As filed with the Securities and Exchange Commission on October 22, 2001.
File No. ___________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. _____ [ ]
INVESTEC FUNDS
(Formerly Guinness Flight Investment Funds)
(Exact name of Registrant as Specified in Trust Instrument)
1055 Washington Blvd., 3rd Floor
Stamford, Connecticut 06901
___________________________________________________
(Address of Principal Executive Office) (Zip Code)
(800) 362-5365
(Area Code and Telephone Number)
Susan Penry-Williams, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
____________________________________
(Name and Address of Agent for Service)
Copy to
Mr. Royce N. Brennen
Investec Funds
1055 Washington Blvd., 3rd Floor
Stamford, Connecticut 06901
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
Title of Securities Being Registered: Shares of Beneficial Interest.
No Filing Fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940, as amended.
Registrant proposes that the filing become effective on November 21, 2001,
pursuant to Rule 488 under the Securities Act of 1933, as amended.
Investec Funds
1055 Washington Blvd., 3rd Floor
Stamford, Connecticut 06901
Dear Shareholder,
Enclosed is a Proxy Statement seeking approval by the shareholders of your
Fund of a proposed merger of Investec internet.com(TM) Index Fund ("internet.com
Fund") and Investec Wireless World Fund(TM) ("Wireless Fund") (collectively,
"Merging Funds") into Investec Wired(R) Index Fund ("Wired Fund"). Investec
Asset Management U.S. Limited ("Investec") is the investment adviser for the
Investec Funds and will remain the investment adviser of the Wired Fund after
the merger.
We are recommending the merger of the Funds because the investment
objectives of the Merging Funds and the Wired Fund are similar and the Funds
employ similar investment policies to achieve their investment objectives.
Additionally, as discussed in the accompanying document, the Merging Funds'
asset bases are decreasing and the Wired Fund's ratio of expenses to net assets
for the most recently completed fiscal year is lower than those of the Merging
Funds. The combined assets of the Funds should provide a more stable asset base
for management because daily purchases and redemptions of shares should have a
less significant impact on the size of the combined Funds. The accompanying
document describes the proposed transaction and compares the investment
policies, operating expenses and performance history of the Merging Funds and
the Wired Fund. You should review the accompanying materials carefully.
Remember your vote is important. Please take a moment after reviewing the
enclosed materials to sign and return your proxy card in the enclosed postage
paid return envelope. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call from our proxy solicitor reminding you to
vote your shares. You may also vote your shares on the internet at http://_____
______________.
Sincerely,
Royce N. Brennan
President
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
INVESTEC FUNDS
Investec Wireless World FundTM
Investec internet.comTM Index Fund
800-915-6565
NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
The Investec Funds (the "Trust") will host a special joint meeting of
shareholders of the Investec Wireless World FundTM (the "Wireless World Fund")
and the Investec internet.comTM Index Fund (the "internet.com Fund") (separately
referred to as "a Fund" or "your Fund", and collectively referred to as "the
Funds") on December 17, 2001, at _______ a.m. Eastern Time (the "Meeting"). The
Meeting will be held at the Funds' offices, located at 1055 Washington Blvd.,
3rd Floor, Stamford, Connecticut. At the Meeting, we will ask shareholders of
each Fund to vote on the following proposal:
To approve an Agreement and Plan of Reorganization and Liquidation
(the "Plan") which if approved would result in the reorganization of
the Fund into the Investec Wired(R) Index Fund; and
To transact such other business as may properly come before the
Meeting and any adjournments thereof.
______________, 2001
By Order of the Board of Trustees,
Eric M. Banhazl
Secretary
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE EASILY AND QUICKLY BY MAIL, BY PHONE (Toll-Free), OR BY FAX.
JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON YOUR ENCLOSED PROXY CARD.
------------------------------------------------------------------------------
INVESTEC FUNDS
Investec Wireless World FundTM
Investec internet.comTM Index Fund
SPECIAL JOINT MEETING OF SHAREHOLDERS
December 17, 2001
____________________________________________________________
INVESTEC FUNDS
1055 Washington Blvd., 3rd Floor
Stamford, Connecticut 06901
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED __________, 2001
INTRODUCTION
------------
This Combined Proxy Statement and Prospectus is being provided for a
special joint meeting of shareholders of the Investec Wireless World FundTM (the
"Wireless World Fund") and the Investec internet.comTM Index Fund (the
"internet.com Fund") (separately referred to as "each Fund" or "your Fund", and
collectively referred to as "the Funds") to be held on December 17, 2001 (the
"Meeting"). We have divided the Combined Proxy Statement and Prospectus into
five parts:
Part 1-- An Overview
Part 2 -- Proposal to Approve an Agreement and Plan of the
Reorganization and Liquidation on behalf of your Fund
Part 3 -- More on Proxy Voting and Joint Meeting of Shareholders
Part 4 -- Trust Information
Part 5 -- Form of Agreement and Plan of Reorganization and Liquidation
Please read the entire Proxy Statement before voting. If you have any
questions, please feel free to call us at 800-915-6565.
This Combined Proxy Statement and Prospectus was first mailed to
shareholders the week of _________, 2001. It contains information about the
Investec Funds that you should know. Please keep it for future reference. A
Statement of Additional Information dated April 26, 2001 is incorporated by
reference and can be obtained free of charge by calling us at 800-915-6565.
Neither the Securities and Exchange Commission (the "SEC") nor any state
securities commission has approved or disapproved these securities, or
determined that this Combined Proxy Statement and Prospectus is ACCURATE or
COMPLETE. Anyone who tells you otherwise is Committing a crime.
Investec Funds is required by federal law to file reports, proxy
statements and other information with the SEC. The SEC maintains a website that
contains information about the Investec Funds. Any such reports, proxy material
and other information can be inspected and copied at the public reference
facilities of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
such materials can be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by electronic request at the following e-mail
address: publicinfo@sec.gov, at prescribed rates. You may call the SEC at (202)
942-8090 for information on the operation of the Public Reference Room.
PART 1 - AN OVERVIEW........................................................1
PART 2 - PROPOSAL TO APPROVE AN AGREEMENT AND PLAN OF THE REORGANIZATION AND
LIQUIDATION ON BEHALF OF YOUR FUND...........................................1
Introduction...........................................................1
How the Reorganization Works...........................................2
How the Fees of your Fund Compare to the Fees of the Wired
Index Fund.......................................................2
Information about the Reorganization...................................4
Why We Want to Reorganize the Funds....................................6
Considerations by the Board of Trustees................................7
How your Fund compares to the Wired Index Fund.........................7
Comparison of Investment Objectives..............................7
Comparison of Principal Investment Risks.........................9
Comparison of Potential Risks and Rewards/Performance...........10
Comparison of Operations........................................11
Investment Advisory Agreement.........................................11
Administration Agreement, Distribution Agreement and
Distribution Plans..............................................12
Transfer Agent and Custodian..........................................12
Dividends and Other Distributions.....................................12
Purchase, Redemption and Exchange Procedures..........................12
Exchange and Redemption Rights........................................13
Trustees..............................................................13
Comparison of Shareholder Rights......................................13
Capitalization of the Funds...........................................13
Required Vote.........................................................14
Board Recommendation..................................................14
PART 3 - MORE ON PROXY VOTING AND JOINT MEETING OF SHAREHOLDERS............14
PART 4 - FUND INFORMATION..................................................16
PART 5 - FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION.......16
PART 1 - AN OVERVIEW
The Board of Trustees of the Investec Funds (the "Trust") has sent you
this Combined Proxy Statement and Prospectus to ask for your vote on a proposal
to approve an Agreement and Plan of the Reorganization and Liquidation on behalf
of your Fund. If this proposal is approved by the shareholders of your Fund,
your Fund will be reorganized into the Investec Wired(R) Index Fund* (the "Wired
Index Fund"). In this Combined Proxy Statement and Prospectus, we refer to the
Agreement and Plan of Reorganization and Liquidation as the "Plan of
Reorganization," and to the transactions described in the Plan of Reorganization
as the "reorganization."
PART 2 - PROPOSAL TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION AND
LIQUIDATION ON BEHALF OF YOUR FUND
Introduction
The Board of Trustees of the Trust, on behalf of each Fund and the Wired
Index Fund, all of which are series of the Trust, has approved an Agreement and
Plan of Reorganization and Liquidation under which your Fund would be
reorganized into the Wired Index Fund.
The primary purpose of the reorganization of your Fund is to provide a
more stable base for management of the Fund because daily purchases and
redemptions of shares should have a less significant impact on the size of the
combined funds. This may grant a wider range of choices among permitted
investments than are currently available to your Fund. In addition, the larger
asset base following the reorganization may help your Fund achieve economies of
scale, thereby reducing its expenses as a percentage of net assets.
---------------
* "WIRED INDEX" is a service mark, and "WIRED" a registered trademark, of
Advance Magazine Publishers Inc. ("Advance"), used with permission of
Advance. Wired Magazine and Advance make no representation or warranty,
express or implied, to Investec or any member of the public regarding the
advisability of investing in securities generally or in the Fund
particularly or the ability of the Wired Index to track any aspect of
market performance. Wired Magazine will continue to determine the
composition of the Index without regard to Investec or the Fund, and Wired
Magazine has no obligation to take the needs of Investec or investors in
the Fund into consideration in determining or composing the Index. Advance
does not guarantee the quality, accuracy, currency, and/or the completeness
of the index or any data included therein. Advance makes no warranty,
express or implied, as to the results to be obtained by Investec, investors
in the fund, or any other person or entity from the use of the wired index
or any data included therein connection with the fund or for any other use.
Advance makes no express or implied warranties, and hereby expressly
disclaims all warranties, or merchantability or fitness for a particular
purpose or use with respect to the wired index or any data included
therein. Without limiting any of the foregoing, in no event shall advance
have any liability for any special, punitive, indirect, or consequential
damages (including lost profits), even if notified of the possibility of
such damages.
[The reorganization will qualify as a tax-free reorganization under the
Internal Revenue Code (the "Code").]
Shareholders of each Fund will vote separately to determine whether a Fund
will be reorganized into the Wired Index Fund. For each Fund, a majority vote by
shareholders is needed to adopt the Plan of Reorganization on behalf of that
Fund. If the reorganization of a Fund is not consummated for any reason,
including the failure to obtain the requisite approval of the shareholders of
the Fund, the reorganization may nevertheless proceed with respect to the other
Fund.
The next few pages of this Combined Proxy Statement and Prospectus discuss
some of the details of the proposed reorganization and how it will affect your
Fund and you.
How the Reorganization Works
If you approve the proposal discussed in this Combined Proxy Statement and
Prospectus, your Fund would reorganize into the Wired Index Fund. The
reorganization would work as follows:
o If you approve the Plan of Reorganization, your Fund would transfer
substantially all of its assets and liabilities to the Wired Index Fund,
in exchange for shares of the Wired Index Fund.
o Your Fund would distribute to you the Wired Index Fund shares it receives.
The dollar value of the Wired Index Fund shares would be the same as the
dollar value of your Fund shares.
o You would become a shareholder of the Wired Index Fund. Your Fund would
then cease operations.
The internet.com Fund and the Wired Index Fund are managed by the same
portfolio manager and focus on long-term capital appreciation. The Wireless
World Fund is managed by a different team of portfolio managers than the Wired
Index Fund, but also focuses on long-term capital appreciation. If the proposal
is approved, the portfolio manager of the Wired Index Fund will manage the Fund
and the focus will continue to be long-term capital appreciation.
The investment objective of the Wireless World Fund is long-term capital
appreciation primarily through investments in equity securities of companies
with substantial business interest in, or that will benefit from, a shift toward
wireless communication. The investment objective of the internet.com Fund is
long-term capital appreciation primarily through investments in equity
securities of companies that comprise the internet.com Index. The investment
objective of the Wired Index Fund is long-term capital appreciation primarily
though investments in equity securities of companies that comprise the Wired
Index. Investec Asset Management U.S. Limited (the "Adviser") currently serves
as the investment adviser of each Fund.
How the Fees of your Fund Compare to the Fees of the Wired Index
Fund
Both your Fund and the Wired Index Fund, like all mutual funds, incur
certain expenses in their operations. These expenses include management fees, as
well as the costs of maintaining
2
accounts, administration, providing shareholder liaison and distribution
services, and other activities. The following table describes the fees and
expenses you may pay if you invest in your Fund or the Wired Index Fund. The
table also shows the expected expenses of the Wired Index Fund after the
reorganizations. The Funds' annual expenses may be more or less than the amounts
shown below.
Combined Pro
Forma
Wireless internet.com Wired (All three
World Fund Fund Index Fund Funds)
Shareholder Transaction
Expenses (paid directly from
your investment)
Maximum Sales Charge Imposed None None None None
on Purchases (as a percentage
of offering price)
Sales Charge Imposed on
Reinvested Dividends None None None None
Deferred Sales Charge None None None None
Redemption Fees/Exchange Fees 1.00%(1) 2.00%(5) 1.00%(1) 1.00%(5)
Maximum Account Fee None None None None
Annual Fund Operating Expenses
(as a percentage of average
daily net assets)
Management Fees 1.00% 0.90%(2) 0.90%(2) 0.90%(2)
Distribution (Rule 12b-1) Fees 0.00% 0.00% 0.00% 0.00%
Other Expenses 0.68%(3) 0.64% 0.34% 0.79%
Total Annual Fund Operating
Expenses 1.68%(3) 1.54%(4) 1.24%(4) 1.69%(4)
Expenses Reimbursed to the Fund None 0.19% None 0.34%
Net Annual Fund Operating
Expenses (expenses actually
incurred by the Fund) None 1.35%(4) 1.24%(4) 1.35%(4)
(1) You will be charged a 1% fee if you redeem or exchange shares of this Fund
within 30 days of purchase. There is a $10 fee for redemptions by wire.
(2) Pursuant to an Advisory Agreement, this Fund will pay an advisory fee of
0.90% on the first $100 in assets, 0.75% on the next $100 to $500 in assets,
and 0.60% on assets over $500 million.
(3) These expenses are based on the estimated amount for the current fiscal
year.
(4) The Fund's Adviser is contractually obligated to cap the Fund's Total Annual
Fund Operating Expenses at 1.35% through June 30, 2002.
(5) You will be charged a 2% fee if you redeem or exchange shares of this Fund
within 30 days of purchase. There is a $10 fee for redemptions by wire.
3
Example. This Example is intended to help you compare the cost of
investing in your Fund with the cost of investing in the Wired Index Fund, and
with the cost of investing in the Wired Index Fund if the proposal is approved
by shareholders of each Fund.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that a
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
--------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Wireless World Fund $171 $530 $913 $1,987
--------------------------------------------------------------------------------
internet.com Fund $137 $468 $821 $1,818
--------------------------------------------------------------------------------
Wired Index Fund* $126 $393 $681 $1,500
--------------------------------------------------------------------------------
Combined Pro Forma (All three Funds)* $137 $499 $886 $1,969
--------------------------------------------------------------------------------
* Your costs of investing in the Fund for 1 year reflect the amount you
would pay after the Adviser reimburses the Fund for some or all of the
Other Expenses. Your costs of investing in the Fund for 3, 5 and 10 years
reflect the amount you would pay if the Adviser did not reimburse the Fund
for some or all of the Other Expenses. If the Adviser continues to cap the
Fund's expenses for 3, 5 or 10 years as the Adviser did for the first
year, your actual costs for those periods would be lower than the amounts
shown. The Adviser is currently under no obligation to cap expenses for
any period beyond June 30, 2002.
Information about the Reorganization
This section describes some information you should know about the
reorganization of your Fund.
Description of transaction. The Plan of Reorganization provides that your
Fund will transfer substantially all of its assets to the Wired Index Fund in
exchange for shares of the Wired Index Fund in the same proportion as the shares
of your Fund. The Wired Index Fund will also assume substantially all of your
Fund's liabilities. After this transaction, the Wired Index Fund will give you
shares of the Wired Index Fund (the "Closing"). The dollar value of the shares
you receive will be equal to the dollar value of the Fund shares you owned at
the end of business on the day the Closing. You will not pay a sales charge or
any other fee as part of this transaction. The Funds will bear certain expenses
that are normal with this type of reorganization.
Please see the Plan of Reorganization for a more detailed description of
the reorganization. You can find the Plan of Reorganization in Part 5 of this
Combined Proxy Statement and Prospectus.
[Tax Consequences of the Reorganization. The following discussion
addresses certain material United States federal income tax consequences of the
reorganization. It is based on current tax law, which may be changed by
legislative, judicial, or administrative action,
4
sometimes with retroactive effect. No attempt has been made to present a
complete discussion of the federal tax consequences to the Funds or their
shareholders, and this discussion does not address any state, local or foreign
tax consequences. The discussion relates to United States persons who hold
shares of a Fund as capital assets (as defined in section 1221 of the United
States Internal Revenue Code (the "Code")). Special tax considerations may apply
to certain types of investors subject to special treatment under the tax law.
Accordingly, you are urged to consult your tax adviser with specific reference
to your own tax circumstances.
As a condition to the closing of the reorganization, both your Fund and
the Wired Index Fund must receive an opinion of counsel, on the basis of the
representations set forth or referred to in such opinion, substantially to the
effect that:
o No gain or loss will be recognized by your Fund on the transfer to
the Wired Index Fund of its assets in exchange solely for shares of
the Wired Index Fund and the Wired Index Fund's assumption of your
Fund's liabilities or on the subsequent distribution of shares of
the Wired Index Fund to you in liquidation of your Fund;
o No gain or loss will be recognized by the Wired Index Fund on its
receipt of your Fund's assets in exchange solely for shares of the
Wired Index Fund and the Wired Index Fund's assumption of your
Fund's liabilities;
o The Wired Index Fund's adjusted tax basis in the assets acquired
from your Fund will be equal to the basis thereof in your Fund's
hands immediately before the reorganization, and the Wired Index
Fund's holding period for the assets acquired from your Fund will
include your Fund's holding period therefor;
o You will recognize no gain or loss on the exchange of shares of your
Fund solely for shares of the Wired Index Fund pursuant to the
reorganization; and
o Your aggregate tax basis in shares of the Wired Index Fund received
by you in the reorganization will equal your aggregate tax basis in
the shares of your Fund surrendered in exchange therefor, and your
holding period for shares of the Wired Index Fund received in the
reorganization will include your holding period for the shares of
your Fund surrendered in exchange therefor, provided that you hold
such shares as capital assets at the effective time of the
reorganization.
As of September 30, 2001, the internet.com Fund and the Wireless World
Fund had capital loss carryforwards of $14,761,661 and $23,649,490,
respectively. As a result of the reorganization, the use of your Fund's capital
loss carryforward after the reorganization may be limited to an amount equal to
the net asset value of your Fund immediately prior to the reorganization
multiplied by the long-term tax-exempt rate in effect for the month in which the
reorganization occurs (the rate for October 2001 is 4.94%).
You will be required to retain in your records and file with your federal
income tax return for the taxable year in which the reorganization takes place a
statement setting forth all relevant
5
facts in respect of the nonrecognition of gain or loss upon the exchange. The
statement is required to include:
o your tax basis in the shares surrendered in the reorganization; and
o the fair market value of the shares of the Wired Index Fund received
in the reorganization as of the effective time of the
reorganization.
Your Fund or the Wired Index Fund may pay a dividend or distribute a
taxable gain prior to the reorganization. You may be liable for taxes on those
distributions.
The foregoing discussion is intended only as a summary and does not
purport to be a complete analysis or listing of all potential tax effects
relevant to a decision whether to vote in favor of the reorganization.]
Conditions of the reorganization. Before the reorganization can occur,
both your Fund and the Wired Index Fund must satisfy certain conditions. For
example:
o [Each Fund must receive an opinion of counsel stating, in effect, that
the reorganization will qualify as a tax-free reorganization under the
Code;]
o Each Fund must receive an opinion of counsel certifying to certain matters
concerning the legal existence of each Fund;
o For each Fund, a majority of the shareholders voting at the Meeting in
person or by proxy must approve the reorganization on behalf of that Fund.
Why We Want to Reorganize the Funds
The Adviser believes that the reorganization will benefit all of the
Funds. Among other things, the Adviser believes the reorganization will:
o Result in economies of scale. That is, the increased assets of the
combined Funds could possibly reduce expenses over time by spreading fixed
costs over a larger asset base.
o Going forward, eliminate duplicative efforts that separate funds may
require, such as accounting services, resulting in more efficient
operations of the Wired Index Fund.
o Provides a more stable base for management of your Fund because daily
purchases and redemptions of shares should have a less significant impact
on the size of the combined Funds.
o Provide greater investment opportunities. That is, the increased assets of
the combined Funds will provide the manager with a wider range of choices
among permitted investments than are currently available to the Funds
separately.
6
Considerations by the Board of Trustees
On September 10, 2001, the Board of Trustees of the Trust, on behalf of
both your Fund and the Wired Index Fund, unanimously approved the proposed Plan
of Reorganization for each Fund. The Trustees concluded that the reorganization:
o Was in the best interests of the shareholders of both your Fund and the
Wired Index Fund; and
o Would not result in any dilution of the value of your investment or the
investment of the shareholders of the Wired Index Fund.
In approving the Plan of Reorganization, the Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940, as amended) (the "Independent Trustees"),
considered that, among other things:
o Both your Fund and the Wired Index Fund seek long-term capital
appreciation;
o Merging your Fund with the Wired Index Fund would result in the combined
Fund having a larger asset base which, over time, may result in economies
of scale and offer improved services to shareholders; and
o [The reorganization will qualify as a tax-free reorganization under the
Code.]
How your Fund Compares to the Wired Index Fund
For complete information about your Fund, or the Wired Index Fund, please
refer to your copy of the Investec Funds' combined prospectus dated April 26,
2001. You also can call us at 800-915-6565 for a free copy of the combined
prospectus. The information contained in your Fund's prospectus is incorporated
by reference into this Combined Proxy Statement and Prospectus.
Comparison of Investment Objectives. The following table compares
the investment objective of your Fund with the investment objective of the Wired
Index Fund.
-----------------------------------------------------------------------------------------
Wireless World Fund internet.com Fund Wired Index Fund
-----------------------------------------------------------------------------------------
Long-term capital Long-term capital Long-term capital appreciation
appreciation primarily appreciation primarily primarily though investments in
through investments in through investments in equity securities of companies
equity securities of equity securities of that comprise the Wired Index.
companies with companies that comprise the
substantial business internet.com Index.
interest in, or that
will benefit from, a
shift toward wireless
communication.
-----------------------------------------------------------------------------------------
7
Comparison of Investment Policies and Strategies. Your Fund and the
Wired Index Fund differ primarily in the investment strategies that they employ
to achieve their respective goals. The following table compares the principal
investment policies and strategies of your Fund with the principal investment
policies and strategies of the Wired Index Fund.
-----------------------------------------------------------------------------------------
Wireless World Fund internet.com Fund Wired Index Fund
-----------------------------------------------------------------------------------------
The Fund intends to invest at The internet.com(TM)Index The Wired(R)Index Fund
least 85% of its assets in Fund will invest at least will invest at least 85%
companies with substantial 85% of its total assets in of its total assets in
interest in, or that may the securities that comprise securities that comprise
benefit from, a shift toward the internet.com Index. the Wired(R)Index.
wireless communications. This
would include As an index fund, the As an index fund, the
telecommunications companies, internet.com(TM)Index Fund Wired(R)Index Fund will
hardware manufacturers, will attempt to replicate attempt to replicate the
Internet companies, content the performance of the performance of the Wired(R)
providers and service internet.com Index. The Fund Index. The Fund will
companies that supply will follow a principal follow a principal
equipment, hardware, investment policy of "full investment policy of
information or services via replication," meaning that "full replication",
wireless communications the Fund will attempt to meaning that the Fund
devices. invest in all 50 component will attempt to invest in
issues that comprise the all 40 component issues
The Fund intends to invest in internet.com Index in that comprise the Wired(R)
a portfolio of approximately proportion to their Index in the proportion
40 stocks that the manager weighting in the Index. From they are represented
believes represent the most time to time, the Fund may within the Index. From
attractive "wireless also use a method known as time to time, we may also
companies." "index sampling" to use a method known as
efficiently handle cash "index sampling", to
In evaluating and selecting inflows and outflows on a efficiently handle cash
companies for inclusion in the short-term basis. "Index inflows and outflows on a
Fund the manager uses a sampling" is an investment short-term basis. "Index
"bottom up" process. This technique that seeks to sampling" is an
process places a premium on replicate the performance of investment technique that
examining and selecting the Index by investing in seeks to replicate the
individual stocks based on fewer than the 50 component performance of the Wired(R)
their individual investment stocks. Index by investing in
merits. The manager will be fewer than the 40
particularly interested in component stocks.
growth companies that are
likely to benefit from new or Temporary Defensive
innovative products, services Investing. During unusual
or processes that should economic or business
enhance such companies' circumstances as
prospects for future growth in determined by the
earnings and revenues. manager, the Fund may
adopt a temporary
The manager will invest mainly defensive position and
in medium to large invest a portion or all
capitalization companies of its portfolio in Money
(companies with market Market Instruments. To
capitalizations of more than the extent the Fund is
U.S. $1 billion at the time of invested in Money Market
purchase) but will from time Instruments for defensive
to time invest in smaller purposes the Fund's
capitalization issues investment objective may
-----------------------------------------------------------------------------------------
8
-----------------------------------------------------------------------------------------
Wireless World Fund internet.com Fund Wired Index Fund
-----------------------------------------------------------------------------------------
(companies with market not be achieved.
capitalizations of less than
U.S. $1 billion at the time of
purchase).
During unusual economic or
business circumstances as
determined by the manager, the
Fund may adopt a temporary
defensive position and invest
a portion or all of its
portfolio in Money Market
Instruments. To the extent the
Fund is invested in Money
Market Instruments for
defensive purposes the Fund's
investment objective may not
be achieved.
-----------------------------------------------------------------------------------------
Comparison of Principal Investment Risks. The following table
compares the principal investment risks of investing in your Fund with the
principal investment risks of investing in the Wired Index Fund.
-----------------------------------------------------------------------------------------
Wireless World Fund internet.com Fund Wired Index Fund
-----------------------------------------------------------------------------------------
The Fund is subject to the The Fund is subject to the The Fund is subject to
following risks common to all following risks common to the risks common to all
mutual funds that invest in all mutual funds that invest mutual funds that invest
equity securities and that in equity securities and the in equity securities and
invest in companies involved securities that make up the the securities that make
in the telecommunications, internet.com Index. You may up the Wired(R) Index. You
Internet or technology lose money under any of the may lose money under any
industries. You may lose money following circumstances: of the following
if any of the following occur: circumstances:
o the internet.com Index
o The stock market declines declines in value; o the Wired(R)Index
in value; declines in value;
o Internet stocks fall
o Telecommunications, out of favor with o the Wired(R)Index is
technology or wireless investors (market value more adversely
services stocks decline of an Internet stock affected by a market
in value; goes down); downturn than a
larger, more
o Telecommunications, o the internet.com Index broad-based index
technology or wireless is more adversely due to its
services stocks fall out affected by a market concentration and
of favor with investors; downturn than a larger, focus on specific
more broad-based index sectors;
o Telecommunications, due to its
technology or wireless concentration and focus o technology or
services companies in on Internet stocks or a telecommunication
which the Fund invests specific sub-sector stocks fall out of
lose money due to within the Internet favor with
competitive business sector; investors; or
9
-----------------------------------------------------------------------------------------
Wireless World Fund internet.com Fund Wired Index Fund
-----------------------------------------------------------------------------------------
pressures or failure to
keep pace with the rapid o Internet companies in o technology companies
rate of technological the internet.com Index in the Wired(R)Index
change; or lose money due to lose money due to
intense pricing intense pricing
o The Fund manager's pressure or high pressure or high
investment strategy does capital investment capital investment
not achieve the Fund's costs; costs.
objective or the manager
does not implement the o the Fund manager's The Wired(R)Index Fund
strategy properly. investment strategy currently has a
does not achieve the meaningful minority
You should also be aware that Fund's objective or the percentage of its assets
the share prices of manager does not represented by companies
telecommunications, technology implement the strategy in the technology,
and wireless services properly; or Internet and
companies fluctuate more than communications
other stocks because these o the stock market goes industries. These
industries are subject to more down. industries are extremely
rapid change in technology and competitive and subject
products than stocks of In addition, you should be to rapid rates of change.
companies in most other aware that share prices of The competitive nature of
industries. Further, to the Internet companies will these industries and
extent that the Fund invests fluctuate more than other rapid rate of change
in small companies there may stocks because Internet places a challenge on the
be additional risks associated stocks are subject to more management of these
with such stocks. Stocks of rapid change in technology companies to be
small companies are more and products than other successful.
difficult to sell during stocks and that small cap
market downturns due to lower stocks which comprise the The Wired(R) Index Fund is
liquidity. The Fund may internet.com Index are more non-diversified which
exhibit a greater degree of difficult to sell during a means that, compared to
volatility and fluctuation on down market due to lower other funds, the Fund may
a day-to-day basis than a more liquidity. The Fund may invest a greater
diversified fund. exhibit a greater degree of percentage of its assets
volatility and fluctuation in a particular issuer.
on a day-to day basis than a To the extent that the
larger, broad-based index. Fund invests in a small
number of issuers, there
may be a greater risk of
losing money than in a
diversified investment
company.
-----------------------------------------------------------------------------------------
Comparison of Potential Risks and Rewards/Performance. Your Fund and
the Wired Index Fund have their own risks and potential rewards. The charts and
tables below compare the potential risks and rewards of investing in each Fund.
The bar charts shown below provide an indication of the risks of investing
in each Fund by showing changes in each Fund's performance for various time
periods ending December 31. The figures shown in the bar charts and tables
assume reinvestment of dividends.
Keep in mind that past performance does not indicate future results.
10
Wireless World Fund
No bar chart is available because the Fund has not been in existence for a
full calendar year.
internet.com Fund
2000: -58.48
During the period shown in the bar chart, the best performance for a
quarter was 11.34% (for the quarter ended 3/31/00). The worst performance
was -52.20% (for the quarter ended 12/31/00).
Wired Index Fund
1999: 68.68%
2000: -16.78%
During the period shown in the bar chart, the best performance for a
quarter was 40.06% (for the quarter ended 12/31/99). The worst performance was
-19.55% (for the quarter ended 12/31/00).
The average annual total returns for internet.com Fund and the Wired Index
Fund for the periods ended December 31, 2000 are as follows:
----------------------------------------------------------------------
Average Annual Total Returns Past One Since
Year inception
----------------------------------------------------------------------
internet.com -58.48% -17.85%*
----------------------------------------------------------------------
Wired Index Fund -16.78% 24.52%**
----------------------------------------------------------------------
* Average annual total return since inception, July 30, 1999.
** Average annual total return since inception, December 15, 1998.
The average annual total returns for the Wireless World Fund is not
available because the Fund has not been in existence for a full calendar year.
Comparison of Operations.
Investment Advisory Agreement
Investec Asset Management U.S. Limited (the "Adviser") is the investment
adviser for all the Funds and the Wired Index Fund. The Adviser supervises all
aspects of the Funds' operations and advises the Funds, subject to oversight by
the Fund's Board of Trustees. For providing these services, the each Fund pays
the Adviser an annual advisory fee. The Adviser's primary offices are located in
the U.K., South Africa, Guernsey, Hong Kong, and the U.S. The U.S. office is
located at 1055 Washington Blvd., 3rd Floor Stamford, CT 06901. The Advisers'
main office is located in London, England at 2 Gresham Street, London EC2V 7QP.
The Hong Kong office is located at 2106-2108 Jardine House, One Connaught Place,
Central, Hong Kong. The Advisory Agreement was approved on behalf of each Fund
by the Board of Trustees on June
11
3, 1998 and by the shareholders of the Funds on August 25, 1998 at a shareholder
meeting called for that purpose.
Administration Agreement, Distribution Agreement and Distribution
Plan
The Trust has entered into separate Administration and Distribution
Agreements with respect to the Funds with Investment Company Administration,
L.L.C. ("Administrator") and Quasar Distributors, LLC ("Distributor"),
respectively.
For its services to the Funds, the Administrator receives a monthly fee
equal to, on an annual basis, 0.05% of each Fund's average daily net assets,
subject to a $20,000 annual minimum per fund.
Under the Distribution Agreement, the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchases for the Funds'
shares and pays the expenses of printing and distributing any prospectuses,
reports and other literature used by the Distributor, advertising, and other
promotional activities in connection with the offering of shares of the Funds
for sale to the public.
The Funds will not make separate payments as a result of the Distribution
Plan to the Adviser, the Administrator, Distributor or any other party, it being
recognized that the Funds presently pay, and will continue to pay, an investment
advisory fee to the Adviser and an administration fee to the Administrator. To
the extent that any payments made by the Funds to the Adviser or the
Administrator, including payment of fees under the Investment Advisory Agreement
or the Administration Agreement, respectively, should be deemed to be indirect
financing of any activity primarily intended to result in the sale of shares of
the Funds within the context of rule 12b-1 under the 1940 Act, then such
payments shall be deemed to be authorized by the Plan. The Distribution Plan and
related agreements were approved by the Board of Trustees including all of the
"Qualified Trustees" (Trustees who are not "interested" persons of the Funds, as
defined in the Investment Company Act of 1940 Act, as amended (the "1940 Act"),
and who have no direct or indirect financial interest in the Plan or any related
agreement).
Transfer Agent and Custodian
Transfer Agent. State Street Bank and Trust Company is the Transfer Agent
for the Funds. The Transfer Agent provides record keeping and shareholder
services. State Street is located at P.O. Box 1912, Boston, MA 02105.
Custodian. Investors Bank and Trust Company is the custodian for the
Funds. The custodian holds the securities, cash and other assets of the Funds.
Investors Bank and Trust is located at 200 Claredon Street, Boston, MA 02116.
Dividends and Other Distributions
Both Funds and the Wired Index Fund distribute all or most of their net
investment income and net capital gains to shareholders. Dividends (investment
income) for the Funds are normally declared and paid semi-annually, in June and
December. Net capital gains for the Funds are normally distributed in June and
December. When calculating the amount of capital
12
gain for a Fund, the Fund can offset any capital gain with net capital loss
(which may be carried forward from a previous year).
Your dividends and/or capital gains distributions will be automatically
reinvested on the ex-dividend date when there is a distribution, unless you
elect otherwise, so that you will be buying more of both full and fractional
shares of the Fund. You will be buying those new shares at the NAV per share on
the ex-dividend date. You may choose to have dividends and capital gains
distributions paid to you in cash. You may also choose to reinvest dividends and
capital gains distributions in shares of another Investec Fund. You may
authorize either of these options by calling the Transfer Agent at (800)
915-6565 and requesting an optional shareholder services form. Dividends and
distributions are treated in the same manner for federal income tax purposes
whether you receive them in the form of cash or additional shares
Purchase, Redemption and Exchange Procedures
The Transfer Agent is open from 8 a.m. to 6 p.m. Eastern Time for
purchase, redemption and exchange orders. Shares will be purchased, exchanged
and redeemed at NAV per share. For trades in the Wired(R) Index Fund, Wireless
World Fund(TM) and internet.com(TM) Index Fund, the transfer agent must receive
your request by the close of the New York Stock Exchange (generally 4:00 p.m.
Eastern Time) to receive the NAV of that day. The phone number you should call
for account transaction requests is (800) 915-6565.
Exchange and Redemption Rights
You may exchange or redeem shares by mail or telephone. When you exchange
shares, you sell shares of one Investec Fund and buy shares of another Fund. You
may realize either a gain or loss on those shares and will be responsible for
paying the appropriate taxes. If you exchange or redeem through a broker, the
broker may charge you a transaction fee. If you purchased your shares by check,
you may not receive your redemption proceeds until the check has cleared, which
may take up to 15 calendar days.
Trustees
The Board of Trustees of the Trust is responsible for the management of
both Funds.
Comparison of Shareholder Rights. As series of the Trust, both
Funds' shareholders have the same rights, including, but not limited to, par
value, preemptive rights, preference and appraisal rights.
Capitalization of the Funds. The table below show existing
capitalization as of September 30, 2001, as well as pro forma capitalization as
of the same date, which reflects the impact of any corporate actions, including
accounting adjustments, required to facilitate the reorganization. For these
reasons, the total pro forma combined Total Net Assets may differ from the
combined net assets of the Funds prior to the reorganization.
13
---------------------------------------------------------------------------
Total Net
Assets in Shares
Millions Outstanding
---------------------------------------------------------------------------
Wireless World $10,470 2,894
---------------------------------------------------------------------------
internet.com Fund $3,746 1,341
---------------------------------------------------------------------------
Wired Index Fund $70,693 6,556
---------------------------------------------------------------------------
Combined Pro Forma (All Three Funds) $84,909 7,875
---------------------------------------------------------------------------
Required Vote
Approval of the Proposal requires approval of a majority of the
outstanding voting securities of your Fund. Should the Plan of Reorganization
not be approved with respect to your Fund, the Board of Trustees would determine
what, if any, further action should be taken, including continuing to operate
your Fund or liquidating it. If the reorganization of a Fund is not consummated
for any reason, including the failure to obtain the requisite approval of the
shareholders of the Fund, the reorganization may nevertheless proceed with
respect to the other Fund.
Board Recommendation
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS OF EACH FUND VOTE "FOR" THE PROPOSAL
PART 3 - MORE ON PROXY VOTING AND JOINT MEETING OF SHAREHOLDERS
Who Can Vote
Only shareholders of record of each Fund at the close of business on the
Record Date, __________, 2001, may vote for the proposals at the Meeting. As of
the Record Date, the Wireless World Fund had ________shares of beneficial
interest issued and outstanding, each share being entitled to one vote. As of
the Record Date, the internet.com Fund had ________shares of beneficial interest
issued and outstanding, each share being entitled to one vote.
Information Concerning Outstanding Shares
[To the best knowledge of each of the Funds, no person beneficially owned
5% or more of the outstanding shares of a Fund as of the Record Date. As of the
Record Date, the Trustees and officers as a group owned beneficially less than
1% of the outstanding shares of either one of the Funds.]
Quorum Requirements
At the Meeting, the presence in person or by proxy of shareholders of
one-third of the outstanding shares entitled to vote at the Meeting shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that a quorum of shareholders is not present at the Meeting, the
persons named as proxies shall have the power to adjourn the Meeting. Such
14
meeting shall be reconvened without additional notice. In the event a quorum is
present but sufficient votes to approve the proposal are not received, the
persons named as proxies may propose one or more adjournments to permit further
solicitation of proxies. If this should occur, we will vote proxies for or
against a motion to adjourn in the same proportion to the votes received in
favor or against the proposal.
You may cast one vote for the proposal for each whole share that you own
of the Fund. We count your fractional shares as fractional votes. If we receive
your proxy before the Meeting date, we will vote your shares as you instruct the
proxies. If you sign and return your proxy, but do not specify instructions, we
will vote your shares in favor of the proposal. You may revoke your proxy at any
time before the Meeting if you notify us in writing, or if you attend the
Meeting in person and vote in person.
If a proxy represents a broker "non-vote" (that is, a proxy from a broker
or nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote shares on a particular matter
with respect to which the broker or nominee does not have discretionary power)
or is marked with an abstention, the shares represented thereby will be
considered to be present at the Meeting for purposes of determining the
existence of a quorum for the transaction of business but will not be voted. For
this reason, a broker "non-vote" and abstentions will have the affect of a "no"
vote for purposes of obtaining the requisite approval of the proposal.
The Proxy Solicitation Process
The Board of Trustees of the Trust is soliciting your proxy to vote on the
matters described in this Combined Prospectus and Proxy Statement. We expect to
solicit proxies primarily by mail, but representatives of the Fund, the Fund's
investment advisor, their affiliates or others may communicate with you by mail
or by telephone or other electronic means to discuss your vote. Such individuals
will receive no additional compensation from the Fund for soliciting your proxy
vote. [The Funds have also retained Georgeson Shareholder, a professional proxy
solicitation firm, to assist in the solicitation of proxies. The cost of the
services of Georgeson Shareholder is expected to be approximately $_____ and
will be shared equally by the Funds and the Adviser.]
If you do not expect to attend the Meeting, please sign your proxy card
promptly and return it in the enclosed envelope to avoid unnecessary expense and
delay. No postage is necessary. You may also vote your shares by phone at
1-800-690-6903, by fax at ________________, or via the internet at
http//www.proxyvote.com. If you need assistance, or have any questions regarding
the proposal or how to vote your shares, please call your Fund at
1-800-434-5623. A proxy is revocable at any time prior to its use.
Other business. The Board of Trustees knows of no other business to be
brought before the Meeting. If any other matters properly come before the
Meeting, and on all matters incidental to the conduct of the Meeting, the named
proxies will vote all proxies using their best judgment on such matters unless
instructed to the contrary.
15
Recommendation of the Board of Trustees. After carefully considering all
of the issues involved, the Board of Trustees of the Trust has unanimously
concluded that the proposals are in the best interests of shareholders. The
Board of Trustees recommends that you vote to approve the Proposals.
PART 4 - FUND INFORMATION
The Trust is a business trust established under Delaware law. The
operations of The Trust is governed by a Trust Instrument dated March 7, 1997.
Each Fund is a separate series of the Trust and, as such, has similar
rights under the Trust Instrument of the Trust and applicable Delaware law. You
should be aware of the following features of the Funds:
o Shares of each Fund participate equally in dividends and other
distributions attributable to that Fund, including any distributions in
the event of a liquidation.
o Each share of the Funds is entitled to one vote for all purposes.
o Shares of all series of the Trust vote for the election of Trustees and on
any other matter that affects all series of the Trust in substantially the
same manner, except as otherwise required by law.
o As to matters that affect each Fund differently, such as approval of an
investment advisory agreement, shares of each series vote as a separate
series.
o Delaware law does not require registered investment companies, such as the
Trust or its series, to hold annual meetings of shareholders and it is
anticipated that shareholder meetings will be held only when specifically
required by federal or state law.
o Shareholders have available certain procedures for the removal of
Trustees.
o The Trust indemnifies trustees and officers to the fullest extent
permitted under federal and Delaware law.
Financial Statements. Ernst & Young LLP, independent auditors of the
Trust, has audited the financial statements for the year ended December 31, 2000
incorporated by reference into the Statement of Additional Information dated
April 26, 2001.
PART 5 - FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
This AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ("Agreement") is
made as of __________, 2001, between Investec Funds, a Delaware business trust
(the "Trust"), on behalf of Investec Wired(R) Index Fund, a series of the Trust
("Acquiring Fund"), and the Trust, on behalf of [Investec Wireless World
FundTM][Investec internet.com FundTM], a series of the Trust ("Target").
(Acquiring Fund and Target are sometimes referred to
16
herein individually as a "Fund" and collectively as the "Funds," and the Trust
is sometimes referred to herein as the "Investment Company.")
All agreements, representations, and obligations described herein, made or
to be taken or undertaken by either Fund, are made or shall be taken or
undertaken by the Trust on the Fund's behalf.
In accordance with the terms and conditions set forth in this Agreement,
the parties desire that Target transfer substantially all its assets to
Acquiring Fund in exchange solely for voting shares of beneficial interest of
Acquiring Fund ("Acquiring Fund's Shares") and the assumption by Acquiring Fund
of substantially all of Target's liabilities, and that Target distribute
Acquiring Fund's Shares pro rata to the holders of shares of beneficial interest
in Target ("Target's Shares") in liquidation of Target. All such transactions
with respect to Target and Acquiring Fund are referred to herein collectively as
the "Reorganization."
It is intended by the parties hereto that the Reorganization constitute a
reorganization within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"). The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Treasury
Regulation Sections 1.368-2(g) and 1.368-3(a).
In consideration of the mutual promises herein, the parties covenant and
agree as follows:
1. PLAN OF REORGANIZATION AND LIQUIDATION OF TARGET
1.1. At the Effective Time (as defined in paragraph 3.1), Target agrees
to assign, sell, convey, transfer, and deliver all of its assets
described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring
Fund agrees in exchange therefore:
(a) to issue and deliver to Target the number of full and
fractional Acquiring Fund's Shares determined by dividing the
net value of Target (computed as set forth in paragraph 2.1)
by the "NAV" (computed as set forth in paragraph 2.2) of
Acquiring Fund's Shares; and
(b) to assume Target's liabilities described in paragraph 1.3
("Liabilities").
1.2. Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to
register shares under applicable securities laws, books and records,
deferred and prepaid expenses shown as assets on Target's books, and
other property owned by Target at the Effective Time as defined in
paragraph 3.1.
1.3. Liabilities shall include (except as otherwise provided herein) all
of Target's known liabilities, debts and obligations arising in the
ordinary course of business reflected on
the books of Target at the Effective Time, and any contingent
liabilities, if any, as the Board of Trustees shall reasonably deem
exist against Target at the Effective Time, for which contingent and
other appropriate liability reserves shall be established on
Target's books. Notwithstanding the foregoing, Target agrees to use
its best efforts to discharge all of its known Liabilities prior to
the Effective Time.
17
1.4. At or immediately before the Effective Time, Target shall declare
and pay to its shareholders a dividend and/or other distribution in
an amount large enough so that it will have distributed
substantially all (and in any event not less than 90%) of its
investment company taxable income (computed without regard to any
deduction for dividends paid) and substantially all of its realized
net capital gain, if any, for the current taxable year through the
Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute Acquiring Fund's Shares
received by it pursuant to paragraph 1.1 to Target's shareholders of
record, determined as of the Effective Time (collectively
"Shareholders" and individually a "Shareholder"), in exchange for
Target's Shares and in liquidation of Target. To accomplish this
distribution, Acquiring Fund's transfer agent ("Transfer Agent")
shall open accounts on Acquiring Fund's share transfer books in the
Shareholders' names and transfer Acquiring Fund's Shares thereto.
Each Shareholder's account shall be credited with the pro rata
number of full and fractional (rounded to the third decimal place)
Acquiring Fund's Shares due that Shareholder. All outstanding
Target's Shares, including any represented by certificates, shall
simultaneously be canceled on Target's share transfer books.
Acquiring Fund shall not issue certificates representing Acquiring
Fund's Shares in connection with the Reorganization. However,
certificates representing Target's Shares shall represent Acquiring
Fund's Shares after the Reorganization.
1.6. As soon as reasonably practicable after distribution of Acquiring
Fund's Shares pursuant to paragraph 1.5, Target shall be terminated
and any further actions shall be taken in connection therewith as
required by applicable law. Target shall file such instruments and
shall take all other steps necessary to effect a complete
liquidation and dissolution of Target.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on
which it is terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund's Shares
in a name other than that of the registered holder on Target's books
of Target's Shares exchanged therefor shall be paid by the person to
whom Acquiring Fund's Shares are to be issued, as a condition of
such transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a)
the value of the Assets computed as of the close of regular trading
on the New York Stock Exchange ("NYSE") on the date of the Closing
as defined in paragraph 3.1 ("Valuation Time"), using the valuation
procedures set forth in Target's then current prospectus and
statement of additional information less (b) the amount of the
Liabilities as of the Valuation Time.
18
2.2. For purposes of paragraph 1.1(a), the NAV of Acquiring Fund's Shares
shall be computed as of the Valuation Time, using the valuation
procedures set forth in Acquiring Fund's then current prospectus and
statement of additional information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of Investec Asset Management U.S. Limited.
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal
offices, located at 1055 Washington Blvd., Stamford, CT 06901 on
____________, 2001, or at such other place and/or on such other date
upon which the parties may agree. All acts taking place at the
Closing shall be deemed to take place simultaneously as of the close
of business on the date thereof or at such other time upon which the
parties may agree ("Effective Time"). If, immediately before the
Valuation Time, (a) the NYSE is closed to trading or trading thereon
is restricted or (b) trading or the reporting of trading on the NYSE
or elsewhere is disrupted, so that accurate appraisal of the net
value of Target and the NAV for Acquiring Fund is impracticable, the
Effective Time shall be postponed until the first business day after
the day when such trading shall have been fully resumed and such
reporting shall have been restored.
3.2. Target shall deliver to the Trust at the Closing a schedule of its
Assets as of the Effective Time, which shall set forth for all
portfolio securities included therein their adjusted tax bases and
holding periods by lot. Target's custodian shall deliver at the
Closing a certificate of an authorized officer stating that (a) the
Assets held by the custodian will be transferred to Acquiring Fund
at the Effective Time and (b) all necessary taxes in conjunction
with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision
for payment has been made.
3.3. The Transfer Agent shall deliver at the Closing a certificate as to
the opening on Acquiring Fund's share transfer books of accounts in
the names of Target's Shareholders. The Trust shall issue and
deliver a confirmation to Target evidencing Acquiring Fund's Shares
to be credited to Target at the Effective Time or provide evidence
satisfactory to Target that Acquiring Fund's Shares have been
credited to Target's account on Acquiring Fund's books. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts, or other
documents as the other party or its counsel may reasonably request.
3.4. The Trust, on behalf of Target and Acquiring Fund, respectively,
shall deliver at the Closing a certificate executed in its name by
its President or a Vice President and dated as of the Effective
Time, to the effect that the representations and warranties it
made in this Agreement are true and correct in all material respects
at the Effective Time, with the same force and effect as if made at
and as of the Effective Time, except as they may be affected by the
transactions contemplated by this Agreement.
19
4. REPRESENTATIONS AND WARRANTIES
4.1. Target represents and warrants as follows:
4.1.1. At the Closing, Target will have good and marketable title
to its Assets and full right, power, and authority to sell,
assign, transfer, and deliver its Assets free of any liens
or other encumbrances; and upon delivery and payment for
the Assets, Acquiring Fund will acquire good and marketable
title thereto;
4.1.2. Acquiring Fund's Shares are not being acquired for the
purpose of making any distribution thereof, other than in
accordance with the terms hereof;
4.1.3. Target's current prospectus and statement of additional
information conform in all material respects to the
applicable requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and do not include any untrue
statement of a material fact or omit any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading;
4.1.4. Target is not in violation of, and the execution and
delivery of this Agreement and consummation of the
transactions contemplated hereby will not (a) conflict with
or violate Delaware law or any provision of the Trust's
Trust Instrument or By-laws or of any agreement,
instrument, lease, or other undertaking to which Target is
a party or by which it is bound or (b) result in the
acceleration of any obligation, or the imposition of any
penalty, under any agreement, judgment, or decree to which
Target is a party or by which it is bound, except as
previously disclosed in writing to and accepted by the
Trust;
4.1.5. Except as otherwise disclosed in writing to and accepted by
the Trust, all material contracts and other commitments of
or applicable to Target (other than this Agreement and
investment contracts, including options and futures) will
be terminated, or provision for discharge of any
liabilities of Target thereunder will be made, at or prior
to the Effective Time, without Target incurring any
liability or penalty with respect thereto and without
diminishing or releasing any rights Target may have had
with respect to actions taken or not taken by any other
party thereto prior to the Closing;
4.1.6. Except as otherwise disclosed in writing to and accepted by
the Trust on behalf of Acquiring Fund, no litigation,
administrative proceeding, or investigation of or before
any court or governmental body is presently pending or (to
Target's knowledge) threatened against Target or any of its
properties or assets that, if adversely determined, would
materially and adversely affect Target's financial
condition or the conduct of its business; Target knows of
no facts that might form the basis for the institution of
any such litigation, proceeding, or investigation and is
not a party to or subject to the provisions of any order,
decree, or judgment of
20
any court or governmental body that materially or adversely
affects its business or its ability to consummate the
transactions contemplated hereby;
4.1.7. The execution, delivery, and performance of this Agreement
has been duly authorized as of the date hereof by all
necessary action on the part of the Trust's Board of
Trustees on behalf of Target, which has made the
determinations required by Rule 17a-8(a) under the 1940
Act; and, subject to approval by Target's shareholders and
receipt of any necessary exemptive relief or no-action
assurances requested from the Securities and Exchange
Commission ("SEC") or its staff with respect to Sections
17(a) and 17(d) of the 1940 Act, this Agreement will
constitute a valid and legally binding obligation of
Target, enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and
similar laws relating to or affecting creditors' rights and
by general principles of equity;
4.1.8. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by
Target's shareholders;
4.1.9. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the Securities
Exchange Act of 1934, as amended ("1934 Act"), or the 1940
Act for the execution or performance of this Agreement by
Target, except for (a) a proxy statement ("Proxy
Statement"), the information for which is included in a
combined prospectus and proxy statement filed by Acquiring
Fund with the SEC on Form N-14, (b) receipt of the
exemptive relief or no-action assurances referenced in
subparagraph 4.1.7, and (c) such consents, approvals,
authorizations, and filings as have been made or received
or as may be required subsequent to the Effective Time;
4.1.10. On the effective date of the Registration Statement, at
the time of the shareholders' meeting referred to in
paragraph 5.2, and at the Effective Time, the Proxy
Statement will (a) comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act, and
the 1940 Act and the rules and regulations thereunder and
(b) not contain any untrue statement of a material fact or
omit any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading. This provision shall not apply to statements in
or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by the Trust
for use therein.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. Acquiring Fund's Shares to be issued and delivered to
Target hereunder will, at the Effective Time, have been
duly authorized and, when issued and delivered as provided
herein, will be duly and validly issued and outstanding
shares of Acquiring Fund, fully paid and nonassessable by
the Trust (except as disclosed in the Trust's then current
prospectus and statement of additional information). Except
as contemplated by this Agreement, Acquiring Fund does not
have
21
outstanding any options, warrants, or other rights to
subscribe for or purchase any of its shares, nor is there
outstanding any security convertible into any of its
shares;
4.2.2. Acquiring Fund's current prospectus and statement of
additional information conform in all material respects to
the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations thereunder and do not
include any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading;
4.2.3. Acquiring Fund is not in violation of, and the execution
and delivery of this Agreement and consummation of the
transactions contemplated hereby (a) will not conflict with
or violate Delaware law or any provision of the Trust's
Trust Instrument or By-laws or any provision of any
agreement, instrument, lease, or other undertaking to which
Acquiring Fund is a party or by which it is bound or (b)
result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment,
or decree to which Acquiring Fund is a party or by which it
is bound, except as previously disclosed in writing to and
accepted by the Trust;
4.2.4. Except as otherwise disclosed in writing to and accepted by
the Trust on behalf of Target, no litigation,
administrative proceeding, or investigation of or before
any court or governmental body is presently pending or (to
Acquiring Fund's knowledge) threatened against the Trust
with respect to Acquiring Fund or any of its properties or
assets that, if adversely determined, would materially and
adversely affect Acquiring Fund's financial condition or
the conduct of its business; Acquiring Fund knows of no
facts that might form the basis for the institution of any
such litigation, proceeding, or investigation and is not a
party to or subject to the provisions of any order, decree,
or judgment of any court or governmental body that
materially or adversely affects its business or its ability
to consummate the transactions contemplated hereby;
4.2.5. The execution, delivery, and performance of this Agreement
has been duly authorized as of the date hereof by all
necessary action on the part of the Trust's Board of
Trustees on behalf of Acquiring Fund, which has made the
determinations required by Rule 17a-8(a) under the 1940
Act; and, subject to receipt of any necessary exemptive
relief or no-action assurances requested from the SEC or
its staff with respect to Sections 17(a) and 17(d) of the
1940 Act, this Agreement will constitute a valid and
legally binding obligation of Acquiring Fund, enforceable
in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of
equity;
4.2.6. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the 1934 Act, or
the 1940 Act for the execution or performance of
22
this Agreement by the Trust, except for (a) the filing with
the SEC of the Registration Statement and a post-effective
amendment to the Trust's registration statement on Form
N-14, (b) receipt of the exemptive relief or no-action
assurances referenced in subparagraph 4.2.5, and (c) such
consents, approvals, authorizations, and filings as have
been made or received or as may be required subsequent to
the Effective Time;
4.3. The Trust, on behalf of each Fund, represents and warrants to the
other as follows:
4.3.1. The Trust is a business trust that is duly organized, validly
existing, and in good standing under the laws of the State of
Delaware; and a copy of its Certificate of Trust is on file
with the Secretary of the State of Delaware;
4.3.2. The Trust is duly registered as an open-end management
investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
4.3.3. Each Fund is a duly established and designated series of the
Trust.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in the
ordinary course between the date hereof and the Closing, it being
understood that (a) such ordinary course will include declaring and
paying customary dividends and other distributions and such changes
in operations as are contemplated by each Fund's normal business
activities and (b) each Fund will retain exclusive control of the
composition of its portfolio until the Closing, provided that Target
shall not dispose of more than an insignificant portion of its
historic business assets during such period without Acquiring Fund's
prior consent.
5.2. Target covenants to call a special meeting of shareholders to
consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated
hereby.
5.3. Target covenants that Acquiring Fund's Shares to be delivered
hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms
hereof.
5.4. Target covenants that it will assist the Trust in obtaining such
information as the Trust reasonably requests concerning the
beneficial ownership of Target's Shares. 5.5. Target covenants that
its books and records (including all books and records required to
be maintained under the 1940 Act and the rules and regulations
thereunder) will be turned over to the Trust at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal securities laws.
23
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be
executed and delivered all such assignments and other instruments,
and will take or cause to be taken such further action, as the other
Fund may deem necessary or desirable in order to vest in, and
confirm to (a) Acquiring Fund, title to and possession of all
Target's Assets, and (b) Target, title to and possession of
Acquiring Fund's Shares to be delivered hereunder, and otherwise to
carry out the intent and purpose hereof.
5.8. Acquiring Fund covenants to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and such state securities laws as it may deem appropriate in order
to continue its operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to
be taken all actions, and to do or cause to be done all things,
reasonably necessary, proper, or advisable to consummate and
effectuate the transactions contemplated hereby.
6. CONDITIONS PRECEDENT
6.1. Each Fund's obligations hereunder shall be subject to (a)
performance by the other Fund of all the obligations to be performed
hereunder at or before the Effective Time, (b) all representations
and warranties of the other Fund contained herein being true and
correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated hereby, as
of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further
conditions that, at or before the Effective Time:
6.1.1. This Agreement and the transactions contemplated hereby
shall have been duly adopted and approved by the Trust's
Board of Trustees on behalf of Target and Acquiring Fund
and shall have been approved by Target's shareholders in
accordance with applicable law.
6.1.2. All necessary filings shall have been made with the SEC and
state securities authorities, and no order or directive
shall have been received that any other or further action
is required to permit the parties to carry out the
transactions contemplated hereby. The Registration
Statement shall have become effective under the 1933 Act,
no stop orders suspending the effectiveness thereof shall
have been issued, and the SEC shall not have issued an
unfavorable report with respect to the Reorganization under
Section 25(b) of the 1940 Act nor instituted any
proceedings seeking to enjoin consummation of the
transactions contemplated hereby under Section 25(c) of the
1940 Act. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC
and state securities authorities) deemed necessary by
either Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall
have been obtained, except where failure to obtain the same
would not involve a risk of a material adverse effect on
the assets or properties of the Fund.
24
6.1.3. At the Effective Time, no action, suit, or other proceeding
shall be pending before any court or governmental agency in
which it is sought to restrain or prohibit, or to obtain
damages or other relief in connection with, the
transactions contemplated hereby.
6.1.4. Target shall have received an opinion of Kramer Levin
Naftalis & Frankel LLP, counsel to the Trust ("Counsel"),
substantially to the effect that:
6.1.4.1. Acquiring Fund is a validly existing series of the
Trust, a business trust duly formed and validly
existing and in good standing under the laws of the
State of Delaware with the power under its Trust
Instrument to carry on its business and to own all
of its properties and assets;
6.1.4.2. This Agreement (a) has been duly authorized and
executed by the Trust on behalf of Acquiring Fund
and (b) assuming due authorization, execution, and
delivery of this Agreement by Target, is a legal,
valid and binding obligation of Acquiring Fund,
enforceable against Acquiring Fund in accordance
with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency,
reorganization, receivership, fraudulent conveyance,
moratorium or other laws of general application
relating to or affecting the enforcement of
creditors' rights and remedies, as from time to time
in effect, (ii) application of equitable principles
(regardless of whether such enforceability is
considered in a proceeding in equity or at law) and
(iii) principles of course of dealing or course of
performance and standards of good faith, fair
dealing, materiality and reasonableness that may be
applied by a court to the exercise of rights and
remedies;
6.1.4.3. Acquiring Fund's Shares to be issued and delivered
to the Shareholders under this Agreement, assuming
their due delivery as contemplated by this
Agreement, will be duly authorized and validly
issued and outstanding and fully paid and
nonassessable (except as disclosed in the Trust's
then current prospectus and statement of additional
information);
6.1.4.4. The execution and delivery of this Agreement did
not, and the consummation of the transactions
contemplated hereby will not (a) materially violate
the Trust's Trust Instrument or By-laws or any
provision of any agreement to which the Trust (with
respect to Acquiring Fund) is a party or by which it
is bound or (b) to the knowledge of Counsel, result
in the acceleration of any obligation, or the
imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the
Trust (with respect to Acquiring Fund) is a party or
by which it (with respect to Acquiring Fund) is
bound, except as set forth in such opinion or as
previously disclosed in writing to and accepted by
the Trust;
6.1.4.5. To the knowledge of Counsel, no consent, approval,
authorization or order of any Delaware or Federal
Court or governmental authority of the State of
Delaware or the United States of America is required
for the
25
consummation by the Trust on behalf of Acquiring
Fund, of the transactions contemplated by the
Agreement, except such as may be required under the
1933 Act, the 1934 Act and the 1940 Act and under
securities laws of states other than the State of
Delaware;
6.1.4.6. The Trust is registered with the SEC as an
investment company, and to the knowledge of Counsel
no order has been issued or proceeding instituted to
suspend such registration; and
6.1.4.7. To the knowledge of Counsel, (a) no litigation,
administrative proceeding, or investigation of or
before any court or governmental body is pending or
threatened as to the Trust (with respect to
Acquiring Fund) or any of its properties or assets
attributable or allocable to Acquiring Fund and (b)
the Trust (with respect to Acquiring Fund) is not a
party to or subject to the provisions of any order,
decree, or judgment of any court or governmental
body that materially and adversely affects Acquiring
Fund's business, except as set forth in such opinion
or as otherwise disclosed in writing to and accepted
by the Trust.
In rendering such opinion, Counsel may (i) rely, as to
matters governed by the laws of the State of Delaware, on
an opinion of competent Delaware counsel, (ii) make
assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without
independent verification thereof, and other customary
assumptions as the parties may agree, (iii) limit such
opinion to applicable federal and state law, (iv) define
the word "knowledge" and related terms to mean the
knowledge of attorneys then with such firm who have devoted
substantive attention to matters directly related to this
Agreement and the Reorganization; and (v) rely on
certificates of officers or trustees of the Trust, in each
case reasonably acceptable to the Trust.
6.1.5. Acquiring Fund shall have received an opinion of Counsel,
substantially to the effect that:
6.1.5.1. Target is a validly existing series of the Trust,
a business trust duly organized and validly existing
and in good standing under the laws of the State of
Delaware with power under its Trust Instrument to
own all of its properties and assets and, to the
knowledge of Counsel, to carry on its business as
presently conducted;
6.1.5.2. This Agreement (a) has been duly authorized and
executed by the Trust on behalf of Target and (b)
assuming due authorization, execution, and delivery
of this Agreement by the Trust on behalf of
Acquiring Fund, is a legal, valid and binding
obligation of Target, enforceable against Target in
accordance with its terms, except as such
enforceability may be limited by (i)
bankruptcy, insolvency, reorganization,
receivership, fraudulent conveyance, moratorium or
other laws of general application relating to or
affecting the enforcement of creditors' rights and
remedies, as from time to time in effect,
26
(ii) application of equitable principles (regardless
of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles
of course of dealing or course of performance and
standards of good faith, fair dealing, materiality
and reasonableness that may be applied by a court to
the exercise of rights and remedies;
6.1.5.3. The execution and delivery of this Agreement did
not, and the consummation of the transactions
contemplated hereby will not, (a) materially violate
the Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to
which the Trust (with respect to Target) is a party
or by which it is bound or (b) to the knowledge of
such counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under
any agreement, judgment, or decree known to Counsel
to which the Trust (with respect to Target) is a
party or by which it (with respect to Target) is
bound, except as set forth in such opinion or as
previously disclosed in writing to and accepted by
the Trust;
6.1.5.4. To the knowledge of Counsel, no consent, approval,
authorization or order of any Delaware or Federal
Court or governmental authority of the State of
Delaware or the United States of America is required
for the consummation by the Trust on behalf of
Target, of the transactions contemplated by the
Agreement, except such as may be required under the
1933 Act, the 1934 Act and the 1940 Act and under
securities laws of states other than the State of
Delaware;
6.1.5.5. The Trust is registered with the SEC as an
investment company, and to the knowledge of Counsel
no order has been issued or proceeding instituted to
suspend such registration; and
6.1.5.6. To the knowledge of Counsel, (a) no litigation,
administrative proceeding, or investigation of or
before any court or governmental body is pending or
threatened as to the Trust (with respect to Target)
or any of its properties or assets attributable or
allocable to Target and (b) the Trust (with respect
to Target) is not a party to or subject to the
provisions of any order, decree, or judgment of any
court or governmental body that materially and
adversely affects Target's business, except as set
forth in such opinion or as otherwise disclosed in
writing to and accepted by the Trust.
In rendering such opinion, Counsel may (i) rely, as to matters
governed by the laws of the State of Delaware, on an opinion of
competent Delaware counsel, (ii) make assumptions regarding the
authenticity, genuineness, and/or conformity of documents and
copies thereof without independent verification thereof, and other
customary assumptions as the parties may agree, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys
then with such firm who have devoted substantive attention to
matters directly related to this Agreement and the
27
Reorganization, and (v) rely on certificates of officers or
trustees of Target; in each case reasonably acceptable to the
Trust.
6.1.6. [The Trust, on behalf of Target and Acquiring Fund, shall
have received an opinion of Counsel addressed to and in
form and substance reasonably satisfactory to it, as to the
federal income tax consequences of the Reorganization ("Tax
Opinion"). In rendering the Tax Opinion, Counsel may rely
as to factual matters, exclusively and without independent
verification, on the representations made in this Agreement
(and/or in separate letters addressed to Counsel) and each
Fund's separate covenants. Each Fund agrees to make
reasonable covenants and representations as to factual
matters as of the Effective Time in connection with the
rendering of such opinion. The Tax Opinion shall be
substantially to the effect that, based on the facts and
assumptions stated therein and conditioned on consummation
of the Reorganization in accordance with this Agreement,
for federal income tax purposes:
6.1.6.1. The Reorganization will constitute a
reorganization within the meaning of section
368(a)(1) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of
section 368(b) of the Code;
6.1.6.2. No gain or loss will be recognized by Target on
the transfer to Acquiring Fund of its assets in
exchange solely for Acquiring Fund's Shares and
Acquiring Fund's assumption of Target's liabilities
or on the subsequent distribution of those shares to
the Shareholders in liquidation of Target;
6.1.6.3. No gain or loss will be recognized by Acquiring
Fund on its receipt of Target's assets in exchange
solely for Acquiring Fund's Shares and its
assumption of Target's liabilities;
6.1.6.4. Acquiring Fund's adjusted tax basis in the assets
acquired from Target will be equal to the basis
thereof in Target's hands immediately before the
Reorganization, and Acquiring Fund's holding period
for the assets acquired from Target will include
Target's holding period therefor;
6.1.6.5. A Shareholder will recognize no gain or loss on
the exchange of Target Shares solely for Acquiring
Fund's Shares pursuant to the Reorganization; and
6.1.6.6. A Shareholder's aggregate tax basis in Acquiring
Fund's Shares received by it in the Reorganization
will equal its aggregate tax basis in its Target
Shares surrendered in exchange therefor, and its
holding period for Acquiring Fund Shares received in
the reorganization will include its holding period
for Target Shares surrendered in exchange therefor,
provided such Target Shares are held as capital
assets by the Shareholder at the Effective Time.]
28
6.2. At any time before the Closing, either Fund may waive any of the
foregoing conditions if, in the judgment of the Trust's Board of
Trustees, such waiver will not have a material adverse effect on its
shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
7.1. The Trust, on behalf of each Fund, represents and warrants that
there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
7.2. The Funds will be responsible for paying the following expenses
incurred in connection with the Reorganization:
[to be provided]
8. ENTIRE AGREEMENT; SURVIVAL
8.1. Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire
agreement between the parties. The representations, warranties, and
covenants contained herein or in any document delivered pursuant
hereto or in connection herewith shall survive the Closing.
9. TERMINATION OF AGREEMENT
9.1. This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target's
Shareholders:
9.1.1. By either Fund (a) in the event of a material breach of any
representation, warranty, or covenant contained herein to
be performed at or prior to the Effective Time, (b) if a
condition to its obligations has not been met and it
reasonably appears that such condition will not or cannot
be met, or (c) if the Closing has not occurred on or before
_____________, 2002; or
9.1.2. By the parties' mutual agreement.
9.2. In the event of termination under paragraphs 9.1.1(a), (b) or
(c) or 9.1.2, there shall be no liability for damages on the
part of either Fund affected by the termination, or the
trustees or officers of the Trust, to the other Fund.
10. AMENDMENT
10.1. This Agreement may be amended, modified, or supplemented at any
time, notwithstanding approval thereof by Target's Shareholders, in
such manner as may be mutually agreed upon in writing by the
parties; provided that following such approval no such amendment
shall have a material adverse effect on such Shareholders'
interests.
29
11. MISCELLANEOUS
11.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the
case of any conflict between such laws and the federal securities
laws, the latter shall govern.
11.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or
corporation other than the parties and their respective successors
and assigns any rights or remedies under or by reason of this
Agreement.
11.3. The parties acknowledge that the Trust is a business trust. Notice
is hereby given that this instrument is executed on behalf of the
Trust's Trustees solely in their capacity as trustees, and not
individually, and that the Trust's obligations under this instrument
on behalf of each Fund are not binding on or enforceable against any
of its trustees, officers, or shareholders, but are only binding on
and enforceable against the respective Funds' assets and property.
Each Fund agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the corresponding Fund's assets and
property in settlement of such rights or claims and not to such
Trustees or shareholders or to the assets of any other series of the
Trust.
11.4. The Trust agrees to indemnify and hold harmless each Trustee of the
Trust at the time of the execution of this Agreement against
expenses, including reasonable attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by such
Trustee in connection with any claim that is asserted against such
trustee arising out of such person's service as a Trustee of the
Trust, provided that such indemnification shall be limited to the
full extent of the indemnification that is available to the Trustees
of the Trust pursuant to the provisions of the Trust's Trust
Instrument and applicable law.
11.5 The Trust, on behalf of each Fund, hereby waives any conflict
arising out of the representation of each Fund by Counsel.
30
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized officer.
ATTEST: INVESTEC FUNDS, on behalf of the
[Investec Wireless World FundTM]
[Investec internet.com FundTM]
By: _________________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
ATTEST: INVESTEC FUNDS, on behalf of the
Investec Wired(R) Index Fund
By: _________________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
31
Part B
STATEMENT OF ADDITIONAL INFORMATION
_______, 2001
Acquisition of the Assets of
INVESTEC FUNDS
Wireless World FundTM
internet.comTM Index Fund
by and in exchange for all the shares of
INVESTEC FUNDS
Wired(R) Index Fund
This Statement of Additional Information dated __________, 2001, is not a
prospectus, but should be read in conjunction with the Combined Proxy Statement
and Prospectus dated ___________, 2001. This Statement of Additional Information
is incorporated by reference in its entirety into the Combined Proxy Statement
and Prospectus. Copies of the Combined Proxy Statement and Prospectus may be
obtained by writing Investec Funds at 1055 Washington Blvd., 3rd Floor,
Stamford, CT 06901 or by calling toll free 1-800-915-6565.
TABLE OF CONTENTS
Page
Statement of Additional Information of the Investec Wired(R)Index
Fund, the Investec Wireless World FundTM, and the Investec
internet.comTM Index Fund, all of which are series of the Investec
Funds, dated April 26, 2001. 2
Financial Statements of the Investec Wired(R)Index Fund, the
Investec Wireless World FundTM, and the Investec internet.comTM
Index Fund, dated December 31, 2000 and June 30, 2001. 2
STATEMENT OF ADDITIONAL INFORMATION OF THE REGISTRANT AND OF EACH COMPANY
BEING ACQUIRED
The Statement of Additional Information of the Investec Wired(R) Index
Fund (the "Registrant"), the Investec Wireless World FundTM, and the Investec
internet.comTM Index Fund (each a "Company Being Acquired"), all of which are
series of the Investec Funds, dated April 26, 2001, as filed with the Securities
and Exchange Commission on April 26, 2001, pursuant to Rule 485(b) (File No.
33-75340) hereby is incorporated by reference. You may obtain a copy at no cost
by writing Investec Funds at 1055 Washington Blvd., 3rd Floor, Stamford, CT
06901 or by calling toll free 1-800-915-6565.
FINANCIAL STATEMENTS OF THE REGISTRANT AND OF EACH COMPANY BEING ACQUIRED
The audited and unaudited Financial Statements of the Investec Wired(R)
Index Fund (the "Registrant"), the Investec Wireless World FundTM, and the
Investec internet.comTM Index Fund (each a "Company Being Acquired"), all of
which are series of the Investec Funds, are incorporated by reference to the
Annual Report and Semi-Annual Report of the Investec Funds (File No. 33-75340)
dated December 31, 2000 June 30, 2001, respectively. You may obtain copies at no
cost by writing Investec Funds at 1055 Washington Blvd., 3rd Floor, Stamford, CT
06901 or by calling toll free 1-800-915-6565.
The following unaudited pro forma financial information combines the
Schedules of Portfolio Investments, the Statements of Assets and Liabilities,
and the Statements of Operations, as of September 30, 2001, of the Investec
Wireless World Fund(TM), Investec Internet.com(TM) Index Fund and the Investec
Wired(R) Index Fund to reflect the reorganization of the Investec Wireless World
Fund(TM) and the Investec Internet.com(TM) Index Fund into the Investec Wired(R)
Index Fund. The pro forma financial information shows the expected effect of the
reorganization transaction on the Investec Wired(R) Index Fund.
INVESTEC INTERNET.COM(TM) INDEX FUND, INVESTEC WIRED(R) INDEX AND
INVESTEC WIRELESS WORLD FUND(TM)
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2001
(UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------------------------------
internet.com(TM) Wired(R) Wireless internet.com(TM) Wired(R)
Index Fund Index Fund World Fund(TM) Pro Forma Index Fund Index Fund
(Historical) (Historical) (Historical) Combined (Historical) (Historical
---------------- ------------ ------------- ---------- -------------- ------------
AUTOMOBILE
- 78,175 - 78,175 DaimlerChrysler AG $ - $ 2,343,687
-------- -----------
BANKING
- 41,854 - 41,854 State Street Corp. - 1,904,357
-------- -----------
BIOLOGICAL RESEARCH
- 8,148 - 8,148 Affymetrix, Inc.* - 130,775
- 50,190 - 50,190 Aventis S.A. - 3,768,767
- 9,400 - 9,400 INCYTE Pharmaceuticals, Inc.* - 128,404
-------- -----------
- 4,027,946
-------- -----------
BIOPHARMACEUTICALS
- 28,400 - 28,400 Millennium Pharmaceuticals, Inc.* - 504,384
-------- -----------
BUSINESS & Information Services
- - 30,820 30,820 Accenture Ltd. - -
-------- -----------
COMMUNICATION SERVICES
- 29,200 - 29,200 WPP Group Plc - 1,076,677
-------- -----------
COMPUTER EQUIPMENT
- - 94,250 94,250 Asustek Computer, Inc. - -
15,490 227,010 - 242,500 Cisco Systems, Inc.* 188,668 2,764,982
- - 44,700 44,700 M-Systems Flash Disk Pioneers, Ltd. - -
- - 236,679 236,679 Parthus Technologies Plc - -
-------- -----------
188,668 2,764,982
-------- -----------
Computer Services
- - 6,500 6,500 Electronic Data Systems Corp. - -
- - 21,300 21,300 Logica Plc - -
-------- -----------
- -
-------- -----------
Computer Storage Devices
- 96,366 - 96,366 Emc Corp./Mass* - 1,132,301
-------- -----------
Computers
- - 2,700 2,700 International Business Machines Corp. - -
17,910 225,180 - 243,090 Sun Microsystems, Inc.* 148,116 1,862,239
-------- -----------
148,116 1,862,239
-------- -----------
Consumer Electronics
- 50,338 - 50,338 Sony Corp. - 1,671,222
-------- -----------
-------------------------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------------------------
Wireless
World Fund(TM) Pro Forma Pro Forma
(Historical) Adjust Combined
-------------- ------------ -------------
AUTOMOBILE
DaimlerChrysler AG - $ - $ 2,343,687
--------- -------- ----------
BANKING
State Street Corp. - - 1,904,357
--------- -------- ----------
BIOLOGICAL RESEARCH
Affymetrix, Inc.* - - 130,775
Aventis S.A. - - 3,768,767
INCYTE Pharmaceuticals, Inc.* - - 128,404
--------- -------- ----------
- - 4,027,946
--------- -------- ----------
BIOPHARMACEUTICALS
Millennium Pharmaceuticals, Inc.* - - 504,384
--------- -------- ----------
BUSINESS & Information Services
Accenture Ltd. 392,955 - 392,955
--------- -------- ----------
COMMUNICATION SERVICES
WPP Group Plc - - 1,076,677
--------- -------- ----------
COMPUTER EQUIPMENT
Asustek Computer, Inc. 282,665 - 282,665
Cisco Systems, Inc.* - - 2,953,650
M-Systems Flash Disk Pioneers, Ltd. 189,081 - 189,081
Parthus Technologies Plc 70,454 - 70,454
--------- -------- ----------
542,200 - 3,495,850
--------- -------- ----------
COMPUTER SERVICES
Electronic Data Systems Corp. 374,270 - 374,270
Logica Plc 211,349 - 211,349
--------- -------- ----------
585,619 - 585,619
--------- -------- ----------
COMPUTER STORAGE DEVICES
Emc Corp./Mass*
- - 1,132,301
--------- -------- ----------
COMPUTERS
International Business Machines Corp. 249,210 - 249,210
Sun Microsystems, Inc.* - - 2,010,355
--------- -------- ----------
249,210 - 2,259,565
--------- -------- ----------
CONSUMER ELECTRONICS
Sony Corp. - - 1,671,222
--------- -------- ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------------------------------
internet.com(TM) Wired(R) Wireless internet.com(TM) Wired(R)
Index Fund Index Fund World Fund(TM) Pro Forma Index Fund Index Fund
(Historical) (Historical) (Historical) Combined (Historical) (Historical
---------------- ------------ ------------- ---------- -------------- ------------
Consulting Services
9,140 - - 9,140 Sapient Corp. 35,189 -
3,330 - - 3,330 Wireless Facilities, Inc. 14,885 -
--------- ----------
50,074 -
--------- ----------
Electronics Manufacturing
- - 8,700 8,700 ASM International, N.V. - -
- 60,530 - 60,530 Flextronics International Ltd.* - 1,001,166
- - 15,300 15,300 Intersil Holding Corp. - -
- - 14,900 14,900 Philips Electronics N.V. - -
- - 10,010 10,010 Samsung Electronics - -
--------- ----------
- 1,001,166
--------- ----------
Energy / Petroleum
- 61,410 - 61,410 Enron Corp. - 1,672,194
--------- ----------
Entertainment
- 126,945 - 126,945 Walt Disney Co. - 2,363,716
--------- ----------
E-Tailers and E-Commerce
20,120 - - 20,120 Amazon.com, Inc. 120,116 -
--------- ----------
Financial Services
- 177,163 - 177,163 Charles Schwab & Co., Inc. - 2,037,375
- 50,682 6,300 56,982 First Data Corp. - 2,952,733
--------- ----------
- 4,990,108
--------- ----------
Holding Offices
- - 76,860 76,860 Nordic Baltic Holding (NBH) AB - -
--------- ----------
Hotel Management -
- 31,353 - 31,353 Marriott International, Inc. - Class A - 1,047,190
--------- ----------
- 1,047,190
--------- ----------
Industry Machinery
- 70,682 - 70,682 Applied Materials, Inc.* - 2,010,196
--------- ----------
Insurance
- 47,115 - 47,115 American International Group, Inc. - 3,674,970
--------- ----------
Internet Content
26,070 - - 26,070 CMGI, Inc. 26,070 -
10,260 - - 10,260 CNET, Inc. 44,118 -
9,900 - - 9,900 Doubleclick, Inc. 56,430 -
8,140 - - 8,140 HomeStore.com, Inc. 62,271 -
24,620 - - 24,620 InfoSpace, Inc. 36,438 -
9,560 - - 9,560 Inktomi Corp. 26,194 -
2,250 - - 2,250 Multex.com, Inc. 4,658 -
4,450 - - 4,450 S1 Corp. 37,647 -
--------- ----------
293,826 -
--------- ----------
-------------------------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------------------------
Wireless
World Fund(TM) Pro Forma Pro Forma
(Historical) Adjust Combined
-------------- ------------ -------------
Consulting Services
Sapient Corp. - - 35,189
Wireless Facilities, Inc. - - 14,885
---------- -------- ----------
- - 50,074
---------- -------- ----------
Electronics Manufacturing
ASM International, N.V. 100,050 - 100,050
Flextronics International Ltd.* - - 1,001,166
Intersil Holding Corp. 427,176 - 427,176
Philips Electronics N.V. 288,854 - 288,854
Samsung Electronics 589,589 - 589,589
---------- -------- ----------
1,405,669 - 2,406,835
Energy / Petroleum
Enron Corp. - - 1,672,194
---------- -------- ----------
Entertainment
Walt Disney Co. - - 2,363,716
---------- -------- ----------
E-Tailers and E-Commerce
Amazon.com, Inc. - - 120,116
---------- -------- ----------
Financial Services
Charles Schwab & Co., Inc. - - 2,037,375
First Data Corp. 367,038 - 3,319,771
---------- -------- ----------
367,038 - 5,357,146
---------- -------- ----------
Holding Offices
Nordic Baltic Holding (NBH) AB 374,340 - 374,340
---------- -------- ----------
Hotel Management - -
Marriott International, Inc. - Class A - - 1,047,190
---------- -------- ----------
- - 1,047,190
---------- -------- ----------
Industry Machinery
Applied Materials, Inc.* - - 2,010,196
---------- -------- ----------
Insurance
American International Group, Inc. - - 3,674,970
---------- -------- ----------
Internet Content
CMGI, Inc. - - 26,070
CNET, Inc. - - 88,236
Doubleclick, Inc. - - 112,860
HomeStore.com, Inc. - - 124,542
InfoSpace, Inc. - - 36,438
Inktomi Corp. - - 26,194
Multex.com, Inc. - - 4,658
S1 Corp. - - 37,647
---------- -------- ----------
- - 293,826
---------- -------- ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------------------------------
internet.com(TM) Wired(R) Wireless internet.com(TM) Wired(R)
Index Fund Index Fund World Fund(TM) Pro Forma Index Fund Index Fund
(Historical) (Historical) (Historical) Combined (Historical) (Historical
---------------- ------------ ------------- ---------- -------------- ------------
Internet Enablers
19,150 - - 19,150 Ariba, Inc. 35,619 -
6,600 - - 6,600 Broadcom Corp. 133,980 -
15,090 - - 15,090 Commerce One, Inc. 37,121 -
9,040 - - 9,040 Juniper Networks, Inc. 87,688 -
4,700 - - 4,700 net2Phone, Inc. 14,241 -
----------- ------------
308,649 -
----------- ------------
Internet / New Media
14,150 - - 14,150 Ameritrade Holding Corp. - Class A 56,741 -
5,320 76,594 - 81,914 AOL Time Warner, Inc.* 176,092 2,535,261
23,940 - - 23,940 E*trade Group, Inc. 144,837 -
4,110 34,400 - 38,510 eBay, Inc.* 188,032 1,573,800
4,290 - - 4,290 GOTO.com, Inc. 53,196 -
4,240 - - 4,240 Hotel Reservations Network, Inc. 96,418 -
10,600 - - 10,600 Ticketmaster Online - CitySearch, Inc. 109,710 -
14,070 71,578 - 85,648 Yahoo!, Inc.* 123,957 630,602
----------- ------------
948,983 4,739,663
----------- ------------
Internet Search/Portals
37,050 - - 37,050 Terra Networks S.A., ADR 188,585 -
----------- ------------
Internet Security
5,560 - 10,300 15,860 Check Point Software Technologies Ltd. 122,431 -
3,520 - - 3,520 Internet Security Systems, Inc. 32,067 -
12,160 - - 12,160 RealNetworks, Inc. 59,098 -
4,690 - - 4,690 VeriSign, Inc. 196,511 -
----------- ------------
410,107 -
----------- ------------
Internet Services
41,580 - - 41,580 Asia Global Crossing Ltd. 93,555 -
----------- ------------
Media - -
- 66,612 - 66,612 News Corp. Cayman ADR - 1,605,349
- 30,541 - 30,541 Reuters Group - Sponsored ADR - 1,595,767
----------- ------------
- 3,201,116
----------- ------------
Oil & Gas Services
- 58,386 - 58,386 Schlumberger Ltd. - 2,668,240
----------- ------------
Pharmaceuticals
- 72,286 - 72,286 GlaxoSmithKline Plc* - 4,056,690
----------- ------------
Retail
- 74,560 - 74,560 Wal-Mart Stores, Inc. - 3,690,720
----------- ------------
Semiconductors
56,454 - 14,850 71,304 Infineon Technologies AG - -
- 124,580 - 124,580 Intel Corp. - 2,540,186
- - 2,500 2,500 Kla-Tencor Corp. - -
- - 20,802 20,802 Perlos Oyj - -
- - 145,000 145,000 Taiwan Semiconductor Manufacturing Co. Ltd. - -
----------- ------------
2,540,186
-------------------------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------------------------
Wireless
World Fund(TM) Pro Forma Pro Forma
(Historical) Adjust Combined
-------------- ------------ -------------
Internet Enablers
Ariba, Inc. - - 35,619
Broadcom Corp. - - 133,980
Commerce One, Inc. - - 37,121
Juniper Networks, Inc. - - 87,688
net2Phone, Inc. - - 14,241
--------- --------- ----------
- - 308,649
--------- --------- ----------
Internet / New Media
Ameritrade Holding Corp. - Class A - - 56,741
AOL Time Warner, Inc.* - - 2,711,353
E*trade Group, Inc. - - 144,837
eBay, Inc.* - - 1,761,832
GOTO.com, Inc. - - 53,196
Hotel Reservations Network, Inc. - - 96,418
Ticketmaster Online - CitySearch, Inc. - - 109,710
Yahoo!, Inc.* - - 754,559
--------- --------- ----------
- - 5,688,646
--------- --------- ----------
Internet Search/Portals
Terra Networks S.A., ADR - - 188,585
--------- --------- ----------
Internet Security
Check Point Software Technologies Ltd. 226,806 - 349,237
Internet Security Systems, Inc. - - 32,067
RealNetworks, Inc. - - 59,098
VeriSign, Inc. - - 196,511
--------- --------- ----------
226,806 - 636,913
--------- --------- ----------
Internet Services
Asia Global Crossing Ltd. - 93,555
--------- --------- ----------
Media - - -
News Corp. Cayman ADR - - 1,605,349
Reuters Group - Sponsored ADR - - 1,595,767
--------- --------- ----------
- - 3,201,116
--------- --------- ----------
Oil & Gas Services
Schlumberger Ltd. - - 2,668,240
--------- --------- ----------
Pharmaceuticals
GlaxoSmithKline Plc* - - 4,056,690
--------- --------- ----------
Retail
Wal-Mart Stores, Inc. - - 3,690,720
--------- --------- ----------
Semiconductors
Infineon Technologies AG 181,381 - 181,381
Intel Corp. - - 2,540,186
Kla-Tencor Corp. 78,950 - 78,950
Perlos Oyj 159,037 - 159,037
Taiwan Semiconductor Manufacturing Co. Ltd. 196,219 - 196,219
--------- --------- ----------
615,587 - 3,155,773
--------- --------- ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------------------------------
internet.com(TM) Wired(R) Wireless internet.com(TM) Wired(R)
Index Fund Index Fund World Fund(TM) Pro Forma Index Fund Index Fund
(Historical) (Historical) (Historical) Combined (Historical) (Historical
---------------- ------------ ------------- ---------- -------------- ------------
SOFTWARE
- - 8,900 8,900 Amdocs, Ltd. - -
4,760 - - 4,760 Art Technology Group, Inc. 3,332 -
26,670 - - 26,670 At Home Corp. 4,001 -
- - 8,600 8,600 BEA Systems, Inc. - -
20,840 31,200 - 52,040 BroadVision, Inc.* 18,964 28,392
9,810 - - 9,810 EarthLink, Inc. 149,406 -
40,380 - - 40,380 Exodus Communications, Inc. 7,067 -
14,430 51,800 - 66,230 i2 Technologies, Inc.* 49,639 178,192
7,790 - - 7,790 Liberate Technologies, Inc. 77,588 -
- 57,044 - 57,044 Microsoft Corp.* - 2,918,941
2,290 - - 2,290 Netegrity, Inc. 19,625 -
- - 5,000 5,000 Nvidia Corp - -
8,110 - - 8,110 Openwave Systems, Inc. 103,403 -
- 238,870 - 238,870 Oracle Corp.* - 3,004,985
- 33,905 - 33,905 Parametric Technology Corp.* - 175,967
- - 8,100 8,100 Peoplesoft, Inc. - -
13,220 - - 13,220 Portal Software, Inc. 19,698 -
12,660 - - 12,660 Red Hat, Inc. 44,310 -
5,850 - - 5,850 Research In Motion Ltd. 94,068 -
4,290 - - 4,290 RSA Security, Inc. 57,743 -
20,460 - - 20,460 Sycamore Networks, Inc. 71,201 -
- - 5,400 5,400 THQ, Inc. - -
14,880 - - 14,880 TIBCO Software, Inc. 109,219 -
31,000 - - 31,000 Ulticom, Inc. 25,048 -
18,610 - - 18,610 Vignette Corp. 65,879 -
------------ ------------
920,191 6,306,477
------------ ------------
Specialty Steel
- 10,141 - 10,141 Nucor Corp. - 402,598
------------ ------------
Telecommunications
- - 21,700 21,700 AT&T Wireless Services, Inc. - -
- - 17,300 17,300 Motorola, Inc. - -
- - 35 35 NTT DoCoMo, Inc. - -
- 94,618 - 94,618 Qwest Communications International* - 1,580,121
- - 9,100 9,100 SBC Communications, Inc. - -
- - 39,760 39,760 TTI Team Telecom International Ltd. - -
- - 20,400 20,400 Utstarcom, Inc. - -
------------ ------------
- 1,580,121
------------ ------------
Telecommunications - Equipment
- 164,690 - 164,690 JDS Uniphase Corp.* - 1,040,841
------------ ------------
Transportation
- 38,144 - 38,144 FedEx Corp.* - 1,401,792
- 16,810 - 16,810 Sabre Holdings Corp.* - 449,499
------------ ------------
- 1,851,291
------------ ------------
-------------------------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------------------------
Wireless
World Fund(TM) Pro Forma Pro Forma
(Historical) Adjust Combined
-------------- ------------ -------------
SOFTWARE
Amdocs, Ltd. 237,185 - 237,185
Art Technology Group, Inc. - - 3,332
At Home Corp. - - 4,001
BEA Systems, Inc. 82,474 - 82,474
BroadVision, Inc.* - - 47,356
EarthLink, Inc. - - 149,406
Exodus Communications, Inc. - - 7,067
i2 Technologies, Inc.* - - 227,831
Liberate Technologies, Inc. - - 77,588
Microsoft Corp.* - - 2,918,941
Netegrity, Inc. - - 19,625
Nvidia Corp 137,350 - 137,350
Openwave Systems, Inc. - - 103,403
Oracle Corp.* - - 3,004,985
Parametric Technology Corp.* - - 175,967
Peoplesoft, Inc. 146,124 - 146,124
Portal Software, Inc. - - 19,698
Red Hat, Inc. - - 44,310
Research In Motion Ltd. - - 94,068
RSA Security, Inc. - - 57,743
Sycamore Networks, Inc. - - 71,201
THQ, Inc. 233,010 - 233,010
TIBCO Software, Inc. - - 109,219
Ulticom, Inc. - - 25,048
Vignette Corp. - - 65,879
----------- --------- -----------
836,143 - 8,062,811
----------- --------- -----------
Specialty Steel
Nucor Corp. - - 402,598
----------- --------- -----------
Telecommunications
AT&T Wireless Services, Inc. 324,198 - 324,198
Motorola, Inc. 269,880 - 269,880
NTT DoCoMo, Inc. 473,052 - 473,052
Qwest Communications International* - - 1,580,121
SBC Communications, Inc. 428,792 - 428,792
TTI Team Telecom International Ltd. 475,132 - 475,132
Utstarcom, Inc. 331,500 - 331,500
----------- --------- -----------
2,302,554 - 3,882,675
----------- --------- -----------
Telecommunications - Equipment
JDS Uniphase Corp.* - - 1,040,841
----------- --------- -----------
Transportation
FedEx Corp.* - - 1,401,792
Sabre Holdings Corp.* - - 449,499
----------- --------- -----------
- - 1,851,291
----------- --------- -----------
------------------------------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------------------------------
internet.com(TM) Wired(R) Wireless internet.com(TM) Wired(R)
Index Fund Index Fund World Fund(TM) Pro Forma Index Fund Index Fund
(Historical) (Historical) (Historical) Combined (Historical) (Historical
---------------- ------------ ------------- ---------- -------------- ------------
WIRELESS COMMUNICATION EQUIPMENT
- 112,762 31,080 143,842 Nokia OYJ - 1,764,725
- - 5,100 5,100 QUALCOM, Inc. - -
43,010 - - 43,010 Palm, Inc. 62,795 -
- - 10,800 10,800 Sprint Corp. (PCS Group) - -
- - 5,900 5,900 Tekelec - -
- - 9,910 9,910 Verizon Communications - -
- 127,680 175,480 303,160 Vodafone AirTouch Public Ltd. - 2,803,853
------------ -----------
Total Common Stocks
(cost $11,531,779, $99,911,189
and $15,364,473, respectively) 3,733,665 70,693,856
------------ -----------
Total Investments in Securities
(cost $11,531,779, $99,911,189
and $15,364,473, respectively+) 3,733,665 70,693,856
Other Assets less Liabilities 12,711 (765
------------ -----------
Net Assets $ 3,746,376 $70,693,091
------------ -----------
+ Cost for Federal income tax purposes is the same.
Net unrealized appreciation (depreciation) consists of:
Gross unrealized appreciation $ 169,760 $ 4,292,313
Gross unrealized depreciation (7,967,873) (33,509,646
------------ ------------
Net unrealized depreciation $ (7,798,113) $(29,217,333
------------ ------------
-------------------------------------------------------------------------------------------------
Value
-------------------------------------------------------------------------------------------------
Wireless
World Fund(TM) Pro Forma Pro Forma
(Historical) Adjust Combined
-------------- ----------- -------------
WIRELESS COMMUNICATION EQUIPMENT
Nokia OYJ 507,760 - 2,272,485
QUALCOM, Inc. 242,454 - 242,454
Palm, Inc. - - 62,795
Sprint Corp. (PCS Group) 283,932 - 283,932
Tekelec 77,703 - 77,703
Verizon Communications 536,230 - 536,230
Vodafone AirTouch Public Ltd. 386,934 - 3,190,787
----------- --------- ----------
2,035,013 - 6,666,386
----------- --------- ----------
Total Common Stocks
(cost $11,531,779, $99,911,189
and $15,364,473, respectively) 9,933,134 - 84,360,655
----------- --------- -----------
Total Investments in Securities
(cost $11,531,779, $99,911,189
and $15,364,473, respectively+) 9,933,134 - 84,360,655
Other Assets less Liabilities 350,264 186,865 549,075
----------- ---------- -----------
Net Assets $10,283,398 $ 186,865 $84,909,730
----------- ---------- ------------
+ Cost for Federal income tax purposes is the same.
Net unrealized appreciation (depreciation) consists of:
Gross unrealized appreciation $ 84,525
Gross unrealized depreciation (5,515,864) - $ 4,546,598
----------- ---------- ------------
Net unrealized depreciation $(5,431,339 - $(42,446,785)
----------- ---------- ------------
* Non-income producing security.
See accompanying Notes to Pro Forma Combining Financial Statements.
INVESTEC INTERNET.COMTM INDEX FUND,
INVESTEC WIRED(R) INDEX FUND AND
INVESTEC WIRELESS WORLD FUNDTM
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2001
(UNAUDITED)
internet.com(TM) Wired(R) Wireless
Index Fund Index Fund World Fund(TM) Pro Forma Pro Forma
(Historical) (Historical) (Historical) Adjust Combined
------------- ------------- ------------- ------------- -------------
ASSETS
Investments in securities, at cost $ 11,531,779 $ 99,911,189 $ 15,364,473 $ 0 $ 126,807,441
============= ============= ============= ============= =============
Investments in securities, at value $ 3,733,665 $ 70,693,856 $ 9,933,134 $ 0 $ 84,360,655
Cash 38,985 40,290 438,999 -- 518,274
Receivables:
Securities sold -- -- -- -- --
Fund shares sold 6,400 1,732 7,500 -- 15,632
Dividends and interest 36 55,313 1,886 -- 57,235
Due from advisor 1,253 -- -- 185,735 186,988
Prepaid expenses and other assets 8,179 4,711 15,860 -- 28,750
------------- ------------- ------------- ------------- -------------
Total assets 3,788,518 70,795,902 10,397,379 185,735 85,167,534
------------- ------------- ------------- ------------- -------------
LIABILITIES
Cash overdraft -- -- -- -- --
Payables:
Securities purchased -- -- 53,310 -- 53,310
Fund shares redeemed -- -- 1,130 (1,130) --
Due to advisor -- 1,702 550 -- 2,252
Accrued expenses 40,216 95,322 57,699 -- 193,237
Deferred trustees' compensation 1,926 5,787 1,292 -- 9,005
------------- ------------- ------------- ------------- -------------
Total liabilities 42,142 102,811 113,981 (1,130) 257,804
------------- ------------- ------------- ------------- -------------
NET ASSETS $ 3,746,376 $ 70,693,091 $ 10,283,398 $ 186,865 $ 84,909,730
============= ============= ============= ============= =============
Number of shares issued and outstanding
(unlimited shares authorized no par value) 1,340,976 6,556,164 2,893,789 (2,915,968) 7,874,961
============= ============= ============= ============= =============
Net asset value per share $ 2.79 $ 10.78 $ 3.55 -- $ 10.78
============= ============= ============= ============= =============
COMPONENTS OF NET ASSETS
Paid-in capital $ 29,070,766 $ 122,298,803 $ 40,107,883 $ 0 $ 191,477,452
Accumulated net investment income (loss) (96,130) (669,645) (285,212) 186,865 (864,122)
Accumulated net realized loss on investments (17,430,147) (21,718,734) (24,108,209) -- (63,257,090)
Net unrealized appreciation (depreciation) on:
Investments (7,798,113) (29,217,333) (5,431,339) -- (42,446,785)
Foreign currency -- -- 275 -- 275
------------- ------------- ------------- ------------- -------------
Net assets $ 3,746,376 $ 70,693,091 $ 10,283,398 $ 186,865 $ 84,909,730
============= ============= ============= ============= =============
See accompanying Notes to Pro Forma Combining Financial Statements.
INVESTEC INTERNET.COMTM INDEX FUND,
INVESTEC WIRED(R) INDEX FUND AND
INVESTEC WIRELESS WORLD FUNDTM
PRO FORMA COMBINING STATEMENT OF OPERATIONS
SEPTEMBER 30, 2001
(UNAUDITED)
internet.comTM Wired(R) Wireless
Index Fund Index Fund World FundTM Pro Forma Pro Forma
(Historical) (Historical) (Historical) Adjust Combined
--------------- ------------- -------------- ----------- ------------
INVESTMENT INCOME
Income
Dividends + $0 $543,167 $64,916 $0 $608,083
Interest 677 3,140 15,550 - 19,367
--------------- ------------- -------------- ----------- ------------
Total income 677 546,307 80,466 - 627,450
--------------- ------------- -------------- ----------- ------------
Expenses
Advisory fees 64,379 785,848 131,887 (12,679) 969,435
Fund accounting fees 32,794 38,547 31,496 - 102,837
Transfer agent fees 47,094 152,232 81,180 - 280,506
Custody fees 21,411 63,257 14,563 - 99,231
Administration fees 14,850 45,127 14,845 - 74,822
Audit fees 11,505 18,640 12,839 - 42,984
Registration expense 16,977 19,693 25,187 - 61,857
Reports to shareholders 16,337 47,748 31,953 - 96,038
Legal fees 13,634 47,060 8,704 - 69,398
Trustee fees 6,944 16,597 6,759 - 30,300
Insurance expense 1,231 8,690 1,636 - 11,557
Interest expense 2,046 12,915 466 - 15,427
Miscellaneous 2,712 19,518 4,163 - 26,393
--------------- ------------- -------------- ----------- ------------
Total expenses 251,914 1,275,872 365,678 (12,679) 1,880,785
Less: fees waived and expenses absorbed (155,107) (59,920) - (174,186) (389,213)
--------------- ------------- -------------- ----------- ------------
Net expenses 96,807 1,215,952 365,678 (186,865) 1,491,572
--------------- ------------- -------------- ----------- ------------
Net investment income (loss) (96,130) (669,645) (285,212) 186,865 (864,122)
--------------- ------------- -------------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (10,370,210) (18,405,642) (16,773,503) - (45,549,355)
Net realized loss on foreign currency - - (23,012) - (23,012)
Net unrealized appreciation (depreciation) on:
Investments 673,234 (37,937,284) 3,946,896 - (33,317,154)
Foreign currency - - (3,072) - (3,072)
--------------- ------------- -------------- ----------- ------------
Net realized and unrealized loss on investments (9,696,976) (56,342,926) (12,852,691) - (78,892,593)
--------------- ------------- -------------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations ($9,793,106) ($57,012,571) ($13,137,903) $186,865 ($79,756,715)
=============== ============= ============== =========== ============
+ Net of foreign tax withheld of $30,135 for the Wired(R) Index Fund and
$6,129 for the Wireless World FundTM.
See accompanying Notes to Pro Forma Combining Financial Statements.
INVESTEC FUNDS
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENT
--------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRO FORMA PRESENTATION
The pro forma combining financial statements and the accompanying pro forma
schedules of investments give effect to the proposed Agreements and Plans of
Reorganization pursuant to which the Investec internet.com(TM) Index Fund and
the Investec Wireless World Fund(TM) (each a series of the Investec Funds,
collectively referred to as the "Acquired Funds") will transfer all of their
assets and liabilities to the Investec Wired(R) Index Fund (the "Acquiring
Fund"), respectively, in exchange for shares of the corresponding Acquiring
Fund. The Investec Wired(R) Index Fund will be the legal and accounting survivor
of the reorganizations. The pro forma statements should be read in conjunction
with the historical financial statements of the Investec internet.comTM Index
Fund and the Investec Wireless World FundTM included in the Statement of
Additional Information.
It is contemplated that the reorganizations will be accounted for as a tax-free
reorganization of investment companies.
NOTE 2 - PRO FORMA ADJUSTMENTS
Pro forma adjustments have been made to give effect to each of the following as
if the reorganizations had occurred as of the beginning of each period
presented:
A - Adjust investment advisory fees to conform with the contractual
rates of the Acquiring Fund
B - Adjust expense waiver/reimbursements to conform with the Acquiring
Fund contractual arrangements
INVESTEC FUNDS
PART C
ITEM 15. INDEMNIFICATION.
The response to this item is incorporated by reference to Item 25 of Part C
of Post-Effective Amendment No. 29 to the Registrant's Registration Statement
on Form N-1A as filed April 26, 2001, accession number 0000922423-01-500074.
Item 16. Exhibits:
(1)(a) Certificate of Trust. (1)
(1)(b) Amendment to Certificate of Trust dated September 8, 2000. (2)
(2) Bylaws. (1)
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization and Liquidation.
(5)(a) Trust Instrument. (1)
(5)(b) Amendment to Trust Instrument. (2)
(5)(c) Schedule A to Trust Instrument as of June 28, 2000. (2)
(6) Investment Advisory Agreement between Registrant and Investec Asset
Management U.S., Limited (formerly Guinness Flight Investment
Management Limited). (3)
(7) General Distribution Agreement between Registrant and First Fund
Distributors, Inc. (3)
(8) Not Applicable.
(9) Amended Custodian Agreement between Registrant and Investors Bank &
Trust Company. (3)
(10)(a) Distribution and Service Plan. (3)
(10)(b) Form of Distribution Plan for a class of the Guinness Flight Wired(R)
Index Fund. (4)
---------------
(1) Filed as an Exhibit to Post-Effective Amendment No. 7 to Registrant's
Registration Statement on Form N-1A filed electronically on March 20,
1997, accession number 0000922423-96-000220 and incorporated herein by
reference.
(2) Filed as an Exhibit to Post-Effective Amendment No. 28 to Registrant's
Registration Statement on Form N-1A filed electronically on October 13,
2000, accession number 0000922423-96-500010 and incorporated herein by
reference.
(3) Filed as an Exhibit to Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A filed electronically on August 28,
1998, accession number 0000922423-98-000948 and incorporated herein by
reference.
(4) Filed as an Exhibit to Post-Effective Amendment No. 24 to Registrant's
Registration Statement on Form N-1A filed electronically on December 23,
1999, accession number 0000922423-99-001476 and incorporated herein by
reference.
C-1
(10)(c) Form of Rule 18f-3 Multi-Class Plan. (5)
(11)(a) Consent of Counsel.
(11)(b) Opinion of counsel (to be filed by amendment).
(11)(c) Opinion of Delaware counsel (to be filed by amendment).
(12) Tax Opinion (to be filed by amendment).
(13) Not Applicable.
(14) Consent of Ernst & Young LLP, Independent Auditors for the
Registrant.
(15) Not Applicable.
(16) Powers of Attorney.
(17) Form of Proxy Cards.
ITEM 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Securities Act
of 1933, as amended (the "Securities Act"), the reoffering prospectus will
contain the information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial
bona fide offering of them.
---------------
(5) Filed as an Exhibit to Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N-1A filed electronically on June 30, 2000,
accession number 0000922423-00-000903 and incorporated herein by
reference.
C-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form N-14 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 19th day of October, 2001.
INVESTEC FUNDS
By: /s/ Royce N. Brennan
--------------------------------------
Royce N. Brennan
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities indicated on the 19th of October, 2001.
Signature Title Date
/s/ Eric Banhazl Treasurer October 19, 2001
----------------------
Eric Banhazl
/s/ Dr. Gunter Dufey Trustee October 19, 2001
----------------------
*Dr. Gunter Dufey
/s/ J. I. Fordwood Trustee October 19, 2001
----------------------
*J. I. Fordwood
/s/ Timothy Guinness Trustee October 19, 2001
----------------------
*Timothy Guinness
/s/ Bret A. Herscher Trustee October 19, 2001
----------------------
*Bret A. Herscher
/s/ J. Brooks Reece, Jr. Trustee October 19, 2001
----------------------
*J. Brooks Reece, Jr.
*By: /s/ Susan Penry-Williams
---------------------------
Susan Penry-Williams
Attorney-in-Fact
EXHIBIT INDEX
EX-99.4 Form of Agreement and Plan of Reorganization and Liquidation.
EX-99.11(a) Consent of Counsel.
EX-99.11(b) Opinion of counsel (to be filed by amendment).
EX-99.12 Opinion of Delaware counsel (to be filed by amendment).
EX-99.14 Consent of Ernst & Young LLP, Independent Auditors for the
Registrant.
EX-99.16 Powers of Attorney.
EX-99.17 Form of Proxy Cards.