SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ARK FUNDS
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(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ARK FUNDS
TWO PORTLAND SQUARE
PORTLAND, ME 04101
December 23, 2002
Dear Shareholders:
The enclosed proxy materials relate to a Special Meeting of Shareholders
of ARK Funds (the "Fund") to be held on January __, 2003. As discussed in more
detail in the Proxy Statement, on September 26, 2002, M&T Bank Corporation
entered into an agreement with Allied Irish Banks, p.l.c. to acquire Allfirst
Financial Inc., the parent corporation of Allfirst Bank and indirect parent
corporation of Allied Investment Advisors, Inc. ("AIA"), the Fund's investment
adviser (the "Proposed Acquisition"). The Proposed Acquisition would result in
changes to AIA's ownership structure.
In connection therewith, you are being asked to vote on one or more of the
following proposals: (i) approval of a new investment advisory agreement between
AIA and the Fund (the "New Advisory Agreement") with respect to each series of
the Fund (each a "Portfolio"); (ii) approval of a new investment sub-advisory
agreement among AIA, AIB Investment Managers Limited and the Fund to provide
certain sub-advisory services to the Fund's International Equity Portfolio; and
(iii) approval of a new investment sub-advisory agreement among AIA, Govett
Investment Management Limited and the Fund to provide certain sub-advisory
services to the Fund's Emerging Markets Equity Portfolio (collectively, the two
new sub-advisory agreements are referred to as the "New Sub-Advisory
Agreements").
The terms of the New Advisory Agreement and the New Sub-Advisory
Agreements are unchanged in all material respects. The agreements do not call
for any increase in either the fees any Portfolio of the Fund is obligated to
pay or the expenses it is obligated to bear. The Board of Trustees of the Fund
unanimously recommends that you vote "FOR" all proposals that apply to your
Portfolio(s).
Your vote is important. Please take a moment now to review the proxy
materials and complete, sign, date and return the enclosed Form of Proxy in the
enclosed postage-paid envelope.
Thank you for your attention to this matter and for your continued
investment in the Fund.
Sincerely,
/s/ William H. Cowie, Jr.
William H. Cowie, Jr.
Chairman of the Board
ARK FUNDS
TWO PORTLAND SQUARE
PORTLAND, ME 04101
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NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
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Dear Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of ARK Funds (the "Fund") will be held at 10:00 a.m. Eastern
Time on January __, 2003, at Allfirst Trust Company, N.A., 25 South Charles
Street, 16th Floor, Baltimore, Maryland 21201. As discussed in more detail in
the enclosed Proxy Statement, on September 26, 2002, M&T Bank Corporation
entered into an agreement with Allied Irish Banks, p.l.c. to acquire Allfirst
Financial Inc., the parent corporation of Allfirst Bank and indirect parent
corporation of Allied Investment Advisors, Inc. ("AIA"), the Fund's investment
adviser (the "Proposed Acquisition"). The Proposed Acquisition would result in
changes to AIA's ownership structure. In connection therewith, shareholders are
being asked to consider and act upon the following proposals at the Special
Meeting:
(i) To approve a new investment advisory agreement between AIA and the
Fund (the "New Advisory Agreement"). The New Advisory Agreement
provides that AIA will provide investment advisory services to each
series of the Fund (each a "Portfolio") on the same terms and for
the same compensation under which it currently operates;
(ii) To approve a new investment sub-advisory agreement among AIA, AIB
Investment Managers Limited ("AIBIM") and the Fund (the "New AIBIM
Sub-Advisory Agreement"). The New AIBIM Sub-Advisory Agreement
provides that AIBIM will provide sub-advisory services to the Fund's
International Equity Portfolio on the same terms and for the same
compensation under which it currently operates;
(iii) To approve a new investment sub-advisory agreement among AIA, Govett
Investment Management Limited ("Govett") and the Fund (the "New
Govett Sub-Advisory Agreement"). The New Govett Sub-Advisory
Agreement provides that Govett will provide sub-advisory services to
the Fund's Emerging Markets Equity Portfolio on the same terms and
for the same compensation under which it currently operates; and
(iv) To transact any other business that may properly come before the
Board of Trustees, or any adjournment thereof, in the discretion of
the proxies or their substitutes.
Only holders of shares of beneficial interest of the Fund of record at the
close of business on December 13, 2002, are entitled to notice of, and to vote
at, the Special Meeting and any adjournments thereof.
By Order of the Board of Trustees,
/s/ Thomas R. Rus
Thomas R. Rus
Secretary
December 23, 2002
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YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE RETURN YOU FORM OF PROXY PROMPTLY.
ANY SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED
TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED FORM OF PROXY, DATE AND
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE
IF MAILED IN THE UNITED STATES.
TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER
SOLICITATION, WE ASK YOUR COPPOERATION IN MAILING YOUR PROXY PROMPTLY,
NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
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QUESTIONS & ANSWERS ABOUT
THE SPECIAL MEETING
Q: WHY IS ARK FUNDS (THE "FUND") SENDING ME THIS PROXY STATEMENT?
A: As you may know, M&T Bank Corporation ("M&T") has entered into an
agreement with Allied Irish Banks, p.l.c. to acquire Allfirst Financial
Inc., the direct parent corporation of Allfirst Bank and indirect parent
corporation of Allied Investment Advisors, Inc. ("AIA"), which is the
Fund's investment adviser (the "Proposed Acquisition"). As a result of
the Proposed Acquisition, a change in control of the Fund's investment
adviser will occur that will automatically terminate the agreement
between the Fund and its investment adviser and sub-advisers. A new
investment advisory agreement and new investment sub-advisory agreements
are being proposed to enable the adviser and sub-advisers to continue to
provide services to the Fund.
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: The proposals you are being asked to vote on are:
o approval of a new investment advisory agreement between AIA and
the Fund with respect to each series of the Fund (each a
"Portfolio");
o approval of a new investment sub-advisory agreement among AIA, AIB
Investment Managers Limited and the Fund to provide certain
sub-advisory services to the Fund's International Equity Portfolio;
and
o approval of a new investment sub-advisory agreement among AIA, Govett
Investment Management Limited and the Fund to provide certain
sub-advisory services to the Fund's Emerging Markets Equity
Portfolio.
The agreements contain terms substantially identical to those in the
current agreements.
Q: WHY AM I BEING ASKED TO VOTE ON NEW ADVISORY AND SUB-ADVISORY
AGREEMENTS?
A: The Investment Company Act of 1940 (the "1940 Act"), which regulates
investment companies such as the Fund, requires a shareholder vote to
approve a new advisory or sub-advisory agreement following certain
types of business transactions such as the Proposed Acquisition. The
new advisory and sub-advisory agreements are substantially identical to
the current advisory and sub-advisory agreements, except for the dates
of execution and termination. The Board of Trustees has already
approved the new advisory and sub-advisory agreements and now needs
your approval of this matter.
Q: HOW WILL THE PROPOSED ACQUISITION AFFECT ME?
A: The Proposed Acquisition will have no immediate impact on the operations
of the Fund. The Fund and the investment objective of each Portfolio
will not change as a result of the transaction. You will still own the
same shares in the Fund after the Proposed Acquisition.
M&T has told the Board of Trustees that it does not intend to make any
changes in the level or quality of the advisory services provided to the
Fund and that no fees will be changed as a result of the transaction.
Q: HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
A: The Board of Trustees unanimously recommends that you vote "FOR" the
proposals on the enclosed Form of Proxy.
Q: WHO IS ELIGIBLE TO VOTE?
A: Shareholders of record of the Fund at the close of business on December
13, 2002, are entitled to notice of, and to vote at, the Special Meeting
or at any adjournments of the Special Meeting. Shareholders of record
will be entitled to one vote for each full share and a proportionate
fractional vote for each fractional share that they hold on each matter
presented at the Special Meeting.
Q: HOW DO I VOTE MY SHARES?
A: You may vote your shares (i) in person, by attending the Special
Meeting, or (ii) by mail. To vote by mail, please sign, date and
return the Form of Proxy in the enclosed postage-paid envelope.
Q: WHY ARE MULTIPLE FORMS OF PROXY ENCLOSED?
A: If you are a shareholder of more than one Portfolio, you have been sent
a Form of Proxy for each Portfolio you own because each requires a
separate vote. Please sign, date and return each Form of Proxy in the
enclosed postage-paid envelope.
Q: IF I SEND MY PROXY IN NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER?
A: You may revoke your proxy at any time before it is voted by (i) sending
to the Secretary of the Fund a written revocation, or (ii) forwarding a
later-dated proxy that is received by the Fund at or prior to the
Special Meeting, or (iii) attending the Special Meeting and voting in
person. Even if you plan to attend the Special Meeting, we ask that you
return the enclosed Form of Proxy. This will help us ensure that an
adequate number of shares are present for the Special Meeting to be
held.
ARK FUNDS
TWO PORTLAND SQUARE
PORTLAND, ME 04101
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PROXY STATEMENT
This Proxy Statement is furnished by the Board of Trustees of ARK Funds
(the "Fund") in connection with its solicitation of proxies for use at the
Special Meeting of Shareholders (the "Special Meeting") of the Fund to be held
at 10:00 a.m. Eastern Time on January __, 2003, at Allfirst Trust Company, N.A.
("Allfirst Trust"), 25 South Charles Street, 16th Floor, Baltimore, Maryland
21201. The purpose of the Special Meeting and the matters to be acted upon are
set forth in the accompanying Notice of Special Meeting of Shareholders.
The close of business on December 13, 2002, has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Special Meeting. As of the record date, the Fund had the following
shares of beneficial interest outstanding and entitled to vote:
SHARES OF BENEFICIAL INTEREST
OUTSTANDING ON DECEMBER 13, 2002
INSTITUTIONAL INSTITUTIONAL
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PORTFOLIO CLASS A CLASS B CLASS C CLASS CLASS II
--------- ------- ------- ------- ----- --------
U.S. Treasury Money Market
U.S. Government Money Market
Money Market
Pennsylvania Tax-Free Money Market
Tax-Free Money Market
Short-Term Treasury
Short-Term Bond
Maryland Tax-Free
Pennsylvania Tax-Free
Intermediate Fixed Income
U.S. Government Bond
Income
Balanced
Equity Income
Value Equity
Equity Index
Blue Chip Equity
Capital Growth
Mid-Cap Equity
Small-Cap Equity
International Equity
Emerging Markets Equity
SHARES OF BENEFICIAL INTEREST
OUTSTANDING ON DECEMBER 13, 2002
PORTFOLIO CORPORATE CLASS CORPORATE II CORPORATE III
CLASS CLASS
--------- --------------- ------------ -------------
U.S. Government Cash Management
U.S. Treasury Cash Management
Prime Cash Management
Tax-Free Cash Management
SHARES OF BENEFICIAL INTEREST
OUTSTANDING ON DECEMBER 13, 2002
PORTFOLIO INSTITUTIONAL
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CLASS
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Social Issues Intermediate
Fixed Income
Social Issues Blue Chip Equity
Social Issues Capital Growth
Social Issues Small-Cap Equity
Each share will be entitled to one vote for each proposal at the Special
Meeting. It is expected that the Notice of Special Meeting of Shareholders,
Proxy Statement and Form of Proxy will first be mailed to shareholders on or
about December 23, 2002.
If the accompanying Form of Proxy is properly executed and returned,
shares represented by it will be voted at the Special Meeting, or any
adjournments thereof, in accordance with the instructions on the proxy. However,
if no instructions are specified, shares will be voted for the proposals. A
proxy may be revoked at any time prior to the time it is voted by written notice
to the Secretary of the Fund, by execution of a subsequent proxy or by
attendance at the Special Meeting. If a quorum is not present at the Special
Meeting, or if sufficient votes to approve one or more of the proposed items are
not received, the persons named as proxies may propose one or more adjournments
of the Special Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by proxy. In such case, the
persons named as proxies will vote those proxies which they are entitled to vote
for any such item in favor of such an adjournment, and will vote those proxies
required to be voted against any such item against any such adjournment. In the
event that the Special Meeting is adjourned, the same procedures will apply at a
later meeting date.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and with respect to which the broker does not
have discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present but will have the same effect as votes cast against any proposal.
Abstentions and broker non-votes will have no effect on the outcome of a vote
for adjournment.
2
Information about persons who, to the knowledge of management, owned
beneficially more than 5% of the outstanding shares of a Portfolio as of
November 30, 2002 is set forth in Appendix A. To the knowledge of management, as
of November 30, 2002, the executive officers and Trustees of the Fund, as a
group, except as indicated in Appendix A, owned less than 1% of the outstanding
shares of each Portfolio.
All expenses associated with the preparation and mailing of this Proxy
Statement and the solicitation of proxies will be borne by Allied Irish Banks,
p.l.c. ("AIB") and will include reimbursement of brokerage firms and others for
expenses in forwarding proxy solicitation materials to beneficial owners. The
solicitation of proxies will be largely by mail. Certain officers and regular
agents of the Fund, who will receive no additional compensation for their
services, may use their efforts, by telephone or otherwise, to request the
return of proxies.
PROPOSAL 1. APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
BETWEEN IA AND THE FUND. THE NEW INVESTMENT ADVISORY
AGREEMENT PROVIDES THAT AIA WILL PROVIDE INVESTMENT
ADVISORY SERVICES TO THE FUND ON THE SAME TERMS AND
FOR THE SAME COMPENSATION UNDER WHICH IT CURRENTLY
OPERATES.
BACKGROUND
AIA serves as investment adviser to the Fund on behalf of each series of
the Fund (each a "Portfolio") pursuant to an investment advisory agreement dated
February 12, 1998, as amended ("Current Advisory Agreement"). The Current
Advisory Agreement was last approved by shareholders with respect to the
International Equity Portfolio on August 8, 2000 for the purpose of increasing
the advisory fee paid to AIA with respect to that Portfolio. The Current
Advisory Agreement was last approved by shareholders with respect to the Income,
Maryland Tax-Free, Pennsylvania Tax-Free, Balanced, Blue Chip Equity, Mid-Cap
Equity, Capital Growth and Small-Cap Equity Portfolios on February 4, 1998 for
the purpose of increasing the advisory fee paid to AIA with respect to those
Portfolios. With respect to the remaining Portfolios, the Current Advisory
Agreement was approved by their initial shareholders prior to the commencement
of operations of those Portfolios. As explained in more detail below,
shareholders of all Portfolios of the Fund are being asked to approve a new
investment advisory agreement between AIA and the Fund (the "New Advisory
Agreement").
The Current Advisory Agreement, as required by the Investment Company Act
of 1940 (the "1940 Act"), contains a provision requiring that the agreement
terminate in the event of an "assignment." Under the 1940 Act, a change in
control of an investment adviser results in an assignment and termination of the
adviser's investment advisory contracts. As described below, AIA will undergo a
change in control upon consummation of a proposed acquisition. Such a change in
control may be deemed to result in the assignment of, and therefore the
termination of, the Current Advisory Agreement. To avoid any uncertainty about
the status of the Current Advisory Agreement, the Board of Trustees believes
that it is prudent and in the best interest of each Portfolio to obtain
shareholder approval of the New Advisory Agreement. As discussed below, neither
the level or quality of the advisory services provided to each Portfolio nor the
compensation paid for those services will change under the New Advisory
Agreement. THE NEW ADVISORY AGREEMENT CONTAINS TERMS SUBSTANTIALLY IDENTICAL TO
THOSE IN THE CURRENT ADVISORY AGREEMENT.
3
SUMMARY OF THE PROPOSED ACQUISITION
On September 26, 2002, M&T Bank Corporation ("M&T"), located at One M&T
Plaza, Buffalo, New York 14203, entered into an agreement with AIB, located at
Bankcenter, Ballsbridge, Dublin 4 Ireland, to acquire AIB's wholly-owned
subsidiary, Allfirst Financial Inc. ("Allfirst"), located at 25 South Charles
Street, Baltimore, Maryland 21201 (the "Proposed Acquisition"). Upon
consummation of the Proposed Acquisition, M&T will acquire control of Allfirst
and its subsidiaries. Allfirst's wholly-owned subsidiary, Allfirst Bank, located
at 25 South Charles Street, Baltimore, Maryland 21201, would be merged into
M&T's wholly-owned subsidiary, Manufacturers and Traders Trust Company ("M&T
Bank"), located at One M&T Plaza, Buffalo, New York 14203. AIA, a wholly-owned
subsidiary of Allfirst Bank, would become an indirect wholly-owned subsidiary of
M&T.
The Proposed Acquisition, if consummated, may be deemed to constitute an
"assignment," as defined in the 1940 Act, of the Fund's Current Advisory
Agreement with AIA. As required by the 1940 Act, the Current Advisory Agreement
provides for automatic termination in the event of an assignment. Accordingly,
the Current Advisory Agreement will terminate upon the consummation of the
Proposed Acquisition. The New Advisory Agreement is being proposed to enable AIA
to continue to manage the Fund. No change in the Fund's portfolio managers or
portfolio management teams is anticipated to occur as a result of the Proposed
Acquisition. Appendix B lists the current executive officers and directors of
AIA.
M&T is the nation's 26th largest bank holding company, with total assets
of over $34 billion as of September 30, 2002. Its principal banking subsidiary,
M&T Bank, is one of the nation's strongest and most highly regarded regional
banks with over 470 branches throughout New York, Pennsylvania, Maryland and
West Virginia. M&T Asset Management, a department of M&T Bank, is the investment
adviser to the VISION Group of Funds. As of September 30, 2002, M&T Bank had
$8.3 billion in assets under management.
It is anticipated that the Proposed Acquisition would benefit AIA and the
Fund in a number of ways, including the following: (a) the affiliation with M&T
would expand the Fund's opportunities for asset growth and related benefits; (b)
the combined resources of M&T and Allfirst would improve their ability to
compete in the evolving and competitive financial services industry; and (c)
AIA's access to greater resources would provide for continued innovation and
improved services.
In approving the New Advisory Agreement, the Board of Trustees took into
account that there are no material differences between the provisions of the
Current and the New Advisory Agreements. The Board of Trustees also noted that
neither the Portfolios nor their shareholders will pay any of the costs and
expenses incurred by the Portfolios associated with the Proposed Acquisition.
Further, the Board of Trustees considered that M&T does not intend to make any
material changes to AIA's human or other resources that would aversely impact
AIA's ability to provide the same quality of advisory services it has provided
in the past. Following consummation of the Proposed Acquisition, M&T intends to
carefully study the investment performance of each of the Portfolios, as well as
the combined resources of M&T and Allfirst, in order to determine what steps, if
any, may be taken to ensure strong investment performance of the Portfolios into
the future. It is anticipated that as a result of such study, M&T may recommend,
among other things, various actions such as reorganizations or mergers involving
certain Portfolios, as well as changes in or adjustments to the investment
personnel assigned to manage certain Portfolios. Any proposals involving
4
reorganizations or mergers of Portfolios would be presented to the Board of
Trustees for its approval. Moreover, implementation of certain of these
proposals also may require shareholder approval.
At a meeting of the Board of Trustees held on December 13, 2002, the Board
of Trustees, including all of the trustees who are not "interested persons" of
the Fund as defined in the 1940 Act (the "Independent Trustees") unanimously
concluded that the New Advisory Agreement is in the best interests of the Fund
and its shareholders, and approved, and voted to recommend to the shareholders
of each Portfolio that they approve, the New Advisory Agreement.
THE CURRENT AND NEW ADVISORY AGREEMENTS
Except for differences in the effective and renewal dates, the Current and
New Advisory Agreements are the same in all material respects. A form of the New
Advisory Agreement is attached to this Proxy Statement as Exhibit A.
Pursuant to both agreements, AIA serves as investment adviser to the Fund
and is responsible for providing a continuous investment program for the
Portfolios, including the provision of investment research and management with
respect to all securities and investments and cash equivalents purchased, sold
or held in the Portfolios, and the selection of brokers and dealers through
which securities transactions for the Portfolios are executed. AIA performs its
responsibilities subject to the supervision of, and policies established by, the
Board of Trustees.
Under both agreements, AIA bears all expenses incurred by it in performing
its duties as investment adviser. The Fund bears all expenses, not specifically
assumed by AIA, incurred in the conduct of its operations, including, without
limitation, the following: (a) the cost (including brokerage commissions) of
securities purchased or sold by the Portfolios and any losses incurred in
connection therewith; (b) fees payable to, and expenses incurred on behalf of
the Fund by, AIA; (c) expenses of organizing the Fund; (d) filing fees and
expenses relating to the registration and qualification of the Fund's shares and
the Fund under federal and/or state securities laws and maintaining such
registrations and qualifications; (e) fees and salaries payable to the Fund's
trustees and officers; (f) taxes (including any income or franchise taxes) and
governmental fees; (g) costs of any liability, uncollectible items of deposit
and other insurance or fidelity bonds; (h) any costs, expenses or losses arising
out of liability of or claim for damages or other relief asserted against the
Fund for violation of any law; (i) legal, accounting and auditing expenses,
including legal fees of special counsel at any time retained for those members
of the Board of Trustees who are not interested persons of the Fund and expenses
relating to the use of consulting services by the Fund provided that the use of
such services is approved by the Fund's Board of Trustees; (j) charges of
custodians, transfer agents and other agents; (k) costs of preparing share
certificates; (l) expenses of setting in type and printing prospectuses and
supplements thereto for existing shareholders as well as shareholder reports and
proxy material; (m) costs of mailing prospectuses, statements of additional
information and supplements thereto to existing shareholders as well as
shareholder reports and proxy material; (n) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Fund; (o) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (p) costs of mailing and tabulating proxies
and costs of shareholders' and trustees' meetings; and (q) the cost of
investment company literature and other publications provided by the Fund to its
trustees and officers. All expenses are allocated among the Portfolios in
5
accordance with the Fund's Agreement and Declaration of Trust and the provisions
of the 1940 Act.
Both agreements provide that AIA is entitled to receive a fee, payable
monthly, at an annual rate based on the average daily net assets of each
Portfolio. The fee for each Portfolio under the New Advisory Agreement is the
same as under the Current Advisory Agreement as set forth in the table below.
The table also sets forth the individual fee paid (or reimbursed) on behalf of
each Portfolio for the fiscal year ended April 30, 2002. During that period, the
aggregate fee paid by the Fund to AIA for services on behalf of the Portfolios
was approximately $21,737,798.
FEE UNDER CURRENT FEE PAID
AND NEW ADVISORY (FISCAL YEAR ENDED
PORTFOLIO AGREEMENTS APRIL 30, 2002)
--------- ---------- ---------------
U.S. Treasury Money Market 0.25% $ 849,123
U.S. Government Money Market 0.25% 2,476,521
Money Market 0.25% 2,020,158
Pennsylvania Tax-Free Money Market 0.25% 40,251
Tax-Free Money Market 0.25% 132,772
Short-Term Treasury 0.35% 145,451
Short-Term Bond 0.75% 511,637
Maryland Tax-Free 0.65% 587,164
Pennsylvania Tax-Free 0.65% 1,065,255
Intermediate Fixed Income 0.60% 663,713
U.S. Government Bond 0.75% 787,851
Income 0.60% 1,790,724
Balanced 0.65% 1,866,103
Equity Income 0.70% 488,291
Value Equity 1.00% 2,474,537
Equity Index 0.20% 50,455
Blue Chip Equity 0.70% 1,789,908
Capital Growth 0.70% 1,376,454
Mid-Cap Equity 0.80% 709,490
Small-Cap Equity 0.80% 1,175,776
International Equity 1.00% 234,290
Emerging Markets Equity 1.00% (34,090)
U.S. Government Cash Management 0.15% 570,811
U.S. Treasury Cash Management 0.15% (439)
Prime Cash Management 0.15% (22,127)
Tax-Free Cash Management 0.15% 12,341
Social Issues Intermediate Fixed
Income 0.60% 1,397
Social Issues Blue Chip Equity 0.70% (2,512)
Social Issues Capital Growth 0.70% (11,959)
Social Issues Small-Cap Equity 0.80% (11,543)
Each agreement provides that AIA shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or any of its
Portfolios in connection with the matters to which the contract relates
including, without limitation, losses that may be sustained in connection with
6
the purchase, holding, redemption or sale of any security on behalf of any
Portfolio of the Fund, except a loss resulting from the willful misfeasance, bad
faith or gross negligence of AIA in the performance of its duties or from
reckless disregard by it of its obligations and duties under the agreement.
Both agreements are renewable annually with respect to a Portfolio (a) by
the vote of a majority of those members of the Board of Trustees who are not
parties to the agreement or "interested persons" of any such party as defined in
the 1940 Act, cast in person at a meeting called for the purpose of voting on
such approval; and (b) by all of the members of the Board of Trustees or by vote
of the holders of "a majority of the outstanding voting securities" of a
Portfolio (as defined in the 1940 Act).
Both agreements terminate automatically if assigned (as defined in the
1940 Act) and may be terminated with respect to a Portfolio at any time, without
penalty, on 60 days' written notice.
CONSIDERATION BY THE BOARD OF TRUSTEES
The Board of Trustees determined that the terms of the New Advisory
Agreement are fair and reasonable and that approval of the New Advisory
Agreement on behalf of each Portfolio is in the best interests of the Portfolio
and its shareholders. At a series of meetings held from September through
December 2002, the Fund's Board of Trustees met and conferred with
representatives of AIA, Allfirst, Allfirst Trust, M&T and M&T Bank. The
representatives discussed with the Board of Trustees the anticipated effects of
the Proposed Acquisition on the advisory, sub-advisory and related relationships
with the Portfolios. These representatives provided information to the Board of
Trustees concerning: (a) the specific terms of the Proposed Acquisition; (b) the
anticipated advisory and sub-advisory relationships with the Portfolios; and (c)
the proposed plans for ongoing management, distribution and operation of the
Portfolios. Throughout this period, the Independent Trustees and their counsel
requested and received additional information from M&T, and held telephone
conferences regarding the Proposed Acquisition and its potential impact on the
Portfolios and their shareholders.
In evaluating the New Advisory Agreement, the Board of Trustees obtained
substantial information regarding: (a) the management, financial position and
business of M&T and its affiliates' business and operations; (b) the performance
of the investment companies advised by M & T; (c) the impact of the Proposed
Acquisition on the Portfolios and their shareholders; and (d) the current plans
of M&T and its affiliates with respect to AIA and the Portfolios. The Board of
Trustees also received information regarding M&T's plans for the retention of
personnel currently employed by AIA who currently provide services to the
Portfolios.
The Board of Trustees evaluated the above-referenced information and
considered, among other things, the following: (a) that the terms of the New
Advisory Agreement are substantially identical to those of the Current Advisory
Agreement, except for the dates of execution and termination; (b) the financial
strength and resources of M&T and its commitment to asset management growth; (c)
the favorable history, reputation, qualifications and background of AIA and M&T,
as well as the qualifications of each company's personnel; (d) the expectation
that the investment objectives, policies and management strategies of the
Portfolios after the Proposed Acquisition will not materially change; (e) the
expectation that substantially the same investment teams and management
personnel will manage the Portfolios on a day-to-day basis; (f) the expectation
that the investment expertise available to the Portfolios will be enhanced by
the combined M&T and AIA management team; (g) the fact that shareholders of the
7
Portfolios will have access to a more diversified mutual fund product line
through the anticipated exchange privilege with the investment companies managed
by M&T Bank; (h) the enhanced distribution potential for the Portfolios through
M&T's sales network; (i) statements from M&T as to its intention and belief that
it does not intend to make any material changes to AIA's financial, human and
other resources that would adversely impact AIA's ability to provide the same
level and quality of advisory services that it has provided in the past; (j) the
statement of M&T as to its intention and belief that the Proposed Acquisition
would have no material adverse effect on the advisory services provided to the
Fund by AIA; and (k) the commitment of AIB to pay the expenses of the Fund in
connection with the Proposed Acquisition so that shareholders of the Fund's
Portfolios would not have to bear such expenses.
SECTION 15(F) OF THE 1940 ACT
[M&T has agreed to use its best efforts to assure compliance with the
conditions of Section 15(f) of the 1940 Act.] Section 15(f) provides a
non-exclusive safe harbor for an investment adviser or any affiliated persons
thereof to receive any amount or benefit in connection with a transaction that
results in a change in control of or identity of the investment adviser to an
investment company as long as two conditions are met. First, no "unfair burden"
may be imposed on the investment company as a result of the transaction relating
to the change of control, or any express or implied terms, conditions or
understandings applicable thereto. As defined in the 1940 Act, the term "unfair
burden" includes any arrangement during the two-year period after the change in
control whereby the investment adviser (or predecessor or successor adviser), or
any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services), or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter of the
investment company). Second, during the three-year period immediately following
the change of control, at least 75% of an investment company's board of trustees
must not be "interested persons" of the investment adviser or the predecessor
investment adviser within the meaning of the 1940 Act. M&T and Allfirst have
advised the Board that they are aware of no circumstances arising from the
Proposed Acquisition that might result in an "unfair burden" being imposed on
the Fund.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board of Trustees, including the Independent Trustees, considered the
proposal at meetings held on November 1, 2002 and December 13, 2002. The Board
of Trustees, including the Independent Trustees, unanimously concluded that the
terms of the New Advisory Agreement for the Fund are reasonable, fair and in the
best interests of each Portfolio of the Fund and its shareholders, and that the
fees provided therein are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
The Board of Trustees based this decision on its evaluation of the information
presented and other information made available to them, its experience with AIA,
and M&T's assurances that there were no planned changes in the advisory services
provided to the Fund. The Board, by a vote cast at the December 13, 2002
meeting, unanimously approved and voted to recommend to the shareholders of each
Portfolio that they approve, the New Advisory Agreement.
8
REQUIRED VOTE
As provided under the 1940 Act, approval of the New Advisory Agreement
with respect to a Portfolio will require the affirmative vote of a majority of
the outstanding voting securities of the Portfolio. In accordance with the 1940
Act and as used in this Proposal 1, a "majority of the outstanding voting
securities" of a Portfolio means the lesser of (a) 67% or more of the shares of
the Portfolio present at the Special Meeting if the owners of more than 50% of
the outstanding shares of the Portfolio are present in person or by proxy, or
(b) more than 50% of the outstanding shares of the Portfolio.
If the shareholders of a Portfolio approve the New Advisory Agreement, it
will become effective upon termination of the Current Advisory Agreement in
accordance with its terms, which would occur upon consummation of the Proposed
Acquisition. If the Proposed Acquisition is not consummated, the Current
Advisory Agreement will remain in effect until otherwise terminated in
accordance with its terms.
If shareholders of a Portfolio do not approve the New Advisory Agreement,
the Current Advisory Agreement will remain in effect until terminated in
accordance with its terms and the Board of Trustees will consider what further
action to take consistent with its fiduciary duties to the Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1
----------------------
PROPOSAL 2. APPROVAL OF A NEW INVESTMENT SUB-ADVISORY AGREEMENT
AMONG AIA, AIB INVESTMENT MANAGERS LIMITED ("AIBIM") AND
THE FUND. THE NEW INVESTMENT SUB-ADVISORY AGREEMENT
PROVIDES THAT AIBIM WILL PROVIDE SUB-ADVISORY SERVICES
TO THE FUND'S INTERNATIONAL EQUITY PORTFOLIO ON THE SAME
TERMS AND FOR THE SAME COMPENSATION UNDER WHICH IT
CURRENTLY OPERATES.
BACKGROUND
AIBIM serves as the sub-adviser to the Fund's International Equity
Portfolio pursuant to a sub-advisory agreement entered into among AIA, AIB
Govett, Inc. ("AIB Govett") and the Fund dated June 30, 2000 (the "Current
Sub-Advisory Agreement"). The Current Sub-Advisory Agreement was approved by
shareholders on [August 8, 2000].
AIBIM and AIB Govett are direct wholly-owned subsidiaries of AIB Asset
Management Holdings Limited ("AIBAMH") and indirect majority-owned subsidiaries
of AIB. Due to an internal reorganization of AIBAMH effective September 1, 2002,
AIB Govett transferred to AIBIM its duties and responsibilities under the
Current Sub-Advisory Agreement with respect to the International Equity
Portfolio. The transfer did not cause an "assignment," as defined in the 1940
Act, of the Current Sub-Advisory Agreement, because there was no change in
actual control or management of the sub-adviser to the International Equity
Portfolio. Appendix B lists the current executive officers and directors of
AIBIM.
9
As discussed in Proposal 1, AIA will undergo a change in control upon
consummation of the Proposed Acquisition by M&T. Under the 1940 Act, a change in
control of an investment adviser results in an assignment and termination of the
adviser's investment advisory contracts. The Current Sub-Advisory Agreement
contains a provision requiring its automatic termination in the event the
Current Advisory Agreement between AIA and the Fund terminates for any reason.
As a result, the Board of Trustees believes that it is prudent and in the best
interest of the International Equity Portfolio to obtain shareholder approval of
a new sub-advisory agreement among AIA, AIBIM and the Fund with respect to the
International Equity Portfolio (the "New AIBIM Sub-Advisory Agreement"). THE NEW
AIBIM SUB-ADVISORY AGREEMENT CONTAINS TERMS SUBSTANTIALLY IDENTICAL TO THOSE IN
THE CURRENT SUB-ADVISORY AGREEMENT.
THE CURRENT AND NEW AIBIM SUB-ADVISORY AGREEMENTS
Except for differences in the effective and renewal dates, the Current
Sub-Advisory Agreement and New AIBIM Sub-Advisory Agreement are the same in all
material respects. A form of the New AIBIM Sub-Advisory Agreement is attached to
this Proxy Statement as Exhibit B.
Pursuant to both agreements, AIBIM manages the International Equity
Portfolio and is responsible for placing all orders for the purchase and sale of
portfolio securities, subject to the supervision of the Board of Trustees and
AIA. As compensation, under both agreements, AIBIM is paid a monthly
sub-advisory fee by AIA (not by the Fund) at an annual rate equal to [0.50%] of
the International Equity Portfolio's average daily net assets.
Both agreements provide that AIBIM will not be liable for any error of
judgment or mistake of law or for any losses suffered by the International
Equity Portfolio or AIA in connection with the matters to which both agreements
relate including, without limitation, losses that may be sustained in connection
with the purchase, holding, redemption, or sale of any security, except that
AIBIM may be held liable to the extent that such losses resulted from AIBIM's
willful misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by AIBIM of its duties.
Both agreements are renewable annually (a) by the vote of a majority of
those members of the Board of Trustees who are not "interested persons" of the
Fund, AIA or AIBIM as defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval; and (b) by the vote of a
majority of the Fund's Board of Trustees or, by the vote of the holders of "a
majority of the outstanding voting securities," (as defined in the 1940 Act), of
the International Equity Portfolio.
Both agreements may be terminated at any time, without penalty, on 60
days' written notice. Both agreements terminate automatically upon termination
of the investment advisory agreement between AIA and the Fund and also terminate
automatically and immediately in the event of their assignment (as defined in
the 1940 Act).
10
CONSIDERATION BY THE BOARD OF TRUSTEES
The Board of Trustees determined that the terms of the New AIBIM
Sub-Advisory Agreement are fair and reasonable and that approval of the New
AIBIM Sub-Advisory Agreement on behalf of the International Equity Portfolio is
in the best interests of the International Equity Portfolio and its
shareholders. At a series of meetings held from September through December 2002,
the Fund's Board of Trustees met and conferred with representatives of AIA,
Allfirst, Allfirst Trust, M&T and M&T Bank. The representatives discussed with
the Board of Trustees the anticipated effects of the Proposed Acquisition on the
advisory, sub-advisory and related relationships with the Fund. The
representatives provided information to the Board of Trustees concerning: (a)
the specific terms of the Proposed Acquisition; (b) the anticipated advisory and
sub-advisory relationships with the Fund; and (c) the proposed plans for ongoing
management, distribution and operation of the Fund. Throughout this period, the
Board of Trustees and its counsel requested and received additional information
from M&T, and held telephone conferences regarding the Proposed Acquisition and
its potential impact on the Fund and its shareholders.
In evaluating the New AIBIM Sub-Advisory Agreement, the Board of Trustees
obtained substantial information regarding: (a) the management, financial
position and business of M&T and the business and operations of its affiliates;
(b) the performance of the investment companies advised by M & T; (c) the impact
of the Proposed Acquisition on the International Equity Portfolio and its
shareholders; and (d) the current plans of M&T and its affiliates with respect
to AIA and the International Equity Portfolio. The Board of Trustees also
received information regarding M&T's plans for the retention of personnel
currently employed by AIA who currently provide services to the International
Equity Portfolio. In addition, the Board of Trustees received information
regarding AIBIM.
In connection with their deliberations, the Board of Trustees evaluated
the above-referenced information and considered, among other things, the
following: (a) that the terms of the New AIBIM Sub-Advisory Agreement are
substantially identical to those of the Current Sub-Advisory Agreement, except
for the dates of execution and termination; (b) the investment performance of
AIBIM; (c) the favorable history, reputation, qualifications and background of
AIBIM, as well as the qualifications of its personnel; (d) the statement of M&T
as to its intention and belief that the Proposed Acquisition would have no
material adverse effect on the sub-advisory services provided to the
International Equity Portfolio by AIBIM; (e) the expectation that the investment
objectives, policies and management strategies of the International Equity
Portfolio after the Proposed Acquisition will not materially change; (f) the
expectation that substantially the same investment team and management personnel
will manage the International Equity Portfolio on a day-to-day basis; and (g)
the commitment of AIB to pay the expenses of the International Equity Portfolio
in connection with the Proposed Acquisition so that shareholders of the
International Equity Portfolio would not have to bear such expenses.
11
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board of Trustees, including the Independent Trustees, considered the
proposal at meetings held on November 1, 2002 and December 13, 2002. The Board
of Trustees, including the Independent Trustees, unanimously concluded that the
terms of the New AIBIM Sub-Advisory Agreement are reasonable, fair and in the
best interests of the International Equity Portfolio and its shareholders, and
that the fees provided therein are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
The Board of Trustees based this decision on its evaluation of the information
presented and other information made available to them, its experience with AIA
and AIBIM, and M&T's assurances that there were no planned changes in the level
or quality of the advisory or sub-advisory services provided to the
International Equity Portfolio. The Board, by a vote cast at the December 13,
2002, meeting, unanimously approved and voted to recommend to the shareholders
of the International Equity Portfolio that they approve the New AIBIM
Sub-Advisory Agreement.
REQUIRED VOTE
As provided under the 1940 Act, approval of the New AIBIM Sub-Advisory
Agreement will require the affirmative vote of a majority of the outstanding
voting securities of the International Equity Portfolio. In accordance with the
1940 Act and as used in this Proposal 2, a "majority of the outstanding voting
securities" of the International Equity Portfolio means the lesser of (a) 67% or
more of the shares of the International Equity Portfolio present at the Special
Meeting if the owners of more than 50% of the outstanding shares of the
International Equity Portfolio are present in person or by proxy, or (b) more
than 50% of the outstanding shares of the International Equity Portfolio.
If the shareholders of the International Equity Portfolio approve the New
AIBIM Sub-Advisory Agreement, it will become effective upon termination of the
Current Sub-Advisory Agreement in accordance with its terms, which would occur
upon consummation of the Proposed Acquisition. If the Proposed Acquisition is
not consummated, the Current Sub-Advisory Agreement will remain in effect until
otherwise terminated in accordance with its terms.
If shareholders do not approve the New AIBIM Sub-Advisory Agreement, the
Current Sub-Advisory Agreement will remain in effect until terminated in
accordance with its terms and the Board of Trustees will consider what further
action to take consistent with its fiduciary duties to the International Equity
Portfolio.
THE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL 2
----------------------
12
PROPOSAL 3. APPROVAL OF A NEW INVESTMENT SUB-ADVISORY AGREEMENT
AMONG AIA, GOVETT INVESTMENT MANAGEMENT LIMITED
("GOVETT") AND THE FUND. THE NEW INVESTMENT SUB-ADVISORY
AGREEMENT PROVIDES THAT GOVETT WILL PROVIDE SUB-ADVISORY
SERVICES TO THE FUND'S EMERGING MARKETS EQUITY PORTFOLIO
ON THE SAME TERMS AND FOR THE SAME COMPENSATION UNDER
WHICH IT CURRENTLY OPERATES.
BACKGROUND
Govett serves as the sub-adviser to the Fund's Emerging Markets Equity
Portfolio pursuant to a sub-advisory agreement entered into among AIA, AIB
Govett and the Fund dated June 30, 2000 (the "Current Sub-Advisory Agreement").
The Current Sub-Advisory Agreement was approved by the initial shareholders of
the Emerging Markets Equity Portfolio prior to commencement of operations of
that Portfolio.
Govett and AIB Govett are direct wholly-owned subsidiaries of AIBAMH and
indirect majority-owned subsidiaries of AIB. Due to an internal reorganization
of AIBAMH effective September 1, 2002, AIB Govett transferred to Govett its
duties and responsibilities under the Current Sub-Advisory Agreement with
respect to the Emerging Markets Equity Portfolio. The transfer did not cause an
"assignment" as defined in the 1940 Act, of the Current Sub-Advisory Agreement,
because there was no change in actual control or management of the sub-adviser
to the Emerging Markets Equity Portfolio. Appendix B lists the current executive
officers and directors of Govett.
As discussed in Proposal 1, AIA will undergo a change in control upon
consummation of the Proposed Acquisition by M&T. Under the 1940 Act, a change in
control of an investment adviser results in an assignment and termination of the
adviser's investment advisory contracts. The Current Sub-Advisory Agreement
contains a provision requiring its automatic termination in the event the
Current Advisory Agreement between AIA and the Fund terminates for any reason.
As a result, the Board of Trustees believes that it is prudent and in the best
interest of the Emerging Markets Equity Portfolio to obtain shareholder approval
of a new sub-advisory agreement among AIA, Govett and the Fund with respect to
the Emerging Markets Equity Portfolio (the "New Govett Sub-Advisory Agreement").
THE NEW GOVETT SUB-ADVISORY AGREEMENT CONTAINS TERMS SUBSTANTIALLY IDENTICAL TO
THOSE IN THE CURRENT SUB-ADVISORY AGREEMENT.
THE CURRENT AND NEW GOVETT SUB-ADVISORY AGREEMENTS
Except for differences in the effective and renewal dates, the Current
Sub-Advisory Agreement and New Govett Sub-Advisory Agreement are the same in all
material respects. A form of the New Govett Sub-Advisory Agreement is attached
to this Proxy Statement as Exhibit C.
Pursuant to both agreements, Govett manages the Emerging Markets Equity
Portfolio and is responsible for placing all orders for the purchase and sale of
portfolio securities, subject to the supervision of the Board of Trustees and
AIA. As compensation, under both agreements, Govett is paid a monthly
13
sub-advisory fee by AIA (not by the Fund) at an annual rate equal to [0.50%] of
the Emerging Markets Equity Portfolio's average daily net assets.
Both agreements provide that Govett will not be liable for any error of
judgment or mistake of law or for any losses suffered by the Emerging Markets
Equity Portfolio or AIA in connection with the matters to which both agreements
relate including, without limitation, losses that may be sustained in connection
with the purchase, holding, redemption, or sale of any security, except that
Govett may be held liable to the extent that such losses resulted from Govett's
willful misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by Govett of its duties.
Both agreements are renewable annually (a) by the vote of a majority of
those members of the Board of Trustees who are not "interested persons" of the
Fund, AIA, or Govett as defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval; and (b) by the vote of a
majority of the Fund's Board of Trustees, or by the vote of the holders of "a
majority of the outstanding voting securities," as defined in the 1940 Act, of
the Emerging Markets Equity Portfolio.
Both agreements may be terminated at any time, without penalty, on 60
days' written notice. Both agreements terminate automatically upon termination
of the investment advisory agreement between AIA and the Fund and also terminate
automatically and immediately in the event of their assignment (as defined in
the 1940 Act).
CONSIDERATION BY THE BOARD OF TRUSTEES
The Board of Trustees determined that the terms of the New Govett
Sub-Advisory Agreement are fair and reasonable and that approval of the New
Govett Sub-Advisory Agreement on behalf of the Emerging Markets Equity Portfolio
is in the best interests of the Emerging Markets Equity Portfolio and its
shareholders. At a series of meetings held from September through December 2002,
the Fund's Board of Trustees met and conferred with representatives of AIA,
Allfirst, Allfirst Trust, M&T and M&T Bank. The representatives discussed with
the Board of Trustees the anticipated effects of the Proposed Acquisition on the
advisory, sub-advisory and related relationships with the Fund. These
representatives provided information to the Board of Trustees concerning: (a)
the specific terms of the Proposed Acquisition; (b) the anticipated advisory and
sub-advisory relationships with the Fund; and (c) the proposed plans for ongoing
management, distribution and operation of the Fund. Throughout this period, the
Board of Trustees and its counsel requested and received additional information
from M&T, and held telephone conferences regarding the Proposed Acquisition and
its potential impact on the Fund and its shareholders.
In evaluating the New Govett Sub-Advisory Agreement, the Board of Trustees
obtained substantial information regarding: (a) the management, financial
position and business of M&T and the business and operations of its affiliates;
(b) the performance of the investment companies advised by M&T; (c) the impact
of the Proposed Acquisition on the Emerging Markets Equity Portfolio and its
shareholders; and (d) the current plans of M&T and its affiliates with respect
to AIA and the Emerging Markets Equity Portfolio. The Board of Trustees also
received information regarding the terms of the Proposed Acquisition and M&T's
plans for the retention of personnel currently employed by AIA who currently
provide services to the Emerging Markets Equity Portfolio. In addition, the
Board of Trustees received information regarding Govett.
14
In connection with their deliberations, the Board of Trustees evaluated
the above-referenced information and considered, among other things, the
following: (a) that the terms of the New Govett Sub-Advisory Agreement are
substantially identical to those of the Current Sub-Advisory Agreement, except
for the dates of execution and termination; (b) the investment performance of
Govett; (c) the favorable history, reputation, qualifications and background of
Govett, as well as the qualifications of its personnel; (d) the statement of M&T
as to its intention and belief that the Proposed Acquisition would have no
material adverse effect on the sub-advisory services provided to the Emerging
Markets Equity Portfolio by Govett; (e) the expectation that the investment
objectives, policies and management strategies of the Emerging Markets Equity
Portfolio after the Proposed Acquisition will not materially change; (f) the
expectation that substantially the same investment team and management personnel
will manage the Emerging Markets Equity Portfolio on a day-to-day basis; and (g)
the commitment of AIB to pay the expenses of the Emerging Markets Equity
Portfolio in connection with the Proposed Acquisition so that shareholders of
the Emerging Markets Equity Portfolio would not have to bear such expenses.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board of Trustees, including the Independent Trustees, considered the
proposal at meetings held on November 1, 2002 and December 13, 2002. The Board
of Trustees, including the Independent Trustees, unanimously concluded that the
terms of the New Govett Sub-Advisory Agreement are reasonable, fair and in the
best interests of the Emerging Markets Equity Portfolio and its shareholders,
and that the fees provided therein are fair and reasonable in light of the usual
and customary charges made by others for services of the same nature and
quality. The Board of Trustees based this decision on its evaluation of the
information presented and other information made available to them, its
experience with AIA and Govett, and M&T's assurances that there were no planned
changes in the advisory or sub-advisory services provided to the Emerging
Markets Equity Portfolio. The Board, by a vote cast at the December 13, 2002
meeting, unanimously approved and voted to recommend to the shareholders of the
Emerging Markets Equity Portfolio that they approve the New Govett Sub-Advisory
Agreement.
REQUIRED VOTE
As provided under the 1940 Act, approval of the New Govett Sub-Advisory
Agreement will require the affirmative vote of a majority of the outstanding
voting securities of the Emerging Markets Equity Portfolio. In accordance with
the 1940 Act and as used in this Proposal 3, a "majority of the outstanding
voting securities" of the Emerging Markets Equity Portfolio means the lesser of
(a) 67% or more of the shares of the Emerging Markets Equity Portfolio present
at the Special Meeting if the owners of more than 50% of the outstanding shares
of the Emerging Markets Equity Portfolio are present in person or by proxy, or
(b) more than 50% of the outstanding shares of the Emerging Markets Equity
Portfolio.
If the shareholders of the Emerging Markets Equity Portfolio approve the
New Govett Sub-Advisory Agreement, it will become effective upon termination of
the Current Sub-Advisory Agreement in accordance with its terms, which would
occur upon consummation of the Proposed Acquisition. If the Proposed Acquisition
is not consummated, the Current Sub-Advisory Agreement will remain in effect
until otherwise terminated in accordance with its terms.
15
If shareholders do not approve the New Govett Sub-Advisory Agreement, the
Current Sub-Advisory Agreement will remain in effect until terminated in
accordance with its terms and the Board of Trustees will consider what further
action to take consistent with its fiduciary duties to the Emerging Markets
Equity Portfolio.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" PROPOSAL 3
----------------------
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser of the Fund is Allied Investment Advisors, Inc.
("AIA"), located at 100 E. Pratt Street, 17th Floor, Baltimore, Maryland 21202.
AIA provides (or supervises the sub-advisers who provide) the Portfolios with
day-to-day management services and makes investment decisions on behalf of the
Portfolios in accordance with each Portfolio's investment policies.
SUB-ADVISERS
AIB Investment Managers Limited, located at Percy Place, Dublin 4 Ireland,
serves as the sub-adviser to the Fund's International Equity Portfolio. Govett
Investment Management Limited, located at Shackleton House, 4 Battle Bridge
Lane, London, SEI 2H, serves as the sub-adviser to the Fund's Emerging Markets
Equity Portfolio. The sub-advisers furnish an investment program in respect of,
and make investment decisions for, all assets of the Portfolios that they
sub-advise and place all orders for the purchase and sale of securities on
behalf of those Portfolios.
DISTRIBUTION, ADMINISTRATIVE, TRANSFER AGENCY AND CUSTODY SERVICES
ARK Funds Distributors, LLC, located at Two Portland Square, Portland,
Maine 04101, serves as the distributor of the Fund's shares.
Allfirst Trust, N.A. ("Allfirst Trust"), an affiliate of AIA, located at
25 South Charles Street, Baltimore, Maryland 21201, is currently responsible for
providing the following services to the Portfolios. It is anticipated that
Allfirst Trust will continue to be responsible for providing the services after
approval of the New Advisory Agreement, the New AIBIM Sub-Advisory Agreement and
the New Govett Sub-Advisory Agreement.
Allfirst Trust serves as the Fund's administrator. Forum Administrative
Services, LLC, located at Two Portland Square, Portland, Maine 04101, also
provides administrative services to the Fund pursuant to a sub-administration
agreement with Allfirst Trust.
16
Allfirst Trust serves as the Fund's transfer agent and has sub-contracted
transfer agency services to Boston Financial Data Services, Inc., located at Two
Heritage Drive, North Quincy, Massachusetts 02171.
Allfirst Trust also serves as the Fund's custodian.
Appendix C provides information regarding the fees paid by the Fund to
Allfirst Trust for the fiscal year ended April 30, 2002.
SOLICITATION OF PROXIES
[The Fund] has retained ADP Investor Communications ("ADP"), a
professional proxy solicitation firm, to assist in the solicitation of proxies.
You may receive a telephone call from this firm concerning this proxy
solicitation. [The Fund] estimates that ADP will be paid fees of approximately
$___________. [In addition, ADP will be paid for its expenses incurred; the
amount of these expenses will depend on the nature and extent of the services
provided in connection with the solicitation.]
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Special Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Special Meeting, the
persons named as proxies in the enclosed Form of Proxy will vote thereon
according to their best judgment in the interests of the Fund.
SHAREHOLDER PROPOSALS
A shareholder's proposal intended to be presented at any subsequent
meeting of shareholders of the Fund must be received by the Fund a reasonable
time before the Board of Trustees makes the solicitation relating to such
meeting, in order to be included in the Fund's proxy statement and form of proxy
relating to such meeting. Shareholder proposals that are submitted in a timely
manner will not necessarily be included in the Fund's proxy materials. Inclusion
of such proposals is subject to limitations under the federal securities laws.
The Fund is not required to hold annual meetings of shareholders if the
election of Board of Trustees members is not required under the 1940 Act. It is
the present intention of the Board of Trustees not to hold annual meetings of
shareholders unless such shareholder action is required.
SHAREHOLDER REPORTS
The Fund's most recent Annual and Semi-Annual Reports have previously
been sent to shareholders and may be obtained without charge by calling
toll-free 1-800-ARK-FUND (1-800-275-3863) or by writing to the Fund at ARK
Funds, P.O. Box 8525, Boston, MA 02266-8525.
Dated: December 23, 2002
17
APPENDIX A
----------
5% SHAREHOLDERS OF A PORTFOLIO
(As of December 9, 2002)
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
BALANCED
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 8,0479,954.130 63.87%
Allfirst Bank
Attention: Linda Thomas 109-810
110 S. Paca Street
Baltimore, MD 21201
U of MD Med Pen 2,960,449.290 23.49%
Michelle-Wiles, Dir
Compensation-U of MD
29 S Greene Street - Room
Baltimore, MD 21201
Smithco Profit Sharing 885,913.510 7.03%
L. B. Smith, Inc.
Attn: Robert Sherwood
2001 State Road
Camp Hill, PA 17011
- ----------------------------------------------------------------------------------------------
BLUE CHIP EQUITY
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 1,406,513.740 11.45%
Allfirst Bank
Attention: Linda Thomas 109-810
110 S. Paca Street
Baltimore, MD 21201
- ----------------------------------------------------------------------------------------------
CAPITAL GROWTH
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 950,765.430 17.78%
Allfirst Bank
Attention: Linda Thomas 109-810
110 S. Paca Street
Baltimore, MD 21201
- ----------------------------------------------------------------------------------------------
EQUITY INDEX
- ----------------------------------------------------------------------------------------------
S&G Pollack Trust 1,050,640.110 14.27%
Mrs. S Wilson Pollack
333 N 26th Street
Camp Hill, PA 17011
1
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Md Med Comp Ins - Equity 889,038.940 12.08%
MD Medicine Comp Ins Program
Attn: Jane C McConnell
11 South Paca St Suite 200
Baltimore, MD 21201
Pollack Foundation 639,129.940 8.68%
Mrs. S Wilson Pollack
333 N 26th Street
Camp Hill, PA 17011
Lane Enterprises, Inc. 401K 498,375.760 6.77%
Lane Enterprises Inc.
Attn: Daniel N Gallagher
3905 Hartzdale Dr - Suite 514
Camp Hill, PA 17011
Wolf Organization - Pen - York 471,698.110 6.41%
Bank
Wolf Supply Co
Attn: Thomas-Wolf, President
20 W Market St
York, PA 17401-1203
Pollock, Doug T/A 440,376.800 5.98%
Douglas W Pollock
1358 Pieffers Lane
Oberlin, PA 17113
AMP Inc Supp Ben Tr 421,781.470 5.73%
AMP Inc
Attn: Lisa Durborow
PO Box 3608 MS 161-04
Harrisburg, PA 17105-3608
- ----------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY
- ----------------------------------------------------------------------------------------------
Health Alliance of Pennsylvania 117,764.200 5.61%
Hospital Association of PA
Attn: Michael A. Suchanick, CPA
P O Box 8600
Harrisburg, PA 17105-8600
Kline Foundation 117,955.750 5.62%
J W & Bessie H. Kline Foundation
515 S 29th Street
Harrisburg, PA 17104
- ----------------------------------------------------------------------------------------------
2
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
MARYLAND TAX FREE
- ----------------------------------------------------------------------------------------------
Charles R Fulton Revocable 524,636.940 5.4%
Trust
Charles R. Fulton
P O Box 67
Snow Hill, MD 21863-0067
- ----------------------------------------------------------------------------------------------
MID CAP
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 984,560.680 14.52%
See above
- ----------------------------------------------------------------------------------------------
PENNSYLVANIA TAX FREE
- ----------------------------------------------------------------------------------------------
S & G Pollack Trust 1,450,317.880 9.35%
Grace M Pollock
333 N 26th Street
Camp Hill, PA 17011
- ----------------------------------------------------------------------------------------------
SHORT TERM BOND
- ----------------------------------------------------------------------------------------------
York Container Profit Sharing 454,242.970 7.98%
William Ludwig
York Container Co
PO Box 3008
York, PA 17402-0008
- ----------------------------------------------------------------------------------------------
SMALL-CAP EQUITY
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 960,529.890 29.80%
See above
- ----------------------------------------------------------------------------------------------
US GOVERNMENT BOND
- ----------------------------------------------------------------------------------------------
Tyco Electronics Foundation 708,380.060 7.48%
The AMP Foundation
Attn: Jacqueline Heisse
P O Box 3608 MS 140-41
Harrisburg, PA 17105-3608
- ----------------------------------------------------------------------------------------------
VALUE EQUITY
- ----------------------------------------------------------------------------------------------
Pinnacle Health System 1,540,710.560 7.48%
Attn: Fredrick G. Fetters, CFO
PO Box 8700
Harrisburg, PA 17105-8700
- ----------------------------------------------------------------------------------------------
SOCIAL ISSUES SMALL CAP
- ----------------------------------------------------------------------------------------------
Michael Odlum IRA 6,646.980 42.27%
Michael G. Odlum
6 Fox Ridge Drive
Malvern, PA 19355-2876
3
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Marion Diehl Trust/St. Paul UM 2,173.170 13.82%
Church
St. Paul United Methodist Church
c/o Jack Kane
750 Norland Avenue
Chambersburg, PA 17201
St Paul/Methodist Agency 2,056.450 13.08%
same as above - Marion Diehl
Trust
Neighborhood Center 917.780 5.84%
Dale Laninga, President
Neighborhood Center Endowment
Fund
2435 North Third Street
Harrisburg, PA 17110
Shelby T. White - Lindsay T/A 812.350 5.17%
Lindsay Caldwell Bridges
17 Russell Street
Asheville, NC 28806
- ----------------------------------------------------------------------------------------------
SOCIAL ISSUES CAP GROWTH
- ----------------------------------------------------------------------------------------------
Michael Odlum IRA 8,568.140 32.50%
See above
Marion Diehl Trust 6,237.190 23.66%
See above
St Paul/Methodist Agency 3,835.170 14.55%
same as above - Marion Diehl
Trust
Neighborhead Center 6,718.970 25.49%
See above
- ----------------------------------------------------------------------------------------------
SOCIAL ISSUES BLUE CHIP
- ----------------------------------------------------------------------------------------------
Marion Diehl Trust 11,174.190 10.44%
See above
St Paul/Methodist Agency 9,176.450 8.58%
same as above - Marion Diehl
Trust
Neighborhood Center 7,186.850 6.72%
See above
4
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Convent of the Sisters of Mercy 67,567.410 63.16%
Convent of the Sisters of Mercy
Attn: Sister Dorothy Flynn, RSM
273 Willoughby Ave
Brooklyn, NY 11205-1418
Shelby T. White - Lindsay T/A 6,576.880 6.15%
Lindsay Caldwell Bridges
17 Russell Street
Asheville, NC 28806
- ----------------------------------------------------------------------------------------------
SOCIAL ISSUES INTERMEDIATE
- ----------------------------------------------------------------------------------------------
Lindsay Caldwell Bridges Rev Tr 18,482.490 6.06%
Lindsay Caldwell Bridges
17 Russell Street
Asheville, NC 28806
Marion Diehl Trust 26,048.300 8.55%
See above
Convent of the Sisters of Mercy 40,778.650 13.38%
See above
Missionary Sisters of Our Lady 131,656.230 43.20%
Apostle
See above
Rockhurst High School 72,322.890 23.73%
Rockhurst High School
Attn: Dana Brack, CFO
9301 Stateline Road
Kansas City, MO 64114
- ----------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO RETAIL CLASS
- ----------------------------------------------------------------------------------------------
Chesnut/Blakehurst Waitlist 876,060.000 25.08%
Phase I
Blakehurst
Attn: roland De Vasher
1055 West Joppa Rd.
Towson, MD 21204
Chesnut/Blakehurst Capital 941,339.220 26.95%
Replacement
Blakehurst
Attn: Roland De Vasher
1055 West Joppa Rd.
Towson, MD 21204
Augsburg Luthern Village 942,387.200 26.98%
Augsburg Lutheran Village, Inc.
5
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Attn: Pamela E. Spencer
6825 Campfield Road
Baltimore, MD 21207-4657
Chesnut/Blakehurst Adm Fee 360,503.900 6.43%
Phase 1
Blakehurst
Attn: Roland De Vasher
1055 West Joppa Rd.
Towson, MD 21204
MIDFA Genvec 1999 224,411.190 6.43%
Mr. Jeffrey W. Church
Genvec, Inc.
65 W. Watkins Mill Road
Gaithersburg, MD 20878
- ----------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------------------------------
Cap Bond Proc Series 02 A&B DC 158,697,533.000 17.13%
Gov
Joseph Heyward, Jr.
Suite 360
441 4th Street, N.W.
Washington, DC 20001-2700
Emergency Reserve Fd DC Gov 69,172,073.100 7.47%
Joseph Heyward, Jr.
Suite 360
441 4th Street NW
Washington, DC 20001-2700
Montgomery Co Board of Ed 61,589,529.750 6.65%
Active Emp
Girlingwes
G. Wesley-Girling, Director
INS/Ret
Montgomery County Public
Schools
850 Hungerford Drive
Rockville, MD 20850-1747
- ----------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO II
- ----------------------------------------------------------------------------------------------
Piper Marbury Rudnick & Wolfe 54,100,954.910 14.23%
IC
c/o Karen R. Pasko
6225 Smith Ave
Baltimore, MD 21209-3600
NYC Deferred Comp GIC 44,888,489.780 11.81%
New York City Deferred Comp
Plan
Attn: Joan Barrow, Chief
Accountant
40 Rector Street - 3rd Floor
New York, NY 10212-0331
6
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Anne Arundel Medical Center 25,549,661.660 6.72%
Anne Arundel Medical Center
Attn: Sandra L Huffer, CPA
64 Franklin Street
Annapolis, MD 21401-2777
World Wildlife Fund 21,309,642.940 5.61%
Jewish Commty Fdn of Metrowest
Attention: Howard Rabner
901 Route 10
Whippany, NJ 07981-1156
- ----------------------------------------------------------------------------------------------
PRIME CASH MANAGEMENT CORPORATE CASH I
- ----------------------------------------------------------------------------------------------
Allfirst Financial Pension Plan 3,316,153.290 87.38%
See above
Wellspan 2002 Project Fund 478,928.450 12.62%
Richard A. Harley
Gettysburg Hospital
147 Gettys St
Gettysburg, PA 17325
- ----------------------------------------------------------------------------------------------
TAX FREE MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------
M L Clark 5,798,894.070 7.11%
Jeffrey M. Clark
1 N Minster Drive
White Plains, NY 10604
- ----------------------------------------------------------------------------------------------
TAX FREE MONEY MARKET FUND II
- ----------------------------------------------------------------------------------------------
Merchants Investments LLC 7,881,154.660 19.50%
Merchants Terminal Corporation
Mr. Harry D. Halpert
501 North Kresson Street
Baltimore, MD 21224
Gaye G. Haynes Revocable Trust 4,887,169.470 12.09%
Gaye G. Haynes Revocable Trust
G Haynes W Haynes
J Beaty Co-ttees
327 Ponte Vedra Blvd
Ponte Vedra, FL 32082-1813
William S Abell Marital Trust 2,766,416.690 6.84%
William S. Abell Marital Trust
W S Abell & A F Abell
Co-Trustees
8401 Connecticut Ave Suite 1100
Chevy Chase, MD 20815-5803
- ----------------------------------------------------------------------------------------------
7
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
US GOVERNMENT MONEY MARKET
- ----------------------------------------------------------------------------------------------
Allfirst Bank Film 1,129,680,000.000 9.39%
Gale Schaeffer
First Bank Center M/C
499 Mitchell Street
Millsboro, DE 19966
- ----------------------------------------------------------------------------------------------
US GOVERNMENT MONEY MARKET II
- ----------------------------------------------------------------------------------------------
MWAA 2002 Series A 46,922,741.300 16%
Attn: Nancy Edwards
1 Aviation Circle
Washington, DC 20001-6000
NLC Mutual InsCo - Neuberger 14,467,994.880 4.93%
NLC Mutual Insurance Company
Mr. Michael McCord, Controller
1301 Pennsylvania Ave NW
Suite 550
Washington, DC 20004-1701
Balt Life Ins Co Alliance 57,568,346.110 19.63%
The Baltimore Life Companies
Attn: Ora Pindrik
10075 Red Run Blvd.
Owings Mills, MD 21117-4871
- ----------------------------------------------------------------------------------------------
US GOVERNMENT CASH MANAGEMENT CORPORATE CASH II
- ----------------------------------------------------------------------------------------------
MHEFA PL 1985 Loan Repayment 47,976,797.890 5.50%
MD. H. & H. Ed. Fac. Auth.
Attn: Barbara Nichols
401 E Pratt Street, Suite 1224
Baltimore, MD 21202
- ----------------------------------------------------------------------------------------------
US GOVERNMENT CASH MANAGEMENT CORPORATE CASH III
- ----------------------------------------------------------------------------------------------
AA Co NBP Project 2000 Project 3,427,199.670 39.79%
Fund
Anne Arundel County
Attn: Mr. Jim Lawrence
P O Box 2700 MS 1309
Annapolis, MD 21404
PH Glatfelter Escrow 2,009,959.320 23.34%
P.H. Glatfelter Company
Attention: John R. Anke
96 South George St., Suite
York, PA 17401-1434
8
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
AA Co NBP Project 2000 Reserve 1,408,587.530 16.35%
Fund
Anne Arundel County
Attn: Mr. Jim Lawrence
P O Box 2700 MIS 1309
Annapolis, MD 21404
HAPGCO SF 2000A General Fund 840,923.090 9.76%
Housing Authority of PG County
Attn: Valencia Scott, Suite 210B
9400 Peppercorn Place
Largo, MD 20774
- ----------------------------------------------------------------------------------------------
US GOVERNMENT MONEY MARKET PORTFOLIO RETAIL
- ----------------------------------------------------------------------------------------------
York County Solid Waste 12,068,061.840 16.13%
York Co Solid Waste & Refuse
Auth
Attn: William A. Ehrman
2700 Black Bridge Road
York, PA 17402-7901
MCC Balt Parking 97B Const Fund 6,184,799.700 8.26%
City of Baltimore
Bureau of Treasury Management
100 Guilford Ave
Baltimore, MD 21202-3421
Fred Co Urbana Monocacy 4,942,098.750 6.60%
Infrastruct
Frederick County, MD
Attn: Ms. Patricia Barney
12 E Church St, Winchester Hall
Frederick, MD 21701
York Co Solid Waste 97 Oper & 4,862,017.610 6.50%
Maint
same as above
BG&E Unit 2 Fixed Income Stw 4,022,241.260 5.37%
Baltimore Gas & Electric
PO Box 1475
Baltimore, MD 21203-1475
STW Fixed Income Management
Attn: Cherie Cooper, Suite 100
200 East Carrillo Street
Santa Barbara, CA 93101
9
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
US TREASURY CASH MANAGEMENT CORPORATE CASH II
- ----------------------------------------------------------------------------------------------
St. Mary's County 02 Facility 10,319,071.740 27.94%
Fund
St. Mary's Hospital
Paul Barber, CFO
25500 Point Lookout Road
Leonardtown, MD 20650
HOC Housing Relacement Reserve 5,927,404.150 16.04%
Fund
HOC of Montgomery County,
Maryland
Attn: Cash Manager-Claire Kim
10400 Detrick Avenue
Kensington, MD 20895-2484
IDB Oak Ridge 2002 Series Con 7,796,461.630 21.11%
Industrial Development Board
of City of Oak Ridge, Tennessee
200 S Tulane
Oak Ridge, TN 37830
Bethesda Place Tenant/Lease 2,250,000.000 6.09%
Escrow
Bethesda Place Limited
Partnership
Attn: Arnold Polinger
5530 Wisconsin Avenue Ste 1000
Chevy Chase, MD 20815-4330
- ----------------------------------------------------------------------------------------------
US TREASURY MONEY MARKET PORTFOLIO RETAIL
- ----------------------------------------------------------------------------------------------
Cianbro - SHA Escrow 1,026,547.680 17.37%
Cianbro Corporation
Hunnewell Square
Pittsfield, Maine 04967
Medco Univ Vill 2001 Revenue 831,631.080 14.07%
Fund
Collegiate Housing Foundation
Attn: Lee Covey
3613 Stein St
Mobile, AL 36608
Balto Co Maryvale 1998 Pledged 548,860.490 9.3%
Maryvale Preparatory School
Attn: Sister Shawn Marie Maguire
11300 Falls Road
Brooklandville, Maryland 21022
Medco Univ Courtyard 1999 452,818.550 7.66%
Revenue
Collegiate Housing Foundation
Attn: Lee Covey
3613 Stein St
Mobile, AL 36608
10
NAME AND ADDRESS OF NUMBER OF PERCENT OF
------------------- --------- ----------
PORTFOLIO SHAREHOLDER SHARES PORTFOLIO
--------- ----------- ------ ---------
- ----------------------------------------------------------------------------------------------
Medco Univ Courtyard 1999 387,170.430 6.55%
Revenue
Collegiate Housing Foundation
Attn: Lee Covey
3613 Stein St
Mobile, AL 36608
Medco Univ Courtyard 1999 425,948,760 7.21%
Interest
Collegiate Housing Foundation
Attn: Lee Covey
3613 Stein St
Mobile, AL 36608
- ----------------------------------------------------------------------------------------------
US TREASURY MONEY MARKET FUND II
- ----------------------------------------------------------------------------------------------
Calvert Co Govt General 24,614,526.900 13.98%
Operating a/c
Terry Shannon
Dept. of Admin & Finance
175 Main Street, Courthouse
Prince Frederick, MD 20678
Kaiser Foundation Hospital 11,274,477.380 6.40%
Kaiser Foundation Hospitals
zttn: William M. Hansen, DOF
One Kaiser Plaza 26th Floor
Oakland, CA 94612
Calvert Co Govt - 2002 Bond 11,712,695.990 6.65%
Issue
Terry Shannon
Dept. of Admin & Finance
175 Main Street, Courthouse
Prince Frederick, MD 20678
Kaiser Foundation Hospital 11,274,477.380 6.40%
Kaiser Foundation Hospitals
Attn: William M. Hansen, DOF
One Kaiser Plaza 26th Floor
Oakland, CA 94612
11
APPENDIX B
----------
EXECUTIVE OFFICERS AND DIRECTORS OF AIA
NAME AND POSITION(S) WITH AIA* PRINCIPAL OCCUPATION(S)
------------------------------ -----------------------
Rick A. Gold** Executive Vice President - Asset Management
Chief Executive Officer and Allfirst Financial, Inc.
Director
Timothy J. Hynes III Senior Vice President - Asset Management
Assistant Secretary and Director Allfirst Financial, Inc.
Kathy A. Jackson President - Asset Management
Director Allfirst Financial, Inc.
Michael G. Odlum President and Director
President and Director Allied Investment Advisors, Inc.
Jerome A. Ratliffe Corporate Secretary
Secretary Allfirst Financial, Inc.
Mark A. Mullican President
Director Allfirst Brokerage Corporation
Robert T. Sweet Managing Director and Principal
Managing Director and Principal Allied Investment Advisors, Inc.
John E. Leo Chief Investment Officer
Chief Investment Officer Allied Investment Advisors, Inc.
Jessica Wait Jennings Managing Director and Principal
Managing Director and Principal Allied Investment Advisors, Inc.
Brett A. Hoffacker Managing Director and Principal
Managing Director and Principal Allied Investment Advisors, Inc.
James M. Hannan Managing Director and Principal
Managing Director and Principal Allied Investment Advisors, Inc.
* Rick A. Gold, AIA's principal executive officer, also is the President and a
Trustee of the Fund.
** The address of each executive officer and director of AIA is 100 E. Pratt
Street, 17th Floor, Baltimore, Maryland 21202.
1
EXECUTIVE OFFICERS AND DIRECTORS OF AIBIM
NAME, POSITION(S) WITH AIBIM AND PRINCIPAL OCCUPATION
ADDRESS
-------------------------------- --------------------
Martina Dolan Group Compliance Officer
Director AIB Asset Management Holdings Limited
Shackleton House
4 Battle Bridge Lane
London SEI 2HR, England
Patrick K. Cunneen General Manager
Director AIB Capital Markets
AIB International Centre
IFSC
Dublin 1, Ireland
John J. Costello Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
James C. Doyle Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Kieran P. Corcoran Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Eileen M. Fitzpatrick Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Noel Minogue Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
2
Niall P. Markey Director and Secretary
Director and Secretary AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Louis M. McGuigan Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Paul A. Brophy Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Lore Hayes Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Frank O'Riordan Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Barry Rogers Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
Noel McEvoy Director
Director AIB Investment Managers Limited
AIB Investment House
Percy Place
Dublin 4, Ireland
3
EXECUTIVE OFFICERS AND DIRECTORS OF GOVETT
NAME AND POSITION(S) WITH GOVETT* PRINCIPAL OCCUPATION(S)
--------------------------------- -----------------------
Peter Kysel Director
Director Portfolio Management
Portfolio Management Govett Investment Management Limited
John W. Murray Managing Director of Investments
Managing Director of Investments Chief Investment Officer, Portfolio
Chief Investment Officer, Portfolio Management
Management Govett Investment Management Limited
Noel McEvoy Chairman and Chief Executive Officer
Chairman and Chief Executive Officer Strategic Director, Business Manager
Strategic Director, Business Manager Govett Investment Management Limited
Thomas C. Dangerfield Director
Director Portfolio Management
Portfolio Management Govett Investment Management Limited
Colm E. Doherty Director
Director Portfolio Management
Portfolio Management Govett Investment Management Limited
John A. MacLean Director
Director Portfolio Management
Portfolio Management Govett Investment Management Limited
Martina Dolan Chief Compliance Officer
Chief Compliance Officer Govett Investment Management Limited
Paul Downing Managing Director of Operations
Managing Director of Operations Operations Management
Operations Management Govett Investment Management Limited
Charles E. Lillis Managing Director Funds
Managing Director Funds Marketing Sales
Marketing Sales Govett Investment Management Limited
* The address of each executive officer and director of Govett is 4 Battle
Bridge Lane, Shackleton House, London SEI 2HR, England.
4
APPENDIX C
----------
ADMINISTRATIVE, TRANSFER AGENCY
AND
CUSTODY FEES PAID BY THE FUND
Allfirst Trust serves as the Fund's administrator, transfer agent and custodian.
Pursuant to an administration agreement entered into with the Fund, Allfirst
Trust is entitled to receive an administration fee from the Fund at the annual
rate of $24,000 per Portfolio, plus 0.085% of the annual average daily net
assets of the Portfolios and any out-of-pocket and related expenses. Under a
separate agreement, Allfirst Trust has sub-contracted administrative services to
Forum Administrative Services, LLC. Under this agreement, Allfirst Trust pays to
Forum Administrative Services, LLC the fees it receives from the Fund, except
that it retains a fee of 0.0275% of the annual average daily net assets of the
Portfolios. Prior to January 1, 2002, Allfirst Trust served as sub-administrator
of the Fund for a fee of 0.0275% of the annual average daily net assets of the
Portfolios. The table below shows the administrative fees paid by each Portfolio
of the Fund and retained by Allfirst Trust during the fiscal year ended April
30, 2002.
Pursuant to an agreement entered into with the Fund, Allfirst Trust is entitled
to receive from the Fund an annual fee of up to $16 per Portfolio account and
activity-based fees ranging from $.50 to $12.50 per item and reimbursements for
out-of-pocket expenses. Under a separate agreement, Allfirst Trust has
sub-contracted transfer agency services to Boston Financial Data Services, Inc.
Under this agreement, Allfirst Trust pays to Boston Financial Data Services,
Inc. all of the transfer agency fees and expense reimbursements that it receives
from the Fund.
Allfirst Trust receives a custody fee from the Fund at the annual rate of 0.015%
of the average daily net assets of the Portfolios. Allfirst Trust also charges
the Portfolios transaction handling fees ranging from $5 to $75 per transaction
and receives reimbursement for out-of-pocket expenses. Foreign securities held
by the Portfolios are held by foreign banks participating in a network
coordinated by Deutsche Bank Trust Company Americas, which serves as
sub-custodian for the portfolio holding foreign securities. All expenses
incurred through this network are paid by the Portfolios holding foreign
securities. The table below shows the custody fees paid to Allfirst Trust by
each Portfolio of the Fund during the fiscal year ended April 30, 2002.
1
ADMINISTRATIVE AND CUSTODY FEES PAID BY THE FUND
PORTFOLIO ADMINISTRATIVE FEES CUSTODY FEES PAID
--------- -------------------- -----------------
PAID* (FOR FISCAL (FOR FISCAL YEAR
----------------- ----------------
YEAR ENDED ENDED
----------------- -----
APRIL 30, 2002) APRIL 30, 2002)
--------------- ---------------
U.S. Treasury Money Market $ 428,922 $19,731
U.S. Government Money Market 1,655,307 261,407
Money Market 1,677,356 254,515
Tax-Free Money Market 159,618 31,398
Pennsylvania Tax-Free Money Market 37,719 6,678
Short-Term Treasury 46,726 9,123
Short-Term Bond 77,643 17,898
Maryland Tax-Free 125,128 15,722
Pennsylvania Tax-Free 171,580 25,255
Intermediate Fixed Income 137,851 24,664
U.S. Government Bond 127,316 10,872
Income 302,902 63,991
Balanced 354,006 55,448
Equity Income 82,294 15,030
Value Equity 307,032 43,704
Equity Index 80,230 29,135
Blue Chip Equity 311,466 46,843
Capital Growth 226,951 25,247
Mid-Cap Equity 103,363 25,277
Small-Cap Equity 158,381 55,596
International Equity 37,301 94,901
Emerging Markets Equity 6,778 106,570
U.S. Treasury Cash Management 14,314 4,993
U.S. Government Cash Management 351,606 77,393
Prime Cash Management 26,150 42,202
Tax-Free Cash Management 14,066 (1,618)
Social Issues Intermediate Fixed Income 2,606 92
Social Issues Blue Chip Equity 1,537 227
Social Issues Capital Growth 73 12
Social Issues Small-Cap Equity 94 17
* This column reflects the administrative fees paid by each Portfolio of the
Fund to, and retained by, Allfirst Trust.
2
EXHIBIT A
---------
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this __ day of __________, 2003, by and between ARK
Funds, a Massachusetts business trust (the "Fund'), and Allied Investment
Advisors, Inc., a Maryland corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end, management series
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Fund currently offers __________ series of units of
beneficial interest ("Shares"), each series representing interests in a separate
investment portfolio, and may offer other series of Shares from time to time
(all such series of Shares hereinafter collectively referred to as the
"Portfolios"); and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund and to the Portfolios, subject to and in
accordance with the requirements of the Investment Company Act; and
WHEREAS, the Adviser is willing to render such services under the terms of
this Agreement:
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund and its Portfolios for the period and on such
terms as are set forth in this Agreement. The Adviser hereby accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER. Subject to the supervision of the Fund's
Board of Trustees ("Board"), the Adviser will be responsible for providing a
continuous investment program for the Fund's Portfolios, including the provision
of investment research and management with respect to all securities and
investments and cash equivalents purchased, sold or held in the Portfolios and
the selection of brokers and dealers through which securities transactions for
the respective Portfolios will be executed. In carrying out its responsibilities
under this Agreement, the Adviser will at all times act in accordance with the
investment objectives, policies and restrictions of each Portfolio as stated in
the Fund's registration statement as it may be amended from time to time
("Registration Statement") as well as all applicable rules and regulations of
the Securities and Exchange Commission.
The Adviser further agrees that it will:
(a) promptly advise the Fund's custodian and accounting services agent of
each purchase and sale, as the case may be, made on behalf of each of the
Portfolios of any security or other investment specifying in each case: the name
and quantity of the investment purchased or sold, the unit and aggregate
purchase or sale price, commission paid, the market on which the transaction was
effected, the trade date, the settlement date, the identity of the effecting
broker or dealer and/or such other information as may be reasonably requested by
the custodian and accounting services agent, all in such manner as may from time
to time be reasonably requested by them;
(b) provide, in a timely manner, such information as may be reasonably
requested by the Fund or its authorized agent in connection with the computation
of the net asset value and the net income of each Portfolio in accordance with
the procedures prescribed in the Registration Statement or as more frequently
requested by the Board; provided, however, that the Adviser shall not be
responsible for any such computation or for the calculation of the net asset
value per share of any of the Fund's Portfolios; and
(c) render regular reports to the Board concerning the Adviser's
performance of its responsibilities under this Agreement and such other periodic
and special reports as the Board may request; in particular, the Adviser agrees
that it will attend meetings of the Board or validly constituted committees
thereof.
A-1
3. BROKERAGE TRANSACTIONS. In placing orders with brokers and dealers, the
Adviser shall obtain the most favorable execution of such orders. However, the
Adviser may, in its discretion, purchase and sell portfolio securities to and
from brokers and dealers who provide the Adviser with research, analysis, advice
and similar services, and the Adviser may cause the Fund to pay to those brokers
or dealers, in return for research and analysis, a higher commission or spread
than may be charged by other brokers or dealers, provided that the Adviser
determines in good faith that such commission or spread is reasonable in terms
either of the particular transaction or of the overall responsibility of the
Adviser to the Fund and any other accounts with respect to which the Adviser
exercises investment discretion. In no instance will securities be purchased
from or sold to the Adviser or any affiliated person of the Adviser except in
accordance with the Investment Company Act.
4. DELEGATION. The Adviser may delegate any of its duties as described in,
or derived from, the duties set forth in paragraph 2 of this Agreement, provided
that any such delegation may be made only pursuant to written agreements which
satisfy the requirements of the Investment Company Act and shall have been
approved by the Fund's Board, and by the shareholders of each Portfolio to which
such agreement applies, in accordance with the provisions of the Investment
Company Act.
5. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser hereunder
are not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the Investment Company Act, the Adviser hereby agrees that all records
which it maintains for the Fund and/or the Portfolios are the property of the
Fund and further agrees to surrender promptly to the Fund any of such records
upon request by the Fund. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Investment Company Act the records required
to be maintained by Rule 31a-1 under the Investment Company Act.
7. EXPENSES OF THE FUND. All expenses shall be allocated among the
Portfolios in accordance with the Fund's Declaration of Trust and the provisions
of the Investment Company Act. During the term of this Agreement, the Fund will
bear all expenses, not specifically assumed by the Adviser, incurred in the
conduct of its operations, including, without limitation, responsibility for the
following: (a) the cost (including brokerage commissions) of securities
purchased or sold by the Portfolios and any losses incurred in connection
therewith; (b) fees payable to, and expenses incurred on behalf of the Fund by,
the Adviser; (c) expenses of organizing the Fund; (d) filing fees and expenses
relating to the registration and qualification of the Fund's shares and the Fund
under federal and/or state securities laws and maintaining such registrations
and qualifications; (e) fees and salaries payable to the Fund's trustees and
officers; (f) taxes (including any income or franchise taxes) and governmental
fees; (g) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds; (h) any costs, expenses or losses arising out of a
liability of or claim for damages or other relief asserted against the Fund for
violation of any law; (i) legal, accounting and auditing expenses, including
legal fees of special counsel at any time retained for those members of the
Board who are not interested persons of the Fund and expenses relating to the
use of consulting services by the Fund provided that the use of such services is
approved by the Fund's trustees; (j) charges of custodians, transfer agents and
other agents; (k) costs of preparing share certificates; (l) expenses of setting
in type and printing prospectuses and supplements thereto for existing
shareholders, reports, shareholder reports, and proxy materials; (m) costs of
mailing prospectuses, statements of additional information and supplements
thereto to existing shareholders as well as shareholder reports and proxy
materials; (n) any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Fund; (o) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (p) costs of mailing and tabulating proxies and costs of
shareholders and trustees meetings; and (q) the cost of investment company
literature and other publications provided by the Fund to its trustees and
officers.
The Fund may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Adviser and
acknowledged as otherwise payable by the Adviser pursuant to this Agreement, the
Fund may reduce the fee payable to the Adviser pursuant to this Agreement by
such amount. To the extent that such deductions exceed the fee payable to the
Adviser for any monthly payment period, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding monthly payment
dates.
A-2
8. EXPENSES OF ADVISER. The Adviser will bear all expenses incurred by it
in performing its duties as investment adviser under this Agreement. The Adviser
may, but is not required to, voluntarily assume any portion or all of the
expenses that the Fund is required to pay under paragraph 7 hereof. In addition,
if the expenses borne by the Fund in any fiscal year exceed the applicable
expense limitations imposed by the securities regulations of any state in which
shares are registered or qualified for sale to the public, the Adviser will
reimburse the Fund for any excess up to the amount of the fee payable to it
during that fiscal year pursuant to this Agreement.
9. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay to the Adviser a fee in accordance
with the compensation schedule appended to this Agreement.
10. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any of its Portfolios in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of any Portfolio of the Fund, except a loss resulting from the willful
misfeasance, bad faith or gross negligence of the Adviser in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
11. DURATION AND TERMINATION. This Agreement shall become effective upon
the date first above written and, unless sooner terminated as provided herein,
shall continue in effect automatically for successive periods of twelve months
each, so long as such continuance is specifically approved with respect to each
Portfolio at least annually by (a) the vote of a majority of those members of
the Board who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval; and (b) all of the members of the Board or by vote of the holders of a
majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated with
respect to any Portfolio or the Fund at any time, without the payment of any
penalty by the Fund, upon the vote of the Board or the vote of a majority of the
outstanding voting securities of the Fund and on 60 days' written notice to the
Adviser or by the Adviser at any time, without the payment of any penalty, on 60
days' written notice to the Fund. This Agreement will automatically and
immediately terminate in the event of its assignment. As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meanings as such terms have in the
Investment Company Act.
In the event that this Agreement shall not be approved in the manner
provided herein or shall have been terminated with respect to any Portfolio, the
Adviser and the Fund shall continue to be bound by the terms of this Agreement
with respect to any other Portfolio provided that this Agreement shall have been
approved in the manner contemplated herein with respect to such Portfolio.
12. AMENDMENT OF THIS AGREEMENT. No material provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of any material term of
this Agreement shall be effective until approved by the Board and by the holders
of a majority of the Fund's outstanding voting securities.
13. NAME OF THE FUND. The Fund may use the name "ARK Fund" or any name
derived from or using the word "ARK" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect. At such time as such
agreement shall no longer be in effect, the Fund will (to the extent that it
lawfully can) cease to use such a name or any other name similar thereto.
14. MISCELLANEOUS. The Adviser acknowledges that the Fund is a
Massachusetts business trust, and that the Fund is required by its Declaration
of Trust to limit its liability in all agreements to the assets of the Fund.
Consequently, the Adviser agrees that any claims by it against the Fund may be
satisfied only from the assets of the Fund, and no shareholders, trustees or
officers of the Fund may be held personally liable or responsible for any
obligations arising out of this Agreement.
A-3
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Maryland law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: ARK FUNDS
By:
- -------------------------- -------------------------
Attest: ALLIED INVESTMENT ADVISORS, INC.
By:
- -------------------------- -------------------------
A-4
FEE SCHEDULE
For the services provided, and the expenses assumed, by the Adviser to the
Fund under the terms of the Agreement, the Fund shall pay to the Adviser a
monthly fee at the following annual rates:
PERCENTAGE OF
AVERAGE DAILY NET
ARK FUNDS PORTFOLIO ASSETS
------------------- ------
U.S. Treasury Money Market Portfolio 0.25%
U.S. Government Money Market Portfolio 0.25%
Money Market Portfolio 0.25%
Pennsylvania Tax-Free Money Market Portfolio 0.25%
Tax-Free Money Market Portfolio 0.25%
Short-Term Treasury Portfolio 0.35%
Short-Term Bond Portfolio 0.75%
Maryland Tax-Free Portfolio 0.65%
Pennsylvania Tax-Free Portfolio 0.65%
Intermediate Fixed Income Portfolio 0.60%
U.S. Government Bond Portfolio 0.75%
Income Portfolio 0.60%
Balanced Portfolio (formerly Growth and Income Portfolio) 0.65%
Equity Income Portfolio 0.70%
Value Equity Portfolio 1.00%
Equity Index Portfolio 0.20%
Blue Chip Equity Portfolio 0.70%
Capital Growth Portfolio 0.70%
Mid-Cap Equity Portfolio 0.80%
Small-Cap Equity Portfolio (formerly Special Equity Portfolio) 0.80%
International Equity Portfolio 1.00%
Emerging Markets Equity Portfolio 1.00%
Prime Cash Management Portfolio 0.15%
U.S. Government Cash Management Portfolio 0.15%
U.S. Treasury Cash Management Portfolio 0.15%
Tax-Free Cash Management Portfolio 0.15%
Social Issues Intermediate Fixed Income Portfolio 0.60%
Social Issues Blue Chip Portfolio 0.70%
Social Issues Capital Growth Portfolio 0.70%
Social Issues Small-Cap Equity Portfolio 0.80%
A-5
EXHIBIT B
---------
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of __________, ___, 2003, by and between Allied
Investment Advisors, Inc., a Maryland corporation (the "Adviser"), AIB
Investment Managers Limited, [a corporation organized under the laws of Ireland]
(the "Sub-Adviser"), and ARK Funds, a Massachusetts business trust (the
"Trust").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
offers for public sale distinct series of shares of beneficial interest (each a
"Portfolio"); and
WHEREAS, the Adviser is the investment adviser for each of the
Portfolios of the Trust; and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for each Portfolio listed in Schedule A
(each a "Fund" and collectively, the "Funds");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Adviser to
provide certain sub-investment advisory services to the Funds for the period and
on the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser
with copies properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with
the Secretary of State of the Commonwealth of Massachusetts on March 19,
1993, and all amendments and supplements thereto or restatements thereof
(such Declaration, as presently in effect and as it shall from time to
time be amended or restated, is herein called the "Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Adviser and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), (File No. 33-53690)
and under the 1940 Act (File No. 811-7310), as filed with the Securities
and Exchange Commission ("SEC") and all amendments thereto insofar as such
Registration Statement and such amendments relate to the Funds; and
(e) The Trust's most recent prospectus and statement of additional
information for the Funds (such prospectus and statement of additional
information, as presently in effect, and all amendments and supplements
thereto, are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees
and the Adviser, the Sub-Adviser will furnish an investment program in respect
of, and make investment decisions for, all assets of the Funds and place all
orders for the purchase and sale of securities, all on behalf of the Funds. In
the performance of its duties, the Sub-Adviser will satisfy its fiduciary duties
B-1
to the Funds (as set forth in Section 8, below), and will monitor the
investments of each of the Funds, and will comply with the provisions of the
Trust's Declaration of Trust and By-Laws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the respective Funds.
The Sub-Adviser and the Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Funds and to consult with each other regarding the
investment affairs of the Funds. The Sub-Adviser shall also make itself
available to the Board of Trustees at such times as the Board of Trustees shall
reasonably request.
The Sub-Adviser represents and warrants that it is in compliance
with all applicable rules and regulations of the SEC pertaining to its
investment advisory activities and agrees that it:
(a) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable rules and
regulations of the SEC pertaining to its investment advisory
activities;
(c) will place orders pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Sub-Adviser will attempt to
obtain the best combination of prompt execution of orders in an effective
manner and at the most favorable price. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are
comparable, the Sub-Adviser may, in its discretion, purchase and sell
portfolio securities to and from brokers and dealers who provide the
Sub-Adviser with research, analysis, advice and other services. In no
instance will portfolio securities be purchased from or sold to any
affiliated person of either the Trust, the Adviser, or the Sub-Adviser,
except as may be permitted under the 1940 Act;
(d) will report regularly to the Adviser and will make appropriate
persons available for the purpose of reviewing at reasonable times with
representatives of the Adviser and the Board of Trustees the management of
each of the Funds, including, without limitation, review of the respective
investment strategies of the Funds, the performance of the Funds in
relation to standard industry indices, interest rate considerations and
general conditions affecting the marketplace and will provide various
other reports from time to time as reasonably requested by the Adviser;
(e) will maintain books and records with respect to the Funds'
securities transactions and will furnish the Adviser and the Trust's Board
of Trustees such periodic and special reports as the Board of Trustees or
the Adviser may request; and
(f) will act upon instructions from the Adviser not inconsistent
with the fiduciary duties hereunder.
The Sub-Adviser shall have the right to execute and deliver, or cause its
nominee to execute and deliver, all proxies and notices of meetings and other
notices affecting or relating to the securities of each of the Funds.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Funds, on behalf of the Trust, are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records upon
the Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement.
6. COMPENSATION. For the services to be provided by the Sub-Adviser
pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
B-2
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee
as set forth on Schedule A attached to this Agreement.
7. SERVICES TO OTHERS. The Adviser understands, and has advised the
Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the future
act, as an investment adviser to fiduciary and other managed accounts, and as
investment adviser, sub-investment adviser, and/or administrator to the other
investment companies. The Adviser has no objection to the Sub-Adviser's acting
in such capacities, provided that whenever the Fund and one or more other
investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed by the Sub-Adviser to be equitable to each
company. The Adviser recognizes, and has advised the Trust's Board of Trustees,
that in some cases this procedure may adversely affect the size of the position
that a Fund may obtain in a particular security. In addition, the Adviser
understands, and has advised the Trust's Board of Trustees, that the persons
employed by the Sub-Adviser to assist in the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of the
Sub-Adviser or any of its affiliates to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature so long as
its services under this Agreement are not impaired thereby.
8. LIMITATION OF LIABILITY OF SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds or the Adviser in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of the Funds, except a loss resulting from the willful misfeasance, bad
faith or gross negligence of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. DURATION AND TERMINATION. As to each Fund, this Agreement will become
effective as of the date set forth on Schedule A provided that it has been
approved by vote of a majority of the outstanding voting securities of the
respective Fund in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, will continue in effect for
successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date for such Fund in each year,
PROVIDED that such continuation is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not interested persons of the Trust, the Sub-Adviser, or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) by the vote of a majority of the Trust's Board of Trustees or, as to each
Fund, by the vote of the holders of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any
or all Funds at any time, without the payment of any penalty, by the Adviser, by
vote of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund on sixty (60) days' written notice to
the Sub-Adviser and by the Sub-Adviser on sixty (60) days' written notice to the
Adviser and the Trust. This Agreement will terminate automatically upon
termination of the investment advisory agreement between the Trust and the
Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" have the
same meanings of such terms in the 1940 Act). Termination of this Agreement with
respect to any Fund shall in no way affect the continued validity of this
Agreement or the performance thereunder with respect to any other Fund.
10. AMENDMENT OF THIS AGREEMENT. No material provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
The names "ARK Funds" and "Trustees of ARK Funds" refer respectively to
the Trust created by, and the Trustees, as trustees but not individually or
B-3
personally, acting from time to time under, the Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "ARK Funds" entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only the
assets of the Trust. Persons dealing with a Fund must look solely to the assets
of the Trust belonging to the Fund for the enforcement of any claims against the
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ALLIED INVESTMENT ADVISORS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
AIB INVESTMENT MANAGERS LIMITED
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ARK FUNDS
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
B-4
SCHEDULE A
For the services provided and the expenses assumed by the Sub-Adviser
under the terms of the Agreement, the Adviser shall pay to the Sub-Adviser a
monthly fee at the following annual rate:
PERCENT OF
AVERAGE DAILY EFFECTIVE
FUND NET ASSETS DATE
- ---- ---------- ----
ARK International Equity Portfolio 0.50% _____________ ___, 2003
B-5
EXHIBIT C
---------
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of _______________ ____, 2003, by and between Allied
Investment Advisors, Inc., a Maryland corporation (the "Adviser"), Govett
Investment Management Limited, [a corporation organized under the laws of
England] (the "Sub-Adviser"), and ARK Funds, a Massachusetts business trust (the
"Trust").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
offers for public sale distinct series of shares of beneficial interest (each a
"Portfolio"); and
WHEREAS, the Adviser is the investment adviser for each of the
Portfolios of the Trust; and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for each Portfolio listed in Schedule A
(each a "Fund" and collectively, the "Funds");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Adviser to provide
certain sub-investment advisory services to the Funds for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with
the Secretary of State of the Commonwealth of Massachusetts on March 19,
1993, and all amendments and supplements thereto or restatements thereof
(such Declaration, as presently in effect and as it shall from time to
time be amended or restated, is herein called the "Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Adviser and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), (File No. 33-53690)
and under the 1940 Act (File No. 811-7310), as filed with the Securities
and Exchange Commission ("SEC") and all amendments thereto insofar as such
Registration Statement and such amendments relate to the Funds; and
(e) The Trust's most recent prospectus and statement of additional
information for the Funds (such prospectus and statement of additional
information, as presently in effect, and all amendments and supplements
thereto, are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees
and the Adviser, the Sub-Adviser will furnish an investment program in respect
of, and make investment decisions for, all assets of the Funds and place all
orders for the purchase and sale of securities, all on behalf of the Funds. In
the performance of its duties, the Sub-Adviser will satisfy its fiduciary duties
to the Funds (as set forth in Section 8, below), and will monitor the
C-1
investments of each of the Funds, and will comply with the provisions of the
Trust's Declaration of Trust and By-Laws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the respective Funds.
The Sub-Adviser and the Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Funds and to consult with each other regarding the
investment affairs of the Funds. The Sub-Adviser shall also make itself
available to the Board of Trustees at such times as the Board of Trustees shall
reasonably request.
The Sub-Adviser represents and warrants that it is in compliance
with all applicable rules and regulations of the SEC pertaining to its
investment advisory activities and agrees that it:
(a) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable rules and
regulations of the SEC pertaining to its investment advisory
activities;
(c) will place orders pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Sub-Adviser will attempt to
obtain the best combination of prompt execution of orders in an effective
manner and at the most favorable price. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are
comparable, the Sub-Adviser may, in its discretion, purchase and sell
portfolio securities to and from brokers and dealers who provide the
Sub-Adviser with research, analysis, advice and other services. In no
instance will portfolio securities be purchased from or sold to any
affiliated person of either the Trust, the Adviser, or the Sub-Adviser,
except as may be permitted under the 1940 Act;
(d) will report regularly to the Adviser and will make appropriate
persons available for the purpose of reviewing at reasonable times with
representatives of the Adviser and the Board of Trustees the management of
each of the Funds, including, without limitation, review of the respective
investment strategies of the Funds, the performance of the Funds in
relation to standard industry indices, interest rate considerations and
general conditions affecting the marketplace and will provide various
other reports from time to time as reasonably requested by the Adviser;
(e) will maintain books and records with respect to the Funds'
securities transactions and will furnish the Adviser and the Trust's Board
of Trustees such periodic and special reports as the Board of Trustees or
the Adviser may request; and
(f) will act upon instructions from the Adviser not inconsistent
with the fiduciary duties hereunder.
The Sub-Adviser shall have the right to execute and deliver, or cause its
nominee to execute and deliver, all proxies and notices of meetings and other
notices affecting or relating to the securities of each of the Funds.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Funds, on behalf of the Trust, are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records upon
the Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement.
6. COMPENSATION. For the services to be provided by the Sub-Adviser
pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
C-2
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee
as set forth on Schedule A attached to this Agreement.
7. SERVICES TO OTHERS. The Adviser understands, and has advised the
Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the future
act, as an investment adviser to fiduciary and other managed accounts, and as
investment adviser, sub-investment adviser, and/or administrator to the other
investment companies. The Adviser has no objection to the Sub-Adviser's acting
in such capacities, provided that whenever the Fund and one or more other
investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed by the Sub-Adviser to be equitable to each
company. The Adviser recognizes, and has advised the Trust's Board of Trustees,
that in some cases this procedure may adversely affect the size of the position
that a Fund may obtain in a particular security. In addition, the Adviser
understands, and has advised the Trust's Board of Trustees, that the persons
employed by the Sub-Adviser to assist in the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of the
Sub-Adviser or any of its affiliates to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature so long as
its services under this Agreement are not impaired thereby.
8. LIMITATION OF LIABILITY OF SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds or the Adviser in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of the Funds, except a loss resulting from the willful misfeasance, bad
faith or gross negligence of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. DURATION AND TERMINATION. As to each Fund, this Agreement will become
effective as of the date set forth on Schedule A provided that it has been
approved by vote of a majority of the outstanding voting securities of the
respective Fund in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, will continue in effect for
successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date for such Fund in each year,
PROVIDED that such continuation is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not interested persons of the Trust, the Sub-Adviser, or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) by the vote of a majority of the Trust's Board of Trustees or, as to each
Fund, by the vote of the holders of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any
or all Funds at any time, without the payment of any penalty, by the Adviser, by
vote of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund on sixty (60) days' written notice to
the Sub-Adviser and by the Sub-Adviser on sixty (60) days' written notice to the
Adviser and the Trust. This Agreement will terminate automatically upon
termination of the investment advisory agreement between the Trust and the
Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" have the
same meanings of such terms in the 1940 Act). Termination of this Agreement with
respect to any Fund shall in no way affect the continued validity of this
Agreement or the performance thereunder with respect to any other Fund.
10. AMENDMENT OF THIS AGREEMENT. No material provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
The names "ARK Funds" and "Trustees of ARK Funds" refer respectively to
the Trust created by, and the Trustees, as trustees but not individually or
personally, acting from time to time under, the Declaration of Trust, to which
C-3
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "ARK Funds" entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only the
assets of the Trust. Persons dealing with a Fund must look solely to the assets
of the Trust belonging to the Fund for the enforcement of any claims against the
Trust.
C-4
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ALLIED INVESTMENT ADVISORS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
GOVETT INVESTMENT MANAGEMENT LIMITED
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ARK FUNDS
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
C-5
SCHEDULE A
For the services provided and the expenses assumed by the Sub-Adviser
under the terms of the Agreement, the Adviser shall pay to the Sub-Adviser a
monthly fee at the following annual rate:
PERCENT OF
AVERAGE DAILY EFFECTIVE
FUND NET ASSETS DATE
- ---- ---------- ----
ARK Emerging Markets Equity Portfolio 0.50% ____________ ___, 2003
C-6
ARK FUNDS
[NAME OF PORTFOLIO] ("PORTFOLIO")
SPECIAL MEETING OF SHAREHOLDERS
JANUARY __, 2003
This proxy is being solicited on behalf of the Board of Trustees of ARK
Funds (the "Fund") and relates to the proposal with respect to the Portfolio.
The undersigned hereby appoints as proxies James Foggo, Laurie Brooks and
Timothy Barto, each of them (with power of substitution) to vote for the
undersigned all shares of beneficial interest of the undersigned in the Fund at
the Special Meeting of Shareholders to be held at 10:00 a.m. Eastern Time on
January __, 2003, at Allfirst Trust Company N.A., 25 South Charles Street, 16th
Floor, Baltimore, Maryland 21201, and any adjournment thereof, with all the
power the undersigned would have if personally present. The shares represented
by this proxy will be voted as instructed. Unless indicated to the contrary,
this proxy shall be deemed to grant authority to vote "FOR" the proposal
relating to the [Name of Portfolio], with the Fund having discretionary power to
vote upon such other business as may properly come before the Meeting.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED HEREIN BY THE SIGNING
SHAREHOLDER(S). IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR THE PROPOSAL.
PLEASE DATE, SIGN AND RETURN PROMPTLY
VOTE ON PROPOSAL FOR AGAINST ABSTAIN
1. Approval of a new investment advisory / / / / / /
agreement between AIA and the Fund ("New
Advisory Agreement"). The New Advisory
Agreement provides that AIA will provide
investment advisory services to the Fund on
the same terms and for the same compensation
under which it currently operates.
Please sign within the box. If shares are held jointly, each shareholder named
should sign. If only one signs, his or her signature will be binding. If the
shareholder is a corporation, the President or a Vice President should sign in
his or her own name indicating this. If the Shareholder is a partnership, a
partner should sign, in his or her own name, that he or she is a "Partner."
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature Date
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature (Joint Owners) Date
ARK FUNDS
INTERNATIONAL EQUITY PORTFOLIO ("PORTFOLIO")
SPECIAL MEETING OF SHAREHOLDERS
JANUARY __, 2003
This proxy is being solicited on behalf of the Board of Trustees of ARK
Funds (the "Fund") and relates to the proposals with respect to the Portfolio.
The undersigned hereby appoints as proxies James Foggo, Laurie Brooks and
Timothy Barto, each of them (with power of substitution) to vote for the
undersigned all shares of beneficial interest of the undersigned in the Fund at
the Special Meeting of Shareholders to be held at 10:00 a.m. Eastern Time on
January __, 2003, at Allfirst Trust Company N.A., 25 South Charles Street, 16th
Floor, Baltimore, Maryland 21201, and any adjournment thereof, with all the
power the undersigned would have if personally present. The shares represented
by this proxy will be voted as instructed. Unless indicated to the contrary,
this proxy shall be deemed to grant authority to vote "FOR" all proposals
relating to the Portfolio, with the Fund having discretionary power to vote upon
such other business as may properly come before the Meeting.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED HEREIN BY THE SIGNING
SHAREHOLDER(S). IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR THE PROPOSALS.
PLEASE DATE, SIGN AND RETURN PROMPTLY
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of a new investment advisory / / / / / /
agreement between AIA and the Fund ("New
Advisory Agreement"). The New Advisory
Agreement provides that AIA will provide
investment advisory services to the Fund on
the same terms and for the same compensation
under which it currently operates.
2. Approval of a new investment sub-advisory
agreement among AIA, AIB Investment Managers
Limited and the Fund (the "New AIBIM
Sub-Advisory Agreement"). The New AIBIM
Sub-Advisory Agreement provides that AIB
Investment Managers Limited will provide
sub-advisory services to the Portfolio on the
same terms and for the same compensation
under which it currently operates.
Please sign within the box. If shares are held jointly, each shareholder named
should sign. If only one signs, his or her signature will be binding. If the
shareholder is a corporation, the President or a Vice President should sign in
his or her own name indicating this. If the Shareholder is a partnership, a
partner should sign, in his or her own name, that he or she is a "Partner."
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature Date
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature (Joint Owners) Date
ARK FUNDS
EMERGING MARKETS EQUITY PORTFOLIO ("PORTFOLIO")
SPECIAL MEETING OF SHAREHOLDERS
JANUARY __, 2003
This proxy is being solicited on behalf of the Board of Trustees of ARK
Funds (the "Fund") and relates to the proposals with respect to the Portfolio.
The undersigned hereby appoints as proxies James Foggo, Laurie Brooks and
Timothy Barto, each of them (with power of substitution) to vote for the
undersigned all shares of beneficial interest of the undersigned in the Fund at
the Special Meeting of Shareholders to be held at 10:00 a.m. Eastern Time on
January __, 2003, at Allfirst Trust Company N.A., 25 South Charles Street, 16th
Floor, Baltimore, Maryland 21201, and any adjournment thereof, with all the
power the undersigned would have if personally present. The shares represented
by this proxy will be voted as instructed. Unless indicated to the contrary,
this proxy shall be deemed to grant authority to vote "FOR" all proposals
relating to the Portfolio, with the Fund having discretionary power to vote upon
such other business as may properly come before the Meeting.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED HEREIN BY THE SIGNING
SHAREHOLDER(S). IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR THE PROPOSALS.
PLEASE DATE, SIGN AND RETURN PROMPTLY
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of a new investment advisory / / / / / /
agreement between AIA and the Fund ("New
Advisory Agreement"). The New Advisory
Agreement provides that AIA will provide
investment advisory services to the Fund on
the same terms and for the same compensation
under which it currently operates.
2. Approval of a new investment sub-advisory
agreement among AIA, Govett Investment
Management Limited and the Fund (the "New
Govett Sub-Advisory Agreement"). The New
Govett Sub-Advisory Agreement provides that
Govett Investment Management Limited will
provide sub-advisory services to the Portfolio
on the same terms and for the same
compensation under which it currently
operates.
Please sign within the box. If shares are held jointly, each shareholder named
should sign. If only one signs, his or her signature will be binding. If the
shareholder is a corporation, the President or a Vice President should sign, in
his or her own name indicating this. If the Shareholder is a partnership, a
partner should sign in his or her own name, that he or she is a "Partner."
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature Date
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature (Joint Owners) Date