SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
</Table>
RBC FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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RBC Funds
IMPORTANT NEWS FOR SHAREHOLDERS
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
While we encourage you to read the full text of the enclosed Proxy Statement, we
are also providing you with a brief overview of the subject of the shareholder
vote.
QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A.The Board of Directors of your Fund has determined that it is in the best
interests of your Fund to terminate the Fund's current investment advisory
agreement ("Current Agreement") with Glenwood Capital Management, Inc.
("Glenwood") and enter into a new investment advisory agreement ("New
Agreement") with Voyageur Asset Management Inc. ("Voyageur"). The proposed
change of each Fund's investment adviser from Glenwood to Voyageur is part of
a strategic business plan proposed by RBC Financial Group ("RBC"), a financial
services organization with specialized global businesses which include both
Glenwood and Voyageur. RBC has decided to restructure its various business
units to take advantage of each company's strengths. As part of this strategy,
RBC believes that Voyageur will be better positioned to provide the Funds with
investment advisory services going forward. Voyageur currently has
approximately 65 employees and, as of October 31, 2002, had approximately
$19.5 billion under management. The Funds' Board considered, among other
things, the advantages to the Funds of gaining access to the resources of a
much larger U.S. investment advisory firm with significant depth in portfolio
management talent, research capabilities and product diversification, as well
as continuing access to certain members of Glenwood's existing portfolio
management team who will transition to Voyageur as part of the restructuring.
As legally required, we are asking the shareholders of each Fund to approve
the New Agreement. The terms of the New Agreement are the same in all material
respects as the Current Agreement, except as described more fully in the
enclosed Proxy Statement. There will be no change in the types of services
provided and the advisory fees charged to your Fund.
The enclosed Proxy Statement provides additional information about Voyageur,
the New Agreement and certain other matters. THE BOARD MEMBERS OF YOUR FUND,
INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE FUND, VOYAGEUR, RBC OR ANY
OTHER AFFILIATES, RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A.You are receiving these proxy materials - a booklet that includes the Proxy
Statement and one or more proxy cards - because you have the right to vote on
important proposals concerning your investment in the Fund.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A.If you own shares of more than one Fund, you will receive a proxy card for
each Fund that you own.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW AGREEMENT?
A.The New Agreement must be approved by the vote of a majority of each Fund's
outstanding shares, as defined by federal law. Therefore, it is necessary to
obtain your approval of the New Agreement, which will replace the Current
Agreement.
Q. HOW WILL THE NEW AGREEMENT AFFECT ME AS A FUND SHAREHOLDER?
A.Your Fund and its investment objectives and policies will not change as a
result of the New Agreement. There will be no changes to your account and you
will still own the same shares in the same Fund. Voyageur will be ultimately
responsible for the overall management of each Fund's portfolio under the New
Agreement and will employ a team approach to the management of the Funds, with
each portfolio management team having access to Voyageur's investment research
and other money management resources.
Q. WILL THE FEES PAYABLE UNDER THE NEW AGREEMENT INCREASE AS A RESULT OF THIS
PROPOSAL?
A.No. The proposal to approve the New Agreement involves no increase in fee
rates.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A.You also are being asked to re-elect the current members of the Board and to
vote on the Board's selection of the Fund's independent accountants.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A.After careful consideration, the Board of Directors of your Fund recommends
that you vote FOR the Proposals.
Q. WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A.No. The Funds will not bear these costs.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A.If you have any questions before you vote or need assistance completing your
proxy card(s), please call 1-800-442-3688.
2
RBC Funds
3435 STELZER ROAD
COLUMBUS, OHIO 43219
November , 2002
Dear Shareholder:
The Board of Directors of RBC Funds, Inc. (the "Company") is proposing that
the Company's current investment advisory agreement (the "Current Agreement")
with Glenwood Capital Management, Inc. ("Glenwood") be terminated and that a new
investment advisory agreement (the "New Agreement") be entered into with
Voyageur Asset Management Inc. ("Voyageur"). The New Agreement will apply to
each of the Company's portfolios (the "Funds"), including the Fund(s) in which
you hold shares.
Voyageur is a wholly-owned subsidiary of RBC Dain Rauscher Corp. and was
founded in 1983. RBC Dain Rauscher Corp. is a wholly-owned subsidiary of Royal
Bank of Canada, the ultimate parent company of Glenwood. Voyageur's charter is
to provide fixed income, equity, and balanced portfolio management services to
clients from a variety of backgrounds and a broad range of financial needs. As
of October 31, 2002, Voyageur's investment team managed approximately $19.5
billion in assets for individuals, public entities, Taft-Hartley plans,
corporations, private nonprofits, foundations, endowments, and healthcare
organizations. A more thorough description of Voyageur's businesses is contained
in the enclosed proxy statement.
At a shareholder meeting on December 18, 2002, you will be asked to approve
the New Agreement with Voyageur. Your approval is necessary because the New
Agreement represents a change in your Fund's investment adviser. The terms of
the New Agreement are the same in all material respects as the Current
Agreement, except for: the dates of execution and termination; certain legal
provisions applicable to new advisory contracts; a specific provision clarifying
that the New Agreement may be amended, subject to applicable legal requirements;
specific authority for the Voyageur to delegate its responsibilities to a sub-
adviser, subject to compliance with applicable legal requirements; updates
reflecting changes in applicable state law and the nature of the Funds' service
and distribution arrangements; a specific acknowledgement that Voyageur does not
warrant any level of performance results for the Funds; clarification that the
Funds may consider sales of Fund shares as a factor in selecting broker-dealers
to execute Fund portfolio transactions; new specific authority to allocate
brokerage in a manner that will help generate resources to defray Fund
distribution and other expenses; clarification that each Fund pays its advisory
fees in arrears; and minor editorial revisions. There will be no change in the
types of services provided and the advisory fees charged to your Fund. Your
account(s) will not be affected by the change in investment advisers.
IT IS IMPORTANT TO REMEMBER THAT EACH FUND AND ITS INVESTMENT OBJECTIVES
AND POLICIES WILL NOT CHANGE AS A RESULT OF THIS PROXY SOLICITATION OR THE NEW
AGREEMENT. YOU WILL STILL OWN THE SAME SHARES IN THE SAME FUND(S).
In addition, shareholders are being asked to elect the five Directors who
currently comprise the Company's Board of Directors and to approve the selection
of the Company's independent accountants.
AFTER CAREFUL CONSIDERATION, RBC FUNDS' BOARD OF DIRECTORS UNANIMOUSLY
APPROVED EACH PROPOSAL AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH
PROPOSAL.
Your vote is important regardless of the number of shares you own. Please
take a few minutes to read the proxy statement and cast your vote. IT IS
IMPORTANT THAT WE RECEIVE YOUR VOTE NO LATER THAN THE TIME OF THE SHAREHOLDER
MEETING ON DECEMBER 18, 2002. If you are a shareholder of more than one Fund, or
have more than one account registered in your name, you will receive one proxy
card for each account. AFTER YOU HAVE
3
MARKED YOUR VOTE ON THE PROPOSALS, PLEASE BE SURE TO SIGN YOUR PROXY CARD(S) AND
RETURN THE CARD(S) IN THE ENCLOSED POSTAGE-PAID ENVELOPE WITHOUT DELAY.
IF YOU HAVE ANY QUESTIONS BEFORE YOU VOTE OR NEED ASSISTANCE IN COMPLETING
YOUR PROXY CARD(S), PLEASE CALL 1-800-442-3688. We'll help you get the answers
you need promptly. We appreciate your participation and prompt response in this
matter and thank you for your continued support of RBC Funds.
Sincerely,
WALTER B. GRIMM SIGNATURE
Walter B. Grimm
President, RBC Funds, Inc.
4
PRELIMINARY COPY
NOTICE OF ANNUAL MEETING
OF THE SHAREHOLDERS OF
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
Notice is hereby given that an Annual Meeting of the Shareholders (the
"Meeting") of each fund listed above (each a "Fund" and collectively the
"Funds"), all of the series of RBC Funds, Inc. (the "Company"), will be held on
December 18, 2002 at 10:00 a.m. Eastern Time at 3435 Stelzer Road, Columbus,
Ohio 43219, for the following purposes:
Proposal 1. To approve or disapprove a new master investment advisory
agreement, including an investment advisory contract
supplement with respect to each Fund, between the Company, on
behalf of each Fund, and Voyageur Asset Management Inc.;
Proposal 2. To elect Leslie H. Garner, Jr., James H. Speed, Jr., R.
William Shauman, Lucy Hancock Bode and J. Franklin Martin as
Directors of the Company; and
Proposal 3. To approve the selection of PricewaterhouseCoopers LLP as the
independent accountants for each Fund.
The Board of Directors recommends that you approve each nominee for
Director and vote in favor of each other proposal.
Please read the enclosed proxy statement carefully for information
concerning the proposals to be placed before the Meeting or any adjournments or
postponements thereof.
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.
In the event that the necessary quorum to transact business or the vote
required to approve a proposal as to one or more Funds is not obtained at the
Meeting, the persons named as proxies may propose one or more adjournments of
the Meeting as to such Fund or Funds in accordance with applicable law to permit
further solicitation of proxies. Any such adjournment as to a Fund will require
the affirmative vote of the holders of a majority of the applicable Fund's
shares present in person or by proxy at the Meeting or any officer of the
Company present at the Meeting who is entitled to preside or act as Secretary of
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.
Shareholders of record at the close of business on November 13, 2002 are
entitled to notice of and to vote at the Meeting. You are invited to attend the
Meeting. If you cannot do so, however, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD(S), AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY
AS POSSIBLE. Any shareholder attending the Meeting may vote in person even
though a proxy has already been returned.
By Order of the Board of Directors,
/s/ CURTIS W. BARNES
Curtis W. Barnes
Secretary
[DATE]
5
PRELIMINARY COPY
RBC FUNDS, INC.
3435 STELZER ROAD
COLUMBUS, OHIO 43219
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
(EACH A "FUND" AND COLLECTIVELY THE "FUNDS")
PROXY STATEMENT
[DATE]
This Proxy Statement provides you with information you should review before
voting on the matters (each a "Proposal") listed in the Notice of Annual Meeting
for the Funds, which are all of the series of RBC Funds, Inc. (the "Company").
The Company's Board of Directors (the "Board," the members of which are referred
to herein as the "Directors") is soliciting your vote for the Annual Meeting of
Shareholders of each Fund (the "Meeting") to be held on December 18, 2002 at
10:00 A.M. Eastern Time at 3435 Stelzer Road, Columbus, Ohio 43219, and, if the
Meeting is adjourned or postponed, at any adjournment or postponement thereof.
SOLICITATION OF PROXIES
The Board is soliciting votes from shareholders of each Fund with respect
to each Proposal. The solicitation of votes is made by the mailing of this Proxy
Statement and the accompanying proxy card(s) on or about [DATE].
The appointed proxies will vote in their discretion on any other business
that may properly come before the Meeting or any adjournments or postponements
thereof. Additional matters would include only matters that were not anticipated
as of the date of this Proxy Statement.
SHAREHOLDER REPORTS
Copies of the Company's most recent annual and semi-annual reports,
including financial statements, previously have been sent to shareholders. This
Proxy Statement should be read in conjunction with the Annual Report. Copies of
the reports are available without charge upon request to the Company by calling
1-800-442-3688 or by writing to the Company at the above address.
PROPOSAL 1
APPROVAL OF THE NEW AGREEMENT WITH VOYAGEUR
GENERAL OVERVIEW
The Board is proposing that the current master investment advisory
agreement (including the investment advisory contract supplement with respect to
each Fund) (the "Current Agreement") between the Company, on behalf of each
Fund, and Glenwood Capital Management, Inc. ("Glenwood") be terminated and that
the Company, on behalf of each Fund, enter into a new master investment advisory
agreement (including an investment advisory contract supplement with respect to
each Fund) with Voyageur Asset Management Inc. (the "New Agreement"). At a
meeting of the Board held on November 4, 2002, the New Agreement was approved
unanimously by the Board, including all of the Directors who are not parties to
the New Agreement
6
or interested persons of such parties. The Board's approval of the New Agreement
on behalf of each Fund is subject to approval by the shareholders of that Fund.
The proposed change of each Fund's investment adviser from Glenwood to
Voyageur is part of a strategic business plan proposed by RBC Financial Group, a
financial services organization with specialized global businesses which include
both Glenwood and Voyageur. RBC Financial Group has decided to restructure its
various business units to take advantage of each company's strengths. As part of
this strategy, RBC Financial Group believes that Voyageur will be better
positioned to provide the Funds with investment advisory services going forward.
Voyageur currently has approximately 65 employees and, as of October 31, 2002,
had approximately $19.5 billion under management. The Board considered, among
other things, the advantages to the Funds of gaining access to the resources of
a much larger U.S. investment advisory firm with significant depth in portfolio
management talent, research capabilities and product diversification, as well as
continuing access to certain members of Glenwood's existing portfolio management
team who will transition to Voyageur as part of the restructuring.
Voyageur is a wholly-owned subsidiary of RBC Dain Rauscher Corp., which
maintains its offices at Dain Bosworth Plaza, 60 South Sixth St., Minneapolis,
MN 55402. RBC Dain Rauscher Corp. is a wholly-owned subsidiary of Royal Bank of
Canada ("RBC"), which maintains its offices at 200 Bay St., Toronto, Ontario,
Canada M5J 2J5 A6 00000. Voyageur has been registered with the Securities and
Exchange Commission ("SEC") as an investment adviser since 1983, and has been a
portfolio manager of publicly-offered mutual funds since 1986. Voyageur
maintains its offices at 90 South Seventh St., Suite 4300, Minneapolis, MN
55402. Please see "Information About Voyageur" below.
Shareholders of each Fund are being asked to approve the New Agreement
between the Fund and Voyageur at the Meeting. Approval is sought to replace the
Funds' Current Agreement with Glenwood with the New Agreement with Voyageur. The
terms of the New Agreement are the same in all material respects as the Current
Agreement, except for: the dates of execution and termination; certain legal
provisions applicable to new advisory contracts; a specific provision clarifying
that the New Agreement may be amended, subject to applicable legal requirements;
specific authority for the Voyageur to delegate its responsibilities to a sub-
adviser, subject to compliance with applicable legal requirements; updates
reflecting changes in applicable state law and the nature of the Funds' service
and distribution arrangements; a specific acknowledgement that Voyageur does not
warrant any level of performance results for the Funds; clarification that the
Funds may consider sales of Fund shares as a factor in selecting broker-dealers
to execute Fund portfolio transactions; new specific authority to allocate
brokerage in a manner that will help generate resources to defray Fund
distribution and other expenses; clarification that each Fund pays its advisory
fees in arrears; and minor editorial revisions. There will be no change in the
types of services provided and the advisory fees charged to the Funds in
connection with this proposal.
Voyageur will be ultimately responsible for the overall management of each
Fund's portfolio under the New Agreement and will employ a team approach to the
management of the Funds, with each portfolio management team having access to
Voyageur's investment research and other money management resources. It is
expected that some of Glenwood's existing investment management personnel would
continue to be retained as employees of Voyageur.
The form of the New Agreement (including the form of the investment
advisory contract supplement with respect to each Fund) is attached as Exhibit A
to this Proxy Statement and the description of its terms in this section is
qualified in its entirety by reference to Exhibit A. Also included in Exhibit A
is a copy of the form of the New Agreement (including the form of the investment
advisory contract supplement) that has been marked to show changes from the
Current Agreement for your reference.
Appendix 1 shows the date when each Fund commenced operations, the date the
Current Agreement became effective with respect to each Fund, the date when the
Current Agreement was last approved by the Board with respect to each Fund, the
date to which the Current Agreement was last continued with respect to each
Fund, and the date when the Current Agreement was last approved by the
shareholders (or, in some cases, a Fund's sole initial shareholder) of each
Fund. The Current Agreement was last submitted to
7
shareholders (or, in some cases, to a Fund's sole shareholder) prior to its
becoming effective, as required by the Investment Company Act of 1940, as
amended (the "1940 Act").
The New Agreement must be voted upon separately by the shareholders of each
Fund. The New Agreement is expected to take effect on or before December 31,
2002 with respect to each Fund following shareholder approval of the New
Agreement by shareholders of that Fund and the termination of the Current
Agreement by the Board with respect to that Fund. If approved by shareholders of
a Fund, the New Agreement will remain in effect for that Fund through February
29, 2004, and, unless earlier terminated, will continue from year to year
thereafter, provided that each such continuance is approved annually with
respect to that Fund (i) by the Board or by the vote of a majority of the
outstanding voting securities of the particular Fund, and, in either case, (ii)
by a majority of the Directors who are not parties to the New Agreement or
"interested persons," as defined in the 1940 Act, of any such party (other than
as Directors).
THE TERMS OF THE NEW AGREEMENT
GENERALLY. The terms of the New Agreement are the same in all material
respects as those of the Current Agreement, except for: the dates of execution
and termination; certain legal provisions applicable to new advisory contracts;
a specific provision clarifying that the New Agreement may be amended, subject
to applicable legal requirements; specific authority for the Voyageur to
delegate its responsibilities to a sub-adviser, subject to compliance with
applicable legal requirements; updates reflecting changes in applicable state
law and the nature of the Funds' service and distribution arrangements; a
specific acknowledgement that Voyageur does not warrant any level of performance
results for the Funds; clarification that the Funds may consider sales of Fund
shares as a factor in selecting broker-dealers to execute Fund portfolio
transactions; new specific authority to allocate brokerage in a manner that will
help generate resources to defray Fund distribution and other expenses;
clarification that each Fund pays its advisory fees in arrears; and minor
editorial revisions. Under the New Agreement, Voyageur will provide investment
advisory services with respect to each Fund.
VOYAGEUR'S RESPONSIBILITIES. The New Agreement provides that Voyageur will
make investments for the account of each Fund in accordance with Voyageur's best
judgment and within the investment objectives and restrictions set forth in the
registration statements applicable to the Funds, the 1940 Act and the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), relating to
regulated investment companies, subject to policy decisions adopted by the
Board. Voyageur will determine the securities to be purchased or sold by each
Fund and will place orders with broker-dealers pursuant to its determinations.
Voyageur will also (i) comply with all reasonable requests of the Company for
information, and (ii) provide such other services as Voyageur will from time to
time determine to be necessary or useful to the administration of the Funds.
AGGREGATION AND ALLOCATION OF TRADES BY VOYAGEUR. On occasions when
Voyageur deems the purchase or sale of a security to be in the best interest of
a Fund as well as other customers, the New Agreement permits Voyageur, to the
extent permitted by applicable law, to aggregate the securities to be so sold or
purchased in order to obtain the best execution or lower brokerage commissions,
if any. Voyageur also may purchase or sell a particular security for one or more
customers in different amounts. On either occasion, and to the extent permitted
by applicable law and regulations, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Voyageur in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Fund involved and to such other customers.
EXPENSES OF THE COMPANY. The New Agreement provides that the Company will
be responsible for all of its expenses and liabilities, including: (1)
compensation of the Directors who are not interested persons (as defined in the
1940 Act) of Voyageur or the Fund's administrator; (2) taxes and governmental
fees; (3) interest charges; (4) fees and expenses of the Company's independent
accountants and legal counsel; (5) trade association membership dues; (6) fees
and expenses of any custodian (including maintenance of books and accounts and
calculation of the net asset value of shares of the Funds); fees and expenses of
the Company's administrator, transfer agent, fund accountant and dividend
disbursing agent of the Company; (7) expenses of issuing, redeeming, registering
and qualifying for sale shares of common stock in the
8
Company; (8) expenses of preparing and printing share certificates, prospectuses
and reports to shareholders, notices, proxy statements and reports to regulatory
agencies; (9) the cost of office supplies, including stationery; (10) travel
expenses of all officers, Directors and employees; (11) insurance premiums; (12)
brokerage and other expenses of executing portfolio transactions; (13) expenses
of shareholders' meetings; (14) organizational expenses; and (15) extraordinary
expenses.
LIMITATION OF LIABILITY OF VOYAGEUR. Pursuant to the New Agreement,
Voyageur will give the Company the benefit of Voyageur's best judgment and
efforts in rendering investment advisory services. The New Agreement states that
Voyageur will not be liable under the New Agreement for any mistake in judgment
or in any other event whatsoever, provided that nothing in the New Agreement
will be deemed to protect or purport to protect Voyageur against any liability
to the Company or its shareholders to which Voyageur would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of Voyageur's duties under the New Agreement or by reason of
Voyageur's reckless disregard of its obligations and duties under the New
Agreement.
COMPENSATION PAID TO VOYAGEUR. The New Agreement provides that for
Voyageur's provision of investment advisory services, each Fund will pay
Voyageur a monthly fee on the first business day of each month at the annual
rates set forth in Appendix 2 to this Proxy Statement. The fee rate payable by
each Fund pursuant to the New Agreement is the same as that Fund's rate payable
under the Current Agreement.
TERM AND TERMINATION. The New Agreement also provides that it will
continue in effect as to a Fund only if its continuance as to that Fund is
specifically approved at least annually (i) by the vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by a
majority of the Board, and (ii) by the vote, cast in person at a meeting called
for that purpose, of a majority of the Company's Directors who are not parties
to the New Agreement or "interested persons" (as defined in the 1940 Act) of any
such party. The New Agreement also provides that it may be terminated with
respect to a Fund at any time, without the payment of any penalty, by a vote of
a majority of the outstanding voting securities of that Fund (as defined in the
1940 Act) or by a vote of majority of the entire Board on sixty (60) days'
written notice to Voyageur, or by Voyageur on sixty (60) days' written notice to
the Company. The New Agreement provides that it will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
NON-EXCLUSIVITY. The New Agreement further provides that nothing contained
in the New Agreement will limit the freedom of Voyageur or any affiliated person
of Voyageur to engage in any other business or to devote time and attention to
the management or other aspects of any other business or to render services of
any kind to any other corporation, firm, individual or association.
GOVERNING LAW. Finally, the New Agreement provides that it will be
construed in accordance with the laws of the State of Minnesota provided that
nothing in the New Agreement will be construed in a manner inconsistent with the
1940 Act.
INFORMATION ABOUT VOYAGEUR
As noted above, Voyageur is a wholly-owned subsidiary of RBC Dain Rauscher
Corp., which itself is a wholly-owned subsidiary of RBC. 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 was formed in 1983 and currently provides investment advisory and
administrative services to Great Hall Investment Funds, Inc., a series company
that currently consists of five separately managed money market portfolios. The
Great Hall Funds serve principally as 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, 2002, Voyageur had
approximately $19.5 billion in assets under management (approximately $11
billion of which was represented by Great Hall's net assets).
9
In addition to managing the Great Hall Funds, Voyageur serves as the
sub-adviser to Delaware Core Equity Fund, a separately managed series of
Voyageur Mutual Funds III that is managed by Delaware Management Company. For
these services, Voyageur receives a sub-advisory fee (which it has not waived or
otherwise reduced) equal to 0.325% of the Delaware Core Equity Fund's average
daily net assets. As of September 30, 2002, the Delaware Core Equity Fund had
total net assets of $23,037,245.
INFORMATION ABOUT GLENWOOD
Glenwood is a wholly-owned subsidiary of RBC Centura Bank, which is a
wholly owned subsidiary of RBC Centura Banks, Inc. Glenwood maintains offices at
3201 Beechleaf Court, Suite 350, Raleigh, North Carolina 27604. RBC Centura
Bank, which maintains offices at 131 North Church Street, Rocky Mount, North
Carolina 27802, is a member of the Federal Reserve System and manages the
financial assets of individual and institutional investors. RBC Centura Banks,
Inc., which maintains offices at 131 North Church Street, Rocky Mount, North
Carolina 27802, is wholly owned by RBC.
Appendix 3 to this Proxy Statement sets forth information regarding the
principal executive officer and directors of Glenwood and Voyageur. Appendix 4
to this Proxy Statement sets forth the amount of fees paid by each Fund to
Glenwood under the Current Agreement during the fiscal year ended April 30,
2002. Appendix 5 to this Proxy Statement sets forth information concerning the
amount and purpose of material payments (other than advisory fees) made by the
Funds to Glenwood or any affiliated person of Glenwood during the fiscal year
ended April 30, 2002.
EVALUATION OF THE NEW AGREEMENT BY THE BOARD
In determining whether to approve the New Agreement and to recommend its
approval to shareholders, the Board, including all of the Directors who are not
"interested persons" of the Company for purposes of the 1940 Act (the
"Independent Directors"), considered various materials and representations
provided by Voyageur and RBC and met with senior representatives of Voyageur and
a senior representative of RBC. The Independent Directors were advised by
independent legal counsel throughout this process. The Board met on November 4,
2002 to review and consider, among other things, information relating to the New
Agreement.
In evaluating the New Agreement, the Board considered information furnished
by Voyageur and RBC, including: (i) information about Voyageur's personnel and
Voyageur's plans with respect to the operation and management of the Funds,
including Voyageur's plans to employ a team approach to the management of the
Funds; (ii) data as to Voyageur's investment performance; (iii) representations
by Voyageur that it would provide advisory and other services to each Fund of a
scope and quality at least equivalent to the scope and quality of the services
provided to the Funds under the Current Agreement; (iv) information regarding
the desirability of retaining, subject to ordinary turnover, some of Glenwood's
existing investment management personnel as employees of Voyageur; (v)
information regarding the financial resources of Voyageur and RBC; and (vi) the
advantages to the Funds of gaining access to the resources of a much larger U.S.
investment advisory firm with significant depth in portfolio management talent,
research capabilities and product diversification, as well as continuing access
to certain members of Glenwood's existing portfolio management team who will
transition to Voyageur as part of the restructuring.
The Board also considered that the terms of the New Agreement will be the
same in all material respects as the Current Agreement (except for: the dates of
execution and termination; certain legal provisions applicable to new advisory
contracts; a specific provision clarifying that the New Agreement may be
amended, subject to applicable legal requirements; specific authority for the
Voyageur to delegate its responsibilities to a sub-adviser, subject to
compliance with applicable legal requirements; updates reflecting changes in
applicable state law and the nature of the Funds' service and distribution
arrangements; a specific acknowledgement that Voyageur does not warrant any
level of performance results for the Funds; clarification that the Funds may
consider sales of Fund shares as a factor in selecting broker-dealers to execute
Fund portfolio transactions; new specific authority to allocate brokerage in a
manner that will help generate resources to defray Fund distribution and other
expenses; clarification that each Fund pays its advisory fees in arrears; and
minor
10
editorial revisions) and that the fee rates payable by the Funds under the New
Agreement will remain the same as those under the Current Agreement.
Based upon its evaluation, the Board concluded that each Fund's engagement
of Voyageur would provide the Fund with access to highly effective management
and advisory services and capabilities and that the provision of investment
advisory services by Voyageur is in the best interests of the Fund. The Board
concluded further that the terms of the New Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interest of each
Fund and its shareholders.
Accordingly, the Directors, including the Independent Directors,
unanimously voted to approve the New Agreement for each Fund and to submit the
New Agreement to each Fund's shareholders for approval.
If the shareholders of a Fund should fail to approve the New Agreement, the
Current Agreement would remain in effect for that Fund and the Board would meet
to consider appropriate action for that Fund, consistent with its fiduciary
duties.
REQUIRED VOTE
Shareholders of each Fund must separately approve the New Agreement.
Approval of this Proposal 1 by a Fund requires an affirmative vote of the lesser
of (i) 67% or more of the Fund's shares present at the Meeting if more than 50%
of the outstanding shares of the Fund are present or represented by proxy, or
(ii) more than 50% of the outstanding shares of the Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE "FOR"
THIS PROPOSAL.
PROPOSAL 2
ELECTION OF LESLIE H. GARNER, JR., JAMES H. SPEED, JR., R. WILLIAM SHAUMAN,
LUCY HANCOCK BODE AND J. FRANKLIN MARTIN AS DIRECTORS OF THE FUNDS.
At the Meeting, you will be asked to elect each of Leslie H. Garner, Jr.,
James H. Speed, Jr., R. William Shauman, Lucy Hancock Bode and J. Franklin
Martin as a Director of the Funds. Each of the nominees currently serves as a
Director. Mr. Martin and Mr. Shauman were appointed by the Board in January 1996
and July 1999, respectively. The remaining Directors were previously elected by
the Company's then sole shareholder. Mr. Martin is deemed to be an "interested
person" of the Company for purposes of the 1940 Act and, therefore, serves as an
"Interested Director" of the Company. Each of the other nominees serves as an
Independent Director of the Company. All of the nominees will continue to serve
as Directors whether or not shareholders of the Funds approve this Proposal.
The persons named as proxies on the enclosed proxy card(s) will vote for
the election of each of the nominees named above unless authority to vote for
any or all of the nominees is withheld in the proxy. Each Director so elected
will serve as a Director of the Company until the next meeting of shareholders,
if any, called for the purpose of electing Directors and until the election and
qualification of a successor or until such Director sooner dies, resigns or is
removed as provided in the governing documents of the Company. Each of the
nominees has indicated that he or she is willing to serve as a Director. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the current Directors may recommend.
The primary responsibility of the Board is to represent the interests of
shareholders of each Fund and to provide oversight of the management of the
Fund. The Board of Directors met 5 times during the fiscal year ended April 30,
2002. Each Director attended at least 75% of all Board and applicable committee
meetings.
The following information shows the Directors/nominees for Director and the
executive officers of the Funds and their principal occupations which, unless
otherwise specified, are of more than five years duration, although the titles
held may have varied during that period.
11
DIRECTORS/NOMINEES
<Table>
<Caption>
NUMBER OF OTHER
TERM OF RBC FUNDS DIRECTORSHIPS
NAME, AGE, ADDRESS OFFICE AND OVERSEEN BY HELD BY
AND POSITION HELD LENGTH OF PRINCIPAL OCCUPATION(S) DIRECTOR/ DIRECTOR/
WITH COMPANY TIME SERVED(1) DURING PAST 5 YEARS NOMINEE NOMINEE
- ------------------ -------------- -------------------------- ----------- -------------
INTERESTED DIRECTORS
J. Franklin Martin* Since 1/24/96 President, LandCraft 6 0
(57) Properties, Inc. (Real
LandCraft Properties, Inc. Estate) (1978-present).
201 N. Tryon Street
Suite 2650
Charlotte, NC 28202
DIRECTOR
INDEPENDENT DIRECTORS
Leslie H. Garner, Jr. Since 4/26/94 President, Cornell 6 0
(52) College.
Cornell College
600 First Street
West Mount Vernon,
IA 52314-1098
DIRECTOR
James H. Speed, Jr. Since 4/26/94 Retired; previously, Vice 6 0
(49) President and Controller,
11032 Brasskettle Drive Hardee's Food Systems,
Raleigh, NC 27614 Inc. (1991-2000); Senior
DIRECTOR Audit Manager, Deloitte &
Touche (Accounting)
(1979-1991).
R. William Shauman Since 7/20/99 Banking Consultant; 6 0
(64) previously, President,
530 W. South Street First of America Insurance
Kalamazoo, MI 49007 Co. (1997-1998); Executive
DIRECTOR Vice President First of
America Bank Corp.
(1993-1997).
Lucy Hancock Bode Since 4/26/94 Lobbyist. 6 0
(51)
2518 White Oak Road
Raleigh, NC 27609
DIRECTOR
</Table>
- ---------------
(1) Each Director serves in such capacity for an indefinite period of time until
their removal, resignation or retirement.
* Mr. Martin is the president and a stockholder of LandCraft Properties, Inc.
("Landcraft"). During the Funds' last two fiscal years, Landcraft received
substantial business loans from RBC Centura Bank. Glenwood, the Funds'
current investment adviser, is a wholly-owned subsidiary of RBC Centura
Bank. Accordingly, Mr. Martin is considered an "interested person" of the
Funds within the meaning of the 1940 Act.
12
EXECUTIVE OFFICERS(1)
<Table>
<Caption>
TERM OF OFFICE AND
NAME, AGE AND POSITION LENGTH OF TIME
HELD WITH COMPANY SERVED(2) PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------- ------------------ ----------------------------------------------------
Walter B. Grimm (57) Since 7/13/99 BISYS Fund Services Ohio, Inc. ("BISYS") -- Senior
PRESIDENT Vice President and Client Services Executive of
Client Services (1992-present).
Lara Bocskey (32) Since 5/16/01 BISYS -- Client Services Manager (1998-present);
VICE PRESIDENT previously, First of America Bank
Corporation -- Product Manager (1997-1998),
Marketing Specialist (1995-1997).
Nadeem Yousaf (33) Since 5/24/00 BISYS -- Vice President -- Financial Services (1999-
TREASURER present); previously, Director, Investors Bank and
Trust.
Curtis Barnes (46) Since 7/13/99 BISYS -- Vice President-Legal Services
SECRETARY (1995-present).
</Table>
- ---------------
(1) Address of each officer, unless otherwise indicated, is: 3435 Stelzer Road,
Columbus, Ohio 43219.
(2) Each officer serves in such capacity for an indefinite period of time until
their removal, resignation or retirement.
The table below shows the value of each Director's holdings in the Company
and all of the Funds as of [the record date].
DOLLAR RANGE OF SECURITIES IN THE FUNDS
<Table>
<Caption>
RBC AGGREGATE
NORTH DOLLAR RANGE
CAROLINA RBC RBC RBC RBC RBC OF SECURITIES
TAX-FREE LARGE CAP MID CAP SMALL CAP GOVERNMENT QUALITY IN THE FUND
DIRECTOR BOND FUND EQUITY FUND EQUITY FUND EQUITY FUND INCOME FUND INCOME FUND COMPLEX
- -------- --------- ----------- ----------- ----------- ----------- ----------- -------------
Lucy Hancock Bode.... None None $10,001- None None None $10,001-
$50,000 $50,000
J. Franklin Martin... None $10,001- None None None None $10,001-
$50,000 $50,000
Leslie H. Garner,
Jr. ............... None $50,001- $50,001- $1-$10,000 None None Over
$100,000 $100,000 $100,000
James H. Speed,
Jr. ............... None None None None None None None
R. William Shauman... None None None None None None None
</Table>
Each Director receives from the Company an annual retainer of $3,000 (plus
$750 for serving on the Board's Audit Committee, as applicable) and a fee of
$750 for each Board and Board committee meeting attended. The Directors are
reimbursed for all out-of-pocket expenses relating to attendance at such
meetings. Directors who are directors, officers or employees of Glenwood or the
Funds' administrator do not receive compensation from the Company. The table
below sets forth the compensation received by each Director from the Company for
the fiscal year ended April 30, 2002.
13
COMPENSATION
<Table>
<Caption>
TOTAL COMPENSATION
AGGREGATE PENSION OR FROM FUND AND
COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL FUND COMPLEX
FROM ACCRUED AS A PART BENEFITS FROM (6 FUNDS)
DIRECTOR THE FUNDS OF FUND EXPENSES RETIREMENT PAID TO DIRECTORS
- -------- -------------- ------------------- ---------------- ------------------
Lucy Hancock Bode............. $6,750 0 0 $6,750
J. Franklin Martin............ $6,750 0 0 $6,750
Leslie H. Garner, Jr. ........ $8,250 0 0 $8,250
James H. Speed, Jr. .......... $9,000 0 0 $9,000
R. William Shauman............ $9,000 0 0 $9,000
</Table>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee comprised solely of Independent
Directors, currently Messrs. Shauman, Speed and Garner. As set forth in its
charter, the primary duties of the Company's Audit Committee are: (a) to
recommend the selection, retention or termination of accountants and, in
connection therewith, to review information concerning the independence of the
accountants and to receive the accountants' specific representations as to their
independence; (b) to meet with the Company's independent accountants, including
private meetings, as necessary; (c) to consider the effect upon the Funds of any
changes in accounting principles or practices proposed by the Funds' investment
adviser, administrator or accountants; (d) to review the fees charged by the
accountants for audit and non-audit services; (e) to investigate improprieties
or suspected improprieties in Fund financial and accounting operations that are
called to their attention; and (f) 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 Committee may deem necessary or appropriate. The Audit
Committee met 3 times during the fiscal year ended April 30, 2002.
The Company also has a Nominating Committee that is comprised of all of the
Independent Directors. 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. The
Nominating Committee did not meet during the fiscal year ended April 30, 2002.
REQUIRED VOTE
Election of each of Leslie H. Garner, Jr., James H. Speed, Jr., R. William
Shauman, Lucy Hancock Bode and J. Franklin Martin as a Director requires the
approval of a plurality of the votes cast at the Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
FOR THE ELECTION OF EACH NOMINEE AS A DIRECTOR.
PROPOSAL 3
APPROVAL OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS THE INDEPENDENT ACCOUNTANTS FOR EACH FUND
It is intended that proxies cast by each Fund's shareholders not limited to
the contrary will be voted in favor of ratifying the selection, by a majority of
the Independent Directors of the Funds, of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") under Section 32(a) of the 1940 Act as the Funds'
independent accountants, to certify every financial statement of each Fund
required by any law or regulation to be certified by independent accountants and
filed with the SEC in respect of all or any part of the fiscal year of the Fund
ending April 30, 2003.
During the Funds' fiscal year ended April 30, 2001, KPMG LLP ("KPMG")
served as the Funds' independent accountants. During the Funds' fiscal year
ended April 30, 2002, KPMG resigned as the Funds independent accountants on the
basis it was no longer "independent" of the Funds within the meaning of the
professional standards applicable to KPMG. On October 29, 2001, based on the
recommendations of
14
management and the Audit Committee, the Board of Directors approved the decision
to change independent accountants and engage Ernst & Young, LLP ("Ernst &
Young") as its new independent accountants as of that date for the remainder of
the fiscal year ending April 30, 2002. On October 3, 2002, Ernst & Young
informed the Funds that RBC, the ultimate parent of both Glenwood and Voyageur,
wanted to engage Ernst & Young to provide services to RBC that would be
inconsistent with current independence rules. Accordingly, Ernst & Young
resigned as the Funds' independent accountants effective October 3, 2002. On
November 4, 2002, based on the recommendations of management and the Audit
Committee, the Board of Directors approved the decision to change the Funds'
independent accountants and engage PricewaterhouseCoopers as the Funds' new
independent accountants as of that date for the remainder of the fiscal year
ending April 30, 2003.
During the Funds' fiscal year ended April 30, 2001, KPMG'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, 2001, and through October 29, 2001, there were no
disagreements between the Funds and KPMG on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure,
which if not resolved to the satisfaction of KPMG would have caused it to make
reference to the disagreements in its report on the financial statements for
such periods.
During the Funds' fiscal year ended April 30, 2002, Ernst & Young'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, 2001, and through October 3, 2002, there were no
disagreements between the Funds and Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of Ernst & Young would have
caused it to make reference to the disagreements in its report on the financial
statements for such periods.
The Funds have been advised that neither PricewaterhouseCoopers nor any of
its partners has any direct or material indirect financial interest in the
Funds. Accounting services to be performed by PricewaterhouseCoopers for the
Funds will consist of the examination of the annual financial statements of the
Fund, consultation on financial, accounting and reporting matters, review and
consultation regarding various filings with the SEC and attendance at some
meetings of the Board of Directors. PricewaterhouseCoopers also will perform
non-audit services consisting of review and/or preparation of income tax returns
of the Fund. Representatives of PricewaterhouseCoopers will be present and
available for questioning at the Meeting and will have an opportunity to make a
statement.
FEES PAID TO ERNST & YOUNG
AUDIT FEES. For the fiscal year ended April 30, 2002, the aggregate fees
billed by Ernst & Young and paid by the Funds for professional services rendered
for the audit of the Funds' annual financial statements and the review of the
Funds' interim financial statements were $53,500 ($8,449 per Fund).
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Not
applicable.
ALL OTHER FEES. For the fiscal year ended April 30, 2002, the aggregate
fees billed by Ernst & Young and paid by the Funds for non-audit services (other
than fees for financial information systems design and implementation) provided
to Funds, Glenwood and its affiliates that provide services to the Funds, were
$16,500 ($2,083.33 per Fund). It was determined by the Audit Committee that the
provision of such non-audit services was compatible with Ernst & Young's
independence as accountants for the Funds.
REQUIRED VOTE
Shareholders of each Fund must separately approve this Proposal. Approval
of this Proposal by a Fund requires the approval by a majority of the total
votes validly cast, in person or by proxy, at the Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
FOR THIS PROPOSAL.
15
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Management of the Funds does not know of any matter to be presented at the
Meeting other than that described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote thereon in
accordance with their best judgment.
SERVICE PROVIDERS
The Fund's administrator, transfer agent and fund accountant is BISYS Fund
Services Ohio, Inc., located at 3435 Stelzer Road, Columbus, Ohio 43219. Centura
Funds Distributors, Inc., an affiliate of BISYS and located at the same address,
serves as the principal underwriter of the Funds.
RBC Centura Bank, 131 North Church Street, Rocky Mount, North Carolina
27802, acts as custodian of the Company's assets. For the fiscal year ended
April 30, 2002, the custodian earned fees of $41,226, $35,422, $7,625, $10,061,
$20,311, $7,568 for the Mid Cap Equity Fund, Large Cap Equity Fund, Small Cap
Equity Fund, Government Income Fund, Quality Income Fund, and North Carolina
Tax-Free Bond Fund, respectively.
BROKERAGE
Under the New Agreement, Voyageur would select broker-dealers to execute
transactions and evaluate the reasonableness of commissions on the basis of
quality, quantity, and the nature of the firms' professional services.
Commissions to be charged and the rendering of investment services, including
statistical, research, and counseling services by brokerage firms, are factors
to be considered in the placing of brokerage business. The types of research
services provided by brokers may include general economic and industry data, and
information on securities of specific companies. Research services furnished by
brokers through whom the Company effects securities transactions may be used by
Voyageur in servicing all of its accounts. In addition, not all of these
services may be used by Voyageur in connection with the services they provide to
a Fund or the Company. Voyageur may consider sales of shares of the Funds as a
factor in the selection of broker-dealers and may select broker-dealers who
provide them with research services. Voyageur may choose broker-dealers that
provide Voyageur with research services and may cause a client to pay such
broker-dealers commissions which exceed those other broker-dealers may have
charged, if Voyageur views the commissions as reasonable in relation to the
value of the brokerage and/or research services. Voyageur will not, however,
seek to execute brokerage transactions other than at the best price and
execution, taking into account all relevant factors such as price, promptness of
execution and other advantages to clients, including a determination that the
commission paid is reasonable in relation to the value of the brokerage and/or
research services.
VOTING RIGHTS
Shareholders of record on November 13, 2002 (the "record date") are
entitled to be present and to vote at the Meeting or any adjournment or
postponement thereof. As of the record date, each Fund offered multiple classes
of shares to the public. Each Fund may vote separately on matters affecting only
that Fund, and each class of shares of each Fund may vote separately on matters
affecting only that class or affecting that class differently from other
classes. Shareholders of each Fund will vote on each Proposal as a single class
regardless of the class of shares they own. Appendix 6 sets forth the number of
shares of each class of each Fund issued and outstanding as of the record date.
One-third of the outstanding shares of a Fund, represented by proxy or in
person and regardless of class, will constitute a quorum for that Fund as to
matters presented at the Meeting. In the event that a quorum of shareholders is
not represented at the Meeting with respect to one or more Funds, the Meeting
may be adjourned by a majority of the applicable Fund's shareholders present in
person or by proxy, or by any officer of the Company present entitled to preside
or act as Secretary of the Meeting, until a quorum exists. If there are
insufficient votes to approve a Proposal, the persons named as proxies may
propose one or more adjournments of the Meeting to permit additional time for
the solicitation of proxies, in accordance with
16
applicable law. Adjourned meetings must be held within a reasonable time after
the date originally set for the Meeting (but not more than 120 days after the
record date). Solicitation of votes may continue to be made without any
obligation to provide any additional notice of the adjournment. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the applicable Proposal and will vote against
any such adjournment those proxies to be voted against Proposal.
For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted in favor of a Proposal.
Broker non-votes are proxies received by a Fund from brokers or nominees when
the broker or nominee has neither received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
The Funds expect that, before the Meeting, broker-dealer firms holding
shares of the Funds in "street name" for their customers will request voting
instructions from their customers and beneficial owners. If these instructions
are not received by the date specified in the broker-dealer firms' proxy
solicitation materials, the Funds understand that the broker-dealers that are
members of the New York Stock Exchange may vote on the items to be considered at
the Meeting on behalf of their customers and beneficial owners under rules of
the New York Stock Exchange.
Abstentions and broker non-votes will have the effect of a "no" vote on
Proposal 1. Abstentions and broker non-votes will not be counted in favor of,
but will have no other effect on, the votes for Proposals 2 and 3.
The number of shares that you may vote is the total of the number shown on
the proxy card accompanying this Proxy Statement. Shareholders are entitled to
one vote for each full share and a proportionate vote for each fractional share
held. Any shareholder giving a proxy has the power to revoke it by mail
(addressed to the Secretary at the principal executive office of the Company at
the address shown at the beginning of this Proxy Statement) or in person at the
Meeting, by executing a superseding proxy or by submitting a notice of
revocation to the Company.
BENEFICIAL OWNERS
To the best of the Company's knowledge, as of [the record date], no
Director of the Company owned beneficially 1% or more of the outstanding shares
of any class of a Fund, and the Directors and officers of the Company
beneficially owned, as a group, less than 1% of the shares of each class of each
Fund.
To the best of the Company's knowledge, as of [the record date], no person
owned beneficially more than 5% of any class of any Fund, except as set forth in
Appendix 7.
EXPENSES
RBC and/or one or more of its affiliates will pay the expenses of the Funds
in connection with this Notice and Proxy Statement and the Meeting, including
the printing, mailing, solicitation and vote tabulation expenses and
out-of-pocket expenses. The Funds will not bear the expenses of the Proxy
Statement.
SHAREHOLDER PROPOSALS
The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the 1940 Act. A shareholder proposal to be
considered for inclusion in the proxy statement at any subsequent meeting of
shareholders must be submitted a reasonable time before the proxy statement for
that meeting is mailed. Whether a proposal is submitted in the proxy statement
will be determined in accordance with applicable federal and state laws. The
timely submission of a proposal does not guarantee its inclusion.
17
Please complete the enclosed proxy card(s) and return the card(s) in the
enclosed self-addressed, postage-paid envelope promptly.
By Order of the Board,
/s/ CURTIS W. BARNES
Curtis W. Barnes
Secretary
18
EXHIBIT A
FORM OF NEW
MASTER INVESTMENT ADVISORY CONTRACT
RBC FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio 43219
Voyageur Asset Management Inc.
90 South Seventh Street, Suite 4300
Minneapolis, Minnesota 55402-4115
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") and
Voyageur Asset Management Inc. (the "Adviser") as follows:
1. The Company is an open-end investment company which currently has one or
more separate investment portfolios as may be established and designated by the
Directors from time to time (the "Funds"). This contract shall pertain to such
Funds as shall be designated in the supplements (each a "Supplement") to this
Master Investment Advisory Contract (the "Contract") as further agreed between
the Company and the Adviser. A separate class of shares of common stock in the
Company is offered to investors with respect to each Fund. The Company engages
in the business of investing and reinvesting the assets of each Fund in the
manner and in accordance with the investment objectives and restrictions with
respect to each Fund, as specified in the Registration Statement of the Company,
as amended from time to time (the "Registration Statement"), filed by the
Company under the Investment Company Act of 1940 (the "1940 Act") and the
Securities Act of 1933 (the "1933 Act"). Copies of the Registration Statement
have been furnished to the Adviser. Any amendments to the Registration Statement
shall be furnished to the Adviser promptly.
2. The Company hereby appoints the Adviser to provide the investment
advisory services specified in this Contract and the Adviser hereby accepts such
appointment.
3. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this Contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract.
(b) The Company shall be responsible for all of its expenses and
liabilities, including, but not limited to, compensation of its Directors who
are not affiliated with the Adviser, the Company's administrator, distributor,
or any of their affiliates; taxes and governmental fees; interest charges; fees
and expenses of the Company's independent auditors and legal counsel; trade
association membership dues; fees and expenses of any custodian (including
maintenance of books and accounts and calculation of the net asset valuation of
shares of the Funds); fees and expenses of any administrator, transfer agent,
fund accountant or dividend paying agent of the Company; expenses of any plan
adopted with respect to the Funds pursuant to Rule 12b-1 under the 1940 Act;
shareholder servicing expenses; expenses of issuing, redeeming, registering and
qualifying for sale shares of common stock in the Company; expenses of preparing
and printing share certificates, prospectuses and reports to shareholders,
notices, proxy statements and reports to regulatory agencies; the cost of office
supplies, including stationery; travel expenses of all officers, Directors and
employees; insurance premiums; brokerage and other expenses of executing
portfolio transactions; expenses of shareholders' meetings; organizational
expenses; and extraordinary expenses.
4. (a) The Adviser shall provide to the Company investment guidance and
policy direction in connection with the management of the portfolio of each
Fund, including oral and written research analysis, advice, statistical and
economic data and information and judgments, of both a macroeconomic and
microeconomic character.
1
The Adviser will determine the securities to be purchased or sold by
each Fund and will place orders with broker-dealers pursuant to its
determinations. The Adviser will determine what portion of each Fund's portfolio
shall be invested in securities described by the policies of each Fund and what
portion, if any, should be invested otherwise or held uninvested.
The Company will have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to investment
advisory customers of the Adviser. In making investment decisions, hereunder, it
is understood that the Adviser will not use any inside information that may be
in its possession or in the possession of any of its affiliates, nor will the
Adviser seek to obtain any such information.
(b) The Adviser shall provide to the Company's officers such information
relating to the Company and the Funds and the services to be provided by the
Adviser hereunder as the Company may reasonably request.
(c) As manager of the assets of each Fund, the Adviser shall make
investments for the account of each Fund in accordance with the Adviser's best
judgment and within the investment objectives and restrictions set forth in the
Registration Statement, the 1940 Act and the provisions of the Internal Revenue
Code relating to regulated investment companies, subject to policy decisions
adopted by the Company's Board of Directors. The Company will promptly notify
the Adviser in writing of any changes in a Fund's investment objectives and
restrictions.
(d) The Adviser shall furnish to the Company's Board of Directors
periodic reports on the investment performance of each Fund and on the
performance of its obligations under this Contract and shall supply such
additional reports and information as the Company's officers or Board of
Directors shall reasonably request.
(e) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of a Fund as well as other customers, the
Adviser, to the extent permitted by applicable law, may aggregate the securities
to be so sold or purchased in order to obtain the best execution or lower
brokerage commissions, if any. The Adviser may also on occasion purchase or sell
a particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to that Fund and to such other customers.
(f) The Adviser may cause a Fund to pay a broker which provides brokerage
and research-related products and services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker might
have charged. Such higher commissions may not be paid unless the Adviser
determines in good faith that the amount paid is reasonable in relation to the
services received in terms of the particular transaction or the Adviser's
overall responsibilities to each Fund and any other of the Adviser's clients. In
addition, subject to seeking the most favorable price and best execution
available, the Adviser may also consider sales of shares of the Company as a
factor in the selection of brokers and dealers. Subject to seeking the most
favorable price and execution, the Company's Board of Directors may cause the
Adviser to effect transactions in portfolio securities through broker-dealers in
a manner that will help generate resources to: (i) pay the cost of certain
expenses which the Company is required to pay or for which the Company is
required to arrange payment; or (ii) finance activities that are primarily
intended to result in the sale of the Company's shares.
(g) The Adviser is authorized, with respect to any one or more Funds, to
delegate any or all of its rights, duties and obligations under this Contract or
any Supplement (subject in any event to all of the limitations, terms and
conditions applicable to the Adviser hereunder) to one or more sub-advisers, and
may enter into agreements with sub-advisers, and may replace any such
sub-advisers from time to time in its discretion, in accordance with applicable
requirements of the 1940 Act, the Investment Advisers Act of 1940, as amended
("Advisers Act"), and rules and regulations thereunder, as amended from time to
time or as interpreted from time to time by the staff of the Securities and
Exchange Commission ("SEC"), and in
2
accordance with any applicable exemptive orders or similar relief granted by the
SEC. The Adviser shall oversee the performance and services provided by any
sub-adviser engaged hereunder.
5. The Adviser shall give the Company the benefit of the Adviser's best
judgment and efforts in rendering services under this Contract. As an inducement
to the Adviser's undertaking to render these services, the Company agrees that
the Adviser shall not be liable under this Contract for any mistake in judgment
or in any other event whatsoever, provided that nothing in this Contract shall
be deemed to protect or purport to protect the Adviser against any liability to
the Company or its shareholders to which the Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Adviser's duties under this Contract or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder. The
Adviser makes no representation or warranty, express or implied, that any level
of performance or investment results will be achieved by any Fund or that any
Fund will perform comparably with any standard or index, including other clients
of the adviser, whether public or private.
6. In consideration of the services to be rendered by the Adviser under
this Contract, each Fund shall pay the Adviser a monthly fee on the first
business day of each month at the annual rates set forth in a Supplement to this
Contract with respect to each Fund, provided that no fee shall accrue or be
payable hereunder with respect to a Fund until the first day after the day (the
"Approval Date") on which this Contract has been approved by the vote of a
majority of the outstanding voting securities of that Fund (as defined in the
1940 Act). If the fees payable to the Adviser pursuant to this paragraph 6 begin
to accrue before the end of any month or if this Contract terminates before the
end of any month, the fees for the period from that date to the end of that
month or from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness of termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in the Prospectus for the
computation of net asset value. For purposes of this Contract, a "business day"
is any day the New York Stock Exchange is open for trading.
7. (a) This Contract and any Supplement shall become effective with respect
to a Fund on the date specified, provided it has been approved with respect to
that Fund (i) by the Company's Board of Directors, (ii) by the vote, cast in
person at a meeting called for that purpose, of a majority of the Directors who
are not parties to this Contract or "interested persons" (as defined in the 1940
Act) of any such party ("Independent Directors"), and (iii) by a majority of the
outstanding voting securities (as defined in the 1940 Act) of that Fund.
(b) This Contract shall thereafter continue in effect for a period of
more than two years from the date specified as to a Fund only so long as the
continuance is specifically approved at least annually (i) by the vote of a
majority of the outstanding voting securities of that Fund (as defined in the
1940 Act) or by a majority of the Company's Board of Directors and (ii) by the
vote, cast in person at a meeting called for that purpose, of a majority of the
Company's Independent Directors.
(c) This Contract and any Supplement may be modified by mutual agreement
of the parties, subject to the requirements of the 1940 Act, as modified by
rules and regulations thereunder, orders of the SEC, and interpretations thereof
by the SEC or its staff.
(d) This Contract and any Supplement thereto may be terminated with
respect to a Fund at any time, without the payment of any penalty, by a vote of
a majority of the outstanding voting securities of that Fund (as defined in the
1940 Act) or by a vote of a majority of the Company's entire Board of Directors
on 60 days written notice to the Adviser, or by the Adviser on 60 days written
notice to the Company. This Contract shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
8. Except to the extent necessary to perform the Adviser's obligations
under this Contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
3
9. The investment management services of the Adviser to the Company under
this Contract are not to be deemed exclusive as to the Adviser and the Adviser
will be free to render similar services to others.
10. This Contract shall be construed in accordance with the laws of the
State of Minnesota, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
11. In the event that the Board of Directors of the Company shall establish
one or more additional investment portfolios, it shall so notify the Adviser in
writing. If the Adviser wishes to render investment advisory services to such
portfolio, it shall so notify the Company in writing, whereupon such portfolio
shall become a Fund hereunder.
12. Name Reservation. The Company acknowledges and agrees that the Royal
Bank of Canada, parent company of the Adviser, has property rights relating to
the use of the term "RBC" and has permitted the use of such term by the Company
and its Funds. The Company agrees that: (i) it will use the term "RBC" only as a
component of the names of the Company and the Funds and for no other purposes;
(ii) it will not purport to grant to any third party any rights in such term;
(iii) at the request of the Adviser or the Royal Bank of Canada, the Company
will take such action as may be required to provide its consent to use of the
term by the Adviser or the Royal Bank of Canada, or any affiliate of the Adviser
or of the Royal Bank of Canada to whom the Adviser or the Royal Bank of Canada
shall have granted the right to such use; and (iv) the Royal Bank of Canada may
use or grant to others the right to use the term as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company. Upon termination of this Agreement
as to the Company or any Fund, the Company shall, upon request of the Adviser or
the Royal Bank of Canada, cease to use the term "RBC" as part of the name of the
Company and its Funds, or of any Fund as to which the Agreement is terminated,
as applicable. In the event of any such request by the Adviser or the Royal Bank
of Canada that use of the term "RBC" shall cease, the Company shall cause its
officers, Directors and stockholders to take any and all such actions which the
Adviser or the Royal Bank of Canada may request to effect such request and to
reconvey to the Royal Bank of Canada any and all rights to the term "RBC."
If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
<Table>
RBC FUNDS, INC.
By:
Name:
Title:
ACCEPTED:
VOYAGEUR ASSET Dated:
MANAGEMENT INC.
By:
Name:
Title:
</Table>
4
FORM OF NEW
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
RBC FUNDS, INC.
3435 STELZER ROAD
COLUMBUS, OHIO 43219
Voyageur Asset Management Inc.
90 South Seventh Street, Suite 4300
Minneapolis, Minnesota 55402-4115
RE: [NAME OF FUND]
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") and
Voyageur Asset Management Inc. (the "Adviser") as follows:
1. The Company is an open-end investment company organized as a Maryland
corporation and consists of one or more separate investment portfolios as have
been or may be established by the Directors of the Company from time to time. A
separate series of shares of common stock of the Company, which may include one
or more separate classes of shares, is offered to investors with respect to each
investment portfolio. [Name of Fund] (the "Fund") is a separate investment
portfolio of the Company.
2. The Company and the Adviser have entered into a Master Investment
Advisory Contract ("Master Advisory Contract") pursuant to which the Company has
employed the Adviser to provide the services specified in that Contract and the
Adviser has accepted such employment.
3. As provided in paragraph 1 of the Master Advisory Contract, the Company
hereby adopts the Master Advisory Contract with respect to the Fund and the
Adviser hereby acknowledges that the Master Advisory Contract shall pertain to
the Fund, the terms and conditions of such Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" or "Funds" as used in the Master Advisory Contract shall
for purposes of this Investment Advisory Contract Supplement (the "Supplement")
pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject
to further conditions as set forth therein, the Company shall with respect to
the Fund pay the Adviser, in arrears, a monthly fee on the first business day of
each month at the annual rate of % of the Fund's average daily net assets
(as determined on each business day at the time set forth in the Prospectus for
determining net asset value per share). [Note: For purposes of the foregoing
sentence, the annual rate payable by the Company to the Adviser with respect to
each Fund is as follows: 0.70% for the RBC Large Cap Equity Fund; 0.70% for the
RBC Mid Cap Equity Fund; 0.70% for the RBC Small Cap Equity Fund; 0.30% for the
RBC Government Income Fund; 0.60% for the RBC Quality Income Fund; and 0.35% for
the RBC North Carolina Tax Free Bond Fund. The fee rates payable hereunder are
the same as those payable under the Funds' Current Agreement.]
6. This Supplement and the Master Advisory Contract (together, the
"Contract"), having been approved as specified in paragraph 7(a) of the Master
Advisory Contract, became effective with respect to the Fund on ,
and shall continue thereafter in effect with respect to the Fund for a
period of more than two years from such date only so long as the continuance is
specifically approved at least annually (a) by the vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act of 1940 (the "1940 Act")) or by a majority of the Company's Board of
Directors and (b) by the vote, cast in person at a meeting called for that
purpose, of a majority of the Company's Directors who are not parties to this
Contract or "interested persons" (as defined in the 1940 Act ) of any such
party. This Contract may be terminated with respect to the Fund at any time,
without the payment of any penalty, by vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act) or by a vote of a
5
majority of the Company's entire Board of Directors on 60 days written notice to
the Adviser or by the Adviser on 60 days written notice to the Company. This
Contract shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
RBC FUNDS, INC.
By:
Name:
Title:
ACCEPTED:
VOYAGEUR ASSET MANAGEMENT INC.
Dated:
By:
Name:
6
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
FORM OF NEW
[MASTER INVESTMENT ADVISORY AGREEMENT]
MASTER INVESTMENT ADVISORY CONTRACT
[CENTURA]RBC FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio 43219
[Glenwood]Voyageur [Capital]Asset Management [Company]Inc.
[131 North Church]90 South Seventh Street, Suite 4300
[Rocky Mount, North Carolina 27802]
Minneapolis, Minnesota 55402-4115
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") and
[Glenwood]Voyageur [Capital]Asset Management [Company]Inc. (the "Adviser") as
follows:
1. The Company is an open-end investment company which currently has one or
more separate investment portfolios as may be established and designated by the
Directors from time to time (the "Funds"). This contract shall pertain to such
Funds as shall be designated in the supplements (each a "Supplement") to this
Master Investment Advisory Contract (the "Contract") as further agreed between
the Company and the Adviser. A separate class of shares of common stock in the
Company is offered to investors with respect to each Fund. The Company engages
in the business of investing and reinvesting the assets of each Fund in the
manner and in accordance with the investment objectives and restrictions with
respect to each Fund, as specified in the [currently effective Prospectus (the
"Prospectus") relating to the Funds included in the Company's]Registration
Statement of the Company, as amended from time to time (the "Registration
Statement"), filed by the Company under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933 (the "1933 Act"). Copies of the
[documents referred to in the preceding sentence]Registration Statement have
been furnished to the Adviser. Any amendments to [those documents]the
Registration Statement shall be furnished to the Adviser promptly. [Pursuant to
a Master Distribution Contract and the Supplements thereto (the "Distribution
Contract") between the Company and Centura Funds Distributor, Inc. (the
"Distributor") and a Master Administrative Services Contract and the Supplements
thereto between the Company and Furman Selz Incorporated (the "Sponsor"), the
Company has employed the Distributor and the Sponsor, respectively, to act as
principal underwriter for each Fund and to provide to the Company management and
other services. The Company has adopted a Master Distribution Plan and the
Supplements thereto (the "Plan") with respect to the Funds pursuant to Rule
12b-1 under the 1940 Act.]
2. The Company hereby appoints the Adviser to provide the investment
advisory services specified in this Contract and the Adviser hereby accepts such
appointment.
3. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this Contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract.
(b) The Company shall be responsible for all of its expenses and
liabilities, including, but not limited to, compensation of its Directors who
are not affiliated with the Adviser, the [Sponsor]Company's administrator,
distributor, or any of their affiliates; taxes and governmental fees; interest
charges; fees and expenses of the Company's independent [accountants]auditors
and legal counsel; trade association membership dues; fees and expenses of any
custodian (including maintenance of books and accounts and calculation of the
net asset valuation of shares of the Funds); fees and expenses of any
administrator, transfer agent, [registrar and]fund accountant or dividend
[disbursing]paying agent of the Company; expenses of any plan adopted with
respect to the Funds pursuant to Rule 12b-1 under the 1940 Act; shareholder
servicing expenses; expenses of issuing, redeeming, registering and qualifying
for sale shares of common stock in the Company; expenses of preparing and
printing share certificates, prospectuses and reports to shareholders, notices,
proxy statements and reports
7
to regulatory agencies; the cost of office supplies, including stationery;
travel expenses of all officers, Directors and employees; insurance premiums;
brokerage and other expenses of executing portfolio transactions; expenses of
shareholders' meetings; organizational expenses; and extraordinary expenses.
4. (a) The Adviser shall provide to the Company investment guidance and
policy direction in connection with the management of the portfolio of each
Fund, including oral and written research analysis, advice, statistical and
economic data and information and judgments, of both a macroeconomic and
microeconomic character.
The Adviser will determine the securities to be purchased or sold by each
Fund and will place orders with broker-dealers pursuant to its determinations.
The Adviser will determine what portion of each Fund's portfolio shall be
invested in securities described by the policies of each Fund and what portion,
if any, should be invested otherwise or held uninvested.
The Company will have the benefit of the investment analysis and research,
the review of current economic conditions and trends and the consideration of
long-range investment policy generally available to investment advisory
customers of the Adviser. In making investment decisions, hereunder, it is
understood that the Adviser will not use any inside information that may be in
its possession or in the possession of any of its affiliates, nor will the
Adviser seek to obtain any such information.
(b) The Adviser shall provide to the Company's officers [administrative
assistance in connection with the operation of]such information relating to the
Company and [each of] the Funds[, which shall include (i) compliance with all
reasonable requests of] and the [Company for information, including information
required in connection with the Company's filings with the Securities and
Exchange Commission and state securities commissions, and (ii) such
other]services [as the Adviser shall from time to time determine, upon
consultation with the Sponsor,] to be [necessary or useful to]provided by the
[administration of]Adviser hereunder as the Company [and the Funds]may
reasonably request.
(c) As manager of the assets of each Fund, the Adviser shall make
investments for the account of each Fund in accordance with the Adviser's best
judgment and within the investment objectives and restrictions set forth in the
[Prospectus]Registration Statement, the 1940 Act and the provisions of the
Internal Revenue Code relating to regulated investment companies, subject to
policy decisions adopted by the Company's Board of Directors. The Company will
promptly notify the Adviser in writing of any changes in a Fund's investment
objectives and restrictions.
(d) The Adviser shall furnish to the Company's Board of Directors
periodic reports on the investment performance of each Fund and on the
performance of its obligations under this Contract and shall supply such
additional reports and information as the Company's officers or Board of
Directors shall reasonably request.
(e) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of a Fund as well as other customers, the
Adviser, to the extent permitted by applicable law, may aggregate the securities
to be so sold or purchased in order to obtain the best execution or lower
brokerage commissions, if any. The Adviser may also on occasion purchase or sell
a particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to that Fund and to such other customers.
(f) The Adviser may cause a Fund to pay a broker which provides brokerage
and research-related products and services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker might
have charged. Such higher commissions may not be paid unless the Adviser
determines in good faith that the amount paid is reasonable in relation to the
services received in terms of the particular transaction or the Adviser's
overall responsibilities to each Fund and any other of the Adviser's clients. In
addition, subject to seeking the most favorable price and best execution
available, the Adviser may also consider sales of shares of the Company as a
factor in the selection of brokers and dealers. Subject to seeking the most
favorable price and execution, the Company's Board of Directors may cause the
Adviser to effect transactions in portfolio securities through broker-dealers in
a manner that will help generate resources
8
to: (i) pay the cost of certain expenses which the Company is required to pay or
for which the Company is required to arrange payment; or (ii) finance activities
that are primarily intended to result in the sale of the Company's shares.
(g) The Adviser is authorized, with respect to any one or more Funds, to
delegate any or all of its rights, duties and obligations under this Contract or
any Supplement (subject in any event to all of the limitations, terms and
conditions applicable to the Adviser hereunder) to one or more sub-advisers, and
may enter into agreements with sub-advisers, and may replace any such
sub-advisers from time to time in its discretion, in accordance with applicable
requirements of the 1940 Act, the Investment Advisers Act of 1940, as amended
("Advisers Act"), and rules and regulations thereunder, as amended from time to
time or as interpreted from time to time by the staff of the Securities and
Exchange Commission ("SEC"), and in accordance with any applicable exemptive
orders or similar relief granted by the SEC. The Adviser shall oversee the
performance and services provided by any sub-adviser engaged hereunder.
5. The Adviser shall give the Company the benefit of the Adviser's best
judgment and efforts in rendering services under this Contract. As an inducement
to the Adviser's undertaking to render these services, the Company agrees that
the Adviser shall not be liable under this Contract for any mistake in judgment
or in any other event whatsoever, provided that nothing in this Contract shall
be deemed to protect or purport to protect the Adviser against any liability to
the Company or its shareholders to which the Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Adviser's duties under this Contract or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder. The
Adviser makes no representation or warranty, express or implied, that any level
of performance or investment results will be achieved by any Fund or that any
Fund will perform comparably with any standard or index, including other clients
of the adviser, whether public or private.
6. In consideration of the services to be rendered by the Adviser under
this Contract, each Fund shall pay the Adviser a monthly fee on the first
business day of each month at the annual rates set forth in a Supplement to this
Contract with respect to each Fund, provided that no fee shall accrue or be
payable hereunder with respect to a Fund until the first day after the day (the
"Approval Date") on which this Contract has been approved by the vote of a
majority of the outstanding voting securities of that Fund (as defined in the
1940 Act). If the fees payable to the Adviser pursuant to this paragraph 6 begin
to accrue before the end of any month or if this Contract terminates before the
end of any month, the fees for the period from that date to the end of that
month or from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness of termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in the Prospectus for the
computation of net asset value. For purposes of this Contract, a "business day"
is any day the New York Stock Exchange is open for trading.
7. [If the aggregate expenses of every character incurred by, or allocated
to, each Fund in any fiscal year, other than interest, taxes, expenses under the
Plan, brokerage commissions and other portfolio transaction expenses, other
expenditures which are capitalized in accordance with generally accepted
accounting principles and any extraordinary expense (including, without
limiting, litigation and indemnification expense), but including the fees
payable under this Contract and the fees payable to the Sponsor under the Plan
("includable expenses"), shall exceed the expense limitations applicable to that
Fund imposed by state securities law or regulations thereunder, as these
limitations may be raised or lowered from time to time, the Adviser shall pay
that Fund an amount equal to a percentage of that excess as set forth in a
Supplement to this Contract with respect to each Fund (the "Adviser's
reimbursement") provided, however, that the Adviser shall not be required to pay
any amount in excess of fees received by the Adviser from the Company under this
Contract. With respect to portions of a fiscal year in which this Contract shall
be in effect, the foregoing limitations shall be prorated according to the
proportion which that portion of the fiscal year bears to the full fiscal year.
At the end of each month of the Company's fiscal year, the Sponsor will review
the includable expenses accrued during that fiscal year to the end of the period
and shall estimate the contemplated includable expenses for the balance of that
fiscal year. If, as a result of that review and estimation, it appears likely
that the includable expenses will exceed the limitations referred to in this
paragraph 7 for a fiscal year with respect to a Fund, the monthly fees relating
to that Fund payable to the Adviser under this Contract for]
9
[such month shall be reduced, subject to a later reimbursement to reflect actual
expenses, by an amount equal to that percentage set forth in a Supplement to
this Contract (which shall be equal to the Adviser's reimbursement) of a pro
rata portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includable expenses
for the fiscal year (less an amount equal to the aggregate of actual reductions
made pursuant to this provision with respect to prior months of the fiscal year)
are expected to exceed the limitations provided in this paragraph 7. For
purposes of the foregoing, the value of the net assets of each Fund shall be
computed in the manner specified in paragraph 6, and any payments required to be
made by the Adviser shall be made once a year promptly after the end of the
Company's fiscal year.](a) This Contract and any Supplement shall become
effective with respect to a Fund on the date specified, provided it has been
approved with respect to that Fund (i) by the Company's Board of Directors, (ii)
by the vote, cast in person at a meeting called for that purpose, of a majority
of the Directors who are not parties to this Contract or "interested persons"
(as defined in the 1940 Act) of any such party ("Independent Directors"), and
(iii) by a majority of the outstanding voting securities (as defined in the 1940
Act) of that Fund.
[8.] ([a]b) This Contract [and any Supplement shall become effective with
respect to each Fund on the date specified and] shall thereafter continue in
effect for a period of more than two years from [that]the date [with]specified
[respect]as to [that]a Fund only so long as the continuance is specifically
approved at least annually (i) by the vote of a majority of the outstanding
voting securities of that Fund (as defined in the 1940 Act) or by a majority of
the Company's Board of Directors and (ii) by the vote, cast in person at a
meeting called for that purpose, of a majority of the Company's Independent
Directors [who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party.].
(c) This Contract and any Supplement may be modified by mutual agreement
of the parties, subject to the requirements of the 1940 Act, as modified by
rules and regulations thereunder, orders of the SEC, and interpretations thereof
by the SEC or its staff.
[(b] (d) This Contract and any Supplement thereto may be terminated with
respect to a Fund at any time, without the payment of any penalty, by a vote of
a majority of the outstanding voting securities of that Fund (as defined in the
1940 Act) or by a vote of a majority of the Company's entire Board of Directors
on 60 days written notice to the Adviser, or by the Adviser on 60 days written
notice to the Company. This Contract shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
8.[9.] Except to the extent necessary to perform the Adviser's obligations
under this Contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
9.[10.] The investment management services of the Adviser to the Company
under this Contract are not to be deemed exclusive as to the Adviser and the
Adviser will be free to render similar services to others.
10.[11.] This Contract shall be construed in accordance with the laws of
the State of [North Carolina]Minnesota, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act.
11.[12.] In the event that the Board of Directors of the Company shall
establish one or more additional investment portfolios, it shall so notify the
Adviser in writing. If the Adviser wishes to render investment advisory services
to such portfolio, it shall so notify the Company in writing, whereupon such
portfolio shall become a Fund hereunder.
12.[13.] Name Reservation. The Company acknowledges and agrees that the
Royal Bank of Canada, parent company of the Adviser, has property rights
relating to the use of the term "[Centura]RBC" and has permitted the use of such
term by the Company and its Funds. The Company agrees that: (i) it will use the
term "[Centura]RBC" only as a component of the names of the Company and the
Funds and for no other purposes; (ii) it will not purport to grant to any third
party any rights in such term; (iii) at the request of the Adviser or the Royal
Bank of Canada, the Company will take such action as may be required to provide
its consent to use of the term by the Adviser or the Royal Bank of Canada, or
any affiliate of the Adviser or of the
10
Royal Bank of Canada to whom the Adviser or the Royal Bank of Canada shall have
granted the right to such use; and (iv) the [Adviser]Royal Bank of Canada may
use or grant to others the right to use the term as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company. Upon termination of this Agreement
as to the Company or any Fund, the Company shall, upon request of the Adviser or
the Royal Bank of Canada, cease to use the term "[Centura]RBC" as part of the
name of the Company and its Funds, or of any Fund as to which the Agreement is
terminated, as applicable. In the event of any such request by the Adviser or
the Royal Bank of Canada that use of the term "[Centura]RBC" shall cease, the
Company shall cause its officers, Directors and stockholders to take any and all
such actions which the Adviser or the Royal Bank of Canada may request to effect
such request and to reconvey to the [Adviser]Royal Bank of Canada any and all
rights to the term "[Centura]RBC."
If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
<Table>
[CENTURA]RBC FUNDS, INC.
By:
Name:
Title:
ACCEPTED:
[GLENWOOD]VOYAGEUR [CAPITAL]ASSET Dated:
MANAGEMENT [COMPANY] INC.
By:
Name:
Title:
</Table>
11
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets "[" and "]" in the electronic format.
FORM OF NEW
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
[CENTURA]RBC FUNDS, INC.
3435 STELZER ROAD
COLUMBUS, OHIO 43219
[Glenwood]Voyageur [Capital]Asset Management [Company]Inc.
[131 North Church]90 South Seventh Street, Suite 4300
[Rocky Mount, NC 27802]
Minneapolis, Minnesota 55402-4115
RE: (NAME OF FUND)
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") and
[Glenwood]Voyageur [Capital]Asset Management [Company]Inc. (the "Adviser") as
follows:
1. The Company is an open-end investment company organized as a Maryland
corporation and consists of one or more separate investment portfolios as have
been or may be established by the Directors of the Company from time to time. A
separate [class]series of shares of common stock of the Company, which may
include one or more separate classes of shares, is offered to investors with
respect to each investment portfolio. [ ](Name of Fund)(the "Fund") is
a separate investment portfolio of the Company.
2. The Company and the Adviser have entered into a Master Investment
Advisory Contract ("Master Advisory Contract") pursuant to which the Company has
employed the Adviser to provide [investment advisory and other]the services
specified in that Contract and the Adviser has accepted such employment.
3. As provided in paragraph 1 of the Master Advisory Contract, the Company
hereby adopts the Master Advisory Contract with respect to the Fund and the
Adviser hereby acknowledges that the Master Advisory Contract shall pertain to
the Fund, the terms and conditions of such Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" or "Funds" as used in the Master Advisory Contract shall
for purposes of this Investment Advisory Contract Supplement (the "Supplement")
pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject
to further conditions as set forth therein, the Company shall with respect to
the Fund pay the Adviser, in arrears, a monthly fee on the first business day of
each month at the annual rate of % of the Fund's average daily net assets
(as determined on each business day at the time set forth in the Prospectus for
determining net asset value per share). (Note: For purposes of the foregoing
sentence, the annual rate payable by the Company to the Adviser with respect to
each Fund is as follows: 0.70% for the RBC Large Cap Equity Fund; 0.70% for the
RBC Mid Cap Equity Fund; 0.70% for the RBC Small Cap Equity Fund; 0.30% for the
RBC Government Income Fund; 0.60% for the RBC Quality Income Fund; and 0.35% for
the RBC North Carolina Tax Free Bond Fund. The fee rates payable hereunder are
the same as those payable under the Funds' Current Agreement.)
[6. As provided and defined in paragraph 7 of the Master Advisory Contract,
the "Adviser's reimbursement" shall for purposes of this Supplement with respect
to the Fund equal .]
6.[7.] This Supplement and the Master Advisory Contract (together, the
"Contract"), having been approved as specified in paragraph 7(a) of the Master
Advisory Contract, became effective with respect to the Fund on , and
shall continue thereafter in effect with respect to the Fund for a period of
more than two years from such date only so long as the continuance is
specifically approved at least annually (a) by the vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act of 1940 (the "1940 Act")) or by a majority of the Company's Board of
Directors and (b) by the vote, cast in person at a meeting called for that
purpose, of a majority of the Company's Directors who are not parties to
12
this Contract or "interested persons" (as defined in the 1940 Act ) of any such
party. This Contract may be terminated with respect to the Fund at any time,
without the payment of any penalty, by vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days written notice to
the Adviser [and]or by the Adviser on 60 days written notice to the Company.
This Contract shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
[CENTURA]RBC FUNDS, INC.
By:
Name:
Title:
ACCEPTED:
[GLENWOOD]VOYAGEUR [CAPITAL]ASSET MANAGEMENT [COMPANY]INC.
Dated:
By:
Name:
[Title: ]
13
APPENDIX 1
DATES RELATING TO THE CURRENT AGREEMENT
<Table>
<Caption>
DATE CURRENT DATE CURRENT DATE CURRENT
AGREEMENT AGREEMENT LAST DATE TO WHICH AGREEMENT WAS LAST
DATE OF BECAME APPROVED BY BOARD CURRENT AGREEMENT APPROVED BY
COMMENCEMENT OF EFFECTIVE WITH WITH RESPECT TO WAS LAST CONTINUED SHAREHOLDERS OR
FUND OPERATIONS OF FUND* RESPECT TO FUND FUND FOR FUND SOLE SHAREHOLDER+
RBC LARGE CAP EQUITY September 30, 1996 July 24, 1996 February 20, 2002 February 20, 2003 July 24, 1996
FUND
RBC MID CAP EQUITY May 31, 1994 April 26, 1994 February 20, 2002 February 20, 2003 April 26, 1994
FUND
RBC SMALL CAP EQUITY May 1, 1997 January 29, 1997 February 20, 2002 February 20, 2003 January 29, 1997
FUND
RBC GOVERNMENT INCOME May 31, 1994 April 26, 1994 February 20, 2002 February 20, 2003 April 26, 1994
FUND
RBC QUALITY INCOME June 1, 2000 January 27, 1999 February 20, 2002 February 20, 2003 January 27, 1999
FUND
RBC NORTH CAROLINA May 31, 1994 April 26, 1994 February 20, 2002 February 20, 2003 April 26, 1994
TAX-FREE BOND FUND
</Table>
* Represents the date on which each series began operations as an investment
company. The date of commencement of operations represents the conversion date
for some series: the Large Cap Equity and North Carolina Tax-Free Bond Funds
were previously operated as a common trust fund, the Mid Cap Equity and
Government Income Funds were previously bank collective trust funds, and the
Small Cap Fund was previously a bank common trust fund.
+ The Agreement was last submitted to shareholder vote for purposes of its
initial approval by shareholders of the Funds.
A-1
APPENDIX 2
FEE RATES PAYABLE UNDER THE CURRENT AGREEMENT AND THE NEW AGREEMENT
<Table>
<Caption>
FEE RATES PAYABLE TO THE FUND'S ADVISER
FUND UNDER THE CURRENT AND NEW AGREEMENTS
RBC LARGE CAP EQUITY FUND 0.70%
RBC MID CAP EQUITY FUND 0.70%
RBC SMALL CAP EQUITY FUND 0.70%
RBC GOVERNMENT INCOME FUND 0.30%
RBC QUALITY INCOME FUND 0.60%
RBC NORTH CAROLINA TAX-FREE BOND FUND 0.35%
</Table>
A-2
APPENDIX 3
DIRECTORS AND PRINCIPAL EXECUTIVE OF VOYAGEUR AND GLENWOOD
<Table>
<Caption>
NAME POSITION ADDRESS PRINCIPAL OCCUPATION
RBC Centura Bank
P.O. Box 1220
Shauneen Bruder Director of Glenwood Rocky Mount, NC 27802 Banking
RBC Centura Bank
P.O. Box 1220
Scott Custer Director of Glenwood Rocky Mount, NC 27802 Banking
RBC Centura Bank
P.O. Box 1220
Kel Landis Director of Glenwood Rocky Mount, NC 27802 Banking
RBC Centura Bank
Chairman and P.O. Box 1220
Mike Allen President of Glenwood Rocky Mount, NC 27802 Banking
Voyageur Asset
Management Inc. Senior Vice President
60 South Sixth Street and Controller of RBC
Daniel J. Collins Director of Voyageur Minneapolis, MN 55402 Dain Rauscher Corp.
Executive Vice
Voyageur Asset President and Chief
Management Inc. Financial Officer of
60 South Sixth Street RBC Dain Rauscher
Lisa A. Ferris Director of Voyageur Minneapolis, MN 55402 Corp.
Voyageur Asset
Management Inc.
Director and Chief 90 South Seventh
Executive Officer of Street Chief Executive
John G. Taft Voyageur Minneapolis, MN 55402 Officer of Voyageur
</Table>
A-3
APPENDIX 4
FEES PAID TO GLENWOOD
UNDER THE CURRENT AGREEMENT
<Table>
<Caption>
FEES PAID TO GLENWOOD UNDER THE CURRENT
FUND AGREEMENT DURING FISCAL YEAR ENDED APRIL 30, 2002
RBC LARGE CAP EQUITY FUND $991,770
RBC MID CAP EQUITY FUND $1,154,339
RBC SMALL CAP EQUITY FUND $213,500
RBC GOVERNMENT INCOME FUND $120,717
RBC QUALITY INCOME FUND $487,489
RBC NORTH CAROLINA TAX-FREE BOND FUND $105,938
</Table>
A-4
APPENDIX 5
FEES PAID BY THE FUNDS TO AFFILIATES OF GLENWOOD DURING THE FISCAL YEAR ENDED
APRIL 30, 2002.
<Table>
<Caption>
12b-1 FEES PAID TO PERCENTAGE OF FUND'S
CENTURA SECURITIES AGGREGATE AGGREGATE COMMISSIONS
FOR SHAREHOLDER COMMISSIONS PAID TO THAT WERE PAID TO
FUND SERVICES CENTURA SECURITIES CENTURA SECURITIES
RBC LARGE CAP EQUITY FUND $ 5,244 $2,997 63%
RBC MID CAP EQUITY FUND $17,433 $8,384 28%
RBC SMALL CAP EQUITY FUND $ 4,057 $2,215 70%
RBC GOVERNMENT INCOME FUND $ 1,287 $ 186 5%
RBC QUALITY INCOME FUND $ 167 $ 30 1%
RBC NORTH CAROLINA TAX-FREE BOND FUND $ 1,148 $ 12 1%
</Table>
A-5
APPENDIX 6
[TO BE PROVIDED]
FUND SHARES OUTSTANDING ON THE RECORD DATE
<Table>
<Caption>
FUND CLASS SHARES OUTSTANDING ON RECORD DATE
RBC LARGE CAP EQUITY FUND Class A
RBC LARGE CAP EQUITY FUND Class B
RBC LARGE CAP EQUITY FUND Class I
RBC MID CAP EQUITY FUND Class A
RBC MID CAP EQUITY FUND Class B
RBC MID CAP EQUITY FUND Class I
RBC SMALL CAP EQUITY FUND Class A
RBC SMALL CAP EQUITY FUND Class B
RBC SMALL CAP EQUITY FUND Class I
RBC GOVERNMENT INCOME FUND Class A
RBC GOVERNMENT INCOME FUND Class B
RBC GOVERNMENT INCOME FUND Class I
RBC QUALITY INCOME FUND Class A
RBC QUALITY INCOME FUND Class B
RBC QUALITY INCOME FUND Class I
RBC NORTH CAROLINA TAX-FREE BOND Class A
FUND
RBC NORTH CAROLINA TAX-FREE BOND Class B
FUND
RBC NORTH CAROLINA TAX-FREE BOND Class I
FUND
</Table>
A-6
APPENDIX 7
[TO BE PROVIDED]
5% BENEFICIAL OWNERS OF FUND SHARES AS OF THE RECORD DATE
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF CLASS
TITLE OF CLASS OF SHARES BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED
</Table>
A-7
FORM OF PROXY CARD
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF [FUND NAME] (THE "FUND")
A SERIES OF RBC FUNDS, INC. (THE "COMPANY")
ANNUAL MEETING OF SHAREHOLDERS
December 18, 2002 - 10:00 A.M. EASTERN TIME
The undersigned hereby revokes all previous proxies for his or her shares and
appoints Lara Bocskey and Curtis Barnes and each of them, with the power of
substitution, as Proxies, and hereby authorizes them to vote as designated
below, as effectively as the undersigned could do if personally present, all the
shares of the Fund held of record by the undersigned on November 13, 2002, at
the Annual Meeting of Shareholders, or any adjournment(s) thereof, to be held at
10:00 A.M. Eastern Time on December 18, 2002 at 3435 Stelzer Road, Columbus,
Ohio 43219.
1. Approval of a new master investment advisory agreement,
including an investment advisory contract supplement with
respect to the Fund, between the Company, on behalf of the
Fund, and Voyageur Asset Management Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Approval of the election of Leslie H. Garner, Jr., James H.
Speed, Jr., R. William Shauman, Lucy Hancock Bode and J.
Franklin Martin as Directors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the selection of PricewaterhouseCoopers LLP as
the independent accountants for the Fund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on Other Side)
(Continued from Other Side)
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Directors, and when properly
executed, will be voted as specified. If no specification is made, the
undersigned's vote, as a shareholder of the Fund, will be cast in favor of each
proposal. If any other matters properly come before the meeting of which the
Directors were not aware within a reasonable time before the solicitation, the
undersigned hereby authorizes proxy holders to vote in their discretion on such
matters. The undersigned acknowledges receipt of the Notice of Meeting and Proxy
Statement dated [____________].
Please sign exactly as your name or names appear below. When shares are held by
joint tenants, both should sign. If signing as attorney, executor, trustee or in
any other representative capacity, or as a corporate officer, please give full
title. Please date the proxy.
----------------------------
(Signature)
Dated:
-----------------------------