SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant
|_| Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For use of
(as permitted by Rule 14a-6(e)(2) the Commission Only
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
RNC Mutual Fund Group, Inc.
(Name of Registrant as Specified in Charter)
-------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
RNC CAPITAL MANAGEMENT LLC
September 6, 2002
Dear Shareholder:
In the current market environment, we believe that the RNC Mutual Fund
Group, Inc. (the "Company") and the shareholders of its two funds, RNC Equity
Fund and RNC Money Market Fund (each a "Fund," collectively, the "Funds"), can
be better served by alternatives that are able to efficiently and
cost-effectively service your investment needs. For this reason, RNC Capital
Management, LLC has recommended to the Directors that oversee the Company, a
proposal to liquidate the Funds.
On July 11 and July 31, 2002, the Board of Directors of the Company met to
consider this proposal to liquidate the Funds. After carefully studying the
merits of the proposal and the alternatives that would be made available to
shareholders, the Board unanimously determined that the liquidation of the Funds
is in the best interests of each Fund and its shareholders. Information on the
alternatives available to you will be coming to you shortly in another mailing.
Please read the enclosed proxy materials and consider the information
provided. Your vote is very important to us. We encourage you to complete and
mail your proxy card promptly since the Special Meeting of Shareholders will be
held on September 24, 2002. Thank you for your response.
The Board of Directors of the Company has unanimously approved this
proposal and recommends that you vote in favor of the proposal.
Sincerely,
[GRAPHIC OMITTED][GRAPHIC OMITTED]
/s/ Daniel J. Genter, Jr.
--------------------------------------
Daniel J. Genter, Jr.
President and Chief Executive Officer
RNC MUTUAL FUND GROUP, INC.
11601 Wilshire Boulevard, 25th Floor
Los Angeles, California 90025
(800) 385-7003
Notice of Special Meeting of Shareholders
of the
RNC Equity Fund
and the
RNC Money Market Fund
To Be Held September 24, 2002
To the Shareholders of the RNC Equity Fund and the RNC Money Market Fund:
A special meeting of shareholders of the RNC Equity Fund and the RNC Money
Market Fund (the "Funds"), each a series of RNC Mutual Fund Group, Inc. (the
"Company"), will be held at the offices of the Company, 11601 Wilshire
Boulevard, 25th Floor, Los Angeles, California 90025 on September 24, 2002, at
10:00 a.m., local time (the "Meeting"). At the Meeting, shareholders will be
asked to vote on the following proposal, as well as any other business as may
properly come before the Meeting:
Proposal 1 -To be approved by the shareholders of the RNC Equity Fund and
the RNC Money Market Fund
o To consider and act upon a proposal to liquidate the Funds and
terminate RNC Mutual Fund Group, Inc.
Only shareholders of record at the close of business on July 31, 2002 will
be entitled to receive this notice and to vote at the Meeting.
By Order of the Board of Directors
Manuel A. Gutierrez
Secretary
Your vote is important regardless of how many shares you own.
-------------------
Please vote on the enclosed proxy form, date and sign it, and return it in the
pre-addressed envelope provided. No postage is necessary if mailed in the United
States. In order to avoid the additional expense and disruption of further
solicitation, we request your cooperation in voting promptly.
RNC MUTUAL FUND GROUP, INC.
Proxy Statement
For a Special Meeting of Shareholders
To Be Held on September 24, 2002
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
RNC Mutual Fund Group, Inc. (the "Company") for voting at the special meeting
(the "Meeting") of shareholders of the two authorized series of the Company: RNC
Equity Fund and the RNC Money Market Fund (each a "Fund," collectively the
"Funds"). The Meeting will be held at the offices of the Company and the Funds'
investment adviser, RNC Capital Management, LLC (the "Manager"), 1160 Wilshire
Boulevard, 25th Floor, Los Angeles, California 90025 at 10:00 a.m. (local time)
on September 24, 2002. Any and all adjournments of the Meeting will be held at
the same location. The purpose of the Meeting is set forth in the accompanying
Notice of Special Meeting of Shareholders and is elaborated on in this proxy
statement.
The Board of Directors has fixed the close of business on July 31, 2002 as
the record date (the "Record Date") for determining holders of the Funds' shares
entitled to notice of and to vote at the Meeting. Each shareholder will be
entitled to one vote for each share held. At the close of business on the Record
Date, there were 415,832.452 shares of the RNC Equity Fund outstanding and
54,983,332.810 shares of the RNC Money Market Fund outstanding.
Each share of each Fund is entitled to one vote on the Proposal and on each
other matter that it is entitled to vote upon at the Meeting. Each valid proxy
that is received will be voted in accordance with its instructions, and may be
voted on such other business as may come before the Meeting as the persons named
in the proxy determine. If no instructions are given on an executed proxy that
has been returned, that proxy will be voted FOR the Proposal. Shareholders who
execute proxies may revoke them at any time before they are voted, either by
writing to the Company or by voting in person at the Meeting.
PROPOSAL 1: APPROVAL OF THE PROPOSED LIQUIDATION AND TERMINATION OF THE RNC
MUTUAL FUND GROUP, INC.
The Company currently consists of two Funds, a money market fund and an
equity fund, both of which are small in size and unable to invest efficiently on
behalf of shareholders without some level of subsidization by the Manager.
Because there are now more cost-effective alternatives available, both the
Manager and the Board of Directors of the Company believe that liquidating the
assets of each Fund and terminating the Company's existence is in the best
interest of the shareholders of both Funds. Accordingly, the Board, which
consists entirely of directors who are not "interested persons," as that term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), (the
"Independent Directors") at meetings held on July 11 and July 31, 2002,
unanimously agreed to liquidate each Fund's assets and terminate the Company. A
copy of the proposed Plan of Liquidation (the "Plan"), which provides for
liquidating each Fund's assets, distributing the proceeds thereof to its
shareholders pro rata, and terminating the Company's existence, is available
free of charge upon request by contacting the Manager.
Under the Articles of Amendment and Restatement of the Company and its
By-Laws (as revised), the affirmative vote of at least two-thirds of the total
votes entitled to be cast at a meeting of the shareholders is required to effect
the liquidation of the Funds and terminate the Company.
Summary of the Factors Considered By the Board
Both the RNC Money Market Fund and the RNC Equity Fund are designed
primarily to accommodate the investment needs of clients and friends of the
Manager, RNC Capital Management, LLC. The Manager's business focus is now such
that the Manager anticipates little future need for the Funds, and it projects
stagnant assets and gradual shrinkage of each Fund through normal redemption
activity. Even though the Funds are currently of sufficient size to be managed
in accordance with their respective investment objectives and their expenses are
contained at competitive levels by the Manager, without new asset flows the
Funds will no longer be viable. In addition, there are attractive new
alternatives for shareholders. Finally, the Manager has indicated that it is
unwilling to continue indefinitely its current subsidization of the Funds. For
these reasons, the Manager has recommended that the Funds should be liquidated
in an orderly manner and the Company terminated. An important part of the
Manager's proposal is the fact that the Manager has alternative investment
options available to shareholders, as well as the fact that the Manager will
bear all the costs of the transaction, and that no shareholder will be
tax-disadvantaged by the proposed liquidation.
In evaluating the proposed liquidation and termination of the Company, the
Board of Directors considered a number of inter-related factors with respect to
each Fund, including the following:
o the low level of each Fund's total assets;
o the current expense ratios;
o the continuing dependency of the Funds on subsidization by the
Manager;
o the fact that the Manager is unwillingly indefinitely to continue its
current level of subsidization of the Funds;
o the likelihood that neither Fund can attract additional assets to
sustain an acceptable expense ratio with subsidization by the Manager;
o the recommendations of the Manager and the Manager's future business
plans;
o the alternative investment options that would be made available to the
shareholders; and
o the general tax status of the Funds and the fact that (with respect to
the Equity Fund) no shareholder is expected to have a taxable gain on
the investment, but instead will have a loss which taxable
shareholders can deploy to individual advantage.
The Directors also considered alternatives other than liquidation. They
reviewed possible mergers with other mutual funds, and they made inquiries
regarding "adoption" of the Funds by other investment advisers. These
alternatives proved to be impractical because of the small size of the Funds,
their need for subsidization, and their special relationship to the Manager.
Based on a consideration of the foregoing, and other factors they deemed
relevant, including the fact that the Manager has agreed to bear all costs of
the liquidation and the Manager has agreed to provide alternative investment
options to the shareholders, the Board of Directors unanimously approved the
liquidation of each Fund and termination of the Company, subject to shareholder
approval.
If the Proposal is not approved by the shareholders of the Funds, the Funds
will continue to operate as series of the Company subject to further action by
the Board which will consider all of the options available to it.
Description of the Proposed Liquidation
The Plan was adopted by the Board of Directors with respect to the RNC
Equity Fund and the RNC Money Market Fund on July 31, 2002 (the "Effective
Date"). In anticipation of the adoption of such Plan, with the authorization of
the Board of Directors, the Funds were closed to new accounts on July 11, 2002.
As of the Effective Date, in order to ensure a fair and orderly
distribution in which all shareholders are treated equally, the Board of
Directors directed the Manager to cause each of the Funds to sell their
securities at then prevailing market prices and to invest the net proceeds in
short term money market instruments, as permitted under each Fund's current
Prospectus and Registration Statement. In addition, as of the Effective Date, a
reserve was established to cover all expenses which have accrued or are expected
to accrue on the books of each Fund prior to the date on which the assets of
each Funds, net of each Fund's known liabilities and reserves, are distributed
to the applicable shareholders (the "Distribution Date"). The RNC Equity Fund is
subject to a limit on operating expenses which the Manager has agreed will apply
to all operating expenses including any liquidation expenses. The RNC Money
Market Fund is not subject to any specific limit on operating expenses, but its
expense ratio will be monitored throughout the liquidation process by both the
Manager and the Board of Directors to ensure that it remains within reasonable
tolerances.
Each Fund will distribute all of its assets on the Distribution Date except
the cash reserved to pay the Fund's remaining liabilities and expenses. A second
liquidating distribution, if necessary, is anticipated to be made within four
months after the first liquidating distribution and will consist of any cash
remaining after payment of those liabilities and expenses. As soon as
practicable thereafter, each Fund will be dissolved and the Company will be
terminated.
Shareholders of each Fund on September 25, 2002, are entitled to
liquidation distributions. However, shareholders may continue to redeem Fund
shares up to the business day prior to the Distribution Date in accordance with
the Fund's current prospectus. Because each Fund's investments have been
converted into short term money market instruments, and because the appropriate
accruals for operating expenses have been made, the Manager and the Board of
Directors do not anticipate that there will be any material difference in the
proceeds per share received by Shareholders who redeem prior to the Distribution
Date and shareholders who receive a liquidation distribution on the Distribution
Date.
The date or dates on which either Fund will pay the liquidating
distributions and on which the Fund will be liquidated have not been determined,
but it is anticipated that, if the Proposal is approved, the Distribution Date
would occur as soon as reasonably practicable after the meeting. Shareholders
will receive their pro rata portion of the liquidation distribution by check
mailed to the shareholder's address of record or in accordance with any valid
instructions given by the shareholder regarding the transfer of such assets,
including the transfer of employee benefit plans assets to a new trustee. Each
Shareholder will be receiving additional information on alternatives recommended
by the Manager well in advance of the Distribution Date.
Under the Plan, the Manager will be responsible for all expenses incurred
in connection with carrying out the Plan, including the cost of soliciting
proxies and terminating a Fund's existence.
Federal Income Tax Consequences
The following summary provides general information with regard to the
federal income tax consequences to the shareholders of a dividend distribution,
if any, and the liquidation distributions (collectively, the "Final
Distributions") from either Fund pursuant to the provisions of the Plan. This
summary also discusses the federal income tax consequences of the liquidation of
a Fund. The Company has not sought a ruling from the Internal Revenue Service
(the "IRS") with respect to the liquidation of the Funds and the tax
consequences thereof to a Fund or the shareholders. The tax consequences
discussed herein may affect shareholders differently depending on their
particular tax situations unrelated to the Final Distributions, and accordingly,
this summary is not a substitute for careful tax planning on an individual
basis. The receipt of the Final Distributions may result in tax consequences
that are unanticipated by shareholders. Thus, each shareholder is urged to
consult his or her own tax adviser regarding the tax consequences to the
shareholder of the receipt of dividend distributions and liquidating
distributions, and the liquidation of a Fund.
This summary is based on the tax laws and regulations in effect on the date
of this proxy statement, all of which are subject to change by legislative or
administrative action, possibly with retroactive effect. The discussion herein
does not address the particular federal income tax consequences that may apply
to certain shareholders such as trusts, estates, tax-exempt organizations,
qualified plans, individual retirement accounts, nonresident aliens, or other
foreign investors. This summary does not address state, local or foreign tax
consequences of a shareholder's receipt of the Final Distributions.
Pursuant to the Plan, each Fund will (i) sell its assets, (ii) declare and
distribute, if necessary, a dividend which, together with all previous
dividends, has the effect of distributing all of the Fund's taxable income for
all taxable years ending at or prior to the liquidation, and (iii) distribute
its remaining assets in one or more liquidating distributions, and (iv)
dissolve. Each Fund anticipates that it will continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code") during the liquidation period, and therefore will not be taxed on any of
its net income from the sale of its assets.
For federal income tax purposes, any dividend distribution made by either
Fund will be a taxable capital gain dividend to the extent designated by the
Fund pursuant to the provisions of Section 852 of the Code. To the extent not so
designated, the dividend distribution will be a taxable ordinary dividend. The
liquidating distributions will constitute a taxable event in which the
shareholder will be viewed as having sold shares of a Fund in exchange for cash
[plus the fair market value of any other assets received]. Each shareholder will
recognize gain or loss measured by the difference between the shareholder's
adjusted tax basis in the shares and the aggregate amount of the liquidating
distributions received. The liquidating distribution will generally be taxable
as capital gains to the extent that the distributions exceed the shareholder's
basis in the Fund shares, or capital loss to the extent the shareholder's basis
exceeds the aggregate amount of the liquidating distributions received. If a
shareholder holds shares as capital assets, the gain or loss will be
characterized as a long-term capital gain or loss if the shares were held for
more than one year.
If a shareholder fails to furnish a correct taxpayer identification number
or has failed to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to "backup withholding,"
the shareholder may be subject to backup withholding tax with respect to taxable
proceeds received as part of the Final Distributions.
The receipt of the Final Distributions by an individual retirement account
or qualified plan is outside the scope of this discussion and such shareholders
should consult with their own tax advisers concerning the consequences of the
receipt of the Final Distributions.
Required Vote and Voting Procedures
The Board of Directors unanimously recommends that shareholders of the RNC
Equity Fund and the RNC Money Market Fund vote for Proposal No. 1.
The presence in person or by proxy of a majority of outstanding shares on
the Record Date entitled to the vote at the Meeting will constitute a quorum for
the conduct of business Shareholder approval of the Proposal to liquidate the
Funds and terminate the Company requires the affirmative vote of two-thirds of
all votes entitled to be cast by the shareholders of both Funds. The Meeting may
be adjourned from time to time by a majority of the votes properly voting on the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. The
persons named in the proxy will vote those shares that they are entitled to vote
in favor of adjournment if adjournment is necessary to obtain a quorum or to
obtain a favorable vote on any Proposal. If the adjournment requires setting a
new record date or the adjournment is for more than 30 days from the date set
for the original meeting (in which case the Board of Directors will set a new
record date), the Company will give notice of the adjourned meeting to the
shareholders. Business may be conducted once a quorum is present and may
continue until adjournment of the Meeting.
Proxies may be voted by mail or by other means determined to be acceptable
and secure by the Company.
All proxies voted, including abstentions and broker non-votes (where the
underlying holder has not voted and the broker does not have discretionary
authority to vote the shares), will be counted toward establishing a quorum.
Approval of the Proposal will occur only if a sufficient number of votes at the
Meeting are cast FOR that Proposal. Abstentions and broker non-votes do not
constitute a vote "for" and effectively result in a vote "against," although
they will count towards the presence of a quorum.
The cost of soliciting proxies will be borne by the Manager, RNC Capital
Management, LLC. In addition to solicitation by mail, some officers and
employees of the Manager and its affiliates, without extra compensation, may
conduct additional solicitations by telephone, facsimile and personal
interviews. It is expected that this proxy statement will first be mailed to
shareholders on or about September 6, 2002.
The holders of 5% or more of the outstanding shares of each Fund on the
Record Date are listed on Exhibit A to this Proxy Statement. Neither the
officers nor the Directors of the Company beneficially own any outstanding
voting securities of either Fund as of the Record Date.
* * * * *
GENERAL INFORMATION
A. Other Matters to Come Before the Meeting
The Company knows of no other matters that are to be brought before the
Meeting. However, if any other matters not now known or determined properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote such Proxy in accordance with their best judgment on such
matters.
B. Shareholder Proposals
The Meeting is a special meeting of shareholders. Neither the Company nor
either Fund is required to or intends to hold regular meetings of its
shareholders. If such a meeting is called, any shareholder who wishes to submit
a proposal for consideration at the meeting should submit the proposal promptly
to the Company.
C. Other Information
RNC Capital Management, LLC, located at 11601 Wilshire Boulevard, 25th
Floor, Los Angeles, California 90025 is the investment adviser to the Funds.
Quaser Distributors, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
is the principal underwriter and distributor of the Funds. U.S. Bancorp Funds
Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202 is the
transfer and dividend disbursing agent, administrator, and fund account for the
Funds.
You can find more information about the Funds' investment policies in the
relevant Prospectus and Statement of Additional Information (SAI), which are
available free of charge.
To request a free copy of the relevant Prospectus or SAI, call us at (800)
576-8229. You can review and copy further information about RNC Mutual Fund
Group, Inc., including the Prospectus or SAI, at the Securities and Exchange
Commission's (SEC's) Public Reference Room in Washington, D.C. To obtain
information on the operation of the Public Reference Room please call (202)
942-8090. Reports and other information about RNC Mutual Fund Group, Inc. are
available at the SEC's Web site at www.sec.gov. You can also obtain copies of
this information, upon payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C., 20549-6009 or by e-mailing the
SEC at publicinfo@sec.gov.
You can find further information about RNC Mutual Fund Group, Inc. in our
annual and semiannual shareholder reports, which discuss the market conditions
and investment strategies that significantly affected each Fund's performance
during its most recent fiscal period. To request a free copy of the most recent
annual or semiannual report, please contact us at (800) 576-8229 or RNC Mutual
Fund Group, Inc., 11601 Wilshire Boulevard, 25th Floor, Los Angeles, California
90025.
- --------------------------------------------------------------------------------
Please complete, sign, and return this proxy promptly. No postage is required if
mailed in the United States.
- --------------------------------------------------------------------------------
By order of the Board of Directors,
/s/Manuel A. Gutierrez
- ------------------------------------
Manuel A. Gutierrez, Secretary
RNC Mutual Fund Group, Inc.
EXHIBIT A
LIST OF FIVE PERCENT SHAREHOLDERS
As of July 31, 2002 the following persons owned of record 5% or more of the
shares of the Funds:
Percentage
Name Shares Ownership
RNC Equity Fund
Marc M. Seltzer & Christina A. Snyder 33,333.33 8.01
RNC Money Market Fund
Union Bank of California 45,003,699.07 81.85
Union Bank of California 7,572,311.86 13.77
HOLDINGS OF OFFICERS/DIRECTORS
None
EXHIBIT B
FORM OF PROXY
RNC MUTUAL FUND GROUP, INC.
SPECIAL MEETING OF SHAREHOLDERS OF
RNC EQUITY FUND and RNC MONEY MARKET FUND
September 24, 2002
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE RNC MUTUAL FUND GROUP, INC.
The undersigned hereby appoints Daniel J. Genter, Jr. and Manuel A.
Gutierrez, and each of them, as proxies of the undersigned, each with the power
to appoint a substitute, for the Special Meeting of Shareholders of the RNC
Equity Fund and the RNC Money Market Fund (the "Funds"), each a separate series
of RNC Mutual Fund Group, Inc., to be held on September 24, 2002, at 10:00 a.m.
at 11601 Wilshire Boulevard, 25th Floor, Los Angeles, California 90025, and at
any and all adjournments thereof (the "Meeting"), to vote, as designated below,
all shares of the Fund, held by the undersigned at the close of business on July
31, 2002. Capitalized terms used without definition have the meanings given to
them in the accompanying Proxy Statement.
A signed proxy will be voted in favor of the Proposal listed below unless
you have specified otherwise. Please sign, date and return this proxy promptly.
You may vote only if you held shares in the Fund at the close of business on
July 31, 2002. Your signature authorizes the proxies to vote in their discretion
on such other business as may properly come before the Meeting including,
without limitation, all matters incident to the conduct of the Meeting.
Please vote by filling in the boxes below.
PROPOSAL 1: To approve the liquidation of the Funds and the termination of RNC
Mutual Fund Group, Inc..
FOR |_| AGAINST |_| ABSTAIN |_|
Dated:_________________________________________________________________, 2002
[Shareholder Name]
Dated:_________________________________________________________________, 2002
[Signature(s) (if held jointly)]
Please sign exactly as the name or names appear on your shareholder account
statement. When signing as attorney, Company, executor, administrator,
custodian, guardian or corporate officer, please give your full title. If shares
are held jointly, each shareholder should sign.
- --------------------------------------------------------------------------------
Please complete, sign, and return this proxy promptly. No postage is required if
mailed in the United States.
- --------------------------------------------------------------------------------