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As filed with the Securities and Exchange Commission on June 29, 2000
REGISTRATION NO. 333-37358
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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.1 POST-EFFECTIVE AMENDMENT NO. ___
(Check Appropriate Box or Boxes.)
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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
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Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.
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).
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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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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
Being Acquired....................................................... Summary; Risk Factors;
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
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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 International Equity Fund ARK International Equity Selection
Portfolio (or ARK International Equity
Portfolio, as discussed below)
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
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 August 4, 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,
/s/ Keith E. Mitchell
---------------------
Keith E. Mitchell
Managing Director
AIB Govett, Inc.
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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 do
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
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Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett International Equity Fund ARK International Equity Selection
Portfolio(1)
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
(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 August 4, 2000
at 3:00 p.m. Eastern Time, 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(S). 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.
/s/ John Hunt
-------------
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 (the
"Meeting") to be held at 25 South Charles Street - 16th Floor, Baltimore,
Maryland 21201 on August 4, 2000 at 3:00 p.m. Eastern Time, at which
shareholders will be asked to consider and approve reorganizations of the
Acquired Funds into the corresponding Acquiring Funds as set forth in the table
below.
Acquired Funds Acquiring Funds
-------------- ---------------
Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett International Equity Fund ARK International Equity Selection
Portfolio or ARK International Equity
Portfolio (1)
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
- -------------------------
(1) Shareholders of the Govett International Equity Fund are being asked to
approve a reorganization into the ARK International Equity Selection
Portfolio. The reorganization will not occur unless Govett shareholders
approve and, in addition, ARK shareholders approve certain changes to the ARK
International Equity Selection Portfolio. As a result, Govett shareholders are
also being asked to approve an alternative reorganization into ARK
International Equity Portfolio, which has been organized for the purpose of
continuing the investment operations of Govett international Equity Fund
should the ARK shareholders not approve the changes to the ARK International
Equity Selection Portfolio.
ARK Funds and Govett Funds are open-end, series, management investment
companies whose investment advisors are affiliated with Allied Irish Banks,
p.l.c. In approving the reorganizations, 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 advisors 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 be tax-free transactions.
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This Prospectus/Proxy Statement constitutes the proxy statement of the
Govett Funds for the Meeting and the prospectus for the shares of 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 Acquired Funds.
The reorganizations will be effected by the transfer of assets and
stated liabilities of an Acquired Fund in exchange for Retail Class A or
Institutional Class shares, as applicable, of the corresponding Acquiring Fund.
On the day of the reorganization, each Acquired Fund shareholder will receive
shares of the corresponding Acquiring Fund, of the same class as their shares in
the Acquired Fund (Retail Class A or Institutional Class) and with the same
total value as their Acquired Fund shares. However, the number of shares each
Acquired Fund shareholder receives, and the price per share, will be different,
depending on the net asset values per share of the Acquiring and Acquired Funds
on the reorganization date. After the reorganizations, the Acquired Funds will
be dissolved.
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 also has been organized for the purpose of continuing the
investment operations of Govett International Equity Fund if certain changes to
ARK International Equity Selection Portfolio are not approved by its
shareholders. If those changes are not approved, then Govett International
Equity Fund would 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 reorganizations 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, accompanies this
Prospectus/Proxy Statement. Additional information is contained in:
- the Statement of Additional Information dated June __, 2000,
relating to this Prospectus/Proxy Statement;
- the Statement of Additional Information dated June __, 2000 of
ARK Funds;
- 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;
- the Class A Retail and Institutional Class Prospectus and the
Statement of Additional Information of Govett Funds, each
dated May 1, 2000; and
- 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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The Govett Funds' Prospectus and Statement of Additional Information dated May
1, 2000 and Annual Report for the fiscal year ended December 31, 1999 are also
incorporated herein by reference.
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
PROPOSED REORGANIZATIONS................................................1
BOARD CONSIDERATIONS....................................................2
REASONS FOR THE REORGANIZATIONS.........................................2
FEDERAL INCOME TAX CONSEQUENCES.........................................2
OVERVIEW OF GOVETT FUNDS AND ARK FUNDS..................................2
Investment Objectives and Policies..................................2
Management and Arrangements with Service Providers..................4
Comparative Fee Tables..............................................4
Purchases..........................................................14
Exchanges..........................................................15
Dividends and Distributions........................................16
Redemption Procedures..............................................16
VOTING INFORMATION.....................................................16
RISK FACTORS................................................................17
FINANCIAL HIGHLIGHTS........................................................20
INFORMATION RELATING TO THE PROPOSED REORGANIZATION.........................21
DESCRIPTION OF THE REORGANIZATION AGREEMENT............................21
BOARD CONSIDERATIONS...................................................22
CAPITALIZATION.........................................................23
FEDERAL INCOME TAX CONSEQUENCES........................................25
INFORMATION RELATING TO VOTING MATTERS......................................26
GENERAL INFORMATION....................................................26
SHAREHOLDER APPROVAL...................................................26
QUORUM.................................................................30
ANNUAL MEETINGS........................................................30
ADDITIONAL INFORMATION ABOUT THE ACQUIRING AND ACQUIRED FUNDS...............30
LEGAL MATTERS...............................................................31
EXPERTS.....................................................................31
OTHER BUSINESS..............................................................31
SHAREHOLDER INQUIRIES.......................................................31
APPENDIX A..................................................................32
APPENDIX B..................................................................56
APPENDIX C..................................................................58
APPENDIX D..................................................................60
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SUMMARY
The following is a summary of certain information relating to the
proposed reorganizations, and is qualified by reference to the more complete
information contained elsewhere in this Prospectus/Proxy Statement and the
Appendices attached.
PROPOSED REORGANIZATIONS. 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 Govett
Funds, within the meaning of Section 2(a)(19) of the Investment Company Act of
1940, as amended (the "1940 Act") (the "Boards"), propose that the Acquired
Funds reorganize into the corresponding Acquiring Funds as set forth in the
table below, and that each Acquired Fund shareholder become a shareholder of the
corresponding Acquiring Fund.
Acquired Funds Acquiring Funds
Govett Global Income Fund ARK Income Portfolio
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett International Equity Fund ARK International Equity Selection Portfolio or
ARK International Equity Portfolio (1)
Govett Emerging Markets Equity Fund ARK Emerging Markets Equity Portfolio
- ------------
(1) If proposed investment policy and other changes are not
implemented, shareholders of Govett International Equity Fund would reorganize
into ARK International Equity Portfolio.
The reorganizations will have two steps:
- First, if the shareholders of an Acquired Fund
approve the reorganization, the Acquired Fund will
transfer substantially all of its assets and
liabilities to its corresponding Acquiring Fund. In
exchange, Acquired Fund will receive shares of its
corresponding Acquiring Fund with a total value equal
to the value of the assets it is transferring (net of
the Acquired Fund's liabilities).
- Second, the Acquired Fund will dissolve. Each
Acquiring Fund will open an account for each
corresponding Acquired Fund's shareholder, and will
credit each shareholder with shares of the Acquiring
Fund of the same class and with the same total value
as the Acquired Fund shares that the shareholder
owned on the date of the reorganization. New share
certificates will not be issued.
No sales charge or fee of any kind will be charged to Acquired Fund
shareholders in connection with the reorganizations.
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BOARD CONSIDERATIONS. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, the Boards 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 - Board Considerations."
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 advisors 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
Govett Emerging Markets Equity Fund/ARK Emerging Markets Equity
Portfolio. The investment objectives and policies of Govett Emerging Markets
Equity Fund and ARK Emerging Markets Equity Portfolio are identical. Both funds
have an investment objective of long-term capital appreciation. They seek to
achieve their investment objective by investing primarily in equity securities
of issuers located in emerging market countries. Both funds may invest in debt
obligations convertible into equity securities, and in non-convertible debt
securities when their advisors believe these non-convertible securities present
favorable opportunities for capital appreciation. Under normal market
conditions, at least 65% of the funds' total assets will be invested in
securities of issuers located in at least three different countries (other than
the United States). Additionally, at least 65% of the funds' total assets will
normally be invested in common and preferred stocks, and warrants to acquire
such stocks. Each fund may also engage in hedging strategies such as options,
futures and forward currency contracts, to attempt to reduce the overall risk of
its investment portfolio, enhance income, realize gains or manage the fund's
foreign currency exposure.
Govett International Equity Fund/ARK International Equity Selection
Portfolio. The investment objectives and policies of Govett International Equity
Fund and the proposed revised investment objectives and policies of ARK
International Equity Selection Portfolio (or, alternatively, ARK International
Equity Portfolio) are identical. Both funds have an investment
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objective of long-term capital appreciation. They seek to achieve their
investment objective by investing primarily in equity securities of non-U.S.
issuers. Under normal market conditions, the funds will invest at least 65% of
their total assets in issuers located in not less than three different countries
(other than the United States). In addition, the funds will normally invest at
least 65% of their total assets in common and preferred stocks, and warrants to
acquire such stocks. Both funds may invest in debt obligations convertible into
equity securities, and in non-convertible debt securities when their advisors
believe these non-convertible securities present favorable opportunities for
capital appreciation. Each fund may also engage in hedging strategies such as
options, futures and forward currency contracts, to attempt to reduce the
overall risk of its investment portfolio, enhance income, realize gains or
manage the fund's foreign currency exposure.
Govett Global Income Fund/ARK Income Portfolio. The investment
objectives of Govett Global Income Fund and ARK Income Portfolio are similar.
The primary investment objective of Govett Global Income Fund is to provide high
current income as is consistent with the preservation of capital, while its
secondary objective is capital appreciation. ARK Income Portfolio's primary
investment objective is current income, while its secondary objective is capital
growth. The Govett Global Income Fund seeks to achieve its investment objectives
by investing primarily in debt securities. 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.
The ARK Income Portfolio seeks its investment objective by investing primarily
in U.S. investment-grade corporate and government fixed income securities
(including convertible and mortgage-backed securities) and unrated securities
determined by the advisor to be of comparable quality. 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 may
also invest up to 15% of its total assets in securities rated below investment
grade ("junk bonds").
The primary differences in the funds' investment polices are the types
and the credit quality of debt securities in which the funds invest. While
Govett Global Income Fund invests primarily in U.S. and foreign government debt
securities, the ARK Income Portfolio primarily invests in U.S. corporate and
government fixed income securities. Govett Global Income Fund's investment
policies require that it normally invest 75% of its total assets in
investment-grade debt securities and commercial paper. The ARK Income
Portfolio's investment policies also require that it invest primarily in
investment - grade fixed income securities. ARK Income Portfolio, however, may
invest a greater percentage of its assets in non-investment grade securities.
Govett Smaller Companies Fund/ARK Small-Cap Equity Portfolio. The
investment objective of Govett Smaller Companies Fund is long-term capital
appreciation by investing primarily in equity securities of smaller companies.
The investment objective of ARK Small-Cap Equity Portfolio is long-term capital
appreciation. It seeks to achieve its investment objective by investing
primarily in the common stock and other equity securities of
small-capitalization U.S. issuers. 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
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equity securities of companies with a market capitalization of $2 billion or
less at the time of investment.
The primary differences in the funds' investment policies are the type
and size of the companies in which they invest. While the Govett Smaller
Companies Fund invests in both foreign and U.S. issuers, the ARK Small-Cap
Equity Portfolio invests primarily in U.S. companies. In addition, Govett
Smaller Companies Fund invests in companies with market capitalizations up to $3
billion, whereas the ARK Small-Cap Equity Portfolio invests in companies with
market capitalizations up to $2 billion. Thus, the market capitalizations of the
companies in which the ARK Small-Cap Equity Portfolio invests may be somewhat
smaller.
Additional Information. 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, Annual Report and Semi-Annual Report of ARK
Funds, which are incorporated herein by reference. The Prospectus, Annual
Report, and Semi-Annual Report of the ARK Funds are furnished with this
Prospectus/Proxy Statement.
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
their subadvisor 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
advisor to the Acquiring Funds is Allied Investment Advisors, Inc. ("AIA"). AIB
Govett will perform subadvisory services for the ARK International Equity
Selection Portfolio (or ARK International Equity Portfolio) and ARK Emerging
Markets Portfolio. SEI Investments Distribution Co. serves as the distributor of
the shares of the Acquiring Funds. Administrative services are provided by SEI
Investments Mutual Funds Services. Allfirst Trust Company, National Association,
serves as custodian for the securities and cash of the Acquiring Funds, and
Bankers Trust provides custodial services for foreign securities. SEI
Investments Distribution Co. serves as the distributor and principal underwriter
of the ARK Funds' shares. Retail Class A shares of the Acquiring Funds are
subject to a distribution and shareholder services plan. The Acquiring Funds'
Institutional Class shares are 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 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
4
16
current fiscal year, and (b) estimated (combined) 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 the 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 (a) 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) estimated (combined) information for the Acquiring
Fund assuming the reorganization had taken place on October 31, 1999.
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
SHAREHOLDER FEES Govett (Combined) Govett (Combined)
(fees paid directly from your Global ARK ARK Global ARK ARK
investment) Income Income Income Income Income Income
Fund Portfolio Portfolio Fund Portfolio Portfolio
---- --------- --------- ---- --------- ---------
Maximum sales load imposed on None 4.50% 4.50% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None None None
redemptions
Redemption Fee 1.00%(1) None(2) None(2) 1.00%(1) None(2) None(2)
Exchange Fee 1.00%(1) None None 1.00%(1) None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average
net assets)
Management Fees 0.75% 0.60% 0.60% 0.75% 0.60% 0.60%
Distribution (12b-1) Fees 0.35% 0.30% 0.30% None None None
Other Expenses 3.41% 0.35% 0.35% 3.41% 0.35% 0.35%
----- ----- ----- ----- ----- -----
Total Annual Portfolio Operating
Expenses 4.51%(3) 1.25% 1.25% 4.16%(3) 0.95% 0.95%
Fee Waiver and Expense Reimbursement
(2.16%) (0.20%) (0.20%) (2.16%) (0.09%) (0.09%)
------- ------- ------- ------- ------- -------
Net Operating Expenses 2.35%(4) 1.05%(5) 1.05%(5) 2.00%(4) 0.86%(5) 0.86%(5)
- --------------------------------
(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.
5
17
(2) If redemption proceeds are wired to a bank account, a $10 fee is applicable.
(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.
(4) During 1999, 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.
(5) The Portfolio's advisor has agreed contractually to waive fees and reimburse
expenses in order to keep total operating expenses from exceeding 1.05% for
Retail Class A and 0.86% for Institutional Class until August 31, 2001. The
Portfolio's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because, in addition to its
contractual commitment, the advisor is voluntarily reimbursing expenses in order
to keep total operating expenses at a specified level. The advisor may
discontinue all or part of these reimbursements at any time. With the expense
reimbursements, the Portfolio's actual total operating expenses are as follows:
Income Portfolio - Retail Class A 0.95%
Income Portfolio - Institutional Class 0.82%
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:
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Govett Estimated
Govett (Combined) Global ARK (Combined)
Global ARK Income ARK Income Income Income ARK Income
Income Fund Portfolio Portfolio Fund Portfolio Portfolio
----------- --------- --------- ---- --------- ---------
1 Year $238 $552 $552 $203 $88 $88
3 Years $1,169 $810 $810 $1,067 $294 $294
5 Years $2,108 $1,087 $1,087 $1,946 $517 $517
10 Years $4,498 $1,876 $1,876 $4,208 $1,158 $1,158
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. In addition, this example assumes that the current agreements
regarding fee waivers and expense reimbursements will remain in effect only
through the end of the Fund's current fiscal year. 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.
6
18
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
Govett ARK (Combined) Govett ARK (Combined)
SHAREHOLDER FEES Smaller Small-Cap ARK Small-Cap Smaller Small-Cap ARK Small-Cap
(fees paid directly from your Companies Equity Equity Companies Equity Equity
investment) Fund Portfolio Portfolio Fund Portfolio Portfolio
- ----------- ---- --------- --------- ---- --------- ---------
Maximum sales load imposed on None 4.75% 4.75% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None None None
redemptions
Redemption Fee 1.00%(1) None(2) None(2) 1.00%(1) None(2) None(2)
Exchange Fee 1.00%(1) None None 1.00%(1) None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average
net assets)
Management Fees 1.00% 0.80% 0.80% 1.00% 0.80% 0.80%
Distribution (12b-1) Fees 0.35% 0.40% 0.40% None None None
Other Expenses 1.81% 0.46% 0.46% 1.81% 0.46% 0.46%
----- ----- ----- ----- ----- -----
Total Annual Portfolio Operating
Expenses 3.16%(3) 1.66% 1.66% 2.81%(3) 1.26%(6) 1.26%(6)
Fee Waiver and Expense Reimbursement
(0.81%) (0.22%) (0.22%) (0.81%)
------- ------- ------- -------
Net Operating Expenses 2.35%(4) 1.44%(5) 1.44%(5) 2.00%(4)
- ---------------
(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) If redemption proceeds are wired to a bank account, a $10 fee is applicable.
(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.
(4) During 1999, 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.
(5) The Portfolio's advisor has agreed contractually to waive fees and reimburse
expenses of the Retail Class A in order to keep total operating expenses from
exceeding 1.44% until August 31, 2001. The Retail Class A's total actual annual
operating expenses for the most recent fiscal year were less than the amount
shown above because, in addition to its contractual commitment, the advisor is
voluntarily reimbursing expenses in order to keep total operating expenses at a
specified level. The advisor may discontinue all or part of these reimbursements
at any time. With the expense reimbursements, the Portfolio's actual total
operating expenses are as follows:
Small-Cap Equity Portfolio - Retail Class A 1.30%
7
19
(6) The Portfolio's total actual annual operating expenses for the most recent
fiscal year were less than the amount shown above because the advisor is
voluntarily waiving reimbursing expenses in order to keep total operating
expenses at a specified level. The advisor may discontinue all or part of these
reimbursements at any time. With the expense reimbursements, the Portfolio's
actual total operating expenses are as follows:
Small-Cap Equity Portfolio - Institutional Class 1.19%
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:
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated
(Combined) Estimated
Govett ARK ARK Govett ARK (Combined)
Smaller Small-Cap Small-Cap Smaller Small-Cap ARK Small-Cap
Companies Equity Equity Companies Equity Equity
Fund Portfolio Portfolio Fund Portfolio Portfolio
---- --------- --------- ---- --------- ---------
1 Year $238 $615 $615 $203 $128 $128
3 Years $899 $953 $953 $795 $400 $400
5 Years $1,584 $1,315 $1,315 $1,412 $692 $692
10 Years $3,411 $2,329 $2,329 $3,079 $1,523 $1,523
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. In addition, this example assumes that the current agreements
regarding fee waivers and expense reimbursements will remain in effect only
through the end of the Fund's current fiscal year. 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.
8
20
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
Govett (Combined) ARK (Combined)
Emerging ARK Emerging ARK Emerging Govett Emerging ARK Emerging
SHAREHOLDER FEES Markets Markets Markets Emerging Markets Markets
(fees paid directly from your Equity Equity Equity Markets Equity Equity
investment) Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
---- --------- --------- ----------- --------- ---------
Maximum sales load imposed on None 4.75% 4.75% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None None None
redemptions
Redemption Fee 1.00%(1) None(2) None(2) 1.00%(1) None(2) None(2)
Exchange Fee 1.00%(1) None None 1.00%(1) None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.35% 0.40% 0.40% None None None
Other Expenses 2.96% 1.00%(5) 1.00%(5) 2.96% 1.00%(5) 1.00%(5)
----- ----- ----- ----- ----- -----
Total Annual Portfolio Operating
Expenses 4.31%(3) 2.40% 2.40% 3.96%(3) 2.00% 2.00%
Fee Waiver and Expense
Reimbursement (2.46%) (0.30%) (0.30%) (2.46%) None None
------- ------- ------- ------- ---- ----
Net Operating Expenses 1.85%(4) 2.10%(6) 2.10%(6) 1.50%(4) 2.00%(4) 2.00%(4)
- ---------
(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) If redemption proceeds are wired to a bank account, a $10 fee is applicable.
(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.
(4) During 1999, 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.
(5) As of the date of this Proxy/Prospectus, the Portfolio has not yet commenced
operations and Other Expenses are based on estimates for the current fiscal
year.
9
21
(6) The Portfolio's Advisor has agreed contractually to waive fees and reimburse
expenses in order to keep total operating expenses from exceeding 2.10% for
Retail Class A and 2.00% for Institutional Class until August 31, 2001. In
addition to its contractual waiver, the advisor is also voluntarily waiving a
portion of the fees in order to keep total operating expenses at a specified
level. The advisor may discontinue all or part of these voluntary waivers at any
time. With the voluntary fee waivers, the Portfolio's actual total operating
expenses are as follows:
Emerging Markets Equity Portfolio - Retail Class A 2.08%
Emerging Markets Equity Portfolio - Institutional Class 1.98%
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:
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
Govett (Combined) ARK (Combined)
Emerging ARK Emerging ARK Emerging Govett Emerging ARK Emerging
Markets Markets Markets Emerging Markets Markets
Equity Equity Equity Markets Equity Equity
Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
---- --------- --------- ----------- --------- ---------
1 Year $188 $678 $678 $153 $203 $203
3 Years $1,083 $1,161 $1,161 $981 $627 $627
5 Years $1,991 $1,669 $1,669 $1,826 $1,078 $1,078
10 Years $4,316 $3,060 $3,060 $4,019 $2,327 $2,327
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. In addition, this example assumes that the current agreements
regarding fee waivers and expense reimbursements will remain in effect only
through the end of the Fund's current fiscal year. 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.
10
22
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
(Combined) (Combined)
ARK ARK ARK ARK
International International International International
SHAREHOLDER FEES Govett Equity Equity Govett Equity Equity
(fees paid directly from your International Selection Selection International Selection Selection
investment) Equity Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
----------- --------- --------- ----------- --------- ---------
Maximum sales load imposed on None 1.50% 4.75% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None None None
redemptions
Redemption Fee 1.00%(1) None(2) None(2) 1.00%(1) None(2) None(2)
Exchange Fee 1.00%(1) None None 1.00%(1) None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Management Fees 1.00% 0.65% 1.00% 1.00% 0.65% 1.00%
Distribution (12b-1) Fees 0.35% 0.40% 0.40% None None None
Other Expenses 1.99% 0.40% 0.45% 1.98% 0.40% 0.45%
----- ----- ----- ----- ----- -----
Total Annual Portfolio Operating
Expenses 3.34%(3) 1.45% 1.85% 2.98%(3) 1.05% 1.45%
Fee Waiver and Expense
Reimbursement (0.99%) (0.31%) (0.35%) (0.98%) (0.08%) (0.05%)
------- ------- ------- ------- ------- -------
Net Operating Expenses 2.35%(4) 1.14% 1.50%(5) 2.00%(4) 0.97% 1.40%(5)
- ---------------
(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) If redemption proceeds are wired to a bank account, a $10 fee is applicable.
(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.
(4) During 1999, 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.
(5) If the changes to the Portfolio's investment objectives and policies are
approved by the shareholders and implemented, the Portfolio's advisor has agreed
contractually to waive fees and reimburse expenses in order to keep total
operating expenses from exceeding 1.50% for Retail Class A and 1.40% for
Institutional Class until August 31, 2001.
11
23
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:
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
(Combined) (Combined)
ARK ARK ARK ARK
International International International International
Equity Equity Govett Equity Equity
Govett International Selection Selection International Selection Selection
Equity Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
----------- --------- --------- ----------- --------- ---------
1 Year $238 $264 $620 $203 $99 $143
3 Years $935 $572 $997 $829 $326 $454
5 Years $1,656 $901 $1,397 $1,481 $572 $787
10 Years $3,564 $1,833 $2,514 $3,230 $1,275 $1,731
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. In addition, this example assumes that the current agreements
regarding fee waivers and expense reimbursements will remain in effect only
through the end of the Fund's current fiscal year. 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.
12
24
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
(Combined) (Combined)
ARK ARK ARK ARK
SHAREHOLDER FEES Govett International International Govett International International
(fees paid directly from your International Equity Equity International Equity Equity
investment) Equity Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
----------- --------- --------- ----------- --------- ---------
Maximum sales load imposed on None 4.75% 4.75% None None None
purchases and reinvested dividends
Deferred sales charges imposed on None None None None None None
redemptions
Redemption Fee 1.00%(1) None(2) None(2) 1.00%(1) None(2) None(2)
Exchange Fee 1.00%(1) None None 1.00%(1) None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of
average net assets)
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.35% 0.40% 0.40% None None None
Other Expenses 1.99% 0.75%(5) 0.75%(5) 1.98% 0.75%(5) 0.75%(5)
----- ----- ----- ----- ----- -----
Total Annual Portfolio Operating
Expenses 3.34%(3) 2.15% 2.15% 2.98%(3) 1.75% 1.75%
Fee Waiver and Expense
Reimbursement (0.99%) (0.55%) (0.55%) (0.98%) (0.25%) (0.25%)
------- ------- ------- ------- ------- -------
Net Operating Expenses 2.35%(4) 1.60%(6) 1.60%(6) 2.00%(4) 1.50%(6) 1.50%(6)
- ---------------
(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) If redemption proceeds are wired to a bank account, a $10 fee is applicable.
(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.
(4) During 1999, 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.
(5) As of the date of this Prospectus/Proxy Statement, the Portfolio has not yet
commenced operations and Other Expenses are based on estimates for the current
fiscal year.
13
25
(6) The Portfolio's advisor has agreed contractually to waive fees and reimburse
expenses in order to keep total operating expenses from exceeding 1.60% for
Retail Class A and 1.50% for Institutional Class until August 31, 2001.
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:
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
Estimated Estimated
(Combined) (Combined)
ARK ARK ARK ARK
International International Govett International International
Govett International Equity Equity International Equity Equity
Equity Fund Portfolio Portfolio Equity Fund Portfolio Portfolio
----------- --------- --------- ----------- --------- ---------
1 Year $238 $630 $630 $203 $153 $153
3 Years $935 $1,066 $1,066 $829 $527 $527
5 Years $1,656 $1,526 $1,526 $1,481 $926 $926
10 Years $3,564 $2,799 $2,799 $3,230 $2,042 $2,042
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. In addition, this example assumes that the current agreements
regarding fee waivers and expense reimbursements will remain in effect only
through the end of the Fund's current fiscal year. 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.
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. 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:
14
26
Class A Retail Institutional Class
-------------- -------------------
First Stage Second Stage
Shareholders (you Shareholders (you
became, and remain, became, and remain, a
a shareholder prior to shareholder on or after
January 1, 1998) January 1, 1998)
---------------- ----------------
To open a regular account $500 $5,000 $25,000
To add to a regular account $25 $1,000 $0
To open an IRA account $500 $2,000 N/A
To add to an IRA account $25 $1,000 N/A
Minimum account balance $500 $500 $0
Shares of the Acquiring Funds are 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 Acquiring Funds is
4.75%, except the ARK Income Portfolio which is 4.50%. Institutional Class
shares of the Acquiring 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 is 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:
Retail Class A Institutional Class
-------------- -------------------
To open an account $500 $100,000
To add to an account $500 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
After the reorganizations, former shareholders of the Acquired Funds
will have the same exchange rights as holders of shares of the same class of the
Acquiring Funds. Shares of the
15
27
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. Shares of the Acquired Funds may also be exchanged at
their net asset value, plus any sales charge differential, for the shares of the
same class of the other Govett Funds and the Kemper Money Market Fund. The
primary differences in the exchange rights of the Acquired and Acquiring Fund
shareholders are the number of fund portfolios into which Acquired Fund
shareholders may exchange their shares. Class A Retail and Institutional Class
shares of the Acquired Funds purchased after December 31, 1998 are subject to an
exchange fee of 1% on shares exchanged within six months of purchase; the
Acquiring Funds do not have any exchange fees. In addition, Acquired Fund
shareholders have a smaller number of fund portfolios into which they may
exchange their shares as compared to the number of portfolios available to
Acquiring Fund shareholders.
Dividends and Distributions
The Acquired and Acquiring Funds each declare and pay dividends from
net investment income and net realized capital gains, if any, annually, except
the Govett Global Income Fund and ARK Income Portfolio, which declare income
dividends daily and pay them monthly. 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.
The primary difference between the Acquired and Acquiring Funds is the
automatic reinvestment of dividends. Holders of shares of the Acquired Fund may
elect to have their dividends and distributions automatically reinvested in
additional shares of the same class, 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. For the Acquiring Funds,
dividends and distributions are automatically reinvested in additional shares,
unless cash payments are requested in writing.
Redemption Procedures
Shares of the Acquired and 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. The
primary difference in the redemption procedures of the Acquired and Acquiring
Funds is that Class A Retail and Institutional Class shares of the Acquired
Funds purchased after September 30, 1998 are subject to a 1% redemption fee on
shares sold within six months of purchase. The Acquiring Funds do not have any
redemption fees.
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 given, 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
reorganizations, see "Information Relating to Voting Matters."
RISK FACTORS
The following discussion summarizes some of the more significant risk
factors relating to the Acquired Funds and 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. See Appendix D for more information concerning risk.
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28
ARK INCOME PORTFOLIO/GOVETT GLOBAL INCOME FUND. Govett Global Income
Fund will merge into ARK Income Portfolio. The following discussion summarizes
the risks for each fund.
RISKS COMMON TO BOTH FUNDS
FIXED INCOME RISK. The prices of the funds' fixed income securities
respond to economic developments, particularly interest rate changes, as well as
to perceptions about the creditworthiness of individual issuers. Generally, the
funds' 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 funds' securities affects risk.
CREDIT RISK. 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.
FOREIGN SECURITIES AND CURRENCY RISK. Investments in foreign markets
expose the funds' 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
The funds may invest in emerging markets, and these risks are increased
to the extent they do so.
RISKS ASSOCIATED WITH ARK INCOME PORTFOLIO
MORTGAGE-BACKED SECURITIES 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.
RISKS ASSOCIATED WITH GOVETT GLOBAL INCOME FUND
DIVERSIFICATION RISK. Govett 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
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29
number of issuers than diversified mutual funds, which exposes it to a greater
risk of loss from its investments in any one company.
PRIMARY DIFFERENCES IN INVESTMENT RISK OF THE FUNDS
ARK Income Portfolio and Govett Global Income Fund are subject to
substantially the same investment risks arising out of investing in debt
securities. However, Govett Global Income Fund is subject to additional risks of
non-diversification and investment in foreign securities. Under its investment
policies, the ARK Income Portfolio is a diversified company and invests to a
lesser extent in foreign securities. However, ARK Income Portfolio may invest a
greater percentage of its assets in non-investment grade securities.
ARK SMALL-CAP EQUITY PORTFOLIO/GOVETT SMALLER COMPANIES FUND. Govett
Smaller Companies Fund will merge into ARK Small-Cap Equity Portfolio. The
following discussion summarizes the risks for each fund.
RISKS COMMON TO BOTH FUNDS
EQUITY RISK. Since they purchase equity securities, the funds are
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 funds' 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
funds.
SMALL-CAP RISK. The smaller capitalization companies the funds invest
in may be more vulnerable to adverse business or economic events than larger,
more established companies. In particular, these small companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small-cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
FIXED INCOME RISK. 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.
FOREIGN SECURITIES RISK. Investments in foreign markets expose the
funds' 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
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30
The funds may invest in emerging markets, and these risks are increased to
the extent they do so.
PRIMARY DIFFERENCES IN INVESTMENT RISK OF THE FUNDS
ARK Small-Cap Equity Portfolio and Govett Smaller Companies Fund are
subject to substantially the same investment risks arising out of investing in
companies with small market capitalizations. ARK Small-Cap Equity Portfolio is
subject to additional risks arising out of its smaller capitalization focus and
investments in junk bonds. ARK Small-Cap Equity Portfolio invests in companies
with market capitalizations of $2 billion or less. By contrast, Govett Smaller
Companies may invest in securities of issuers with market capitalizations up to
$3 billion. Thus, ARK Small-Cap Equity Portfolio may be subject to greater
volatility than the Govett Smaller Companies Fund since the market
capitalizations of the companies in which it invests may be smaller.
ARK EMERGING MARKETS EQUITY PORTFOLIO/GOVETT EMERGING MARKETS EQUITY FUND.
Govett Emerging Markets Equity Fund will merge into ARK Emerging Markets Equity
Portfolio. There are no significant differences in the investment risk of the
funds. The following discussion summarizes the risks for each fund.
RISKS COMMON TO BOTH FUNDS
EQUITY RISK. Since they purchase equity securities, the funds are 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
funds' 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 funds.
FOREIGN SECURITIES RISK. Investments in foreign markets expose the
funds' 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
The funds may invest in emerging markets, and these risks are increased to
the extent they do so.
SMALL-CAP RISK. 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 (OR ARK INTERNATIONAL EQUITY
PORTFOLIO)/GOVETT INTERNATIONAL EQUITY FUND. Govett International Equity Fund
will merge into ARK International Equity Selection Portfolio (or ARK
International Equity Portfolio).
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31
There are no significant differences in the investment risk of the funds. The
following discussion summarizes the risks for each fund.
EQUITY RISK. Since they purchase equity securities, the funds are 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 funds' 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
funds.
FOREIGN SECURITIES RISK. Investments in foreign markets expose the
funds' 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
The funds may invest in emerging markets, and these risks are increased to
the extent they do so.
SMALL-CAP RISK. 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.
See Appendix D for more information concerning risk.
FINANCIAL HIGHLIGHTS
The Financial Highlights information for the Acquired and Acquiring Funds
are incorporated by reference to the May 1, 2000 Prospectus and the Annual
Report for the fiscal year ended December 31, 1999 of Govett Funds and the June
__, 2000 Prospectus and the Annual Report for the fiscal year ended April 30,
1999 and Semi-Annual Report for the six-months ended October 31, 1999 of ARK
Funds, and are available upon request, without charge, by calling Govett Funds
at 1-800-821-0803 or ARK Funds at 1-888-4ARK-FUND. In addition, ARK financial
materials are furnished along with this Prospectus/Proxy Statement.
INFORMATION RELATING TO THE PROPOSED REORGANIZATIONS
ARK Funds and Govett Funds have entered into a reorganization agreement
that provides that each Acquiring Fund is to acquire the corresponding Acquired
Fund. The reorganization agreement puts forth the terms and conditions that will
apply to the Acquired Funds reorganization into the Acquiring Funds. A copy of
the reorganization agreement is attached as Appendix A.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The reorganization
agreement provides the details of the reorganizations. In essence, the
reorganizations will have two steps:
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32
- First, if the shareholders of an Acquired Fund approve the
reorganization, the Acquired Fund will transfer substantially all of
its assets and liabilities to its corresponding Acquiring Fund. In
exchange, the Acquired Fund will receive shares of its corresponding
Acquiring Fund with a total value equal to the value of the assets
it is transferring (net of the Acquired Fund's liabilities).
- Second, the Acquired Fund will dissolve. Each Acquiring Fund will
open an account for each corresponding Acquired Fund's shareholder,
and will credit each shareholder with shares of the Acquiring Fund
of the same class and with the same total value as the Acquired Fund
shares that the shareholder owned on the date of the reorganization.
New share certificates will not be issued.
On or before the reorganization date, the Acquired Funds will distribute
all of their investment company taxable income earned, and all of their net
capital gains realized. On the day of the reorganization, Acquired Fund
shareholders will receive shares of the corresponding Acquiring Fund, of the
same class as their shares of the Acquired Fund and with the same total value as
their shares of the Acquired Fund. However, the number of shares the Acquired
Fund shareholders will receive, and the price per share, will be different,
depending on the net asset values per share of the funds on the reorganization
date.
Reorganization expenses will be paid by AIB Govett. The consummation
of the reorganizations is subject to certain conditions:
- Approval of the reorganization agreement by the shareholders of the
Acquired Funds (1);
- Receipt of certain legal opinions described in the reorganization
agreement;
- Continuing accuracy of the representations and warranties in the
reorganization agreement;
- Performance in all material respects of the agreements in the
reorganization agreement.
ARK Funds and Govett Funds may mutually agree to terminate the
reorganization agreement at or prior to the reorganization 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
that date. In addition, either ARK Funds or
- ---------------
(1) The reorganization of the Govett International Equity Fund into the ARK
International Selection Portfolio will also be contingent upon the approval by
ARK shareholders and implementation of the proposed change in the investment
policy and related matters.
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33
Govett Funds may waive the other party's breach of a provision or failure to
satisfy a condition of the reorganization agreement.
BOARD CONSIDERATIONS. 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 reorganizations, 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 advisors 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.
After consideration of the factors and other relevant information, the
Board of Directors of Govett Funds unanimously approved the reorganization
agreement and directed that it be submitted to 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 October 31, 1999: (a) the capitalization of the Acquiring Funds and the
Acquired Funds, except for Govett Global Income Fund and ARK Income Portfolio
and (b) the estimated (combined) capitalization of the Acquiring Funds, with the
exception of ARK Income Portfolio, 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 reorganization date as a result
of daily share purchase and redemption activity.
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34
Estimated (Combined)
Govett Smaller ARK Small-Cap ARK Small-Cap
Companies Fund Equity Portfolio Equity Portfolio
Class A Retail Retail Class A Retail Class A
-------------- --------------- --------------------
Total Net Assets $59,952,238 $3,608,980 $63,561,218
Shares Outstanding 2,646,172 189,198 3,331,349
Net Asset Value
Per Share $22.66 $19.08 $19.08
Estimated (Combined)
Govett Smaller ARK Small-Cap ARK Small-Cap
Companies Fund Equity Portfolio Equity Portfolio
Institutional Class Institutional Class Institutional Class
------------------- ------------------- --------------------
Total Net Assets N/A $46,509,716 $46,509,716
Shares Outstanding N/A 2,424,296 2,424,296
Net Asset Value
Per Share N/A $19.19 $19.19
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35
Govett Emerging Estimated (Combined)
Markets ARK Emerging Markets ARK Emerging Markets
Equity Fund Equity Portfolio(1) Equity Portfolio
Class A Retail Retail Class A Retail Class A
-------------- -------------------- --------------------
Total Net Assets $14,873,216 N/A $14,873,216
Shares Outstanding 1,429,346 N/A 1,429,346
Net Asset Value
Per Share $10.41 N/A $10.41
Estimated (Combined)
Govett International ARK International ARK International
Equity Fund Equity Selection Portfolio Equity Selection Portfolio(2)
Class A Retail Retail Class A Retail Class A
-------------------- -------------------------- -----------------------------
Total Net Assets $11,679,800 $1,995,966 $13,675,766
Shares Outstanding 943,538 160,234 1,097,618
Net Asset Value
Per Share $12.38 $12.46 $12.46
Estimated (Combined)
Govett International ARK International ARK International
Equity Fund Equity Selection Portfolio Equity Selection Portfolio(3)
Institutional Class Institutional Class Institutional Class
-------------------- -------------------------- -----------------------------
Total Net Assets $7,538,847 $28,028,545 $35,567,392
Shares Outstanding 606,543 2,249,641 2,854,685
Net Asset Value
Per Share $12.43 $12.46 $12.46
The capitalization information for Govett Global Income Fund and ARK
Income Portfolio is set forth below as of June 15, 2000.
Govett Global ARK Income Estimated (Combined)
Income Fund Portfolio ARK Income Portfolio
Class A Retail Retail Class A Retail Class A
-------------- -------------- --------------------
Total Net Assets $3,547,482 $5,578,844 $9,126,326
Shares Outstanding 503,816 577,172 944,026
Net Asset Value
Per Share $7.04 $9.67 $9.67
Govett Global ARK Income Estimated (Combined)
Income Fund Portfolio ARK Income Portfolio
Institutional Class Institutional Class Institutional Class
------------------- ------------------- --------------------
Total Net Assets N/A $355,232,955 $355,232,955
Shares Outstanding N/A 37,195,664 37,195,664
Net Asset Value
Per Share N/A $9.55 $9.55
- -----------------
(1) The ARK Emerging Markets Equity Portfolio was created solely for purposes of
the reorganization.
(2) 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 Estimated (Combined) Total Net Assets, Shares
Outstanding, and Net Asset Value Per Share for Retail Class A shares would be
$11,679,900, 943,546 and $12.38, respectively.
(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 Estimated (Combined) Total Net Assets, Shares
Outstanding, and Net Asset Value Per Share for Institutional Class would be
$7,538,947, 606,551 and $12.43, respectively.
FEDERAL INCOME TAX CONSEQUENCES. Each reorganization of an Acquired Fund
into an Acquiring Fund will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. The
reorganizations are not expected to have material federal income tax
consequences to the Acquired Funds, Acquiring Funds or their shareholders.
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36
Following the reorganization, each Acquiring Fund will have the same federal tax
basis in the assets of the corresponding Acquired Fund that that Acquired Fund
had in those assets immediately prior to the reorganization. In addition, each
shareholder of an Acquired Fund will have the same federal tax basis in the
shares of the Acquiring Fund received in the reorganization that the shareholder
had in his or her shares of the Acquired Fund immediately prior to the
reorganization. It is not expected that Acquired Fund shareholders would incur
any personal state or local taxes as a result of the reorganization, but
Acquired Funds shareholders should consult their tax advisors to make sure.
At December 31, 1999, the Govett Emerging Markets Equity Fund, Govett
Smaller Companies Fund and Govett Global Income Fund had capital loss
carry-forwards available to offset future net capital gains of $12,933,321,
$26,909,229, $4,656,156, respectively. The carry-forward period for capital
losses is limited to eight years, and various portions will expire through 2006
for Govett Emerging Markets Equity Fund and Govett Smaller Companies Fund and
2007 for Govett Global Income Fund unless used to offset realized capital gains.
Under the Internal Revenue Code, ARK Small-Cap Equity Portfolio and ARK Income
Portfolio will succeed to only a portion of these capital loss carry-forwards,
limited generally to an amount equal to the fair market value of the
corresponding Acquired Funds on the closing date of the reorganization
multiplied by the long-term tax-exempt rate in effect at that time (currently
5.84%). Since the merger of the Govett Emerging Markets Equity Fund into the ARK
Emerging Markets Equity Portfolio is a shell reorganization, the ARK Emerging
Markets Equity Portfolio will succeed to Govett Emerging Markets Equity Fund's
entire capital loss carry-forward. The limited ability of the Acquiring Funds to
utilize the full amount of the capital loss carry-forwards may adversely affect
Acquired Fund shareholders.
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. The opinion of counsel is not binding on the IRS and
does not preclude the IRS from adopting a contrary position.
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.
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37
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 506,050 Shares N/A
Govett Smaller Companies Fund 2,304,814 Shares N/A
Govett Emerging Markets Equity Fund 1,157,946 Shares N/A
Govett International Equity Fund 889,493 Shares 504,618 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 by it 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 June 1, 2000, the following persons beneficially owned of record 5%
or more of the shares of the Acquired Funds:
Name and Address of Number of Percent Owned
Shareholder Portfolio Shares Beneficially
------------------- --------- --------- -------------
Subramonian Shankar Govett
5990 Neely Court Global
Norcross, GA 30092-1418 Income 53,487 10.59%
Michael E. Pichichero Govett
332 Landing Road S International
Rochester, NY 14610-3535 Equity 47,419 3.41%
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38
Light & Co
c/o Allfirst Trust Company
NA Govett
Securities Processing International
109-911 Equity 441,381 31.74%
P.O. Box 1596
Baltimore, MD 21203-1596
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Under this definition, Light & Co. may be
deemed to be a controlling person of Govett International Equity Fund.
As of June 1, 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, the above-mentioned 5%
shareholders of the Acquired Funds will own the following percentage of shares
of the Acquiring Funds:
Percentage of
Name and Address of Shareholder Portfolio Outstanding Shares
------------------------------- ------------- ------------------
Subramonian Shankar
5990 Neely Court Govett
Norcross, GA 30092-1418 Global Income 0.15%
Michael E. Pichichero Govett
332 Landing Road S International
Rochester, NY 14610-3535 Equity 3.41%
Light & Co
c/o Allfirst Trust Company NA
Securities Processing 109-911 Govett
P.O. Box 1596 International
Baltimore, MD 21203-1596 Equity 31.74%
As of June 1, 2000, the following persons beneficially owned of record 5%
or more of the shares of the Acquiring Funds:
Name and Address Number of Percent of
of Shareholder Portfolio Shares Portfolio
---------------- --------- --------- ----------
Allfirst Financial Pension Plan Income 4,152,659 11.01%
Allfirst Bank- Mail Code 109-810
110 S. Paca Street
Baltimore, MD 21201 Small-Cap Equity 544,200 10.18%
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39
Name and Address Number of Percent of
of Shareholder Portfolio Shares Portfolio
---------------- --------- --------- ----------
IBEW Intl Off Reps & Assts Pen Income 6,716,786 17.81%
Plan
IBEW
1125-15th Street, N.W. Small-Cap Equity 471,053 11.57%
Washington, DC 20005-2765
IBEW Off Emp Pen Plan
IBEW
1125-15th Street, N.W.
Washington, DC 20005-2765 Income 2,457,621 6.52%
As of June 1, 2000, the trustees and officers of ARK Funds, as a group,
owned less than 1% of the outstanding shares of each of the Acquiring Funds,
with the exception of the following:
Name and Address of Number of Percent Owned
Shareholder Portfolio Shares Beneficially
------------------- --------- --------- -------------
William H. Cowie Jr. &
Barbara Jean Cowie JT Ten
1408 Ruxton Road Small-Cap
Baltimore, MD 21204-6622 Equity 6,632 0.17%
Bill Cowie TTEE
BJ & Bill Cowie Charitable
Trust
1408 Ruxton Road Small-Cap
Baltimore, MD 21204-6622 Equity 34,344 0.86%
-----
Total 1.03%
Upon consummation of the reorganizations, the above-mentioned holders of
the Acquiring Funds will own the following percentages of shares of the
Acquiring Funds:
Name and Address Percentage of Outstanding
of Shareholder Portfolio Shares
---------------- --------- -------------------------
Allfirst Financial Pension Plan Income 11.38%
Allfirst Bank-Mail Code 109-810
110 S. Paca Street
Baltimore, MD 21201 Small-Cap 9.46%
Equity
IBEW Intl Off Reps & Assts Pen Income 18.41%
Plan
IBEW
1125-15th Street, N.W. Small-Cap 8.18%
Washington, DC 20005-2765 Equity
IBEW Off Emp Pen Plan
IBEW
1125-15th Street, N.W.
Washington, DC 20005-2765 Income 6.74%
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 reorganizations 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
28
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present, the persons named as proxies will 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 shareholders 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 AND ACQUIRED FUNDS
Additional information about the Acquiring and Acquired Funds is included
in the Prospectus of ARK Funds, which accompanies this Prospectus/Proxy
Statement and is incorporated by reference, and the Class A Retail and
Institutional Class Prospectus of Govett Funds, which are also incorporated by
reference. Additional information for ARK Funds may also be obtained from its
Statement of Additional Information and its 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. Additional information about Govett
Funds may also be obtained from its Statement of Additional Information and its
Annual Report for the fiscal year ended December 31, 1999, which have been filed
with the SEC. Copies of the Statement of Additional Information, Annual Report,
and Semi-Annual Report for ARK Funds may be obtained without charge by calling
1-888-4ARK-FUND. Copies of the Prospectus, Statement of Additional Information,
and Annual Report for Govett Funds may be obtained without charge by calling
Govett Funds at 1-800-821-0803. ARK Funds and Govett Funds are subject to
certain informational requirements of the Securities Exchange Act of 1934 and
the 1940 Act, as applicable, and in accordance with such requirements file
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;
- 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;
- By writing to the SEC's Public Reference Branch, Office of Consumer
Affairs and Information, 450 Fifth Street, N.W., Washington, D.C. at
rates prescribed by the SEC;
- By e-mail request to publicinfo@sec.gov (for a duplicating fee); and
- On the SEC's EDGAR database on the SEC's Internet Web site at
http://www.sec.gov.
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LEGAL MATTERS
Certain legal matters concerning the tax consequences of the
reorganizations will be passed upon by Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., Washington, D.C. 20036-1800.
EXPERTS
The audited financial statements of Govett Funds incorporated by reference
herein and included in Govett Funds' Annual Report to Shareholders for the
fiscal year ended December 31, 1999 have been audited by PricewaterhouseCoopers
LLP, independent auditors. The audited financial statements of ARK Funds
incorporated by reference herein and included in ARK Funds' Annual Report to
Shareholders for the fiscal year ended April 30, 1999 have been audited by KPMG
LLP, independent auditors. The independent auditors' reports are included in the
funds' respective Annual Reports to Shareholders. These financial statements
have been incorporated herein by reference in reliance on PricewaterhouseCoopers
LLP's and KPMG LLP's reports given on their authority as experts in auditing and
accounting.
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 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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44
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 the
------------------------
Acquired Funds shall take place on
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45
August 12, 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 instructions are
consistent with the current prospectus and statement of additional information
of ARK.
34
46
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 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.
35
47
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 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.
36
48
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 other consents and approvals required for
consummation of the transactions contemplated by this Agreement.
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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.
(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
38
50
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 there under 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 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.
39
51
(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 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
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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 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.
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(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 there under 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 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
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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:
(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
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55
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 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:
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56
(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
be 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:
(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:
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(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;
(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 therefore, provided that such
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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 (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
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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:
Regina M. Pisa, P.C.
Goodwin, Procter & Hoar LLP
One Exchange Place
Boston, MA 02109-2881
Facsimile: (617) 523-1231
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(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.
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6.12 Limitation of Liability.
------------------------
(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
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 and 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 manager. 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 investment manager 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 advisor 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 advisor 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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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 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 Acquiring and Acquired
Funds 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
advisor 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.
56
68
APPENDIX C
ARRANGEMENTS WITH SERVICE PROVIDERS
ACQUIRING FUNDS
Allied Investment Advisors, Inc. ("AIA") serves as the investment advisor
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 investment subadvisor to the
ARK Emerging Markets Equity Portfolio and ARK International Equity Selection
Portfolio (or ARK International Equity 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,
each Acquiring Fund may pay a fee to the distributor of up to 0.75% of the
average net assets of the Retail Class A of the 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 Funds.
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 of each Acquiring Fund.
SEI Investments Mutual Funds Services ("SMF") 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 SMF. For its services, SMF 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. SMF may voluntarily waive all or a
portion of its fee from time to time in its sole discretion. Pursuant to a
separate agreement with SMF, Allfirst Trust Company, National Association,
performs sub-administration services on behalf of the Acquiring Funds, for which
it receives a fee from SMF at the annual rate of up to 0.0275% of each Acquiring
Fund's aggregate average daily net assets. See "Management" in the Prospectus of
ARK Funds, which is incorporated herein by reference, for additional information
about SMF.
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.
57
69
SMF 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.
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 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 monthly fee to AIB
Govett, as determined at the close of business of each business day during the
month, at an annual rate of 1% of the average daily net assets of each Acquired
Fund. From its investment management fee, AIB Govett pays AIB Govett Asset
Management Limited to provide certain investment sub-advisory services for the
Acquired Funds.
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.
58
70
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 fund's average
weighted maturity to fluctuate, and may require a fund 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 which non-U.S. securities may be subject. A foreign government's limits
on the repatriation of
59
71
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 fund's assets measured in U.S. dollars may be
affected by changes in currency rates and in exchange control
regulations.
- A fund may incur substantial costs in connection with conversions
between various currencies.
- A fund 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
60
72
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.
61
73
ARK FUNDS
CROSS REFERENCE SHEET
PART B
Item No. Heading
- -------- -------
10. Cover Page..................................... Cover Page
11. Table of Contents.............................. Table of Contents
12. Additional Information About the Registrant.... Statement of
Additional Information
of ARK Funds dated
June __, 2000
13. Additional Information About the Company
Being Acquired................................. Statement of
Additional Information
of The Govett Funds,
Inc. dated May 1, 2000
14. Financial Statements........................... Cover Page
74
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 August 4,
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 are
hereby incorporated herein by reference. The unaudited financial statements for
the Acquiring Funds contained in the Semi-Annual Report for the six months ended
October 31, 1999 are incorporated by reference herein. No other parts of the
Annual Report and the Semi-Annual Report are incorporated by reference herein.
Further information about the Acquired Funds is contained in the Govett
Funds' Statement of Additional Information dated May 1, 2000, and is
incorporated herein by reference. 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.
75
TABLE OF CONTENTS
Page
----
General Information..................................................... 1
Pro Forma Financial Statements.......................................... 2
76
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 by, 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), 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.,
Eastern Time, on August 4, 2000, at 25 South Charles Street - 16th Floor,
Baltimore, Maryland 21201. For further information about the transaction, see
the Prospectus/Proxy Statement.
B-1
77
PRO FORMA FINANCIAL STATEMENTS(1)
Acquired Fund Acquiring Fund
------------- --------------
Govett Smaller Companies Fund ARK Small-Cap Equity Portfolio
Govett International Equity Fund ARK International Equity Selection Portfolio
- -----------------------------
(1) 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
October 31, 1999
The accompanying unaudited Pro Forma Combining Schedule of Investments,
Statement of Assets and Liabilities, and Statement of Operations reflect the
accounts of Govett Smaller Companies and Liabilities Fund and ARK Small-Cap
Equity Portfolio and Govett International Equity Fund and ARK International
Equity Selection Portfolio, at October 31, 1999 and 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.
B-2
78
ARK Small-Cap Equity Portfolio
Pro-Forma Combining Schedule of Investments
October 31, 1999 (Unaudited)
Govett
ARK Small-Cap Equity Portfolio Smaller Companies Fund Adjustments
------------------------------ ------------------------------ ------------------------------
Shares Market Value(000) Shares Market Value(000) Shares Market Value(000)
----------- ----------------- ----------- ----------------- ----------- -----------------
Common Stocks--82.6%
Belgium --0.0%
Computer & Services
Dolmen Computer Applications 1,200 21 (1,200) (21)
Retail
Colruyt S.A. 12,000 658 (12,000) (658)
-------
679
-------
Denmark --0.0%
Services
ISS International Service System - Class B 18,000 965 (18,000) (965)
-------
Finland --0.0%
Semi-Conductors/Instruments
Perlos OYJ 9,000 148 (9,000) (148)
-------
France --0.0%
Computer & Services
Cap Gemini Sogeti 7,108 1,077 (7,108) (1,077)
-------
Germany--0.0%
Electrical & Electronics
Vivanco Gruppe AG 25,400 369 (25,400) (369)
-------
Israel--0.0%
Telecommunications
Forsoft Ltd. 55,000 402 (55,000) (402)
-------
Italy--0.0%
Publishing
Class Editori 140,000 1,180 (140,000) (1,180)
-------
Japan--0.0%
Drugs
Kyorin Pharmaceutical Co 52,000 1,890 (52,000) (1,890)
Electrical & Electronics
Fuji Soft ABC Incorporated 18,700 1,712 (18,700) (1,712)
Meitic Corp 44,800 1,680 (44,800) (1,680)
Services
HIS Co Limited 51,350 2,044 (51,350) (2,044)
-------
Total Japan 7,326
-------
Netherlands--0.0%
Electronic Components & Instruments
Magnus Holding NV 110,177 337 (110,177) (337)
-------
Norway--0.0%
Computer Software
Merkantildata ASA 55,300 469 (55,300) (469)
-------
United Kingdom--0.0%
Electrical & Electronics
RM PLC 161,033 1,656 (161,033) (1,656)
Electronic Components & Instruments
Critchley Group PLC 98,800 711 (98,800) (711)
Health & Personal Care
Nestor Healthcare Group PLC 105,991 1,037 (105,991) (1,037)
Seton Scholl Healthcare PLC 90,000 962 (90,000) (962)
Transportation
Metroline PLC 130,755 331 (130,755) (331)
-------
Total United Kingdom 4,697
-------
Spain--0.0%
Computers & Services
Indra Systems SA 22,300 234 (22,300) (234)
Financial Services
NM Hotels SA 50,000 565 (50,000) (565)
Food & Beverage
Superdiplo SA 25,000 458 (25,000) (458)
-------
Total Spain 1,257
-------
Thailand--0.0%
Telecommunications
Total Access Communications 367,000 888 (367,000) (888)
-------
ARK Small-Cap Equity Portfolio
Pro Forma Combined
--------------------------------
Shares(000) Market Value(000)
----------- -----------------
Common Stocks--82.6%
Belgium --0.0%
Computer & Services
Dolmen Computer Applications 0 0
Retail
Colruyt S.A. 0 0
------
0
------
Denmark --0.0%
Services
ISS International Service System - Class B 0 0
------
Finland --0.0%
Semi-Conductors/Instruments
Perlos OYJ 0 0
------
France --0.0%
Computer & Services
Cap Gemini Sogeti 0 0
------
Germany--0.0%
Electrical & Electronics
Vivanco Gruppe AG 0 0
------
Israel--0.0%
Telecommunications
Forsoft Ltd. 0 0
------
Italy--0.0%
Publishing
Class Editori 0 0
------
Japan--0.0%
Drugs
Kyorin Pharmaceutical Co 0 0
Electrical & Electronics
Fuji Soft ABC Incorporated 0 0
Meitic Corp 0 0
Services
HIS Co Limited 0 0
------
Total Japan 0
------
Netherlands--0.0%
Electronic Components & Instruments
Magnus Holding NV 0 0
------
Norway--0.0%
Computer Software
Merkantildata ASA 0 0
------
United Kingdom--0.0%
Electrical & Electronics
RM PLC 0 0
Electronic Components & Instruments
Critchley Group PLC 0 0
Health & Personal Care
Nestor Healthcare Group PLC 0 0
Seton Scholl Healthcare PLC 0 0
Transportation
Metroline PLC 0 0
------
Total United Kingdom 0
------
Spain--0.0%
Computers & Services
Indra Systems SA 0 0
Financial Services
NH Hotels SA 0 0
Food & Beverage
Superdiplo SA 0 0
------
Total Spain 0
------
Thailand--0.0%
Telecommunications
Total Access Communications 0 0
------
79
Govett
ARK Small-Cap Equity Portfolio Smaller Companies Fund
---------------------------------- ----------------------------------
Shares (000) Market Value (000) Shares (000) Market Value (000)
------------ ------------------ ------------ ------------------
United States--82.6%
Banks/Finance--4.8%
Cit Group Inc Cl A 30,000 716
E-Stamp 1,600 37
Illuminet Holdings* 11,000 511
Interwoven* 5,500 431
First Tennessee National 25,000 850
Paine Webber Group 20,000 815
People's Heritage Financial Group 50,000 950
Waddell & Reed Financial Associates 40,000 960
----- ------
Total Banks/Finance 979 4,291
----- ------
Broadcasting, Newspapers & Advertising--5.6%
Freeshop.com* 45,000 762
Radio Unica Communications* 12,500 358
Spanish Broadcasting Systems, Cl A* 11,000 293
True North Communications 10,000 403 25,000 1,008
Young & Rubicam 30,000 1,372 44,000 2,013
----- ------
Total Broadcasting, Newspapers & Advertising 3,188 3,021
----- ------
Building & Construction--1.3%
Stolt Comex Seaway S.A., ADR* 75,000 802 60,000 641
----- ------
Building & Construction Supplies--0.9%
Mobile Mini* 45,000 982
-----
Chemicals--1.4%
Airgas* 73,400 697
Wellman Inc. 55,000 828
------
Total Chemicals 1,525
------
Clothing & Apparel--0.4%
Cutter Buck Inc. 30,000 493
------
Communications Equipment--11.4%
Altigen Communications * 30,000 356 25,000 297
CD Radio * 25,000 637
CIENA* 30,000 1,057 30,000 1,058
Comverse Technology 19,000 2,157
Digital Microwave* 60,000 892
Digital Lightwave * 30,000 518
Metricom* 10,000 439
Microcell Telecommunications* 75,000 1,425
Powerwave Technologies* 10,000 651
Sawtek* 15,000 615 34,000 1,394
Scientific-Atlanta Inc. 20,000 1,145
------ ------
Total Communications Equipment 6,590 6,051
------ ------
Computer Software--2.8%
Legato Systems* 15,000 806 30,000 1,613
US Internetworking 20,000 666
------ ------
Total Computer Software 806 2,279
------ ------
Computers & Services--5.5%
Electronics for Imaging 36,000 1,451
Emulex* 14,600 2,277
Jabil Circuit* 40,000 2,090
Jupiter Communications* 500 17
Online Resources & Communications Corp 25,000 266
------ ------
Total Computers & Services 2,294 3,807
------ ------
Drugs--0.1%
Supergen* 4,130 116
------
Food, Beverage & Tobacco--1.4%
Interstate Bakeries 25,000 506
Suiza Foods Corp 30,000 1,082
------
Total Food, Beverage & Tobacco 1,588
------
Household Products--1.1%
Dial Corp 50,000 1,169
Internet Services--3.8%
Agile Software* 20,000 1,960
24/7 Media* 20,000 1,296 22,000 950
------ ------
Total Internet Services 3,256 950
------ ------
Machinery--0.4%
Kulicke & Soffa Industries* 15,000 442
------
ARK Small-Cap Equity Portfolio
Adjustments Pro Forma Combined
--------------------------------- -----------------------------------
Shares (000) Market Value (000) Shares (000) Market Value (000)
------------ ------------------ ------------ ------------------
United States--82.6%
Banks/Finance--4.8%
Cit Group Inc Cl A 30,000 716
E-Stamp 1,600 37
Illuminet Holdings* 11,000 511
Interwoven* 5,500 431
First Tennessee National 25,000 850
Paine Webber Group 20,000 815
People's Heritage Financial Group 50,000 950
Waddell & Reed Financial Associates 40,000 960
----------
Total Banks/Finance 5,270
----------
Broadcasting, Newspapers & Advertising--5.6%
Freeshop.com* 45,000 762
Radio Unica Communications* 12,500 358
Spanish Broadcasting Systems, Cl A* 11,000 293
True North Communications 35,000 1,411
Young & Rubicam 74,000 3,385
----------
Total Broadcasting, Newspapers & Advertising 6,209
----------
Building & Construction--1.3%
Stolt Comex Seaway S.A., ADR* 135,000 1,443
----------
Building & Construction Supplies--0.9%
Mobile Mini* 45,000 982
----------
Chemicals--1.4%
Airgas* 73,400 697
Wellman Inc. 55,000 828
----------
Total Chemicals 1,525
----------
Clothing & Apparel--0.4%
Cutter Buck Inc. 30,000 493
----------
Communications Equipment--11.4%
Altigen Communications * 55,000 653
CD Radio * 25,000 637
CIENA* 60,000 2,115
Comverse Technology 19,000 2,157
Digital Microwave* 60,000 892
Digital Lightwave * 30,000 518
Metricom* 10,000 439
Microcell Telecommunications* 75,000 1,425
Powerwave Technologies* 10,000 651
Sawtek* 49,000 2,009
Scientific-Atlanta Inc. 20,000 1,145
----------
Total Communications Equipment 12,641
----------
Computer Software--2.8%
Legato Systems* 45,000 2,419
US Internetworking 20,000 666
----------
Total Computer Software 3,085
----------
Computers & Services--5.5%
Electronics for Imaging 36,000 1,451
Emulex* 14,600 2,277
Jabil Circuit* 40,000 2,090
Jupiter Communications* 500 17
Online Resources & Communications Corp 25,000 266
----------
Total Computers & Services 6,101
----------
Drugs--0.1%
Supergen* 4,130 116
----------
Food, Beverage & Tobacco--1.4%
Interstate Bakeries 25,000 506
Suiza Foods Corp 30,000 1,082
----------
Total Food, Beverage & Tobacco 1,588
----------
Household Products--1.1%
Dial Corp 50,000 1,169
Internet Services--3.8%
Agile Software* 20,000 1,960
24/7 Media* 42,000 2,246
----------
Total Internet Services 4,206
----------
Machinery--0.4%
Kulicke & Soffa Industries* 15,000 442
----------
80
Govett
ARK Small-Cap Equity Portfolio Smaller Companies Fund
----------------------------------- -----------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Medical Instruments--0.5%
Biomet 20,000 603
------
Miscellaneous Business Services--10.4%
Breakaway Solutions* 500 27
BSQUARE* 1,000 40
Data Return 1,000 15
Flycast Communications* 25,000 1,259
Kana Communications* 10,500 883
Marimba* 50,500 1,439
Netcentives * 250 4
Puma Technology* 25,000 925
Southeby's Holdings, Cl A 35,000 1,006
Splitrock Services* 40,000 875
Tibco Software* 37,500 1,463
Trend Micro* 80,000 1,580
USWeb* 35,000 1,356
Ziplink* 50,000 594
------ ------
Total Miscellaneous Business Services 10,460 1,006
------ ------
Petroleum & Fuel Products--0.7%
Chieftan International* 21,700 415
Tuboscope* 30,000 334
------
Total Petroleum & Fuel Products 749
------
Professional Services--0.8%
Consolidated Graphics* 5,500 110
Razorfish* 10,000 738
------
Total Professional Services 848
------
Retail--1.5%
Gaiam, Cl A* 9,700 62
Linens n Things Inc. 25,000 994
Office Depot 46,500 578
------ ------
Total Retail 62 1,572
------ ------
Semi-Conductors/Instruments--9.4%
Amkor Technology* 30,000 606
Cymer* 15,000 554
Cypress Semiconductor* 30,000 767
Dallas Semiconductor 10,000 589
Fairchild Semiconductor International, Cl A* 25,000 631
International Rectifier 50,000 972
JNI 6,500 347
MKS Instruments Inc 37,500 788
National Semiconductor 20,000 599
SDL* 10,000 1,233
Semtech* 30,000 1,149
Silicon Image* 500 22
Teradyne 15,000 577
Xilinx* 20,000 1,572
------ ------
Total Semi-Conductors/Instruments 6,870 3,536
------ ------
Telephones & Telecommunications--16.6%
Airgate PCS* 25,800 1,290
Clearnet, Cl A* 80,000 1,760
ITC Deltacom* 15,000 360
ITXC 9,000 407
Pacific Gateway Exchange Inc 25,000 569
Pairgain Technologies Inc 15,000 185
Rambus* 8,000 541
RCN* 15,000 718
Rural Cellular, Cl A* 35,000 2,107 25,000 1,505
Shared Technologies Cellular* 50,000 463
Triton PCS Holdings, Cl A* 10,200 360
Voicestream Wireless* 20,000 1,975 24,000 2,370
Western Wireless, Cl A* 30,000 1,586 27,500 1,454
Winstar Communications Inc 20,000 776
------ ------
Total Telephones & Telecommunications 11,567 6,859
------ ------
Wholesale--1.4%
Baltimore Technologies* 15,000 488
Price Communications* 46,500 1,011
------
Total Wholesale 1,499
------
------ ------
Total United States 51,510 39,391
------ ------
------ ------
Total Common Stocks (Cost $40,744, $44,930 and
$69,541 respectively) 51,510 59,185
------ ------
ARK Small-Cap Equity Portfolio
Adjustments Pro Forma Combined
------------------------------------ -----------------------------------
Shares Market Value(000) Shares Market Value (000)
------------ ----------------- ------------ ------------------
Medical Instruments--0.5%
Biomet 20,000 603
--------
Miscellaneous Business Services--10.4%
Breakaway Solutions* 500 27
BSQUARE* 1,000 40
Data Return 1,000 15
Flycast Communications* 25,000 1,259
Kana Communications* 10,500 883
Marimba* 50,500 1,439
Netcentives * 250 4
Puma Technology* 25,000 925
Southeby's Holdings, Cl A 35,000 1,006
Splitrock Services* 40,000 875
Tibco Software* 37,500 1,463
Trend Micro* 80,000 1,580
USWeb* 35,000 1,356
Ziplink* 50,000 594
--------
Total Miscellaneous Business Services 11,466
--------
Petroleum & Fuel Products--0.7%
Chieftan International* 21,700 415
Tuboscope* 30,000 334
--------
Total Petroleum & Fuel Products 749
--------
Professional Services--0.8%
Consolidated Graphics* 5,500 110
Razorfish* 10,000 738
--------
Total Professional Services 848
--------
Retail--1.5%
Gaiam, Cl A* 9,700 62
Linens n Things Inc. 25,000 994
Office Depot 46,500 578
--------
Total Retail 1,634
--------
Semi-Conductors/Instruments--9.4%
Amkor Technology* 30,000 606
Cymer* 15,000 554
Cypress Semiconductor* 30,000 767
Dallas Semiconductor 10,000 589
Fairchild Semiconductor International, Cl A* 25,000 631
International Rectifier 50,000 972
JNI 6,500 347
MKS Instruments Inc 37,500 788
National Semiconductor 20,000 599
SDL* 10,000 1,233
Semtech* 30,000 1,149
Silicon Image* 500 22
Teradyne 15,000 577
Xilinx* 20,000 1,572
--------
Total Semi-Conductors/Instruments 10,406
--------
Telephones & Telecommunications--16.6%
Airgate PCS* 25,800 1,290
Clearnet, Cl A* 80,000 1,760
ITC Deltacom* 15,000 360
ITXC 9,000 407
Pacific Gateway Exchange Inc 25,000 569
Pairgain Technologies Inc 15,000 185
Rambus* 8,000 541
RCN* 15,000 718
Rural Cellular, Cl A* 60,000 3,612
Shared Technologies Cellular* 50,000 463
Triton PCS Holdings, Cl A* 10,200 360
Voicestream Wireless* 44,000 4,345
Western Wireless, Cl A* 57,500 3,040
Winstar Communications Inc 20,000 776
--------
Total Telephones & Telecommunications 18,426
--------
Wholesale--1.4%
Baltimore Technologies* 15,000 488
Price Communications* 46,500 1,011
--------
Total Wholesale 1,499
--------
--------
Total United States 90,901
--------
-------- ------
Total Common Stocks (Cost $40,744, $44,930 and
$69,541 respectively) (19,794) 90,901
-------- ------
81
ARK Small-Cap Equity Portfolio Govett Smaller Companies Fund
---------------------------------- ----------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Par (000) Value (000) Par (000) Value (000)
Repurchase Agreement--1.6%
First Boston (5.330%, dated 10/29/99, 1,818 1,818
matures 11/01/99,repurchase price $1,819,185;
collateralized by U.S. Gov't Agency Instruments:
total market value $1,873,924)) (Cost $1,818,
0 and $1,818 respectively)
-------- --------
Total Investments--84.2% 53,328 59,185
-------- --------
(Cost $42,562, $44,930 and $71,359 respectively)
Other Assets and Liabilities, Net--15.8% (3,210) 767
-------- --------
Total Net Assets--100.0% 50,118 59,952
======== ========
ARK Small-Cap Equity Portfolio
Adjustments Pro Forma Combined
---------------------------------- ----------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Par (000) Value (000)
Repurchase Agreement--1.6%
First Boston (5.330%, dated 10/29/99, 1,818 1,818
matures 11/01/99, repurchase price $1,819,185;
collateralized by U.S. Gov't Agency Instruments:
total market value $1,873,924)) (Cost $1,818, 0,
and $1,818 respectively)
---------
Total Investments--84.2% (19,794) 92,719
---------
(Cost $42,562, $44,930 and $71,359 respectively)
Other Assets and Liabilities, Net--15.8% 19,794 17,351
--------- ---------
Total Net Assets--100.0% 0 110,070
--------- =========
* Non-income producing security
ADR-American Depository Receipt
Cl-Class
See Notes to Pro Forma Combining Financial Statements
82
ARK SMALL-CAP EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999 (UNAUDITED)
(IN 000'S)
ARK SMALL-CAP
GOVETT EQUITY
ARK SMALL- SMALLER PORTFOLIO
CAP EQUITY COMPANIES PRO FORMA
PORTFOLIO FUND ADJUSTMENTS COMBINED
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Identified cost of securities $ 42,562 $ 44,930 $(16,133) $ 71,359
Net unrealized gains on securities 10,766 14,255 (3,661) 21,360
- -------------------------------------------------------------------------------------------------------------------------------
Market value of securities 53,328 59,185 (19,794) 92,719
Cash 0 1,063 1,063
Foreign currency, at value (cost $0, $12, $0
respectively) 11 11
Receivable for securities sold 2,629 665 19,794 23,088
Receivable from Adviser 0 13 13
Receivable for Fund shares sold 9 0 9
Dividends and interest receivable 26 26
Receivable for closed forward foreign currency
exchange contracts 0 0 -
Unrealized gains on forward foreign currency
exchange contracts 0 0 -
Receivable for daily variation margin on open
futures contracts 0 0 -
Deferred organization expenses 0 0 -
Receivable from related parties 0 0 -
Prepaid expenses and other assets 14 14
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 55,966 60,977 0 116,943
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES -
Payable for securities purchased 5,781 5,781
Payable for Fund shares redeemed 24 649 673
Advisory fee payable 98 98
Distribution Plan expenses payable 51 51
Accrued expenses and other liabilities 43 227 270
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,848 1,025 0 6,873
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 50,118 $ 59,952 $ - $ 110,070
===============================================================================================================================
NET ASSETS REPRESENTED BY -
Paid-in capital-Institutional Class $ 24,597 $ - $ 24,597
Paid-in capital-Retail Class A $ 2,389 $ 76,593 $ 78,982
Undistributed (overdistributed) net investment
income or loss 0 13,250 13,250
Accumulated net realized gains or losses on
securities and foreign currency transactions 12,366 (44,145) 3,661 (28,118)
Net unrealized gains on securities
and foreign currency transactions 10,766 14,254 (3,661) 21,359
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 50,118 $ 59,952 $ - $ 110,070
===============================================================================================================================
NET ASSETS CONSISTS OF -
Class I $ 46,509 $ 46,509
Class A 3,609 59,952 63,561
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 50,118 $ 59,952 $ - $ 110,070
===============================================================================================================================
SHARES OUTSTANDING -
Class I 2,424,296 2,424,296
Class A 189,198 2,646,172 496,748 3,332,118
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class I $ 19.18 $ - $ 19.18
===============================================================================================================================
Class A $ 19.08 $ 22.66 $ 19.08
===============================================================================================================================
Class A (offering price) $ 20.03 $ 20.03
===============================================================================================================================
See Notes to Pro Forma Combining Financial Statements
83
ARK SMALL-CAP EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999 (UNAUDITED)
(IN 000'S)
ARK SMALL-CAP
EQUITY
ARK SMALL-CAP GOVETT SMALLER PORTFOLIO
EQUITY COMPANIES ADJUSTMENTS PRO FORMA
PORTFOLIO FUND COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 45 $ 293 $ 338
Interest 115 16 131
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 160 309 469
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Administrator Fees 44 299 (223) (1) 120
Investment Advisory Fees 269 588 (117) (2) 740
Custodian Fees 29 30 38 (3) 97
Transfer Agency Fees 4 447 (441) (4) 10
Professional Fees 1 68 (33) (5) 36
Registration Fees 11 62 (48) (6) 25
Distribution Fees
Retail Class A 10 204 33 (7) 247
Printing Fees 4 - 4
Trustee Fees 1 33 (33) (8) 1
Miscellaneous Fees 2 44 (44) (9) 2
Overdraft expense 57 (57) (3) -
Shareholder Servicing Fees - 147 (10) 198
Institutional Class 47
Retail Class A 4
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 426 1,832 (778) 1,480
Fee waivers and reimbursements (19) (436) 304 (11) (151)
- ----------------------------------------------------------------------------------------------------------------------------------
Net expenses 407 1,396 (474) 1,329
- ----------------------------------------------------------------------------------------------------------------------------------
Interest 11 11
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME OR LOSS $ (247) $ (1,098) $ 474 $ (871)
- ----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS OR LOSSES ON SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gains or losses on:
Securities $ 13,457 $ 14,491 $ 27,948
Foreign Currency - (58) (58)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gains or losses on securities
and foreign currency transactions 13,457 14,433 27,890
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized gains or losses on
securities and foreign currency transactions 10,458 13,975 24,433
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains or losses
on securities and foreign currency transactions 23,915 28,408 52,323
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,668 $ 27,310 $ 474 $ 51,452
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Adjustment to reflect administrator fees for the combined fund based on
the administrator fee rates in place for the acquiring fund during the
period.
(2) Adjustment to reflect advisory fees for the combined fund based on the
advisory fee rates in place for the acquiring fund during the period.
(3) Adjustment to reflect custody fees for the combined fund based on the
custody fee rates (and overdraft fees) in place for the acquiring fund
during the period.
(4) Adjustment to reflect transfer agency fees for the combined fund based on
the transfer agency fee rates in place for the acquiring fund during the
period.
(5) Adjustment to reflect the reduction in professional services fees.
(6) Adjustment to reflect the reduction in registration and filing fees.
(7) Adjustment to reflect distribution fees for the combined fund based on the
distribution fee rates in place for the acquiring fund during the period.
(8) Adjustment to reflect the reduction in trustee fees.
(9) Adjustment to reflect the reduction in miscellaneous fees.
(10) Adjustment to reflect shareholder service fees for the combined fund based
on the shareholder service fee rates in place for the acquiring fund
during the period.
(11) Adjustment to reflect waivers necessary to limit overall fund expenses to
the acquiring fund's contractual ** limit of 1.44% and 1.26%, on an annual
basis, of the average daily net assets of Retail Class A and Institutional
Class respectively.
** The acquiring fund's adviser has contractually agreed to waive fees and
reimburse expenses in order to keep the total operating expenses from
exceeding the expressed limits for the period ended 8/31/01.
See Notes to Pro Forma Combining Financial Statements
84
ARK SMALL-CAP EQUITY PORTFOLIO
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
OCTOBER 31, 1999 (UNAUDITED)
1. Basis of Combination - The Pro Forma Combining Schedule of Investments, Pro
Forma Combining Statement of Assets and Liabilities and the related Pro
Forma Combining Statement of Operations ("Pro Forma Statements"), reflect
the accounts of ARK Small-Cap Equity Portfolio ("Small Cap Portfolio") and
Govett Smaller Companies Fund ("Smaller Companies Fund") at October 31,
1999 and for the year then ended.
The Pro Forma Statements give effect to the proposed Agreement and Plan of
Reorganization (the "Reorganization") to be submitted to shareholders of
Smaller Companies Fund. The Reorganization provides for the acquisition of
all assets and the identified liabilities of Smaller Companies Fund by
Small Cap Portfolio, in exchange for Class A shares of Small Cap Portfolio.
Thereafter, there will be a distribution of Class A shares of Small Cap
Portfolio to the respective shareholders of Smaller Companies Fund in
liquidation and subsequent termination thereof. As a result of the
Reorganization, the shareholders of Smaller Companies Fund will become the
owners of that number of full and fractional Class A shares of Small Cap
Portfolio having an aggregate net asset value equal to the aggregate net
asset value of their shares of Smaller Companies Fund as of the close of
business immediately prior to the date that Smaller Companies Fund net
assets are exchanged for Class A shares of Small Cap Portfolio.
The Pro Forma Combining Financial Statements reflect the expenses of each
Fund in carrying out its obligations under the Reorganization as though the
merger occurred at the beginning of the respective periods presented.
The information contained herein is based on the experience of each Fund
for the respective periods then ended and is designed to permit
shareholders of the consolidating mutual funds to evaluate the financial
effects of the proposed Reorganization. The expenses of Smaller Companies
Fund in connection with the Reorganization (including the cost of any proxy
soliciting agents) will be borne by AIB Govett, Inc.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of each Fund incorporated by reference in the
Statement of Additional Information.
2. Shares of Beneficial Interest - The Pro Forma net asset values per share
assume the issuance of Class A shares of Small Cap Portfolio which would
have been issued at October 31, 1999 in connection with the proposed
Reorganization. Shareholders of Smaller Companies Fund would receive Class
A shares of Small Cap Portfolio based on conversion ratios determined on
October 31, 1999. The conversion ratios are calculated by dividing the net
asset value of Smaller Companies Fund by the net asset value per share of
the Class A shares of Small Cap Portfolio.
3. Pro Forma Operations - The Pro Forma Combining Statement of Operations
assumes similar rates of gross investment income for the investments of
each Fund. Accordingly, the combined gross investment income is equal to
the sum of each Fund's gross investment income. Pro Forma operating
expenses include the actual expenses of the Funds. The pro forma combined
expenses were calculated by applying the Small Cap Portfolio expense rates
to the pro forma combined average daily net assets of the two funds for the
twelve months ended October 31, 1999. The adjustments reflect those amounts
needed to adjust the combined expenses to these rates. The non-contractual
expenses were adjusted to approximate the actual expenses of the combined
fund as of October 31, 1999.
B-9
85
ARK International Equity Portfolio
Pro Forma Combining Schedule of Investments
October 31, 1999 (Unaudited)
ARK International Govett
Equity Selection Portfolio International Equity Fund
--------------------------------- ---------------------------------
Shares (000) Market Value (000) Shares (000) Market Value (000)
------------ ------------------ ------------ ------------------
Mutual Funds--0.0% 0 0
American Advantage International Equity Fund 96,612 1,870
American Century International Growth Fund 181,893 2,054
American Funds Europacific Growth Fund 65,572 2,360
Artisan International Fund 96,809 2,025
BT Institutional International Equity Fund 131,070 1,911
Federated International Small Company Fund, Class A 31,972 924
Fidelity Diversified International Fund 102,735 2,191
Glenmede International Institutional Portfolio 112,557 2,006
Harbor International Fund 48,854 1,988
Janus Overseas Fund 89,130 2,258
Pilgrim International Small Cap Growth Fund, Class Q 9,773 310
Putnam International Growth Fund 95,198 2,283
Scudder International Fund 36,709 2,145
Scudder Japan Fund 127,437 2,020
Templeton Foreign Fund, Class I 117,157 1,165
UMB Scout Worldwide Fund 50,765 1,079
-----------
Total Mutual Funds (Cost $24,514, $0, and $0 respectively) 28,589
-----------
Common Stocks--38.7%
Brazil--1.1%
Companhia Vale do Rio Doce 1,400 27
Companhia Vale do Rio Doce ADR 4,660 91
Pao de Acucar ADR 3,930 86
San Paolo 10,780 140
Telecom de Sao Paulo SA 1,078,000 101
Telecentro Sul Participacoes 9,021,000 108
-----
Total Brazil (Cost $592) 553
-----
China--0.2%
Huaneng Power Internaltional - ADR (cost $92) 5,900 72
-----
Finland --1.3%
Nokia OYJ - Cl. A (cost $123) 6,511 745
-----
France --5.8%
Accor SA 1,137 256
Axa 2,975 420
Banque Nationale de Paris 3,040 264
Groupe Danone 974 248
Lafarge 1,624 156
L Air Liquide 641 99
Rhone Poulenc Cl. A 2,055 115
Suez Lyonnaise des Euax 840 136
Total Fina SA Cl. B 3,761 508
Valeo SA 867 62
Vivendi 7,963 604
-----
Total France (Cost $2,577) 2,868
-----
Germany --3.1%
Bayerische Hypo Vereinsbank 2,285 149
Celanese AG 348 5
Deutsche Bank AG 4,835 347
Hoechst AG 3,133 137
Mannesmann AG 2,916 450
Siemens AG 2,598 232
Viag AG 4,030 75
Volkswagen AG 2,228 131
-----
Total Germany (Cost $1,321) 1,526
-----
Hong Kong --0.5%
Hutchison Whampoa 14,000 141
New World Development Co. 56,000 106
-----
Total Hong Kong (Cost $208) 247
-----
Hungary --0.2%
Matav Tr -ADR (cost $111) 4,000 115
-----
India --0.4%
Mahangar Tele Nigam 8,000 66
State Bank of India 8,250 110
-----
Total India (Cost $150) 176
-----
Israel-- 0.0%
Partner Communications ADR 1,945 31
-----
Italy --0.3%
Generali (cost $168) 4,843 155
-----
ARK International
Equity Portfolio
Adjustments Pro Forma Combined
---------------------------------- ---------------------------------
Shares (000) Market Value (000) Shares (000) Market Value (000)
------------ ------------------ ------------ -----------------
Mutual Funds--0.0%
American Advantage International Equity Fund (96,612) (1,870) 0 0
American Century International Growth Fund (181,893) (2,054) 0 0
American Funds Europacific Growth Fund (65,572) (2,360) 0 0
Artisan International Fund (96,809) (2,025) 0 0
BT Institutional International Equity Fund (131,070) (1,911) 0 0
Federated International Small Company Fund, Class A (31,972) (924) 0 0
Fidelity Diversified International Fund (102,735) (2,191) 0 0
Glenmede International Institutional Portfolio (112,557) (2,006) 0 0
Harbor International Fund (48,854) (1,988) 0 0
Janus Overseas Fund (89,130) (2,258) 0 0
Pilgrim International Small Cap Growth Fund, Class Q (9,773) (310) 0 0
Putnam International Growth Fund (95,198) (2,283) 0 0
Scudder International Fund (36,709) (2,145) 0 0
Scudder Japan Fund (127,437) (2,020) 0 0
Templeton Foreign Fund, Class I (117,157) (1,165) 0 0
UMB Scout Worldwide Fund (50,765) (1,079) 0 0
-------- -------
Total Mutual Funds (Cost $24,514, $0, and $0 respectively) (28,589) 0
-------- -------
Common Stocks--38.7%
Brazil--1.1%
Companhia Vale do Rio Doce 1,400 27
Companhia Vale do Rio Doce ADR 4,660 91
Pao de Acucar ADR 3,930 86
San Paolo 10,780 140
Telecom de Sao Paulo SA 1,078,000 101
Telecentro Sul Participacoes 9,021,000 108
-----
Total Brazil (Cost $592) 553
-----
China--0.2%
Huaneng Power Internaltional - ADR (cost $92) 5,900 72
-----
Finland --1.3%
Nokia OYJ - Cl. A (cost $123) 6,511 745
-----
France --5.8%
Accor SA 1,137 256
Axa 2,975 420
Banque Nationale de Paris 3,040 264
Groupe Danone 974 248
Lafarge 1,624 156
L Air Liquide 641 99
Rhone Poulenc Cl. A 2,055 115
Suez Lyonnaise des Euax 840 136
Total Fina SA Cl. B 3,761 508
Valeo SA 867 62
Vivendi 7,963 604
-----
Total France (Cost $2,577) 2,868
-----
Germany --3.1%
Bayerische Hypo Vereinsbank 2,285 149
Celanese AG 348 5
Deutsche Bank AG 4,835 347
Hoechst AG 3,133 137
Mannesmann AG 2,916 450
Siemens AG 2,598 232
Viag AG 4,030 75
Volkswagen AG 2,228 131
-----
Total Germany (Cost $1,321) 1,526
-----
Hong Kong --0.5%
Hutchison Whampoa 14,000 141
New World Development Co. 56,000 106
-----
Total Hong Kong (Cost $208) 247
-----
Hungary --0.2%
Matav Tr -ADR (cost $111) 4,000 115
-----
India --0.4%
Mahangar Tele Nigam 8,000 66
State Bank of India 8,250 110
-----
Total India (Cost $150) 176
-----
Israel-- 0.0%
Partner Communications ADR 1,945 31
-----
Italy --0.3%
Generali (cost $168) 4,843 155
-----
86
ARK International Govett
Equity Selection Portfolio International Equity Fund
-------------------------------- ------------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ -------------------
Japan --8.5%
The Bank of Tokyo - Mitsubishi 8,000 133
Fuji Bank 5,000 69
Fuji Heavy Industries Ltd 10,000 85
Fujistu General 9,000 272
Hitachi Ltd. 19,000 206
Honda Motor 1,000 42
Ito Yokado Company Ltd. 4,000 320
Matsushita Electric Industries 10,000 211
Matsushita Heavy Industries Ltd. 37,000 145
Sakura Bank 4,000 34
Nippon Express 26,000 184
Nippon Steel Corp 95,000 241
Ricoh Corp Ltd. 10,000 163
Sekisui House Ltd. 12,000 130
Shin-Etsu Chemical Co. 7,000 289
Sony Corp 1,600 249
Sumitomo Bank 9,000 145
Sumitomo Chemical 43,000 276
Sumitomo Marine & Fire 22,000 170
Takeda Chemical Industries 5,000 287
Tokyo Marine & Fire Insurance 9,000 118
Toppan Printing 9,000 110
Mazda Motor 21,000 114
Promise Co Ltd. 3,000 201
-----
Total Japan (Cost $3,221) 4,194
-----
Korea --1.2%
Korea Electric Power Corp 7,800 123
Samsung Electronics GDS 5,780 338
Samsung Electronics New GDS 1,814 151
-----
Total Korea (Cost $236) 612
-----
Mexico --0.8%
Cifra S.A. Ser C 106,100 162
Telefonos de Mexico ADR 2,850 244
-----
Total Mexico (Cost $245) 406
-----
Netherlands --3.0%
ABN-Amro Holdings NV 48 1
Equant NV 621 60
Fortis NV 4,964 171
Henkel KGAA 1,930 131
ING Groep NV 4,751 280
Koninklijke Ahold NV 9,236 284
Royal Dutch Petroleum 917 55
United Pan-Europe Comm NV 1,650 127
VNU Ver Ned Uitgevers 11,229 380
-----
Total Netherlands (Cost $1,254) 1,489
-----
Philippines --0.1%
Philippines Long Distance Telephone ADR (cost $90) 3,100 64
-----
South Africa --0.2%
Edgars Stores Ltd. 314 3
South African Breweries PLC 8,600 75
-----
Total South Africa (Cost $85) 78
-----
Spain --0.1%
Amadeus Global Travel Dist. (cost $41) 6,600 40
-----
Sweden --0.4%
Atlas Copco AB 4,364 115
Sandvik AB Cl. B 2,130 55
-----
Total Sweden (Cost $170) 170
-----
Switzerland --2.2%
Nestle SA 92 177
Novartis AG 156 233
Roche Holding AG 13 156
Swisscom AG 430 131
UBS AG 732 213
Zurich Allied AG 247 140
-----
Total Switzerland (Cost $1,082) 1,050
-----
Taiwan --0.6%
Asustek Computer Inc - GDR (cost $150) 21,021 296
-----
Thailand --0.2%
Thai Farmer's Bank (cost $96) 55,000 78
-----
Turkey --0.2%
Yapi Ve Kredi Bankasi AS (cost $90) 7,812,000 114
-----
United Kingdom --8.3%
Alpha Credit Bank 2,542 194
Equity Portfolio
Adjustments Pro Forma Combined
---------------------------------- -----------------------------------
Shares (000) Market Value (000) Shares (000) Market Value (000)
------------ ------------------- ------------ ------------------
Japan --8.5%
The Bank of Tokyo - Mitsubishi 8,000 133
Fuji Bank 5,000 69
Fuji Heavy Industries Ltd 10,000 85
Fujistu General 9,000 272
Hitachi Ltd. 19,000 206
Honda Motor 1,000 42
Ito Yokado Company Ltd. 4,000 320
Matsushita Electric Industries 10,000 211
Matsushita Heavy Industries Ltd. 37,000 145
Sakura Bank 4,000 34
Nippon Express 26,000 184
Nippon Steel Corp 95,000 241
Ricoh Corp Ltd. 10,000 163
Sekisui House Ltd. 12,000 130
Shin-Etsu Chemical Co. 7,000 289
Sony Corp 1,600 249
Sumitomo Bank 9,000 145
Sumitomo Chemical 43,000 276
Sumitomo Marine & Fire 22,000 170
Takeda Chemical Industries 5,000 287
Tokyo Marine & Fire Insurance 9,000 118
Toppan Printing 9,000 110
Mazda Motor 21,000 114
Promise Co Ltd. 3,000 201
-----
Total Japan (Cost $3,221) 4,194
-----
Korea --1.2%
Korea Electric Power Corp 7,800 123
Samsung Electronics GDS 5,780 338
Samsung Electronics New GDS 1,814 151
-----
Total Korea (Cost $236) 612
-----
Mexico --0.8%
Cifra S.A. Ser C 106,100 162
Telefonos de Mexico ADR 2,850 244
-----
Total Mexico (Cost $245) 406
-----
Netherlands --3.0%
ABN-Amro Holdings NV 48 1
Equant NV 621 60
Fortis NV 4,964 171
Henkel KGAA 1,930 131
ING Groep NV 4,751 280
Koninklijke Ahold NV 9,236 284
Royal Dutch Petroleum 917 55
United Pan-Europe Comm NV 1,650 127
VNU Ver Ned Uitgevers 11,229 380
-----
Total Netherlands (Cost $1,254) 1,489
-----
Philippines --0.1%
Philippines Long Distance Telephone ADR (cost $90) 3,100 64
-----
South Africa --0.2%
Edgars Stores Ltd. 314 3
South African Breweries PLC 8,600 75
-----
Total South Africa (Cost $85) 78
-----
Spain --0.1%
Amadeus Global Travel Dist. (cost $41) 6,600 40
-----
Sweden --0.4%
Atlas Copco AB 4,364 115
Sandvik AB Cl. B 2,130 55
-----
Total Sweden (Cost $170) 170
-----
Switzerland --2.2%
Nestle SA 92 177
Novartis AG 156 233
Roche Holding AG 13 156
Swisscom AG 430 131
UBS AG 732 213
Zurich Allied AG 247 140
-----
Total Switzerland (Cost $1,082) 1,050
-----
Taiwan --0.6%
Asustek Computer Inc - GDR (cost $150) 21,021 296
-----
Thailand --0.2%
Thai Farmer's Bank (cost $96) 55,000 78
-----
Turkey --0.2%
Yapi Ve Kredi Bankasi AS (cost $90) 7,812,000 114
-----
United Kingdom --8.3%
Alpha Credit Bank 2,542 194
87
ARK International Govett
Equity Selection Portfolio International Equity Fund
----------------------------------- ------------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Allied Domenq PLC 5,501 31
Allied Zurich PLC 8,041 97
Astrazeneca PLC 4,364 197
Barclays PLC 7,823 239
Barrat Developments PLC 14,390 56
BP Amoco PLC 17,132 166
British American Tobacco PLC 9,706 64
British Energy PLC 10,028 68
British Telecom PLC 4,746 86
Commercial Union PLC 7,478 109
Cookson Group PLC 14,500 45
Diageo PLC 12,650 128
Energis PLC 2,790 89
Eircom PLC 21,600 90
General Electric Company PLC 9,500 103
Glaxo Welcome PLC 9,775 289
Granada Group PLC 12,998 103
Halifax PLC 9,056 116
Invensys PLC 27,399 135
Kelda Group PLC 10,263 62
Lloyds TSB Group PLC 20,539 285
National Westminster Bank 8,763 199
Prudential Corp PLC 13,050 205
Railtrack Group PLC 9,051 183
Royal Sun & Alliance Insurance Group 6,623 45
Severn Trent PLC 7,054 101
Smithkline Beecham PLC 13,937 180
Smiths Industries PLC 1,800 24
Unilever PLC 13,346 124
Vodafone Airtouch PLC 56,385 262
------
Total United Kingdom (Cost $3,680) 4,075
------
Total Common Stocks (cost $0, $15,740 and $15,740 respectively) 19,154
------
Equity Portfolio
Adjustments Pro Forma Combined
----------------------------------- ---------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------- ------------ ------------------
Allied Domenq PLC 5,501 31
Allied Zurich PLC 8,041 97
Astrazeneca PLC 4,364 197
Barclays PLC 7,823 239
Barrat Developments PLC 14,390 56
BP Amoco PLC 17,132 166
British American Tobacco PLC 9,706 64
British Energy PLC 10,028 68
British Telecom PLC 4,746 86
Commercial Union PLC 7,478 109
Cookson Group PLC 14,500 45
Diageo PLC 12,650 128
Energis PLC 2,790 89
Eircom PLC 21,600 90
General Electric Company PLC 9,500 103
Glaxo Welcome PLC 9,775 289
Granada Group PLC 12,998 103
Halifax PLC 9,056 116
Invensys PLC 27,399 135
Kelda Group PLC 10,263 62
Lloyds TSB Group PLC 20,539 285
National Westminster Bank 8,763 199
Prudential Corp PLC 13,050 205
Railtrack Group PLC 9,051 183
Royal Sun & Alliance Insurance Group 6,623 45
Severn Trent PLC 7,054 101
Smithkline Beecham PLC 13,937 180
Smiths Industries PLC 1,800 24
Unilever PLC 13,346 124
Vodafone Airtouch PLC 56,385 262
-------
Total United Kingdom (Cost $3,680) 4,075
-------
-------
Total Common Stocks (cost $0, $15,740 and $15,740 respectively) 19,154
-------
ARK International Govett International
Equity Selection Portfolio Equity Fund
--------------------------------- ---------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Par(000) Value(000) Par(000) Value(000)
Repurchase Agreements --3.1%
(repurchase price $1,547,769 (collateralized by First Boston 1,547 1,547
5.330%, dated 10/29/99, matures 11/01/99, U.S. Gov't
Agency Instruments total market value $1,595,381))
------
Total Repurchase Agreement (Cost $1,547, $0, and $1,547
respectively) 1,547
------
------ ------
Total Investments--41.8% (Cost $26,061, $15,740, 30,136 19,154
and $17,287 respectively)
------ ------
Other Assets and Liabilities, Net--58.2% (111) 65
------ ------
Total Net Assets--100.0% 30,025 19,219
====== ======
See Notes to Pro Forma Combining Financial Statements
Equity Portfolio
Adjustments Pro Forma Combined
--------------------------------- ---------------------------------
Shares Market Value (000) Shares Market Value (000)
------------ ------------------ ------------ ------------------
Par(000) Value(000)
Repurchase Agreements --3.1%
(repurchase price $1,547,769 (collateralized by First Boston 1,547 1,547
5.330%, dated 10/29/99, matures 11/01/99, U.S. Gov't
Agency Instruments total market value $1,595,381))
------
Total Repurchase Agreement (Cost $1,547, $0, and $1,547
respectively) 1,547
------
------
Total Investments--41.8% (Cost $26,061, $15,740, 20,701
------
and $17,287 respectively) (28,589)
Other Assets and Liabilities, Net--58.2% 28,589 28,543
-------- ------
Total Net Assets--100.0% 0 49,244
======== ======
See Notes to Pro Forma Combining Financial Statements
88
ARK INTERNATIONAL EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999 (UNAUDITED)
(IN 000'S)
ARK
ARK INTERNATIONAL
INTERNATIONAL GOVETT EQUITY
EQUITY INTERNATIONAL PORTFOLIO
SELECTION EQUITY PRO FORMA
PORTFOLIO FUND ADJUSTMENTS COMBINED
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
Identified cost of securities $ 26,061 $ 15,740 $ (24,514) $ 17,287
Net unrealized gains on securities 4,075 3,414 (4,075) 3,414
- --------------------------------------------------------------------------------------------------------------------------------
Market value of securities 30,136 19,154 (28,589) 20,701
Cash 36 92 128
Foreign currency (Cost $0, $28, $28 respectively) 28
Receivable for securities sold 40 28,589 28,629
Dividends and interest receivable 52 39 91
Receivable from related parties 0 3 3
Prepaid expenses and other assets 3 56 59
- --------------------------------------------------------------------------------------------------------------------------------
Total assets 30,227 19,412 0 49,639
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES --
Distributions payable 0 0 --
Payable for securities purchased 63 63
Payable for Fund shares redeemed 176 24 200
Advisory fee payable 16 16
Distribution Plan expenses payable 9 9
Accrued expenses and other liabilities 26 81 107
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 202 193 395
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 30,025 $ 19,219 $49,244
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY --
Paid-in capital-Institutional Class $ 22,887 $ 6,932 $ 29,819
Paid-in capital-Retail Class A $ 1,820 $ 7,096 $ 8,916
Undistributed net investment income or loss 48 1,234 1,282
Accumulated net realized gains on securities
and foreign currency transactions 1,195 543 4,075 5,813
Net unrealized gains on securities and foreign
currency transactions 4,075 3,414 (4,075) 3,414
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 30,025 $ 19,219 $ - $ 49,244
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSISTS OF --
Class I $ 28,029 $ 7,539 $ 35,568
Class A 1,996 11,680 $ 13,676
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 30,025 $ 19,219 $ 49,244
- --------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING --
Class I 2,249,641 606,543 (1,499) 2,854,685
Class A 160,234 943,538 (6,154) 1,097,618
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class I $ 12.46 $ 12.43 $ 12.46
- --------------------------------------------------------------------------------------------------------------------------------
Class A $ 12.46 $ 12.38 $ 12.46
- --------------------------------------------------------------------------------------------------------------------------------
Class A (offering price @ 1.50% and 4.75%
combined sales load) $ 12.65 N/A $ 13.08
- --------------------------------------------------------------------------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements
89
ARK INTERNATIONAL EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999 (UNAUDITED)
(IN 000'S)
ARK
ARK INTERNATIONAL
INTERNATIONAL GOVETT EQUITY
EQUITY INTERNATIONAL PORTFOLIO
SELECTION EQUITY PRO FORMA
PORTFOLIO FUND ADJUSTMENTS COMBINED
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld) $540 $360 $900
Interest 70 6 76
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 610 366 976
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Administrator Fees 39 149 (126) (1) 62
Investment Advisory Fees 190 186 102 (2) 478
Custodian Fees 20 7 27
Transfer Agency Fees 3 64 (62) (3) 5
Professional Fees 3 70 (48) (4) 25
Registration Fees 3 16 (8) (5) 11
Distribution Fees -
Retail Class A 7 40 5 (6) 52
Printing Fees 4 - 4
Trustee Fees - 33 (32) (7) 1
Amortization of Deferred Organization Costs 2 - 2
Miscellaneous Fees 2 16 (11) (8) 7
Shareholder Servicing Fees - -
Institutional Class 41 11 (9) 52
Retail Class A 2 18 (9) 20
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 316 581 (151) 746
Fee waivers and reimbursements (41) (173) 150 (10) (64)
- -----------------------------------------------------------------------------------------------------------------------------
Net expenses 275 408 (1) 682
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME OR LOSS $335 $(42) $1 $294
- -----------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS OR LOSSES ON SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gains or losses on:
Securities $1,706 $2,107 $3,813
Foreign currency - 36 36
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains or losses on securities
and foreign currency transactions 1,706 2,143 3,849
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized gains or losses on securities
and foreign currency transactions 4,428 2,006 6,434
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains or losses
on securities and foreign currency transactions 6,134 4,149 10,283
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,469 $4,107 $1 $10,577
- -----------------------------------------------------------------------------------------------------------------------------
(1) Adjustment to reflect administrator fees for the combined fund based on the
administrator fee rates in place for the acquiring fund during the period.
(2) Adjustment to reflect advisory fees for the combined fund based on the
restated pro forma advisory fee rates in place for the acquiring fund.
(3) Adjustment to reflect transfer agency fees for the combined fund based on
the transfer agency agreement in place for the acquiring fund during the
period.
(4) Adjustment to reflect the reduction in audit and professional services
fees.
(5) Adjustment to reflect the reduction in registration and filing fees.
(6) Adjustment to reflect distribution fees for the combined fund based on the
distribution fee rates in place for the acquiring fund during the period.
(7) Adjustment to reflect the reduction in trustees fees to the level of the
acquiring fund.
(8) Adjustment to reflect the reduction in miscellaneous fees.
(9) Adjustment to reflect shareholder service fees for the combined fund based
on the service fee rates in place for the acquiring fund during the period.
(10) Adjustment to reflect fee waivers necessary to limit overall fund expenses
to the acquiring fund's contractual** limit on an annual basis, of average
net assets.
** The acquiring fund's adviser has contractually agreed to waive fees and
reimburse expenses in order to keep the total operating expenses from
exceeding 1.50% and 1.40% for Retail Class A and Institutional Class
respectively for the period ended 8/31/01.
See Notes to Pro Forma Combining Financial Statements
90
ARK INTERNATIONAL EQUITY PORTFOLIO
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
OCTOBER 31, 1999 (UNAUDITED)
1. Basis of Combination - The Pro Forma Combining Schedule of Investments, Pro
Forma Combining Statement of Assets and Liabilities and the related Pro
Forma Combining Statement of Operations ("Pro Forma Statements"), reflect
the accounts of ARK International Equity Selection Portfolio
("International Equity Selection Portfolio") and Govett International
Equity Fund ("International Equity Fund") at October 31, 1999 and for the
year then ended.
The Pro Forma Combining Financial Statements give effect to the proposed
Agreement and Plan of Reorganization (the "Reorganization") to be submitted
to shareholders of International Equity Fund. The Reorganization provides
for the acquisition of all assets and the identified liabilities of
International Equity Fund by International Equity Selection Portfolio, in
exchange for Class A shares and Institutional shares of International
Equity Selection Portfolio. Thereafter, there will be a distribution of
Class A shares and Institutional shares of International Equity Selection
Portfolio to the respective shareholders of International Equity Fund in
liquidation and subsequent termination thereof. As a result of the
Reorganization, the shareholders of International Equity Fund will become
the owners of that number of full and fractional Class A shares and
Institutional shares of International Equity Selection Portfolio having an
aggregate net asset value equal to the aggregate net asset value of their
respective shares of International Equity Fund as of the close of business
immediately prior to the date that International Equity Fund net assets are
exchanged for Class A shares and Institutional shares of International
Equity Selection Portfolio.
The Pro Forma Combining Financial Statements reflect the expenses of each
Fund in carrying out its obligations under the Reorganization as though the
merger occurred at the beginning of the respective periods presented.
The information contained herein is based on the experience of each Fund
for the respective periods then ended and is designed to permit
shareholders of the consolidating mutual funds to evaluate the financial
effects of the proposed Reorganization. The expenses of International
Equity Fund in connection with the Reorganization (including the cost of
any proxy soliciting agents) will be borne by AIB Govett, Inc. It is not
anticipated that the securities of the combined portfolio will be sold in
significant amounts in order to comply with the policies and investment
practices of International Equity Selection Portfolio.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of each Fund incorporated by reference in the
Statement of Additional Information.
2. Shares of Beneficial Interest - The Pro Forma net asset values per share
assume the issuance of Class A shares and Institutional shares of
International Equity Selection Portfolio which would have been issued at
October 31, 1999 in connection with the proposed Reorganization.
Shareholders of International Equity Fund would receive Class A shares and
Institutional shares of International Equity Selection Portfolio based on
conversion ratios determined on October 31, 1999. The conversion ratios are
calculated by dividing the net asset value of International Equity Fund by
the net asset value per share of the respective class of International
Equity Selection Portfolio.
3. Pro Forma Operations - The Pro Forma Combining Statement of Operations
assumes similar rates of gross investment income for the investments of
each Fund. Accordingly, the combined gross investment income is equal to
the sum of each Fund's gross investment income. Pro Forma operating
expenses include the actual expenses of the Funds. The pro forma combined
expenses were calculated by applying the International Equity Selection
Portfolio expense rates to the pro forma combined average daily net assets
of the two funds for the twelve months ended October 31, 1999. The
adjustments reflect those amounts needed to adjust the combined expenses to
these rates. The non-contractual expenses were adjusted to approximate the
actual expenses of the combined fund as of October 31, 1999.
B-16
91
ARK FUNDS
CROSS REFERENCE SHEET
PART C
Item No. Heading
- -------- -------
15. Indemnification.........................................Indemnification
16. Exhibits................................................Exhibits
17. Undertakings............................................Undertaking
92
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) Agreement and Plan of Reorganization is included in
Appendix 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 Form N-1A.
(b) Investment Subadvisory Agreement, between the
Registrant and AIB Govett is incorporated by
reference to Exhibit (d)(2) to Post-Effective
Amendment No. 27 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
C-1
93
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 8(b) to Post-Effective Amendment No. 6
to Registrant's Form N-1A.
(10) (a) Distribution and Shareholder Services Plan for
Retail Class A and Institutional Class 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) 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.*
C-2
94
(b) (1) Consent of PricewaterhouseCoopers LLP,
independent auditors of The Govett Funds,
Inc.*
(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. 27 to Registrant's Form N-1A.
(c) Statement of Additional Information of the
Registrant dated June __, 2000 is incorporated
herein by reference to Post-Effective Amendment No.
27 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.
C-3
95
- -----------------------
* Filed herewith.
** To be filed by amendment.
C-4
96
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 of 1933,
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 Securities Act of 1933, 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.
(3) The undersigned Registrant agrees that an opinion and consent of
Kirkpatrick & Lockhart LLP as to tax matters regarding the reorganizations will
be filed by post-effective amendment after the transactions contemplated by the
reorganization agreement have occurred.
C-5
97
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 29th day of June, 2000.
ARK FUNDS, INC.
By: /s/ Rick A. Gold June 29, 2000
- -------------------- -------------------
Rick A. Gold, President Date
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/ Rick A. Gold President (principal June 29, 2000
- ------------------------------ executive officer)
Rick A. Gold
/s/ James F. Volk Treasurer, Controller and June 29, 2000
- ------------------------------ Chief Financial Officer
James F. Volk
* Trustee
- ------------------------------
William H. Cowie
* Trustee
- ------------------------------
David D. Downes
* Trustee
- ------------------------------
Charlotte R. Kerr
* Trustee
- ------------------------------
Thomas Schweizer
* Trustee
- ------------------------------
Richard B. Seidel
* By: /s/ Alan C. Porter June 29, 2000
-------------------
Alan C. Porter
Attorney-in-Fact
An original power-of-attorney authorizing Alan C. Porter to execute amendments
to this Registration Statement for each trustee of the Registrant on whose
behalf this amendment to the Registration Statement is filed has been executed
and filed with the Securities and Exchange Commission.
98
EXHIBIT INDEX
(1) (a) Declaration of Trust 1/
(b) Amended and Restated Declaration of Trust 2/
(c) Supplement dated March 23, 1993 to the Amended and Restated
Declaration of Trust dated March 19, 1993 2/
(2) By-Laws 2/
(3) Voting Trust Agreement- Not applicable.
(4) A copy of the Agreement and Plan of Reorganization is attached as
Appendix A to the Prospectus contained in the Registration
Statement.
(5) Not applicable.
(6) (a) Investment Advisory Agreement between the Registrant and Allied
Investment Advisors, Inc. dated February 12, 1998 4/
(b) Investment Subadvisory Agreement between the Registrant and
AIB Govett 8/
(7) (a) Distribution Agreement between the Registrant and SEI Investments
Distribution Co. dated November 1, 1995 3/
(b) Administration Agreement between the Registrant and SEI Investments
Mutual Fund Services dated November 1, 1995 3/
(8) Bonus or Profit Sharing Contract- Not applicable.
(9) (a) Custody Agreement between the Registrant and Allfirst Trust
Company, National Association dated April 1, 1997 4/
(b) Subcustody Agreement between First National Bank of Maryland and
Bankers Trust Company dated November 9, 1995 3/
(10) (a) Distribution and Shareholder Services Plan for Retail Class A and
Institutional Class 5/
(b) Amended and Restated Rule 18f-3 Plan 6/
(11) Opinion and consent of legal counsel 7/
(12) Opinion and Consent of Kirkpatrick & Lockhart LLP as to tax matters
(to be filed by Post-Effective Amendment)
99
(13) (a) Transfer Agency and Service Agreement between the Registrant and
SEI Investments Mutual Fund Services dated November 1, 1995 3/
(b) Sub-Administration Agreement between SEI Investments Management
Corporation and Allfirst Trust Company, National Association dated
January 1, 1998 4/
(14) (a) Consent of KPMG LLP, independent auditors of the Registrant
(filed herewith)
(b) Consent of PricewaterhouseCoopers LLP, independent auditors of The
Govett Funds, Inc. (filed herewith)
(15) Omitted Financial Statements- Not applicable.
(16) Power of Attorney of Trustees of the Registrant (filed herewith)
(17) (a) Form of Proxy Card (filed herewith)
(b) Retail Class A and Institutional Class Prospectus of the Registrant
dated June __, 2000 and 8/
(c) Statement of Additional Information of the Registrant dated June
__, 2000 8/
(d) Class A Retail and Institutional Class Prospectus of The Govett
Funds, Inc. dated May 1, 2000 and Statement of Additional
Information of The Govett Funds, Inc. dated May 1, 2000
9/ (filed herewith)
(e) Annual Report of The Govett Funds, Inc. for the fiscal year ended
December 31, 1999 10/ (filed herewith)
(f) Annual Report of the ARK Funds for the fiscal year ended April 30,
1999 11/
(g) Semi-Annual Report of the ARK Funds for the six months ended
October 31, 1999 11/
-------------------------
1/ Incorporated by reference to the Registration Statement of the Trust on
Form N-1A as filed with the SEC on October 23, 1992.
2/ Incorporated by reference to Pre-Effective Amendment No. 2 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on May 4, 1993.
3/ Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on December 12, 1995.
100
4/ Incorporated by reference to Post-Effective Amendment No. 17 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on February 6, 1998.
5/ Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on June 29, 1999.
6/ Incorporated by reference to Post-Effective Amendment No. 25 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on April 13, 2000.
7/ Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on May 22, 2000.
8/ Incorporated by reference to Post-Effective Amendment No. 27 to the
Registration Statement of the Trust on Form N-1A as filed with the SEC
on June 29, 2000.
9/ Post-Effective Amendment No. 26 to The Govett Funds, Inc. Registration
Statement on Form N-1A as filed with the SEC on May 9, 2000.
10/ Filed by the Govett Funds with the SEC pursuant to Rule 30b-2 under the
Investment Company Act of 1940.
11/ Filed by the Registrant with the SEC pursuant to Rule 30b-2 under the
Investment Company Act of 1940.