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SCHEDULE 14A
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE DLB FUND GROUP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
5) Total fee paid:
_________________________________________________________________________
[_] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount previously paid:
_________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
3) Filing Party:
_________________________________________________________________________
4) Date Filed:
_________________________________________________________________________
[DLB Fund Group Letterhead]
To the Shareholders of the DLB Stewart Ivory International Fund and the DLB
Stewart Ivory Emerging Markets Fund:
The attached proxy statement discusses a proposal to approve new investment
sub-advisory agreements between David L. Babson & Company Inc. and First State
Investments International Limited for the DLB Stewart Ivory International Fund
and the DLB Stewart Ivory Emerging Markets Fund (each, a "Fund" and together,
the "Funds"). Information regarding the proposal to approve the new investment
sub-advisory agreements for each Fund is included in the attached Proxy
Statement, which we encourage you to read carefully.
Although we would like each shareholder to attend the Special Meeting described
in the attached Proxy Statement, we realize this is not possible. Whether or not
you plan to attend, however, we need your vote, and urge you to complete the
enclosed proxy and return it to us promptly. We look forward to receiving your
vote in favor of the proposal to approve the new investment sub-advisory
agreements for the Funds.
Thank you for your support of the Funds.
Sincerely,
/s/ Frank L. Tarantino
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Frank L. Tarantino
President
THE DLB FUND GROUP
ONE MEMORIAL DRIVE, CAMBRIDGE, MA 02142
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of:
DLB Stewart Ivory International Fund
DLB Stewart Ivory Emerging Markets Fund
PLEASE TAKE NOTICE THAT A SPECIAL MEETING OF SHAREHOLDERS OF THE DLB
STEWART IVORY INTERNATIONAL FUND AND THE DLB STEWART IVORY EMERGING MARKETS FUND
(EACH, A "FUND" AND TOGETHER, THE "FUNDS"), EACH A SERIES OF THE DLB FUND GROUP
(THE "TRUST"), HAS BEEN CALLED TO BE HELD AT THE PRINCIPAL OFFICES OF THE TRUST,
LOCATED AT ONE MEMORIAL DRIVE, 10TH FLOOR, CAMBRIDGE, MASSACHUSETTS 02142, ON
FRIDAY, FEBRUARY 21, 2003 AT 9:30 A.M. EASTERN TIME, FOR THE FOLLOWING PURPOSES:
1) to approve the Funds' new investment sub-advisory agreements with
First State Investments International Limited; and
2) to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Each shareholder of record of the shares of the Funds at the close of
business on December 30, 2002 is entitled to receive notice of and to vote at
the meeting or any adjournment thereof, and is invited to attend the Special
Meeting in person.
If you do not expect to attend, you are requested to complete, date and
sign the enclosed proxy instruction form(s) and return it promptly in the
envelope provided for that purpose. The enclosed proxy is being solicited on
behalf of the Board of Trustees. You may revoke your proxy at any time prior to
its use. Among other methods, by appearing at the meeting and requesting
revocation prior to the voting, you may revoke the proxy and vote in person.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY
INSTRUCTION FORM, DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By order of the Board of Trustees
/s/ John E. Deitelbaum
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John E. Deitelbaum
Clerk
Cambridge, Massachusetts
January 31, 2003
THE DLB FUND GROUP
ONE MEMORIAL DRIVE
CAMBRIDGE, MA 02142-1300
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
OF
DLB STEWART IVORY INTERNATIONAL FUND
DLB STEWART IVORY EMERGING MARKETS FUND
TO BE HELD FEBRUARY 21, 2003
9:30 A.M. EASTERN TIME
This proxy statement is being furnished to the shareholders of the DLB
Stewart Ivory International Fund (the "International Fund") and the DLB Stewart
Ivory Emerging Markets Fund (the "Emerging Markets Fund"), each a series of The
DLB Fund Group (the "Trust"), in connection with the solicitation of proxies by
the Trust's Board of Trustees to be used at a Special Meeting of Shareholders to
be held on February 21, 2003 at 9:30 a.m. Eastern Time, at the principal
executive offices of the Trust located at One Memorial Drive, Cambridge,
Massachusetts 02142. This proxy statement and the accompanying letter to
shareholders from the President of the Trust, Notice of the Special Meeting of
Shareholders and proxy instruction forms are being mailed on or about January
31, 2003, to shareholders of record on the record date (December 30, 2002). The
costs of the Special Meeting, including the solicitation of proxies, will be
borne by S.I. International Assets, the current sub-adviser to the International
Fund and the Emerging Markets Fund. None of the expenses relating to the Special
Meeting will be borne by the Trust.
The purpose of the Special Meeting is to ask the shareholders of each
of the International Fund and the Emerging Markets Fund (collectively, the
"Funds") to approve a new investment sub-advisory agreement with respect to each
Fund between David L. Babson & Company Inc. ("Babson"), the Funds' investment
manager, and First State Investments International Limited ("First State") as
the Funds' investment sub-adviser (collectively, the "New Sub-Advisory
Agreements").
The enclosed proxy, if properly executed and returned, will be voted
(or counted as an abstention) in accordance with the choices specified therein
and will be included in determining whether there is a quorum to conduct the
Special Meeting. In the event a quorum is not present at the Special Meeting or
in the event that a quorum is present but sufficient votes to approve the
proposed item are not received, the persons named as proxies may propose one or
more adjournments of the Special Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Special Meeting in person or by proxy. The
persons named as proxies will vote those proxies that they are entitled to vote
FOR any such proposal, in favor of such an adjournment, and will vote those
proxies required to be voted AGAINST any such proposal, against any such
adjournment. If a shareholder executes and returns a proxy but fails to indicate
how the votes should be cast, the proxy will be voted in favor of approval of
the relevant New Sub-Advisory Agreement between Babson and First State. The
proxy may be revoked at any time prior to voting by (1) writing to the Clerk of
the Trust at One Memorial Drive, Cambridge, Massachusetts 02142; (2) attending
the Special Meeting and voting in person; or (3) signing and returning a new
proxy (if returned and received in time to be voted).
VOTE REQUIRED: As required by the Investment Company Act of 1940 (the
"1940 Act"), each Fund's shareholders vote separately to approve the New
Sub-Advisory Agreement that relates to that Fund. A New Sub-Advisory Agreement
with respect to a Fund cannot be implemented unless approved at
the Special Meeting by a majority of the outstanding voting securities of each
Fund. Such a majority means the affirmative vote of the holders of (a) 67% or
more of the shares of the Fund present in person or by proxy at the Special
Meeting, if the holders of more than 50% of the outstanding shares are so
present, or (b) more than 50% of the outstanding shares of that Fund, whichever
is less.
Votes cast by proxy or in person at the Special Meeting will be counted
by persons appointed by the Trust to act as election inspectors for the Special
Meeting. The election inspectors will count the total number of votes cast "for"
approval of the proposal for purposes of determining whether sufficient
affirmative votes have been cast. With respect to the approval of the New
Sub-Advisory Agreements, an abstention from voting has the same effect as a vote
cast "against" on the outcome of the vote or Proposal.
SHARES OUTSTANDING ENTITLED TO VOTE: To be entitled to notice of and to
vote at the Special Meeting, a shareholder must have owned shares of the
International Fund and/or the Emerging Markets Fund as of the close of business
on DECEMBER 30, 2002, the record date for voting at the Special Meeting. As of
December 30, 2002, there were 6,218,884.075 votes eligible to be cast at this
Special Meeting, which are attributable to each Fund as follows:
International Fund: 3,167,644.279
Emerging Markets Fund: 3,051,239.796
On the record date, the officers and Trustees of the Trust as a group
beneficially owned less than 1% of the outstanding shares of either Fund. As of
the Record Date, the following entities were known to own of record 5% or more
of the outstanding shares of the specified Fund:
EMERGING MARKETS FUND
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SHARES PERCENTAGE
SHAREHOLDER NAME AND ADDRESS OWNED OWNED
Massachusetts Mutual Life 2,993,326.791 98.10%
Insurance Company
1295 State Street
Springfield, MA 01111
INTERNATIONAL FUND
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SHARES PERCENTAGE
SHAREHOLDER NAME AND ADDRESS OWNED OWNED
Massachusetts Mutual Life 885,630.248 27.96%
Insurance Company*
1295 State Street
Springfield, MA 01111
Plymouth County Retirement Plan** 825,666.650 26.07%
South Russell Street
Plymouth, MA 02380
Pittsfield Retirement System 548,068.539 17.30%
City Hall
70 Allen Street
Pittsfield, MA 01201
JP Morgan Chase Trust 448,019.696 14.14%
Bronx-Lebanon Hospital Center Master
4 New York Plaza
New York, NY 10004
Greenfield Contributory Retirement Systems 312,638.733 9.87%
Town Hall
14 Court Square
Greenfield, MA 01301
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* Massachusetts Mutual Life Insurance Company ("MassMutual") offers the
International Fund as an underlying investment option for 401(k) plans that it
administers. The percentage of the International Fund owned by MassMutual varies
daily based on the investment activities of the participants in these plans, and
may fall above or below 25% on any given day.
** On December 21, 2001, Mac & Co. (shares beneficially owned by Virginia Power
Collectively Bargained VEBA), liquidated its entire position of the
International Fund (30% ownership at October 31, 2001). This redemption
increased the percentage of voting securities held by Plymouth County Retirement
Plan from 13% ownership at October 31, 2001 to 26.07% at December 30, 2002. This
percentage increase was not directly caused by the purchase of any additional
shares by Plymouth County Retirement Plan.
Shares may be voted in person or by proxy. Each whole share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional share shall be entitled to a proportionate fractional vote. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them.
REPORTS TO SHAREHOLDERS: A copy of each Fund's Annual Report for the
one-year period ended October 31, 2002 has been previously sent to the
respective shareholders of the International Fund and the Emerging Markets Fund.
COPIES OF EACH FUND'S ANNUAL REPORT AND MOST RECENT SEMIANNUAL REPORT PRECEDING
THE ANNUAL REPORT ARE AVAILABLE WITHOUT CHARGE UPON REQUEST AND MAY BE OBTAINED
BY CALLING (1-877-766-0014) OR BY WRITING TO THE DLB FUND GROUP COORDINATOR, ONE
MEMORIAL DRIVE, CAMBRIDGE, MASSACHUSETTS 02142.
THE PROPOSAL
TO APPROVE THE FUNDS' NEW INVESTMENT SUB-ADVISORY
AGREEMENTS WITH FIRST STATE
The Trustees of the Trust are proposing that shareholders of each Fund
approve the New Sub-Advisory Agreements between Babson and First State, which
would become effective immediately following shareholder approval.
BACKGROUND: Each Fund has entered into an investment management
agreement with Babson, the principal business address of which is One Memorial
Drive, Cambridge, Massachusetts 02142. Babson, in turn, hired Babson Stewart
Ivory International ("BSII") to serve as the investment sub-adviser for the
Funds. BSII is a registered investment adviser with over $727 million in assets
under management as of December 31, 2002, and a Massachusetts general
partnership whose principal place of business is One Memorial Drive, Cambridge,
Massachusetts 02142. Babson and Stewart Ivory & Company (International) Limited
("Stewart Ivory International") are the two general partners of BSII. On
September 20, 2002, BSII changed its name to S.I. International Assets.
Contemporaneously, Babson and Stewart Ivory International, a wholly-owned
subsidiary of First State Investments (UK Holdings) Limited, entered into an
agreement providing for the orderly winding-up of BSII, with the anticipation
that existing clients of BSII would enter into new investment advisory
agreements with Stewart Ivory International, (now known as First State) with
respect to each Fund. First State is the entity of the S.I. International Assets
partnership that provides portfolio management services to the Funds.
Babson is an indirect, majority owned subsidiary of MassMutual, a
mutual life insurance company whose principal executive offices are at 1295
State Street, Springfield, Massachusetts 01111. Specifically, Babson is a wholly
owned subsidiary of DLB Acquisition Corp., a holding company that is a majority
owned subsidiary of MassMutual Holding Company (98.3% as of December 31, 2002),
a holding company and a wholly owned subsidiary of MassMutual. The principal
executive offices of DLB Acquisition Corp. and MassMutual Holding Company are at
1295 State Street, Springfield, MA 01111. As of December 30, 2002, MassMutual
owned more than 25% of the outstanding shares of each Fund and therefore is
deemed to "control" each such Fund within the meaning of the 1940 Act. Kevin M.
McClintock, a Trustee of the Trust, is also a Managing Director of Babson and
BSII.
First State, whose principal place of business is 23 St. Andrew Square,
Edinburgh, Scotland EH2 1BB, is an indirect subsidiary of The Commonwealth Bank
of Australia ("Commonwealth"), whose principal executive offices are at 48
Martin Place, Sydney, Australia. Specifically, First State is a wholly-owned
subsidiary of First State Investment Management (UK) Limited, itself a
wholly-owned subsidiary of First State Investments (UK Holdings) Limited, the
principal place of business of each being 23 St. Andrew Square, Edinburgh,
Scotland EH2 1BB. First State Investments (UK Holdings) Limited is itself a
wholly-owned subsidiary of Colonial First State Group Limited. Colonial First
State Group Limited, whose principal executive offices are at 48 Martin Place,
Sydney, Australia, is, in turn, a wholly-owned subsidiary of Colonial Mutual
Life Assurance Society Limited, whose principal executive offices are at 48
Martin Place, Sydney, Australia, and which, in turn, is a wholly-owned
subsidiary of Colonial Holding Company (No.2) Pty Limited. Colonial Holding
Company (No. 2) Pty Limited is a holding company and wholly-owned subsidiary of
Colonial Holding Company Pty Limited, a wholly-owned subsidiary of Colonial
Limited, itself a wholly owned subsidiary of Commonwealth. The principal offices
of Colonial
Holding Company (No.2) Pty Limited, Colonial Holding Company Pty Limited and
Colonial Limited are at 48 Martin Place, Sydney, Australia.
The name and principal occupation of the principal executive officer and each
director of First State are:
NAME PRINCIPAL OCCUPATION
- ---- --------------------
Robert W. Adams Chief Executive Officer and Director
Gregory R. Cooper Chief Operating Officer and Director
Stuart W. Paul Chief Investment Officer and Director
The address for Messrs. Adams, Cooper and Paul is 23 St. Andrew Square,
Edinburgh, Scotland EH2 1BB.
In addition to serving as the investment sub-adviser to the Funds, BSII
currently, and it is anticipated that First State will ultimately, serves as the
investment sub-adviser to the Babson-Stewart Ivory International Fund, a
registered investment company that has investment objectives similar to those of
the International Fund. Information regarding the investment sub-advisory fees
payable to BSII for serving as the investment sub-adviser of the Babson-Stewart
Ivory International Fund, as well as the approximate net assets of that fund as
of its most recent calendar year end, is set forth below.
Approximate Total Assets Investment Sub-Advisory
Name of Fund as of December 30, 2002 Fees
- ------------ ----------------------- ----
Babson-Stewart Ivory $12,750,400 0.475% of the average
International Fund daily total net assets
With respect to the above named fund, BSII has not waived, reduced, or otherwise
agreed to reduce its compensation under any applicable contract.
CURRENT SUB-ADVISORY AGREEMENTS: The current investment sub-advisory
agreements (the "Current Investment Sub-Advisory Agreements") between Babson and
BSII with respect to the International Fund and the Emerging Markets Fund were
most recently approved by the Trustees of the Trust, including the independent
Trustees, in connection with the annual contract review at the Trustees' May 10,
2002 Board Meeting, and were most recently submitted to shareholders of the
International Fund and Emerging Markets Fund for approval on September 15, 2000,
the date they became effective, following a change in control of BSII that
occurred following a corporate acquisition in which Stewart Ivory International
became an indirect subsidiary of The Commonwealth Bank of Australia. The Current
Investment Sub-Advisory Agreements will terminate upon shareholder approval of
the New Sub-Advisory Agreements, or the dissolution of BSII. First State has
informed the Board of Trustees of the Trust that First State does not anticipate
that the dissolution of BSII (now named S.I. International Assets) will have any
adverse effect on the performance by First State of its obligations as
sub-adviser to the Funds.
NEW SUB-ADVISORY AGREEMENTS: At a Meeting of the Board of Trustees of
the Trust held December 13, 2002, the Board of Trustees, including a majority of
the independent Trustees, approved the form, terms, and provisions of the New
Investment Sub-Advisory Agreements by and between Babson and First State
relating to the International Fund and the Emerging Markets Fund, to become
effective immediately following shareholder approval.
The terms of the New Sub-Advisory Agreements, which are more fully
described below, are substantially similar to those of the Current Sub-Advisory
Agreements. There is no change in the fees payable by either Babson or the
Funds. If approved by Shareholders, the New Sub-Advisory Agreements will become
effective on February 21, 2003 and will expire on February 21, 2005. The New
Sub-Advisory Agreement for each Fund will continue in effect from year to year
thereafter if such continuance is approved by the Board or by a majority of the
outstanding voting securities (as previously defined) of the Fund, and, in
either event, by the vote cast in person of a majority of the independent
Trustees. In the event that Shareholders of a Fund do not approve the New
Sub-Advisory Agreement, the Current Sub-Advisory Agreement will remain in effect
until BSII is dissolved or the Board takes such action, if any, as it deems to
be in the best interests of the Fund and its shareholders.
In evaluating the New Sub-Advisory Agreements, the Board requested and
reviewed materials furnished by First State, including First State's report and
financial statements for the year ended June 30, 2002, personal dealing policy,
best execution policy, remuneration policy, biographies, allocation and
aggregation procedures, conflicts of interest policy, and Form ADV containing
information regarding First State and its personnel and advisory operations. The
Board also reviewed and discussed the terms and provisions of the New
Sub-Advisory Agreements as they compared to the Current Sub-Advisory Agreements,
as well as material submitted by First State concerning the anticipated effect
that the transition would have on its provision of investment management
services to the Funds. The Board was also informed that the existing portfolio
managers for the Funds would continue managing the Funds from its UK offices
after the consummation of the transition.
The Board considered: (1) the quality of the operations and services
which have been provided to the Funds by BSII and that are expected to continue
to be provided by First State after the transition, with no change in fee rates;
(2) the overall experience and reputation of First State in providing such
services to the Funds and other institutional investors; (3) the financial
strength of First State; and (4) the benefits of continuity in the services to
be provided under the New Sub-Advisory Agreements, noting in particular the fact
that First State does not intend to change the portfolio managers and supporting
investment teams currently managing each Fund. The Board did not give greater
weight to any one factor than to the other factors they considered. Based upon
its review, the Board concluded that the terms of the New Sub-Advisory
Agreements are reasonable, fair and in the best interests of the Funds and their
respective shareholders, and that the fees provided therein are fair and
reasonable. Accordingly, the Board concluded that retaining First State as
sub-adviser to the Funds is desirable and in the best interests of the Funds and
their respective shareholders. Based on these and other considerations, the
Board unanimously recommended approval of the New Sub-Advisory Agreements and
their submission to the shareholders for their approval. The New Sub-Advisory
Agreements will become effective immediately upon shareholder approval.
DESCRIPTION OF THE NEW SUB-ADVISORY AGREEMENTS. Each of the New
Sub-Advisory Agreements provides that First State will, at its expense and
subject to the control of the Trustees of the Trust, furnish continuously an
investment program for the respective Funds, make investment decisions on behalf
of the Funds, and place all orders for purchase and sale of portfolio
securities; and (2) in the performance of its duties, comply with the provisions
of the Agreement and Declaration of Trust (the "Declaration of Trust") and
By-laws of the Trust and the Fund's stated investment objective, policies and
restrictions. The New Sub-Advisory Agreements also provide that First State may
pay higher brokerage commissions to brokers providing brokerage and research
services to First State than it might pay to other brokers.
The New Sub-Advisory Agreements further provide that, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties thereunder on the part of First State, First State shall
not be subject to liability to the Trust, any shareholder or the Manager for any
act or omission in the course of, or connected with, rendering services
thereunder. The New Sub-Advisory
Agreements may be terminated without penalty by the Trust (by a vote of the
majority of the outstanding shares or vote of the Board of Trustees), at any
time, by written notice to the Sub-Adviser or Babson, or by either party to the
Agreement by not more that 60 days' written notice to the other party. Each of
the New Sub-Advisory Agreements automatically terminates in the event of its
assignment or in the event the investment management agreement terminates.
There will be no change in investment sub-advisory fees under the New
Sub-Advisory Agreements. Babson will continue to pay for the sub-advisory
services of First State at the same rates as the Current Sub-Advisory
Agreements. The fee is computed and paid monthly, based on the individual Fund's
average daily net asset value. Babson will continue to pay First State a fee as
compensation for First State's advisory services for each of the Funds at the
following annual rates:
FUND ANNUAL FEE
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International Fund 0.375%
Emerging Markets Fund 0.875%
This fee is paid within five (5) business days after the end of each
month. The investment sub-advisory fees paid by Babson to BSII with respect to
the International Fund and the Emerging Markets Fund for the fiscal year ended
October 31, 2002, were $152,067 and $335,298, respectively.
The material differences between the Current Sub-Advisory Agreements
and the New Sub-Advisory Agreements, other than the change in the Sub-Advisor,
are as follows:
o The name of each Fund will no longer include reference to
"Stewart Ivory." The Funds will be named DLB International Fund
and DLB Emerging Markets Fund.
o First State will not be responsible for furnishing office space
and equipment or providing bookkeeping or clerical services.
These services will be provided by Babson.
o First State represents that it is an investment adviser
registered under the Investment Advisers Act of 1940, as
amended, and is also authorized by the Financial Services
Authority in the United Kingdom. First State further represents
that it has taken reasonable care to determine that Babson has
sufficient investment experience and understanding to be
treated as an Intermediate Client. No such representation
appears in the Current Sub-Advisory Agreements.
o Unlike the Current Sub-Advisory Agreements, First State and its
affiliates will not be required to seek Babson's approval prior
to undertaking to act as an investment adviser or sub-adviser
for any U.S. registered investment company with similar
investment polices to either Fund.
o The Trust reserves the right to terminate the New Sub-Advisory
Agreements by written notice to Babson or First State at any
time.
o First State will not be liable to the Trust, any shareholder or
the Manager, absent its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations under the
New Sub-Advisory Agreement, for any act or omission in the
course of, or connected with, rendering service under the
Agreement. Under the Current Sub-Advisory Agreements, this
liability clause extended only to the Trust and the
shareholders of the Trust.
o Unlike the Current Sub-Advisory Agreements, the New
Sub-Advisory Agreements include a notice provision for the
receipt by First State of notices, instructions and advice with
respect to securities transactions or any other matters
contemplated by each of the New Sub-Advisory Agreements.
o Unlike the Current Sub-Advisory Agreements, each New
Sub-Advisory Agreement includes a provision stipulating that
the Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the Commonwealth of
Massachusetts.
The proposed New Sub-Advisory Agreements between Babson and First
State are attached as Exhibits A and B. Any description of the New Sub-Advisory
Agreements herein is qualified by the terms of the Agreements. If any of the New
Sub-Advisory Agreements are not approved, the Board will meet and consider what
further action must be taken.
The Trust has appointed David.L Babson & Company Inc. (the Manager")
to provide investment management services to the Trust. The Manager seeks to
appoint First State as the Sub-Adviser to provide an investment program for the
DLB International Fund and the DLB Emerging Markets Fund. Notwithstanding the
fact that the Sub-Adviser has, by virtue of its registration as an adviser under
the Investment Advisers Act of 1940, appointed the Securities and Exchange
Commission as its agent for receipt of service of process, a substantial portion
of the assets of the Sub-Adviser are located outside the United States. As a
result, it may be difficult for investors to rely in the United States upon
judgment of courts of the United States predicated upon the civil liability of
the Sub-Adviser under the United States federal securities laws. There may be
doubt as to the enforceability in the United Kingdom by a court in original
actions, or in actions to enforce judgments of United States courts, of civil
liabilities predicated upon United States federal securities laws.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE TO APPROVE THE NEW INVESTMENT
SUB-ADVISORY AGREEMENTS.
ADDITIONAL INFORMATION ABOUT THE TRUST - PRINCIPAL UNDERWRITER AND ADMINISTRATOR
Babson Securities Corp., located at One Memorial Drive, Cambridge,
Massachusetts 02142, is the principal underwriter of the Funds. Investors Bank &
Trust Company, located at 200 Clarendon Street, Boston, Massachusetts 02116,
provides certain administrative services to the Funds, in addition to serving as
the Trust's custodian, transfer agent and dividend disbursing agent.
INTERESTS OF CERTAIN PERSONS
Babson may be deemed to have an interest in the approval of the
Proposal, as it will receive for a period of three years, pursuant to the
agreement under which BSII will be dissolved, a percentage of fees received by
First State from former BSII clients. Additionally, First State and certain of
its officers and employees, including the Fund's portfolio managers, may be
deemed to have an interest in the Proposal described in this Proxy Statement to
the extent that failure to approve it may affect its and their compensation.
Such companies and persons may thus be deemed to derive benefits from the
approval by shareholders of such Proposal.
Approval of the New Sub-Advisory Agreements will cause no change with
respect to the composition of the Board of the Trust or its investment manager
or the selection of officers of the Trust or its investment adviser.
OTHER BUSINESS
While the meeting has been called to act upon any other business that
may properly come before it, at the date of this Proxy Statement the only
business that management intends to present or knows that others will present is
the business set forth in the Notice of Special Meeting. If other matters
lawfully come before the meeting, and on all procedural matters at said meeting,
it is the intention that the proxies that do not include specific restrictions
to the contrary shall be voted in accordance with the best judgment of the
persons named as attorneys-in-fact in the proxy.
SHAREHOLDER PROPOSALS
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required
by the 1940 Act or the Trust's Declaration of Trust. Pursuant to rules adopted
by the Securities and Exchange Commission, a shareholder may include in proxy
statements relating to annual and other meetings of the shareholders of the
Trust certain proposals for shareholder action which he or she intends to
introduce at such special meetings, provided, among other things, that such
proposal must be received by the Trust a reasonable time before a solicitation
of proxies is made for such meeting. Timely submission of a proposal does not
necessarily mean that the proposal will be included.
ALL SHAREHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THE PROXY INSTRUCTION
FORM(S) IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Trustees
John E. Deitelbaum
Clerk
Cambridge, Massachusetts
January 31, 2003
EXHIBIT A
---------
FORM OF
THE DLB INTERNATIONAL FUND
SUB-ADVISORY AGREEMENT
----------------------
Sub-Advisory Agreement executed as of ________________ between DAVID L.
BABSON & COMPANY INC. (the "Manager") and FIRST STATE INVESTMENTS INTERNATIONAL
LIMITED (the "Sub-Adviser").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE MANAGER.
(a) Subject always to the control of the Trustees of The DLB Fund Group
(the "Trust"), a Massachusetts business trust, and to such policies as the
Trustees or the Manager, as the case may be, may determine, the Sub-Adviser
will, at its expense, furnish continuously an investment program for the DLB
International Fund (the "Fund") and will make investment decisions on behalf of
the Fund and place all orders for the purchase and sale of its portfolio
securities. In the performance of its duties, the Sub-Adviser will comply with
the provisions of the Agreement and Declaration of Trust and By-laws of the
Trust and the Fund's stated investment objective, policies and restrictions.
(b) The Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 as amended and is authorized by the Financial
Services Authority in the United Kingdom. It is agreed that the investment
management services are provided on the basis that the Sub-Adviser has taken
reasonable care to determine that the Manager has sufficient investment
experience and understanding to be treated as an Intermediate Client (as such
term is defined in the handbook of rules and guidance published by the Financial
Services Authority ("FSA rules")).
(c) In placing orders for the portfolio transactions of the Fund, the
Sub-Adviser will seek the best price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Sub-Adviser shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability of
the broker. Subject to such policies as the Trustees or the Manager, as the case
may be, may determine, the Sub-Adviser shall not be deemed to have acted
-1-
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Sub-Adviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Fund and to other clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion.
(d) The Sub-Adviser shall not be obligated under this Agreement to pay
any expenses of or for the Trust or of or for the Fund not expressly assumed by
the Sub-Adviser pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Sub-Adviser, and in any person
controlling, controlled by or under common control with the Sub-Adviser, and
that the Sub-Adviser and any person controlling, controlled by or under common
control with the Sub-Adviser may have an interest in the Trust. It is also
understood that the Sub-Adviser and persons controlling, controlled by or under
common control with the Sub-Adviser have and may have advisory, management
service, distribution or other contracts with other organizations and persons,
and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER.
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered, for the facilities furnished and for the
expenses borne by the Sub-Adviser pursuant to Section 1, a fee, computed and
paid monthly at the annual rate of 0.375% of the Fund's average daily net asset
value. Such average daily net asset value of the Fund shall be determined by
taking an average of all of the determinations of such net asset value during
such month while this Agreement is in effect. Such fee shall be payable for each
month within five (5) business days after the end of such month.
In the event that expenses of the Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Trust
are qualified for offer and sale, the compensation due the Sub-Adviser for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense
limitation which the Sub-Adviser may, by written notice to the Manager,
voluntarily declare to be effective with respect to the Fund, subject to such
terms and conditions as the Sub-Adviser may prescribe in such notice, the
compensation due the Sub-Adviser shall be reduced, and, if necessary, the
Sub-Adviser shall bear the Fund's expenses to the extent required by such
expense limitation.
If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
-2-
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract between the Manager and the Trust relating to the Fund shall have
terminated for any reason; and to the extent required by the 1940 Act, this
Agreement shall not be amended unless such amendment is approved at a meeting by
the affirmative vote of a majority of the outstanding shares of the Fund, and by
the vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager or of the Sub-Adviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon the date of shareholder
approval, and shall remain in full force and effect continuously thereafter
(unless terminated automatically as set forth in Section 4.) until terminated as
follows:
(a) The Trust may at any time terminate this Agreement by
written notice delivered or mailed by registered mail, postage prepaid,
to the Manager and Subadviser, or
(b) Either party hereto may at any time terminate this
Agreement by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(c) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust, the Manager or of the Sub-Adviser, by
vote cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Agreement, then this Agreement shall automatically
terminate at the close of business on the second anniversary of its
execution, or upon the expiration of one year from the effective date
of the last such continuance, whichever is later; provided, however,
that if the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Sub-Adviser may continue to serve hereunder in a manner consistent with
the 1940 Act and the rules and regulations thereunder.
-3-
Action by the Trust under paragraph (a) above may be taken either (i)
by vote of a majority of the Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended from time to time, and under the laws of any jurisdiction in which
the Sub-Adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement or any other agreement
concerning the provision of investment advisory services to the Trust, (b) the
Sub-Adviser shall be disqualified from serving as investment adviser to the Fund
pursuant to Section 9 of the 1940 Act, or otherwise, (c) the Sub-Adviser shall
have been served or otherwise have notice of any action, suit, proceeding or
inquiry or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Trust, (d) there is a change in
control of the Sub-Adviser or any parent of the Sub-Adviser within the meaning
of the 1940 Act or (e) there is a material adverse change in the business or
financial position of the Sub-Adviser.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b)
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person,"
"control," "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act; and the phrase "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
8. NONLIABILITY OF THE SUB-ADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Trust,
or to any shareholder of the Trust, or the Manager, for any act or omission in
the course of, or connected with, rendering services hereunder.
-4-
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust or the
Manager, the Sub-Adviser shall at its discretion exercise or procure the
exercise of any voting right attaching to investments of the Fund.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and the obligations of
this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
11. NOTICES.
Unless otherwise permitted, all notices, instructions, and advice with
respect to securities transactions or any other matters contemplated by this
Agreement shall be deemed duly given when received in writing by the Company
Secretary at 23 St. Andrew Square, Edinburgh, Scotland EH2 1BB with a copy to
Ruta Noreika at First State Investments 3rd Floor, 30 Cannon Street London, EC4M
6YQ for the Sub Adviser or when received in writing by the Manager by [ ]with a
copy to such other person or persons at such other addresses as shall be
specified in each case in a notice similarly given.
12. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the Commonwealth of Massachusetts.
-6-
IN WITNESS WHEREOF, David L. Babson & Company Inc. and First State
Investments International Limited have each caused this instrument to be signed
in duplicate on its behalf by its duly authorized representative, all as of the
day and year first above written.
DAVID L. BABSON & COMPANY INC.
By
------------------------------
DeAnne B. Dupont
Managing Director
FIRST STATE INVESTMENTS INTERNATIONAL LIMITED
By
------------------------------
Accepted and agreed to as of the day and year first above written:
THE DLB FUND GROUP,
on behalf of its
DLB International Fund
By
---------------------------
Frank L. Tarantino
President
-7-
EXHIBIT B
---------
FORM OF
THE DLB EMERGING MARKETS FUND
SUB-ADVISORY AGREEMENT
----------------------
Sub-Advisory Agreement executed as of _______________ between DAVID L.
BABSON & COMPANY INC. (the "Manager") and FIRST STATE INVESTMENTS INTERNATIONAL
LIMITED (the "Sub-Adviser").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE MANAGER.
(a) Subject always to the control of the Trustees of The DLB Fund Group
(the "Trust"), a Massachusetts business trust, and to such policies as the
Trustees or the Manager, as the case may be, may determine, the Sub-Adviser
will, at its expense, furnish continuously an investment program for the DLB
Emerging Markets Fund (the "Fund") and will make investment decisions on behalf
of the Fund and place all orders for the purchase and sale of its portfolio
securities.In the performance of its duties, the Sub-Adviser will comply with
the provisions of the Agreement and Declaration of Trust and By-laws of the
Trust and the Fund's stated investment objective, policies and restrictions.
(b) The Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 as amended and is authorized by the Financial
Services Authority in the United Kingdom. It is agreed that the investment
management services are provided on the basis that the Sub-Adviser has taken
reasonable care to determine that the Manager has sufficient investment
experience and understanding to be treated as an Intermediate Client (as such
term is defined in the handbook of rules and guidance published by the Financial
Services Authority ("FSA rules")).
(c) In placing orders for the portfolio transactions of the Fund, the
Sub-Adviser will seek the best price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Sub-Adviser shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
-1-
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability of
the broker. Subject to such policies as the Trustees or the Manager, as the case
may be, may determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Sub-Adviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Fund and to other clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion.
(d) The Sub-Adviser shall not be obligated under this Agreement to pay
any expenses of or for the Trust or of or for the Fund not expressly assumed by
the Sub-Adviser pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Sub-Adviser, and in any person
controlling, controlled by or under common control with the Sub-Adviser, and
that the Sub-Adviser and any person controlling, controlled by or under common
control with the Sub-Adviser may have an interest in the Trust. It is also
understood that the Sub-Adviser and persons controlling, controlled by or under
common control with the Sub-Adviser have and may have advisory, management
service, distribution or other contracts with other organizations and persons,
and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER.
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered, for the facilities furnished and for the
expenses borne by the Sub-Adviser pursuant to Section 1, a fee, computed and
paid monthly at the annual rate of 0.875% of the Fund's average daily net asset
value. Such average daily net asset value of the Fund shall be determined by
taking an average of all of the determinations of such net asset value during
such month while this Agreement is in effect. Such fee shall be payable for each
month within five (5) business days after the end of such month.
In the event that expenses of the Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Trust
are qualified for offer and sale, the compensation due the Sub-Adviser for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense
limitation which the Sub-Adviser may, by written notice to the Manager,
voluntarily declare to be effective with respect to the Fund, subject to such
terms and conditions as the Sub-Adviser may prescribe in such notice, the
compensation due the Sub-Adviser shall be reduced, and, if necessary, the
Sub-Adviser shall bear the Fund's expenses to the extent required by such
expense limitation.
If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
-2-
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract between the Manager and the Trust relating to the Fund shall have
terminated for any reason; and to the extent required by the 1940 Act, this
Agreement shall not be amended unless such amendment is approved at a meeting by
the affirmative vote of a majority of the outstanding shares of the Fund, and by
the vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager or of the Sub-Adviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon the date of shareholder
approval, and shall remain in full force and effect continuously thereafter
(unless terminated automatically as set forth in Section 4.) until terminated as
follows:
(a) The Trust may at any time terminate this Agreement by
written notice delivered or mailed by registered mail, postage prepaid,
to the Manager and Subadviser, or
(b) Either party hereto may at any time terminate this
Agreement by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(c) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust, the Manager or of the Sub-Adviser, by
vote cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Agreement, then this Agreement shall automatically
terminate at the close of business on the second anniversary of its
execution, or upon the expiration of one year from the effective date
of the last such continuance, whichever is later; provided, however,
that if the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Sub-Adviser may continue to serve hereunder in a manner consistent with
the 1940 Act and the rules and regulations thereunder.
Action by the Trust under paragraph (a) above may be taken either (i)
by vote of a majority of the Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
-3-
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended from time to time, and under the laws of any jurisdiction in which
the Sub-Adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement or any other agreement
concerning the provision of investment advisory services to the Trust, (b) the
Sub-Adviser shall be disqualified from serving as investment adviser to the Fund
pursuant to Section 9 of the 1940 Act, or otherwise, (c) the Sub-Adviser shall
have been served or otherwise have notice of any action, suit, proceeding or
inquiry or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Trust, (d) there is a change in
control of the Sub-Adviser or any parent of the Sub-Adviser within the meaning
of the 1940 Act or (e) there is a material adverse change in the business or
financial position of the Sub-Adviser.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b)
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person,"
"control," "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act; and the phrase "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
8. NONLIABILITY OF THE SUB-ADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Trust,
or to any shareholder of the Trust, or the Manager, for any act or omission in
the course of, or connected with, rendering services hereunder.
-4-
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust or the
Manager, the Sub-Adviser shall at its discretion exercise or procure the
exercise of any voting right attaching to investments of the Fund.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and the obligations of
this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
11. NOTICES.
Unless otherwise permitted, all notices, instructions, and advice with
respect to securities transactions or any other matters contemplated by this
Agreement shall be deemed duly given when received in writing by the Company
Secretary at 23 St. Andrew Square, Edinburgh, Scotland EH2 1BB with a copy to
Ruta Noreika at First State Investments 3rd Floor, 30 Cannon Street London, EC4M
6YQ for the Sub Adviser or when received in writing by the Manager by [ ]with a
copy to such other person or persons at such other addresses as shall be
specified in each case in a notice similarly given.
12. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the Commonwealth of Massachusetts.
-5-
IN WITNESS WHEREOF, David L. Babson & Company Inc. and First State
Investments International Limited have each caused this instrument to be signed
in duplicate on its behalf by its duly authorized representative, all as of the
day and year first above written.
DAVID L. BABSON & COMPANY INC.
By
----------------------------------
DeAnne B. Dupont
Managing Director
FIRST STATE INVESTMENTS INTERNATIONAL LIMITED
By
----------------------------------
Accepted and agreed to as of the day and year first above written:
THE DLB FUND GROUP,
on behalf of its
DLB Emerging Markets Fund
By
----------------------
Frank L. Tarantino
President
-6-
PROXY INSTRUCTION FORM
THE DLB FUND GROUP
DLB STEWART IVORY INTERNATIONAL FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Frank L. Tarantino and John E. Deitelbaum, and
each of them, attorneys-in-fact and proxies of the undersigned, with full power
of substitution, to vote all shares of the DLB Stewart Ivory International Fund
that the undersigned is entitled to vote at the Special Meeting of shareholders
of the Trust to be held at the principal offices of the Trust, One Memorial
Drive, 10th Floor, Cambridge, Massachusetts on February 21, 2003 at 9:30 a.m.
Eastern Time and at any adjournments thereof (the "Special Meeting").
THIS PROXY WILL BE VOTED ON ITEM (1) IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN
ON THIS CARD, AND IN THE ABSENCE OF INSTRUCTIONS THE UNDERSIGNED HEREBY
AUTHORIZES THE AFORESAID PROXY OR PROXIES TO VOTE FOR ITEM (1).
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the Special Meeting.
PLEASE COMPLETE, DATE AND SIGN BELOW.
The proxies are instructed to vote as follows:
(Please mark your choice by placing an "x" in the appropriate box using blue or
black ink.)
1. Approval of the new investment sub-advisory agreement between David L. Babson
& Company Inc. and First State Investments International Limited with respect to
the DLB International Fund.
FOR [_] AGAINST [_] ABSTAIN [_]
MARK HERE IF
YOU PLAN TO ATTEND [_]
THE MEETING.
The undersigned hereby acknowledges receipt of the accompanying Notice of
Special Meeting and the Proxy Statement with respect thereto, and hereby revokes
any proxy heretofore given. This proxy may be revoked at any time before it is
exercised.
[Insert shareholder name and address here]
Signature: Date:
Name:
Title:
Signature: Date:
Name:
Title:
Please sign exactly as your name or names appear. When signing as joint tenant,
all parties to the joint tenancy should sign. When signing as attorney,
executor, administrator, officer of a corporation, trustee or guardian, please
give your full title as such. PLEASE RETURN THE COMPLETED, DATED, AND SIGNED
PROXY IN THE ENCLOSED ENVELOPE.
PROXY INSTRUCTION FORM
THE DLB FUND GROUP
DLB STEWART IVORY EMERGING MARKETS FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Frank L. Tarantino and John E. Deitelbaum, and
each of them, attorneys-in-fact and proxies of the undersigned, with full power
of substitution, to vote all shares of the DLB Stewart Ivory Emerging Markets
Fund that the undersigned is entitled to vote at the Special Meeting of
shareholders of the Trust to be held at the principal offices of the Trust, One
Memorial Drive, 10th Floor, Cambridge, Massachusetts on February 21, 2003 at
9:30 a.m. Eastern Time and at any adjournments thereof (the "Special Meeting").
THIS PROXY WILL BE VOTED ON ITEM (1) IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN
ON THIS CARD, AND IN THE ABSENCE OF INSTRUCTIONS THE UNDERSIGNED HEREBY
AUTHORIZES THE AFORESAID PROXY OR PROXIES TO VOTE FOR ITEM (1).
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the Special Meeting.
PLEASE COMPLETE, DATE AND SIGN BELOW.
The proxies are instructed to vote as follows:
(Please mark your choice by placing an "x" in the appropriate box using blue or
black ink.)
1. Approval of the new investment sub-advisory agreement between David L. Babson
& Company Inc. and First State Investments International Limited with respect to
the DLB Emerging Markets Fund.
FOR [_] AGAINST [_] ABSTAIN [_]
MARK HERE IF
YOU PLAN TO ATTEND [_]
THE MEETING.
The undersigned hereby acknowledges receipt of the accompanying Notice of
Special Meeting and the Proxy Statement with respect thereto, and hereby revokes
any proxy heretofore given. This proxy may be revoked at any time before it is
exercised.
[Insert shareholder name and address here]
Signature: Date:
Name:
Title:
Signature: Date:
Name:
Title:
Please sign exactly as your name or names appear. When signing as joint tenant,
all parties to the joint tenancy should sign. When signing as attorney,
executor, administrator, officer of a corporation, trustee or guardian, please
give your full title as such. PLEASE RETURN THE COMPLETED, DATED, AND SIGNED
PROXY IN THE ENCLOSED ENVELOPE.