(2)
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Advisory Fee
12b-1/Shareholder Services Fees 0.35% 0.00%
Other Expenses 1.99% 1.98%
Fee Waiver and Expense
Reimbursement (0.99%) (0.98%)
Net Operating Expenses (after
waivers) 2.35%(3) 2.00%(3)
10
22
EXAMPLE
A shareholder would pay the following expenses on a $10,000 investment,
assuming a 5% annual return, reinvestment on all dividends and redemption of the
shares after the number of year indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Govett International Equity Fund
Class A Retail $238 $733 $1,255 $2,686
Institutional Class $2203 $627 $1,078 $2,327
ARK International Equity Selection Portfolio
Retail Class A
Institutional Class
Pro Forma ARK International Equity Selection Portfolio
Retail Class A
Institutional Class
ARK International Equity Portfolio
Retail Class A
Institutional Class
Pro Forma ARK International Equity Portfolio
Retail Class A
Institutional Class
- ---------------
(1) The pro forma for ARK International Equity Portfolio would be identical
to the pro forma for ARK International Equity Selection Portfolio.
(2) Class A Retail and Institutional Class shares purchased after September
30, 1998 are subject to a redemption fee of 1% on shares sold within six months
of purchase, and shares of either class purchased after December 31, 1998 are
subject to an exchange fee of 1% on shares exchanged within six months of
purchase.
(3) The figures presented in this table are based on the gross expenses
incurred by Class A Retail shares of the fund during the year ended December
31, 1999. During that year, the Investment Manager paid or reimbursed the fund
for certain operating expenses. The actual total operating expenses paid by the
fund with respect to Class A Retail shares for 1999 were 2.35% and 2.00% of
average daily net assets, respectively. For the 2000 fiscal year, the
Investment Manager has agreed to pay and reimburse certain operating expenses
to limit total annual operating expenses to 2.35% of average daily net assets
for Class A Retail shares and to 2.00% of average daily net assets for
Institutional Class shares.
[(4) (ARK Funds') Other Expenses have been reduced to reflect the voluntary
waiver of the administrative fee by the administrator. The administrator can
terminate these voluntary waivers and reimbursements at any time at their sole
discretion.]
11
23
Expense Ratios -- Acquired Funds
The following table sets forth (a) the ratios of operating expenses to
average net assets of the Class A Retail and Institutional Class of each
Acquired Fund for the fiscal year ended December 31, 1999, (i) after fee
waivers and expense reimbursements, and (ii) absent fee waivers and expense
reimbursements.
FISCAL YEAR ENDED DECEMBER 31, 1999
Ratio of Operating Ratio of Operating
Expenses to Average Net Expenses to Average
Assets After Fee Waivers Net Assets Absent Fee
and Expense Waivers and Expense
Acquired Fund Reimbursements Reimbursements
- ------------- -------------- --------------
Class A Class A
Retail Institutional Retail Institutional
------ ------------- ------ -------------
Govett Global Income Fund % % % %
Govett Smaller Companies Fund
Govett Emerging Markets Equity Fund
Govett International Equity Fund
Expense Ratios -- Acquiring Fund
The following table sets forth the ratios of operating expenses to
average net assets of the Retail Class A and Institutional Class of each
Acquiring Fund for the fiscal year ended April 30, 1999, (i) after fee waivers
and expense reimbursements, (ii) absent fee waivers and expense reimbursements,
and (iii) the annualized ratios of operating expenses to average net assets of
the Retail Class A and Institutional Class of the Acquiring Funds for the six
months ended October 31, 1999, (a) after fee waivers and expense reimbursements,
and (b) absent fee waivers and expense reimbursements.
12
24
FISCAL YEAR ENDED APRIL 30, 1999
Ratio of Operating Ratio of Operating
Expenses to Average Net Expenses to Average
Assets After Fee Waivers Net Assets Absent Fee
and Expense Waivers and Expense
Acquiring Fund Reimbursements Reimbursements
- -------------- -------------- --------------
Retail Retail
Class A Institutional Class A Institutional
------ ------------- ------ -------------
ARK Income Portfolio
ARK Small-Cap Equity Portfolio
ARK Emerging Markets Equity Portfolio N/A(1) N/A(1)
ARK International Equity Selection
Portfolio(1)
SIX MONTHS ENDED OCTOBER 31, 1999
Ratio of Operating Ratio of Operating
Expenses to Average Net Expenses to Average
Assets After Fee Waivers Net Assets Absent Fee
and Expense Waivers and Expense
Acquiring Fund Reimbursements Reimbursements
- -------------- -------------- --------------
Retail Retail
Class A Institutional Class A Institutional
------- ------------- ------- -------------
ARK Income Portfolio
ARK Small-Cap Equity Portfolio
ARK Emerging Markets Equity Portfolio N/A(1) N/A(1)
ARK International Equity Selection
Portfolio
- -----------------------------
(1) Estimated operating expenses.
13
25
Purchases
Class A Retail shares of the Acquired Funds may be sold to any
interested party who meets the investment minimum. Institutional Class shares of
the Acquired Funds may be sold only to certain eligible investors, including
Acquired Funds shareholders. Class A Retail shares and Institutional Class
shares may be purchased at their net asset value without a sales charge
determined as of the close of the regular trading session of the New York Stock
Exchange (normally 4:00 p.m. Eastern Time). Share purchases may be made Monday
through Friday, except on certain holidays. The following minimum investments
apply to Class A Retail shares or Institutional Class shares of the Acquired
Funds unless they are waived:
Class A Retail Institutional Class
-------------- -------------------
Second Stage First Stage
Shareholders (you Shareholders (you
became, and remain, became, and remain,
a shareholder on or a shareholder prior
after January 1, 1998) to January 1, 1998)
--------------------- -------------------
To open a regular account $5,000 $500 $25,000
To add to a regular account $1,000 $25 $0
To open an IRA account $2,000 $500 N/A
To add to an IRA account $1,000 $25 N/A
Minimum account balance [___] [___] $0
Shares of the Acquiring Funds may be sold on a continuous basis at net
asset value plus any applicable sales charge. Retail Class A shares are sold
through qualified securities brokers and other financial institutions. The
maximum sales charge applicable to the Retail Class A of the Acquired Funds is
4.75%, except the ARK Income Portfolio which is 4.50%. Institutional Class
shares of the Acquired Funds are sold to individuals, institutions and other
entities that have established trust, custodial or money management
relationships with Allfirst Bank ("Allfirst") or its affiliates. Institutional
Class shares may be purchased by eligible investors at their net asset value
without a sales charge. Purchases may be made Monday through Friday, except on
certain holidays. The net asset value of the Acquiring Funds are calculated as
of the close of regular trading on the New York Stock Exchange (normally 4:00
p.m. Eastern Time). Shareholders of the Acquiring Funds may reinvest their
dividends in Retail Class A or Institutional Class shares, as applicable, of the
Acquiring Funds but additional purchases of shares may only be made by Acquiring
Fund shareholders who are otherwise eligible to purchase shares of that
particular class. The following minimum investments apply to purchases of shares
of the Acquiring Funds unless they are waived:
14
26
Class A Retail Institutional Class
-------------- -------------------
To open an account $500 $100,000
To add to an account [___] N/A
Minimum account balance 500 250,000*
- ---------------
*An Institutional Class shareholder of the Acquiring Fund must, within six
months, reach and maintain an aggregate balance of $250,000.
Exchanges
All or a portion of the shares of the Acquiring Funds may be exchanged
on any business day at their net asset value, plus any sales charge
differential, for shares of the same class of one or more of the other ARK
Funds. Currently, shares of the Acquired Funds may be exchanged at their net
asset value, plus any sales charge differential, for the shares of the same
class of the other Govett Funds portfolios and the [Kemper Money Market Fund].
After the Reorganizations, Acquired Funds shareholders may only exchange their
Acquiring Fund shares for shares of the same class of the ARK Funds.
Dividends and Distributions
The Acquired Funds declare and pay any dividends from net investment
income annually, except the Govett Global Income Fun, which declares dividends
daily and pays dividends monthly. Net realized capital gains, if any, are
distributed by the Acquired Funds at least annually, except the Govett Global
Income Fund. The Govett Global Income Fund declares dividends daily and pays
dividends monthly. Such distributions may include all or a portion of the fund's
net realized short-term gains. At least annually, distributions of any net
realized or remaining gains will be declared. Holders of shares of the Acquired
Fund may elect to have their dividends and distributions automatically
reinvested in additional shares of the same class at the net asset value next
determined after payment, to receive their dividends and distributions in cash,
or to receive a combination of additional shares and cash. If a shareholder
fails to select an option, all dividends and distributions are reinvested in
additional shares.
Each Acquiring Fund declares and pays any dividends from net investment
income at least annually, except for the ARK Income Portfolio, which declares
dividends daily and pays dividends monthly. Net realized capital gains, if any,
are distributed by each Acquiring Fund at least annually. Dividends and
distributions are automatically reinvested in additional shares of the same
class on the payment dates at the net asset value as of the payable date of the
dividend or distribution, unless cash payments are requested in writing.
Acquiring Funds shareholders may reinvest their dividends in shares of the
Acquiring Funds.
15
27
Redemption Procedures
The shares of the Acquired Funds and the Acquiring Funds are redeemable
on any business day at a price equal to the net asset value of the shares the
next time it is calculated after receipt of a redemption request in good order.
VOTING INFORMATION. This Prospectus/Proxy Statement is being furnished
in connection with the solicitation of proxies by the Board of Directors of
Govett Funds in connection with the Meeting. Only shareholders of record at the
close of business on May 18, 2000 will be entitled to notice of and to vote at
the Meeting. Each share or fraction thereof is entitled to one vote or fraction
thereof. Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no instruction is made, the
persons named as proxies will vote in favor of each proposal set forth in the
Notice of Meeting. Proxies may be revoked at any time before they are exercised
by submitting a written notice of revocation or a subsequently executed proxy,
or by attending the Meeting and voting in person. For additional information,
including a description of the shareholder vote required for approval of the
Reorganization Agreement and transactions contemplated thereby, see "Information
Relating to Voting Matters."
RISK FACTORS
The following discussion summarizes some of the more significant risk
factors of the Acquired Funds and the corresponding Acquiring Funds and is
qualified by reference to the more complete information about each fund
contained in the prospectuses and statements of additional information of Govett
Funds and ARK Funds.
GOVETT GLOBAL INCOME FUND/ARK INCOME PORTFOLIO. Govett Global Income
Fund will merge with and into ARK Income Portfolio. The following discussion
summarizes the risks for each fund.
Govett Global Income Fund.
Since the fund invests primarily in debt securities, the major risks are
those of debt investing, including sudden rises in interest rates causing
reductions in the value of the fund's debt holdings. They may also include
sudden economic disruptions in one or more markets causing issuers to default on
debt payments to the fund.
Investments in foreign markets expose the fund's investments to
additional risks including the following:
- Political instability;
- Significant or rapid changes in currency exchange rates;
- Foreign exchange restrictions;
- Inaccurate or incomplete financial information resulting from
less strict securities market regulations and accounting
standards.
These risks are increased to the extent the fund invests in emerging
markets. The fund may invest in emerging markets.
Global Income Fund is not a "diversified company" as defined in the
Investment Company Act of 1940. As a result, this fund may invest in a smaller
number of issuers than
16
28
diversified mutual funds, which exposes Global Income Fund to a greater risk of
loss from its investments in any one company.
ARK Income Portfolio. The prices of the Portfolio's fixed income
securities respond to economic developments, particularly interest rate changes,
as well as to perceptions about the creditworthiness of individual issuers.
Generally, the Portfolio's fixed income securities will decrease in value if
interest rates rise. The volatility of lower rated securities is even greater
than that of higher rated securities. Also, securities with longer maturities
are generally more volatile, so the average maturity of the Portfolio's
securities affects risk.
The mortgages underlying mortgage-backed securities may be paid off
early, which makes it difficult to determine their actual maturity and therefore
calculate how the securities will respond to changes in interest rates. The
Portfolio may have to reinvest prepaid amounts at lower interest rates. This
risk of prepayment is an additional risk of mortgage-backed securities.
The Portfolio's U.S. government securities are not guaranteed against
price movements due to changing interest rates. Obligations issued by some U.S.
government agencies are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
Junk bonds involve greater risks of default or downgrade and are more
volatile than investment-grade securities. Junk bonds involve a greater risk of
price declines than investment-grade securities due to actual or perceived
changes in an issuer's creditworthiness. In addition, issuers of junk bonds may
be more susceptible than other issuers to economic downturns. Junk bonds are
subject to the risk that the issuer may not be able to pay interest and
ultimately to repay principal upon maturity. Discontinuation of these payments
could substantially adversely affect the market value of the security.
GOVETT SMALLER COMPANIES FUND/ARK SMALL-CAP EQUITY PORTFOLIO. Govett
Smaller Companies Fund will merge with and into ARK Small-Cap Equity Portfolio.
The following discussion summarizes the risks for each fund.
Govett Smaller Companies Fund.
Since the fund invests primarily in common stocks, the major risks are
those of stock investing, including periods of little or no growth and sudden
declines in value.
Investments in foreign markets expose the fund's investments to
additional risks including the following:
- Political instability;
- Significant or rapid changes in currency exchange rates;
- Foreign exchange restrictions;
- Inaccurate or incomplete financial information resulting from
less strict securities market regulations and accounting
standards.
These risks are increased to the extent the fund invests in emerging
markets. The fund may invest in emerging markets.
17
29
Securities of smaller companies tend to experience more price volatility
than securities of larger companies. Generally, smaller companies have more
limited product lines and markets than larger companies. On the other hand,
larger companies generally do not offer the potential for capital appreciation
as do well-managed smaller companies.
ARK Emerging Markets Equity Portfolio.
Since it purchases equity securities, the Portfolio is subject to the
risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of the
Portfolio's equity securities may fluctuate significantly from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Portfolio.
Investing in non-U.S. countries poses additional risks since political
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
non-U.S. countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of the Portfolio's investments. These
currency movements may happen separately from and in response to events that do
not otherwise affect the value of the security in the issuer's home country.
These various risks will be even greater for investments in emerging market
countries since political turmoil and rapid changes in economic conditions are
more likely to occur in these countries.
GOVETT INTERNATIONAL EQUITY FUND/ARK INTERNATIONAL EQUITY SELECTION
PORTFOLIO OR ARK INTERNATIONAL EQUITY PORTFOLIO. Govett International Equity
Fund will merge with and into ARK International Equity Selection Portfolio or
ARK International Equity Portfolio. The following discussion summarizes the
risks for each fund.
Govett International Equity Fund.
Since the fund invests primarily in common stocks, the major risks are
those of stock investing, including periods of little or no growth and sudden
declines in value.
Investments in foreign markets expose the fund's investments to
additional risks including the following:
- Political instability;
- Significant or rapid changes in currency exchange rates;
- Foreign exchange restrictions;
18
30
- Inaccurate or incomplete financial information resulting from
less strict securities market regulations and accounting
standards.
These risks are increased to the extent the fund invests in emerging
markets. The fund invests primarily in emerging markets.
Securities of smaller companies tend to experience more price volatility
than securities of larger companies. Generally, smaller companies have more
limited product lines and markets than larger companies. On the other hand,
larger companies generally do not offer the potential for capital appreciation
as do well-managed smaller companies.
ARK Emerging Markets Equity Portfolio.
Since it purchases equity securities, the Portfolio is subject to the
risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of the
Portfolio's equity securities may fluctuate significantly from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Portfolio.
Investing in non-U.S. countries poses additional risks since political
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
non-U.S. countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of the Portfolio's investments. These
currency movements may happen separately from and in response to events that do
not otherwise affect the value of the security in the issuer's home country.
These various risks will be even greater for investments in emerging market
countries since political turmoil and rapid changes in economic conditions are
more likely to occur in these countries.
GOVETT INTERNATIONAL EQUITY FUND/ARK INTERNATIONAL EQUITY SELECTION
PORTFOLIO OR ARK INTERNATIONAL EQUITY PORTFOLIO. Govett International Equity
Fund will merge with and into ARK International Equity Selection Portfolio or
ARK International Equity Portfolio. The following discussion summarizes the
risks for each fund.
Govett International Equity Fund.
Since the fund invests primarily in common stocks, the major risks are
those of stock investing, including periods of little or no growth and sudden
declines in value.
Investments in foreign markets expose the fund's investments to
additional risks including the following:
- Political instability;
- Significant or rapid changes in currency exchange rates;
- Foreign exchange restrictions;
- Inaccurate or incomplete financial information resulting from
less strict securities market regulations and accounting
standards.
19
31
These risks are increased to the extent the fund invests in emerging
markets. The fund may invest in emerging markets.
Securities of smaller companies tend to experience more price volatility
than securities of larger companies. Generally, smaller companies have more
limited product lines and markets than larger companies. On the other hand,
larger companies generally do not offer the potential for capital appreciation
as do well-managed smaller companies.
ARK International Equity Selection Portfolio and ARK International
Equity Portfolio.
Each Portfolio is subject to the risk that stock prices will decline
over short or extended periods of time. Historically, the equity markets have
moved in cycles, and the value of the mutual fund shares that the Portfolio owns
may fluctuate significantly from day to day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Portfolio.
Investing in foreign countries poses additional risks since political
and economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Portfolio's investments in fund
shares. These currency movements may happen separately from and in response to
events that do not otherwise affect the value of the security in the issuer's
home country. These various risks will be even greater for investments in
emerging market countries since political turmoil and rapid changes in economic
conditions are more likely to occur in these countries.
See Appendix D for more information concerning Risk Factors.
INFORMATION RELATING TO THE PROPOSED REORGANIZATIONS
ARK Funds and Govett Funds have entered into the Reorganization
Agreement that provides that each Acquiring Fund is to acquire the corresponding
Acquired Fund. Significant provisions of the Reorganization Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix A to this Prospectus/Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The Reorganization
Agreement provides that on the Closing Date (as defined in the Reorganization
Agreement), each Acquiring Fund will acquire the assets and assume the stated
liabilities of a corresponding Acquired Fund. In exchange for the transfer of
assets and assumption of stated liabilities of each Acquired Fund, ARK Funds
will issue to each Acquired Fund, at the Closing, a number of full and
fractional Retail Class A or Institutional Class shares of a corresponding
Acquiring Fund. The number of shares so issued will have an aggregate net asset
value equal to the value of the net assets of the Acquired Fund. [In determining
the value of the assets of each Acquired Fund, each security will be priced in
accordance with the policies and procedures of the Acquiring Funds as described
in ARK Funds then current prospectus and statement of additional information and
in accordance with applicable provisions of the 1940 Act.]
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The Reorganization Agreement provides that the Govett Global Income Fund
and Govett Smaller Companies Fund will declare a dividend on or prior to the
Closing Date in order to distribute to their shareholders all of their
investment company taxable income earned, and all of their net capital gains
realized, up to and including the Closing Date.
The Acquired Funds will liquidate and distribute pro rata to their
shareholders within two business days after the Closing Date the Acquiring
Funds' shares to be received by the Acquired Funds at the Closing. All of the
issued and outstanding shares of the Acquired Funds will then be canceled on the
books of Govett Funds and will thereafter represent only the right to receive
Retail Class A or Institutional Class shares of the Acquiring Funds, and the
Acquired Funds' transfer books will be closed permanently. After the Closing
Date, the Acquired Funds will not conduct any business other than related to
their termination and Govett Funds will effect the termination of the Acquired
Funds.
The expenses incurred by ARK Funds and Govett Funds in connection with
the Reorganizations will be borne by AIB Govett, Inc.
The consummation of the Reorganizations is subject to certain
conditions. The Reorganizations will be contingent upon the approval of the
Reorganization Agreement and the transactions contemplated thereby by the
shareholders of the Acquired Funds. The reorganization of the Govett
International Equity Fund will also be contingent upon the approval of the
implementation of the proposed change in the investment policy of the ARK
International Equity Selection Portfolio and related matters. In addition, the
reorganizations will be contingent upon: (a) the receipt of certain legal
opinions described in the Reorganization Agreement (see Appendix A attached
hereto); (b) the continuing accuracy of the representations and warranties in
the Reorganization Agreement; and (c) the performance in all material respects
of the agreements in the Reorganization Agreement. If these conditions are
satisfied, the Closing Dates of the Reorganizations are expected to be July 15,
2000 for the Govett Global Income Fund and Govett Smaller Companies Fund and
July 22, 2000 for the Govett Emerging Markets Equity Fund and Govett
International Equity Fund.
ARK Funds and Govett Funds may mutually agree to terminate the
Reorganization Agreement at or prior to the Closing Date. Either ARK Funds or
Govett Funds may terminate the Reorganization Agreement at any time after
September 30, 2000 if the Reorganizations have not occurred on or prior to such
date. In addition, either ARK Funds or Govett Funds may waive the other party's
breach of a provision or failure to satisfy a condition of the Reorganization
Agreement.
The Board of Directors of Govett Funds has determined that the
Reorganizations are in the best interests of the Acquired Funds and their
shareholders and has approved the Reorganization Agreement. In approving the
Reorganization Agreement and the transactions contemplated thereby, the board
considered the following factors, among others: (a) more efficient operations
due to combining the assets of the Acquired Funds with the Acquiring Funds; (b)
the opportunity for the shareholders of each Acquired Fund to participate in a
larger family of mutual funds through the exchange privilege offered by ARK
Funds; (c) the similarity of the investment objective and policies of each
Acquired Fund and the corresponding Acquiring Fund; (d) the fact that the
investment advisers of the Acquired Funds and the Acquiring Funds are under
common control and there would be a continuation of several of the same
personnel and resources; (e) the fact that shareholder interests would not be
diluted in the proposed Reorganizations; and (f) the status of each
Reorganization as a tax-free reorganization.
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After consideration of the foregoing factors and other relevant
information, the Board of Directors of Govett Funds unanimously approved the
Reorganization Agreement and directed that it be submitted to the shareholders
for approval. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
REORGANIZATION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
At a meeting held on December 10, 1999, the Board of Directors of ARK
Funds approved the Reorganization Agreement, finding that the Reorganizations
are in the best interests of the Acquiring Funds and their shareholders and that
the interests of the existing shareholders of the Acquiring Funds would not be
diluted as a result of the Reorganizations.
CAPITALIZATION. Because the Acquired Funds will be combined in the
Reorganizations with the Acquiring Funds, the total capitalization of the
Acquiring Funds after the Reorganizations is expected to be greater than the
current capitalization of the Acquired Funds. The following table sets forth as
of December 31, 1999: (a) the capitalization of the Acquiring Funds and the
Acquired Funds, and (b) the pro forma capitalization of the Acquiring Funds as
adjusted to give effect to the Reorganizations. If consummated, the
capitalization of the Acquiring Funds and Acquired Funds is likely to be
different at the Closing Date as a result of daily share purchase and redemption
activity.
Govett Global ARK Income Pro Forma
Income Fund Portfolio ARK Income Portfolio
Total Net Assets
Shares Outstanding
Net Asset Value
Per Share
Pro Forma
Govett Smaller ARK Small-Cap ARK Small-Cap
Companies Fund Equity Portfolio Equity Portfolio
Total Net Assets
Shares Outstanding
Net Asset Value
Per Share
Govett Emerging Pro Forma
Markets ARK Emerging Markets ARK Emerging Markets
Equity Fund Equity Portfolio Equity Portfolio
Total Net Assets
Shares Outstanding
Net Asset Value
Per Share
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Pro Forma
Govett International ARK International ARK International
Equity Fund Equity Selection Equity Selection
Portfolio(2) Portfolio(3)
Total Net Assets
Shares Outstanding
Net Asset Value
Per Share
- -----------------
(1) The ARK Emerging Markets Equity Portfolio was created solely for purposes of
the Reorganization. Assets and outstanding shares reflect initial seed money
that will be infused prior to the Reorganization.
(2) The ARK International Equity Portfolio has been created solely for the
purpose of the Reorganization with the Govett International Equity Fund, in the
event that shareholders of the ARK International Equity Selection Portfolio do
not approve the proposed change in its investment policy and related matters.
Assets and outstanding shares for the ARK International Equity Portfolio of ____
and ____, respectively, reflect initial seed money that will be infused prior to
the Reorganization.
(3) In the event that the Govett International Equity Fund is reorganized with
the ARK International Equity Portfolio (rather than the ARK International Equity
Selection Portfolio), the Pro Forma Total Net Assets, Shares Outstanding, and
Net Asset Value Per Share would be $____, _____ and $_____, respectively.
FEDERAL INCOME TAX CONSEQUENCES. The consummation of the Reorganizations
is conditioned upon the receipt of an opinion of Kirkpatrick & Lockhart LLP
substantially to the effect that for federal income tax purposes: (a) the
transfer of the assets of the Acquired Funds, and the assumption by the
Acquiring Funds of the stated liabilities of the Acquired Funds, in exchange for
Retail Class A and Institutional Class shares of the Acquiring Funds, and the
distribution of such shares to the shareholders of the Acquired Funds, as
provided in the Reorganization Agreement, will constitute a "reorganization"
within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), and, with respect to such reorganization, the Acquired
Funds and the Acquiring Funds will each be considered "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (b) no gain or
loss will be recognized by the Acquired Funds as a result of such transactions;
(c) no gain or loss will be recognized by the Acquiring Funds as a result of
such transactions; (d) no gain or loss will be recognized by the shareholders of
the Acquired Funds on the distribution to them by the Acquired Funds of Retail
Class A or Institutional Class shares of the Acquiring Funds in exchange for
their Acquired Funds shares of any class; (e) the adjusted tax basis of the
Acquiring Funds shares received by each shareholder of a corresponding Acquired
Fund will be the same as the aggregate basis of the shareholder's Acquired Funds
shares immediately prior to the transaction; (f) in accordance with Section
362(b) of the Code, the basis of the assets of the Acquired Funds in the hands
of the Acquiring Funds will be the same as the basis of such assets of the
Acquired Funds in the hands of the Acquired Funds immediately prior to the
exchange; (g) a shareholder's holding period for Acquiring Funds shares will be
determined by including the period for which the shareholder held the shares of
the Acquired Fund exchanged therefore provided that the shareholder held such
shares of the Acquired Fund as a capital asset; and (h) the holding period of
the Acquiring Funds with respect to the assets of the Acquired Funds will
include the period for which such assets were held by the Acquired Funds.
ARK Funds and Govett Funds have not sought a tax ruling from the
Internal Revenue Service (the "IRS"), but are acting in reliance upon the
opinion of counsel discussed above. In
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rendering their opinion, such counsel will rely as to certain factual matters on
certificates of officers of ARK Funds and Govett Funds. The opinion of counsel
is not binding on the IRS and does not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisers concerning the
potential tax consequences to them, including state and local income taxes.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. The Board of Directors of Govett Funds, in
connection with the Meeting, is providing this Prospectus/Proxy Statement in
connection with the solicitation of proxies. Solicitation of proxies will occur
principally by mail, but officers and service contractors of Govett Funds may
also solicit proxies by telephone, telegraph, or personal interview. Any
shareholder giving a proxy may revoke it at any time before it is exercised by
submitting to Govett Funds a written notice of revocation or a subsequently
executed proxy, or by attending the Meeting and voting in person.
Only shareholders of the Acquired Funds of record at the close of
business on May 18, 2000 will be entitled to vote at the Meeting. On that date,
there were outstanding and entitled to be voted:
Class A Retail Institutional Class
Govett Global Income Fund Shares Shares
Govett Smaller Companies Fund Shares Shares
Govett Emerging Markets Equity Fund Shares Shares
Govett International Equity Fund Shares Shares
Each share or fractional share is entitled to one vote or fraction thereof.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting or any adjournment
thereof. For information on adjournments of the Meeting, see "Quorum" below.
SHAREHOLDER APPROVAL. The Reorganization Agreement and the transactions
contemplated thereby are being submitted for approval at the Meeting in
accordance with the provisions of the charter and bylaws of Govett Funds. Under
the charter, the Reorganizations must be approved by not less than a majority of
the total number of share outstanding of the class or series of stock entitled
to vote thereon.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted in determining whether a quorum is present for purposes of convening the
Meeting. With respect to voting on the Reorganizations, abstentions and broker
non-votes will have the same effect as votes cast against the proposal.
The vote of the shareholders of the Acquiring Funds regarding the
reorganizations is not being solicited because their approval or consent is not
necessary for the Reorganizations to be consummated.
As of___________, 2000, ___________________________ and its affiliates
held of record, but not beneficially, ____% of the shares of the Acquired Funds.
[LIST IF APPLICABLE] For purposes of the 1940 Act, any person who owns directly
or through one or more controlled
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companies more than 25% of the voting securities of a company is presumed to
"control" such company. Under this definition, ____________ and its affiliates
may be deemed to be controlling persons of ___________ of the Acquired Funds.
As of _____________, 2000, the following persons beneficially owned of
record 5% or more of the shares of the Acquired Funds:
Percentage of
Name/Address Outstanding Shares
%
As of _______________, 2000 the directors and officers of Govett Funds,
as a group, owned less than 1% of the outstanding shares of each of the Acquired
Funds.
Upon consummation of the Reorganizations, _______________ and the
above-mentioned 5% shareholders of the Acquired Funds will own the following
percentage of shares of the Acquiring Funds:
Percentage of
Name/Address Outstanding Shares
%
As of ___________, 2000 the following persons beneficially owned of
record 5% or more of the shares of the Acquiring Funds:
Name/Address Shares Owned
As of ____________ , the trustees and officers of ARK Funds, as a group,
owned less than 1% of the outstanding shares of each of the Acquired Funds.
Upon consummation of the Reorganizations, the above-mentioned holders of
the Acquiring Funds will own the following percentages of shares of the
Acquiring Funds:
Percentage of
Name/Address Outstanding Shares
%
QUORUM. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Reorganization Agreement and the transactions contemplated thereby
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will
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vote in favor of such adjournments if they determine that adjournment and
additional solicitation is reasonable and in the best interest of shareholders
of the Acquired Funds. A quorum is constituted by the presence in person or by
proxy of stockholders entitled to cast a majority of the votes entitled to be
cast at the Meeting.
ANNUAL MEETINGS. Govett Funds does not intend to hold annual meetings of
shareholders for the election of directors and other business unless and until
such time as less than a majority of the directors holding office have been
elected by shareholders, at which time the directors then in office will call a
shareholders' meeting for the purpose of electing directors. Shareholders have
the right to call a meeting of shareholders to consider the removal of one or
more directors or to act on other matters, and such meetings will be called when
requested in writing by the holders of record of 10% or more of Govett Funds'
outstanding shares. To the extent required by law, Govett Funds will assist in
shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS
Additional information about the Acquiring Funds is included in the
Prospectus of ARK Funds that accompanies this Prospectus/Proxy Statement and is
incorporated by reference herein. Additional information may also be obtained
from the Statement of Additional Information of ARK Funds and the Annual Report
for the fiscal year ended April 30, 1999, and Semi-Annual Report for the
six-months ended October 31, 1999, which have been filed with the SEC. Copies of
the Statement of Additional Information, Annual Report, and Semi-Annual Report
may be obtained without charge by calling 1-800-ARK-FUND. ARK Funds is subject
to certain informational requirements of the Securities Exchange Act of 1934 and
the 1940 Act, as applicable, and in accordance with such requirements files
reports, proxy statements, and other information with the SEC. These materials
may be inspected and copied at the Public Reference Facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information, 450 Fifth Street,
N.W., Washington, D.C. at rates prescribed by the SEC or from the SEC's Web site
(http://www.sec.gov).
ADDITIONAL INFORMATION ABOUT THE ACQUIRED FUND
Additional information about the Acquired Funds is included in the Class
A Retail and Institutional Class Prospectus of Govett Funds that are
incorporated by reference herein. Additional information may also be obtained
from the Statement of Additional Information of Govett Funds and the Annual
Report for the fiscal year ended December 31, 1999, which have been filed with
the SEC. Copies of the Prospectus, Statement of Additional Information, and
Annual Report may be obtained without charge by calling Govett Funds at
1-800-821-0803. Govett Funds is subject to certain informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, as applicable, and in
accordance with such requirements files reports, proxy statements, and other
information with the SEC. These materials may be inspected and copied at the
public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the SEC's Regional Offices at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information, 450 Fifth Street, N.W.,
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Washington, D.C. at rates prescribed by the SEC or from the SEC's Web site
(http://www.sec.gov).
OTHER BUSINESS
The Board of Directors of Govett Funds knows of no other business to be
brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that proxies, which do not contain specific
restrictions to the contrary, will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Govett Funds in writing at
the address on the cover page of this Prospectus/Proxy Statement or by
telephoning 1-800-821-0803.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") made as of
May 17, 2000, by and among The Govett Funds, Inc., a Maryland corporation
("Govett"), ARK Funds, a Massachusetts business trust ("ARK"), and AIB Govett,
Inc., a Maryland corporation ("AIB Govett").
W I T N E S S E T H:
WHEREAS, the parties hereto desire that substantially all of the assets
and stated liabilities of certain of the separately designated series of Govett
(individually, an "Acquired Fund" and collectively, the "Acquired Funds") be
transferred to, combined with, acquired and assumed by certain of the separately
designated series of ARK (individually, an "Acquiring Fund" and collectively,
the "Acquiring Funds") in exchange for shares of the Acquiring Funds, which
shall thereafter be distributed by Govett to the shareholders of the Acquired
Funds, as follows: Govett Global Income Fund will be combined with the ARK
Income Portfolio; Govett Smaller Companies Fund will be combined with the ARK
Small-Cap Equity Portfolio; Govett International Equity Fund will be combined
with the ARK International Equity Selection Portfolio or ARK International
Equity Portfolio; and Govett Emerging Markets Equity Fund will be combined with
the ARK Emerging Markets Equity Portfolio (which Portfolio shall have nominal
assets and liabilities before such combination) all upon the terms and
conditions hereinafter set forth (each such transaction of an Acquired Fund with
the corresponding Acquiring Fund, a "Reorganization" and collectively, the
"Reorganizations"); and
WHEREAS, the parties intend that, in connection with the
Reorganizations, Govett International Smaller Companies Fund (the "Terminated
Fund") will be reorganized or be terminated and liquidated, Govett will be
deregistered as described in this Agreement and Govett will be dissolved; and
WHEREAS, the parties wish to enter into a definitive agreement setting
forth the terms and conditions of the foregoing transactions and to adopt this
Agreement as a "plan of reorganization" within the meaning of Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, and agreements set forth herein, the parties hereto agree
as follows:
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ARTICLE I
TRANSFER OF ASSETS IN EXCHANGE FOR SHARES; ASSUMPTION
OF LIABILITIES; LIQUIDATION OF ACQUIRED FUNDS
Subject to the terms and conditions of this Agreement, the parties agree
to effect the following transactions in respect of the Reorganizations:
1.1 Transfer of Acquired Fund Assets; Issuance of Acquiring Fund Shares.
At the Closing (as defined in Section 1.6), of a Reorganization, Govett, on
behalf of the Acquired Funds, shall transfer to ARK all of the assets of each
Acquired Fund, in exchange for and against delivery by ARK of a number of Retail
Class A and Institutional Class shares (including fractional shares) of
beneficial interest, without par value, of the Acquiring Fund specified in
Section 1.5 having an aggregate net asset value equal to the value of the assets
of the Acquired Fund so transferred (the "Acquiring Fund Shares"), in each case
determined and adjusted as provided in Section 1.3, and the assumption of the
stated liabilities of the Acquired Fund as provided in Section 1.4. Portfolio
securities of an Acquired Fund shall be delivered to Allfirst Trust Company,
National Association, the custodian for the Acquiring Fund (the "Custodian"), to
be held for the account of such Acquired Fund, on the day immediately preceding
the Closing Date (as defined in Section 1.6) for the Reorganization of such
Acquired Fund, duly endorsed in proper form for transfer and in such condition
as to constitute good delivery thereof, in accordance with the custom of
brokers, and shall be accompanied by all necessary stock transfer stamps, if
any, or a check for the appropriate purchase price thereof. If Govett shall be
unable to make timely delivery of any portfolio securities of an Acquired Fund
as herein required, ARK may, in the exercise of its reasonable discretion, waive
such delivery, provided that Govett has timely delivered such documents,
including assignment and escrow agreements, due bills, confirmation slips and
the like, as may reasonably be requested by ARK and the Custodian. Cash of an
Acquired Fund shall be delivered by Govett on the day immediately preceding the
Closing Date and shall be in the form of currency or a wire transfer in
immediately available funds, payable to the order of "Allfirst Trust Company,
National Association, as Custodian for ARK Funds." On the day immediately
preceding the Closing of a Reorganization of an Acquired Fund, ARK shall issue
and deliver to Govett a confirmation evidencing the Acquiring Fund Shares
credited to the account of the Acquired Fund, or provide satisfactory evidence
to Govett that the Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of ARK. It is expressly agreed that no sales charge
will be imposed upon issuance of the Acquiring Fund Shares or their distribution
to shareholders of the Acquired Funds as provided in Section 1.7.
1.2 Acquired Fund Assets. The assets of the Acquired Funds to be
acquired by ARK hereunder shall consist of all property of such Acquired Fund,
including, without limitation, all cash, securities, commodities, and futures
interests, dividends or interest receivable, and any
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deferred or prepaid expenses shown as an asset on the statement of assets and
liabilities of the Acquired Fund delivered pursuant to Section 2.5.
1.3 Valuation. The value of the assets of an Acquired Fund to be
acquired by ARK shall be computed by ARK as of the close of regular trading on
the New York Stock Exchange, Inc. (the "Exchange") on the day immediately
preceding the Closing Date for the Reorganization of such Acquired Fund, using
the valuation policies and procedures set forth in the then-current prospectus
and statement of additional information of ARK. The valuation of such assets by
ARK shall be subject to review by Govett and to such adjustments, if any, as may
be agreed to by ARK. The aggregate net asset value of the Acquiring Fund Shares
shall be computed by ARK using the net asset value per share of the Acquiring
Fund as of the close of regular trading on the Exchange on the day immediately
preceding such Closing Date. The share transfer books of Govett in respect of
the Acquired Fund shall be permanently closed as of the close of business on the
business day immediately preceding the Closing Date and no transfer of shares of
the Acquired Fund shall thereafter be made on such books. Govett shall only
accept purchase orders or redemption requests received prior to the close of
regular trading on the Exchange on the business day immediately preceding the
Closing Date for its Reorganization; purchase orders or redemption requests
received thereafter shall be deemed to be orders to purchase or requests for
redemption of shares of the corresponding Acquiring Fund, as the case may be,
and shall be executed at the net asset value per share determined as set forth
in the then-current prospectus and statement of additional information of ARK,
provided that the Reorganization of the Acquired Fund is consummated.
1.4 Acquired Fund Liabilities. At the Closing of the Reorganization of
an Acquired Fund, the Acquiring Fund shall assume the stated liabilities,
expenses, costs, charges, and reserves of the Acquired Fund reflected on the
statement of assets and liabilities of the Acquired Fund delivered pursuant to
Section 2.5 (the "Acquired Fund Liabilities"). Each Acquiring Fund shall assume
only such Acquired Fund Liabilities of the corresponding Acquired Fund and shall
not assume any other liabilities, whether absolute or contingent, known or
unknown, accrued or unaccrued. All Acquired Fund Liabilities of an Acquired
Fund, to the extent they exist at or after the Closing, shall after the Closing
attach to the corresponding Acquiring Fund and may be enforced against such
Acquiring Fund to the same extent as if the same had been incurred by the
Acquiring Fund.
1.5 Acquired Funds; Corresponding Acquiring Funds. The assets of each
Acquired Fund shall be acquired by the Acquiring Fund identified opposite its
name in Schedule 1.5 attached hereto.
1.6 Closings; Closing Dates. The closing of the Reorganizations of
Govett Global Income Fund and Govett Smaller Companies Fund shall take place on
July 15, 2000, and the closing of the Reorganizations of the Govett Emerging
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Markets Equity Fund and the Govett International Equity Fund shall take place
on July 22, 2000, at the offices of Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, NW, 2nd Floor, Washington, DC, or at such other time and
place as may be agreed upon by the parties. In the event that on the day
preceding such date (i) the Exchange is closed or trading thereon is restricted,
or (ii) trading or the reporting of trading on the Exchange or elsewhere is
disrupted so that accurate appraisal of the value of the assets of the Acquired
Fund or the aggregate net asset value of the Acquiring Fund Shares is
impractical, the Reorganization shall be postponed until such day as may be
agreed upon by the parties. The closing of a Reorganization is referred to
herein as a "Closing" and the date on which the Closing shall take place is
referred to herein as a "Closing Date."
1.7 Distribution of Acquiring Fund Shares. As soon after the Closing of
the Reorganization of an Acquired Fund as is conveniently practicable, and in
any event within two business days after the Closing, Govett shall distribute
pro rata to its shareholders of record as of the close of business on the
business day immediately preceding the Closing Date for such Reorganization (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received by an Acquired
Fund hereunder. Govett shall accomplish such distribution by delivering a
written instruction, signed by the principal executive officer of Govett and
certified by an authorized signatory of FPS Services, Inc., the transfer agent
of Govett, to SEI Investments Distribution Company, the transfer agent of ARK
(the "Transfer Agent"), directing the Transfer Agent to open accounts on the
books of ARK in the names of the Acquired Fund Shareholders and transfer to such
accounts the respective pro rata interest, in full and fractional (to three
decimal places) shares, of each such shareholder in the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of ARK. ARK
agrees to instruct the Transfer Agent to comply with such instructions. All
issued and outstanding shares of the Acquired Fund and all certificates, if any,
indicating ownership of such shares shall simultaneously be canceled on the
books of Govett, although from and after the Closing of the Reorganization of an
Acquired Fund each certificate which theretofore represented shares of the
Acquired Fund shall evidence ownership of the corresponding Acquiring Fund
Shares on the basis hereinabove set forth. No redemption or repurchase of any
Acquiring Fund Shares credited to Acquired Fund Shareholders and represented by
unsurrendered certificates shall be permitted until such certificates have been
surrendered for cancellation. ARK shall not issue certificates representing
Acquiring Fund Shares in connection with such distribution. Promptly after the
distribution described above, ARK shall cause appropriate notification to be
mailed to the Acquired Fund Shareholders informing each such shareholder of the
number of Acquiring Fund Shares credited to his account and confirming the
registration thereof in his name. All distributions on the Acquiring Fund Shares
shall be paid to the Acquired Fund Shareholders in cash or invested in
additional shares of the Acquiring Fund at the net asset value thereof on the
respective payment dates in accordance with instructions previously given by
such shareholders to the transfer agent of Govett, provided that such
instructions have been given to the Transfer Agent and such
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instructions are consistent with the current prospectus and statement of
additional information of ARK.
1.8 Payment of Transfer Taxes. Any transfer taxes payable upon issuance
of Acquiring Fund Shares in a name other than the name of an Acquired Fund
Shareholder shall, as a condition of such issuance and transfer, be paid by the
person to whom such Acquiring Fund Shares are to be issued and transferred.
1.9 Liquidation of Acquired Funds.
(a) As soon as conveniently practicable after the distribution
required pursuant to Section 1.7 has been made in respect of the Acquired Funds,
and the reorganization or termination and liquidation of the Terminated Fund,
Govett shall take, in accordance with applicable law, all such action as may be
necessary to effect a complete liquidation of Govett.
(b) As soon as conveniently practicable after consummation of the
Reorganizations provided for herein and the reorganization or liquidation and
termination of the Terminated Fund, Govett shall make all filings and take all
such action as may be necessary to effect its dissolution and shall, in
accordance with applicable law, file an application for an order of the
Securities and Exchange Commission (the "Commission") pursuant to Section 8(f)
of the Investment Company Act of 1940, as amended (the "1940 Act"), declaring
that Govett has ceased to be an investment company and take all such other
action as may be necessary to deregister under the 1940 Act. ARK shall provide
assistance to Govett in order to effect the above-mentioned actions.
1.10 Reporting. Any reporting obligation of Govett with respect to an
Acquired Fund is and shall remain the responsibility of Govett until Govett is
deregistered under the 1940 Act. ARK shall provide assistance to Govett to the
extent any such reporting obligations relate to the Reorganizations and shall
provide all information regarding the Acquiring Funds and the Reorganizations as
may be necessary in order for Govett to comply with its reporting obligations.
ARTICLE II
COVENANTS AND AGREEMENTS
2.1 Conduct of Business. After the date of this Agreement and on or
prior to the Closing Date of the Reorganization of an Acquired Fund, Govett and
ARK will conduct the respective businesses of the Acquired Funds and the
Acquiring Funds, respectively, only in the ordinary course, it being understood
that such ordinary course of business shall include the
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matters contemplated by Section 2.2(b) hereof and the declaration and payment of
customary dividends and distributions and any special dividends or distributions
required hereunder.
2.2 Shareholders' Meetings. (a) Govett shall call, convene, and hold a
meeting of shareholders of the Acquired Funds as soon as practicable in
accordance with applicable law, for the purpose of approving this Agreement and
the transactions herein contemplated, and for such other purposes as may be
necessary or desirable, and the directors of Govett shall, subject to the
exercise of their fiduciary duties, recommend a favorable vote thereon. Govett
shall solicit the proxies of shareholders of the Acquired Funds to vote on the
matters to be acted upon at such meeting.
(b) ARK shall call, convene and hold a meeting of shareholders of the
ARK International Equity Selection Portfolio as soon as practicable in
accordance with applicable law, for the purpose of approving the matters listed
in Schedule 2.2(b) attached hereto, and for such other purposes as may be
necessary or desirable, and the trustees of ARK shall, subject to the exercise
of their fiduciary duties, recommend a favorable vote thereon. ARK shall solicit
the proxies of shareholders of the ARK International Equity Selection Portfolio
to vote on the matters to be acted upon at such meeting.
2.3 Registration Statement; Prospectus/Proxy Statement. (a) ARK shall
prepare to be filed with the Commission under the Securities Act of 1933, as
amended (the "1933 Act") and the Securities Exchange Act of 1934, as amended
(the "1934 Act"), relating to the registration of the Acquiring Fund Shares and
the meeting of Govett shareholders referred to in Section 2.2(a), in the form of
a prospectus/proxy statement and related statement of additional information to
be included in the registration statement on Form N-14 of ARK, in connection
with this Agreement. Such registration statement in the form in which it shall
become effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date, such registration statement as amended, is
referred to herein as the "Registration Statement." The combined
prospectus/proxy statement and related statement of additional information in
the form first filed with the Commission pursuant to Rule 497(c) under the 1933
Act is referred to herein as the "Prospectus/Proxy Statement." Govett and ARK
will each use its best efforts to cause the Registration Statement to become
effective under the 1933 Act as soon as practicable and agree to cooperate in
such efforts. Upon effectiveness of the Registration Statement, Govett will
cause the Prospectus/Proxy Statement to be delivered to shareholders of the
Acquired Funds entitled to vote on this Agreement and the transactions herein
contemplated in accordance with applicable law.
(b) ARK shall prepare preliminary proxy materials to be filed with the
Commission under the 1934 Act relating to the meeting of shareholders of the ARK
International Equity Selection Portfolio referred to in Section 2.2(b). Such
proxy materials in the form in which they are filed with the Commission pursuant
to paragraph (b) of Rule 14a-6 are referred to herein as
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the "ARK Proxy Statement". ARK will cause the ARK Proxy Statement to be
delivered to shareholders of the ARK International Equity Selection Portfolio
entitled to vote on the matters contemplated by Section 2.2(b) in accordance
with applicable law.
2.4 Information. Throughout the period prior to the Closing of a
Reorganization, Govett and ARK shall furnish to one another, and the other's
accountants, legal counsel, and other representatives, all such information
concerning the Acquired Funds or the Acquiring Funds and their businesses and
properties as may reasonably be requested by the other, or by such
representatives.
2.5 Financial Statements. At the Closing of the Reorganization of an
Acquired Fund, Govett shall deliver to ARK an unaudited statement of assets and
liabilities of the Acquired Fund, together with an unaudited schedule of
portfolio investments as at the close of business on the day immediately
preceding the Closing Date. These financial statements shall be prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods covered by such statements. Govett shall also deliver to
ARK on or before such Closing Date the detailed tax-basis accounting records for
each security to be transferred to the Acquiring Fund hereunder, which shall be
prepared in accordance with the requirements for specific identification tax-lot
accounting and clearly reflect the bases used for determination of gain and loss
realized on the partial sale of any security to be transferred to the Acquiring
Fund. As promptly as practicable thereafter, Govett shall furnish ARK, in such
form as is reasonably satisfactory to ARK, a statement of the earnings and
profits of the Acquired Fund for federal income tax purposes, which statement
shall be certified by the treasurer of Govett.
2.6 Final Dividend. On or before the Closing Date of the Reorganization
of an Acquired Fund, Govett shall declare and pay a dividend or dividends on the
shares of Govett Global Income Fund, Govett Smaller Companies Fund, and Govett
International Equity Fund (unless the condition precedent set forth in Section
4.1(a)(ii) shall not have been met), which, together with all previous
dividends, shall have the effect of distributing to shareholders of such
Acquired Fund all of such Acquired Fund's investment company taxable income for
the applicable taxable periods of such Acquired Fund (computed without regard to
any deduction for dividends paid) and all of its net capital gains realized in
the applicable taxable periods of such Acquired Fund (after reduction for any
capital loss carry-forward). For purposes of this Section 2.6, an "applicable
tax period" of such an Acquired Fund shall mean the final taxable year of the
Acquired Fund and any other taxable year of the Acquired Fund with respect to
which the Acquired Fund could elect under Section 855 of the Code to have a
distribution made on or before the Closing Date treated as having been paid
during such other taxable year.
2.7 Other Necessary Action. Govett and ARK shall each take all necessary
corporate or other action and use its best efforts to complete all filings and
obtain all governmental and
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other consents and approvals required for consummation of the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Acquired Company. Govett hereby
represents and warrants to ARK as follows:
(a) Govett is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland and has full
corporate power to conduct its business as it is now being conducted and to own
the properties and assets it now owns. Govett is qualified to transact business
as a foreign corporation in all jurisdictions in which it conducts any business
or owns any properties or assets, except where the failure to be so qualified
does not cause a material adverse effect on Govett.
(b) Govett is registered with the Commission pursuant to Section 8
of the 1940 Act as an open-end management investment company.
(c) The audited financial statements of the Acquired Fund for the
fiscal year ended December 31, 1999, delivered to ARK by Govett have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods covered by such statements, and,
together with such notes attached thereto, fairly present the financial position
and results of operations of the Acquired Funds at the dates of such statements
and for the periods covered thereby.
(d) Since December 31, 1999, Govett on behalf of the Acquired
Funds has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not in the ordinary
course of business, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the condition
(financial or other), earnings, business, or properties of the Acquired Funds
(other than changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course).
(e) There is no litigation, proceeding or governmental
investigation pending or, to the knowledge of Govett, threatened against or
relating to the Acquired Funds, the properties or business of the Acquired
Funds, or this Agreement.
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(f) Each Acquired Fund has qualified and elected to be treated as
a regulated investment company under Subchapter M of the Code for each of its
taxable years. All federal and other tax returns and reports of the Acquired
Funds required by law to have been filed with the proper taxing authority have
been filed with the proper taxing authority, and all federal and other taxes
payable pursuant to such returns and reports have been paid so far as due, or
provision has been made for the payment thereof, and, to Govett's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to any such return.
(g) When filed with the Commission and from the effective date of
the Prospectus/Proxy Statement until the Closing Date, the Prospectus/Proxy
Statement will comply in all material respects with the applicable requirements
of the 1933 Act, the 1934 Act and the 1940 Act and the applicable rules and
regulations of the Commission promulgated thereunder and the Prospectus/Proxy
Statement (and any supplement thereto) will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; except insofar as the same are caused by or contained in (a) any
information relating to, or furnished in writing to Govett by, ARK or the
Acquiring Funds or (b) any violation of the 1933 Act, the 1934 Act or any other
securities law or rule or regulation thereunder caused by ARK.
(h) Except as separately disclosed in writing to ARK,
PricewaterhouseCoopers LLP, which has certified the financial statements of the
Acquired Funds to be filed with the Commission as part of the Registration
Statement, are, to the knowledge of Govett, independent public auditors as
required by the 1933 Act and the rules and regulations of the Commission
thereunder.
(i) Govett has full power and authority to execute, deliver and
carry out the terms of this Agreement on behalf of the Acquired Funds. The
execution, delivery and performance of this Agreement by Govett, and the
consummation of the transactions contemplated hereby, have been duly authorized
by its board of directors, and this Agreement constitutes a valid and legally
binding obligation of Govett, enforceable against Govett in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws affecting the rights of creditors generally and the exercise of
judicial discretion in accordance with general principles of equity. No other
proceedings on the part of Govett or the shareholders of the Acquired Funds
(other than as contemplated in Section 4.1(a)(i)) are necessary to authorize
this Agreement and the transactions contemplated hereby.
(j) Govett is not in default under any agreement, lease, contract,
indenture, or other instrument or obligation to which it is a party or by which
it or any of its properties or assets are bound and which default is of material
significance in respect of the business or financial condition of the Acquired
Funds. The execution and delivery of this Agreement, the
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48
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or violate or result in a breach of any of
the terms or provisions of, or constitute a default under, any agreement or
other instrument to which Govett is a party, or the charter or bylaws of Govett,
or any statute, order, rule, or regulation of any court or of any governmental
or other regulatory body having jurisdiction, applicable to Govett.
(k) As of the Closing, Govett will have good and marketable title
to the assets of the Acquired Funds to be transferred to the Acquiring Funds
pursuant to this Agreement, and, subject to the approval of shareholders of
Govett, will have full right, power, and authority to sell, assign, transfer,
and deliver such assets hereunder, and upon delivery and payment for such
assets, the Acquiring Funds will acquire good and marketable title thereto, free
and clear of all liens, mortgages, pledges, encumbrances, charges, claims, and
equities, and subject to no restrictions on the transfer thereof, except as
disclosed in writing to and accepted by ARK prior to the Closing.
(l) Neither Govett nor, to the knowledge of Govett, any Acquired
Fund Shareholder has any present intention of redeeming or otherwise disposing
of the Acquiring Fund Shares after the Closing Date, except as provided pursuant
to and in accordance with the terms of this Agreement.
(m) Except as disclosed in the application described in Section
4.3(c) of this Agreement, to the knowledge of Govett, no entity that is an
affiliated person, or an affiliated person of an affiliated person, of an
Acquired Fund, as that term is defined in Section 2(a)(3) of the 1940 Act, has
the financial incentive and the ability to influence the terms of the
Reorganizations.
3.2 Representations and Warranties of ARK. ARK hereby represents and
warrants to Govett as follows:
(a) ARK is a business trust duly organized and validly existing in
good standing under the laws of the Commonwealth of Massachusetts and has full
power to conduct its business as it is now being conducted and to own the
properties and assets it now owns. ARK is qualified to transact business in all
jurisdictions in which it conducts any business or owns any properties or
assets, except where the failure to be so qualified does not cause a material
adverse effect on the Acquiring Fund.
(b) ARK is registered with the Commission pursuant to Section 8 of
the 1940 Act as an open-end management investment company.
(c) The authorized capitalization of ARK representing the
beneficial interest in the Acquiring Funds consists of an unlimited number of
shares of beneficial interest, without par
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value, designated as Retail Class A shares and Institutional Class shares of
"ARK International Equity Selection Portfolio," "ARK International Equity
Portfolio," "ARK Small-Cap Equity Portfolio," "ARK Income Portfolio" and "ARK
Emerging Markets Equity Portfolio" and Retail Class B shares of "ARK Income
Portfolio." All of the issued and outstanding shares of the Acquiring Funds have
been duly and validly issued and are fully paid and non-assessable by ARK. As of
the Closing, all Acquiring Fund Shares to be issued and delivered by ARK
pursuant to this Agreement have been duly authorized for issuance and, when
issued and delivered as provided herein and in the Prospectus/Proxy Statement
(and any supplement thereto), will be validly issued, fully paid, and
non-assessable by ARK.
(d) The current prospectus and statement of additional information
of ARK comply in all material respects with the applicable requirements of the
1933 Act and the 1940 Act and the applicable rules and regulations of the
Commission thereunder and do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) The audited financial statements for the fiscal year ended
April 30, 1999 and unaudited financial statements for the six months ended
October 31, 1999 of the Acquiring Funds delivered to Govett by ARK have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods covered by such statements, and
fairly present the financial position and results of operations of the Acquiring
Funds at the dates of such statements and for the periods covered thereby.
(f) Since October 31, 1999, ARK on behalf of the Acquiring Funds
has not incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, and there has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition (financial or
other), earnings, business, or properties of the Acquiring Fund (other than
changes in the ordinary course of business, including, without limitation,
dividends and distributions in the ordinary course).
(g) There is no litigation, proceeding or governmental
investigation pending or, to the knowledge of ARK, threatened against or
relating to the Acquiring Funds, the properties or business of the Acquiring
Funds, or this Agreement.
(h) Except for the ARK International Equity Portfolio and the ARK
Emerging Markets Equity Portfolio, each Acquiring Fund has qualified and elected
to be treated as a regulated investment company under Subchapter M of the Code
for each of its taxable years. The ARK International Equity Portfolio and the
ARK Emerging Markets Equity Portfolio intend to qualify and elect to be treated
as a regulated investment company under Subchapter M of the
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Code for each of its taxable years. All federal and other tax returns and
reports of the Acquiring Funds required by law to have been filed with the
proper taxing authority have been filed with the proper taxing authority, and
all federal and other taxes payable pursuant to such returns and reports have
been paid so far as due, or provision has been made for the payment thereof,
and, to ARK's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return.
(i) When filed with the Commission and from the effective date of
the Prospectus/Proxy Statement until the Closing, the Registration Statement,
Prospectus/Proxy Statement, and the ARK Proxy Statement will comply in all
material respects with the applicable requirements of the 1933 Act, the 1934 Act
and the 1940 Act and the applicable rules and regulations of the Commission
thereunder and the Prospectus/Proxy Statement (and any supplement thereto) and
the ARK Proxy Statement do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; , except insofar as the same are caused by or contained in (a) any
information relating to, or furnished in writing to ARK by, Govett or the
Acquired Funds or (b) any violation of the 1933 Act, the 1934 Act or any other
securities law or rule or regulation thereunder caused by Govett.
(j) KPMG LLP, which has certified the financial statements of the
Acquiring Funds to be filed with the Commission as part of the Registration
Statement, are, to the knowledge of ARK, independent public auditors as required
by the 1933 Act and the rules and regulations of the Commission thereunder.
(k) ARK has full power and authority to execute, deliver, and
carry out the terms of this Agreement on behalf of the Acquiring Funds. The
execution, delivery, and performance of this Agreement by ARK, and the
consummation of the transactions contemplated hereby, have been duly authorized
by its board of trustees, and this Agreement constitutes a valid and legally
binding obligation of ARK, enforceable against ARK in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws affecting the rights of creditors generally and the exercise of
judicial discretion in accordance with general principles of equity. No other
proceedings on the part of ARK or the shareholders of the Acquiring Funds (other
than as contemplated in Section 4.1(a)(i)) are necessary to authorize this
Agreement and the transactions contemplated hereby.
(l) ARK is not in default under any agreement, lease, contract,
indenture, or other instrument or obligation to which it is a party or by which
it or any of its properties or assets are bound and which default is of material
significance in respect of the business or financial condition of the Acquiring
Funds. The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or violate or result in a
breach of any of the terms or provisions of, or constitute a default under, any
agreement or other
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instrument to which ARK is a party, or the declaration of trust or by-laws of
ARK, or any statute, order, rule, or regulation of any court or of any
governmental or other regulatory body having jurisdiction applicable to ARK.
(m) Except as disclosed in the application described in Section
4.3(c) of this Agreement, to the knowledge of ARK, no entity that is an
affiliated person, or an affiliated person of an affiliated person, of an
Acquiring Fund, as that term is defined in Section 2(a)(3) of the 1940 Act, has
the financial incentive and the ability to influence the terms of the
Reorganizations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Obligations of Govett. The obligations of
Govett to consummate the Reorganization of each Acquired Fund shall be subject,
at its election, to the performance by ARK of all of the obligations to be
performed by it under this Agreement on or before the Closing Date for the
Reorganization of such Acquired Fund and, in addition thereto, to the following
further conditions:
(a)(i)This Agreement and the transactions contemplated hereby
shall have been duly approved by the requisite affirmative vote of the
outstanding Retail Class A and Institutional Class shareholders of the Acquired
Fund, voting together as a single class, entitled to vote at the special meeting
of shareholders of Govett duly called for such purpose.
(a)(ii) With respect to the Reorganization of the Govett
International Equity Fund, each of the proposed changes in investment policies
and other related matters contemplated by Section 2.2(b) shall have been duly
approved by the requisite affirmative vote of the outstanding shares of the ARK
International Equity Selection Portfolio entitled to vote at the special meeting
of shareholders of the ARK International Equity Selection Portfolio duly called
for such purpose and each such change or other matter shall have been fully
implemented by the ARK International Equity Selection Portfolio. In the event
that the foregoing condition shall not have been performed by ARK on or before
the Closing Date for the Reorganization of the Govett International Equity Fund,
then the assets and stated liabilities of the Govett International Equity Fund
shall be transferred to, combined with, acquired, and assumed by the ARK
International Equity Portfolio.
(b) ARK shall have furnished to Govett a certificate of ARK,
signed by the principal executive officer and the principal financial officer of
ARK, dated the Closing Date, to the effect that:
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(i) the representations and warranties of ARK in this
Agreement are true and correct in all respects on and as of such Closing
Date with the same effect as if made on such Closing Date (except
representations and warranties that speak to a specific date, which
shall be true and correct as of such date) and ARK has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing of the Reorganization
of the Acquired Funds;
(ii) Since the date of the most recent financial statements
of the Acquiring Funds included in the Registration Statement and
Prospectus/Proxy Statement (and any supplement thereto), there has been
no material adverse change in the condition (financial or other),
earnings, business, or properties of such Acquiring Fund (other than
changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course) and
changes in net asset value per share, except as set forth in or
contemplated in the Registration Statement and Prospectus/Proxy
Statement (and any supplement thereto);
(iii) The Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to ARK's knowledge, threatened; and
(iv) The Acquiring Fund Shares shall have been duly
qualified for offering to the public in all states in which such
qualification is required for consummation of the transactions
contemplated hereunder.
(c) Prior to the Closing Date, ARK shall have furnished to Govett
such further information, certificates, and documents, including certified
copies of the proceedings of its board of trustees and shareholders, as Govett
may reasonably request.
4.2 Conditions Precedent to Obligations of ARK. The obligations of ARK
to consummate each Reorganization shall be subject, at its election, to the
performance by Govett of all of the obligations to be performed by it under this
Agreement on or before the Closing Date for such Reorganization and, in addition
thereto, to the following further conditions:
(a) Govett shall have furnished to ARK a certificate of Govett,
signed by the principal financial officer of Acquired Company, dated the Closing
Date, to the effect that the unaudited financial statements of the Acquired
Funds delivered to ARK pursuant to Section 2.5 have been prepared in accordance
with generally accepted accounting principles consistently followed throughout
the periods covered by such statements and fairly present the financial
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53
position and results of operations of the Acquired Funds at the dates of such
statements and for the periods covered thereby.
(b) Govett shall have furnished to ARK a certificate of Govett,
signed by the principal executive officer and the principal financial officer of
Govett, dated the Closing Date, to the effect that:
(i) the representations and warranties of Govett in this
Agreement are true and correct in all respects on and as of such Closing
Date with the same effect as if made on such Closing Date (except
representations and warranties that speak to a specific date, which
shall true and correct as of such date) and Govett has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing of the Reorganization
of the Acquired Funds;
(ii) Since the date of the most recent financial statements
of the Acquired Funds included in the Registration Statement and
Proxy/Prospectus Statement (or any supplement thereto), there has been
no material adverse change in the condition (financial or other),
earnings, business or properties of the Acquired Fund (other than
changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course and
changes in net asset value per share, except as set forth in or
contemplated in the Registration Statement and Proxy/Prospectus
Statement (or any supplement thereto); and
(c) ARK shall have received (i) a certificate of an authorized
signatory of the Custodian stating that the portfolio securities, cash and other
assets of such Acquired Fund have been delivered as provided in Section 1.1 and
(ii) a certificate of an authorized signatory of the Transfer Agent stating that
its records contain the names and addresses of the Acquired Fund Shareholders
and the number and percentage of ownership of the Acquiring Fund Shares to be
transferred to the account of each such shareholder upon the consummation of the
Reorganization of the Acquired Fund.
(d) Prior to the Closing Date, Govett shall have furnished to ARK
such further information, certificates, and documents, including certified
copies of the proceedings of its board of directors and shareholders, as ARK may
reasonably request.
4.3 Other Conditions Precedent. The obligations of the parties hereto to
consummate the Reorganization shall be subject to the fulfillment, prior to or
at the Closing, of each of the following conditions:
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(a) This Agreement and the transactions contemplated hereby
shall have been duly approved by the requisite affirmative vote of the
shareholders of the ARK International Equity Selection Portfolio;
(b) Govett and ARK shall have received a legal opinion or
opinions from Kirkpatrick & Lockhart LLP satisfactory to the parties and their
counsel, to the effect that, if the transactions contemplated by this Agreement
are consummated in accordance with the terms hereof, for federal income tax
purposes:
(i) the transfer by each Acquired Fund of its assets to the
corresponding Acquiring Fund solely in exchange for shares of the
corresponding Acquiring Fund and the assumption by such Acquiring Fund
of the stated liabilities of the Acquired Fund as herein provided, and
the distribution of such shares to the shareholders of the Acquired
Fund, as provided in this Agreement, will constitute a "reorganization"
within the meaning of Section 368(a)(1) of the Code and each such Fund
will be "a party to the reorganization" within the meaning of Section
368(b) of the Code;
(ii) no gain or loss will be recognized by an Acquired Fund
on the transfer of its assets to the corresponding Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption of the stated
liabilities of the Acquired Fund, and no gain or loss will be recognized
by the Acquired Fund on the distribution of the Acquiring Fund Shares to
the Acquired Fund Shareholders;
(iii) no gain or loss will be recognized by an Acquiring
Fund upon the receipt of the assets of the corresponding Acquired Fund
in exchange for the Acquiring Fund Shares and the assumption of the
stated liabilities of the Acquired Fund;
(iv) the adjusted tax basis of each asset of each Acquired
Fund in the hands of the corresponding Acquiring Fund will be the same
as the adjusted tax basis of such asset in the hands of the Acquired
Fund immediately prior to the Reorganization;
(v) the holding period of each asset of each Acquired Fund
in the hands of the corresponding Acquiring Fund will include the
holding period of such asset in the hands of the Acquired Fund
immediately prior to the Reorganization;
(vi) no gain or loss will be recognized by the Acquired Fund
Shareholders upon the receipt of the Acquiring Fund Shares (including
fractional shares) by such shareholders, provided that such shareholders
receive solely Acquiring Fund Shares (including fractional shares) in
exchange for their shares of the Acquired Fund;
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(vii) the adjusted basis of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund Shareholder
will be the same as the adjusted tax basis of the shares of the Acquired
Fund surrendered immediately prior to the Reorganization;
(viii) the holding period of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund Shareholder
will include the holding period of the shares of the Acquired Fund
surrendered in exchange therefor, provided that such shares were held as
a capital asset in the hands of the Acquired Fund Shareholder on the
date of the exchange; and
(ix) in rendering such opinion, Kirkpatrick & Lockhart LLP
shall require delivery of and rely on representation letters delivered
by ARK, Govett and, if necessary, certain shareholders of the Acquired
Funds. Such representation letters shall be in such form and substance
as shall be satisfactory to Kirkpatrick & Lockhart LLP.
(c) ARK and Govett shall have received from the Commission an
order approving an application of ARK on behalf of the Acquiring Funds and
Govett on behalf of the Acquired Funds for an order exempting them from Section
17 of the 1940 Act in connection with the Reorganization. All state securities
law and all other governmental approvals necessary or advisable in the opinion
of counsel to consummate the transactions contemplated by this Agreement shall
have been received and shall not contain any provision which is unduly
burdensome.
(d) No suit, action or other proceeding against Govett or ARK or
their respective officers or directors/trustees shall be threatened or pending
before any court or governmental agency in which it will be, or it is, sought to
restrain or prohibit any of the transactions contemplated by this Agreement or
to obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
(e) Articles of transfer shall have been filed and accepted for
record by the Maryland State Department of Assessments and Taxation.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated with respect to the
Reorganization of an Acquired Fund and the transactions contemplated hereby with
respect to such Reorganization abandoned any time prior to the Closing of such
Reorganization
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(notwithstanding any approval of this Agreement and the transactions herein
contemplated by the shareholders of the Acquired Fund):
(i) by mutual written consent of the parties duly authorized by or
on behalf of their respective boards of directors/trustees;
(ii) by either party at any time after September 30, 2000, if the
Closing has not occurred on or prior to such date or if there shall be
any law or regulation that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if any
judgment, injunction, order or decree enjoining a party from
consummating the transactions herein contemplated is entered and such
judgment, injunction, order or decree shall become final and
nonappealable; or
(iii) by Govett if the shareholders of the Acquired Fund shall
have voted upon and not approved this Agreement and the transactions
herein contemplated.
The party desiring to terminate this Agreement pursuant to clause (ii) or (iii)
shall give notice of such termination to the other party in the manner specified
in Section 6.1. In the event of any such termination, there shall be no
liability for damages on the part of either Govett or ARK, or their respective
directors, trustees or officers, to the other party or its directors, trustees
or officers. No termination of this Agreement shall affect the obligations of
AIB Govett under Section 6.5 of this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests and other communications to a party
hereunder shall be in writing (including facsimile or similar writing),
addressed to such party and given at or sent to the following address:
(a) in the case of Govett or AIB Govett:
The Govett Funds, Inc.
250 Montgomery Street, Suite 1200
San Francisco, CA 94104
Attention: Secretary
Facsimile: (415) 263-1880
with a copy to:
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Regina M. Pisa, P.C.
Goodwin, Procter & Hoar LLP
One Exchange Place
Boston, MA 02109-2881
Facsimile: (617) 523-1231
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58
(b) in the case of ARK:
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
Attention: Secretary
Facsimile: (610) 676-1040
with a copy to:
Alan C. Porter, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
Facsimile: (202) 778-9100
or such other address or facsimile number as either party may hereafter specify
for the purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section 6.1 and the
appropriate answer back is received, or (ii) if given by any other means, when
delivered at the address specified in this Section 6.1.
6.2 Amendments; Waivers. Any provision of this Agreement may be amended
or waived prior to the Closing of the Reorganization of an Acquired Fund if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by each party or, in the case of a waiver, by the party against which
the waiver is to be effective; provided that following the approval by
shareholders at the meeting of the shareholders of such Acquired Fund pursuant
to Section 2.2 of this Agreement, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the shareholders of the Acquired Fund.
6.3 Successors. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided that no party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the
other party hereto.
6.4 Broker's or Finder's Fees. The parties represent and warrant to each
other that the transactions contemplated by this Agreement have been negotiated
directly between them,
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without the intervention of any person as a result of any action by them in such
a manner as to give rise to a valid claim for a brokerage commission, finder's
fee or like payment.
6.5 Expenses. The parties hereby acknowledge that AIB Govett, Inc. or an
affiliate will pay all expenses incurred in connection with entering into and
carrying out the transactions contemplated by this Agreement, whether or not the
transactions contemplated hereby are consummated. Such expenses include, without
limitation, (i) expenses associated with the preparation and filing of the
Registration Statements and proxy statements; (ii) fees and expenses for
registration or qualification of the Acquiring Fund Shares under the 1933 Act
and state securities or "blue sky" laws; (iii) fees and disbursements of legal
counsel and accountants; and (iv) postage, printing and proxy solicitation
costs.
6.6 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Maryland.
6.7 Survival. The covenants, agreements, representations, and warranties
of the parties in respect of the Reorganization of an Acquired Fund contained
herein (other than the agreements in Section 6.5) shall not survive, and shall
be extinguished by, the Closing of such Reorganization.
6.8 Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
6.9 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition, or warranty other
than as set forth herein has been made or relied upon by either party hereto.
6.10 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
6.11 Parties in Interest. Nothing expressed or implied herein is
intended or shall be construed to confer upon any person, other than the parties
hereto, any rights or remedies under or by reason of this Agreement or the
transactions contemplated hereby.
6.11 Limitation of Liability.
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(a) A copy of the declaration of trust of ARK is on file with the
Secretary of State of the Commonwealth of Massachusetts, and it is expressly
agreed that this instrument is executed on behalf of ARK by the officers thereof
in such capacities, and not individually, and that the obligations of this
instrument are not binding upon any of the trustees, officers, or shareholders
of ARK personally, but are binding only upon the assets and property of ARK.
(b) The parties specifically acknowledge and agree that any
liability under this Agreement, or in connection with the transactions herein
contemplated, to an Acquiring Fund or an Acquired Fund shall be discharged only
out of the assets of the Acquiring Fund or Acquired Fund, as the case may be,
and that no other series of Govett or ARK shall be liable with respect thereto.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
ATTEST: THE GOVETT FUNDS, INC.
By: By:
----------------------- ------------------------------
ATTEST: ARK FUNDS
By: By:
----------------------- ------------------------------
ATTEST: AIB GOVETT, INC.
By: By:
----------------------- ------------------------------
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Schedule 1.5
------------
Acquired Fund Acquiring Fund
------------- --------------
- ------------------------------------------------ -----------------------------------------------
Govett Global Income Fund ARK Income Portfolio
- ------------------------------------------------ -----------------------------------------------
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
- ------------------------------------------------ -----------------------------------------------
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
- ------------------------------------------------ -----------------------------------------------
Govett International Equity Fund ARK International Equity Selection Portfolio(1)
- ------------------------------------------------ -----------------------------------------------
(1) In the event that the condition precedent to the Reorganization set forth in
Section 4.1(a)(ii) has not been met on or by the Closing Date for such
Reorganization., then the Govett International Equity Fund shall be reorganized
with and into the ARK International Equity Portfolio (which Portfolio shall have
nominal assets and liabilities before such combination).
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Schedule 2.2(b)
The purpose of the Meeting is to consider and act upon the following proposals.
- To modify the fund's investment objectives and policies to permit
directly investing in foreign securities as opposed to investing
in other investment companies that invest in such foreign
securities.
- To approve an amended management contract to increase the advisory
fee for the fund.
- To approve an amended sub-advisory contract for the fund.
- To transact such other matters as may properly come before the
Meeting or any adjournments thereof.
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Appendix B
INVESTMENT PRACTICES
INVESTMENT PRACTICES. The Acquired Funds and the Acquiring Funds follow
similar principal investment practices. These practices are as follows, with
certain differences noted.
Depositary Receipts. The funds may invest in sponsored and unsponsored
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts (GDRs"), and similar global instruments to the extent
that they may invest in the underlying securities. A U.S. or foreign bank or
trust company typically "sponsors" these depositary instruments, which evidence
ownership of underlying securities issued by a U.S. or foreign corporation.
Unsponsored programs are organized independently and without the cooperation of
the issuer of the underlying securities. As a result, information about the
issuer may not be as readily available or as current as for sponsored depositary
instruments, and prices may be more volatile than if they were sponsored by the
issuers of the underlying securities.
Investment in Debt Securities and Commercial Paper. The funds may invest
in debt obligations convertible into equity securities. The Acquired Funds may
invest in non-convertible debt securities. At least 75% of each of the Acquired
Funds' total assets invested in non-convertible debt securities other than
commercial paper must be rated, at the time of purchase, at least in the A
category by Standard & Poor's or Moody's or, if unrated, determined to be of
comparable quality by the fund's investment adviser. The Acquired Funds'
commercial paper investments must, at the time of purchase, be rated at least
Prime-2 by Moody's or A-2 by Standard & Poor's or, if unrated, determined to be
of comparable quality by the fund's investment manager. The subsequent downgrade
of a debt security to a level below the investment grade required by the fund
will not require an immediate sale of that security, but the adviser will
consider the circumstances of the downgrade in determining whether to hold that
security, including causes of the downgrade, local market conditions, and
general economic trends. The Acquiring Funds do not have a stated restriction
regarding rating of debt securities or commercial paper.
Temporary Strategies. To retain flexibility to respond promptly to
adverse changes in market and economic conditions, a fund may use temporary
defensive strategies. Under such a strategy, a fund may hold cash (either U.S.
dollars, foreign currencies or multinational currency units), and/or invest any
portion of all of its assets in short-term, high quality debt securities. For
debt obligations other than commercial paper, such instruments must be rated, at
the time of purchase, at least AAA by Standard & Poor's or Aaa by Moody's. For
commercial paper, such investments must be rated, at the time of purchase, at
least A-2 by Standard & Poor's or Prime-2 to Moody's. If such investments are
unrated, a fund's adviser must have determined that they are of comparable
quality to the required ratings for each type of investment. It is impossible to
predict when or for how long a fund's adviser may use such temporary strategies.
Hedging Strategies. The funds may use certain hedging strategies to
attempt to reduce the overall level of investment and currency risk normally
associated with their investments, although there can be no assurance that such
efforts will succeed. Among the types of transactions which may be used are:
forward currency contracts, writing of covered put and call options, purchase of
put and call options on currencies and equity and debt securities, stock index
futures and options thereon, interest rate or currency futures and options
thereon, and securities futures and options thereon.
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65
Repurchase Agreements and Overnight Time Deposits. Each fund may enter
into repurchase agreements, in which the fund acquires a high-grade liquid debt
security from a U.S. bank, broker-dealer or other financial institution that
simultaneously agrees to repurchase the security at a specified time and price.
Repurchase agreements are collateralized, in an amount at least equal to the
current value of the loaned securities, plus any accrued interest, by cash,
letters of credit, U.S. government securities, or, in the case of the Acquired
Funds only, other high grade liquid debt securities at the Acquired Funds'
custodian (or designated subcustodian), segregated from other fund assets. In
segregating such assets, the fund's custodian either places them in a segregated
account or separately identifies them and makes them unavailable for investment
by the fund. The Acquired Funds may also invest in overnight time deposits
placed at competitive interest rates with creditworthy banks, including with
their global custodian.
Investments in Other Investment Companies. The Govett Emerging Markets
Equity Fund and the Ark Emerging Markets Equity Portfolio may invest in such
companies to the extent permitted under the 1940 Act. A fund may not invest in
any investment companies managed by its investment adviser or any of its
affiliates. Investments in investment companies may involve a duplication of
certain expenses, such as management and administrative expenses. Emerging and
developing markets countries often limit foreign investments in equity
securities of issuers in such countries. As a result, the funds may be able to
invest in such countries solely or primarily through open- or closed-end
investment companies.
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Appendix C
ARRANGEMENTS WITH SERVICE PROVIDERS
Acquiring Funds
Allied Investment Advisors, Inc. ("AIA") serves as the investment
adviser to the Acquiring Funds and is entitled to receive an investment advisory
fee, which is accrued daily and paid monthly, from the Acquiring Funds at the
annual rates described in the fee tables in the Prospectus/Proxy Statement; see
"Comparative Fee Tables". See "Management" in the Prospectuses of ARK Funds,
which are incorporated herein by reference for additional information regarding
AIA.
AIB Govett, Inc. ("AIB Govett") will serve as a subadviser to the ARK
Emerging Markets Equity Portfolio and ARK International Equity Selection
Portfolio.
SEI Investments Distribution Co., a wholly-owned subsidiary of SEI
Investments Company, serves as the distributor for the shares of the Acquiring
Funds.
Pursuant to the provisions of a distribution plan for Retail Class A of
each Acquiring Fund adopted in accordance with Rule 12b-1 under the 1940 Act,
the Acquiring Funds may pay a fee to its distributor of up to 0.75% of the
average net assets of the Retail Class A of each Acquiring Fund. The Board of
Trustees has approved a distribution fee rate for the Retail Class A of each
Acquiring Fund of 0.40%. The distributor may use these distribution fees to
compensate securities dealers and others selling Retail Class A shares of the
Acquiring Fund.
Under shareholder services plans the Acquiring Funds may pay shareholder
services fees to investment professionals at an annual rate of up to 0.25% of
the average net assets of the Retail Class A or Institutional Class shares
attributable to their customers for providing ongoing shareholder support
services to their customers with accounts in such class. The Board of Trustees
has approved an annual shareholder services fee rate of 0.15% for the Retail
Class A and 0.06% for the Institutional Class.
SEI Fund Resources ("SFR") provides administrative services to the
Acquiring Funds. SEI Investments Financial Management Corporation, a
wholly-owned subsidiary of SEI Investments, is the owner of all beneficial
interest in SFR. For its services, SFR receives a fee, which is calculated daily
and paid monthly, at the annual rate of 0.13% of the aggregate average net
assets of each Acquiring Fund. SFR may voluntarily waive all or a portion of its
fee from time to time in its sole discretion. Pursuant to a separate agreement
with SFR, Allfirst Trust Company, National Association performs
sub-administration services on behalf of the Acquiring Funds, for which it
receives a fee from SFR at the annual rate of up to 0.0275% of each Acquiring
Fund's aggregate average daily net assets. See "Management" in the Prospectuses
of ARK Funds, which is incorporated herein by reference for additional
information about SFR.
Allfirst Trust Company, National Association serves as custodian for the
securities and cash of the Acquiring Funds. Foreign securities are held by
foreign banks participating in a network coordinated by Bankers Trust, which
serves as sub-custodian for the Acquiring Funds. SFR provides transfer agent and
related services for the Acquiring Funds and has subcontracted the transfer
agency services to State Street Bank and Trust Company, which maintains
shareholder accounts and records for the Acquiring Funds.
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67
Acquired Funds
Pursuant to an investment management contract with Govett Funds, and
subject to such policies as the Board of Directors of Govett Funds may
establish, AIB Govett, Inc. ("AIB Govett") provides the Acquired Funds with
day-to-day management services and makes investment decisions on their behalf in
accordance with the Acquired Funds investment policies. Subject to the
supervision of the Govett Funds board, AIB Govett also oversees the Acquired
Funds' operations. For these investment management services, each Acquired Fund
pays a fee monthly to AIB Govett based upon the average net assets of each
Acquired Fund, [as determined at the close of business of each business day
during the month,] at the annual rate of 1% of the average daily net assets of
each Acquired Fund. From its investment management fee, AIB Govett, Inc. pays
AIB Govett Asset Management Limited to provide certain investment sub-advisory
services for the Acquired Funds.
The Govett Funds Institutional Class is not subject to any sales
charges, shareholder services fees, or 12b-1 distribution fees. Govett Funds
Class A Retail is not subject to any sales charges or shareholder services fees,
but is subject to a 12b-1 distribution fee of .35%.
FPS Broker Services, Inc. is the distributor and principal underwriter
for the Acquired Funds.
Chase Global Funds Services Company provides administration and
accounting services for the Acquired Funds. The Chase Manhattan Bank serves as
the Acquired Funds' global custodian. FPS Services, Inc., a former affiliate of
the Acquired Funds' distributor, provides transfer agent, shareholder services
agent, and dividend disbursement services to the Acquired Funds.
30
68
Appendix D
PRINCIPAL RISK FACTORS
Equity Risk. Equity securities include publicly and privately issued
equity securities, common and preferred stocks, warrants, rights to subscribe to
common stock and convertible securities, as well as instruments that attempt to
track the price movement of equity indices. Investments in equity securities and
equity derivatives in general are subject to market risks that may cause their
prices to fluctuate over time. Equity derivatives may be more volatile and
increase portfolio risk. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer, and any call provision.
Fluctuations in the value of equity securities in which a mutual fund invests
will cause its portfolio's net asset value to fluctuate. An investment in a
portfolio of equity securities may be more suitable for long-term investors who
can bear the risk of these share price fluctuations.
Fixed Income Risk. The market values of fixed income investments change
in response to interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed income securities
generally rise. Moreover, while securities with longer maturities tend to
produce higher yields, the prices of longer maturity securities are also subject
to greater market fluctuations as a result of changes in interest rates. In
addition to these fundamental risks, different types of fixed income securities
may be subject to the following additional risks:
- Call Risk. During periods of falling interest rates, certain
debt obligations with high interest rates may be prepaid (or
"called") by the issuer prior to maturity. This may cause a
Portfolio's average weighted maturity to fluctuate, and may
require a Portfolio to invest the resulting proceeds at lower
interest rates.
- Credit Risk. The possibility that an issuer will be unable to
make timely payments of either principal or interest.
Foreign Market Risk. Equity and bond markets outside the U.S. have
significantly outperformed U.S. markets from time to time. Consequently,
investments in foreign securities may provide greater long-term investment
returns than would be available from investing solely in U.S. securities.
Nevertheless, each fund's portfolio is subject to market risk--the possibility
that stock prices will decline over short, or even extended, periods--to a
greater degree than domestic investments, as a result of a variety of factors
that can affect stock prices.
For example, there may be less information publicly available about
foreign companies, and less government regulation and supervision of foreign
stock exchanges, securities dealers and publicly traded companies than is
available about comparable U.S. entities. Accounting, auditing and financial
reporting standards, practices and requirements are not uniform and may be less
rigorous than U.S. standards. Securities of some foreign companies are less
liquid, and their prices are more volatile, than securities of comparable U.S.
companies. Trading settlement practices in some markets may be slower or less
frequent than in the U.S., which could affect liquidity of a fund's portfolio.
Trading practices abroad may offer less protection to investors. In some foreign
countries, any or all of expropriation, nationalization, and confiscation are
risks to
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which non-U.S. securities may be subject. A foreign government's limits on the
repatriation of distributions and profits and on removal of securities,
property, or other assets from that country may affect a fund's liquidity and
the value of its assets. Political or social instability, including war or other
armed conflict, or diplomatic developments also could affect U.S. investors.
Currency Risk. International investors are also exposed to currency risk
if the U.S. dollar value of securities denominated in other currencies is
adversely affected by exchange rate movements. Currency risk could affect the
value of a fund's investments, the value of dividends and interest earned by a
fund, and gains that may be realized.
Foreign Taxation Risk. Some foreign governments levy brokerage taxes,
increasing the cost of securities subject to the tax and reducing the realized
gain (or increasing the realized loss) on such securities when they are sold.
Foreign governments may withhold taxes from dividends or interest paid. Such
taxes lower a fund's net asset value.
Foreign Security Risks. Investments in securities of foreign companies
or governments can be more volatile than investments in U.S. companies or
governments. Diplomatic, political, or economic developments, including
nationalization or appropriation, could affect investments in foreign countries.
Foreign securities markets generally have less trading volume and less liquidity
than U.S. markets. In addition, the value of securities denominated in foreign
currencies, and of dividends from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
companies or governments generally are not subject to uniform accounting,
auditing, and financial reporting standards comparable to those applicable to
U.S. companies or governments. Transaction costs are generally higher than those
in the U.S. and expenses for custodial arrangements of foreign securities may be
somewhat greater than typical expenses for custodial arrangements of similar
U.S. securities. Some foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes is recoverable, the non-recovered portion will reduce the income received
from the securities comprising the Portfolio.
In addition to these risks, certain foreign securities may be subject to
the following additional currency risks. Investments in foreign securities
denominated in foreign currencies involve additional risks, including:
- The value of a Portfolio's assets measured in U.S. dollars may
be affected by changes in currency rates and in exchange control
regulations.
- A Portfolio may incur substantial costs in connection with
conversions between various currencies.
- A Portfolio may be unable to hedge against possible variations
in foreign exchange rates or to hedge a specific security
transaction or portfolio position.
- Only a limited market currently exists for hedging transactions
relating to currencies in certain emerging markets.
Investing in Emerging Markets Risk. The risks of investing in foreign
securities are intensified if the investments are in emerging or developing
markets. In general, these markets may offer special investment opportunities
because their securities markets, industries, and capital structure are growing
rapidly, but investments in these countries involve special risks not present in
the U.S. or in mature foreign markets, such as Germany or the United Kingdom,
for
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example. Settlement of securities trades may be subject to extended delays, so
that a fund may not receive securities purchased or the proceeds of sales of
securities on a timely basis. Emerging markets generally have smaller,
less-developed trading markets and exchanges, which may affect liquidity, so
that a fund may not be able to dispose of those securities quickly and at a
reasonable price. These markets may also experience greater volatility, which
can materially affect the value of a fund's portfolio holdings and, therefore,
its net asset value. Emerging market countries may have relatively unstable
governments. In such an environment the risk of nationalization of business or
of prohibitions on repatriation of assets is greater than in more stable,
developed political and economic circumstances. The economy of a developing
market country may be predominantly based on only a few industries, and it may
be highly vulnerable to changes in local or global trade conditions. The legal
and accounting systems, and mechanisms for protecting property rights, may not
be as well developed as those in more mature economies. In addition, some
emerging markets countries have general or industry-specific restrictions on
foreign ownership that may limit or eliminate the fund's opportunities to
acquire desirable securities.
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ARK FUNDS
CROSS REFERENCE SHEET
PART B
Item No. Heading
- -------- -------
10. Cover Page.............................................. Cover Page
11. Table of Contents....................................... Table of Contents
Statement of Additional
Information of ARK Funds
12. Additional Information About the Registrant............. dated June __, 2000
Statement of Additional
Information of The Govett
13. Additional Information About the Company Funds, Inc. dated May 1,
Being Acquired.......................................... 2000
14. Financial Statements.................................... Cover Page
B-34
72
ARK FUNDS
Oaks, Pennsylvania 19456
THE GOVETT FUNDS, INC.
250 Montgomery Street
San Francisco, California 94104
STATEMENT OF ADDITIONAL INFORMATION
(Special Meeting of Shareholders of The Govett Funds, Inc.)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Prospectus/Proxy Statement dated June __, 2000
for the Special Meeting of Shareholders of Govett Funds to be held on July 12,
2000. Copies of the Prospectus/Proxy Statement may be obtained without charge by
calling Govett Funds at 1-800-821-0803. Unless otherwise indicated, capitalized
terms used herein and not otherwise defined have the same meanings as are given
to them in the Prospectus/Proxy Statement.
Further information about the Acquiring Funds is contained in and
incorporated by reference to the ARK Funds' Statement of Additional Information
dated June __, 2000, a copy of which is included herewith. The audited financial
statements and related independent auditor's report for the Acquiring Funds
contained in the Annual Report for the fiscal year ended April 30, 1999 and in
the Semi-Annual Report for the six months ended October 31, 1999 are hereby
incorporated herein by reference. No other parts of the Annual Report are
incorporated by reference herein.
Further information about the Acquired Funds is contained in and
incorporated by reference to the Govett Funds' Statement of Additional
Information dated May 1, 2000, copies of which are included herewith. The
audited financial statements and related independent auditor's report for the
Acquired Funds contained in the Annual Report for the fiscal year ended December
31, 1999 are hereby incorporated herein by reference. No other parts of the
Annual Report are incorporated by reference herein.
The date of this Statement of Additional Information is June __, 2000.
B-35
73
TABLE OF CONTENTS
Page
----
General Information....................................................................1
Pro Forma Financial Statements.........................................................2
B-36
74
GENERAL INFORMATION
The shareholders of the Govett Global Income Fund, Govett Smaller
Companies Fund, Govett Emerging Markets Equity Fund, and Govett International
Equity Fund of The Govett Funds, Inc. (collectively, the "Acquired Funds") are
being asked to approve or disapprove the Agreement and Plan of Reorganization
dated as of May 17, 2000 (the "Reorganization Agreement"), between ARK Funds and
The Govett Funds, Inc. ("Govett Funds") and the transactions contemplated
thereby. The Reorganization Agreement contemplates the transfer of the assets
to, and the assumption of the stated liabilities of the Acquired Funds to the
ARK Income Portfolio, ARK Small-Cap Equity Portfolio, ARK Emerging Markets
Equity Portfolio, and ARK International Equity Selection Portfolio,
respectively, of ARK Funds (collectively the "Acquiring Funds"), in exchange for
full and fractional Retail Class A and Institutional Class shares of the
Acquiring Funds (the "Reorganizations"). The Acquiring Funds shares received by
each Acquired Fund will have an aggregate net asset value equal to the aggregate
net asset value of the shares of the Acquired Funds that are outstanding at the
Closing Date (as defined in the Reorganization Agreement).
Following the exchange, the Acquired Funds will make a liquidating
distribution of the Acquiring Funds shares to their shareholders. Each
shareholder owning shares of an Acquired Fund at the Closing Date will receive
shares of the corresponding Acquiring Fund of equal value, plus the right to
receive any unpaid dividends and distributions that were declared before the
Closing Date on shares in the corresponding Acquired Fund.
The Special Meeting of shareholders of Govett Funds to consider the
Reorganization Agreement and the related transactions will be held at 3:00 p.m.
EST, Eastern Time, on July 12, 2000, at 25 South Charles Street - 16th Floor,
Baltimore, Maryland 21201. For further information about the transaction, see
the Prospectus/Proxy Statement.
B-37
75
PRO FORMA FINANCIAL STATEMENTS
Acquired Fund Acquiring Fund
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
ARK International Equity Selection
Govett International Equity Fund Portfolio
- --------------------------------------
[NO PRO FORMA FINANCIALS ARE PROVIDED FOR TWO OF THE PROPOSED REORGANIZED FUNDS:
- GOVETT GLOBAL INCOME FUND (ACQUIRED FUND) HAS ASSETS THAT TOTAL
LESS THAN 10% THE TOTAL ASSETS OF ARK INCOME PORTFOLIO
(ACQUIRING FUND); AND
- GOVETT EMERGING MARKETS EQUITY FUND (ACQUIRED FUND) IS TO BE
ACQUIRED BY ARK EMERGING MARKETS EQUITY PORTFOLIO, WHICH IS A
SHELL PORTFOLIO REQUIRING NO PRO FORMA.]
Introduction to Proposed Reorganization
December 31, 1999
The accompanying unaudited Pro Forma Combining Schedule of Portfolio
Investments, Statement of Net Assets, and Statement of Operations reflect the
accounts of Govett Smaller Companies Fund and ARK Small-Cap Equity Portfolio and
Govett International Equity Fund and ARK International Equity Selection
Portfolio, at October 31, 1999 for the year then ended. These statements have
been derived from each fund's books and records utilized in calculating daily
net asset value at October 31, 1999.
76
ARK FUNDS
CROSS REFERENCE SHEET
PART C
Item No. Heading
- -------- -------
15. Indemnification.................................................Indemnification
16. Exhibits........................................................Exhibits
17. Undertakings....................................................Undertaking
B-39
77
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article VIII of the Agreement and Declaration of Trust filed as
Exhibit 1 to the Registration Statement is incorporated herein by reference. The
Registrant participates in a group liability policy under which the Registrant
and its trustees, officers, and affiliated persons are insured against certain
liabilities
ITEM 16. EXHIBITS
(1) (a) Declaration of Trust dated October 22, 1992 is
incorporated by reference to Exhibit 1 to the
Registration Statement on Form N-1A (File Nos. 33-53690
and 811-7310) ("Form N-1A").
(b) Amended and Restated Declaration of Trust dated March
19, 1993 is incorporated by reference to Exhibit 19(b)
to Pre-Effective Amendment No. 2 to Registrant's Form
N-1A.
(c) Supplement dated March 23, 1993 to the Amended and
Restated Declaration of Trust dated March 19, 1993 is
incorporated by reference to Exhibit 1(c) to
Pre-Effective Amendment No. 2 to Registrant's Form N-1A.
(2) By-Laws of the Registrant are incorporated by reference
to Exhibit 1(d) to Pre-Effective Amendment No. 2 to
Registrant's Form N-1A.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is included
in Part A.
(5) Not applicable.
(6) (a) Investment Advisory Agreement dated February 12,
1998, between the Registrant and Allied Investment
Advisors, Inc. is incorporated herein by reference to
Exhibit 5(b) to Post-Effective Amendment No.
17 to Registrant's From N-1A.
(b) Investment Advisory Agreement, between the Registrant
and AIB Govett Asset Management Limited is incorporated
by reference to Exhibit (d) to Post-Effective Amendment
No. 23 to Registrant's Form N-1A.
(7) (a) Distribution Agreement dated November 1, 1995,
between the Registrant and SEI Investments Distribution
Co. is incorporated herein
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by reference to Exhibit 6(a) to Post-Effective Amendment
No. 6 to Registrant's Form N-1A.
(b) Administration Agreement dated November 1, 1995, between
the Registrant and SEI Investments Mutual Fund Services
is incorporated herein by reference to Exhibit 6(b) to
Post-Effective Amendment No. 6 to Registrant's Form
N-1A.
(8) Not applicable.
(9) (a) Custody Agreement dated April 1, 1997, between the
Registrant and Allfirst Trust Company, National
Association, is incorporated herein by reference to
Exhibit 8(a) to Post-Effective Amendment No. 17 to
Registrant's Form N-1A.
(b) Subcustody Agreement is incorporated by reference to
Exhibit (d) to Post-Effective Amendment No. 23 to
Registrant's Form N-1A.
(10) (a) Distribution and Shareholder Services Plan is
incorporated by reference to Exhibit (m) to
Post-Effective Amendment No. 21 to Registrant's
Form N-1A.
(b) Amended and Restated Rule 18f-3 Plan is incorporated by
reference to Exhibit (o) to Post-Effective Amendment
No. 25 to Registrant's Form N-1A.
(11) Opinion and consent of legal counsel is incorporated
herein by reference to Exhibit (i) to Registrant's Form
N-1A.
(12) Form of opinion and consent of Kirkpatrick & Lockhart
LLP as to tax matters.**
(13) (a) Transfer Agency and Service Agreement dated November
1, 1995, between the Registrant and SEI Investments
Mutual Fund Services is incorporated herein by reference
to Exhibit 9 is incorporated herein by reference to
Exhibit 18 to Post-Effective Amendment No. 6 to
Registrant's Form N-1A.
(b) Sub-Administration Agreement dated January 1, 1998,
between SEI Investments Management Corporation and
Allfirst Trust Company, National Association, is
incorporated by reference to Exhibit 9(b) is
incorporated herein by reference to Exhibit 18 to
Post-Effective Amendment No. 17 to Registrant's Form
N-1A.
(14) (a) Consent of KPMG LLP, independent auditors of the
Registrant.*
(b) (1) Consent of PricewaterhouseCoopers LLP,
independent auditors of The Govett Funds, Inc.**
(2) Consent of PricewaterhouseCoopers LLP, independent
auditors of The Govett Funds, Inc.**
79
(15) Not applicable.
(16) Powers of Attorney of Directors of the Registrant is
incorporated herein by reference to Post-Effective
Amendment No. 22 to Registrant's Form N-1A.
(17) (a) Form of Proxy Card.**
(b) Retail Class A and Institutional Class Prospectus of the
Registrant dated June __, 2000 is incorporated herein by
reference to Post-Effective Amendment No. 26 to
Registrants Form N-1A.
(c) Statement of Additional Information of the Registrant
dated June __, 2000 is incorporated herein by
reference to Post-Effective Amendment No. 26 to
Registrant's Form N-1A.
(d) Class A Retail and Institutional Class Prospectus of
The Govett Funds, Inc. dated May 1, 2000 is incorporated
herein by reference to Post-Effective Amendment No. 26
to The Govett Funds, Inc. Registration Statement on Form
N-1A.
(e) Statement of Additional Information of The Govett
Funds, Inc. dated May 1, 2000 is incorporated herein by
reference to Post-Effective Amendment No. 26 to The
Govett Funds, Inc. Registration Statement on Form N-1A.
(f) Annual Report of The Govett Funds, Inc. for the fiscal
year ended December 31, 1999 is incorporated herein by
reference to the Registrant's filing with the SEC
pursuant to Rule 30b-2 under the Investment Company Act
of 1940.
(g) Annual Report of the ARK Funds for the fiscal year ended
April 30, 1999 is incorporated herein by reference to
Registrant's filing with the SEC pursuant to Rule 30b-2
under the Investment Company Act of 1940.
(h) Semi-Annual Report of the ARK Funds for the six months
ended October 31, 1999 is incorporated herein by
reference to Registrant's filing with the SEC pursuant
Rule 30b-2 under the Investment Company Act of 1940.
- -----------------------
* Filed herewith.
** To be filed by amendment.
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ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
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SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant in the City of Baltimore, and State
of Maryland on the 17, day of May, 2000.
ARK FUNDS, INC.
By: /s/ Richard A. Gold
-----------------------------------------
Richard A. Gold, President
As required by the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacity on the date indicated.
/s/ Richard A. Gold May 17, 2000
- --------------------------------------- ------------
Richard A. Gold, President (principal executive Officer)
/s/ James F. Volk May 17, 2000
- --------------------------------------- ------------
James F. Volk, Treasurer, Controller and Chief Financial Officer
(principal financial and accounting officer)
/s/ William H. Cowie, Jr. May 17, 2000
- --------------------------------------- ------------
William H. Cowie, Jr., Trustee
/s/ Charlotte Kerr May 17, 2000
- --------------------------------------- ------------
Charlotte Kerr, Trustee
/s/ Thomas Schweizer May 17, 2000
- --------------------------------------- ------------
Thomas Schweizer, Trustee
/s/ Richard B. Seidel May 17, 2000
- --------------------------------------- ------------
Richard B. Seidel, Trustee
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