The Reserve Funds Insert Bruce R. Bent's picture.
Founders of
"America's First Money Fund"
November xx, 1998
Dear Reserve Private Equity Shareholder:
We are pleased to enclose the Notice and Proxy Statement for the Special
Meeting of Shareholders of Reserve Private Equity Series ("Trust") to be held at
3:00 p.m., Eastern Time, on December 17, 1998 at the offices of The Reserve
Funds. Formal notice of the Meeting appears on the next page, followed by the
Proxy Statement. Please take the time to read the Proxy Statement and cast your
vote, because it covers matters that are important to the Trust and to you as a
shareholder.
The meeting is being called because of the pending purchase of the Trust's
adviser, Reserve Management Company, Inc. by incumbent management.
At the Meeting, you will be asked to consider and vote on the following
matters none of which will change the investment objectives or goals of the
funds:
o To provide for the election of Trustees
o To approve new Investment Management Agreements
o To approve new Sub-Advisory Agreements
o To approve amendments to the Declaration of Trust regarding certain
investment policies
o To allow for a Master Fund/Feeder Fund Structure
o To approve the authorization for the Board of Trustees to appoint,
replace, terminate or make changes to any of the sub-advisory
agreements of the Fund without additional shareholder approval
o To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants.
The Trustees of the Trust have reviewed the proposals and concluded they
are in the best interests of the Trust and recommend that you vote FOR each of
the proposals, which are described in more detail in the enclosed Proxy
Statement.
Please Note: Mutual funds are required by law to hold special shareholder
meetings on these types of issues and a minimum of 51% of the shares must vote
in order to hold the meeting. Please take a moment now to sign and return your
ballot in the enclosed postage-paid envelope or vote over the phone by calling
800-xxx-xxxx. Your vote is important regardless of the number of shares you own
and will only take a brief moment of your time. Not completing the proxy impedes
the ability of the Funds in acting on these important matters, which in the
opinion of the Independent Trustees is not in your best interests.
The Trust has retained Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist shareholders in the voting
process. As the date of the Meeting approaches, if we have not already heard
from you, you may receive a telephone call from SCC reminding you to exercise
your right to vote. However, if you have any questions about the proxy material
or need voting assistance, please call SCC at 800-xxx-xxxx, as soon as possible.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
Bruce R. Bent
President
<PAGE>
PRELIMINARY PROXY MATERIALS -- FOR SEC USE ONLY
RESERVE PRIVATE EQUITY SERIES
810 Seventh Avenue
New York, New York 10019
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held December 17, 1998 at 3:00 p.m.
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Reserve Private Equity Series (the "Trust") (consisting of Reserve
Blue Chip Growth Fund, Reserve Convertible Securities Fund, Reserve Informed
Investors Growth Fund, Reserve International Equity Fund, Reserve Large-Cap
Growth Fund (formerly Large-Cap Value), Reserve Mid-Cap Equity Fund (formerly
Mid-Cap Value), and Reserve Small-Cap Growth Fund) (collectively, the "Funds"),
will be held at The Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY
10019, on December 17, 1998, at 3:00 p.m. Eastern Time, or at such adjourned
time as may be necessary to vote for the following purposes:
Proposal Who Will Vote
PROPOSAL 1 Trust Vote
To provide for the election of Trustees
PROPOSAL 2 Fund Vote
To approve new Investment Management Agreements
PROPOSAL 3 Fund Vote
To approve new Sub-Advisory Agreements
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide Trust Vote
dollar-based voting rights;
B. To change the designation of the Trusts' fundamental Fund Vote
investment policy on investing for control of portfolio
companies
PROPOSAL 5 Fund Vote
To approve changes to the Trusts' Fundamental Investment
Policies to Permit a Master Fund/ Feeder Fund Structure
PROPOSAL 6 Fund Vote
To approve of the authorization of the Board of Trustees to
appoint, replace or terminate sub-advisers recommended by
the adviser or amend the terms of any sub-advisory
agreement for the Funds without shareholder approval
PROPOSAL 7 Trust Vote
To ratify the selection of PricewaterhouseCoopers LLP
as independent public accountants for the fiscal year
ending May 31, 1999 and
PROPOSAL 8 For approval
by each Fund
To transact such other business as may properly come before as Necessary
the Meeting.
Voting
Shareholders of record of the Trust at the close of business on October
30, 1998 (the "Record Date") will be entitled to vote at the Meeting. Each share
of the Trust is entitled to one vote.
We urge you to sign, date and return your proxy in the enclosed addressed
envelope, which requires no postage and is intended for your convenience. Your
prompt return of your proxy or proxies may save the Trust the necessity and
expense of further solicitations to ensure a quorum at the Meeting. You may vote
your shares in person at the Meeting.
By Order of the Board of Trustees
-----------------------------
MaryKathleen Foynes
Secretary
Reserve Private Equity Series
New York, New York
November 1, 1998
<PAGE>
PROXY STATEMENT
RESERVE PRIVATE EQUITY SERIES
810 Seventh Avenue
New York, New York 10019
SPECIAL MEETING OF SHAREHOLDERS
To be held December 17, 1998 at 3:00 p.m.
This Proxy Statement and enclosed form of proxy are furnished in connection
with the solicitation of proxies by and on behalf of the Trustees of the Trust
to be used at a Special Meeting of Shareholders of the Trust to be held at The
Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, on December
17, 1998, at 3:00 p.m. Eastern Time, or at any adjournment or adjournments
thereof (the "Meeting"), for the purposes set forth in the accompanying Notice.
This Proxy Statement and the form of proxy are being mailed to
shareholders on or about XXX, 1998. Any shareholder giving a proxy has the power
to revoke it by mail (addressed to the Secretary of the Fund at the principal
executive office of the Fund, 810 Seventh Avenue, New York, NY 10019) or in
person at the Meeting, by executing a superseding proxy or by submitting a
notice of revocation to the Trust. All properly executed and unrevoked proxies
received in time for the Meeting will be voted as specified in the proxy or, if
no specification is made, for each proposal referred to in the proxy statement.
A copy of the Trust's most recent annual report is available upon request
and without charge by calling the Trust at (800) 637-1700 at their principal
executive office, 810 Seventh Avenue, New York, NY 10019.
The following table describes each proposal that will be presented at the
Meeting.
Proposal Who Will Vote
PROPOSAL 1 Trust Vote
To provide for the election of Trustees
PROPOSAL 2 For approval
by Each Fund
To approve new Investment Management Agreements
PROPOSAL 3 For approval
by Each Fund
To approve new Sub-Advisory Agreements
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide Trust Vote
dollar-based voting rights;
B. To change the designation of the Trust's fundamental Fund Vote
investment policy on investing for control of portfolio
companies
PROPOSAL 5 Fund Vote
To approve changes to the Fund's Fundamental Investment
Policies to Permit a Master Fund/Feeder Fund Structure
PROPOSAL 6 Fund Vote
To approve of the authorization of the Board of Trustees
to appoint, replace or terminate sub-advisers recommended
by the adviser or amend the terms of any sub-advisory
agreement for the Funds without shareholder approval
PROPOSAL 7 Trust Vote
To ratify the selection of PricewaterhouseCoopers LLP as
independent public accountants for the fiscal year ending
May 31, 1999 and
PROPOSAL 8 For approval
by each Fund
To transact such other business as may properly come before the as Necessary
Meeting.
Voting
Shareholders of record for the Trust as of the close of business on
October 30, 1998 ("Record Date") are entitled to vote at the Meeting and at any
adjournment thereof of matters submitted to shareholder of the Funds.
Shareholders have one vote for each share held in the Trust. The presence at the
Meeting, in person or by proxy, of the holders of one-third of the shares
outstanding and entitled to vote shall constitute a quorum, permitting action on
matters related to the Trust or a Fund.
NAME OF FUND NUMBER OF SHARES OUTSTANDING
Reserve Blue Chip Growth Fund
Class R Shares
Class I Shares
Reserve Convertible Securities Fund
Class R Shares
Class I Shares
Reserve Informed Investors Growth Fund
Class R Shares
Class I Shares
Reserve International Equity Fund
Class R Shares
Class I Shares
Reserve Large-Cap Growth Fund
Class R Shares
Class I Shares
Reserve Mid-Cap Equity Fund
Class R Shares
Class I Shares
Reserve Small-Cap Growth Fund
Class R Shares
Class I Shares
With respect to Proposal 1 (Election of Trustees) 4a and 7, a majority of
the votes cast at the Meeting at which a quorum is present, must be cast in the
affirmative in order for the Trustee to be elected or the proposal to be
approved.
Approval of Proposals 2, 3, 4b, 5 and 6 requires the affirmative vote of
the majority of the outstanding voting securities of each Fund. For this
purpose, under applicable law, "vote of a majority of the outstanding voting
securities" of the Fund means the vote of (A) 67% or more of the voting
securities of the Fund present at the Meeting, if the holders of more than 50%
of the outstanding voting securities of the Fund are present or represented by
proxy; or (B) more than 50% of the outstanding voting securities of the Fund
whichever is less.
All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is completed,
dated, signed and returned in time to be voted at the Meeting and is not
subsequently revoked. If the proxy is returned properly signed and dated, but no
instructions are given, the shares represented will be voted in favor of each of
the proposals. As set forth under "Other Information - Solicitation of Proxies,"
proxies may be solicited in person or by telephone, telegraph, facsimile, oral
communication or electronic medium. Any proxy may be revoked by the timely
submission of a properly executed subsequent proxy, by a timely written
revocation, or by an oral revocation or vote at the Meeting prior to the
finalization of the vote on a particular proposal. Execution and submission of a
proxy does not affect a shareholder's right to attend the Meeting in person. Due
to applicable legal requirements that the proposals presented in this Proxy
Statement must be approved by specified percentages of the Trust's or Fund's
outstanding shares in order to be adopted, an abstention by a shareholder from
voting on a particular proposal, either by proxy or in person at the Meeting,
will have the same effect as a negative vote as to that matter. Shares that are
held by a broker-dealer or other fiduciary as record owner for the account of a
beneficial owner will be counted for purposes of determining the presence of a
quorum and as votes on particular proposals if the beneficial owner has executed
and timely delivered the necessary instructions for the record owner to attend
the Meeting and vote the shares, or if the record owner has, and exercises,
discretionary voting power. If the record owner does not have discretionary
voting power as to a particular proposal, but grants a proxy for, or votes, the
shares, those shares will be counted toward the quorum but will have the effect
of a negative vote as to that proposal.
All costs associated with the Meeting, including the expenses of
preparing, printing and distributing the Proxy Statement, and legal expenses,
will be borne equally by Reserve Management Company, Inc.
The Board of Trustees may seek one or more adjournments of the Meeting if
necessary to obtain a quorum or to obtain the vote required for approval of one
or more proposals. A vote may be taken at the Meeting, including any
adjournment, on any proposal for which there are sufficient votes even though
the Meeting is adjourned as to other proposals.
PROPOSAL 1
ELECTION OF TRUSTEES (TRUST VOTE)
All Trustees are elected to serve indefinitely until his or her
resignation or removal or until his or her successor is duly elected and
qualified.
Proxies which do not contain specific instructions to the contrary will be
voted in favor of the election of the nominees shown below:
<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Age the Trust During the Past Five Years
<S> <C> <C>
Bruce R. Bent* President, Mr. Bent is President, Treasurer
810 Seventh Avenue Treasurer and and Trustee of The Reserve Fund
New York, NY 10019 Trustee ("RF"), Reserve Institutional Trust
Age: 61 (1970 to present) ("RIT"), Reserve Tax-Exempt Trust
("RTET"), Reserve New York
Tax-Exempt Trust ("RNYTET") and
Reserve Private Equity Series
("RPES"); Director, Vice President
and Secretary of Reserve Management
Company, Inc. ("RMCI") and Reserve
Management Corporation ("RMC"); and
Chairman and Director of Resrv
Partners, Inc. ("RESRV").
Edwin Ehlert, Jr. Trustee Mr. Ehlert is retired. Until his
125 Elm Street (1971 to present) retirement, he was President of
Westfield, NJ 10019 Premier Resources Inc. (a meeting
Age: 66 and planning company) from October
1989 to December 31, 1996 and CEO
of ETA Corporation (a travel agency)
from November 1978 to December 31,
1996. He is a trustee of RF, RIT,
RTET, RNYTET and RPES.
Henri W. Emmet Trustee From January 1995 to December 1995,
1535 Presidential Drive (1978 to present) Mr. Emmet served as a Principal of
Columbus, OH 43212 Global Interaction, which provides
Age: 72 consulting services to
international banking interests.
Mr. Emmet retired as the Managing
Director of Servus Associates, Inc.
in 1994, and U.S.A. Representative
of the First National Bank of
Southern Africa in 1996. He is
currently Trustee of RF, RIT, RTET,
RNYTET, and RPES.
Donald J. Harrington Trustee The Reverend Harrington is
St. John's University (1987 to present) President of St. John's University,
Grand Central and NY, a Trustee of RF, RIT, RTET,
Utopia Parkways RNYTET and RPES and a Director of
Jamaica, NY 11439 Bear Stearns Companies, Inc. since
Age: 53 1993.
Bruce R. Bent II* Senior Vice Mr. Bent II joined The Reserve
810 Seventh Avenue President and Funds in 1992 and is Senior Vice
New York, NY 10019 Assistant President and Assistant Secretary
Age: 32 Secretary, of RF, RIT, RNYTET, RTET and RPES.
Nominee for
election as Trustee
William E. Viklund Trustee Mr. Viklund is formerly President
110 Grist Mill Lane 10/1998-present and COO of Bancorp and President
Plandome Manor, NY and CEO of Long Island Savings
11030 (1980-1996); Senior Vice
Age: 58 President/Department Head of
Bankers Trust Corp. (1972-1980);
and Vice President and Mortgage
Officer of Anchor Savings Bank
(1967-1972).
Vincent J. Mattone Nominee Mr. Mattone is former member of the
12 Deep Hollow Drive, Executive Committee and the Board
Locust , NJ 07760 of Directors of the Bear Stearns
Age: 53 Companies, Inc. from 1985 to 1995.
Prior to joining Bear Stearns, he
was at Salomon Brothers from 1964
to 1979.
Diana P. Herrmann Nominee Ms. Herrmann is President and CEO
380 Madison Avenue of Aquila Management Corporation,
Suite 2300 sponsor of 14 mutual funds with
New York, NY over $3 billion in assets, as of
10017-2513 October 5, 1998. Prior to joining
Age: 40 Aquila in 1986, Ms. Herrmann was
employed with European American
Bank in New York and was a board
member and Secretary of Bank
Credit Association.
Richard Bassuk Nominee From 1995 to present, Mr. Bassuk
The Singer & Bassuk has been a founding principal and
Organization President of The Singer & Bassuk
767 Third Avenue Organization. From 1994 to
New York, NY 10017 present, Mr. Bassuk has served as
Age: 57 Chairman of R.E. Bases Enterprises
Corporation. Previously, Mr.
Bassuk joined Starrett Housing
Corporation in 1973 and was
President and COO from 1981 to 1993.
<FN>
- ---------------------------
* "Interested person" (as defined in the Investment Company Act of 1940) of
the Fund. Bruce R. Bent is the father of Bruce R. Bent II and each is
considered to be an "interested person."
</FN>
</TABLE>
Trustees other than those affiliated with Reserve Management Company, Inc.
("RMCI") and Resrv Partners, Inc. ("RESRV") receive an annual stipend of $3,500
for each joint Board meeting that they attend, and an annual fee of $16,000 plus
expenses for services to all of the Trusts in the complex. For the fiscal year
ended May 31, 1998 such fees and expenses aggregated $351 for the non-interested
Trustees as a group. During the fiscal year ended May 31, 1998, there were four
meetings of the Board. During this period none of the incumbent Trustees
attended less than 75% of the aggregate of the total number of Board meetings
and the total number of Committee meetings for the Committees on which that
Trustee serves.
The Trust has a standing Review Committee, which functions similarly to an
Audit Committee, presently consisting of Messrs. Ehlert, Emmet, and Harrington.
The Review Committee reviews both the audit and non-audit work of each Trust's
independent public accountants, submits a recommendation to the Trustees as to
the selection of independent public accountants, and reviews generally the
maintenance of the Trust's records and the safekeeping arrangements of the
Trust's custodian. The Review Committee of the Trust held its annual meeting
last fiscal year.
For the fiscal year ended May 31, 1998, the Current Trustees received the
following compensation from the Trust and other funds managed by RMCI:
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Est. Annual Total
Name of Trustee Compensation Accrued As Part Benefits Upon Compensation
Nominee from the Trust of Fund Retirement* From All Funds
Expenses* Managed by RMCI
<S> <C> <C> <C> <C>
Bruce R. Bent $ 0 $ 0 $ 0 $ 0
Edwin Ehlert, Jr. $ 117 $ 0 $ 0 $ 30,000.00
Henri W. Emmet $ 117 $ 0 $ 0 $ 30,000.00
Donald J. $ 117 $ 0 $ 0 $ 30,000.00
Harrington
<FN>
* The Trust does not pay any pension or retirement benefits to Trustees.
</FN>
</TABLE>
[As of the Record Date, the Trustees and officers of the Trust owned less
than 1% of the outstanding shares of beneficial interest of each of the Funds.]
The following are the officers of the Trust who are not Trustees:
<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Age the Funds During the Past Five Years
<S> <C> <C>
MaryKathleen Foynes Counsel and Secretary Ms. Foynes is Counsel and
810 Seventh Avenue Secretary of RF, RIT, RNYTET,
New York, NY 10019 RTET, and RPES. Before joining
Age: 29 The Reserve Funds in 1998, Ms.
Foynes was a staff attorney at
PaineWebber, Inc. Prior to
that, Ms. Foynes worked in the
House of Representatives as
District Manager for a Member
of Congress.
Arthur T. Bent III Vice President and Mr. Bent joined The Reserve
810 Seventh Avenue Assistant Secretary Funds in 1997. Prior to
New York, NY 10019 joining Reserve, Mr. Bent was a
Age: 30 private investor.
</TABLE>
Required Vote
The election of each of the above nominees requires a majority of the
votes cast at the meeting at which a quorum is present.
PROPOSAL 2
TO APPROVE NEW INVESTMENT
MANAGEMENT AGREEMENTS (EACH FUND)
The Board of Trustees of the Trust is proposing that shareholders of each
Fund approve new Investment Management Agreements (the "New Agreements") to be
entered into between the Trust and Reserve Management Company, Inc. ("RMCI")
located at 810 Seventh Avenue, New York, NY 10019. The new Investment Advisory
Agreements are substantially similar to the current Investment Advisory
Agreements. A form of the New Agreement is attached hereto as Exhibit A.
Since November 15, 1971, RMCI, a registered investment adviser, and its
affiliates have provided investment advice to The Reserve Funds which as of
October 29, 1998, has assets in excess of $5.2 billion. RMCI currently serves as
investment manager to each Fund pursuant to the terms of an Investment
Management Agreement entered into with each Fund (the "Current Agreements"),
which is described more fully below. Sub-advisers have been retained to manage
the portfolios of each of the Funds. The Adviser supervises a continuous
investment program for the Funds, evaluates and monitors each Sub-Adviser's
performance, investment programs, and compliance with applicable laws and
regulation, and recommends to the Board of Trustees whether the Sub-Adviser's
contract should be continued, terminated or modified. The Adviser is also
responsible for the day-to-day administration of each Fund's activities.
The Change in Control of Reserve Management Company, Inc.
Presently, the voting stock of RMCI is owned equally by members of two
families--the Browns and the Bents. Bruce R. Bent, has been President and
Treasurer of the Funds since their inception, as well as Chief Executive Officer
of RMCI for the past fourteen years. Mr. Bent and certain of his immediate
family members, control 50% of the voting stock of RMCI. The remaining 50% of
the voting stock of RMCI is under the control of Mr. Henry B.R. Brown and
certain of his immediate family members. Mr. Brown, together with Mr. Bent,
founded RMCI which is a successor of Reserve Management Company, which was
founded in 1970.
The following persons currently own beneficially or of record, 10% or
more of the outstanding voting securities of RMCI: Henry B.R. Brown;
Alexander M.R. Brown; Harriet R. Brown; Elizabeth S.B. Devlin; Peter F.
Brown; Bruce R. Bent; Bruce R. Bent II; and Arthur T. Bent III. The address
of each such person is c/o Reserve Management Company, Inc., 810 Seventh
Avenue, New York, NY 10019.
It is currently proposed that members of Mr. Bent's immediate family will
acquire the remaining 50% interest in RMCI that is held by Mr. Brown and his
immediate family members, and this transaction is anticipated to be completed on
or about X. While this transaction, will result in the assignment, and thus,
termination of, the Current Agreements, there is no plan or understanding on the
part of the Bent family to change the operations of RMCI after the change in
control is completed.
Section 15(a) of the 1940 Act prohibits any person from serving as an
investment adviser to a registered investment company except pursuant to a
written contract that has been approved by the shareholders of the company.
Section 15(a) also provides, as do the Current Agreements, for the automatic
termination of such agreements upon their assignment. An assignment is deemed to
include any change of control of the investment adviser.
Because the Current Agreements will be terminated upon the completion of
the change in control of RMCI, it is necessary to adopt new investment
management agreements for the Funds. Management of the Funds made a proposal to
the Trustees at a meeting held on October 7, 1998, for the adoption of the New
Agreements. The Trustees at this meeting approved this recommendation for the
adoption of the New Agreements and the Trustees are recommending that
shareholders approve the New Agreements.
In addition, the Funds intend to conform with the provisions of Section
15(f) of the 1940 Act, which provides, in pertinent part, that an investment
adviser may receive any amount or benefit in connection with a sale of such
investment adviser which results in an assignment of an investment advisory
contract if (1) for a period of three years after the time of such event, 75% of
the members of the board of trustees of the investment company which it advises
are not "interested persons" (as defined in the 1940 Act) of the new or old
investment adviser; and (2) there is no "unfair burden" imposed on the
investment company as a result of the transaction.
1. The Current Agreements
The Current Agreements have been previously approved by shareholders in
the ordinary course of obtaining shareholder approval of such agreements as
required by applicable law. The Current Agreement for Reserve Blue Chip Growth
Fund is dated March 16, 1994 and was submitted to a vote of initial shareholders
on October 28, 1994; the Current Agreement for Reserve Convertible Securities
Fund is dated August 1, 1996 and was submitted to a vote of initial shareholders
on September 3, 1996; the Current Agreement for Reserve Informed Investors
Growth Fund is dated March 16, 1994 and was submitted to a vote of initial
shareholders on December 28, 1994; the Current Agreement for the Reserve
International Equity Fund is dated April 18, 1995 and was submitted to a vote of
initial shareholders on July 13, 1995; the Current Agreement for the Reserve
Large-Cap Growth Fund is dated January 1, 1996 and was submitted to a vote of
initial shareholders on January 2, 1996; the Current Agreement for Reserve
Mid-Cap Equity Fund is dated June 30, 1998 and approved on July 1, 1998; the
Current Agreement for the Reserve Small-Cap Growth Fund is dated March 16, 1994
and was submitted to a vote of initial shareholders on November 14, 1994.
Under the Current Agreements, the Funds pay RMCI a "comprehensive"
management fee (as a percentage of the average daily net assets attributable to
each Class) at an annual rate of:
Class R Shares Class I Shares
Reserve Blue Chip Growth: 1.20% 0.90%
Reserve Convertible Securities: 1.30% 1.00%
Reserve Informed Investors 1.30% 1.00%
Growth:
Reserve International Equity: 1.55% 1.25%
Reserve Large-Cap Growth: 1.20% 0.90%
Reserve Mid-Cap Equity: 1.30% 1.00%
Reserve Small-Cap Growth: 1.30% 1.00%
Under the Current Agreements, the aggregate amount of fees paid by the
Funds to RCMI during the last fiscal year were $795,252.
In accordance with these agreements, RMCI provides all investment advisory
services to the Funds and also provides all operating services to the Funds
including all personnel required for administrative, clerical, recordkeeping,
bookkeeping, shareholder accounting and shareholder servicing functions, all
office space, equipment and supplies used by the Funds and such personnel, and
all other ordinary operating expenses of the Funds except those specifically
identified as being the direct responsibility of the Funds. Those expenses that
are specifically identified as being attributable to the Funds consist solely
of: interest charges, taxes, brokerage fees and commissions, extraordinary legal
and accounting fees and expenses, payments made pursuant to each Funds'
Distribution Plans, and the fees of the Independent Trustees. The terms of the
proposed New Agreements for the Funds are substantially identical to the terms
of the Current Agreements for the Funds.
Management of the Funds has indicated, and the Boards of Trustees of the
Funds have concurred, that the comprehensive fee structure can be beneficial and
in the interests of shareholders because it provides shareholders with a more
easily understood fee structure that offers greater certainty in determining the
total operating expenses of the Fund on an annual basis.
Class R shares of the Funds are subject to a Plan of Distribution, and
related agreements, in accordance with Rule 12b-1 of the 1940 Act. Under the
terms of the Plan of Distribution, the Funds may make payments to certain
brokers, financial institutions and others at an annual rate of .25% as a
percentage of average daily net assets. Such payments are designed to facilitate
the sale of the Funds' shares. Each Plan of Distribution will remain in full
force and effect for each Fund and will not be changed or affected as a result
of the matters addressed herein.
2. Directors and Executive Officers of RMCI
The Directors and Executive Officers of RMCI are:
Henry B.R. Brown, President and Treasurer
Bruce R. Bent, Vice President and Secretary
Bruce R. Bent II, Assistant Secretary
3. The Trustees' Considerations and Recommendations
In approving the New Agreements and determining to submit them to
shareholders for approval, the Trustees concluded that the compensation to be
paid by the Funds under the New Agreements is fair and reasonable. In making
this determination, the Trustees considered various factors. The factors
considered by the Trustees included: (1) the efforts, experience and
profitability of RMCI in rendering its services to the Funds; (2) the nature,
quality and extent of the services as currently provided by RMCI to the Funds
and to be provided under the New Agreements; (3) the performance record of RMCI
in connection with its investment management of the Funds; (4) the fees charged
by investment managers operating funds with similar investments; and (5) the
substantial similarity between the Current and New Agreements.
Required Vote
With respect to each Series, the approval of the New Agreements requires
the affirmative vote of a majority of the respective Fund's outstanding voting
securities, which for these purposes means the vote (i) of 67% or more of the
voting securities present at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) of more than 50% of the outstanding voting securities of the Fund,
whichever is less.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE NEW
INVESTMENT MANAGEMENT AGREEMENTS, AND ANY SIGNED BUT UNMARKED PROXIES WILL BE SO
VOTED.
PROPOSAL 3
TO APPROVE NEW SUB-ADVISORY AGREEMENTS
As discussed in Proposal 2, the termination of the Current Investment
Advisory Agreements, because of the change of control of RMCI will, as a matter
of law and contract terminate the currently existing Sub-Advisory Agreements.
Thus, it is necessary to adopt new Sub-Advisory Agreements between the
sub-advisers and RMCI.
In addition, the sub-adviser to Reserve Blue Chip Growth Fund, Trainer,
Wortham & Company, Inc., also anticipates a change in control. Trainer, Wortham
& Company, Inc. has reached an agreement whereby First Republic Bank, a leading
California financial institution, will acquire the remaining 80.1% of Trainer,
Wortham & Company, Inc. that it does not currently own. Trainer, Wortham &
Company, Inc. has indicated to RMCI and the Board of Trustees that this
transaction will not result in a change in management structure, the investment
process, the personnel who manage the Fund's portfolio or in the level of
service to the Fund. Accordingly, shareholders of the Reserve Blue Chip Growth
Fund will also have to approve a new sub-advisory contract to go into effect
after the change in control of Trainer, Wortham & Company, Inc. Accordingly, in
addition to proposing the adoption of new Investment Management Agreements, RMCI
proposed to the Trustees, at a meeting held on October 7, 1998, the adoption of
new Sub-Advisory agreements.
The new Sub-Advisory Agreements are substantially similar to the current
Sub-Advisory Agreements except for the effective dates and date of terminations.
A form of the new Sub-Advisory agreement is attached hereto as Exhibit B.
1. The Current Sub-Advisory Agreements
The Current Agreements have been previously approved by initial
shareholders as required by applicable law. The Current Sub-Advisory Agreement
for Reserve Blue Chip Growth Fund is dated October 27, 1994 and was submitted to
a vote of initial shareholders on October 28, 1994; the Current Sub-Advisory
Agreement for Reserve Convertible Securities Fund is dated September 2, 1996 and
was submitted to a vote of initial shareholders on September 3, 1996; the
Current Sub-Advisory Agreement for Reserve Informed Investors Growth Fund is
dated December 27, 1994 and was submitted to a vote of initial shareholders on
December 28, 1994; the Current Sub-Advisory Agreement for the Reserve
International Equity Fund is dated July 12, 1995 and was submitted to a vote of
initial shareholders on July 13, 1995; the Current Sub-Advisory Agreement for
the Reserve Large-Cap Growth Fund is dated January 1, 1996 and was submitted to
a vote of initial shareholders on January 2, 1996; and the Current Sub-Advisory
Agreement for Reserve Mid-Cap Equity Fund is dated March 12, 1996 and was
submitted to a vote of initial shareholders on March 13, 1996; the Current
Agreement Sub-Advisory for the Reserve Small-Cap Growth Fund is dated November
13, 1994 and was submitted to a vote of initial shareholders on November 14,
1994.
The Sub-Advisers of the Funds and sub-advisory fees paid for the last
fiscal year are listed below. For their services, the Sub-Adviser of each Fund
receives an annual fee of up to one-half of the net profit before taxes of the
respective Fund. Net profit is deemed to be the comprehensive fee less Fund
expenses and all applicable sales and marketing costs. The Adviser may also pay
a sub-adviser for marketing assistance. For the fiscal year ended May 31, 1998,
none of the Funds, with the exception of The Reserve International Equity Fund
paid any subadvisory fees.
Reserve Blue Chip Growth Fund - Trainer, Wortham & Company, Inc., 845 Third
Avenue, New York, New York 10022. Charles V. Moore and Robert Vile, of 845 Third
Avenue, New York, NY 10022, are the Fund's portfolio managers. Mr. Moore has
been the president of the Sub-Adviser since 1978 and is responsible for the
day-to-day investment decisions of the Reserve Blue Chip Growth Fund.
Reserve Convertible Securities Fund - New Vernon Advisers, Inc., 310 South
Street, P.O. Box 1913, Morristown, NJ 07962, an affiliate of William E. Simon &
Sons, L.L.C. J. Peter Simon, of 310 South Street, P.O. Box 1913, Morristown, NJ
07962, is an Executive Director and founder of William E. Simon & Sons, is
president of New Vernon Advisors, Inc., and serves as the firm's convertible
securities manager and is responsible for the day-to-day investment decisions of
the Reserve Convertible Securities Fund.
Reserve Informed Investors Growth Fund - T.H. Fitzgerald & Co., 180 Church
Street, Naugatuck, CT 06770. Thomas H. Fitzgerald, Jr., of 180 Church Street,
Naugatuck, CT 06770, serves as the Fund's portfolio manager and is responsible
for the day-to-day investment decisions of the Reserve Informed Investors Growth
Fund.
Reserve International Equity Fund - Pinnacle Associates Ltd., 666 Fifth Avenue,
New York, New York 10103. Nicholas Reitenbach, of 666 Fifth Avenue, New York, NY
10103, is director of international investments and partner of Pinnacle
Associates, Ltd., and serves as the Reserve International Equity Fund's primary
portfolio manager.
Reserve Large-Cap Growth Fund --- Siphron Capital Management, 280 S. Beverly
Drive, Beverly Hills, CA 90212. David C. Siphron and Peter D. Siphron, of 280 S.
Beverly Drive, Beverly Hills, CA 90212, both partners of the firm, serve as the
Reserve Large-Cap Growth Fund's portfolio managers, providing investment
recommendations based on a proprietary combination of fundamental and technical
analysis.
Reserve Mid-Cap Equity Fund*--- Pekin, Singer & Shapiro Asset Management, 311
South Wacker Drive, Chicago, IL 60606. JoAnne Pekin, a founder of the firm and
its president, and Martha Doran, of 311 South Wacker Drive, Chicago, IL 60606,
serve as the Fund's portfolio managers. Mrs. Pekin is responsible for the
day-to-day investment decisions of the Reserve Mid-Cap Equity Fund.
Reserve Small-Cap Growth Fund - Roanoke Asset Management, 529 Fifth Avenue, New
York, NY 10017. Edwin G. Vroom, president, Brian J. O'Connor, executive
president and Adele S. Weisman, senior vice-president, of 529 Fifth Avenue, New
York, New York, 10017, serve as the Fund's portfolio managers. They are
responsible for the day-to-day investment decisions of the Reserve Small-Cap
Growth Fund.
- ------------------------------------------------
* Until June 30, 1998 (when its resignation became effective), Southern Capital
Advisors, 50 Front Street, Memphis, TN 38103, served as the Sub-Adviser for
Reserve Mid-Growth Equity Fund.
2. Directors and Executive Officers of Each of the Sub-Advisers
The Directors and Executive Officers of each of the Sub-Advisers are as
follows:
Reserve Blue Chip Growth Fund: Trainer, Wortham & Company, Inc.:
Directors Officers
None Charles V. Moore, President
David P. Como, Managing
Director
A. Alexander Arnold, Managing
Director
H. Williamson Ghriskey, Jr.
Managing Director, Secretary
Reserve Convertible Securities Fund: New Vernon Advisers, Inc:
Directors Officers
Michael B. Lenard Mark J. Butler, Vice
President, Chief Financial
Officer, Treasurer
William Edward Simon, Jr., Christine W. Jenkins, Vice
President, Secretary
John Siebel, Vice President
J. Peter Simon, President
Reserve Informed Investors Growth Fund: T.H. Fitzgerald & Co.:
Directors Officers
None Tom Fitzgerald, CEO
Reserve International Equity Fund: Pinnacle Associates Ltd.:
Directors Officers
None Thomas Passions, President
and CIO
Nicholas Reitenbach, Senior
Vice President
Peter Marron, Senior Vice
President
Edmund Blake, Senior Vice
President
King Harris, Senior Vice
President
Reserve Large-Cap Growth Fund: Siphron Capital Management:
Directors Officers
None Peter Siphron, CFA-
PartnerDavid C. Siphron, CFA-
Partner and President
Reserve Mid-Cap Equity Fund: Pekin, Singer & Shapiro Asset Management:
Directors Officers
None JoAnne Brawar Pekin, President
Sheldon Mark Pekin, Senior
Vice President
Richard Allen Singer, Senior
Vice President
Nathan Shapiro, Senior Vice
President
David Scott Evans, Vice
President
Steven Arthur Shapiro, Vice
President
Martha Jo Doran, Vice
President
Reserve Small-Cap Growth Fund: Roanoke Asset Management:
Directors Officers
Edwin G. Vroom Edwin G. Vroom, President
Adele S. Weisman Adele S. Weisman, Executive
Vice President
Christopher Miller, Senior
Vice President
3. The Trustees' Considerations and Recommendations
In approving the New Sub-Advisory Agreements and determining to submit
them to shareholders for approval, the Trustees concluded that the compensation
to be paid by the Funds under the New Sub-Advisory Agreements is fair and
reasonable. In making this determination, the Trustees considered several
factors. The factors considered by the Trustees included: (1) the efforts and
expenses of the Sub-Advisers in rendering their services to the Funds; (2) the
nature, quality and extent of the services as currently provided by the
Sub-Advisers to the Funds and as to be provided under the New Sub-Advisory
Agreements; (3) the performance record of the Sub-Advisers in connection with
their management of the Funds; (4) the fees charged by Sub-Advisers operating
funds with similar investments; and (5) the substantial similarity between the
current and new agreements. In the case of Trainer, Wortham & Company, Inc. the
Trustees also considered that the proposed change in control would not result in
a change in personnel managing the Fund or in its investment process.
Required Vote
With respect to the Funds, the approval of the New Sub-Advisory Agreements
requires the affirmative vote of a majority of the respective Fund's outstanding
voting securities, which for these purposes means the vote (i) of 67% or more of
the voting securities present at the Meeting, if the holders of more than 50% of
the outstanding voting securities of the Funds are present or represented by
proxy, or (ii) of more than 50% of the outstanding voting securities of the
Funds, whichever is less.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE NEW
SUB-ADVISORY AGREEMENTS, AND ANY SIGNED BUT UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 4
TO APPROVE AMENDMENTS AND REVISIONS TO INVESTMENT
RESTRICTIONS AND DECLARATIONS OF TRUST
The Trustees of each Fund are proposing that shareholders approve various
proposals that would provide for the "modernization" of certain of the operating
policies and procedures for the Trust and the Funds. These policies and
procedures are contained in the Declaration of Trust for the Trust or have been
adopted as fundamental polices by the Funds and have become outmoded due to
changes in the mutual fund industry. Most new mutual funds being created today
operate with these more modern provisions. Accordingly, to permit the Funds to
operate with the greatest amount of flexibility and to allow them to more
adequately compete with competitor funds, shareholders are being asked to
approve the following recommendations. The Trustees approved each of these items
at a meeting held on October 7, 1998.
The proposals are as follows:
A. TO AMEND THE TRUST'S DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING
RIGHTS FOR SHAREHOLDERS OF THE TRUST (Trust Vote)
It is recommended that Section 7.01 of the Declaration of Trust be amended
to provide voting rights based on a shareholder's total dollar interest in a
Fund ("dollar-based voting"), rather than on the number of shares owned, for all
shareholder votes for a Fund. As a result, voting power would be allocated in
proportion to the value of each shareholder's investment.
Currently, shareholders of each Fund vote separately on matters concerning
only that Fund and vote on a trust-wide basis on matters that affect the Trust
as a whole, such as electing Trustees or amending the Declaration of Trust.
Currently, under the Declaration of Trust, each share is entitled to one vote,
with fractional votes for fractional shares, regardless of the relative value of
the shares of each Fund in the Trust.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights as required by the Investment Company Act of 1940 ("1940
Act"). In the case where a Trust has several series or Funds, voting rights may
have become disproportionate since the net asset value per share ("NAV") of the
separate Funds diverge over time. Under the current voting provisions, an
investment in a Fund with a lower NAV may have significantly greater voting
power than the same dollar amount invested in a Fund with a higher NAV.
If approved, the amendment would provide a more equitable distribution of
voting rights than the one-share, one-vote system currently in effect for
certain votes. The voting power of shareholders would be commensurate with the
value of the shareholder's dollar investment rather than with the number of
shares held.
On matters requiring trust-wide votes where all Funds are required to
vote, shareholders who own shares with a lower NAV than other Funds in the Trust
would be giving other shareholders in the Trust more voting "power" than they
currently have. On matters affecting only one Fund, only shareholders of that
Fund vote on the issue. In this instance, under both the current Declarations of
Trust and the amended Declaration of Trust, all shareholders of a Fund would
have the same voting rights, since the NAV is the same for all shares in a
single Fund.
The current provision of the Declaration of Trust is as follows:
Section 7.01: "[e]ach whole share shall be entitled to one vote as to
any matter on which it is entitled to vote..."
If approved, the Declaration of the Trust will be amended as follows:
A shareholder of each series shall be entitled to one vote for each dollar
of net asset value (number of shares owned times net asset value per
share) per share of such series [or class thereof], on any matter on which
such shareholder is entitled to vote and each fractional dollar amount
shall be entitled to a proportionate fractional vote.
It is expected that the proposed amendment will benefit the Trust by
bringing greater equality in voting rights among all shareholders of the Trust.
B. TO CHANGE THE DESIGNATION OF THE TRUST'S FUNDAMENTAL INVESTMENT POLICY ON
INVESTING FOR CONTROL OF PORTFOLIO COMPANIES (FUND VOTE)
It is recommended that each Fund's fundamental policy on investing for
control of portfolio companies be changed from a fundamental policy to a similar
operating policy. Fundamental policies may only be changed with shareholder
approval, while operating policies may be changed by vote of the Board of
Trustees without shareholder approval. While the Funds have no current intention
of investing in companies for the purpose of obtaining or exercising control,
the proposed change would allow the Funds to do so if the Board of Trustees
determined to change the new operating policy. No additional shareholder vote
would be necessary. The proposed amendment will provide the Funds with greater
flexibility to respond to market and regulatory developments.
Each Fund's current fundamental policy on investing for control of
portfolio companies is as follows:
The Fund may not invest in voting securities or in companies for the
purpose of exercising control;
As redesignated, each Fund's operating policy on investing for control of
portfolio companies would be as follows:
As a matter of operating policy, the Fund may not invest in companies for
the purpose of exercising control.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE FOREGOING PROPOSALS,
AND ANY SIGNED BUT UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 5
TO APPROVE CHANGES TO THE TRUST'S
FUNDAMENTAL INVESTMENT POLICIES TO PERMIT A
MASTER FUND/FEEDER FUND STRUCTURE (FUND VOTE)
For greater investment flexibility, RCMI has recommended that each Fund
adopt a condition to its fundamental investment policies to permit each Fund to
invest all or substantially all of its investible assets, except to the extent
required to remain uninvested to satisfy near-term cash requirements, in another
open-end management investment company having the same investment objectives and
substantially similar policies and restrictions as the Fund (a "Master Fund").
The condition would be as follows:
Notwithstanding the foregoing investment
restrictions, the Fund may invest substantially
all of its assets in another open-end investment
company with substantially the same investment
objective as the Fund.
Certain of each Fund's fundamental policies such as the amount a Fund may
invest in a particular industry may preclude the ability of a Fund to adopt a
Master/Feeder Fund structure. The proposed condition to each Fund's fundamental
investment policies would permit the Fund to adopt such a "Master Fund/Feeder
Fund Structure." Rather than investing directly in a portfolio of securities, a
Fund would be authorized to pool its assets with other mutual funds for
investment in a Master Fund, making it a "Feeder Fund." A purpose of such an
arrangement is to achieve operational efficiencies, assuming that the assets of
the Master Fund are greater than the assets of any individual Feeder Fund. While
the Board has not determined that the Fund should convert to a Master
Fund/Feeder Fund Structure at this time, the Board believes it could be in the
best interests of the Fund at some future date, and in that case the Board could
do so without further approval by shareholders.
If the proposed changes in the investment policies are approved by
shareholders of the Fund, the Fund's Board could vote at some time in the future
to convert the Fund into a Feeder Fund under which all or substantially all of
the investment assets of the Fund would be invested in a Master Fund. The Feeder
Fund would transfer its assets to a Master Fund in exchange for an interest in
the Master Fund having the same net asset value as the value of the assets
transferred. The ownership interests of the Fund's shareholders will not be
altered by this change.
Under the Trust's Declaration of Trust a shareholder vote is required to
sell or transfer substantially all of the assets of the Fund. One way to convert
a Fund to a Master Fund/Feeder Fund Structure is through a sale or transfer of
assets. Thus, approval to convert a Fund into a Master/Feeder Fund Structure
through a sale or transfer of assets requires, a shareholder vote. Approval of
this item by shareholders of a Fund is also, therefore, deemed to constitute
approval of the Board's discretionary authority to convert that Fund into a
Master Fund/Feeder Fund Structure through a sale or transfer of assets.
Any Master Fund in which a Feeder Fund would invest would be required to
have the same investment objective and substantially similar policies and
restrictions as the Feeder Fund. Accordingly, by investing in a Master Fund, a
Feeder Fund would continue to pursue its present investment objectives and
policies in substantially the same manner as it does currently, except that it
would do so through its investment in the Master Fund rather than through direct
policies. The Master Fund, whose shares could be offered to institutional
investors in addition to a Feeder Fund, would invest in the same type of
securities in which a Fund would have invested directly, providing substantially
the same investment results to the Feeder Fund's shareholders. However, the
expense ratios, the yields and the total returns of other investors in the
Master Fund may be different from those of the Feeder Fund due to differences in
Feeder Fund expenses.
By investing substantially all of its assets in a Master Fund, a Feeder
Fund may be in a position to realize directly or indirectly certain economies of
scale, in that a larger investment portfolio resulting from multiple Feeder
Funds is expected to achieve a lower ratio of operation expenses to net assets.
A Master Fund may be offered to an undetermined number of institutional
investors. However, there can be no assurance that any such additional
investments in a Master Fund by other Feeder Funds will take place or that
economies of scale may be realized.
If a Fund invests substantially all of its assets in a Master Fund, the
Fund may no longer require active portfolio management services. In this event,
if the shareholders of a Fund approve the proposed policy changes and the Board
converts the Fund into a Feeder Fund, then the existing investment management
agreement may be terminated or no fee would be charged; in such case, the Fund's
Board would likely enter into an administration agreement for the provision of
certain administrative services to the Fund, likely including those currently
provided under the existing investment management agreement, with compensation
at such rates as may be approved by the trustees.
MASTER FUNDS
The investment objective of any Master Fund would be the same as the
investment objective of the applicable Feeder Fund that would invest in it. If
the Fund's Board votes to convert a Fund into a Feeder Fund, the Fund's assets
will no longer be directly invested in the securities of multiple issuers, but
rather will be invested in the securities of a single issuer, i.e., the Master
Fund, which would be registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). A Master
Fund may have a different Board than the Feeder Fund.
A Feeder Fund may withdraw its investment in a Master Fund at any time if
the Board determines that it is in the best interest of the shareholders of the
Feeder Fund to do so or if the investment policies or restrictions of the Master
Fund were changed so that they were inconsistent with the policies and
restrictions of the Feeder Fund. Upon any such withdrawal, the Board of the
Feeder Fund would consider what action might be taken, including the investment
of all the assets of the Feeder Fund in another pooled investment entity having
substantially the same investment objective as the Feeder Fund or the retaining
of an investment adviser to directly invest the Fund's assets in accordance with
its investment objective and policies. If another pooled investment vehicle with
substantially the same investment objective could not be found, it might have a
significant impact on the investment of shareholders in the Feeder Fund.
Whenever a Feeder Fund is asked to vote on a proposal by the Master Fund,
the Feeder Fund will hold a meeting of shareholders if required by applicable
law or its policies, and cast its vote with respect to the Master Fund in the
same proportion as its shareholders vote on the proposal.
Once its assets are invested in a Master Fund, a Feeder Fund will value
its holdings (i.e., shares issued by the Master Fund) at their fair value, which
will be based upon the daily net asset value of the Master Fund. The net income
of the Feeder Fund will be determined at the same time and on the same days as
the net income of the Master Fund is determined, which are the same time and
days that the Feeder Fund uses for this purpose.
TAX CONSIDERATIONS
The possible implementation of a Master Fund/Feeder Fund structure would
not be expected to have any adverse tax effects on the Fund or its shareholders.
Each Feeder Fund would intend to continue to qualify and elect to be
treated as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To so qualify, a Feeder Fund must
meet certain income, distribution, and diversification requirements. It is
expected that any Feeder Fund's investment in a Master Fund will satisfy these
requirements. Provided each Feeder Fund meets these requirements and distributes
all of its net investment income and realized capital gains to its shareholders
in accordance with the timing requirements imposed by the Code, the Feeder Fund
will not pay any Federal income or excise taxes.
BOARD RECOMMENDATION
As a result of its consideration of the foregoing facts, the Board of the
Fund voted unanimously to approve the change in fundamental investment policies
to permit a Master/Feeder Fund structure conversion at the Board's discretion
and to submit them to the shareholders for their approval.
Required Vote
The affirmative vote of the majority of the outstanding voting securities
of the Funds is required for adoption of this proposal. For this purpose, under
applicable law, "vote of a majority of the outstanding voting securities" of the
Funds means the vote of (i) 67% or more of the voting securities of the Funds
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Funds are present or represented by proxy; or (ii) more
than 50% of the outstanding voting securities of the Funds whichever is less.
THE BOARD OF THE FUNDS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE NEW FUNDAMENTAL INVESTMENT POLICY PERMITTING CONVERSION, AT THE BOARD'S
DISCRETION, INTO A MASTER FUND/ FEEDER FUND STRUCTURE.
PROPOSAL 6
TO APPROVE THE AUTHORIZATION OF THE BOARD OF TRUSTEES TO
APPOINT, REPLACE OR TERMINATE SUB-ADVISERS RECOMMENDED BY THE
ADVISER OR AMEND THE TERMS OF ANY SUB-ADVISORY AGREEMENT FOR THE
FUNDS WITHOUT SHAREHOLDER APPROVAL (FUND VOTE)
Section 15(a) of the 1940 Act requires that all contracts pursuant to
which persons serve as investment advisers to investment companies be approved
by shareholders. As interpreted, this requirement also applies to the
appointment of sub-advisers to the Funds. The SEC, however, has granted
conditional exemptions for the shareholder approval requirements for situations
where a fund utilizes a multi-manager approach to portfolio investing. The
Adviser and the Trust have obtained such an exemption. If this proposal is
approved by the shareholders, the Board of Trustees of the Trust would without
further shareholder approval, be able to appoint additional or replacement
sub-advisers, terminate sub-advisers, rehire existing sub-advisers whose
agreements have been assigned (and thus automatically terminated) and enter into
or modify sub-investment advisory agreements.
This Proposal is intended to facilitate the efficient operation of the
multi-manager structure with respect to the Funds and afford the Funds increased
management flexibility. Under the multi-manager structure, the Adviser, with the
approval of the Board of Trustees, would have the same authority and flexibility
with respect to sub-advisers that it has for its own internal portfolio
managers; namely that the Adviser can continually monitor their performance and
replace them if the Adviser, with the approval of the Board of Trustees,
believes such action is appropriate (for example, if the performance is not
satisfactory). Under the multi-manager structure, the Adviser will continuously
monitor the performance of each sub-adviser and may from time to time recommend
that the Board of Trustees add, replace or terminate one or more sub-advisers or
appoint additional sub-advisers, depending on the Adviser's assessment of what
combination of sub-advisers it believes will optimize the Funds' chances of
achieving its investment objective.
While there is no way of knowing exactly how often the Adviser may
recommend, and the Board may approve, the selection of an additional
sub-adviser, or the replacement or termination of an existing sub-adviser, each
of which would typically require a shareholder meeting, it is likely that the
multi-manager structure would result in more frequent shareholder meetings than
would otherwise be the case. However, if this proposal is approved by the
shareholders, the Trustees will not be required to call a shareholder meeting
each time a new sub-adviser is approved (or to reapprove a sub-adviser whose
sub-advisory agreement is automatically terminated because it has been purchased
by another entity) and accordingly, shareholders will forego their existing
privilege of having a vote on such matters.
Shareholder meetings entail substantial costs, and may entail substantial
delays, which could reduce the desired benefits of the multi-manager structure.
These costs and delays must be weighed against the benefits of shareholder
scrutiny of proposed contracts with additional or replacement sub-advisers;
however, even in the absence of shareholder approval, any proposal to add or
replace sub-advisers would receive careful review. First, the Adviser would
assess the Fund's needs and, if it believed additional or replacement
sub-advisers could benefit a Fund, it would systematically search the relevant
universe of available investment managers. Second, any recommendation made by
the Adviser would have to be approved by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Adviser within
the meaning of the 1940 Act. Third, any selections or additional sub-advisers or
replacement sub-advisers would have to comply with conditions contained in the
SEC's exemptive order. Finally the Board of Trustees would not be able to
replace the Adviser as investment adviser for a Fund without obtaining
shareholder approval of the new investment adviser.
BOARD RECOMMENDATION
As a result of its consideration of the foregoing facts, the Board of the
Fund voted unanimously to approve this proposal and to submit such proposal to
the shareholders for their approval.
Required Vote
The affirmative vote of the majority of the outstanding voting securities
of the Funds is required for adoption of this proposal. For this purpose, under
applicable law, "vote of a majority of the outstanding voting securities" of the
Funds means the vote of (i) 67% or more of the voting securities of the Funds
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Funds are present or represented by proxy; or (ii) more
than 50% of the outstanding voting securities of the Funds whichever is less.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
PROPOSAL 6.
PROPOSAL 7
TO RATIFY THE SELECTION OF PRICEWATERHOUSE COOPERS LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING MAY 31, 1999 (Trust Vote)
PricewaterhouseCoopers LLP, 1301 Avenue of the Americas, New York, New
York 10019, currently serves as independent public accountants for each of the
Funds. The Trustees are now seeking shareholder ratification of the selection of
PricewaterhouseCoopers LLP as independent public accountants for the Funds for
the fiscal year ending May 31, 1999.
Neither PricewaterhouseCoopers LLP nor any of its members have any
material direct or indirect financial interest in the Funds. Representatives of
PricewaterhouseCoopers LLP are not expected to be present at the Meeting but
will be available by telephone to respond to questions.
Required Vote
With respect to this proposal, a majority of the votes cast at the meeting
at which a quorum is present must be cast in the affirmative in order for the
Proposal to be approved.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE RATIFICATION
OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FUNDS FOR THE FISCAL YEAR ENDING MAY 31, 1999.
PROPOSAL 8
TO TRANSACT SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING
(FOR APPROVAL BY EACH FUND AS NECESSARY)
OTHER INFORMATION
Share Ownership of Each Fund
The following table sets forth the information concerning beneficial
ownership, as of the Record Date, of each Fund's shares by each person who
beneficially owns more than five percent of the voting securities of each Fund:
RESERVE BLUE CHIP GROWTH FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE CONVERTIBLE SECURITIES FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE INFORMED INVESTORS GROWTH FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE INTERNATIONAL EQUITY FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE LARGE-CAP GROWTH FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE MID-CAP EQUITY FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
RESERVE SMALL-CAP GROWTH FUND
Name & Address of Beneficial Title of Percent of Amount & Nature of
Owner Class Class Nature of Ownership
Beneficial
Ownership
Security Ownership of Management
Name & Amount & Percent
Address Nature of of Class
of Beneficial
Beneficial Ownership
Owner
Reserve Blue Chip Growth Fund
Class R Shares
Class I Shares
Reserve Convertible Securities Fund
Class R Shares
Class I Shares
Reserve Informed Investors Growth Fund
Class R Shares
Class I Shares
Reserve International Equity Fund
Class R Shares
Class I Shares
Reserve Large-Cap Growth Fund
Class R Shares
Class I Shares
Reserve Mid-Cap Equity Fund
Class R Shares
Class I Shares
Reserve Small-Cap Growth Fund
Class R Shares
Class I Shares
Manner of Voting Proxies
All proxies received by the management of the Funds will be voted on all
matters presented at the Meeting, and if not, limited to the contrary, will be
voted FOR all Proposals.
Management knows of no other matters to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is Management's
intention that proxies not limited to the contrary will be voted in accordance
with the judgment of the persons named in the enclosed form of proxy.
Broker "non-votes" (that is, proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owner or
other persons entitled to vote shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will have the
same effect as abstentions in determining whether an issue has received the
requisite approval. Where the broker or nominee has no discretion to vote the
shares as to one or more proposals before the Meeting, the non-voted shares will
be excluded from the pool of shares voted on such issues. Thus, abstentions and
non-votes will have the same effect as a negative vote on issues requiring the
affirmative vote of a specified portion of a Fund's outstanding shares, but will
not be considered votes cast and thus will have no effect on matters requiring
approval of a specified percentage of votes cast.
In the event that at the time any session of the Meeting is called to
order a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the Meeting
to a later date. In the event that a quorum is present but sufficient votes in
favor of any of the Proposals set forth in the Notice of Meeting have not been
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitations of proxies with respect to those
items. Any such adjournment will require the affirmative vote of a majority of
the shares present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote for any such item in favor of such an adjournment, and will
vote those proxies required to be voted against any such item against any such
adjournment. A shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes for its approval
have been received and it is otherwise appropriate.
Solicitation of Proxies
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement. Holders of this Trust whose shares of Common Stock
are held by nominees, such as brokers, can vote their proxies by contacting
their respective nominee. In addition to the solicitation of proxies by mail,
officers of the Trust and employees of the Reserve Funds and its affiliates,
without additional compensation, may solicit proxies in person or by telephone,
telegraph, facsimile, oral communication or electronic medium. The Trust has
retained Shareholder Communication Corporation ("SCC"), a professional proxy
solicitation firm, to assist with any necessary solicitation of proxies. As the
Meeting date approaches, certain shareholders of the Trust may receive a
telephone call from SCC asking the shareholder to vote if the Trust has not yet
received the shareholder's vote. Authorization to permit MaryKathleen Foynes or
Mary A. Belmonte to execute proxies may be obtained by telephonic or
electronically transmitted instructions from shareholders of the Trust. In
taking telephonic instructions, SCC will follow procedures designed to ensure
that the identity of the shareholder casting the vote is accurately determined
and that the voting instructions of the shareholder are accurately determined.
SCC is permitted to answer questions about the process, but is not permitted to
recommend to the shareholders how to vote, other than to read any recommendation
set forth in the proxy statement. SCC will record the shareholder's instructions
on the card. Within 72 hours, SCC will send the shareholder a letter or mailgram
to confirm the shareholder's vote and asking the shareholder to call SCC
immediately if the shareholder's instructions are not correctly reflected in the
confirmation. The costs associated with such solicitation will be paid by the
Investment Manager.
If any shareholder wishes to participate in the meeting of shareholders,
but does not wish to give his or her proxy by telephone, the shareholder may
still submit the proxy card originally sent with the proxy statement or attend
in person. Should shareholders require additional information regarding the
proxy or replacement proxy cards, they may contact ___ toll-free at
1-800-XXX-XXXX.
A shareholder may revoke a proxy at any time prior to its use by filing
with the Trust a written revocation or duly executed proxy bearing a later date.
In addition, any shareholder who attends the Meeting in person may vote by
ballot at the Meeting, thereby canceling any proxy previously given. The persons
named in the accompanying proxy will vote as directed by the proxy, but in the
absence of voting directions in any proxy that is signed and returned, they
intend to vote FOR each of the proposals and may vote at their discretion with
respect to other matters not now known to the Board of Trustees or the Trust
that may be presented at the Meeting.
INVESTMENT ADVISER, UNDERWRITER & ADMINISTRATOR
The Investment Adviser is Reserve Management Company, Inc., 810 Seventh
Avenue, New York NY 10019. Resrv Partners, Inc., is the Funds' principal
underwriter.
Submission of Certain Proposals
Proposals of shareholders which are intended to be presented at a future
shareholders' meeting must be received by each Trust by a reasonable time prior
to the Trust's solicitation of proxies relating to such future meeting.
Shareholder proposals must meet certain requirements and there is no guarantee
that any proposal will be presented at a Shareholder meeting.
Additional Information
The expense of the preparation, printing and mailing of the enclosed form
of proxy, this Notice and Proxy Statement and other expenses relating to the
Meeting will be borne equally by Reserve Management Company, Inc., and the
Funds. To obtain the necessary representation at the Meeting, supplementary
solicitations may be made by mail, telephone, or interview by officers of the
Funds and/or employees of RMCI.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
- ------------------, 1998
<PAGE>
PRELIMINARY PROXY MATERIALS - FOR SEC USE ONLY
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Blue Chip Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Blue Chip Growth Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters referred
to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated ________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Convertible Securities Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Convertible Securities
Fund held by the undersigned at the Special Meeting of Shareholders of the Fund
to be held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve
Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Informed Investors Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Informed Investors
Growth Fund held by the undersigned at the Special Meeting of Shareholders of
the Fund to be held at 3:00 p.m. Eastern Time, on December 17, 1998, at The
Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve International Equity Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve International Equity
Fund held by the undersigned at the Special Meeting of Shareholders of the Fund
to be held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve
Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Large-Cap Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Large-Cap Growth Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters referred
to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Mid-Cap Equity Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Mid-Cap Equity Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters referred
to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policies to
permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
<PAGE>
PROXY
RESERVE PRIVATE EQUITY SERIES
Reserve Small-Cap Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
December 17, 1998
The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Reserve Small-Cap Growth Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m. Eastern Time, on December 17, 1998, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters referred
to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. Election of Trustees:
Bruce R. Bent Donald J. Harrington William E. Viklund
Edwin Ehlert, Jr. Henri W. Emmet Bruce R. Bent II
Vincent J. Mattone Diana P. Herrmann Richard Bassuk
[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT
I.______________________________________________________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new Investment Management Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve a new Sub-Advisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To approve the following proposed amendments:
A. To amend the Trust's Declaration of Trust to provide
dollar-based voting rights;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. To approve changes to the Trust's fundamental investment policy to
Permit a Master/Feeder Structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Funds without
shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VII. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VIII. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 1998
Name of Shareholder(s) -- Please print or type
Signature(s) of Shareholder(s)
Signature(s) of Shareholder(s)
This proxy must be signed by the beneficial owner of Fund shares. If signing as
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
RESERVE PRIVATE EQUITY SERIES
________________, 1998
EXHIBIT A
"COMPREHENSIVE FEE"
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, dated the ____ day of _____________, 1998, made and
entered into by and between Reserve Private Equity Series, (the "Trust"),
organized as an unincorporated business trust under the laws of the Commonwealth
of Massachusetts, and RESERVE MANAGEMENT COMPANY, INC., (the "Manager"), a New
Jersey corporation having its principal place of business in 810 Seventh Avenue,
New York, NY 10019, on behalf of the Reserve Fund (the "Portfolio").
WHEREAS, the Trust is engaged as a non-diversified management investment
company and is registered as such under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest, no par value, in separate series or classes of series, with
each such separate series representing an interest in a separate portfolio of
investment securities and other assets;
The parties agree as follows:
1. Investment Services. The Manager shall select and manage the
Portfolio's investments and shall determine what investments shall be made or
disposed of by the Portfolio and shall effect such acquisitions and
dispositions, all in furtherance of the Portfolio's investment objective and
policies, subject to the overall control and direction of the Trust's Board of
Trustees. The Manager shall report on such activities to the Board of Trustees
of the Trust and shall submit such reports and other information thereon as the
Board of Trustees shall from time to time request. Notwithstanding any other
provision hereof, the Manager, with the approval of the Trust, may contract with
one or more Sub-Investment Managers to perform any of the investment management
services; provided, however, any compensation paid will be the sole
responsibility of the Manager.
2. Other Services and Assumption of Certain Expenses. The Manager shall
furnish to the Trust, on behalf of the Portfolio: (i) the services of a
President and such other executive officers as may be requested by the
Portfolio, (ii) office space and customary office facilities to the extent that
the Portfolio's activities occur in New York, (iii) maintain Portfolio records
not otherwise maintained by the Portfolio's custodian, distributor or
sub-investment managers, and (iv) all accounting, administrative, clerical,
secretarial and statistical services as may be required by the Portfolio for the
operation of its business and compliance with applicable laws. The Manager shall
pay the compensation of all officers of the Trust on behalf of the Portfolio and
all operating and other expenses of the Portfolio except interest charges,
taxes, brokerage fees and commissions, extraordinary legal and accounting fees
and other extraordinary expenses including expenses incurred in connection with
litigation proceedings, other claims and the legal obligations of the Trust to
indemnify its trustees, officers, employees, shareholders, distributors and
other agents of the Trust, payments made pursuant to the Trust's Distribution
Plan, and the fees of the disinterested Trustees. The Manager may contract with
other parties to perform any of the ordinary administrative services required of
the Manager; provided, however any such compensation will be the responsibility
of the Manager.
3. Compensation of the Manager. The Portfolio shall pay to the Manager as
compensation for the services rendered hereunder and as for full reimbursement
for all officers compensation and ordinary operating expenses of the Portfolio
paid by the Manager under paragraph 2 hereof, a Management fee at an annual rate
of ___% of the average daily net asset value of the Portfolio.
The Management fee shall be computed and accrued daily and shall be paid
by the Portfolio to the Manager monthly.
4. Compliance with Applicable Requirements. This Agreement will be
performed in accordance with the requirements of the 1940 Act and the Investment
Advisers Act of 1940 and the rules and regulations under such acts, to the
extent that the subject matter of the Agreement is within the purview of such
acts and such rules and regulations. The Manager will assist the Trust on behalf
of the Portfolio in complying with the requirements of the 1940 Act, and the
Securities Act of 1933, and the rules and regulations under such acts and in
qualifying as a regulated investment company under the Internal Revenue Code of
1986 and applicable regulations of the Internal Revenue Service thereunder. In
carrying out its obligations under this Agreement the Manager shall at all times
conform to the provisions of the Declaration of Trust and By-Laws, the
provisions of the currently effective Registration Statement of the Trust under
the 1940 Act and the Securities Act of 1933, and any other applicable provisions
or state of Federal law.
5. Termination. This Agreement shall be in effect until the close of
business on _____________, 2000 and shall continue in effect from year to year
thereafter but only so long as such continuance is specifically approved at
least annually by (i) either the Board of Trustees of the Trust or a majority
vote of the outstanding voting securities of the Portfolio, provided, however,
that if the shareholders of the Portfolio fail to approve the Agreement, as
provided herein, the Manager may continue to serve in such capacity in the
manner and to the extent permitted by the 1940 Act, and the rules thereunder,
and (ii) the vote of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons (as defined in the 1940 Act) of either
party of this Agreement, cast in person at a meeting called for the purpose of
voting on such approval.
Notwithstanding anything herein to the contrary, this Agreement may be
terminated at any time, without payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities of
the Portfolio, on 60 days' written notice to the Manager, or by the Manager on
like notice to the Trust.
The name Reserve ___________ shall be deemed to have been licensed to the
Trust by the Manager. In the event of termination of this Agreement, the Manager
may terminate or revoke such license on 90 days written notice to the Trust. On
or before the date of such revocation or termination, the Trust will change its
name to another name which does not include the word "Reserve."
6. Non-Assignability. This Agreement shall not be assignable by either
party hereto and shall automatically terminate forthwith in the event of such
assignment (within the meaning of the 1940 Act).
7. Approval of Agreement and Amendments. This Agreement and any material
amendments hereto shall be approved by vote of the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Portfolio,
provided, however, that if the shareholders of the Portfolio fail to approve the
Agreement as provided herein, the Manager may continue to serve in such capacity
in the manner and to the extent permitted by the 1940 Act and the rules
thereunder.
8. Non-Exclusivity. The services of the Manager to the Trust are not to be
deemed exclusive and the Trust agrees that the Manager is free to act as
investment manager to various investment companies and other managed accounts.
For purposes of this Agreement and the undertakings provided for herein, the
Manager shall at all times be considered as an independent contractor, and shall
not be considered as an agent of the Trust and shall have no authority to act
for or represent the Trust in any way.
9. Liability of the Manager. In performing its duties hereunder, the
Manager may rely on all documentation and information furnished it by the Trust.
Except as may otherwise be provided by the 1940 Act, neither the Manager nor its
officers, directors, employees or agents shall be subject to any liability for
any act or omission in the course of, connected with or arising out of any
services to be rendered hereunder, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Manager's duties or by
reason of reckless disregard of the Manager's obligations and duties under this
Agreement.
10. Notices. Any notices and communications required hereunder shall be in
writing and shall be deemed given when delivered in person or when sent by
first-class, registered or certified mail to the Manager, to the Trust at 810
Seventh Avenue, New York, New York 10019, or at such addresses as either party
may from time to time specify by notice to the other.
11. Governing Law. The terms and provisions of this Agreement shall be
interpreted under and governed by the law of the State of New York.
12. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall be deemed to be severable.
13. Shareholder Liability. The Manager understands and agrees that the
obligations of the Trust under this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. The Manager represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming shareholder liability for acts or
obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on the day and year first above written.
RESERVE PRIVATE EQUITY SERIES
By --------------------------------
President
ATTEST:
- -------------------------
Secretary
RESERVE MANAGEMENT COMPANY, INC.
By --------------------------------
President
ATTEST:
- -------------------------
Secretary
EXHIBIT B
SUB-INVESTMENT MANAGEMENT AGREEMENT
BY, BETWEEN AND AMONG
RESERVE PRIVATE EQUITY SERIES
RESERVE MANAGEMENT COMPANY, INC.
AND
-------------------------------
FOR THE
RESERVE ___________________FUND
<PAGE>
SUB-INVESTMENT MANAGEMENT AGREEMENT
FOR THE
RESERVE _________________ FUND
THIS AGREEMENT made this __________ day of ____________________, 199__,
by, between and among RESERVE PRIVATE EQUITY SERIES ("Trust"), RESERVE
MANAGEMENT COMPANY, INC., a New Jersey corporation having its principal place of
business in New York (the "Investment Manager") and
____________________________________., a corporation having its principal place
of business in ______________________________________ (the "Sub-Investment
Manager");
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as a non-diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "1940 Act");
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest, no par value in separate series or classes of series
with each such separate series representing an interest in a separate portfolio
of investment securities and other assets;
WHEREAS, the Trust has employed the Investment Manager to act as
investment manager of the Reserve ___________________ Fund ("Fund") as set forth
in the Investment Management Agreement between the Trust and the Investment
Manager dated __________________________, 199__, (the "Investment Management
Agreement");
WHEREAS, the Sub-Investment Manager is engaged in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Trust and the Investment Manager desire to retain the
Sub-Investment Manager to render investment management services to the Fund in
the manner and on the terms hereinafter set forth;
The parties agree as follows:
1. Duties of the Sub-Investment Manager. The Sub-Investment Manager
hereby agrees subject to the supervision of the Investment Manager and the Trust
(1) to act as the investment adviser to, and investment manager of, the
Reserve____________________ Fund of the Trust, (2) to manage the investment and
reinvestment of the assets of the Fund for the period and on the terms and
conditions set forth in this Agreement, and (3) during the term hereof, as its
own expense, to render the services and to assume the obligations herein set
forth for the compensation provided for herein.
2. Sub-Investment Management Services. In performing the duties stated
in Paragraph 1 above, the Sub-Investment Manager will regularly provide the
Investment Manager and the Trust with such investment research, advice and
management as the Investment Manager and the Trust may from time to time
consider necessary for the proper management of the Fund. The Sub-Investment
Manager will furnish continuously an investment program and will conduct a
continuous program of evaluation of assets in the Fund. In this connection the
Sub-Investment Manager will provide the Board of Trustees and officers of the
Trust with such statistical information with respect to investments of the Fund
and such periodic and special reports and information as the Investment Manager
or the Trust may reasonably request. In addition the Sub-Investment Manager will
determine which securities or other investments shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in securities
or other assets in which it may invest. In so acting, the Sub-Investment Manager
shall always be subject to, and shall follow at all times (i) any restrictions
of the Trust's Declaration of Trust and By-Laws, as amended from time to time,
(ii) the applicable provisions of the 1940 Act, and any rules and regulations
adopted thereunder, (iii) statements relating to the Fund's investment
objectives, policies and restrictions as the same are set forth in the
prospectus of the Fund and statement of additional information then currently
effective under the Securities Act of 1933, and (iv) any other provision of
state and federal law applicable to it in connection with its duties hereunder.
Should the Board of Trustees of the Trust or the Investment Manager at any time,
however, make any definite determination as to investment policy of the Fund and
notify the Sub-Investment Manager thereof, the Sub-Investment Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The
Sub-Investment Manager shall take, on behalf of the Trust, all actions which it
deems necessary to implement the investment policies of the Fund , determined as
provided above, and in particular shall place orders for the purchase or sale of
securities or other investments for the Fund with brokers or dealers selected by
the Sub-Investment Manager.
3. Purchase and Sale of Assets. Nothing in this Agreement shall preclude
the combining of orders for the sale or purchase of securities or other
investments with other accounts managed by the Sub-Investment Manager, provided
that the Sub-Investment Manager does not favor any account over any other
account and provided that any purchase or sale orders executed contemporaneously
shall be allocated in a manner the Sub-Investment Manager deems equitable among
the accounts involved and at a price which is approximately averaged. Neither
the Sub-Investment Manager, nor any of its principals, directors, officers or
employees, nor any person, firm or corporation controlling, controlled by or
under common control with it shall act as a principal or receive any commission
as agent in connection with the purchase or sale of assets of the Fund.
In placing orders for the purchase or sale of investments for the Fund,
the Sub-Investment Manager shall use its best efforts to obtain for the Fund the
most favorable price and execution available, considering all of the
circumstances, and shall maintain records adequate to demonstrate compliance
with this requirement.
Subject to prior authorization by the Trust's Board of Trustees of
appropriate policies and procedures, the Sub-Investment Manager may, to the
extent authorized by Section 28(e) of the Securities Exchange Act of 1934, cause
the Fund to pay a broker or dealer that provides research and other brokerage
services to the Sub-Investment Manager an amount of commission for effecting a
Fund investment transaction in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction. In the event of
such authorization, and to the extent authorized by said section, the
Sub-Investment Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action.
4. Compensation of the Sub-Investment Manager. For the services rendered
by the Sub-Investment Manager, the Investment Manager shall pay to the
Sub-Investment Manager at the end of each calendar quarter a fee equal to
one-half of the net profit before taxes. Net profit is deemed to be the
comprehensive fee less fund expenses (as defined by the SEC and exemplified by
The Reserve Funds' accounting as audited by PricewaterhouseCooopers LLP or
successor auditors) and all applicable sales and marketing costs of both the
Investment Manager and Sub-Investment Manager. Expenses are allocated to a fund
on an identified cost basis or prorated by assets or number of accounts where
facilities, services or personnel are utilized by more than one fund. The Fund
will be audited annually and its books are open to inspection by the Investment
Manager and Sub-Investment Manager on any reasonable frequency with or without
notice. The Investment Manager shall provide an unaudited Statement of
Operations quarterly of the revenues received from and expenses incurred on
behalf of the Fund.
The payment of the advisory fees and the allocation of charges and
expenses between the Trust and the Investment Manager are set forth in the
Investment Management Agreement. Nothing in this Sub-Investment Management
Agreement shall change or affect that arrangement. The payment of advisory fees
and the apportionment of any expenses related to the services of the
Sub-Investment Manager shall be the sole concern of the Investment Manager and
the Sub-Investment Manager and shall not be the responsibility of the Trust.
5. Books and Records. The Sub-Investment Manager agrees that all books
and records which it maintains for the Trust are the Trust's property, and, in
the event of termination of this Agreement for any reason, the Sub-Investment
Manager agrees to return to the Trust, free from any claim or retention of
rights by the Sub-Investment Manager, all records relating to the Fund. The
Sub-Investment Manager also agrees upon request of the Investment Manager or the
Fund, promptly to surrender the books and records to the requester or make the
books and records available for inspection by representatives of regulatory
authorities and the Investment Manager or the Fund. In connection with its
duties hereunder the Sub-Investment Manager further agrees to maintain, prepare
and preserve books and records in accordance with the 1940 Act and rules
thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Sub-Investment Manager will use records or information obtained
under this Agreement only for the purposes contemplated hereby, and will not
disclose such records or information in any manner other than as expressly
authorized by the Trust, or if disclosure is expressly required by applicable
Federal or state regulatory authorities or by this Agreement.
6. Liability and Indemnification. In performing its duties hereunder,
the Sub-Investment Manager may rely on all documentation and information
furnished it by the Trust. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Investment Manager nor its officers, directors, employees or
agents shall be subject to any liability for any act or omission in the course
of, connected with or arising out of any services to be rendered hereunder,
except by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Sub-Investment Manager's duties or by reason of reckless
disregard of the Sub-Investments Manager's obligations and duties under this
Agreement. The Sub-Investment Manager shall also comply with the Fund's Code of
Ethics, which has been provided to it.
Investment Manager and Trust agree to hold harmless and indemnify
Sub-Investment Manager from and against any loss, liability, damages or
expenses, including attorney fees, resulting from willful misfeasance, bad faith
or gross negligence by Investment Manager or Trust, or by any officer, director,
employee or agent of either. Further, Investment Manager and Trust agree to
indemnify Sub-Investment Manager for any loss, liability, damages or expenses,
including attorney fees, that may be incurred by Sub-Investment Manager as a
result of a breach, or allegations of a breach, of a fiduciary duty by
Investment Manager or Trust or as a result of a violation, or allegation of a
violation, by Investment Manager or Trust of the federal securities laws,
including but not limited to, the Investment advisers Act of 1940 and the
Investment Company Act of 1940, or of any other federal or state law(s), rule(s)
or regulation(s) applicable to Investment Manager or Trust.
7. Reliance on Documents. The Trust or its agent will provide timely
information to the Sub-Investment Manager regarding such matters as purchases
and redemptions of shares in the Fund, the cash requirements, and cash available
for investment in the Fund, and all other information as may be reasonably
necessary or appropriate in order for the Sub-Investment Manager to perform its
responsibilities hereunder.
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Fund's prospectus and statement of additional information, the
Declaration of Trust and By-Laws as currently in effect and agrees during the
continuance of this agreement to furnish the Sub-Investment Manger copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Sub-Investment Manager will be entitled to
rely on all such documents furnished to it by the Investment Manager of the
Fund.
8. Approval and Termination of this Agreement. This Agreement and any
amendments hereto shall be approved by vote of the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided, however, that if the shareholders of the Fund fail to approve the
Agreement as provided herein, the Sub-Investment Manager may continue to serve
in such capacity in the manner and to the extent permitted by the Act and the
rules thereunder, and no amendment to this Agreement shall become effective
until so approved.
This Agreement shall become effective as of the date first above
written. Thereafter, it shall continue in effect from year to year, but only so
long as such continuance is specifically approved at least annually by (a) the
Board of Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund, and (b) a majority of those trustees who are not
interested persons of any party to this Agreement cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may be
terminated without the payment of any penalty, by the Board of Trustees of the
Trust, by vote of a majority of the outstanding shares of the Fund, or by the
Investment Manager on sixty days' written notice to the Sub-Investment Manager,
or by the Sub-Investment Manager on sixty days' written notice to the Trust or
the Investment Manager. This Agreement shall automatically terminate in the
event of its assignment or in the event of termination of the Investment
Advisory Agreement.
9. Definitions. The terms "assignment," "interested person," and
"majority of the outstanding voting securities," when used in this Agreement,
shall have the respective meanings specified under the Investment Company Act
and the rules thereunder.
10. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New York as at the
time in effect and the applicable provisions of the 1940 Act. To the extent that
the applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Shareholder Liability. The Sub-Investment Manager understands and
agrees that the obligations of the Trust under this Agreement are not binding
upon any shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Sub-Investment Manager represents that it has notice of
the provisions of the Declaration of Trust of the Trust disclaiming shareholder
liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on the day and year first above written.
RESERVE PRIVATE EQUITY SERIES
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
[INSERT NAME OF SUB ADVISOR]
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
RESERVE MANAGEMENT COMPANY, INC.
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
