SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _____________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
RBC Funds, Inc.
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(Name of Registrant as Specified in its Charter)
(specify)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a96(i)(4) and O-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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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:
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[EFFECTIVE DATE]
Dear Shareholder:
As a shareholder in an RBC fund, you are being asked to vote on several
important matters that would affect your fund. These matters will be considered
at a special meeting of shareholders of your fund, which has been scheduled for
March 15, 2004.
As part of a broader integration initiative, you are being asked to approve the
reorganization of your fund as a separate series of the Tamarack Funds Trust.
The reorganization would be accomplished through a Reorganization transaction
that has been approved by your fund's Board. If you and your fellow shareholders
approve the Reorganization, your fund would be reorganized as a Tamarack Fund on
or about March 31, 2004. The Reorganization would consist of the transfer of all
of the assets of your fund to the corresponding Tamarack Fund in exchange for
shares of the Tamarack Fund, the assumption by the Tamarack Fund of all
liabilities of your fund, and the distribution of Tamarack Fund shares to the
accounts of the shareholders of your fund in complete liquidation of your fund.
The total net asset value of your shares in the Tamarack Fund would be the same
as the total net asset value of your shares in your fund. Voyageur, the
investment advisor to both your fund and the Tamarack Funds, is paying all of
the ordinary costs of the Reorganization and the transaction is expected to
qualify as a tax-free reorganization for federal income tax purposes.
You are also being asked to elect nine nominees to serve on the board of
directors of your fund. In addition, you are being asked to approve the
modification of your fund's fundamental investment polices/restrictions. These
changes are intended to streamline and make uniform the policies/restrictions
applicable to all funds in order to promote ease of administration of the
investment program of each fund and to modernize the investment limitations
currently applicable to the funds. Furthermore, you are being asked to ratify
the Board's selection of Deloitte & Touche LLP as the independent auditors of
your fund for the current fiscal year.
The enclosed materials include detailed information about these four proposals.
To assist you in understanding these proposals we have provided a Definitions of
Key Terms page and a Questions and Answers section.
As a valued shareholder, your vote is very important. Please review the enclosed
materials carefully. After reviewing the materials, please complete, date and
sign the enclosed proxy card(s), and return it in the postage-paid,
self-addressed envelope. Please be aware that if you hold shares in more than
one account, you may receive more than one proxy package. Separate proxy cards
are required for each account. If you would like to attend the shareholder
meeting, you may vote your shares in person. If you expect to attend the
meeting, please notify us in advance by calling [TELEPHONE NUMBER].
Alternatively, you may vote your shares by telephone by following the
instructions on your proxy card(s). Because your vote is important, if we have
not heard from you by [February 20, 2004], you may be contacted by [a
representative of Voyageur or [SOLICITOR NAME]].
If you have any questions, please call your fund's toll-free number (800)
422-3688, and ask to speak with a representative, who will be happy to help you.
Sincerely,
Jennifer Lammers
President
DEFINITIONS OF KEY TERMS
USED IN THE QUESTIONS & ANSWERS
AND LETTER TO SHAREHOLDERS
BOARD: The current board of directors of RBC Funds, Inc. The
members of the Board may change if shareholders of
RBC Funds, Inc. approve the proposal described in the
enclosed materials to elect a new board of directors.
Shareholders of the other funds are being asked to
elect the same new board of directors for their
funds. The independent directors nominated to serve
on the new boards of directors have been selected
from among the independent directors currently
serving on the boards of RBC Funds, Inc. and the
other funds.
INTEGRATION INITIATIVE: Voyageur's effort to integrate its
financial services operations by simplifying the
existing lineup of funds and standardizing current
investment operations. Specifically, this involves
reducing the number of funds (by combining similar
portfolios), closing under-performing portfolios, and
simplifying administration by integrating the funds
under a single legal entity and a single board of
trustees. A final step is to rename all the funds
with a common name, the Tamarack Funds. This renaming
will allow the funds' distributor to provide improved
marketing and sales support to the funds by focusing
resources on supporting a single name in the
marketplace.
PLAN: The Agreement and Plan of Reorganization under which
your fund would be reorganized as a separate
portfolio of the Tamarack Funds Trust.
REORGANIZATION: The proposed reorganization of your fund as a
separate portfolio of the Tamarack Funds Trust, which
would be accomplished through a reorganization
transaction that would be carried out in accordance
with the terms of the Plan.
TAMARACK FUNDS TRUST: The new legal entity (a Delaware statutory trust)
under which Voyageur has proposed to integrate all
the funds as separate portfolios of this trust.
Organizing as a Delaware statutory trust is a common
legal structure for mutual fund companies. As
mentioned above, the Tamarack Funds would become the
new name for the funds if the Integration Initiative
proposals are approved.
THE FUNDS: The Babson Group of Funds, the Great Hall Funds, the
J&B Funds and the RBC Funds are a collection of
twenty-two individual mutual funds and/or portfolios.
Voyageur serves as investment advisor to all of these
funds and portfolios.
THE RBC FUNDS: RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund,
RBC Small Cap Equity Fund, RBC Government Income
Fund, RBC Quality Income Fund, and RBC North Carolina
Tax-Free Bond Fund. Each is a separate portfolio of
RBC Funds, Inc.
VOYAGEUR: Voyageur Asset Management Inc. is an SEC registered
investment advisor and subsidiary of RBC Dain
Rauscher Corporation, currently serving as advisor to
your fund and all the funds. For over 20 years,
Voyageur has provided equity, fixed income and
balanced asset management services to clients
throughout the U.S. and in Canada. Currently,
Voyageur manages client assets totaling over $23
billion.
YOUR FUND: The RBC fund in which you currently hold shares.
[EFFECTIVE DATE]
IMPORTANT NEWS FOR
SHAREHOLDERS OF THE RBC FUNDS
You are being asked to consider several proposals to be voted upon at an
upcoming shareholder meeting of your fund. A brief overview of these proposals
and related matters is provided below. We suggest that you review the
Definitions of Key Terms page before reading the information below. In addition,
we encourage you to read the full text of the enclosed Proxy Statement before
voting.
Q & A: QUESTIONS AND ANSWERS
Q: WHAT IS HAPPENING?
A: Voyageur, your fund's investment advisor, currently serves as the
investment advisor for twenty-two individual mutual funds or
portfolios. Among these twenty-two funds, there is some duplication of
investment objectives and administrative requirements. Voyageur has
undertaken an initiative to simplify the existing fund lineup and
reduce the administrative burden of these overlapping requirements.
Voyageur believes that this will allow your fund and all the funds for
which it serves as investment advisor to be more efficiently
administered. Voyageur also believes that combining certain funds with
comparable investment objectives will either reduce shareholder
expenses or maintain them at the current levels. Therefore, Voyageur
has recommended, and the boards of directors/trustees of the funds have
approved, certain changes, which include: (1) standardizing the
fundamental investment policies/restrictions for the funds, (2)
creating a single board of directors/trustees for the funds, (3)
combining certain funds that have similar investment objectives, (4)
liquidating certain funds that have not grown as quickly as originally
anticipated and that are not expected to attract substantial assets in
the future, and (5) simplifying the organizational structure for the
funds by reorganizing all of the funds (other than those that are being
liquidated or combined into other funds) into a single legal entity to
be named the Tamarack Funds Trust.
As part of this integration initiative, Voyageur has proposed, and your
fund's Board has approved, the reorganization of your fund as a
separate series of the Tamarack Funds Trust. This would be accomplished
through the proposed Reorganization. Also as part of this integration
initiative, your fund's Board has nominated nine individuals to serve
on the Board. These same individuals are being nominated to serve on
the boards of directors/trustees for each of the other funds so that a
single, unitary board of directors/trustees would be elected for all of
the funds. The independent directors/trustees nominated to serve on the
unitary board have been selected from among the independent
directors/trustees currently serving on the boards of the funds. In
addition, as part of this initiative, your fund's Board is recommending
that shareholders approve the modification of your fund's fundamental
investment policies/restrictions in order to streamline and make
uniform the policies/restrictions applicable to all the funds. These
modifications are intended to promote ease of administration of the
investment program of each fund and to modernize the investment
limitations currently applicable to each fund.
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are asked to vote in favor of four proposals:
Proposal 1: The election of each of the nine individuals nominated
to serve on the Board of Directors of RBC Funds, Inc.;
Proposal 2: The approval of the Plan, which would result in your
fund being reorganized as a separate series of the
Tamarack Funds Trust through the Reorganization;
Proposal 3: The approval of the modification of your fund's
fundamental investment policies/restrictions; and
Proposal 4: The ratification of the selection of Deloitte & Touche
LLP as independent auditors of your fund.
Q: HOW DOES MY FUND'S BOARD RECOMMEND THAT I VOTE?
A: After carefully considering the proposals, your fund's Board
unanimously recommends that you vote FOR the nominees listed in
Proposal 1 and FOR Proposals 2, 3 and 4.
Q: WHY HAS MY FUND'S BOARD RECOMMENDED THAT I VOTE IN FAVOR OF THE
REORGANIZATION?
A: After carefully considering the Reorganization proposal, your fund's
Board determined that it is advisable and in the best interests of your
fund and its shareholders. In reaching this determination, the Board
considered multiple factors, including: (1) Voyageur has informed the
Board that it believes that by reorganizing your fund and the other
funds as separate series of a single entity, the Tamarack Funds Trust,
the funds should be able to realize greater operating efficiencies; (2)
Voyageur has informed the Board that it believes that the proposed
Delaware statutory trust form provides a cost efficient and flexible
method of operating your fund for the benefit of its shareholders; (3)
your fund will not bear any ordinary costs of the Reorganization; (4)
the investment objective of your fund will be identical to that of the
corresponding Tamarack Fund, and the Tamarack Fund will be managed by
the same personnel and, with a few exceptions that are the subject of
Proposal 3, in accordance with the same investment strategies and
techniques utilized in the management of your fund immediately prior to
the Reorganization; (5) shareholders of your fund will continue to
receive the same level of services currently provided by your fund; (6)
the Reorganization is intended to be tax-free for federal income tax
purposes; and (7) shareholders' ownership interests will not be diluted
as a result of the Reorganization.
Q: WHEN WOULD THE REORGANIZATION OF MY FUND AS A SERIES OF THE TAMARACK
FUNDS TRUST TAKE PLACE?
A: It is expected that the Reorganization would occur on March 31, 2004.
You would receive notice of any material changes to this schedule.
Q: WOULD THE REORGANIZATION AFFECT MY ACCOUNT VALUE?
A: The value of your fund account would not change as a result of the
Reorganization. Shares of your fund would be exchanged for shares of
the corresponding class of the
corresponding Tamarack Fund in the Reorganization. The total value of
the shares you hold will not be affected. The value of your investment
would be the same immediately before and after the Reorganization.
Q: WHO WOULD PAY FOR THE REORGANIZATION?
A: Voyageur has agreed to bear all ordinary costs and expenses of the
Reorganization, and there are not expected to be any extra-ordinary
costs or expenses. Any costs incurred by an individual shareholder,
such as traveling to the shareholder meeting or seeking personal
financial advice, would be the individual shareholder's responsibility.
Q: WHY AM I BEING ASKED TO ELECT A NEW BOARD OF DIRECTORS FOR RBC FUNDS,
INC.?
A: You are being asked to vote in favor of this proposal in case the
Reorganization is not approved. If the Reorganization is approved, the
board of trustees of the Tamarack Funds Trust will oversee the
operations of the Tamarack Funds. The composition of the board of
trustees of the Tamarack Funds Trust would be the same as the board of
directors you are being asked to approve for RBC Funds, Inc.
A mutual fund's board of directors/trustees represents shareholder
interests and oversees the management and operations of the fund. As
part of the broader integration initiative to simplify the existing
fund lineup and standardize key elements of current investment
operations, which is mentioned above, Voyageur has proposed the
creation of a single board of directors/trustees for all of the funds
managed by Voyageur. Your fund's Board of Directors has voted in favor
of this proposal and has nominated nine individuals to serve on the
unitary board. Information about each nominee is contained in the
enclosed Proxy Statement. You are being asked to approve the election
of each of these nine individuals to the Board of Directors of RBC
Funds, Inc. Your fund's Board believes that a unitary board of
directors/trustees for all of the funds has the potential to increase
efficiencies and enhance the effectiveness of governance.
Q: WHY AM I BEING ASKED TO APPROVE CHANGES TO MY FUND'S INVESTMENT
POLICIES/RESTRICTIONS?
A: The proposed changes to your fund's fundamental investment
policies/restrictions are intended to streamline and make uniform the
policies/restrictions applicable to all of the funds in order to
promote ease of administration of the investment program of each fund
and to modernize the investment limitations currently applicable to
each fund.
Q: WHERE CAN I OBTAIN ADDITIONAL INFORMATION ABOUT THESE FOUR PROPOSALS?
A: The proposals are discussed in more detail in the enclosed Proxy
Statement, which we encourage you to read. If you have any questions
about the matters discussed in the enclosed materials or need
assistance completing your proxy card(s), please call [PROXY SOLICITOR
TELEPHONE NUMBER].
RBC FUNDS, INC.
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RBC LARGE CAP EQUITY FUND
RBC MID CAP EQUITY FUND
RBC SMALL CAP EQUITY FUND
RBC GOVERNMENT INCOME FUND
RBC QUALITY INCOME FUND
RBC NORTH CAROLINA TAX-FREE BOND FUND
60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402
(800) 422-3688
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 15, 2004
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders ("Meeting") of
RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund, RBC Small Cap Equity Fund,
RBC Government Income Fund, RBC Quality Income Fund, and RBC North Carolina
Tax-Free Bond Fund (each a "Fund," and collectively the "Funds"), the separate
series of RBC Funds, Inc. (the "Company"), will be held at the offices of RBC
Dain Rauscher Corporation, 60 South Sixth Street, Minneapolis, Minnesota at 9:00
a.m. Central Time, for the following purposes:
PROPOSAL 1: To approve the election of each of the nine individuals
nominated to serve on the Board of Directors of the Company;
PROPOSAL 2: To approve an Agreement and Plan of Reorganization, pursuant
to which each Fund would be reorganized as a separate
portfolio of the Tamarack Funds Trust, a newly-created
Delaware statutory trust;
PROPOSAL 3: To approve the modification of the Funds' fundamental
investment policies/restrictions in order to modernize such
investment policies/restrictions and increase the Funds'
investment flexibility; and
PROPOSAL 4: To ratify the selection of Deloitte & Touche LLP as the
independent auditors of the Funds for the current fiscal year.
The attached Proxy Statement provides additional information about these
proposals. Shareholders of record of a Fund as of the close of business on
January 15, 2004 are entitled to vote at the Meeting and any adjournment(s) or
postponement(s) thereof. Whether or not you plan to attend the Meeting in
person, please vote your shares. In addition to voting by mail, you may also
vote by telephone, as follows:
TO VOTE BY TELEPHONE:
================================================================
(1) Read the Proxy Statement and have your proxy card at hand.
(2) Call the toll-free 1-[800/888] number that appears on your
proxy card.
(3) Enter the control number set forth on the proxy card and
follow the instructions.
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We encourage you to vote by telephone using the control number that appears on
your enclosed proxy card. Voting by telephone will reduce the time and costs
associated with this proxy solicitation. Whichever method of voting you choose,
please read the enclosed Proxy Statement carefully before you vote.
The persons named as proxies will vote in their discretion on any other business
that may properly come before the Meeting or any adjournments or postponements
thereof.
If the necessary quorum to transact business or the vote required to approve any
proposal is not obtained at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law to permit further solicitation of proxies. Any adjournment as to a matter
being voted on by shareholders of the Funds collectively will require the
affirmative vote of the holders of a majority of the Funds' shares present in
person or by proxy at the Meeting. Any adjournment as to a matter being voted on
by the shareholders of an individual Fund will require the affirmative vote of
the holders of a majority of that individual Fund's shares present in person or
by proxy at the Meeting. The persons named as proxies will vote FOR any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote AGAINST any such adjournment those proxies to be voted
against that Proposal.
PLEASE RESPOND -- WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO
AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors,
Laura Moret
Secretary
[EFFECTIVE DATE]
RBC FUNDS, INC.
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RBC LARGE CAP EQUITY FUND
RBC MID CAP EQUITY FUND
RBC SMALL CAP EQUITY FUND
RBC GOVERNMENT INCOME FUND
RBC QUALITY INCOME FUND
RBC NORTH CAROLINA TAX-FREE BOND FUND
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 15, 2004
This document is a proxy statement (the "Proxy Statement"). This Proxy Statement
is being furnished to shareholders of RBC Large Cap Equity Fund, RBC Mid Cap
Equity Fund, RBC Small Cap Equity Fund, RBC Government Income Fund, RBC Quality
Income Fund and RBC North Carolina Tax-Free Bond Fund (each a "Fund," and
collectively the "Funds"), each of which is a separate series/portfolio of Great
Hall RBC Funds, Inc. (the "Company") in connection with four proposals
("Proposals"). This Proxy Statement sets forth concisely the information that
shareholders should know in order to evaluate the Proposals.
Voyageur Asset Management Inc. ("Voyageur"), a subsidiary of RBC Dain Rauscher
Corporation, is the Funds' investment advisor. On May 1, 2003, Jones & Babson,
Inc. ("J&B"), was acquired by RBC Dain Rauscher Corporation. At the time of this
acquisition, J&B was the investment advisor for the Babson and J&B families of
mutual funds. Subsequent to the acquisition, J&B became an affiliate of
Voyageur. On December 31, 2003, for ease of administration, RBC Dain Rauscher
Corporation consolidated the investment advisory activities of its two
subsidiaries (Voyageur and J&B) into a single entity, which continues to use the
Voyageur name. In addition to the Funds, Voyageur currently serves as the
investment advisor for Great Hall Investment Funds, Inc., J&B Funds, and each of
the funds constituting the Babson Group of Funds -- a collection of twenty-two
individual mutual funds and/or portfolios ("funds").
Voyageur has undertaken an initiative to integrate its financial services
operations by simplifying the existing fund lineup and standardizing key
elements of current investment operations (the "integration initiative").
Voyageur believes that this will allow the Funds and all the funds for which
Voyageur serves as investment advisor to be more efficiently administered.
Voyageur also believes that combining certain funds with comparable investment
objectives will either reduce shareholder expenses or maintain them at the
current levels. As part of this integration initiative, Voyageur has
recommended, and the boards of directors/trustees of the applicable funds have
approved, the following changes: (1) standardizing the fundamental investment
restrictions for the funds, (2) creating boards of directors/trustees for the
funds with uniform members, (3) combining certain funds that have similar
investment objectives and policies, (4) liquidating certain funds that have not
grown as quickly as originally anticipated and that are not expected to attract
substantial assets in the future, and (5) simplifying the organizational
structure for the funds by reorganizing all of the funds (other than those which
are being liquidated or combined into other funds) into portfolios of a single
legal entity to be named the Tamarack Funds Trust. The Tamarack Funds Trust
would be organized as a Delaware statutory trust, a common form of organization
for mutual funds, and would consist of seventeen separate portfolios. The funds
would be referred to as the Tamarack Funds.
The following Proposals will be considered and acted upon at the Meeting:
FUND(S)
PROPOSAL AFFECTED PAGE
===============================================================================
1. To approve the election of each of the ALL FUNDS [ ]
nine individuals nominated to serve on
the Board of Directors of the Company.
2. To approve an Agreement and Plan of ALL FUNDS [ ]
Reorganization, pursuant to which each
Fund would be reorganized as a separate
portfolio of the Tamarack Funds Trust,
a newly-created Delaware statutory
trust.
FUND(S)
PROPOSAL AFFECTED PAGE
===============================================================================
3. To approve the modification of the ALL FUNDS [ ]
fundamental investment
policies/restrictions regarding:
3.A Diversification
3.B Borrowing
3.C Senior Securities
3.D Underwriting Securities
3.E Real Estate
3.F Making Loans
3.G Concentration of Investments
3.H Commodities.
4. To ratify the selection of Deloitte & ALL FUNDS [ ]
Touche LLP as the independent auditors
of the Funds for the current fiscal year.
The Board, on behalf of each Fund, is soliciting proxies from shareholders of
the Funds for the special meeting of shareholders to be held on March 15, 2004,
at the offices of RBC Dain Rauscher Corporation, 60 South Sixth Street,
Minneapolis, Minnesota, at 9:00 a.m. Central Time, and at any and all
adjournment(s) or postponement(s) thereof (the "Meeting"). This Proxy Statement,
the Notice of Special Meeting and the proxy card(s) are first being mailed to
shareholders on or about January 22, 2004, or as soon as practicable thereafter.
This Proxy Statement should be kept for future reference. The most recent annual
report of the Funds, including financial statements, for the fiscal year ended
April 30, 2003, and the most recent semi-annual report of the Funds for the six
months ended October 31, 2003, have been mailed previously to shareholders. If
you would like to receive additional copies of these shareholder reports free of
charge, or copies of any subsequent shareholder report, please contact the
Company by writing to the address set forth on the first page of this proxy
statement or by calling (800) 422-3688. Shareholder reports will be sent by
first class mail within three business days of the receipt of the request.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
2
----------------------------------
PROPOSAL 1 -- ALL FUNDS
ELECTION OF THE DIRECTORS
---------------------------
The purpose of this proposal is to elect a Board of Directors for the Company in
case the Plan, as described in Proposal 2, is not approved by shareholders of
each Fund. It is intended that the enclosed proxy will be voted for the election
as Directors of the Company of the nine nominees listed below ("Nominees"). Two
of the Nominees named below are currently Directors of the Company and each has
served in that capacity since originally elected or appointed.
In order to create uniform boards of directors/trustees for all of the funds
advised by Voyageur, the same Nominees are also being proposed for election to
the boards of directors/trustees of the other funds involved in the proposed
reorganization described below in Proposal 2 (the "Reorganization"). If the
Reorganization takes place, the Nominees will be nominated to serve as the
Trustees of the Tamarack Funds Trust. The Report of the Advisory Group on Best
Practices for Fund Directors issued in 1999 by the Investment Company Institute
recommends that mutual fund boards of directors generally be organized either as
a unitary board for all the funds in a complex or as cluster boards for groups
of funds within a complex, rather than as separate boards for each individual
fund.
THE NOMINEES TO THE BOARD
Information about the Nominees, including their business addresses, ages and
principal occupations during the past five years, and other current
directorships of publicly traded companies or funds, are set forth in the table
below. A Nominee is deemed to be "independent" to the extent the Nominee is not
an "interested person" of the Company, as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act"). For
purposes of this Proxy Statement, "Fund Complex" means: the series of the
Company; the series of Great Hall Investment Funds, Inc.; the series of J&B
Funds; the series of Investors Mark Series Fund, Inc.; Babson Enterprise Fund,
Inc.; Babson Enterprise Fund II, Inc.; Babson-Stewart Ivory International Fund,
Inc.; Babson Value Fund, Inc.; David L. Babson Growth Fund, Inc.; the series of
D.L. Babson Bond Trust; D.L. Babson Money Market Fund, Inc.; D.L. Babson
Tax-Free Income Fund, Inc. and Shadow Stock Fund, Inc.
NUMBER OF
PORTFOLIOS
IN FUND OTHER
POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) COMPLEX(2) DIRECTORSHIPS
WITH THE AND LENGTH OF DURING OVERSEEN HELD BY
NAME, ADDRESS(1) AND AGE COMPANY TIME SERVED PAST 5 YEARS BY NOMINEE NOMINEE
===================================================================================================================================
INDEPENDENT NOMINEES
Lucy Hancock Bode Director Indefinite(3); Lobbyist. 6(4) None
2518 White Oak Road since April 1994
Raleigh, North Carolina
27609
Age: 51
Leslie H. Garner, Jr. Director Indefinite(3); President, Cornell College. 6(4) None
600 First Street since April 1994
West Mount Vernon, Iowa
52314-1098
Age: 53
3
NUMBER OF
PORTFOLIOS
IN FUND OTHER
POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) COMPLEX(2) DIRECTORSHIPS
WITH THE AND LENGTH OF DURING OVERSEEN HELD BY
NAME, ADDRESS(1) AND AGE COMPANY TIME SERVED PAST 5 YEARS BY NOMINEE NOMINEE
===================================================================================================================================
T. Geron Bell Nominee Indefinite(3) President of Twins Sports, Inc. 25(9) None
34 Kirby Puckett Place (the parent company of Minnesota
Minneapolis, Minnesota Twins and Victory Sports) since
55415 November, 2002; prior thereto
Age: 62 President of the Minnesota Twins
Baseball Club Incorporated since
1987.
Ronald James Nominee Indefinite(3) President and Chief Executive 25(9) None
Age: 52 Officer, Center for Ethical
Business Cultures since 2000;
President and Chief Executive
Officer of the Human Resources
Group, a division of Ceridian
Corporation, from 1996-1998.
Ceridian Corporation is an
information services company
specializing in human resources
outsourcing solutions.
John A. MacDonald Nominee Indefinite(3) CIO, Hall Family Foundation. 1(5) None
P.O. Box 419580
Mail Drop 323
Kansas City, Missouri
64141
Age: 54
H. David Rybolt Nominee Indefinite(3) Consultant, HDR Associates, 18(6) None
6501 W. 66th Street (management consulting).
Overland Park, Kansas
66202
Age: 61
James R. Seward Nominee Indefinite(3) Private Investor/Consultant, 10(7) Director, Syntroleum
Age: 51 2000 to present; Financial Corp., Lab One,
Consultant, Seward & Company, Inc., Concorde
LLC 1998-2000. Career Colleges.
Jay H. Wein Nominee Indefinite(3) Independent investor and 25(9) None
5305 Elmridge Circle business consultant since 1989.
Excelsior, Minnesota
55331
Age: 71
4
NUMBER OF
PORTFOLIOS
IN FUND OTHER
POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) COMPLEX(2) DIRECTORSHIPS
WITH THE AND LENGTH OF DURING OVERSEEN HELD BY
NAME, ADDRESS(1) AND AGE COMPANY TIME SERVED PAST 5 YEARS BY NOMINEE NOMINEE
===================================================================================================================================
INTERESTED NOMINEE
Michael T. Lee(8) Nominee Indefinite(3) Chief Operating Officer and None Director, Royal Bank
Age: 40 Senior Vice President, of Canada.
Voyageur, 2003 to present;
Senior Portfolio Manager,
Voyageur, 2000 to present;
Vice President, Senior Research
Analyst and Equity Portfolio
Manager, Voyageur, 1999-2003.
- ----------
(1) Unless otherwise specified, the address of each Director/Nominee is 90
South Seventh Street, Suite 4300, Minneapolis, Minnesota 55402.
(2) The Tamarack Funds Trust consists of 17 "shell" series as of the date
of this Proxy Statement. The Tamarack Funds Trust was formed solely for
the purposes of completing the Reorganization. Accordingly, the series
of the Tamarack Funds Trust have not been included in the totals in
this column.
(3) The Director/Nominee may serve until his or her resignation, removal,
death or otherwise.
(4) Director of RBC Funds, Inc., which consists of six series.
(5) Trustee of J&B Funds, which consists of a single series, J&B Small-Cap
International Fund.
(6) Director/Trustee of each of the Babson Funds except Babson-Stewart
Ivory International Fund, Inc. Director of Investors Mark Series Fund,
Inc., which consists of nine series.
(7) Trustee of J&B Funds, which consists of a single series, J&B Small-Cap
International Fund; also, Director, Investors Mark Series Fund, Inc.,
which consists of nine series.
(8) Mr. Lee is an "interested person" of the Funds as defined in the 1940
Act. He is an officer of Voyageur, the Funds' investment advisor.
(9) Director/Trustee of each of the Babson Funds. Director of Great Hall
Investment Funds, Inc., which consists of five series. Director of
Investors Mark Series Fund, Inc., which consists of nine series.
Trustee of J&B Funds, which consists of a single series, J&B Small-Cap
International Fund.
EXECUTIVE OFFICERS
Officers of the Company are elected by the Board of Directors to oversee the
day-to-day activities of each Fund. Information about the executive officers of
the Company, including their principal occupations during the past five years,
are set forth in EXHIBIT B. Each of these officers are also officers and/or
employees of Voyageur.
SHARE OWNERSHIP
As of [DATE], the Nominees, Directors and officers of the Company beneficially
owned as a group less than 1% of the outstanding shares of each series of the
Company, except as follows:
5
NAME AMOUNT AND NATURE OF
OF BENEFICIAL OWNER/FUND RECORD OR BENEFICIAL OWNERSHIP PERCENT OF SERIES/CLASS
==========================================================================================================================
[Insert executive officers,
directors, nominees as needed]
The following table sets forth the aggregate dollar range of equity securities
owned by each Nominee of the series of the Company and of all funds in the Fund
Complex as of December 31, 2003. The information as to beneficial ownership is
based on statements furnished by each Nominee.
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES
IN ALL REGISTERED INVESTMENT COMPANIES
DOLLAR RANGE OF EQUITY OVERSEEN OR TO BE OVERSEEN BY DIRECTOR/NOMINEE
SECURITIES IN THE FUNDS IN FAMILY OF INVESTMENT COMPANIES
====================================================================================================================
INDEPENDENT NOMINEES
T. Geron Bell $[ ]
[Name of RBC Fund] $[ ]
Lucy Hancock Bode $[ ]
[Name of RBC Fund] $[ ]
Leslie H. Garner, Jr. $[ ]
[Name of RBC Fund] $[ ]
Ronald James $[ ]
[Name of RBC Fund] $[ ]
John A. MacDonald $[ ]
[Name of RBC Fund] $[ ]
H. David Rybolt $[ ]
[Name of RBC Fund] $[ ]
James R. Seward $[ ]
[Name of RBC Fund] $[ ]
Jay H. Wein $[ ]
[Name of RBC Fund] $[ ]
INTERESTED NOMINEE
Michael T. Lee $[ ]
[Name of RBC Fund] $[ ]
The Board of Directors of the Company is currently composed of one interested
Director and four Directors who are not considered to be "interested persons" of
the Company, as that term is defined in the 1940 Act ("Independent Directors").
During the fiscal year ended April 30, 2003, the Board met [NUMBER] times. It is
expected that the Board will meet at least quarterly at regularly scheduled
meetings.
COMPENSATION
Directors of the Company who are not directors, officers or employees of
Voyageur or any of its affiliates receive from the Company a meeting fee
annually of $3000 (plus $750 for serving on the Board's Audit Committee) and a
fee of $750 for each Board of Directors and Board committee meeting attended.
Directors are reimbursed for all out-of-pocket expenses relating to attendance
at such meetings. Directors who are directors,
6
officers or employees of Voyageur do not receive compensation from the Company.
Currently there are no Directors who are directors, officers or employees of
Voyageur.
The following table summarizes the compensation paid to the Directors of the
Company, including committee fees, for the twelve-month period ended April 30,
2003.
- -----------------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED
AGGREGATE BENEFITS ANNUAL
COMPENSATION ACCRUED BENEFITS TOTAL COMPENSATION
FROM THE COMPANY AS PART OF UPON FROM FUND COMPLEX
NAME OF DIRECTOR (6 FUNDS)(1) FUND EXPENSES RETIREMENT PAID TO DIRECTOR
- -----------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
- -----------------------------------------------------------------------------------------------------------
Lucy Hancock Bode $6,750 None None $6,750
- -----------------------------------------------------------------------------------------------------------
Dr. Leslie H. Garner Jr. $9,000 None None $9,000
- -----------------------------------------------------------------------------------------------------------
R. William Shauman $9,000 None None $9,000
- -----------------------------------------------------------------------------------------------------------
James H. Speed, Jr. $9,000 None None $9,000
- -----------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
- -----------------------------------------------------------------------------------------------------------
J. Franklin Martin(1) $6,750 None None $6,750
- -----------------------------------------------------------------------------------------------------------
- ---------------
(1) Mr. Martin is an "interested person" of the Company (as that term is
defined under the 1940 Act) because of certain business dealings with
RBC Centura Bank, an affiliate of Voyageur.
To facilitate the creation of a unitary board of directors/trustees as part of
the integration initiative discussed above, certain Directors agreed not to
stand for re-election. Directors are not entitled to benefits under any pension
or retirement plan. However, the Board determined that, particularly given the
benefits that would accrue to the Funds from the creation of unitary boards of
directors/trustees, it was appropriate to provide the three Directors who are
not standing for re-election a one-time benefit. Given that Voyageur will also
benefit from the administrative efficiencies of unitary boards of
directors/trustees, Voyageur has agreed to bear the costs of this one-time
benefit. The amount of the benefit being paid to each of Messrs. Martin, Shauman
and Speed is $3,000.
STANDING COMMITTEES
The Company has a standing Audit Committee currently consisting of Messrs.
Shauman, Speed and Garner. All are members of the Board and are Independent
Directors. As set forth in its charter, the primary duties of the Company's
Audit Committee are:
(1) in its capacity as a committee of the Board, to be directly
responsible for the appointment, compensation, retention and
oversight of the work of any independent auditor (including
resolution of disagreements between the auditor and Voyageur
and/or the Funds' administrator regarding financial
reporting);
(2) to review information concerning the independence of the
auditors, including (i) whether the auditors provide any
consulting services to RBC Centura Bank, and (ii) all
non-audit services provided by the auditor to the "investment
company complex" (as defined in Rule 2-01(f)(14) of Regulation
S-X) that were not pre-approved by the Audit Committee or its
delegate(s), and to receive the auditors' specific
representations as to their independence;
(3) to meet with the Funds' independent auditors, including
private meetings, as necessary (i) to review the arrangements
for, procedures to be utilized, and scope of the annual audit
and any special audits, including all critical accounting
policies and practices to be used; (ii) to review in advance
the staffing of the annual independent audit with the auditor
and obtain a satisfactory representation from the auditor that
such staffing complies with all applicable laws, regulations
and rules regarding the rotation of audit partners; (iii) to
discuss any matters of concern relating
7
to the Funds' financial statements, including any adjustments
to such statements recommended by the auditors, or other
results of audit(s); (iv) to discuss all alternative
treatments within Generally Accepted Accounting Principles for
policies and practices related to material items that have
been discussed with Voyageur and/or the Funds' administrator,
including: (1) ramifications of the use of such alternative
disclosures and treatments, and (2) the treatment preferred by
the auditor; (v) to discuss other material written
communications between the outside auditor and Voyageur and/or
the Funds' administrator, such as any management letter or
schedule of unadjusted differences; (vi) to discuss the annual
financial statements of the Funds and the auditors' views
regarding significant accounting policies underlying the
statements and their presentation to the public in the Annual
Report and Form N-SAR; (vii) to consider the auditors'
comments with respect to the Funds' financial policies,
procedures and internal accounting controls and Voyageur's and
the administrator's responses thereto; and (viii) to review
with the auditors the form of opinion the auditors propose to
render to the Board and shareholders;
(4) to investigate any reports from Fund officers regarding (i)
significant deficiencies in the internal controls that could
adversely affect the Funds' ability to record, process,
summarize, and report financial data and any material
weaknesses in the Funds' internal controls; and (ii) any
fraud, whether or not material, that involves Voyageur, the
Funds' administrator or other employees who play a significant
role in the Funds' internal controls;
(5) to consider the effect upon the Funds of any changes in
accounting principles or practices proposed by Voyageur, the
Funds' administrator or the auditors;
(6) to review the fees charged by the independent auditors for
audit and non-audit services;
(7) to investigate improprieties or suspected improprieties in
Fund financial and accounting operations that are called to
their attention; and
(8) to report its activities to the full Board on a regular basis
and to make such recommendations with respect to the above and
other matters as the Audit Committee may deem necessary or
appropriate; and
(9) to pre-approve, and/or delegate the authority to pre-approve,
audit and permissible non-audit services.
The Audit Committee met [number] times during the fiscal year ended April 30,
2003. No Director attended less than 75% of the Board meetings, including
committee meetings.
The Company also has a Nominating Committee that is composed of the Independent
Directors. It does not have a charter. The Nominating Committee's primary
responsibility is to nominate Director candidates when there is a vacancy on the
Board. The Nominating Committee does not consider nominees from shareholders and
instead, considers nominees identified through other processes, for example, as
described below. The Nominating Committee did not meet during the fiscal year
ended April 30, 2003.
As described above in Proposal 1, the Board has recommended to shareholders of
the Fund that they approve the election of nine individuals to serve on the
board of directors of the Company. These same individuals are being nominated to
serve on the boards of directors/trustees for each of the other funds so that a
single, unitary board of directors/trustees would be elected for all of the
funds.
The eight independent directors/trustees nominated to serve on the single,
unitary board have been selected from among the independent directors/trustees
currently serving on the boards of the funds. In this connection, the
independent directors/trustees of the existing boards of the funds determined to
create an ad hoc board consolidation committee (the "Committee") of four
independent directors/trustees. An independent board
8
member from each of the four fund families was selected to serve on the
Committee. The Committee was assigned the responsibility of evaluating each
existing board member's professional background and work experience,
professional competencies, time availability and commitment, and overall past
contribution to the board of an existing fund within the fund complex. The
Committee was also responsible for developing recommendations for the size and
actual membership of the new board. Among the core professional competencies and
abilities that the Committee considered relevant in making its recommendations
on board membership were a person's investment background, accounting/finance
background, academic/theoretical background, marketing perspective,
technology/systems background, leadership abilities, business acumen and
entrepreneurial talent. In addition, the Committee took into account the age
distribution, diversity and impact of regulatory requirements in its
recommendations on the composition of the new board.
Based on the recommendations of the Committee, the Nominating Committee (and, in
the case of the other funds, the independent directors/trustees of each of the
funds' boards) determined to fix the number of board members at nine, eight of
whom would be independent board members and one of whom would be an inside board
member. The Nominating Committee, followed by the full Board, approved the
Committee's recommendations on the eight independent board member nominees and
management's recommendation on the inside board member nominee. Each of the
other funds' boards also approved the Committee's recommendations on the eight
independent board member nominees and management's recommendation on the inside
board member nominee.
The Committee does not have a charter. As part of the creation of the new
Tamarack Funds Trust, which is being proposed as part of the integration
initiative described above, it is expected that the Trust's board of trustees
will establish various committees as part of the organization process for the
Trust. As part of that process, the board of trustees will determine whether to
establish a formal nominating committee, prepare a written charter for the
committee, include a formal policy on consideration of shareholder nominations
to serve on the board of trustees, define the material elements that would be
included in any such policy, identify the process to be followed by such
committee in identifying and evaluating nominees (including those recommended by
shareholders), specify minimum qualifications for any committee-recommended
nominees, including any specific qualities or skills, and establish a process
for shareholders to send communications to the board of trustees.
SHAREHOLDER APPROVAL: Election of each of the Nominees to the Board of Directors
must be approved by a plurality of the total votes validly cast in person or by
proxy at the Meeting. The votes of each Fund will be counted together with
respect to the election of the Nominees.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE ELECTION OF
EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.
---------------------------
PROPOSAL 2 -- ALL FUNDS
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
---------------------------
At a meeting of the Board held on December 2, 2003, the Board approved on behalf
of the Company and its Funds an Agreement and Plan of Reorganization ("Plan")
substantially in the form attached to this Proxy Statement as EXHIBIT A. Fund
shareholders are now being asked to approve the Plan. If shareholders of a Fund
approve the proposal, the Directors and officers of the Company will execute and
implement the Plan on behalf of such Fund. If approved, the Reorganization is
expected to take effect on or about March 31, 2004 ("Closing Date"), although
that date may be adjusted in accordance with the Plan.
9
OVERVIEW OF THE PROPOSAL
Shareholders of each Fund are asked to consider the proposed Plan, which
contemplates:
o the transfer of all of the assets of the Fund to the
corresponding Tamarack Fund and the assumption by the
corresponding Tamarack Fund of all of the liabilities of the
Fund in exchange for shares of the corresponding Tamarack Fund
having an aggregate net asset value equal to the transferred
net assets of the Fund;
o the distribution to each shareholder of each class of each
Fund of the same number of shares of the corresponding class
of the corresponding Tamarack Fund having an aggregate net
asset value equal to the aggregate net asset value of the
shares of that class of the Fund held by that shareholder on
the Closing Date; and
o the subsequent complete liquidation of the Fund.
The following table presents the name of the Tamarack Fund corresponding to each
Fund.
====================================================================
RBC FUND CORRESPONDING TAMARACK FUND
--------------------------------------------------------------------
RBC Large Cap Equity Fund Tamarack Large Cap Equity Fund
RBC Mid Cap Equity Fund Tamarack Mid Cap Equity Fund
RBC Small Cap Equity Fund Tamarack Small Cap Equity Fund
RBC Government Income Fund Tamarack Government Income Fund
RBC Quality Income Fund Tamarack Quality Income Fund
RBC North Carolina Tax-Free Tamarack North Carolina Tax-Free
Bond Fund Bond Fund
--------------------------------------------------------------------
For a more detailed discussion of the terms of the Plan, please refer to
"Summary of the Plan," below.
Prior to shares of the Tamarack Funds being distributed to the Funds'
shareholders, the Funds, as shareholders of the Tamarack Funds Trust, will be
asked to vote on certain issues regarding the organization of the Tamarack Funds
Trust. A Fund will vote in favor of such matters regarding the organization of
the Tamarack Funds Trust only to the extent that the shareholders of that Fund
have voted in favor of the proposed Reorganization. Thus, shareholders of the
Funds, in approving the proposed Reorganization, will also, in effect, be
approving the following matters with respect to the Tamarack Funds Trust:
o Election of the nine Trustees described in Proposal 1;
o Approval of an investment advisory agreements with Voyageur,
which will be substantially similar to the investment advisory
agreements currently in place with respect to the Funds,
except as noted below;
o Approval of a Distribution and Service Plan with respect to
each applicable Tamarack Fund and its classes, which will be
substantially similar to the Distribution and Service Plan
currently in place with respect to each Fund, except as noted
below; and
10
o Approval of the liquidation and dissolution of the Company, to
the extent such approval is required.
Shareholders of the Funds are not being asked to vote separately on these
issues. More information on each of these items is discussed below under
"Matters on Which the Tamarack Funds Will Vote."
BOARD CONSIDERATION OF THE PLAN
The primary purposes of the proposed Reorganization are to seek future economies
of scale and to eliminate certain costs associated with operating eight
different business entities--the Company, J&B Funds, Great Hall Investment
Funds, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc.,
Babson Value Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc. and Shadow Stock
Fund, Inc.--in three different states. In unanimously approving the
Reorganization, the Directors of the Company determined that the proposed
Reorganization would be in the best interests of the applicable Fund and its
shareholders and that the ownership interests of each Fund's shareholders would
not be diluted as a result of the Reorganization. Key factors considered by the
Board are summarized below:
o Voyageur has informed the Directors that it believes that by
reorganizing each Fund and the other funds advised by Voyageur
as separate series of a single entity, the Tamarack Funds
Trust, the funds should be able to realize greater operating
efficiencies.
o Voyageur has informed the Directors that it believes that the
proposed Delaware statutory trust form provides a cost
efficient and flexible method of operating Funds for the
benefit of Fund shareholders. In recent years, many mutual
funds have reorganized as Delaware statutory trusts.
o The Funds will not bear any ordinary costs of the
Reorganizations.
o The investment objective of each Fund will be identical to
that of the corresponding Tamarack Fund, and the Tamarack Fund
will be managed by the same personnel and, with a few
exceptions that are the subject of Proposal 3, in accordance
with the same investment strategies and techniques utilized in
the management of the Fund immediately prior to the
Reorganization.
o Shareholders of each Fund will continue to receive the same
level of services currently provided by each Fund.
o Each Reorganization is intended to be tax-free for federal
income tax purposes.
o Shareholders' ownership interests will not be diluted as a
result of the applicable Reorganization.
EFFECTS OF THE REORGANIZATION ON THE FUNDS AND THEIR SHAREHOLDERS
Immediately after the Reorganization, shareholders of the Funds will own shares
of the corresponding class of each corresponding Tamarack Fund that are equal in
number and in value to the shares of each Fund that were held by those
shareholders immediately prior to the closing of the Reorganization (the
"Closing"). For example, a shareholder who owns 100 Class A shares of a Fund
immediately prior to the Closing would own, immediately after the Closing, 100
Class A shares of the corresponding Tamarack Fund having the same net asset
value as those 100 Class A shares of the Fund held immediately prior to the
Closing.
Each Tamarack Fund corresponding to a Fund will have Class A, B, C, I and R
shares. Tamarack Large Cap Equity Fund and Tamarack Quality Income Fund will
also have Class S shares. Class A shares are not subject to any sales charge
(load); they are subject to annual distribution and shareholder servicing fees
of up to 0.50%. Class B shares are closed to new investors. [Class C shares are
subject to a deferred sales charge (load) of [ ]% and annual distribution and
shareholder servicing fees of up to [ ]%.] Class I and S shares are not
11
subject to any sales charge (load) or Rule 12b-1 distribution or service fees.
Class I and S shares will be closed to new investors as of March 31, 2004. This
means that only those investors who receive Class I or S shares issued in the
Reorganization will be able to purchase additional Class I or S shares,
respectively, of Tamarack Funds. Class R shares will be available only to
participants in certain retirement plans.
As a result of the Reorganization, shareholders of the Funds, which are series
of the Company, a Maryland corporation, will become shareholders of the Tamarack
Funds, each of which is a series of a Delaware statutory trust. For a comparison
of certain attributes of these entities that may affect shareholders of the
Funds, please see "Comparison of the Company and the Tamarack Funds Trust "
below.
THE REORGANIZATION WILL NOT RESULT IN ANY CHANGE IN THE INVESTMENT OBJECTIVE,
PRINCIPAL INVESTMENT STRATEGIES OR INVESTMENT ADVISOR OF ANY OF THE FUNDS. IF
PROPOSAL 3 IS APPROVED, WHETHER OR NOT THIS REORGANIZATION PROPOSAL IS APPROVED,
CERTAIN CHANGES MAY BE MADE TO CURRENT INVESTMENT RESTRICTIONS OR POLICIES OF
THE FUNDS, AS FURTHER DESCRIBED IN THAT PROPOSAL. EACH TAMARACK FUND WILL OFFER
THE SAME SHAREHOLDER SERVICES AS ITS CORRESPONDING FUND.
NO SALES LOAD, COMMISSION OR OTHER TRANSACTIONAL FEE IN CONNECTION WITH THE
REORGANIZATION
The full value of your shares of a Fund will be exchanged for shares of the same
class of the corresponding Tamarack Fund without any sales load, commission or
other transactional fee being imposed.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
As a condition to each Fund's obligation to consummate the Reorganization, the
Fund and the Tamarack Fund will receive an opinion from legal counsel to the
Funds to the effect that, on the basis of the existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), current administrative
rules and court decisions, the transactions contemplated by the Plan constitute
a tax-free reorganization for federal income tax purposes.
EXPENSES RELATED TO THE REORGANIZATION
Voyageur, the Funds' investment advisor, will bear all ordinary expenses
associated with the Reorganization, other than any expenses individually
incurred by shareholders.
ADDITIONAL INFORMATION ABOUT THE PLAN
SUMMARY OF TERMS
The following is a summary of the Plan. This summary is subject in all respects
to the provisions of, and is qualified in its entirety by reference to, the
Plan, which is attached as EXHIBIT A.
As stated above, with respect to each Fund and its corresponding Tamarack Fund,
the Plan provides that all of the assets of the Fund will be transferred to the
Tamarack Fund, which will assume all of the Fund's liabilities. Fund
shareholders will receive that number of full and fractional shares of that
class of the Tamarack Fund which is of the same class as and is equivalent in
number and value to the shares of the Fund held as of the close of business on
the Closing Date. Immediately following the Reorganization, shareholders of the
Fund will be shareholders of its corresponding Tamarack Fund and the Tamarack
Fund will have no other shareholders. The Fund's shareholders will not pay a
sales charge, commission or other transaction costs in connection with their
receipt of shares of the Tamarack Fund.
With respect to each Fund, the Plan must be approved separately by shareholders
of that Fund. In the event that shareholders of a particular Fund do not approve
the Reorganization of that Fund with and into the corresponding Tamarack Fund,
the Plan will continue to remain in full force and effect with respect to any
reorganization transactions approved by the shareholders of the other Funds.
Moreover, the Plan provides that
12
the benefits and obligations attendant to the Reorganization are severable with
respect to each Fund and the corresponding Tamarack Fund.
Each Reorganization is subject to a number of conditions, including the
following: (1) approval of the Plan and the transactions contemplated thereby as
described in this Proxy Statement by the shareholders of the Fund; (2) the
receipt of certain legal opinions described in the Plan; (3) the receipt of
certain certificates from the parties concerning the continuing accuracy of the
representations and warranties in the Plan and other matters; and (4) the
parties' performance in all material respects of their agreements and
undertakings in the Plan. For a complete description of the terms and conditions
of the Reorganization, please refer to the Plan in EXHIBIT A.
If the shareholders approve the Plan and the various other conditions required
for the Closing are satisfied, the Closing is expected to occur on or about
March 31, 2004, or such other date as is agreed to by the Funds, on the basis of
values calculated as of the close of regular trading on the New York Stock
Exchange at the as of the close of business on the Closing Date.
The Plan may be terminated (i) by the mutual agreement of the parties, or (ii)
by either party if the Closing shall not have occurred on or before July 15,
2004, unless such date is extended by mutual agreement of the parties, (iii) by
either party if the other party shall have materially breached its obligations
under the Plan or made a material and intentional misrepresentation in the Plan
or in connection with the Plan, or (iv) at any time prior to the Closing Date if
circumstances should develop that, in the opinion of the Board or the board of
trustees of the Tamarack Fund make proceeding with the Reorganization
inadvisable with respect to the Fund or the Tamarack Fund, respectively. The
Plan may also be amended by mutual agreement of the parties in writing. However,
no amendment may be made following the shareholder meeting if such amendment
would have the effect of changing the provisions for determining the number of
shares of the Tamarack Fund to be issued to the Fund under the Plan to the
detriment of the Fund's shareholders without their approval.
TAX CONSIDERATIONS
It is anticipated that each Reorganization will be a tax-free reorganization
within the meaning of Section 368(a) of the Code. With respect to each
Reorganization, the Fund and its corresponding Tamarack Fund will receive an
opinion from Dechert LLP substantially to the effect that, based on certain
facts, assumptions and representations, for federal income tax purposes: (1) the
Reorganization will constitute a "reorganization" within the meaning of Code
Section 368(a); (2) the shareholders will recognize no gain or loss on their
receipt of voting shares of the Tamarack Fund in exchange for their voting
shares of the Fund pursuant to the Reorganization; (3) the Fund will not
recognize gain or loss on the transfer of all of its assets to the Tamarack Fund
solely in exchange for voting shares of the Tamarack Fund and the assumption by
the Tamarack Fund of the Fund's liabilities pursuant to the Reorganization; (4)
the Fund will not recognize gain or loss on its distribution of voting shares of
the Tamarack Fund to its shareholders pursuant to the liquidation of the Fund;
(5) the Tamarack Fund will not recognize gain or loss on its acquisition of all
of the assets of the Fund solely in exchange for voting shares of the Tamarack
Fund and the assumption by the Tamarack Fund of the Fund's liabilities; (6) the
tax basis of the voting shares of the Tamarack Fund received by each of the
Fund's shareholders pursuant to the Reorganization will equal the tax basis of
the voting shares of the Fund surrendered in exchange therefor; (7) the holding
period of the voting shares of the Tamarack Fund received by each of the
shareholders pursuant to the Reorganization will include the period that the
shareholder held the voting shares of the Fund exchanged therefor, provided that
the shareholder held such shares as capital assets on the date of the
Reorganization; (8) the Tamarack Fund's basis in the assets of the Fund received
pursuant to the Reorganization will equal the Fund's basis in the assets
immediately before the Reorganization; and (9) the Tamarack Fund's holding
period in the Fund's assets received pursuant to the Reorganization will include
the period during which the Fund held the assets. No opinion will be expressed
by Dechert LLP, however, as to whether any gain or loss will be recognized by
any Fund or Tamarack Fund in connection with any disposition of assets by the
Fund or the Tamarack Fund prior to or following the Reorganization.
Shareholders of the Fund should consult their tax advisors regarding the effect,
if any, of the Reorganization in light of their individual circumstances and,
since the foregoing discussion only relates to the federal income tax
consequences of the Reorganization, should consult their tax advisors as to
state and local tax consequences, if any, of the Reorganization.
13
COMPARISON OF THE COMPANY AND THE TAMARACK FUNDS TRUST
The Company is a Maryland corporation governed by its Articles of Incorporation,
By-Laws and Board of Directors. The Tamarack Funds Trust is a Delaware statutory
trust governed by its Agreement and Declaration of Trust, By-Laws and Board of
Trustees. The operations of the Tamarack Funds Trust and the Company are also
governed by applicable state and Federal law.
Certain differences and similarities between the Tamarack Funds Trust and the
Company are summarized below, although this is not a complete list of
comparisons. Shareholders should refer to the provisions of these governing
documents and the relevant state law directly for a more thorough comparison.
Copies of these governing documents are available to shareholders without charge
upon written request.
Under the Agreement and Declaration of Trust and By-Laws of the Tamarack Funds
Trust, the Trustees of the Tamarack Funds Trust will have more flexibility than
Directors of the Company and, subject to applicable requirements of the 1940 Act
and Delaware law, broader authority to act. The increased flexibility may allow
the Trustees of the Tamarack Funds Trust to react more quickly to changes in
competitive and regulatory conditions and, as a consequence, may allow the
Tamarack Funds Trust to operate in a more efficient and economical manner.
Delaware law also promotes ease of administration by permitting the Board of the
Tamarack Funds Trust to take certain actions, for example, establishing new
investment series of the Tamarack Funds Trust, without filing additional
documentation with the state, and incurring the additional preparation time and
costs.
Importantly, the Trustees of the Tamarack Funds Trust will effectively have the
same fiduciary obligations to act with due care and in the interest of the
Tamarack Funds and their shareholders as do the Directors with respect to the
Funds and their shareholders.
For more detailed information, please refer to the comparison of the Company and
the Tamarack Funds Trust in EXHIBIT C to this Proxy Statement.
MATTERS ON WHICH THE TAMARACK FUNDS WILL VOTE
As noted above, in approving the Plan, shareholders of each Fund will also be
authorizing that Fund to vote on various actions regarding the corresponding
Tamarack Funds and the Tamarack Funds Trust. Fund shareholders are not being
asked to vote separately on these actions. One of these actions will be to
approve the election of Trustees of the Tamarack Funds Trust. The nominees for
election will be the same Nominees elected under Proposal 1 at the Meeting. In
addition, each Fund, while it is the sole shareholder of the corresponding
Tamarack Fund, will approve a new investment advisory agreement with Voyageur
and a new Service and Distribution Plan for each applicable class of shares. The
new investment advisory agreement will be substantially similar to the current
investment advisory agreement for such Fund, except as noted in EXHIBIT D to
this Proxy Statement. The new Service and Distribution Plans will be
substantially identical to the Service and Distribution Plans currently in
effect for each applicable class of each Fund. For information about the new
investment advisory agreement and the new Service and Distribution Plans, please
refer to EXHIBIT D to this Proxy Statement. Shareholders of each Fund approving
of the Reorganization will also be approving the liquidation and dissolution of
that Fund and the liquidation and dissolution of the Company.
INVESTMENT ADVISOR
On December 18, 2002, Fund shareholders voted to approve Voyageur as the
Company's investment advisor effective December 30, 2002. Voyageur replaced
Glenwood Capital Management, Inc. ("Glenwood") as the Company's investment
advisor. Voyageur is a wholly-owned subsidiary of RBC Dain Rauscher Corporation,
which maintains its offices at Dain Bosworth Plaza, 60 South Sixth Street,
Minneapolis, Minnesota 55402. RBC Dain Rauscher Corporation is a wholly-owned
subsidiary of Royal Bank of Canada ("RBC"), which maintains its offices at 200
Bay Street, Toronto, Ontario, Canada M5J 2J5 A6 00000. Glenwood was also an
14
indirect subsidiary of RBC. RBC is a diversified financial services company that
provides personal and commercial banking, wealth management services, insurance,
corporate and investment banking, online banking and transaction processing on a
global basis. As of October 31, 2003, RBC employs approximately 60,000 people
who serve approximately 12 million personal, business and public sector
customers in North America and in some 30 countries around the world.
Voyageur has been registered with the Securities and Exchange Commission ("SEC")
as an investment advisor since 1983, and has been a portfolio manager of
publicly-offered mutual funds since 1986. Voyageur maintains its offices at 90
South Seventh Street, Suite 4300, Minneapolis, Minnesota 55402. Voyageur employs
an experienced staff of professional investment analysts, portfolio managers and
traders, and uses several proprietary computer-based systems in conjunction with
fundamental analysis to identify investment opportunities.
Voyageur is responsible for the overall management of each Fund's portfolio.
Voyageur employs for each Fund, except the Mid Cap Equity Fund, a team approach
to the management of the Fund, with no individual team member being responsible
solely for investment decisions. Each Fund's management team or portfolio
manager has access to Voyageur's investment research and other money management
resources. Forbes Watson serves as portfolio manager for the Mid Cap Equity
Fund. Mr. Watson joined Voyageur in 2003 from Glenwood Capital Management, an
affiliate of RBC Centura. Mr. Watson had been at Glenwood Capital Management
over five years. He has over twenty years experience in the investment business.
His career began in Dallas with May, Cullum, Ragland, & Brittain, a full service
investment boutique. Other positions included being employed as a trader in
Nasdaq listed companies by the firm then known as Shearson/American Express, and
as a portfolio manager for Jackson, Mississippi-based Trustmark National Bank
and ParkSouth, a registered investment advisor. Mr. Watson holds a BA from North
Texas University and an MBA from Millsaps College. He is a member of the North
Carolina Society of Financial Analysts and the Association for Investment
Management and Research. Mr. Watson also serves on the board of The Carthage
Bank, a community bank located in Carthage, Mississippi.
Voyageur was formed in 1983 and currently provides investment advisory and
administrative services to the Funds; Great Hall Investment Funds, Inc., a
series company that currently consists of five separately managed money market
portfolios; the Babson Group of Funds, a family of ten individual equity, fixed
income, and money market funds and series; and J&B Funds, a series company that
currently consists of a single equity portfolio. The portfolios of Great Hall
Investment Funds, Inc. serve principally as money market sweep vehicles for
brokerage customers of RBC Dain Rauscher Inc. Voyageur also provides fixed
income, equity and balanced portfolio management services to a variety of wrap
programs, insurance company separate accounts, and private account clients,
including individuals, public entities, Taft-Hartley plans, corporations,
private nonprofits, foundations, endowments and healthcare organizations. As of
October 31, 2003, Voyageur had approximately $23 billion in assets under
management, approximately $317 million of which was represented by the net
assets of the Funds, $10.7 billion of which was represented by the net assets of
Great Hall Investment Funds, Inc., $1.2 billion of which was represented by the
net assets of the Babson Group of Funds, and $12 million of which was
represented by the net assets of J&B Funds. Following the Reorganization,
Voyageur will continue to serve the Funds as investment advisor.
EXHIBIT E to this Proxy Statement sets forth the amount of fees paid by each
Fund to Voyageur under the Current Advisory Agreement during the fiscal year
ended April 30, 2003. EXHIBIT E to this Proxy Statement also sets forth
information concerning the amount and purpose of payments made by each Fund to
Voyageur or any affiliated person of Voyageur for services provided to the Fund
(other than under the Current Advisory Agreement or for brokerage commissions)
during the fiscal year ended April 30, 2003.
EXHIBIT F to this Proxy Statement sets forth information regarding other
registered investment companies with investment objectives similar to the Funds
for which Voyageur acts as investment advisor, including the rate of Voyageur's
compensation.
15
EXHIBIT G to this Proxy Statement sets forth information regarding the principal
executive officer and directors of Voyageur.
* * *
SHAREHOLDER APPROVAL: Approval of Proposal 2 with respect to each Fund will
require the affirmative vote of a majority of the shares of that Fund that are
outstanding and entitled to vote, with all classes voting together and not by
class.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH
FUND APPROVE THE PLAN.
---------------------------
PROPOSAL 3 -- ALL FUNDS
APPROVAL OF THE MODIFICATION OF
FUNDAMENTAL INVESTMENT POLICIES/RESTRICTIONS
---------------------------
The 1940 Act requires each Fund to adopt policies governing certain specified
activities, which can be changed only by a shareholder vote. Policies that
cannot be changed or eliminated without a shareholder vote are referred to in
this Proxy Statement as "fundamental" policies or restrictions. The purpose of
this Proposal is to standardize the investment policies/restrictions among the
Funds, the Babson Group of Funds, J&B Funds, and the Great Hall Funds, and to
modify the Fund's current investment policies/restrictions so as to provide the
Funds' Board with the maximum permitted flexibility under applicable law. The
Proposal is described in more detail below.
Each of the fundamental policies/restrictions proposed for revision relates to
an activity that the 1940 Act only permits to be changed by shareholder
approval. Shareholders are being asked to approve amendments to these investment
policies/restrictions, as set forth in Proposals 3.A-3.H.
Each Fund's current fundamental policies/restrictions are set forth in EXHIBIT H
to this Proxy Statement. Changes in fundamental policies/restrictions that are
approved by shareholders, as well as changes in non-fundamental
policies/restrictions that are adopted by the Board, will be reflected in each
Fund's Prospectus and other disclosure documents. Any change in the method of
operation of a Fund will require prior Board approval. Should shareholders
approve the Proposal, the Funds would continue to be managed subject to the
limitations imposed by the 1940 Act and the rules and interpretive guidance
provided thereunder.
Approval of each item of this Proposal with respect to any Fund requires the
affirmative vote of a majority of that Fund's outstanding voting securities (as
that term is defined in the 1940 Act). In addition, approval of changes to the
Funds' fundamental investment policies/restrictions will not be dependent upon
your vote on Proposal 2 regarding the Reorganization. Therefore, if approved by
shareholders, these changes would take effect regardless of the vote with
respect to the Reorganization. Should shareholders also approve the proposed
Reorganization, each Tamarack Fund would have as its fundamental investment
policies/restrictions those revised fundamental investment policies/restrictions
approved by the corresponding Fund's shareholders. Should a Fund's shareholders
not approve an item of this Proposal to amend a particular fundamental
investment policy/restriction, the Fund's current fundamental investment
policy/restriction, as set forth in EXHIBIT H, would continue to apply
unchanged.
16
PROPOSAL 3.A -- DIVERSIFICATION
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's sub-classification as a diversified or
non-diversified Fund would read:
Each Fund has elected to be classified as a diversified series
of an open end management investment company and will invest
its assets only in a manner consistent with this
classification under applicable law.
DISCUSSION OF PROPOSED MODIFICATION
Section 8(b) of the 1940 Act requires each series of an investment company to
state whether it is "diversified" or "non-diversified," as those terms are
defined in the 1940 Act. Under the 1940 Act, a diversified fund generally is
required to have 75% of its total assets invested in (1) cash and cash items
(including receivables), obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or securities of other investment
companies; or (2) other securities limited for any one issuer to an amount (x)
not greater than 5% of the total assets of the fund, and (y) not more than 10%
of the outstanding voting securities of such issuer. Each Fund is currently
classified as a diversified series of an open-end investment company. The Funds'
existing diversification policy/restriction restates the current definition of
"diversified" from the 1940 Act.
No change is being proposed to a Fund's designation as a diversified Fund.
Instead, the proposed change would modify the Funds' fundamental investment
policies/restrictions regarding diversification to rely on the definition of the
term "diversified" in the 1940 Act rather than re-stating relevant percentage
limitations which are applicable under current law. Thus, this investment
policy/restriction will apply to each Fund the requirements of the 1940 Act, as
they may be amended from time to time (which are applicable in any case),
without the Funds' Board or shareholders having to take further action.
PROPOSAL 3.B -- BORROWING
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding borrowing would read:
Each Fund will not borrow money, except as permitted under the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder, or as may otherwise be permitted from
time to time by a regulatory authority having jurisdiction.
DISCUSSION OF PROPOSED MODIFICATION
Unless further restricted, all investment companies are limited in the amount
they may borrow by the 1940 Act. At the present time, the 1940 Act permits a
Fund to borrow from banks in an amount up to 33-1/3% of the Fund's assets,
including the amount borrowed. The proposed policy/restriction would permit the
Funds to borrow in a manner and to the full extent permitted under applicable
law and regulation. Therefore, no further Board or shareholder action would be
needed to conform the borrowing policy/restriction to future changes in the 1940
Act, and interpretations thereunder, that govern borrowing by investment
companies.
17
PROPOSAL 3.C -- SENIOR SECURITIES
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding issuing senior securities would read:
Each Fund will not issue any class of senior securities,
except as permitted under the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder, or as
may otherwise be permitted from time to time by a regulatory
authority having jurisdiction.
DISCUSSION OF PROPOSED MODIFICATION
The 1940 Act prohibits Funds from issuing senior securities, except for
borrowings where certain conditions are met. Under each Fund's current
fundamental investment policy/restriction, each Fund is prohibited from issuing
senior securities, except in certain circumstances permissible under the 1940
Act or SEC interpretation. The proposed policy/restriction rewords the current
policies/restrictions and permits the Funds to issue senior securities to the
full extent permitted under applicable law and regulation. Therefore, no further
Board or shareholder action would be needed to conform this policy/restriction
to future changes in the 1940 Act, and interpretations thereunder, that govern
issuing senior securities by investment companies.
PROPOSAL 3.D -- UNDERWRITING SECURITIES
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding underwriting securities would read:
Each Fund will not engage in the business of underwriting
securities issued by others, except to the extent that the
Fund may be deemed to be an underwriter under applicable laws
in connection with the disposition of portfolio securities.
DISCUSSION OF PROPOSED MODIFICATION
The proposed policy/restriction with respect to underwriting securities is
substantially similar to the current policy/restriction for each of the Funds.
However, the proposed change would help to standardize this policy/restriction
for all of the funds.
PROPOSAL 3.E -- REAL ESTATE
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding investments in real estate would read:
Each Fund will not purchase or sell real estate, unless
acquired as a result of ownership of securities or other
instruments, although it may purchase securities secured by
real estate or interests therein, or securities issued by
companies which invest, deal or otherwise engage in
transactions in real estate or interests therein.
18
DISCUSSION OF PROPOSED MODIFICATION
With the following exception, the proposed real estate policy/restriction
rewords the current policy/restriction without making any material changes. The
current policies/restrictions of the Funds also prohibit investment in real
estate limited partnerships. Voyageur intends to recommend to the Board the
adoption of this policy/restriction with respect to real estate limited
partnerships as non-fundamental.
PROPOSAL 3.F -- MAKING LOANS
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding making loans would read:
Each Fund will not make loans, except as permitted under, or
to the extent not prohibited by, the Investment Company Act of
1940, as amended, and the rules and regulations thereunder, or
as may otherwise be permitted from time to time by a
regulatory authority having jurisdiction.
DISCUSSION OF PROPOSED MODIFICATION
The proposed policy/restriction permits the Funds to engage in securities
lending to the full extent permitted under applicable law and regulation.
Therefore, should the SEC staff modify the requirements governing an investment
company's loan of its securities in the future, under the proposed
policy/restriction, each Fund would be able to take advantage of that increased
flexibility without requiring further shareholder action.
PROPOSAL 3.G -- CONCENTRATION OF INVESTMENTS
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding concentration of investments would read:
Each Fund will not concentrate its investments in the
securities of issuers primarily engaged in the same industry,
as that term is used in the Investment Company Act of 1940, as
amended, and as interpreted or modified from time to time by a
regulatory authority having jurisdiction, except that this
restriction will not apply to the Fund's investments in
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
DISCUSSION OF PROPOSED MODIFICATION
Each Fund currently has, and will continue to have, a fundamental investment
policy/restriction that prohibits the Fund from concentrating its investments in
any one industry. While the 1940 Act does not define what constitutes
"concentration" in an industry, the SEC staff has taken the position that
investment of more than 25% of a Fund's total assets in one or more issuers
conducting their principal business activities in the same industry (excluding
the U.S. Government, its agencies or instrumentalities) constitutes
concentration. The proposed policy/restriction would permit investment in an
industry up to the most recently prescribed limits under the 1940 Act and
accompanying SEC interpretations.
19
PROPOSAL 3.H -- COMMODITIES
APPLICABLE FUNDS -- ALL FUNDS
PROPOSED NEW FUNDAMENTAL INVESTMENT POLICY/RESTRICTION: If this Proposal item is
approved by shareholders, each Fund's fundamental investment policy/restriction
regarding investments in commodities would read:
Each Fund will not purchase or sell physical commodities or
contracts relating to physical commodities, except as
permitted under the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, or as may
otherwise be permitted from time to time by a regulatory
authority having jurisdiction.
DISCUSSION OF PROPOSED MODIFICATION
The current fundamental investment policies/restrictions prohibit the Funds from
investing in commodities or commodity contracts, but except certain financial
instruments, such as futures contracts and options on futures contracts, which
under some interpretations may be deemed commodities. The proposed
policy/restriction prohibits only the purchase of physical commodities or
contracts relating to physical commodities, and permits the Funds to purchase or
sell commodities to the full extent permitted under applicable law and
regulation.
SHAREHOLDER APPROVAL: Approval of Proposals 3.A - 3.H will require the
affirmative vote of a majority of the outstanding shares of the Fund, as that
term is defined in the 1940 Act. Under the 1940 Act, the vote of a "majority of
the outstanding shares" means the vote of (1) 67% or more of the voting
securities entitled to vote on the proposal that are present at the Meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (2) more than 50% of the outstanding voting securities
entitled to vote on the proposal, whichever is less.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH
FUND APPROVE PROPOSALS 3.A THROUGH 3.H., AS APPLICABLE
---------------------------
PROPOSAL 4 -- ALL FUNDS
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
---------------------------
Upon the recommendation of the Audit Committee, the Board of Directors,
including all of the Independent Directors, has selected Deloitte & Touche LLP
("Deloitte") to serve as independent auditors of the Funds with respect to its
financial statements for its current fiscal year and recommends that
shareholders ratify such selection. Deloitte has confirmed to the Audit
Committee that they are independent auditors with respect to the Funds.
Representatives of Deloitte are not expected to be present at the Meeting, but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence. Deloitte also
serves as independent auditors of Babson Group of Funds, Great Hall Investment
Funds, Inc. and J&B Funds.
The Audit Committee is required to pre-approve all audit services and non-audit
services that an independent auditor provides to the Funds. Furthermore, the
Audit Committee is required to pre-approve any engagement of the Funds'
independent auditor to provide non-audit services to Voyageur or any affiliate
of Voyageur that
20
provides ongoing services to the Funds, if such engagement would relate directly
to a Fund's operations and financial reporting. The Audit Committee may delegate
to one or more of its members authority to pre-approve the auditor's provision
of audit and/or non-audit services to the Funds, or the provision of non-audit
services to Voyageur or any service provider affiliated with Voyageur. The Audit
Committee will also review at least annually whether any receipt of non-audit
fees by the Funds' independent auditor from (i) the Fund, (ii) other funds
advised by Voyageur or its affiliates, (iii) Voyageur or any entity controlling
or controlled by Voyageur, and (iv) any investment advisor or investment company
service provider under common control with Voyageur is compatible with
maintaining the independence of the independent auditor.
PricewaterhouseCoopers LLP ("PwC") served as independent auditors of the Funds
for the fiscal year ended April 30, 2003. Representatives of PwC are not
expected to be present at the Meeting, but have been given the opportunity to
make a statement if they so desire and will be available should any matter arise
requiring their presence. For further information about the independent auditors
of the Funds, please refer to the "Independent Auditors" section under "General
Information About the Funds" below.
* * *
SHAREHOLDER APPROVAL: Approval of Proposal 4 by each Fund's shareholders will
require the affirmative vote of a majority of the total votes validly cast at
the Meeting.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
EACH FUND APPROVE PROPOSAL 4.
OTHER BUSINESS
The Board does not intend to present any other business at the Meeting. If,
however, any other matters are properly brought before the Meeting, the persons
named in the accompanying form of proxy will vote thereon in accordance with
their judgment.
SHAREHOLDER PROPOSALS
The Company is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to the Company's offices, 60
South Sixth Street, Minneapolis, Minnesota 55402, so they are received within a
reasonable time before any such meeting. An opportunity will be provided at the
Meeting for shareholders present in person to present a motion to the Meeting.
Should any properly presented motion or any other matter requiring a vote of the
shareholders arise, including any question as to an adjournment or postponement
of the Meeting, the persons named as proxies will vote on such matters according
to their best judgment in the interests of the Funds.
VOTING INFORMATION
This Proxy Statement is furnished in connection with a solicitation of proxies
by the Board to be used at the Meeting. This Proxy Statement, along with a
Notice of the Meeting and proxy card(s), is first being mailed to shareholders
of the Funds on or about January 22, 2004. Only shareholders of record as of the
close of business on January 15, 2004 ("Record Date"), will be entitled to
notice of, and to vote at, the Meeting. If the enclosed form of proxy card is
properly executed and returned in time to be voted at the Meeting, the proxies
named therein will vote the shares represented by the proxy in accordance with
the instructions marked thereon. Unmarked but properly executed proxy cards will
be voted FOR the proposed Reorganization and FOR any other matters deemed
appropriate. A proxy may be revoked at any time on or before the Meeting at
which the
21
matter is voted on, by written notice to the Secretary of the Funds at the
address on the cover of this Proxy Statement or by attending and voting at the
Meeting. Unless revoked, all valid and executed proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, for approval of the Plan and the Reorganization contemplated
thereby. Shareholders holding shares through a broker-dealer who wish to vote or
revoke their proxies in person will need to present a valid proxy obtained from
their broker-dealer. Each share of record on the Record Date is entitled to one
vote on each matter presented at the Meeting, with proportionate votes for
fractional shares.
The Funds request that broker-dealer firms, custodians, nominees and fiduciaries
forward proxy material to the beneficial owners of the shares held of record by
such persons. Voyageur may reimburse such broker-dealer firms, custodians,
nominees and fiduciaries for their reasonable expenses incurred in connection
with such proxy solicitation. The cost of soliciting these proxies will be borne
by Voyageur. Voyageur has engaged [SOLICITOR NAME] to solicit proxies from
brokers, banks, other institutional holders and individual shareholders for an
approximate fee, including out-of-pocket expenses, of up to $[ ].
SHARE INFORMATION
The chart below lists the number of shares of the Funds that are outstanding as
of the Record Date:
NUMBER OF SHARES
NAME OF FUND OUTSTANDING
======================================================================
RBC FUNDS, INC.
---------------
RBC Large Cap Equity Fund
RBC Mid Cap Equity Fund
RBC Small Cap Equity Fund
RBC Government Income Fund
RBC Quality Income Fund
RBC North Carolina Tax-Free Bond Fund
QUORUM
The presence, in person or by proxy, of holders of one-third of the shares of
stock of the Company (or of the applicable Fund, if the proposal under
consideration requires approval by a separate vote of one or more Funds)
entitled to vote at the Meeting constitutes a quorum.
VOTING REQUIREMENT
Nominees for Director receiving a plurality of the votes cast in person or by
proxy at the Meeting at which a quorum exists will be elected to the Board of
Directors of the Company in Proposal 1. Approval of Proposal 2 with respect to
each Fund will require the affirmative vote of a majority of the shares of that
Fund that are outstanding and entitled to vote, with all classes voting together
and not by class. Proposals 3.A-3.S each require the affirmative vote of a
majority of a Fund's outstanding voting securities (as defined in the 1940 Act),
which, for these purposes, is the vote of (1) 67% or more of the voting
securities entitled to vote on the Proposal that are present at the Meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (2) more than 50% of the outstanding voting securities
entitled to vote on the Proposal, whichever is less. Approval of Proposal 4 by
each Fund's shareholders will require the affirmative vote of a majority of the
total votes validly cast at the Meeting. Shareholders are entitled to one vote
for each Fund share. Fractional shares are entitled to proportional voting
rights.
22
ADJOURNMENT
In the event that a quorum to transact business or the vote required to approve
any Proposal is not obtained at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law to permit further solicitation of proxies. If the proposed adjournment
relates to a Proposal on which all Funds are voting collectively, any such
adjournment will require the affirmative vote of the holders of a majority of
all of the Funds' shares present in person or by proxy and entitled to vote at
the Meeting. If the proposed adjournment relates to a Proposal on which Funds
are voting individually, any such adjournment with respect to a particular Fund
will require the affirmative vote of the holders of a majority of that Fund's
shares present in person or by proxy and entitled to vote at the Meeting. The
persons named as proxies will vote in favor of such adjournment with respect to
any Proposal those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment with respect to any Proposal
those proxies required to be voted against that Proposal.
EFFECT OF ABSTENTIONS AND BROKER "NON-VOTES"
For purposes of determining the presence of a quorum for transacting business at
the Meeting, executed proxies marked as abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be treated as shares that are present for
quorum purposes but which have not been voted. Accordingly, abstentions and
broker non-votes will have no effect on Proposal 1, for which the required vote
is a plurality of the votes cast, and will have no effect on Proposal 4, for
which the required vote is a majority of the votes cast, and will effectively be
a vote against adjournment and against Proposals 2 and 3 for which the required
vote is a percentage of the shares outstanding or present, and entitled to vote
on the matter.
PROXY SOLICITATION
[Proxies are being solicited by mail. This Proxy Statement is first being mailed
on or about January 22, 2004 to shareholders of record as of January 15, 2004.
Additional solicitations may be made by telephone, e-mail, or other personal
contact by officers or employees of Voyageur and its affiliates or by proxy
soliciting firms retained by Voyageur. Voyageur has retained [SOLICITOR NAME] to
provide proxy solicitation services in connection with the Meeting at an
estimated cost of $[ ]. In addition, Voyageur may reimburse persons holding
shares in their names or names of their nominees for expenses incurred in
forwarding solicitation material to beneficial owners of Fund shares. The cost
of the solicitation will be borne by Voyageur. In addition to returning a
written proxy card, Fund shareholders may authorize Voyageur or [SOLICITOR NAME]
by telephone to execute proxies on their behalf. As the meeting date approaches,
shareholders of each Fund may receive a call from a representative of Voyageur
or [SOLICITOR NAME] if the Fund has not yet received their votes.
Proxies that are obtained will be recorded in accordance with the following
procedures. In all cases where a telephonic proxy is solicited, a Voyageur or
[SOLICITOR NAME] representative is required to ask the shareholder for the
shareholder's full name, address, social security number or employer
identification number, title (if the person giving the proxy is authorized to
act on behalf of an entity, such as a corporation), the number of shares owned
and to confirm that the shareholder has received this Proxy Statement in the
mail. A Voyageur or [SOLICITOR NAME] representative is required to verify the
identification information provided on the call against shareholder information
provided by a Fund. If the information solicited is successfully verified, the
Voyageur or [SOLICITOR NAME] representative has the responsibility to explain
the voting process, read the Proposals listed on the proxy card, and ask for the
shareholder's instructions on each Proposal. The Voyageur or [SOLICITOR NAME]
representative, although permitted to answer questions about the process, is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth in this Proxy Statement. Voyageur or [SOLICITOR NAME]
will record the shareholder's instructions on the card. Within 72 hours,
Voyageur or [SOLICITOR NAME] will send the shareholder a letter or mailgram
confirming the shareholder's vote and asking the shareholder to call Voyageur or
[SOLICITOR NAME] immediately if the shareholder's instructions are not correctly
23
reflected in the confirmation. Voyageur believes that these procedures are
reasonably designed to ensure that the identity of the shareholder casting the
vote is accurately determined and that the voting instructions of the
shareholder are accurately determined.]
FUND SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
For a list of persons or entities that owned beneficially or of record 5% or
more of the outstanding shares of a class of each of the Funds as of [DATE], to
the best of the Funds' knowledge, please refer to EXHIBIT I.
INFORMATION ABOUT THE FUNDS
Set forth below is a description of the current service providers of the Company
and the proposed service providers of the Tamarack Funds Trust.
INVESTMENT ADVISOR
For a description of Voyageur, please refer to Proposal 2 above.
DISTRIBUTOR, ADMINISTRATOR, FUND ACCOUNTING AGENT, CUSTODIAN AND TRANSFER AGENT
Centura Funds Distributor, Inc. ("Distributor"), 3435 Stelzer Road, Columbus,
Ohio 43219, serves as the Funds' distributor. BISYS Fund Services Ohio, Inc.
("BISYS") serves as the Funds' administrator and fund accounting agent. The
Distributor is an affiliate of BISYS. Wells Fargo Bank Minnesota, N.A. ("Wells
Fargo") serves as the Funds' custodian. BISYS currently serves as the Funds'
transfer agent. On or about February 29, 2004, Boston Financial Data Services
("BFDS") is expected to become the Funds' transfer agent.
Following the Reorganization, J&B, an affiliate of Voyageur, will serve as the
distributor of the Tamarack Funds; BISYS will serve as the Tamarack Funds'
administrator and fund accounting agent; Wells Fargo will serve as the Tamarack
Funds' custodian; and BFDS will serve as the transfer agent to certain Tamarack
Funds, including the Tamarack Funds corresponding to the Funds, while BISYS will
serve as the transfer agent to certain other Tamarack Funds.
INDEPENDENT AUDITORS
On December 2, 2003, the Board of Directors selected Deloitte as independent
auditors of the Funds for the fiscal year ending April 30, 2004. Deloitte has
confirmed to the Audit Committee of the Board of Directors ("Audit Committee")
that they are independent auditors with respect to the Funds.
PwC served as independent auditors of the Funds for the fiscal year ended April
30, 2003. In July and August 2003, a PwC affiliate in Canada provided certain
prohibited non-audit services for the benefit of a Canadian subsidiary of RBC,
the ultimate parent company of Voyageur. As a result of the PwC affiliate in
Canada's provision of these services, PwC resigned as the independent auditors
of the Funds effective October 8, 2003. During the Funds' fiscal year ended
April 30, 2003, PwC's audit reports concerning the Funds contained no adverse
opinion or disclaimer of opinion; nor were its reports qualified or modified as
to uncertainty, audit scope, or accounting principles. Further, in connection
with its audits for the fiscal year ended April 30, 2003, and through October 8,
2003, there were no disagreements between the Funds and PwC on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which if not resolved to the satisfaction of PwC would have
caused it to make reference to the disagreements in its report on the financial
statements for such periods.
Ernst & Young, LLP ("E&Y") served as independent auditors of the Funds for the
fiscal year ended April 30, 2002. On October 3, 2002, E&Y informed the Funds
that RBC, the ultimate parent company of Voyageur, wished to engage E&Y to
provide services to RBC that would be inconsistent with current independence
rules. Accordingly, E&Y resigned as the Funds' independent accountants effective
October 3, 2002. During the
24
Funds' fiscal year ended April 30, 2002, E&Y's audit reports concerning the
Funds contained no adverse opinion or disclaimer of opinion; nor were its
reports qualified or modified as to uncertainty, audit scope, or accounting
principles. Further, in connection with its audits for the fiscal year ended
April 30, 2002, and through October 3, 2002, there were no disagreements between
the Funds and E&Y on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which if not resolved to
the satisfaction of E&Y would have caused it to make reference to the
disagreements in its report on the financial statements for such periods.
Certain information concerning the fees and services provided by PwC and E&Y to
the Funds and to Voyageur and its affiliates for each entity's two most recent
fiscal years is provided below.
AUDIT FEES. The aggregate fees billed by PwC for professional services rendered
for the audit of the Funds' annual financial statements for the fiscal year
ended April 30, 2003 were $ [ ]. The aggregate fees billed by E&Y for
professional services rendered for the audit of the Funds' annual financial
statements for the fiscal year ended April 30, 2002 were $ [ ].
AUDIT-RELATED FEES. The aggregate fees billed by PwC for professional services
rendered that are related to the audit of the Funds' annual financial statements
but not reported under "Audit Fees" above for the fiscal year ended April 30,
2003 were $ [ ]. In addition, the aggregate fees billed by PwC for such services
rendered to Voyageur, or an affiliate thereof that provides ongoing services to
the Funds, relating to the operations and financial reporting of the Funds and
subject to pre-approval by the Audit Committee, for the fiscal year ended April
30, 2003 were $ [ ]. The aggregate fees billed by E&Y for professional services
rendered that are related to the audit of the Funds' annual financial statements
but not reported under "Audit Fees" above for the fiscal year ended April 30,
2002 were $ [ ]. In addition, the aggregate fees billed by E&Y for such services
rendered to Glenwood, or an affiliate thereof that provides ongoing services to
the Funds, relating to the operations and financial reporting of the Funds and
subject to pre-approval by the Audit Committee, for the fiscal year ended April
30, 2002 were $ [ ].
TAX FEES. The aggregate fees billed by PwC for professional services rendered
for tax compliance, tax advice and tax planning for the fiscal year ended April
30, 2003 were $ [ ]. In addition, the aggregate fees billed by PwC for such
services rendered to Voyageur, or an affiliate thereof that provides ongoing
services to the Funds, relating to the operations and financial reporting of the
Funds and subject to pre-approval by the Audit Committee, for the fiscal year
ended April 30, 2003 were $ [ ]. The aggregate fees billed by E&Y for
professional services rendered for tax compliance, tax advice and tax planning
for the fiscal year ended April 30, 2002 were $ [ ]. In addition, the aggregate
fees billed by E&Y for such services rendered to Glenwood, or an affiliate
thereof that provides ongoing services to the Funds, relating to the operations
and financial reporting of the Funds and subject to pre-approval by the Audit
Committee, for the fiscal year ended April 30, 2002 were $ [ ].
ALL OTHER FEES. The aggregate fees billed by PwC for professional services
rendered for products and services other that those described above for the
fiscal years ended April 30, 2003 were $ [ ]. In addition, the aggregate fees
billed by PwC for such services rendered to Voyageur, or an affiliate thereof
that provides ongoing services to the Funds, relating to the operations and
financial reporting of the Funds and subject to pre-approval by the Audit
Committee, for the fiscal year ended April 30, 2003 were $ [ ]. The aggregate
fees billed by E&Y for professional services rendered for products and services
other that those described above for the fiscal years ended April 30, 2002 were
$ [ ]. In addition, the aggregate fees billed by E&Y for such services rendered
to Glenwood, or an affiliate thereof that provides ongoing services to the
Funds, relating to the operations and financial reporting of the Funds and
subject to pre-approval by the Audit Committee, for the fiscal year ended April
30, 2002 were $ [ ].
The Audit Committee considered whether the services described above were
compatible with PwC's and E&Y's independence. The Audit Committee also
considered whether the provision of all other non-audit services rendered to
Voyageur, or an affiliate thereof that provides ongoing services to the Funds,
was compatible with
25
maintaining the independence of PwC and E&Y, respectively. The Audit Committee
has adopted pre-approval policies and procedures pursuant to which the
engagement of any independent auditor is approved. Such procedures provide that:
(1) before an auditor is engaged by the Funds to render audit services, the
Audit Committee shall review and approve the engagement; (2) the Audit Committee
shall review and approve in advance any proposal (with the exception of
proposals that fall under a de minimis exception permitted by applicable law)
that the Funds employ their auditor to render "permissible non-audit services"
to the Funds, or any proposal (with the exception of proposals that fall under a
de minimis exception permitted by applicable law) that Voyageur, and any entity
controlling, controlled by, or under common control with Voyageur that provides
ongoing services to the Funds, employ the Funds' auditor to render non-audit
services, if such engagement would relate directly to the operations and
financial reporting of the Funds; (3) as a part of any such review, the Audit
Committee shall consider whether the provision of such services is consistent
with the auditor's independence; and (4) the Audit Committee may delegate to one
or more of its members ("Delegates") authority to pre-approve the auditor's
provision of audit services or permissible non-audit services to the Funds, or
the provision of non-audit services to Voyageur or any Voyageur-affiliated
service provider, provided that any pre-approval determination made by a
Delegate is presented to the full Audit Committee at its next meeting. The
pre-approval procedures do not include delegation of the Audit Committee's
responsibilities to management.
The percentage of the services rendered described under "Audit-Related Fees,"
"Tax Fees" and "All Other Fees," above, for which pre-approval was waived
subject to the de minimis exception as permitted by applicable law amounted to
[ ]%. The percentage of such services rendered to Voyageur, or an affiliate
thereof that provides ongoing services to the Funds, amounted to [ ]%.
The aggregate non-audit fees billed by PwC for services rendered to the Funds
and to Voyageur, or an affiliate of Voyageur that provided ongoing services to
the Funds, for the fiscal year ended April 30, 2003 were $ [ ]. The aggregate
non-audit fees billed by E&Y for services rendered to the Funds and to Glenwood,
or an affiliate of Glenwood that provided ongoing services to the Funds, for the
fiscal year ended April 30, 2002 were $ [ ].
SHAREHOLDER INFORMATION
To help lower the impact of operating costs, the Funds attempt to eliminate
mailing duplicate documents to the same address. When two or more Fund
shareholders have the same last name and address, the Fund may send only one
prospectus, annual report, semiannual report, general information statement or
proxy to that address rather than mailing separate documents to each
shareholder. Shareholders may opt out of this single mailing at any time by
calling the Funds at (800) 422-3688 or writing to the Funds at 60 South Sixth
Street, Minneapolis, Minnesota 55402 and requesting the additional copies of
Fund documents. Shareholders sharing a single mailing address who are currently
receiving multiple copies of Fund documents can request delivery of a single
copy instead by calling the same telephone number or writing to the same
address.
LEGAL MATTERS
Certain legal matters concerning the federal income tax consequences of the
Reorganization and the issuance of shares of the Tamarack Funds Trust will be
passed upon by Dechert LLP, 200 Clarendon Street, 27th Floor, Boston,
Massachusetts 02116.
26
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made as of this _____day of _____, 2004, by Tamarack Funds Trust ("New Acquiring
Trust"), a Delaware statutory trust, with its principal place of business at
_____, on behalf of each of its separate series listed on Schedule A (each, an
"Acquiring Fund"), and RBC Funds, Inc. ("Target Company"), a Maryland
corporation, with its principal place of business at _____, on behalf of each of
its separate series listed on Schedule A (each, a "Target Fund", and together
with its corresponding Acquiring Fund, a "Fund" and together, the "Funds"). Each
Acquiring Fund has been organized to hold the assets of a Target Fund and such
Acquiring Fund has had no assets (other than the seed capital required by
Section 14(a) of the Investment Company Act of 1940, as amended ("1940 Act"))
and has carried on no business activities prior to the date first shown above
and will have had no assets (other than the required seed capital) and will have
carried on no business activities prior to the consummation of this transaction
described herein.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization
("Reorganization") will consist of the transfer of all of the assets of each
Target Fund to its corresponding Acquiring Fund in exchange solely for voting
shares of beneficial interest ($0.01 par value per share) of such Acquiring
Fund, in such classes as shall correspond to those classes of shares of such
Target Fund (with respect to each pair of Funds and each such class, as
applicable, the ("Acquiring Fund Shares"), the assumption by such Acquiring Fund
of all of the liabilities of such Target Fund and the distribution of such
Acquiring Fund Shares to the shareholders of such Target Fund in complete
liquidation of such Target Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement. All references in this
Agreement to action taken by an Acquiring Fund shall be deemed to refer to
action taken by New Acquiring Trust on behalf of such Acquiring Fund; and all
references in this Agreement to action taken by a Target Fund shall be deemed to
refer to action taken by Target Company on behalf of such Target Fund.
Notwithstanding anything to the contrary in this Agreement, the rights and
obligations of each Acquiring Fund, and the New Acquiring Trust with respect to
that Acquiring Fund, and each Target Fund, and the Target Company with respect
to that Target Fund, are not contingent upon the satisfaction by any other
Acquiring Fund or Target Fund, as applicable, of its obligations under this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
1. TRANSFER OF ASSETS OF EACH TARGET FUND TO CORRESPONDING ACQUIRING FUND IN
EXCHANGE FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL TARGET FUND
LIABILITIES AND THE LIQUIDATION OF TARGET FUND
1.1. Subject to the terms and conditions set forth herein and
on the basis of the representations and warranties contained herein, each Target
Fund agrees to transfer to the corresponding Acquiring Fund all of its assets as
set forth in section 1.2, and such Acquiring Fund agrees in exchange therefor
(i) to deliver to the Target Fund that number of full and fractional [Class __,
Class __ and Class __] Acquiring Fund Shares corresponding to the Target Fund
shares as of the time and date set forth in section 2.1; and (ii) to assume all
of the liabilities of the Target Fund with respect to [Class __, Class __ and
Class __], as set forth in Section 1.2. All such Acquiring Fund Shares delivered
to the Target Funds shall be delivered at net asset value without a sales load,
commission or other similar fee being imposed. Such transactions shall take
place at the closing provided for in section 3.1 (the "Closing").
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1.2. The assets of each Target Fund to be acquired by the
corresponding Acquiring Fund (the "Assets") shall consist of all assets,
including, without limitation, all cash, cash equivalents, securities,
commodities and futures interests and dividends or interest or other receivables
that are owned by the Target Fund and any deferred or prepaid expenses shown as
an asset on the books of the Target Fund on the Valuation Time (as defined in
Section 2.1). The liabilities of each Target Fund to be assumed by the
corresponding Acquiring Fund (the "Liabilities") shall consist of all
liabilities of the Target Fund existing at the Valuation Time, whether accrued
or contingent, known or unknown.
1.3. Immediately upon delivery to a Target Fund of the corresponding
Acquiring Fund Shares, the Target Fund, as the then sole shareholder of the
corresponding Acquiring Fund, shall (i) elect trustees of the New Acquiring
Trust, (ii) approve the advisory and any sub-advisory agreements, (iii) approve
the distribution and service plan pursuant to Rule 12b-1 under the 1940 Act, as
applicable, (iv) ratify the selection of the New Acquiring Trust's independent
accountants, and (v) take such other steps related to the inception of
operations of such Acquiring Fund as deemed necessary or appropriate by the
Trustees of New Acquiring Trust.
1.4. With respect to each pair of Funds, immediately following the
action contemplated by Section 1.3, the Target Fund will distribute to its
shareholders of record (the "Target Fund Shareholders"), determined as of the
Valuation Time (as defined in section 2.1), on a pro rata basis, the
corresponding Acquiring Fund Shares received by the Target Fund pursuant to
section 1.1 and will completely liquidate. Such distribution and liquidation
will be accomplished with respect to the Target Fund by the transfer of the
Acquiring Fund Shares then credited to the account of the Target Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Target Fund Shareholders. An Acquiring Fund
shall have no obligation to inquire as to the validity, propriety or correctness
of such records, but shall assume that such transaction is valid, proper and
correct. With respect to each pair of Funds, the aggregate net asset value of
the Acquiring Fund Shares to be so credited to the Target Fund Shareholders
shall be equal to the aggregate net asset value of the Target Fund shares owned
by such shareholders on the Closing Date. All issued and outstanding shares of
the Target Fund will simultaneously be cancelled on the books of the Target
Fund. Acquiring Funds will not issue certificates representing Acquiring Fund
Shares issued in connection with such exchanges.
1.5. Ownership of Acquiring Fund Shares of each Acquiring Fund will be
shown on its books.
1.6. Any reporting responsibility of a Target Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Target Fund.
1.7. All books and records of a Target Fund, including all books and
records required to be maintained under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the corresponding Acquiring Fund from and after the Closing Date
and shall be turned over to the corresponding Acquiring Fund as soon as
practicable following the Closing Date.
2. VALUATION
2.1. With respect to each pair of Funds, the value of the Assets shall
be computed as of the date and time ("Valuation Time") that is the close of
regular trading on the New York Stock Exchange
A-2
(the "NYSE") on the Closing Date (as defined in section 3.1) after the
declaration and payment of any dividends and/or other distributions on the
Closing Date, using such valuation procedures as are disclosed in the
then-current prospectus and/or statement of additional information for the
Acquiring Fund and as have been approved by its Board of Trustees, copies of
which have been delivered to the Target Fund.
2.2. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act, and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement
shall be March 31, 2004, or such later date as the parties may agree in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place immediately after of 4:00 p.m., Eastern time, on the Closing Date,
unless otherwise agreed to by the parties. The Closing shall be held at the
offices of New Acquiring Trust, _____, or at such other place and time as the
parties may agree.
3.2. Each Target Fund shall deliver to the corresponding Acquiring Fund
on the Closing Date a schedule of Assets.
3.3. With respect to each pair of Funds, the Target Fund shall direct
Wells Fargo Bank Minnesota, N.A., as custodian for the Target Fund, to deliver
at the Closing a certificate of an authorized officer stating that (a) the
Assets shall have been delivered in proper form to Wells Fargo Bank Minnesota,
N.A., as custodian for the corresponding Acquiring Fund, prior to or on the
Closing Date and (b) all necessary taxes in connection 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. The Target Fund's
portfolio securities represented by a certificate or other written instrument
shall be presented by the custodian for the Target Fund to the custodian for the
Acquiring Fund for examination no later than five business days preceding the
Closing Date and transferred and delivered by the Target Fund as of the Closing
Date by the Target Fund for the account of the Acquiring Fund duly endorsed in
proper form for transfer in such condition as to constitute good delivery
thereof. The Target Fund's portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940 Act, shall be
delivered as of the Closing Date by book entry in accordance with the customary
practices of such depositories and the custodian for the Acquiring Fund. The
cash to be transferred by the Target Fund shall be delivered by wire transfer of
federal funds on the Closing Date.
3.4. Each Target Fund shall direct Boston Financial Data Services
("Transfer Agent"), as transfer agent for the Target Fund, to deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Target Fund Shareholders and the number and
percentage ownership (to three decimal places) of outstanding Target Fund
shares, by class, as applicable, owned by each such shareholder immediately
prior to the Closing. The corresponding Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Target Fund or provide evidence satisfactory to the Target Fund that
such Acquiring Fund Shares have been credited to that Target Fund's account on
the books of such Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request to effect the transactions contemplated by this Agreement.
A-3
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of a Target Fund
or a corresponding Acquiring Fund shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading
thereupon or elsewhere shall be disrupted so that, in the judgment of the Board
members of either party to this Agreement, accurate appraisal of the value of
the net assets with respect to the Acquiring Fund Shares or the shares of Target
Fund is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.6. The liabilities of each Target Fund shall include all of such
Target Fund's liabilities, debts, obligations and duties of whatever kind or
nature, whether absolute, accrued, contingent or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Closing Date, and whether or not specifically referred to in this Agreement,
including but not limited to any deferred compensation to such Target Fund's
board members.
4. REPRESENTATIONS AND WARRANTIES
4.1. With respect to each pair of Funds, except as has been fully
disclosed to the Acquiring Fund prior to the date of this Agreement in a written
instrument executed by an appropriate officer of Target Company, Target Company,
on behalf of the corresponding Target Fund, represents and warrants to the
Acquiring Fund as follows:
(a) The Target Fund is duly designated as a series of Target
Company, which is a corporation duly organized and validly existing
under the laws of the State of Maryland, with power under Target
Company's Articles of Incorporation, as amended and supplemented from
time to time, to own all of its Assets and to carry on its business as
it is now being conducted and, subject to approval of shareholders of
the Target Fund, to carry out this Agreement. The Target Fund is
qualified to do business in all jurisdictions in which it is required
to be so qualified, except jurisdictions in which the failure to so
qualify would not reasonably be expected to have a material adverse
effect on the Target Fund. The Target Fund has all material federal,
state and local authorizations necessary to own all of its Assets and
to carry on its business as now being conducted, except authorizations
that the failure to so obtain would not reasonably be expected to have
a material adverse effect on the Target Fund;
(b) The Target Fund is registered with the Commission as an
open-end management investment company under the 1940 Act, and such
registration is in full force and effect and the Target Fund is in
compliance in all material respects with the 1940 Act and the rules and
regulations thereunder;
(c) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by the
Target Fund of the transactions contemplated herein, except such as
have been obtained under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934
Act") and the 1940 Act and such as may be required by state securities
laws;
(d) The Target Fund is not, and the execution, delivery and
performance of this Agreement by the Target Fund, will not, (i) result
in a material violation of Maryland law or its Articles of
Incorporation or By-Laws; (ii) result in a material violation or breach
of, or constitute a default under, any material agreement, indenture,
instrument, contract, lease or other undertaking to which the Target
Fund is a party or by which it is bound, or the acceleration of any
A-4
obligation, or the imposition of any penalty, under any agreement,
indenture, instrument, contract, lease, judgment or decree to which the
Target Fund is a party or by which it is bound; or (iii) result in the
creation or imposition of any lien, charge or encumbrance or any
property or assets of the Target Fund;
(e) All material contracts or other commitments of the Target
Fund (other than this Agreement and any contracts listed on Schedule B)
will terminate without liability to the Target Fund on or prior to the
Closing Date. Each contract listed on Schedule B is a valid, binding
and enforceable obligation of each party thereto and the assignment by
the Target Fund to the corresponding Acquiring Fund of each such
contract will not result in the termination of such contract, any
breach or default thereunder or the imposition of any penalty
thereunder;
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Target Fund or any
properties or assets held by it. The Target Fund knows of no facts that
might form the basis for the institution of such proceedings that would
materially and adversely affect its business and is not a party to or
subject to the provisions of any order, decree or judgment of any court
or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein
contemplated;
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights
of the Target Fund at and for the fiscal year ended April 30, 2003,
have been audited by PricewaterhouseCoopers LLP, and are in accordance
with GAAP consistently applied, and such statements (a copy of each of
which has been furnished to Acquiring Fund) present fairly, in all
material respects, the financial position of the Target Fund as of such
date in accordance with GAAP, and there are no known contingent
liabilities of the Target Fund required to be reflected on a balance
sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein;
(h) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights
of the Target Fund at October 31, 2003, which are unaudited, are, or
will be when first sent to Target Fund shareholders in the regular
course, in accordance with GAAP consistently applied, and such
statements (a copy of each of which has been or will be furnished to
Acquiring Fund) present fairly, in all material respects, the financial
position of the Target Fund as of such date in accordance with GAAP,
and there are no known contingent liabilities of the Target Fund
required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(i) Since October 31, 2003, there has not been any material
adverse change in the Target Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or any incurrence by the Target Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred except as otherwise disclosed to and accepted
in writing by the corresponding Acquiring Fund. For purposes of this
subsection (h), a decline in net asset value per share of the Target
Fund due to declines in market values of securities in the Target
Fund's portfolio, the discharge of the Target Fund liabilities, or the
redemption of Target Fund shares by Target Fund Shareholders shall not
constitute a material adverse change;
A-5
(j) At the date hereof and at the Closing Date, all federal
and other tax returns and reports of the Target Fund required by law to
have been filed by such dates (including any extensions) shall have
been filed and are or will be correct in all material respects, and all
federal and other taxes shown as due or required to be shown as due on
said returns and reports shall have been paid or provision shall have
been made for the payment thereof, and, to the best of the Target
Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(k) For each taxable year of its operation (including the
taxable year that includes the Closing Date), the Target Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has elected to be
treated as such, and has been eligible to and has computed its federal
income tax under Section 852 of the Code;
(l) All issued and outstanding shares of the Target Fund (i)
have been offered and sold in every state and the District of Columbia
in compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws, (ii) are, and
on the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable and not subject to preemptive or
dissenter's rights, and (iii) will be held at the time of the Closing
by the persons and in the amounts set forth in the records of the
Transfer Agent, as provided in section 3.4. The Target Fund does not
have outstanding any options, warrants or other rights to subscribe for
or purchase any of the Target Fund shares, nor is there outstanding any
security convertible into any of the Target Fund shares;
(m) At the Closing Date, the Target Fund will have good and
marketable title to the Assets to be transferred to the corresponding
Acquiring Fund pursuant to section 1.2 and full right, power and
authority to sell, assign, transfer and deliver such Assets hereunder
free of any liens or other encumbrances, and upon delivery and payment
for such Assets, such Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the
1940 Act;
(n) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Board members of Target Company,
(including the determinations required by Rule 17a-8(a) under the 1940
Act), and, subject to approval by Target Fund Shareholders, this
Agreement constitutes a valid and binding obligation of the Target
Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(o) The information to be furnished by the Target Fund for use
in applications for orders, registration statements or proxy materials
or for use in any other document filed or to be filed with any federal,
state or local regulatory authority (including the National Association
of Securities Dealers, Inc. (the "NASD")), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate
and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
applicable thereto;
(p) At the Closing Date, the then current prospectus and
statement of additional information of the Target Fund conform in all
material respects to the applicable requirements of
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the 1933 Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue statement of a
material fact or omit to state 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 materially misleading;
and
(q) The Proxy Statement (as defined in section 5.7), insofar
as it relates to the Target Fund, will, on the effective date of the
Registration Statement and on the Closing Date, (i) comply in all
material respects with the provisions and Regulations of the 1933 Act,
1934 Act and 1940 Act, as applicable, and (ii) not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, not
materially misleading; provided, however, that the representations and
warranties in this section shall not apply to statements in or
omissions from the Proxy Statement and the Registration Statement made
in reliance upon and in conformity with information that was furnished
or should have been furnished by Acquiring Fund for use therein.
4.2. With respect to each pair of Funds, except as has been fully
disclosed to the Target Fund prior to the date of this Agreement in a written
instrument executed by an appropriate officer of New Acquiring Trust, New
Acquiring Trust, on behalf of the corresponding Acquiring Fund, represents and
warrants to the Target Fund as follows:
(a) The Acquiring Fund is duly organized as a series of New
Acquiring Trust, which is a statutory trust duly organized and validly
existing under the laws of the State of Delaware with the power under
New Acquiring Trust's Declaration of Trust to own all of its properties
and assets and to carry on its business as contemplated by this
Agreement;
(b) New Acquiring Trust is registered with the Commission as
an open-end management investment company under the 1940 Act, and such
registration is in full force and effect and Acquiring Fund is in
compliance in all material respects with the 1940 Act and the rules and
regulations thereunder, and the registration of Acquiring Fund Shares
will be in full force and effect on the Closing Date;
(c) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by Acquiring
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as
may be required by state securities laws;
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement by the Acquiring Fund will not, (i)
result in a material violation of Delaware law or its then current
Declaration of Trust or By-Laws; (ii) result in a material violation or
breach of or constitute a default under, any material agreement,
indenture, instrument, contract, lease or other undertaking to which
New Acquiring Trust, on behalf of the Acquiring Fund, is a party or by
which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which New Acquiring Trust, on
behalf of the Acquiring Fund, is a party or by which it is bound; nor
(iii) result in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
A-7
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or
any properties or assets held by it. The Acquiring Fund knows of no
facts that might form the basis for the institution of such proceedings
that would materially and adversely affect its business and is not a
party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions
herein contemplated;
(f) Acquiring Fund will meet the requirements of Subchapter M
of the Code for qualification as a regulated investment company for its
first taxable year that ends after the Closing Date and will be
eligible to, and will for such taxable year, compute its Federal income
tax under Section 852 of the Code;
(g) Upon consummation of the Reorganization, all issued and
outstanding Acquiring Fund Shares will be duly and validly issued and
outstanding, fully paid and non-assessable by New Acquiring Trust and
will have been offered and sold in every state, territory and the
District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and other
securities laws. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares;
(h) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Board members of New Acquiring
Trust (including the determinations required by Rule 17a-8(a) under the
1940 Act), and this Agreement will constitute a valid and binding
obligation of New Acquiring Trust, on behalf of the Acquiring Fund,
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights
and to general equity principles;
(i) The information to be furnished by the Acquiring Fund for
use in applications for orders, registration statements or proxy
materials or for use in any other document filed or to be filed with
any federal, state or local regulatory authority (including the NASD),
which may be necessary in connection with the transactions contemplated
hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other
laws and regulations applicable thereto;
(j) At the Closing Date, the then current prospectus and
statement of additional information of the Acquiring Fund conform in
all material respects to the applicable requirements of the 1933 Act
and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact
or omit to state 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 materially misleading;
(k) Prior to the Closing Date, the Acquiring Fund will have
carried on no business activity and will have had no assets or
liabilities other than the seed capital required by Section 14(a) of
the 1940 Act.
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5. COVENANTS OF ACQUIRING FUND OR TARGET FUND OR BOTH
5.1. Each Target Fund covenants to operate its business in the ordinary
course between the date hereof and the Closing Date, it being understood that
(a) such ordinary course of business will include (i) the declaration and
payment of customary dividends and other distributions and (ii) such changes as
are contemplated by the Target Fund's normal operations.
5.2. Each Target Fund covenants that, upon reasonable notice, the
corresponding Acquiring Fund's officers and agents shall have reasonable access
to the Target Fund's books and records necessary to maintain current knowledge
of the Target Fund and to ensure that the representations and warranties made by
the Target Fund are accurate.
5.3. Each Target Fund covenants to call a meeting of Target Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than June 30, 2004.
5.4. Each Target Fund covenants that the corresponding Acquiring Fund
Shares to be issued hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.5. Each Target Fund covenants that it will assist the corresponding
Acquiring Fund in obtaining such information as such Acquiring Fund reasonably
requests concerning the beneficial ownership of the Target Fund shares.
5.6. With respect to each pair of Funds, each of Acquiring Fund and
Target Fund, on behalf of itself, covenants that, subject to the provisions of
this Agreement, it will take, or cause to be taken, all actions, and do or cause
to be done, all things reasonably necessary, proper and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. Each Target Fund covenants that it will prepare, file with the
Commission, and deliver to the corresponding Acquired Fund Shareholders in
connection with such meeting, a proxy statement on Schedule 14A ("Proxy
Statement") in compliance in all material respects with the provisions of the
1934 Act and the rules and regulations thereunder.
5.8. Each Acquiring Fund covenants that it will provide the
corresponding Target Fund with information reasonably necessary for the
preparation of the Proxy Statement in compliance with the 1934 Act and 1940 Act
and the rules and regulations thereunder.
5.9. Each Target Fund covenants that it will, from time to time, as and
when reasonably requested by the corresponding Acquiring 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 such
Acquiring Fund may reasonably deem necessary or desirable in order to vest in
and confirm such Acquiring Fund's title to and possession of all the Assets and
otherwise to carry out the intent and purpose of this Agreement.
5.10. Each Acquiring Fund covenants to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and 1940 Act,
and such of the state securities laws as it deems appropriate in order to
continue its operations after the Closing Date and to consummate the
transactions
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contemplated herein; provided, however, that such Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.11. Each Fund shall use its reasonable best efforts to fulfill or
obtain the fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF TARGET FUND
With respect to the Reorganization, the obligations of each
Target Fund to consummate the transactions provided for herein shall be subject,
at its election, to the performance by the corresponding Acquiring Fund of all
the obligations to be performed by it hereunder on or before the Closing Date,
and, in addition thereto, the following further conditions:
6.1. All representations and warranties of New Acquiring Trust, on
behalf of the corresponding Acquiring Fund, contained in this Agreement shall be
true and correct in all material respects as of the date hereof and, except as
they may be affected by the transactions contemplated by this Agreement, as of
the Closing Date, with the same force and effect as if made on and as of the
Closing Date.
6.2. The Acquiring Fund shall have delivered to the Target Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to New Acquiring Trust, on behalf
of the Target Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of New Acquiring Trust with respect to the
Acquiring Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Target Fund shall reasonably
request.
6.3. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
With respect to the Reorganization, the obligations of each Acquiring
Fund to consummate the transactions provided for herein shall be subject, at its
election, to the performance by the corresponding Target Fund of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
7.1. All representations and warranties of such Target Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date.
7.2. The Target Fund shall have delivered to the Acquiring Fund a
statement of the Target Fund's Assets and liabilities as of the Closing Date,
certified by the Treasurer of the Target Fund.
7.3. The Target Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Fund, and dated as
of the Closing Date, to the effect that the representations and warranties
A-10
of the Target Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Target Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Target Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND AND TARGET FUND
With respect to each pair of Funds, if any of the conditions
set forth below have not been met on or before the Closing Date with respect to
a Target Fund or Acquiring Fund, the other party to this Agreement shall, at its
option, not be required to consummate the transactions contemplated by this
Agreement:
8.1. This Agreement and the transactions contemplated herein, with
respect to the Target Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of the Target Fund in accordance with the
provisions of the Target Fund's Articles of Incorporation and By-Laws,
applicable Maryland law and the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to Acquiring
Fund. Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Target Fund may waive the conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Target Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Target Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement with respect to the Acquiring Fund
Shares shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated under the
1933 Act.
8.5. With respect to the Reorganization, the parties shall have
received an opinion of Dechert LLP addressed to each Acquiring Fund and Target
Fund, in a form reasonably satisfactory to each such party, substantially to the
effect that, based upon certain facts, assumptions and representations of the
parties, for federal income tax purposes: (i) the transfer to each Acquiring
Fund of all of the assets of the corresponding Target Fund in exchange solely
for such Acquiring Fund Shares and the assumption by such Acquiring Fund of all
of the liabilities of the Target Fund, followed by the distribution of such
shares to the Target Fund Shareholders in exchange for their shares of the
Target Fund in complete liquidation of the Target Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and such
Acquiring Fund and the Target Fund will each be "a party to a reorganization"
A-11
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Target Fund upon the transfer of all of its assets to such
Acquiring Fund in exchange solely for such Acquiring Fund Shares and the
assumption by such Acquiring Fund of all of the liabilities of the Target Fund;
(iii) the basis of the assets of the Target Fund in the hands of such Acquiring
Fund will be the same as the basis of such assets of the Target Fund immediately
prior to the transfer; (iv) the holding period of the assets of the Target Fund
in the hands of such Acquiring Fund will include the period during which such
assets were held by the Target Fund; (v) no gain or loss will be recognized by
such Acquiring Fund upon the receipt of the assets of the Target Fund in
exchange for such Acquiring Fund Shares and the assumption by Acquiring Fund of
all of the liabilities of Target Fund; (vi) no gain or loss will be recognized
by the Target Fund Shareholders upon the receipt of such Acquiring Fund Shares
solely in exchange for their shares of the Target Fund as part of the
transaction; (vii) the basis of such Acquiring Fund Shares received by the
Target Fund Shareholders will be the same as the basis of the shares of the
Target Fund exchanged therefor; and (viii) the holding period of such Acquiring
Fund Shares received by Target Fund Shareholders will include the holding period
during which the shares of the Target Fund exchanged therefor were held,
provided that at the time of the exchange the shares of the Target Fund were
held as capital assets in the hands of the Target Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Dechert LLP of
representations it shall request of New Acquiring Trust and the Target Fund.
Notwithstanding anything herein to the contrary, neither such Acquiring Fund nor
the Target Fund may waive the condition set forth in this section 8.5. No
opinion will be expressed by Dechert LLP, however, as to whether any gain or
loss will be recognized by a Target Fund or Acquiring Fund in connection with
any dispositions of assets by such Fund prior to or following its
Reorganization.
8.6. The Target Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Shares to be issued in connection
with the Reorganization after such number has been calculated in accordance with
paragraph 1.1.
9. INDEMNIFICATION
9.1. Each Acquiring Fund agrees to indemnify and hold harmless the
corresponding Target Fund and each of such Target Fund's Board members and
officers from and against any and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment of reasonable legal fees
and reasonable costs of investigation) to which jointly and severally, such
Target Fund or any of its Board members or officers may become subject, insofar
as any such loss, claim, damage, liability or expense (or actions with respect
thereto) arises out of or is based on any breach by such Acquiring Fund of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
9.2. Each Target Fund agrees to indemnify and hold harmless the
corresponding Acquiring Fund and each of such Acquiring Fund's Board members and
officers from and against any and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment of reasonable legal fees
and reasonable costs of investigation) to which jointly and severally, such
Acquiring Fund or any of its Board members or officers may become subject,
insofar as any such loss, claim, damage, liability or expense (or actions with
respect thereto) arises out of or is based on any breach by such Target Fund of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
10. FEES AND EXPENSES
10.1. Each of New Acquiring Trust, on behalf of each Acquiring Fund,
and Target Company, on behalf of each Target Fund, represents and warrants to
the other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
A-12
10.2. Voyageur Asset Management, Inc. ("Voyageur") will bear all the
expenses associated with the Reorganization, except that Acquiring Fund will
bear all SEC registration fees (which are currently estimated to be $_____). Any
such expenses which are so borne by Voyageur will be solely and directly related
to the Reorganization within the meaning of Revenue Ruling 73-54, 1973-1 C.B.
187. Target Fund Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. Each Fund agrees that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this
section 11.2, the representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing and the obligations of each of
Acquiring Funds and Target Funds in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by any party as it relates to the transactions
applicable to such party (i) by the mutual agreement of the parties, or (ii) by
either party if the Closing shall not have occurred on or before July 15, 2004,
unless such date is extended by mutual agreement of the parties, or (iii) by
either party if the other party shall have materially breached its obligations
under this Agreement or made a material and intentional misrepresentation herein
or in connection herewith; or (iv) upon the resolution of either of the Board of
Trustees of New Acquiring Trust or the Board of Directors of Target Company, at
any time prior to the Closing Date, if circumstances should develop that, in the
opinion of that Board, make proceeding with the Agreement inadvisable with
respect to New Acquiring Trust or Target Company, respectively. In the event of
any such termination, this Agreement shall become void and there shall be no
liability hereunder on the part of any party or their respective Board members
or officers, except for any such material breach or intentional
misrepresentation, as to each of which all remedies at law or in equity of the
party adversely affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by any authorized officer of Target
Company and any authorized officer of New Acquiring Trust; provided, however,
that following the meeting of Target Fund Shareholders called by Target Company
pursuant to section 5.3 of this Agreement, no such amendment may have the effect
of changing the provisions for determining the number of Acquiring Fund Shares
to be issued to Target Fund Shareholders under this Agreement to the detriment
of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
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registered or certified mail, return receipt requested, addressed to the
applicable Target Fund, _____, with a copy to Dechert LLP, 200 Clarendon Street,
Boston, Massachusetts 02116, Attention: Joseph R. Fleming, Esq., or to the
applicable Acquiring Fund, _____, with a copy to Dechert LLP, 200 Clarendon
Street, Boston, Massachusetts 02116, Attention: Joseph R. Fleming, Esq., or to
any other address that Target Funds or Acquiring Fund shall have last designated
by notice to the other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of each
Acquiring Fund and Target Fund and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement.
15.4. Notwithstanding anything to the contrary contained in this
Agreement, the obligations, agreements, representations and warranties with
respect to each Fund shall constitute the obligations, agreements,
representations and warranties of that Fund only (the "Obligated Fund"), and in
no event shall any other series of New Acquiring Trust or the assets of any such
series be held liable with respect to the breach or other default by the
Obligated Fund of its obligations, agreements, representations and warranties as
set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware without regard to its
principles of conflicts of laws.
A-14
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by an authorized officer and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
Attest: TAMARACK FUNDS TRUST,
on behalf of each Acquiring Fund
By:
-------------------------------
Its:
-------------------------------
- --------------------------------------
Secretary
Attest: RBC FUNDS, INC.,
on behalf of each Target Fund
By:
-------------------------------
Its:
-------------------------------
- --------------------------------------
Secretary
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Schedule A
----------
- --------------------------------------------------------------------------------
TARGET FUNDS ACQUIRING FUNDS
- --------------------------------------------------------------------------------
RBC Large Cap Equity Fund, a separate
series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
RBC Mid Cap Equity Fund, a separate
series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
RBC Small Cap Equity Fund, a separate
series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
RBC Government Income Fund, a separate
series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
RBC Quality Income Fund, a separate
series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
RBC North Carolina Tax-Free Bond Fund, a
separate series of RBC Funds, Inc.
- --------------------------------------------------------------------------------
A-16
Schedule B
----------
A-17
EXHIBIT B
CURRENT EXECUTIVE OFFICERS OF THE COMPANY
TERM OF OFFICE
POSITION(S) WITH AND LENGTH
NAME, ADDRESS(1) AND AGE THE COMPANY OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
===================================================================================================================================
Jennifer Lammers President and Chief One year term; Managing Director, Voyageur Asset Management (2000 to
Executive Officer served since present); Mutual Fund Services Director, Voyageur Asset
Age: 42 July 2003. Management (2003 to present); Chief Financial Officer,
Great Hall Investment Funds, Inc. (2001-2003);
Compliance Officer, Great Hall Investment Funds, Inc.
(2000-2001); Director of Finance, Voyageur Asset
Management (2000-2003); Vice President and Manager,
Financial Reporting, RBC Dain Rauscher (1998-2000);
President and Chief Executive Officer(2).
Christopher J. Tomas Treasurer, Chief One year term; Vice President and Finance Manager, RBC Dain Rauscher
Financial Officer served since (2001 to present); Senior Financial Analyst, RBC Dain
Age: 33 and Principal July 2003. Rauscher (1999-2001); Financial Analyst, RBC Dain
Accounting Officer Rauscher (1997-1999); Treasurer, Chief Financial
Officer and Principal Accounting Officer(2).
Martin A. Cramer Vice President, One year term; Legal and Regulatory Affairs Vice President, Chief
Assistant Secretary, served since Compliance Officer and Secretary, Jones & Babson, Inc.
Age: 53 Chief Compliance July 2003. (mutual fund management company); Vice President,
Officer and AML Assistant Secretary, Chief Compliance Officer and AML
Compliance Officer Compliance Officer(2); and formerly, Vice President,
Chief Compliance Officer and Secretary, Buffalo Fund
Complex and Secretary, Gold Bank Funds(3).
Laura Moret Secretary One year term; Vice President and Senior Associate Counsel, RBC Dain
served since Rauscher (2002 to present); Vice President and Group
Age: 49 July 2003. Counsel, American Express Financial Advisors
(1995-2002); Secretary(2).
(1) The address for each officer is 60 South Sixth Street, Minneapolis,
Minnesota 55402.
(2) Great Hall Investment Funds, Inc., J&B Funds, Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc., Babson-Stewart Ivory
International Fund, Inc., Babson Value Fund, Inc., David L. Babson
Growth Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market
Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., Shadow Stock Fund,
Inc. and Investors Mark Series Fund, Inc.
(3) The Buffalo Fund Complex consists of Buffalo Balanced Fund, Inc.,
Buffalo Large Cap Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
Small Cap Fund, Inc., Buffalo USA Global Fund, Inc. and the Buffalo
Funds, which is a series fund consisting of Buffalo Science &
Technology Fund and Buffalo Mid Cap Fund. Gold Bank Funds is a series
fund consisting of Gold Bank Equity and Gold Bank Money Market Fund.
B-1
EXHIBIT C
COMPARISON OF THE TAMARACK FUNDS TRUST AND THE COMPANY
The following is a summary of certain characteristics of the operations of the
Tamarack Funds Trust (the "New Trust"), a Delaware statutory trust, and the
Company, a Maryland corporation, their respective corporate governance documents
and relevant state law. The following is not a complete description of the
documents cited. Shareholders should refer to the provisions of such documents
and state laws governing the New Trust and the Company for a more thorough
description.
SHAREHOLDER LIABILITY
NEW TRUST
The Declaration of Trust of the New Trust provides that shareholders are not
personally liable for the debts, liabilities, obligations and expenses incurred
by, contracted for, or otherwise existing with respect to the New Trust, the
Tamarack Funds or any class of shares. In addition, shareholders have the same
limitation of personal liability as is extended to shareholders of a Delaware
for-profit corporation.
COMPANY
The Company is organized as a Maryland corporation, and as such, its
shareholders generally have no personal liability for its acts or obligations.
LIABILITY OF DIRECTORS/TRUSTEES
NEW TRUST
Absent willful misfeasance, bad faith, gross negligence or reckless disregard of
a Trustee's duties, a Trustee acting in such capacity shall not be personally
liable to any person other than the New Trust or a beneficial owner for any act,
omission or obligation of the New Trust or any Trustee. A Trustee or officer of
the New Trust will be indemnified by the New Trust to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him or in connection with the defense of any proceeding in which he
or she becomes involved by virtue of being or having been a Trustee or officer.
COMPANY
The Articles of Incorporation of the Company provide that, to the fullest extent
by Maryland law and the 1940 Act, a Director is not liable to the Company or its
shareholders for money damages. The Articles of Incorporation also provide that
the Company will indemnify the Directors to the fullest extent permitted by
Maryland law and the 1940 Act.
INSURANCE
NEW TRUST
The Agreement and Declaration of Trust of the New Trust provides that, to the
fullest extent permitted by applicable law, the officers and Trustees are
entitled and have the authority to purchase with Trust property, insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which such Trustee or officer becomes involved by virtue of such
person's capacity or former capacity with the Trust, whether or not the Trust
would have the power to indemnify such Person against such liability under the
provisions of the Article of the Agreement and Declaration of Trust regarding
the limitation of liability of officers and Trustees.
COMPANY
The Articles of Incorporation of the Company provide that the Company may
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Company against any
C-1
liability asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Company would have had
the power to indemnify against such liability.
LIQUIDATION OR DISSOLUTION
Generally, in the event of the liquidation or dissolution of any of the Funds or
Tamarack Funds, as the case may be, the shareholders of that Fund/Tamarack Fund
are entitled to receive, when and as declared by the Board, the excess of the
assets over the liabilities belonging to the Fund/Tamarack Fund. The assets so
distributed to shareholders of a Fund/Tamarack Fund would be distributed among
the shareholders in proportion to the number of shares of that Fund/Tamarack
Fund held by them and recorded on the books of the Fund/Tamarack Fund.
NEW TRUST
The Declaration of Trust of the New Trust permits a majority of the Trustees to
liquidate the New Trust, or any class or series of the New Trust, upon written
notice to shareholders, without submitting the matter for shareholder approval.
COMPANY
Maryland law requires shareholder approval of a dissolution of the Company. If
no shares of a class or series are outstanding, a majority of the Directors may
vote to liquidate such class or series without shareholder approval. Otherwise,
subject to the redemption requirements contained in the Company's Articles of
Incorporation, the Company may first redeem all of the shares outstanding of
each applicable series and/or class, and then liquidate the series or class
without shareholder approval.
RIGHTS OF INSPECTION
NEW TRUST
Shareholders shall have the right to inspect the New Trust's accounts, books or
documents only to the extent such right is conferred by the Trustees.
COMPANY
Under the Company's Articles of Incorporation, shareholders of the Company have
only such rights to inspect and copy the Company's records, documents, accounts
and books and to request statements regarding its affairs as are provided by
Maryland law, subject to such reasonable regulations, not contrary to Maryland
law, as the Board may from time to time adopt regarding the conditions and
limits of such rights. Maryland corporate law provides that one or more persons
who together have owned at least 5% of the outstanding shares of a corporation
for at least six months may, on written request, inspect the books of account
and stock ledger of the corporation.
SHAREHOLDER MEETINGS
Neither the New Trust nor the Company is required to hold annual meetings of
shareholders (other than in a year in which the election of trustees/directors
is required by the 1940 Act), although the New Trust and the Company may hold
special meetings at any time. In each case, on any matters submitted to a vote
of the shareholders, all shares entitled to vote are voted in the aggregate,
except when (1) required by the 1940 Act, shares are voted by the individual
Fund or Tamarack Fund; (2) the matter involves any action that the
Directors/Trustees have determined will affect only the interests of one or more
Fund or Tamarack Fund, then only the shareholders of such series shall be
entitled to vote thereon; and (3) the matter involves any action that the
Directors/Trustees have determined will affect only the interests of one or more
classes, then only the shareholders of such class or classes shall be entitled
to vote thereon.
NEW TRUST
The By-Laws for the New Trust permit special meetings of the shareholders to be
called by shareholders holding at least 10% of the outstanding shares of the New
Trust entitled to vote at such meeting. Shareholders
C-2
may also take action in lieu of a meeting by written instrument signed by the
holders of outstanding shares representing the minimum number of votes that
would be necessary to authorize or take that action at a meeting.
Delaware law provides greater flexibility with regard to shareholder voting
rights, quorums, and proxy requirements. The Declaration of Trust provides that
33-1/3% of the shares entitled to vote at any meeting must be present in person
or by proxy to establish a proper quorum for voting purposes, unless a larger
quorum is required by applicable law, by the By-Laws of the Trust, or by the
Declaration of Trust. Further, when a quorum is present, a majority of votes
cast shall decide any issues, and a plurality shall elect a Trustee of the New
Trust, unless a larger vote is required by the governing documents or under
applicable law. The effect of the quorum and voting provisions is to make it
easier for the New Trust to seek appropriate shareholder approvals for many
actions not related to regulatory issues without experiencing the added costs or
delays of soliciting additional proxies or votes and without being disadvantaged
by abstentions or broker non-votes. Delaware law also affords trustees the
ability to adapt a Delaware statutory trust to future contingencies. For
example, trustees have the authority to incorporate a Delaware statutory trust,
to merge or consolidate a Delaware statutory trust or its series with another
entity, to cause multiple series of a Delaware statutory trust to become
separate trusts, to change the state of domicile or to liquidate a Delaware
statutory trust, all without having to obtain a shareholder vote.
COMPANY
Under the By-Laws of the Company, a special meeting of shareholders of a Fund
shall be called by the Secretary of the Company upon receipt of the written
request of holders of shares entitled to cast not less than 10% of the votes
entitled to be cast at such meeting, provided that (1) such request states the
purposes of such meeting and the matters proposed to be acted upon, and (2) the
shareholders requesting such meeting have paid to the Company the reasonably
estimated cost of preparing and mailing the notice of the meeting, which the
Secretary shall determine and specify to such shareholders. No special
shareholder meeting may be called upon the request of shareholders to consider
any matter that is substantially the same as a matter voted upon at any special
meeting held during the preceding 12 months, unless requested by the holders of
a majority of all shares entitled to be voted at such meeting. Written
shareholder consents in lieu of a meeting are required to be signed by all
shareholders.
Under the Company's Articles of Incorporation, the presence in person or by
proxy of the holders of one third of the shares of stock entitled to vote at a
meeting generally constitutes a quorum. Maryland law requires a plurality of all
votes cast at a meeting at which a quorum is present to elect directors unless
the corporation's Articles of Incorporation or By-Laws require a larger vote.
For most other stockholder votes, Maryland law provides that a majority of all
votes cast at a meeting at which a quorum is present is sufficient to approve
any matter, unless the corporation's Articles of Incorporation provide
otherwise. Certain other matters, such as amendments to a corporation's Articles
of Incorporation, consolidations, mergers, share exchanges and transfers of
assets, require the affirmative vote of two-thirds of all votes entitled to be
cast on the matter for approval of the measure. However, under Maryland law, the
Articles of Incorporation may include a provision that requires less than a
two-thirds vote, provided that the Articles of Incorporation require at least a
majority vote. The Company's Articles of Incorporation provide that
notwithstanding any provision of Maryland law requiring more than a majority
vote to approve any action, the action shall be effective if approved by the
affirmative vote of the holders of a majority of the total number of shares of
the Company, or of a class or series of the Company, as applicable, outstanding
and entitled to vote, except as otherwise provided therein.
REORGANIZATION/COMBINATION TRANSACTIONS
NEW TRUST
Under the Declaration of Trust and Delaware law, the Trustees may generally
authorize mergers, consolidations, share exchanges and reorganizations of a
Tamarack Fund or the New Trust with another trust, series or other business
organization without shareholder approval, although such approval may be
separately required under the federal securities laws and rules thereunder. For
example, the 1940 Act and rules thereunder may require a
C-3
shareholder vote of a proposed merger involving affiliated funds under certain
circumstances, such as when the merging funds have materially different advisory
contracts or fundamental investment policies/restrictions.
COMPANY
A majority of the outstanding shares of a Fund must approve a merger of the Fund
with another business organization.
AMENDMENT OF CHARTER DOCUMENT
NEW TRUST
The Trustees may generally restate, amend or otherwise supplement the Trust's
governing instrument, which includes the Declaration of Trust and the By-Laws,
without the approval of shareholders, subject to limited exceptions (such as
amendments affecting shareholders' voting rights).
COMPANY
The Articles of Incorporation provide that the Company reserves the right to
amend, alter, change or repeal any provision of the Articles of Incorporation,
and all rights conferred upon shareholders are granted subject to this
reservation. Under Maryland law, in general, amendments to the articles of
incorporation of a corporation must be approved by two-thirds of all votes
entitled to be cast, unless such percentage is reduced in the corporation's
articles of incorporation, provided that the articles of incorporation require
at least a majority vote. The Company's Articles of Incorporation provide that
the affirmative vote of the holders of a majority of the total number of shares
of the Company outstanding and entitled to vote will be sufficient to approve an
amendment.
DERIVATIVE ACTIONS
NEW TRUST
Shareholders of the New Trust or any Tamarack Fund may not bring a derivative
action to enforce the right of the New Trust or Tamarack Fund unless certain
conditions are satisfied. The conditions include, among others, that (1) the
complaining shareholder submit a written demand to the Board of Trustees and
that demand must be refused, and (2) at least 10% of the shareholders of the New
Trust or the Tamarack Fund, as applicable, join in bringing the derivative
action. A shareholder of a particular Tamarack Fund is not entitled to
participate in a derivative action on behalf of any other Tamarack Fund of the
New Trust.
COMPANY
Under Maryland law, in general, shareholders may not bring a derivative action
unless they have first made a demand upon the corporation to sue in its own name
and the demand was refused. If the directors of a corporation improperly refuse
to bring a derivative suit or if the demand upon the directors is excused, then
a plaintiff generally must then make the demand upon the corporation's other
shareholders before commencing suit.
C-4
EXHIBIT D
INFORMATION ON CERTAIN MATTERS ON WHICH THE TAMARACK FUNDS WILL VOTE
INVESTMENT ADVISORY AGREEMENTS
Each Fund, while it is the sole shareholder of the corresponding Tamarack Fund,
will approve an investment advisory agreement that is substantially the same as
the existing advisory agreement for each of the Funds, except as noted below.
The proposed investment advisory agreement is an agreement by and between the
New Trust, on behalf of each applicable Tamarack Fund, and Voyageur that is
substantially the same as the current Investment Advisory Agreement, dated
[December 21, 2002], by and between the Company, on behalf of its respective
Funds, and Voyageur, with the exceptions noted below. The current Investment
Advisory Agreement is referred to herein as the "Current Advisory Agreement."
The proposed Investment Advisory Agreement is referred to herein as the "New
Advisory Agreement."
CURRENT ADVISORY AGREEMENT. The Current Advisory Agreement between the Company,
on behalf of the Funds, and Voyageur was approved by Fund shareholders on
December 18, 2002. As of the date of this Proxy Statement, the Board of
Directors last approved the Current Advisory Agreement on November 4, 2002. If
not sooner terminated, the Current Advisory Agreement will continue in effect
until February 29, 2004, and for successive one year periods thereafter,
provided that each continuance is specifically approved annually by (a) the vote
of a majority of the Board who are not parties to the Current Advisory Agreement
or interested persons (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval, and (b) either (i) the vote
of a majority of the outstanding voting securities of the affected Fund, or (ii)
the vote of a majority of the Board. The Current Advisory Agreement is
terminable with respect to a Fund by a vote of the Board, or by the holders of a
majority of the outstanding voting securities of the Fund, at any time without
penalty, upon 60 days written notice to Voyageur. Voyageur may also terminate
its advisory relationship with respect to a Fund without penalty upon 90 days
written notice to the Company. The Current Advisory Agreement terminates
automatically in the event of its assignment (as defined in the 1940 Act).
In determining whether to approve the Current Advisory Agreement, the Board
requested, and received from Voyageur, information that the Board believed to be
reasonably necessary to reach their conclusion. As part of their review of the
Current Advisory Agreement, the Board received and discussed certain
information, including the advisory services performed, qualifications of
staffing, compensations and Fund performance. The Board then met with management
of Voyageur and counsel to the Company to discuss this information and
Voyageur's intentions with regard to the management of the Funds. The Directors
determined that the advisory fees payable to Voyageur were reasonable and fair
based on: (1) the nature, quality and scope of the operations and services to be
provided to the Funds by Voyageur, which include Voyageur's evaluation of each
Fund's investment performance relative to other comparable funds and relevant
indexes; and (2) the comparison of data by Lipper Analytical Services showing
the advisory fees and other expenses of each Fund and those of other comparable
funds. The Board noted that in contrast to the Funds' previous advisor, Voyageur
was a larger investment management firm, with significant research capabilities,
a diverse range of products and significant depth of portfolio management
talent. In addition, the Board also noted that Voyageur's portfolio management
team would include certain members of the previous advisor's portfolio
management team. Further, the Board considered Voyageur's commitment to dedicate
financial and other resources to growing the Funds. In determining to approve
the Current Advisory Agreement, the Board did not identify any single factor as
being more important than others, but considered all factors together. The Board
judged the terms and the conditions of the Current Advisory Agreement, including
the advisory fee, in light of all surrounding circumstances.
D-1
Based on their review of the information requested and provided, the Board
determined that approval of the Current Advisory Agreement was consistent with
the best interests of the Funds and their shareholders, and unanimously approved
the Current Advisory Agreement. Under its terms, the Current Advisory Agreement
will remain in effect with respect to each Fund until February 29, 2004 and
continue thereafter only as long as such continuance is approved at least
annually (i) by vote of the holders of a majority of the outstanding voting
securities of each Fund or by the Board of Directors and (ii) by a majority of
the Directors who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of any such party.
Subsequent to November 4, 2002, the Board of Directors has continued to receive
regular updates on the performance of each of the Funds and other matters
relevant to the performance of Voyageur.
PROVISIONS OF THE CURRENT AND NEW ADVISORY AGREEMENTS. Below is a discussion of
the provisions of, and other relevant information concerning, the Current
Advisory Agreement. Unless otherwise noted, the New Advisory Agreements with
respect to the Tamarack Funds are identical to the Current Advisory Agreements
with respect to the Funds.
Under the terms of the Current Advisory Agreements, Voyageur furnishes
continuing investment supervision to the Funds and is responsible for the
management of each Fund's portfolio. The responsibility for making decisions to
buy, sell or hold a particular security rests with Voyageur, subject to review
by the Board.
The Current Advisory Agreement provides that Voyageur shall not be liable for
any error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the performance of the agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Voyageur in the performance of its duties, or from
reckless disregard by Voyageur of its duties and obligations thereunder.
Under the Current Advisory Agreement, the Funds pay Voyageur fees for its
services performed pursuant to these agreements. The fees, which are computed
daily and paid monthly, are stated as an annual rates for each Fund, calculated
as a percentage of the particular Fund's average daily net assets. The fees
applicable to each Fund may be found in EXHIBIT E to this Proxy Statement; the
aggregate dollar amount paid to Voyageur in the Funds' most recent fiscal year
may be found in EXHIBIT I. The rate of advisory fees to be paid to Voyageur
under the New Advisory Agreement with respect to the Tamarack Funds will be the
same as under the Current Advisory Agreement for each corresponding Fund.
DISTRIBUTION AND SERVICE PLANS
Each Fund, while it is the sole shareholder of its corresponding Tamarack Fund,
will approve proposed new Service and Distribution Plans ("New Plans") for each
applicable class of that Tamarack Fund that are substantially identical to the
Service and Distribution Plans adopted by the Company for each applicable class
of each Fund ("Current Plans"). Below is a discussion of the terms and other
relevant information concerning the Current Plans. Unless otherwise noted, the
New Plans with respect to the Tamarack Funds and their classes is identical to
the Current Plans with respect to the Funds and their classes. [The New Plans
will be identical to the Current Plans with the exception that Jones & Babson,
Inc., an affiliate of Voyageur, will replace Centura Funds Distributor, Inc. as
the Distributor.]
The Current Plans have been adopted by each of the Funds in accordance with Rule
12b-1 under the 1940 Act. The Current Plan for each Fund provides for different
rates of fee payment with respect to Class A shares and Class B shares, as
described in the Prospectus. No Plan has been adopted for Class I shares of any
Fund. Pursuant to the Current Plans, the Funds may pay directly or reimburse
Centura Funds Distributor, Inc. (the "Distributor") monthly in amounts described
in the Prospectus for costs and expenses of marketing the shares, or classes of
shares, of the Funds. The Distributor is an affiliate of BISYS Fund Services
Ohio, Inc., the Funds' administrator and fund accounting agent.
D-2
CURRENT CLASS B PLANS. The Current Class B Plans provide for payments by each
Fund to the Distributor at an annual rate not to exceed 1.00% of the Fund's
average net assets attributable to its Class B shares. For the current fiscal
year, the Distributor has agreed to limit fees for Class B shares of RBC
Government Income Fund and RBC North Carolina Tax-Free Bond Fund to 0.75%. Such
fees may include a Service Fee totaling up to 0.25% of the average annual net
assets attributable to a Fund's Class B shares. The Distributor also receives
the proceeds of any contingent deferred sales charge ("CDSC") imposed on
redemptions of Class B shares.
Class B Shares are not offered to new investors; Class B shareholders may still
exchange their Class B shares for Class B Shares of other Funds. Although Class
B shares have been sold without an initial sales charge, the Distributor paid a
sales commission equal to 4.00% of the amounts invested in RBC Mid Cap Equity
Fund, RBC Large Cap Equity Fund and RBC Small Cap Equity Fund and 2.50% of the
amounts invested in each of the other Funds to securities dealers and other
financial institutions who sold Class B shares. The Distributor was permitted,
at times, to pay sales commissions higher than the above on sales of Class B
shares. These commissions were not paid on exchanges from other Funds and sales
to investors for whom the CDSC is waived.
BOTH CURRENT PLANS. Under each Current Plan, each Fund pays the Distributor and
other securities dealers and other financial institutions and organizations for
certain shareholder service or distribution activities. Subject to overall
limits applicable to each class, selling dealers may be paid amounts totaling up
to 0.50% of the value of average daily net assets of Fund shares annually.
Amounts received by the Distributor may, additionally, subject to the Current
Plan maximums, be used to cover certain other costs and expenses related to the
distribution of Fund shares and provision of service to Fund shareholders,
including: (a) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising; (b)
expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expenses; (c) costs of printing prospectuses and
other materials to be given or sent to prospective investors; and (d) such other
similar services as the Directors determine to be reasonably calculated to
result in the sale of shares of the Funds. Each Fund will pay all costs and
expenses in connection with the preparation, printing and distribution of the
Prospectus to current shareholders and the operation of its Current Plan(s),
including related legal and accounting fees. A Fund will not be liable for
distribution expenditures made by the Distributor in any given year in excess of
the maximum amount payable under a Current Plan for that Fund in that year.
Each Current Plan provides that it may not be amended to increase materially the
costs which the Funds or a class of shares may bear pursuant to the Current Plan
without shareholder approval and that other material amendments of the Current
Plans must be approved by the Board of Directors, and by the Directors who are
neither "interested persons" (as defined in the 1940 Act) of the Company nor
have any direct or indirect financial interest in the operation of the
particular Current Plan or any related agreement, by vote cast in person at a
meeting called for the purpose of considering such amendments. The selection and
nomination of the Directors of the Company have been committed to the discretion
of the Directors who are not "interested persons" of the Company. The Current
Plans with respect to each of the Funds except RBC Large Cap Equity Fund and RBC
Small Cap Equity Fund were approved by the Board of Directors and by the
Directors who are neither "interested persons" nor have any direct or indirect
financial interest in the operation of any Current Plan ("Independent Plan
Director"), by vote cast in person at a April 26, 1994 meeting called for the
purpose of voting on the Current Plans, and by the sole shareholder of each
class of shares of each of the Funds on April 26, 1994. The Current Plan with
respect to RBC Large Cap Equity Fund, and RBC Small Cap Equity Fund,
respectively, was approved by the Board of Directors and by the Independent Plan
Directors by votes cast in person at meetings held July 24, 1996, January 29,
1997, and April 27, 1998 called for the purpose of voting on that Current Plan,
and by the sole shareholder of each class of shares of RBC Large Cap Equity Fund
and RBC Small Cap Equity Fund on July 24, 1996, and January 29, 1997. The
Current Plan with respect to RBC Quality Income Fund was approved by the Board
of Directors and the Independent Plan Directors by vote cast in person at a
meeting held January 27, 1999. (Shareholder approval was not required for RBC
Quality Income Fund.) The continuance of the Current Plans is subject to similar
annual approval by the Directors and the Independent Plan Directors. Each
Current Plan is terminable with respect to a class of shares of a Fund at any
time by a vote of a majority of the Independent Plan Directors or by vote of the
holders of a majority of the shares of the class.
D-3
The Board of Directors has concluded that there is a reasonable likelihood that
the Current Plans will benefit the Funds and their shareholders.
For the fiscal year ended April 30, 2003 the following 12b-1 fees with respect
to Class A Shares were paid (after applicable fee waivers) by the Funds: $19,762
for the Large Cap Equity Fund; $115,427 for the Mid Cap Equity Fund; $11,782 for
the Small Cap Equity Fund; $14,380 for the Government Income Fund; $1,217 for
the Quality Income Fund; and $11,155 for the North Carolina Tax-Free Bond Fund.
(Without fee waivers, such fees would have been: $39,525 for the Large Cap
Equity Fund; $230,855 for the Mid Cap Equity Fund; $23,562 for the Small Cap
Equity Fund; $28,760 for the Government Income Fund; $2,435 for the Quality
Income Fund; and $22,309 for the North Carolina Tax-Free Bond Fund.) All of the
foregoing amounts were paid as compensation to service organizations and
broker/dealers. For the fiscal year ended April 30, 2003, the following 12b-1
fees with respect to Class B Shares were paid (after applicable fee waivers) by
the Funds: $26,553 for the Large Cap Equity Fund; $100,829 for the Mid Cap
Equity Fund; $25,405 for the Small Cap Equity Fund; $4,046 for the Government
Income Fund; $851 for the Quality Income Fund; and $3,241 for the North Carolina
Tax-Free Bond Fund. (Without fee waivers, such fees would have been $5,395 for
the Government Income Fund; $1,135 for the Quality Income Fund; and $4,322 for
the North Carolina Tax-Free Bond Fund.)
D-4
EXHIBIT E
INFORMATION REGARDING CERTAIN PAYMENTS TO
VOYAGEUR AND ITS AFFILIATES
FEES PAID UNDER THE CURRENT ADVISORY AGREEMENTS
The following table provides the amounts paid by each Fund to Voyageur under the
Current Advisory Agreement during the Fund's most recent fiscal year, as well as
the annual fee rate of each Fund under that Agreement.
ADVISORY FEES RECEIVED BY
VOYAGEUR FOR THE FISCAL
ADVISORY FEES RECEIVED BY YEAR ENDED APRIL 30, 2003
VOYAGEUR FOR THE FISCAL AS A PERCENTAGE OF
YEAR ENDED APRIL 30, 2003 AVERAGE NET ASSETS APPLICABLE FEE RATE
==================================================================================================================================
RBC FUNDS, INC.
RBC Large Cap Equity Fund $383,705 [ ]% 0.70% of average daily
net assets
RBC Mid Cap Equity Fund $1,087,728 [ ]% 0.70% of average daily
net assets
RBC Small Cap Equity Fund $166,499 [ ]% 0.70% of average daily
net assets
RBC Government Income Fund $97,719 [ ]% 0.30% of average daily
net assets
RBC Quality Income Fund $325,048 [ ]% 0.60% of average daily
net assets
RBC North Carolina Tax-Free Bond Fund $42,088 [ ]% 0.35% of average daily
net assets
COMMISSIONS PAID TO AFFILIATED BROKERS
For the most recently completed fiscal year, the aggregate amount of commissions
paid by the [NAME OF APPLICABLE FUND] to [BROKER AFFILIATED WITH VOYAGEUR] was
$[ ]. The percentage of the [NAME OF APPLICABLE FUND]'s aggregate brokerage
commissions paid to [BROKER AFFILIATED WITH VOYAGEUR] during the most recently
completed fiscal year was [ ]%.
E-1
FEES PAID TO THE DISTRIBUTOR UNDER THE CURRENT PLANS
The following table provides the amounts paid by each Fund to the Distributor
under the Current Plan during the Fund's most recent fiscal year.
CLASS A SHARES CLASS B SHARES
FISCAL YEAR ENDED FISCAL YEAR ENDED
APRIL 30, 2002 APRIL 30, 2003
DISTRIBUTION AND DISTRIBUTION AND CONTINGENT DEFERRED
SERVICE FEES SERVICE FEES SALES CHARGE
=============================================================================================================
Large Cap Equity Fund $[ ] $[ ] $161
Mid Cap Equity Fund $[ ] $[ ] $146
Small Cap Equity Fund $[ ] $[ ] None
Government Income Fund $[ ] $[ ] None
Quality Income Fund $[ ] $[ ] None
North Carolina Tax-Free Bond Fund $[ ] $[ ] None
FEES PAID TO RBC CENTURA SECURITIES, INC. UNDER THE CURRENT PLANS
The following table provides the amounts paid by each Fund to RBC Centura
Securities, Inc. under the Current Plan during the Fund's most recent fiscal
year.
CLASS A SHARES CLASS B SHARES
FISCAL YEAR ENDED FISCAL YEAR ENDED
APRIL 30, 2002 APRIL 30, 2003
DISTRIBUTION AND DISTRIBUTION AND CONTINGENT DEFERRED
SERVICE FEES SERVICE FEES SALES CHARGE
============================================================================================================
Large Cap Equity Fund $[ ] $[ ] $2,559
Mid Cap Equity Fund $[ ] $[ ] $2,547
Small Cap Equity Fund $[ ] $[ ] $1,057
Government Income Fund $[ ] $[ ] $270
Quality Income Fund $[ ] $[ ] None
North Carolina Tax-Free Bond Fund $[ ] $[ ] None
E-2
FEES PAID TO RBC DAIN RAUSCHER CORPORATION UNDER THE CURRENT PLANS
The following table provides the amounts paid by each Fund to the Distributor
under the Current Plan during the Fund's most recent fiscal year.
CLASS A SHARES CLASS B SHARES
FISCAL YEAR ENDED FISCAL YEAR ENDED
APRIL 30, 2002 APRIL 30, 2003
DISTRIBUTION AND DISTRIBUTION AND CONTINGENT DEFERRED
SERVICE FEES SERVICE FEES SALES CHARGE
=============================================================================================================
Large Cap Equity Fund $[ ] $[ ] $372
Mid Cap Equity Fund $[ ] $[ ] $1,120
Small Cap Equity Fund $[ ] $[ ] $374
Government Income Fund $[ ] $[ ] $182
Quality Income Fund $[ ] $[ ] $166
North Carolina Tax-Free Bond Fund $[ ] $[ ] $110
E-3
EXHIBIT F
OTHER INVESTMENT COMPANIES ADVISED BY VOYAGEUR
----------------------------------------------
Voyageur acts as advisor to the following funds that have investment objectives
similar to the Funds:
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
(AS OF VOYAGEUR'S RATE OF
NAME OF FUND INVESTMENT OBJECTIVE OCT. 31, 2003) ROLE COMPENSATION
- --------------------------------------------------------------------------------------------------------------------
D.L. Babson Bond Trust Maximum current income and $79,990,612 investment 0.85%(1)
- -- Portfolio L reasonable stability of advisor
principal, consistent with
stated quality and maturity
standards.
- --------------------------------------------------------------------------------------------------------------------
D.L. Babson Bond Trust Maximum current income $29,729,707 investment 0.85%(1)
- -- Portfolio S and reasonable stability of advisor
principal, consistent with
stated quality and maturity
standards.
- --------------------------------------------------------------------------------------------------------------------
D.L. Babson Tax-Free Providing the highest level $35,155,401 investment 0.85%(1)
Income Fund, Inc. of regular income exempt advisor
from federal income tax
consistent with stated
quality and maturity
standards.
- --------------------------------------------------------------------------------------------------------------------
Babson Enterprise Long-term growth of capital. $261,778,716 investment 0.96%(1)
Fund, Inc. advisor
- --------------------------------------------------------------------------------------------------------------------
Babson Enterprise Fund Long-term growth of capital. $63,578,149 investment 1.16%(1)
II, Inc. advisor
- --------------------------------------------------------------------------------------------------------------------
Babson-Stewart Ivory Favorable total return $12,183,992 investment 0.85%
International Fund, Inc. (market appreciation and advisor (not waived or
income). otherwise reduced)
- --------------------------------------------------------------------------------------------------------------------
Babson Value Fund, Inc. Long-term growth of capital $392,461,155 investment 0.85%(1)
and income. advisor
- --------------------------------------------------------------------------------------------------------------------
David L. Babson Above average total return $200,687,094 investment 0.73%(1)
Growth Fund, Inc. over longer periods of time advisor
through the growth of both
capital and dividend income.
- --------------------------------------------------------------------------------------------------------------------
F-1
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
(AS OF VOYAGEUR'S RATE OF
NAME OF FUND INVESTMENT OBJECTIVE OCT. 31, 2003) ROLE COMPENSATION
- --------------------------------------------------------------------------------------------------------------------
Shadow Stock Fund, Long-term growth of $119,738,341 investment 0.90%(1)
Inc. capital. advisor
- --------------------------------------------------------------------------------------------------------------------
J&B Small-Cap Long-term growth of $4,119,993 investment 1.45%(2)
International Fund capital. advisor
- --------------------------------------------------------------------------------------------------------------------
Delaware Core Equity Long-term capital $28,381,284 investment 0.325%
Fund appreciation. sub-advisor (not waived or
otherwise reduced)
- --------------------------------------------------------------------------------------------------------------------
- ---------------
(1) Voyageur has contractually agreed to waive fees and/or make payments in
order to keep total operating expenses of these funds (which includes
other expenses in addition to management fees) to the following levels:
Babson Bond Trust -- Portfolio L, 0.98%; Babson Bond Trust -- Portfolio
S, 0.68%; Babson Tax-Free Income Fund, 0.99%; Babson Enterprise Fund,
1.08%; Babson Enterprise Fund II, 1.30%; Babson Value Fund, 0.96%;
David L. Babson Growth Fund, 0.85%; Shadow Stock Fund, 1.03%. This
expense limitation agreement is in place until May 1, 2005.
(2) Voyageur has contractually agreed to waive fees and/or make payments in
order to keep total operating expenses of the J&B Small-Cap
International Fund (which includes other expenses in addition to
management fees) to 1.60% through May 1, 2005.
F-2
EXHIBIT G
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF VOYAGEUR ASSET MANAGEMENT INC.
NAME AND ADDRESS* PRINCIPAL OCCUPATION
============================================================================
John G. Taft Chief Executive Officer and Director
Lisa Ferris Director
Raye C. Kanzenbach Senior Managing Director; Senior Portfolio Manager
- --------
* The address for each officer and director is 90 South Seventh Street,
Suite 4300, Minneapolis, Minnesota 55402.
G-1
EXHIBIT H
CURRENT INVESTMENT POLICIES/RESTRICTIONS
The following restrictions are fundamental investment policies/restrictions of
each Fund. Each Fund may not:
(1) With respect to 75% of its total assets, purchase more than 10% of
the voting securities of any one issuer or invest more than 5% of the value of
such assets in the securities or instruments of any one issuer, except
securities or instruments issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(2) Borrow money except that a Fund may borrow from banks up to 10% of
the current value of its total net assets for temporary or emergency purposes; a
Fund will make no purchases if its outstanding borrowings exceed 5% of its total
assets;
(3) Invest in real estate, provided that a Fund may invest in readily
marketable securities (except limited partnership interests) of issuers that
deal in real estate and securities secured by real estate or interests therein
and a Fund may hold and sell real estate (a) used principally for its own office
space or (b) acquired as a result of a Fund's ownership of securities;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the purchase of securities directly from the issuer
(either alone or as one of a group of bidders) or the disposal of an investment
position may technically cause it to be considered an underwriter as that term
is defined under the Securities Act of 1933;
(5) Make loans, except that a Fund may (a) lend its portfolio
securities, (b) enter into repurchase agreements and (c) purchase the types of
debt instruments described in the Prospectus or the statement of additional
information;
(6) Purchase securities or instruments which would cause 25% or more of
the market value of the Fund's total assets at the time of such purchase to be
invested in securities or instruments of one or more issuers having their
principal business activities in the same industry, provided that there is no
limit with respect to investments in the U.S. Government, its agencies and
instrumentalities;
(7) Issue any senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and provided that collateral
arrangements with respect to forward contracts, futures contracts or options,
including deposits of initial and variation margin, are not considered to be the
issuance of a senior security for purposes of this restriction; or
(8) Purchase or sell commodity contracts, except that the Fund may
invest in futures contracts and in options related to such contracts (for
purposes of this restriction, forward foreign currency exchange contracts are
not deemed to be commodities).
For purposes of restriction number 1, with respect to RBC North Carolina
Tax-Free Bond Fund, the state of North Carolina and each of its political
subdivisions, as well as each district, authority, agency or instrumentality of
North Carolina or of its political subdivisions will be deemed to be a separate
issuer, and all indebtedness of any issuer will be deemed to be a single class
of securities. Securities backed only by the assets of a non-governmental user
will be deemed to be issued by that user. Also, for purposes of this investment
restriction, the RBC Quality Income Fund considers a Municipal Obligation to be
issued by the government entity (or entities) whose assets and revenues back the
Municipal Obligation. For a Municipal Obligation backed only by the assets and
revenues of a non-governmental user, such user is deemed to be the issuer; such
issuers to the extent their principal business activities are in the same
industry, are also subject to investment restriction 6.
H-1
Restriction number 6 will prevent RBC North Carolina Tax-Free Bond Fund from
investing 25% or more of its total assets in industrial building revenue bonds
issued to finance facilities for non-governmental issuers in any one industry,
but this restriction does not apply to any other tax-free Municipal Obligations.
Also, for purposes of this investment restriction, public utilities are not
deemed to be a single industry but are separated by industrial categories, such
as telephone or gas utilities.
For purposes of restriction number 7, with respect to its futures transactions
and writing of options (other than fully covered call options), a Fund will
maintain a segregated account for the period of its obligation under such
contract or option consisting of cash, U.S. Government securities and other
liquid high grade debt obligations in an amount equal to its obligations under
such contracts or options.
H-2
EXHIBIT I
PRINCIPAL SHAREHOLDERS OF THE FUNDS
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of the Record Date, the
following person(s) owned of record or were known by the Funds to own
beneficially 5% or more of any class of the Funds' shares.
AMOUNT AND NATURE OF PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS OUTSTANDING (%)
=============================================================================================================
RBC FUNDS, INC.
RBC Large Cap Equity Fund
RBC Mid Cap Equity Fund
RBC Small Cap Equity Fund
RBC Government Income Fund
RBC Quality Income Fund
RBC North Carolina Tax-Free
Bond Fund
I-1
[FORM OF PROXY CARD]
The shares represented by a properly executed proxy card
will be voted as specified on the proxy card.
[NAME OF FUND] (THE "FUND"), THIS PROXY IS SOLICITED ON BEHALF OF
A SERIES OF RBC FUNDS, INC. THE BOARD OF DIRECTORS
(THE "COMPANY") SPECIAL MEETING OF SHAREHOLDERS
MARCH 15, 2004 - 9:00 A.M. CENTRAL
TIME (THE "MEETING")
The undersigned appoints Jennifer Lammers, Laura Moret, Christopher J. Tomas and
Martin A. Cramer, and each of them individually with power to act without the
other and with the right of substitution in each, the proxies of the undersigned
to vote all shares of the Fund held by the undersigned on January 15, 2004, at
the Meeting, to be held at the offices of RBC Dain Rauscher Corporation, 60
South Sixth Street, Minneapolis, Minnesota, on March 15, 2004 at 9 a.m. Central
Time and at any adjournment thereof, with all powers the undersigned would
possess if present in person. All previous proxies given with respect to the
Meeting are revoked. The undersigned acknowledges receipt of the Notice of
Special Meeting and Proxy Statement dated [EFFECTIVE DATE].
PLEASE VOTE, DATE AND SIGN,
AND PROMPTLY RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE PROVIDED.
Dated: ____________________________
_____________________________________
_____________________________________
(Signature) (SIGN IN THE BOX)
Please sign exactly as your name or
names appear to the left. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee, guardian or in any other
representative capacity, please give
full title as such. If signing for a
corporation, please sign in full
corporate name by authorized person.
If a partnership, please sign in
partnership name by authorized
person.
PLEASE FILL IN BOXES AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS. IF NO SPECIFICATION IS MADE, THE SHARES WILL
BE VOTED "FOR" ALL ITEMS, AS APPLICABLE.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
1. To approve the election of the following individuals to the board of [ ] [ ] [ ]
directors of the Company: (01) T. Geron Bell, (02) Lucy Hancock Bode, (03)
Leslie H. Garner, Jr., (04) Ronald James, (05) Michael T. Lee, (06) John A.
MacDonald, (07) H. David Rybolt, (08) James R. Seward, and (09) Jay H. Wein.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, MARK THE
BOX "FOR ALL EXCEPT" AND WRITE THE NOMINEE'S(S') NAME(S) ON THE LINE BELOW.)
- -------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Reorganization, pursuant to which the [ ] [ ] [ ]
Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a
newly-created Delaware statutory trust.
FOR AGAINST ABSTAIN
3. To approve the modification of the fundamental investment restrictions
regarding:
3.A Diversification [ ] [ ] [ ]
3.B Borrowing [ ] [ ] [ ]
3.C Senior Securities [ ] [ ] [ ]
3.D Underwriting Securities [ ] [ ] [ ]
3.E Real Estate [ ] [ ] [ ]
3.F Making Loans [ ] [ ] [ ]
3.G Concentration of Investments [ ] [ ] [ ]
3.H Commodities. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
4. To ratify the selection of Deloitte & Touche LLP as the independent [ ] [ ] [ ]
auditors of the Fund for the current fiscal year.
THE PERSONS NAMED AS PROXIES WILL VOTE IN THEIR DISCRETION ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
OR POSTPONEMENTS THEREOF
(PLEASE SIGN AND DATE ON REVERSE)