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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Waterhouse Investors Family of Funds, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[Letterhead of TD Waterhouse Group, Inc.]
_____________ ___, 1999
Dear Shareholder,
[As a fellow shareholder in the Waterhouse Dow 30 Fund (the "Fund"),]
I wanted to write a personal note explaining the enclosed proxy and ask you to
vote in favor of the proposal to reorganize the Fund as a Delaware business
trust.
We believe that the proposal to reorganize the Fund will allow us
greater flexibility to conduct the operations of the Fund. Specifically, it
will enable us to continue to attempt to peg the net asset value per share of
the Fund to 1/1000 of the closing value of the Dow Jones Industrial AverageSM
("DJIA"SM). This enables you to monitor the daily closing value of the DJIA.
You should carefully read the Proxy Statement that discusses the proposal in
detail. The formal Notice of Special Meeting of Shareholders and the Proxy
Statement setting forth in detail the proposal are attached, and the form of
Proxy is enclosed for your use.
The Fund's Board of Directors has unanimously approved the proposal
and recommends it to you for your approval. Your vote is important and I urge
you to vote in its favor.
I thank you for your confidence and support.
Sincerely,
Frank Petrilli
President and Chief Operating Officer
TD Waterhouse Group, Inc.
<PAGE>
[LOGO OF WATERHOUSE DOW 30 FUND]
Important News for Waterhouse Dow 30 Fund Shareholders
Please Vote Immediately! You can vote by mail, [telephone, or website] - details
can be found on the enclosed proxy insert.
INFORMATION
The Waterhouse Dow 30 Fund will host a Special Meeting of Shareholders on
_______________ ___, 1999 at ___________________________. The purpose is to
vote on an important proposal affecting the Fund.
The first few pages of this booklet summarize the Fund's proposal and explain
the proxy process - including how to cast your vote. Before you vote, please
read the full text of the proxy statement for a complete understanding of our
proposal.
Reorganization Into a Delaware Business Trust
We want to reorganize the Fund into a Delaware business trust. Currently, the
Fund is organized as a separate series of Waterhouse Investors Family of
Funds, Inc., a Maryland corporation.
Why? As you know, the investment objective of the Fund is to track the total
return of the Dow Jones Industrial AverageSM ("DJIA"SM) before Fund expenses.
The Fund is permitted to employ certain techniques, including declaring share
splits or reverse share splits, in order to maintain the Fund's net asset
value per share on any given day at or near .001 (or 1/1000) of the closing
value of the DJIA. The use of these techniques will not change the absolute
dollar value of a shareholder's investment in the Fund or result in any
additional tax burden to shareholders (although the number of shares and the
net asset value per share would change). By reorganizing as a series of a
Delaware business trust, as described in the accompanying proxy statement, the
Fund will have greater flexibility to declare share splits or reverse share
splits than if it remains a Maryland corporation.
Key Points: The reorganization would not change the Fund's investment
objective or policies. The Fund also would keep the same investment manager,
distributor, administrator and auditors. In addition, your vote would elect
the same individuals who are currently serving as directors to the Fund to
serve as Trustees of the newly organized Delaware business trust.
Q. I'm a small investor. Why should I bother to vote?
<PAGE>
A. Your vote makes a difference. If numerous shareholders just like you fail
to vote their proxies, the Fund may not receive enough votes to go forward
with its meeting. If this happens, we'll need to mail proxies again - a costly
proposition for the Fund!
Q. How can I vote?
A. You can vote in any one of [four] ways:
- [Through the Internet at www.proxyvote.com (or by going to
www.______.com and clicking on "Proxy Voting")].
- [By telephone, with a toll-free call to the number listed on your
proxy card.]
- By mail, with the enclosed ballot.
- In person at the meeting.
[We encourage you to vote by Internet or telephone, using the 12-digit
"control" number that appears on your proxy card. These voting methods will
save the Fund a good deal of money (no return-mail postage!).] Whichever
method you choose, please take the time to read the full text of our proxy
statement before your vote.
[Q. How do you vote by Internet?
A. If you have not yet visited Waterhouse's website - at www._______.com -
this is a great opportunity to check it out. Scan our website and, when you're
ready, click on the "Proxy Voting" link on our homepage to access
www.proxyvote.com (the voting location). Problems?
Please call us at 1-800-__________.]
Q. I plan to vote by mail. How should I sign my proxy card?
A. If you are an individual account owner, please sign exactly as your name
appears on the proxy card. Either owner of a joint account may sign the proxy
card, but the signer's name must exactly match one that appears on the card.
You should sign proxy cards for other types of accounts in a way that
indicates your authority (for instance, "John Brown, Custodian").
Q. When is the deadline for voting?
All votes must be received prior to the Special Meeting, which will
be held at [ ] a.m. on _____________ ___, 1999. However, to prevent additional
costs from being incurred, it is important that you cast your vote as soon as
possible. [If we do not hear from you, you may receive a call from
__________________ requesting that you vote your shares.]
<PAGE>
WATERHOUSE DOW 30 FUND
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ____________ ___, 1999
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To the Shareholders of Waterhouse Dow 30 Fund:
Your Waterhouse Dow 30 Fund (the "Fund") will host a Special Meeting of
shareholders on [ DATE ] , 1999 AT
[ TIME ] A.M., EASTERN TIME, and at any adjournments of the
meeting. It will be held at [ PLACE ] .
At the meeting, we'll ask shareholders to vote on:
1. A proposal to approve an Agreement and Plan of Reorganization to
reorganize the Fund into a Delaware business trust, as more fully
described in the enclosed proxy statement and
2. Any other business properly brought before the meeting or any
adjournments of the meeting.
THE FUND'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSAL
AND RECOMMENDS IT TO YOU FOR YOUR APPROVAL.
Only shareholders of record of the Fund at the close of business on
_____ ___, 1999 are entitled to receive notice of and to vote at the meeting,
and at any adjournments of the meeting, on all matters relating to the Fund.
The proxy statement and proxy card are being first mailed to shareholders on
or about __________ ___, 1999.
By Order of the Board of Directors
- ---------------------------------
Christopher J. Kelley
Secretary
New York, New York
_________ ___, 1999
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YOUR VOTE IS IMPORTANT REGARDLESS OF HOW
MANY SHARES YOU OWNED ON THE RECORD DATE!
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YOU CAN VOTE EASILY AND QUICKLY [BY TOLL-FREE TELEPHONE CALL, AT OUR WEBSITE,
OR BY MAIL.] JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON YOUR ENCLOSED
PROXY CARD. PLEASE HELP THE FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY
VOTING TODAY!
<PAGE>
WATERHOUSE DOW 30 FUND
100 Wall Street
New York, New York 10005
PROXY STATEMENT
Special Meeting of Shareholders
To be held on __________ ___, 1999
INTRODUCTION
This is the proxy statement for the Waterhouse Dow 30 Fund (the
"Fund"). The Board of Directors has sent you this proxy statement to ask for
your vote on a proposal to reorganize the Fund as a Delaware business trust.
We've divided the proxy statement into four parts:
Part 1 - The Fund's Proposal to Reorganize begins on page __.
Part 2 - More on Proxy Voting and Shareholder Meeting begins on page
__.
Part 3 - Fund Information begins on page __.
Part 4 - Directors and Trustees Information begins on page__.
Please be sure to read the entire proxy statement before casting your
vote. Questions? Call us at 1-800-934-4410. This proxy statement and the form
of proxy were first mailed to shareholders on or about _____________ ___,
1999.
PART I - THE FUND'S PROPOSAL TO REORGANIZE INTO A DELAWARE BUSINESS TRUST
The Board of Directors has approved an Agreement and Plan of
Reorganization to reorganize the Fund into a newly created open-end management
investment company organized as a business trust under the Delaware Business
Trust Act. Under the reorganization plan, the Fund will transfer all of its
assets to the newly created Delaware business trust in exchange solely for
voting shares of beneficial interest in the trust and the trust's assumption
of all the Fund's liabilities. Attached to this Proxy Statement as Exhibit A
is a form of the reorganization plan.
By reorganizing as a Delaware business trust, the Fund will have
greater flexibility to conduct certain aspects of its business, such as
declaring share splits or reverse share splits, as explained below.
<PAGE>
To proceed with the reorganization plan, we need shareholder
approval. The next few pages of this proxy statement discuss important details
of the reorganization plan, including the following:
- Why we want to reorganize the Fund.
- How we plan to accomplish the reorganization.
- How the reorganization will affect the Fund.
- How a Delaware business trust compares to the Fund's current legal
structure.
- How many shareholder votes we need to approve the reorganization.
A. WHY WE WANT TO REORGANIZE THE FUND
REORGANIZING AS A DELAWARE BUSINESS TRUST WILL PROVIDE GREATER
FLEXIBILITY TO DECLARE SHARE SPLITS OR REVERSE SHARE SPLITS.
The investment objective of the Fund is to track the total return of the Dow
Jones Industrial Average(Service Mark) ("DJIA"(Service Mark)) before Fund
expenses. The Fund is permitted to employ certain techniques to maintain the
Fund's net asset value per share on any given day at or near .001 (or 1/1000) of
the closing value of the DJIA (the "Ratio"). For example, the Fund declares
daily dividends of its net investment income and may declare a reverse share
split after a capital gains distribution to restore the net asset value per
share to correspond to the Ratio. To date, the Fund has not paid a capital gains
distribution, so it has not been necessary to take any such action to adjust the
Fund's net asset value per share.
Share splits and share dividends increase the number of shares
outstanding, which in turn decreases the net asset value per share. For
example, a 2-for-1 split would double the number of shares outstanding,
thereby halving the net asset value per share. On the other hand, reverse
splits reduce the number of shares outstanding. For example, a 1-for-2 reverse
share split would halve the number of shares outstanding, thereby doubling the
net asset value per share. (Please keep in mind that these are just examples;
in practice, the Fund's use of these techniques is expected to have a much
more limited impact on the Fund's net asset value per share.) Although the
number of shares and the net asset value per share would change, the use of
these techniques will not change the absolute dollar value of a shareholder's
investment in the Fund or result in any additional tax burden to shareholders.
The Fund is a separate series of Waterhouse Investors Family of
Funds, Inc. ("WIFF"), a Maryland corporation consisting of four series. The
Fund has been advised that it would need to obtain shareholder approval to
amend its Articles of Incorporation to clarify that the Fund can declare
reverse share splits in the future without a shareholder vote. The Board of
Directors of the Fund, based on the recommendation of management and the
advice of counsel, has determined it advisable to take this opportunity to
reorganize the Fund as a Delaware business trust. The Board considered that,
at least initially, the Fund will be the only series of the trust. As a
result, reverse share splits of the Fund's outstanding shares will not reduce
the proportionate voting power of the shareholders of the Fund as a whole in
relation to the voting power of any
<PAGE>
other series (as would currently be the case with respect to the Fund and the
other series of WIFF). In the event other series are added to the Delaware
business trust in the future, the Board of Trustees of the Delaware business
trust will have the authority under the trust's Declaration of Trust to
convert the voting rights of shareholders into "dollar based voting" if they
believe it to be a more equitable method of voting. This means that each
shareholder would have the right to cast a number of votes based on the
aggregate net asset value of his or her holdings in the trust, rather than
based on the number of shares. The change to dollar-based voting would ensure
that shareholders' voting rights remain proportionate to their financial
interests and that a share split or a reverse share split would not alter
relative voting rights of shareholders.
While it is the Fund's current intention to maintain the Fund's net
asset value per share at or near the Ratio and to utilize these techniques for
this purpose, the Board of Directors (or Board of Trustees) may in the future
decide to change this policy. In the event that the Board of
Directors/Trustees changes this policy, shareholders will be notified.
DELAWARE BUSINESS TRUST LAW IS FAVORABLE TO MUTUAL FUNDS. We have
proposed to reorganize the Fund as a Delaware business trust because the
Delaware business trust organizational form offers greater flexibility than
the Maryland corporate form. A Maryland corporation is governed by the
detailed requirements imposed by Maryland corporate law and by the terms of
its Articles of Incorporation. A Delaware business trust is subject to fewer
statutory requirements. The newly organized Delaware business trust will be
governed primarily by the terms of an Agreement and Declaration of Trust
("Declaration of Trust"), which is its governing instrument. As stated above,
in particular, the newly organized Delaware business trust will have greater
flexibility to conduct certain aspects of its business, such as declaring
stock splits or reverse share splits.
In addition, Delaware's business trust law contains provisions that
are well suited to mutual funds. For example, the Delaware business trust
organizational form limits inter-series liability in a multi-series business
trust, so that the assets of one series of a business trust are expressly
protected against claims by creditors and shareholders of another series of
that business trust. The "move" to Delaware will be largely on paper; the Fund
will continue to operate out of New York, just as it does now.
B. HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The Board of Directors has
approved a written Agreement and Plan of Reorganization for the Fund. The
reorganization plan spells out the terms and conditions that will apply to the
Fund's reorganization into a Delaware business trust.
THREE STEPS TO REORGANIZE. In essence, the reorganization will be a
three-step process. The first step has already been taken. We have established a
Delaware business trust especially for the Fund, named TD Waterhouse Trust (the
"Trust"). The Trust has one series,
<PAGE>
named TD Waterhouse Dow 30 Fund (the "Successor Fund"). Prior to the
reorganization, the Successor Fund will issue a single share to the Fund.
Second, if the proposal is approved, the Fund will transfer all of its assets
and liabilities to the Successor Fund. As part of this second step, the
Successor Fund will open an account for each Fund shareholder. The Successor
Fund will then credit these accounts with the exact number of full and
fractional shares that each shareholder owned in the Fund on the
reorganization date. And third, we will terminate the Fund as a series of
WIFF.
EFFECTIVE AS SOON AS PRACTICABLE. If approved by shareholders, the
reorganization will take place as soon as feasible after the Fund receives the
necessary regulatory approvals and legal opinions. We think this could be
accomplished by ____________ of 1999. However, at any time prior to the
reorganization, the Board of Directors may decide that it is in the best
interest of the Fund and its shareholders not to go forward with this project.
If that happens, the Fund will continue to operate as it is currently
organized.
C. HOW THE REORGANIZATION WILL AFFECT THE FUND
THE FUND'S INVESTMENT OBJECTIVE, POLICIES, INVESTMENT MANAGER,
AND FISCAL YEAR WILL STAY THE SAME. THE SAME INDIVIDUALS WHO ARE
THE FUND'S EXISTING DIRECTORS WILL SERVE AS TRUSTEES OF THE TRUST. The
reorganization will not change any of these. Your vote in favor of the
reorganization will be treated as approval of the Successor Fund's investment
management agreement with Waterhouse Asset Management, Inc. and of the
election of the Directors of WIFF as Trustees of the Trust.
THE REORGANIZATION WILL HAVE NO IMPACT ON THE FUND'S SHARE
PRICE. On the day of the reorganization, the Successor Fund's share price will
be the same as that of the Fund. The reorganization will not cause the Fund's
share price to go up or down, and you will own the same number of shares. Any
declared but undistributed dividends or capital gains for the Fund will carry
over in the reorganization.
THE FUND'S EXISTING INDEPENDENT AUDITORS WILL BE RATIFIED. We will
treat shareholder approval of the reorganization as ratification of the Fund's
existing independent auditors, Ernst & Young LLP. In this role, Ernst & Young
LLP audits and certifies the Fund's financial statements. Ernst & Young LLP
also reviews the Fund's Annual Reports to shareholders and its filings with
the U.S. Securities and Exchange Commission. Neither Ernst & Young LLP nor any
of its partners have any direct or material indirect financial interest in the
Fund. If you wish to request the attendance of an Ernst & Young LLP
representative at the shareholder meeting, you should contact the Fund's
Secretary at 100 Wall Street, New York, NY 10005.
THE REORGANIZATION IS CONDITIONED ON TAX-FREE TREATMENT AT THE
FEDERAL LEVEL. We fully expect that the reorganization will have no federal
income tax consequences for you or the Fund. We will not proceed with the
reorganization until this
<PAGE>
point is confirmed by an opinion of counsel in writing. Following the
reorganization, from a tax standpoint, the adjusted basis of the Fund shares
and your holding period will be the same as before. We do not expect
shareholders to incur any personal state or local taxes as a result of the
reorganization, but you may wish to consult your own tax adviser to be sure.
D. HOW A DELAWARE BUSINESS TRUST COMPARES TO THE FUND'S
CURRENT LEGAL STRUCTURE
Federal securities laws have much to say about the way that mutual
funds operate, but they do not cover every aspect of a fund's existence. State
law and each fund's governing documents fill in most of the gaps. The
following discussion compares the state law and documents currently governing
the Fund with the state law and documents that will apply if it reorganizes as
a Delaware business trust. This discussion is not a comprehensive review of
all technical distinctions between the different legal structures. (You or
your attorney would need to review the laws and Fund documents firsthand for
that sort of analysis.) We simply want you to know how a Delaware business
trust compares in certain key areas to a Maryland corporation--the Fund's
present legal structure.
SHAREHOLDER LIABILITY. Shareholders of a Fund organized as a Maryland
corporation or Delaware business trust generally have no personal liability for
the Fund's obligations.
DIRECTOR AND TRUSTEE LIABILITY AND INDEMNIFICATION. With a
Maryland corporation, directors cannot be held liable for their activities in
that role so long as they perform their duties in good faith, prudently, and
in the Fund's best interests. The same is generally true for the trustees of a
Delaware business trust, if provided in the fund's governing documents, as in
the case of the Trust and the Successor Fund. Under each legal structure, the
fund can indemnify its directors or trustees from claims and expenses arising
out of their service to the fund--unless, that is, a director or trustee has
acted improperly in a particular matter.
SHAREHOLDER VOTING RIGHTS AND MEETINGS. As either a Maryland
corporation or a Delaware business trust, a Fund is not required to hold
annual meetings. The voting rights of shareholders of the Fund currently are
based on the number of shares that they own. This will be true of the voting
rights of shareholders of the Successor Fund; however, the Board of Trustees
of the Trust will have the authority to change the voting rights to a
dollar-based voting system. Both the Fund and the Successor Fund generally
must call a shareholder meeting if one is requested in writing by investors
entitled to cast 10% or more of the Fund's votes.
<PAGE>
E. HOW MANY SHAREHOLDER VOTES WE NEED TO APPROVE THE
REORGANIZATION
Under the applicable provisions of the Fund's Articles of
Incorporation, to go forward with the reorganization, an affirmative vote of
the holders of a majority of the Fund's outstanding shares on ________ __,
1999, must vote in favor of this proposal. If the reorganization plan is not
approved, the Fund will continue to operate as a Maryland corporation. THE
FUND'S BOARD OF DIRECTORS RECOMMENDS THAT YOU APPROVE THE REORGANIZATION.
PART 2 - MORE ON PROXY VOTING AND SHAREHOLDER MEETINGS
This section provides information on a number of topics relating to
proxy voting and shareholder meetings.
PROXY SOLICITATION METHODS. The Fund will solicit shareholder proxies
in a variety of ways. All shareholders who are entitled to vote will receive
these proxy materials by mail. In addition, Fund employees and officers may
solicit shareholder proxies in person, by telephone, [or through the
Internet.] [We may also arrange for an outside firm,
___________________________, to solicit shareholder votes by telephone on the
Fund's behalf. This procedure, which is expected to cost the Fund
approximately $___ per shareholder vote, will be employed only after more
cost-effective means of soliciting shareholder votes have been exhausted.]
PROXY SOLICITATION COSTS. The Fund will pay all costs of soliciting
proxies from its own shareholders, including costs relating to the printing,
mailing, and tabulation of proxies. The Fund estimates that the costs of
solicitation will be approximately $__________. By voting immediately, you can
help the Fund avoid the considerable expense of a second solicitation.
<PAGE>
QUORUM AND VOTING. In order for the shareholder meeting to go
forward, we must achieve a quorum. This means that one-third of the Fund's
shares must be represented at the meeting--either in person or by proxy. All
returned proxies count towards a quorum, regardless of how they are voted
("For," "Against," or "Abstain"). The Fund will count abstentions and broker
non-votes toward a quorum, but not toward the approval of the proposal.
Abstentions and broker non-votes will have the effect of votes against the
proposal. (Broker non-votes are shares for which (i) the underlying owner has
not voted and (ii) the broker holding the shares does not have discretionary
authority to vote on the particular matter.) If, by the time scheduled for the
Special Meeting, a quorum of shareholders of the Fund is not present or if a
quorum of the Fund's shareholders is present but sufficient votes in favor of
the proposal are not received, the persons present in person or by proxy (or
the persons named as proxies) may propose one or more adjournments of the
Special Meeting to permit further solicitation of proxies from shareholders of
the Fund. Any such adjournment will require the affirmative vote of a majority
of the shares of the Fund present in person or represented by proxy at the
session of the Special Meeting to be adjourned. The persons named as proxies
will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interests of
the Fund's shareholders.
[All of the shares of the Fund are held in the nominee name of
Waterhouse Securities, Inc. ("Waterhouse Securities"), an affiliate of the
investment manager of the Fund, Waterhouse Asset Management, Inc. (the
"Investment Manager"), for the benefit of its customers. Waterhouse Securities
has advised the Fund that it will request instructions of its customers on how
to vote their shares on the proposal. The New York Stock Exchange has
indicated to Waterhouse Securities that in the event Waterhouse Securities
does not receive voting instructions from its customers with respect to the
proposal, Waterhouse Securities may vote in its discretion any shares with
respect to which instructions have not been received. Waterhouse Securities
has advised the Fund that it intends to vote any shares with respect to which
instructions are not received "FOR" the proposal.]
If you submit a proxy without indicating how you want to vote, your
proxy will be voted "FOR" the reorganization.
VOTING SECURITIES AND PRINCIPAL HOLDERS. The only voting securities
of the Fund are its common stock par value $0.0001 per share. Shares of the
Fund have the exclusive right to vote on matters affecting only the rights of
the holders of shares of the Fund. The Board of Directors of the Fund has
fixed the close of business on ___________ ___, 1999 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting. As of the record date, the Fund had __________________ shares
outstanding.
As of the record date, Toronto Dominion Investments Inc., [address],
owned of record and beneficially _________________ shares of the Fund, or
approximately 4% of the Fund's outstanding shares. As of the same date, the
officers and directors of the Fund, as a group, owned less than 1% of the
outstanding shares of the Fund.
<PAGE>
REVOKING YOUR PROXY. You may revoke your proxy at any time up until
voting results are announced at the shareholder meeting. You can do this by
writing to the Fund's Secretary, at 100 Wall Street, New York, NY 10005, or by
voting in person at the meeting. In addition, you can revoke a prior proxy
simply by voting again--using your original proxy card, [by toll-free
telephone call, or at our website.]
SHAREHOLDER PROPOSALS. The Fund has no current plans to hold an
annual or special meeting in 2000. Any shareholder proposals to be included in
the proxy statement for the Fund's next meeting of shareholders must be
received by the Fund within a reasonable period of time prior to that meeting.
NOMINEE ACCOUNTS. Upon request, the Fund will reimburse nominees for
their reasonable expenses in forwarding proxy materials to beneficial owners
of the Fund's shares. Please let us know the number of copies needed and
submit expense invoices for our review to 100 Wall Street, New York, NY 10005.
ANNUAL/SEMIANNUAL REPORTS. The Fund's most recent annual and
semiannual reports to shareholders are available at no cost. To request a
report, please call us toll-free at 1-800-934-4410 or write us at Waterhouse
Securities, Inc., Mutual Fund Services, 100 Wall Street, New York, NY 10005.
OTHER MATTERS. At this point, we know of no other business to be
brought before the shareholder meeting. However, if any other matters do come
up, we will use our best judgment to vote on your behalf.
PART 3 - FUND INFORMATION
This section contains background information about the Fund and its
investment manager.
A. THE FUND
The Fund is a series of Waterhouse Investors Family of Funds, Inc.
("WIFF"). WIFF is registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as an open-end management investment
company. WIFF was organized under Maryland law on August 16, 1995 under the
name Waterhouse Investors Cash Management Fund, Inc. and was renamed under its
current name on December 18, 1997. WIFF currently has four investment series
(including the Fund) with various investment objectives and policies.
The Fund commenced operations on March 31, 1998 and was originally
called the Waterhouse Dow Jones Industrial Average(Service Mark) Index Fund. The
Fund was renamed under its current name on July 22, 1998. The investment
objective of the Fund is to track the total return of the Dow Jones Industrial
Average(Service Mark) ("DJIA"(Service Mark)) before Fund expenses. As of
_________,
<PAGE>
1999, the Fund had net assets of $____________ and _____________ outstanding
shares.
B. THE FUND'S INVESTMENT MANAGER, ADMINISTRATOR AND
DISTRIBUTOR
Waterhouse Asset Management, Inc., a Delaware corporation, 100 Wall
Street, New York, NY 10005, is the Fund's investment manager. The Investment
Manager oversees the Fund's investment program, places orders for the Fund's
purchases and sales of portfolio securities and maintains records relating to
such purchases and sales.
For its services, the Investment Manager is entitled to an annual fee
of 0.20% of the Fund's average daily net assets. The Investment Manager and its
affiliates may, from time to time, voluntarily waive or reimburse all or part of
the Fund's operating expenses. Expense reimbursements by the Investment Manager
or its affiliates will increase the Fund's total return. The Investment Manager
has agreed to assume certain expenses of the Fund (or waive its fees), so that
the total operating expenses payable will not exceed 0.25% of its average daily
net assets. Thereafter, any such fee waivers or reductions will be voluntary and
may be reduced or eliminated at any time without further notice to investors.
For the fiscal period ended October 31, 1998, the Investment Manager waived its
entire investment management fee of $33,188.
In addition to the Fund and the other series of WIFF, the Investment
Manager currently serves as investment manager to National Investors Cash
Management Fund, Inc. and Waterhouse National Bank (of which it is an
affiliate) and as of [December 3, 1998], had total assets under management in
excess of $[7] billion.
Waterhouse Securities, Inc., an affiliate of the Investment Manager,
100 Wall Street, New York, NY 10005, as Administrator, provides administrative
and management services to the Fund. The Investment Manager (and not the Fund)
compensates Waterhouse Securities for providing these services. Waterhouse
Securities has entered into an agreement with Funds Distributor, Inc. ("FDI")
whereby FDI performs certain administrative services for WIFF's portfolios.
Waterhouse Securities pays FDI's fees for providing these services.
The Distributor of WIFF is FDI, 60 State Street, Suite 1300, Boston,
Massachusetts 02109. Pursuant to a Distribution Agreement between WIFF and
FDI, FDI has the exclusive right to distribute shares of WIFF. FDI may enter
into dealer or agency agreements with affiliates of the Investment Manager and
other firms for the sale of WIFF shares. FDI has entered into such an agency
agreement with Waterhouse Securities. FDI receives no fee from WIFF under the
Distribution Agreement for acting as distributor to WIFF. From time to time
and out of its own resources, the Investment Manager or its affiliates may pay
fees to broker-dealers or other persons for distribution or other services
related to the Fund.
<PAGE>
PART 4 - DIRECTOR/TRUSTEE INFORMATION
Your "yes" vote on the reorganization proposal will be treated as a
vote to elect the individuals currently serving as Directors of the Fund as
Trustees of the Trust. Following the reorganization, the Trustees will serve
until the next election or until their term is for some reason terminated.
This section provides detailed information about the individual
Directors of the Fund, including:
- The backgrounds and qualifications of the Directors.
- The identity of the Fund's principal executive officers.
- How many Fund shares are owned by management.
- How often the Board and its committees meet.
- How Directors are compensated.
<PAGE>
A. THE BACKGROUNDS AND QUALIFICATIONS OF DIRECTORS/TRUSTEES
Except as otherwise noted, the individuals listed below currently
serve as the directors and executive officers of WIFF, along with their
principal occupations over the past five years. Their affiliations, if any,
with the Investment Manager and FDI, WIFF's distributor, are listed below.
Principal Occupation during the
Name Age last Five Years and Other Directorships
- ---- --- ---------------------------------------
Richard W. Dalrymple 56 Director. Mr. Dalrymple has served as a Director
of each of WIFF and National Investors Cash
Management Fund, Inc. ("NICM") since December
12, 1995 and February 26, 1998, respectively.
Mr. Dalrymple has been the President of Teamwork
Management, Inc. since January 1997. Mr.
Dalrymple has served as a Director of Dime
Bancorp, Inc. since 1990. Mr. Dalrymple has been
a Trustee of The Shannon McCormack Foundation
since 1988, the Kevin Scott Dalrymple Foundation
since 1993 and a Director of National Center for
Disability Services since 1983. From 1990
through 1995, Mr. Dalrymple served as President
and Chief Operating Officer of Anchor Bank. From
1985 through 1990, Mr. Dalrymple worked for the
Bank of Boston. During this time, Mr. Dalrymple
served as the President of Massachusetts Banking
and the Southern New England Region, and as
Department Executive of Banking Services. Mr.
Dalrymple's address is 45 Rockefeller Plaza, New
York, NY 10111.
Carolyn B. Lewis 62 Director. Ms. Lewis has served as a Director of
each of WIFF and NICM since February 26, 1998.
Since March 1997, Ms. Lewis has served as
President of The CBL Group providing
professional services to clients in the
securities and healthcare industries. Ms. Lewis
spent over 30 years at the United States
Securities and Exchange Commission (SEC) in
various positions including Senior Financial
Analyst, Branch Chief and Assistant Director. In
September 1997, Ms. Lewis was appointed a member
of the Board of Governors of the Philadelphia
Stock Exchange. Presently, Ms. Lewis is a member
of the Board of Directors of the Metropolitan
Washington Airports Authority and a director on
various healthcare and hospital Boards,
including Chairman
<PAGE>
Elect of the Board of Trustees of the American
Hospital Association. Ms. Lewis' address is 2920
W Street Southeast, Washington, DC 20020.
George F. Staudter* 67 Director. Mr. Staudter has served as Chairman of
the Board of Directors of WIFF since December
12, 1995. Mr. Staudter is a Director of Koger
Equity, Inc. Mr. Staudter served as a Director
of Waterhouse Investor Services, Inc. from 1987
to 1996. Since 1989, Mr. Staudter has served as
a Managerial and Financial Consultant, rendering
investment management, tax and estate planning
services to individual clients, and strategic
planning advice to corporate clients. From 1993
through 1994, Mr. Staudter was the Chief
Executive Officer and served on the Board of
Directors for Family Steak Houses of Florida,
Inc. From 1986 through 1988, Mr. Staudter was a
principal and a principal shareholder of Douglas
Capital Management, Inc. In this capacity, Mr.
Staudter served as a member of the Investment
Committee and provided investment counseling and
tax and financial planning services. Mr.
Staudter's address is 9637 Preston Trail West,
Ponte Vedra, FL 32082.
Lawrence J. Toal 62 Director. Mr. Toal has served as a Director of
WIFF since December 12, 1995. Mr. Toal is
Chairman, President and Chief Executive Officer
of Dime Bancorp, Inc. and its subsidiary, The
Dime Savings Bank of New York, FSB (the "Dime").
He joined the Dime in 1991 as President and
Chief Operating Officer. Prior to joining the
Dime, Mr. Toal had been President of PSFS, a $10
billion Philadelphia thrift from 1988 to 1991.
Mr. Toal spent 26 years at The Chase Manhattan
Bank, N.A., in various senior management
positions in consumer, corporate and
international banking areas in the United
States, Europe and Asia. Mr. Toal's address is
589 Fifth Avenue, 3rd Floor, New York, NY 10017.
* Mr. Staudter is considered an "interested person" of WIFF.
<PAGE>
B. PRINCIPAL EXECUTIVE OFFICERS
The following individuals are the principal executive officers of WIFF.
Principal Occupation during the
Name Age last Five Years and Other Directorships
- ---- -- ---------------------------------------
George A. Rio 44 President, Treasurer and Chief Financial
Officer. Mr. Rio is Executive Vice President and
Director of Client Services of FDI since April
1998. From June 1995 to March 1998, Mr. Rio was
Senior Vice President and Senior Key Account
Manager for Putnam Mutual Funds. From May 1994
to June 1995, Mr. Rio was Director of Business
Development for First Data Corporation. His
address is 60 State Street, Suite 1300, Boston,
MA 02109.
Christopher J. Kelley 34 Vice President and Secretary. Mr. Kelley is
Vice President and Senior Associate General
Counsel of FDI, and an officer of certain
investment companies distributed by FDI or its
affiliates. From April 1994 to July 1996, Mr.
Kelley was Assistant Counsel at Forum Financial
Group. His address is 60 State Street, Suite
1300, Boston, MA 02109.
C. FUND SHARES OWNED BY DIRECTORS AND OFFICERS
On __________, 1999, the directors and officers of WIFF, as a group,
owned less than 1% of the outstanding shares of the Fund. [list any individual
director and officer share ownership of Fund, Investment Manager, distributor
or Administrator]
D. BOARD AND COMMITTEE MEETINGS
During fiscal year 1998, WIFF's Board of Directors held five
meetings.
The Board has a standing Audit Committee, which consists of all
Directors who are not "interested persons" of the Fund, namely Messrs.
Dalrymple and Toal and Ms. Lewis. During fiscal year ended October 31, 1998,
the Audit Committee held two meetings. The Audit Committee is responsible for
establishing and maintaining internal controls. In fulfilling this
responsibility, the role of the Audit Committee is to:
1. assess the effectiveness and related costs of controls related
to audits,
2. safeguard assets against unauthorized acquisition, use or
disposition and
<PAGE>
3. ensure that financial statements prepared for external
purposes are fairly represented in conformity with generally
accepted accounting principles.
During fiscal year 1998, no incumbent director attended fewer than
75% of Board and Audit Committee meetings on which he or she was elected to
serve. Following the reorganization, the Fund's Board of Trustees will form a
similar committee.
E. DIRECTOR AND OFFICER COMPENSATION
INDEPENDENT DIRECTORS. WIFF pays its directors an annual retainer and
a per meeting fee and reimburses them for their expenses. WIFF expects to pay
or accrue total directors' fees of approximately $45,000 per year to those
directors who are not designated as interested persons.
"INTERESTED" DIRECTORS AND OFFICERS. The Fund's interested director,
George F. Staudter, receives no compensation from WIFF for his services in that
capacity. However, directors who are interested persons of WIFF may be
compensated by the Investment Manager for their services to WIFF. Officers of
WIFF are not compensated by WIFF.
COMPENSATION TABLE. The amounts of compensation that WIFF paid to each
director for the fiscal year ended October 31, 1998, are as follows:
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Benefits Estimated Annual Total Compensation from
Compensation from Accrued as Part of Benefits Upon Fund Complex (1) Paid to
Name of Board Member WIFF (5) WIFF's Expenses Retirement Board Members (5)
-------------------- -------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Richard W. Dalrymple $19,125 $0 $0 $19,125
Carolyn B. Lewis(2) $11,125 $0 $0 $11,125
Theodore Rosen (3) $10,000 $0 $0 $10,000
George F. Staudter (4) $0 $0 $0 $0
Lawrence J. Toal $20,000 $0 $0 $20,000
</TABLE>
(1) "Fund Complex" includes WIFF and NICM, an investment company also advised
by the Investment Manager.
(2) Became a director of WIFF and NICM on February 26, 1998.
(3) Served as a director of WIFF through February 26, 1998.
(4) Interested director of WIFF.
(5) Amounts do not include reimbursed expenses for attending Board meetings or
compensation from the Investment Manager or its affiliates.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
this day of , 1999, by and between Waterhouse Investors Family of Funds,
Inc., a Maryland corporation ("Corporation"), on behalf of the Waterhouse Dow 30
Fund (the "Old Fund"), and TD Waterhouse Trust, a Delaware business trust
("Trust"), on behalf of, TD Waterhouse Dow 30 Fund (the "New Fund"). (Each of
the Old Fund and New Fund is sometimes referred to herein individually as a
"Fund" and collectively as the "Funds"; Corporation and Trust are sometimes
referred to herein individually as an "Investment Company" and collectively as
the "Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by a Fund are
made and shall be taken or undertaken by Corporation on behalf of the Old Fund
and by Trust on behalf of the New Fund.
The Old Fund intends to change its identity, form, and place of
organization--by converting from a series of a Maryland corporation to a
series of a Delaware business trust --through a reorganization within the
meaning of section 368(a) (1) (F) of the Internal Revenue Code of 1986, as
amended ("Code"). The Old Fund desires to accomplish such conversion by
transferring all its assets to the New Fund (which is being established solely
for the purpose of acquiring such assets and continuing the Old Fund's
business) in exchange solely for voting shares of beneficial interest in the
New Fund ("New Fund Shares") and the New Fund's assumption of the Old Fund's
liabilities, followed by the constructive distribution of the New Fund Shares
pro rata to the holders of shares of common stock of the Old Fund ("Old Fund
Shares") in exchange therefor, all on the terms and conditions set forth in
this Agreement (which is intended to be, and is adopted as, a "plan of
reorganization" for federal income tax purposes). All such transactions
involving the Old Fund and the New Fund are referred to herein as the
"Reorganization."
In consideration of the mutual promises herein contained, the parties
agree as follows:
1. Plan of Reorganization and Termination of Old Fund.
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver
all of its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund
agrees in exchange therefor-
(a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares equal
to the number of full and fractional Old Fund Shares then
outstanding; and
<PAGE>
(b) to assume all of the Old Fund's liabilities described in
paragraph 1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph
2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at
the Effective Time (as defined in paragraph 2.1).
1.3. The Liabilities shall include all of the Old Fund's liabilities,
debts, obligations, and duties of whatever kind of nature, whether absolute,
accrued, contingent, or otherwise, whether or not determinable at the
Effective Time, and whether or not specifically referred to herein.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable, (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall constructively
distribute the New Fund Shares received by it pursuant to paragraph 1.1 to Old
Fund's shareholders of record, determined as of the Effective Time
(collectively, "Shareholders" and each individually, a "Shareholder"), in
exchange for their Old Fund Shares. Such distribution shall be accomplished by
Trust's transfer agent ("Transfer Agent") opening accounts on New Fund's share
transfer books in the Shareholder's names and transferring such New Fund
Shares thereto. Each Shareholder's account shall be credited with the
respective pro rata number of full and fractional (rounded to the third
decimal place) New Fund Shares due that Shareholder. All outstanding Old Fund
Shares, including those represented by certificates, shall simultaneously be
canceled on Old Fund's share transfer books. New Fund shall not issue
certificates representing the New Fund Shares in connection with the
Reorganization. However, certificates representing Old Fund Shares shall
represent New Fund Shares after the Reorganization.
1.5. As soon as reasonably practicable after distribution of the New
Fund Shares pursuant to paragraph 1.4, Old Fund shall be terminated as a
series of Corporation and any further actions shall be taken in connection
therewith as required by applicable law.
1.6. Any transfer taxes payable on issuance of New Fund Shares in a
name other than that of the registered holder of Old Fund's books of the Old
Fund Shares constructively exchanged therefor shall be paid by the person to
whom such New Fund Shares are to be issued, as a condition of such transfer.
1.7. Any reporting responsibility of Old Fund to a public authority
is and shall remain its responsibility up to and including the date on which
it is terminated.
<PAGE>
2. Closing.
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Investment Companies'
principal office on ________, 1999, or on such other date and at such other
place upon which the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the Investment Companies'
close of business on the date thereof or at such other time as the parties may
agree (the "Effective Time").
2.2. Corporation shall deliver to Trust at the Closing a schedule of
the Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by
lot. Old Fund's custodian shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets held by the custodian will be
transferred to New Fund at the Effective Time and (b) all necessary taxes in
conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for
payment has been made.
2.3. Corporation shall deliver to Trust at the Closing a list of the
Shareholders' names and addresses and the number of outstanding Old Fund
Shares owned by each Shareholder, all as of the Effective Time, certified by
Corporation's Secretary or Assistant Secretary. The Transfer Agent shall
deliver at the Closing a certificate as to the opening on New Fund's share
transfer books of account in the Shareholder's names. Trust shall issue and
deliver a confirmation to Corporation evidencing the New Fund Shares to be
credited to Old Fund at the Effective Time or provide evidence satisfactory to
Corporation that such shares have been credited to Old Fund's account on such
books. At the Closing, each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts, or other documents as
the other party or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the
Closing a certificate executed in its name by its President or a Vice
President in form and substance satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties it made
in this Agreement are true and correct at the Effective Time except as they
may be affected by the transactions contemplated by the Agreement.
3. Representations and Warranties.
3.1. Old Fund represents and warrants as follows:
3.1.1. Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland;
<PAGE>
3.1.2. Corporation is duly registered as an open-end
management investment company under the Investment Company Act of
1940, as amended ("1940 Act"), and such registration is in full force
and effect;
3.1.3. Old Fund is a duly established and designated series
of Corporation;
3.1.4. Old Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of the Articles of Incorporation or By-laws of the
Corporation or any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Corporation on
behalf of Old Fund is a party or by which Old Fund is bound;
3.1.5. The execution, delivery and performance of this
Agreement has been duly authorized by the Board of Directors of the
Corporation and by all necessary corporate action, other than
shareholder approval, on the part of the Corporation on behalf of Old
Fund, and this Agreement constitutes a valid and binding obligation
of the Corporation on behalf of Old Fund;
3.1.6. At the Closing, Old Fund will have good and
marketable title to the Assets and full right, power, and authority
to sell, assign, transfer, and deliver the assets free of any liens
or other encumbrances' and upon delivery and payment for the Assets,
New Fund will acquire good and marketable title thereto;
3.1.7. New Fund Shares are not being acquired for the
purpose of making any distribution thereof, other than in accordance
with the terms hereof;
3.1.8. Old Fund is a "fund" as defined in section 851(g)(2)
of the Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable
year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year (and
the Assets will be invested at all times through the Effective Time
in a manner that ensures compliance with the foregoing); it has no
earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it; and it has made all
distributions for each such past taxable year that are necessary to
avoid the imposition of federal excise tax or has paid or provided
for the payment of any excise tax imposed for any such year;
3.1.9. There is no plan or intention of Shareholders who
individually own 5% or more of Old Fund Shares - and, to the best of
the Corporation's management's knowledge, there is no plan or
intention of the remaining Shareholders - to redeem or otherwise
dispose of any New Fund Shares to be received by them in the
Reorganization. Management does not anticipate dispositions of those
shares at the time of or soon after
<PAGE>
the Reorganization to exceed the usual rate and frequency of
redemptions of shares of Old Fund as a series of an open-end
investment company. Consequently, management expects that the
percentage of Shareholder interests, if any, that will be disposed of
as a result of or at the time of the Reorganization will be de
minimis.
3.1.10. The Liabilities were incurred by Old Fund in the
ordinary course of its business and are associated with the Assets;
3.1.11. Old Fund is not under the jurisdiction of a court in
a proceeding under Title 11 of the United States Code or similar case
within the meaning of section 368(a)(3)(A) of the Code;
3.1.12. As of the Effective Time, Old Fund will not have
outstanding any warrants, options, convertible securities, or any
other type of rights pursuant to which any person could acquire Old
Fund Shares;
3.1.13. At the Effective Time, the performance of this
Agreement shall have been duly authorized by all necessary action by
Old Fund's shareholders; and
3.1.14. Old Fund will be terminated as soon as reasonably
practicable after the Reorganization, but in all events within twelve
months after the Effective Time.
3.2. New Fund represents and warrants as follows:
3.2.1. Trust is a business trust duly organized, validly
existing, and in good standing under the laws of the State of
Delaware; and Trust has been established in accordance with the terms
of the Trust's Declaration of Trust.
3.2.2. At the Effective Time, Trust will be duly registered
as an open-end management investment company under the 1940 Act;
3.2.3. Trust is not, and the execution, delivery and
performance of this Agreement will not, result in violation of any
provision of the Declaration of Trust or ByLaws of Trust, or any
material agreement, indenture, instrument, contract, lease or other
undertaking to which Trust is a party or by which Trust is bound.
3.2.4. The execution, delivery and performance of this
Agreement has been duly authorized by the Trustee of the Trust and by
all necessary Trust action on the part of the Trust and this
Agreement constitutes a valid and binding obligation of the Trust.
3.2.5. Before the Effective Time, New Fund will be a duly
established and designated series of Trust;
<PAGE>
3.2.6. New Fund has not commenced operations and will not
commence operations until after the Closing;
3.2.7. Prior to the Effective Time, there will be no issued
and outstanding shares in New Fund or any other securities issued by
New Fund, except as provided in paragraph 4.4;
3.2.8. No consideration other than New Fund Shares (and New
Fund's assumption of the Liabilities) will be issued in exchange for
the Assets in the Reorganization;
3.2.9. The New Fund Shares to be issued and delivered to Old
Fund hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly and
validly issued and outstanding shares of New Fund, fully paid and
non-assessable;
3.2.10. New Fund will be a "fund" as defined in section
851(g)(2) of the Code and will meet all the requirements to qualify
for treatment as a RIC for its taxable year in which the
Reorganization occurs;
3.2.11. New Fund has no plan or intention to issue
additional New Fund Shares following the Reorganization except for
shares issued in the ordinary course of its business as a series of
an open-end investment company; nor does New Fund have any plan or
intention to redeem or otherwise reacquire any New Fund Shares issued
pursuant to the Reorganization, other than in the ordinary course of
that business or to the extent necessary to comply with its legal
obligation under Section 22(e) of the 1940 Act;
3.2.12. New Fund will actively continue Old Fund's business
in substantially the same manner that Old Fund conducted that
business immediately before the Reorganization; and New Fund has no
plan or intention to sell or otherwise dispose of any of the Assets,
except for dispositions made in the ordinary course of its business
and dispositions necessary to maintain its qualification as a RIC;
3.2.13. There is no plan or intention for New Fund to be
dissolved or merged into another corporation or business trust or
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization; and
3.3. Each Fund represents and warrants as follows:
<PAGE>
3.3.1. The fair market value of the New Fund Shares received
by each Shareholder will be approximately equal to the fair market
value of the Old Fund Shares constructively surrendered in exchange
therefor;
3.3.2. Immediately following consummation of the
Reorganization, the Shareholders will own all the New Fund Shares and
will own such shares solely by reason of their ownership of Old Fund
Shares immediately before the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. There is no intercompany indebtedness between the
Funds that was issued or acquired, or will be settled, at a discount;
and
3.3.5. Immediately following consummation of the
Reorganization, New Fund will hold the same assets - except for
assets distributed to shareholders in the course of its business as a
RIC and assets used to pay expenses incurred in connection with the
Reorganization - and be subject to the same liabilities that Old Fund
held or was subject to immediately prior to the Reorganization, plus
any liabilities for expenses of the parties incurred in connection
with the Reorganization. Such excepted assets, together with the
amount of all redemptions and distributions (other than regular,
normal dividends) made by Old Fund immediately preceding the
Reorganization, will, in the aggregate, constitute less than 1% of
its net assets.
4. Conditions Precedent.
Each Fund's obligations hereunder shall be subject to (a) performance
by the other party of all its obligations to be performed hereunder at or
before the Effective Time, (b) all representations and warranties of the other
party contained herein being true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated hereby, as of the Effective Time, with the same force and effect
as if made on and as of the Effective Time, and (c) the further conditions
that, at or before the Effective Time:
4.1. All necessary filings shall have been made with the SEC and
state securities authorities, and no order or directive shall have been
received that any other or further action is required to permit the parties to
carry out the transactions contemplated hereby. All consents, orders, and
permits of federal, state, and local regulatory authorities (including the SEC
and state securities authorities) deemed necessary by either Investment
Company to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain
same would not involve a risk of a material adverse effect on the assets or
properties of either Fund, provided that either Investment Company may for
itself waive any of such conditions;
<PAGE>
4.2. Corporation shall have prepared the Proxy Statement in
compliance with the Securities Exchange Act of 1934, the 1940 Act and the
rules and regulations under each Act, and shall have called a meeting of Old
Fund's shareholders ("Shareholders Meeting") to consider and act on this
Agreement and the Reorganization, and at such meeting those shareholders shall
have approved thereof in accordance with applicable law;
4.3. Each party shall have received an opinion from Swidler Berlin
Shereff Friedman, LLP as to the federal income tax consequences mentioned
below. In rendering such opinion, such counsel may rely as to factual matters,
exclusively and without independent verification, on the representations made
in this Agreement (or in separate letters or certifications addressed to such
counsel) and the certificates delivered pursuant to paragraph 2.4. Such
opinion shall be substantially to the effect that, based on the facts and
assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
4.3.1. The Reorganization will constitute a reorganization
within the meaning of section 368(a)(1)(F) of the Code, and each Fund
will be "a party to a reorganization" within the meaning of section
368(b) of the Code;
4.3.2. No gain or loss will be recognized to Old Fund on the
transfer of the Assets to New Fund in exchange solely for New Fund
Shares and New Fund's assumption of the Liabilities or on the
subsequent distribution of those shares to the Shareholders, in
constructive exchange for their Old Fund Shares, in liquidation of
Old Fund;
4.3.3. No gain or loss will be recognized to New Fund on its
receipt of the Assets in exchange for New Fund Shares and its
assumption of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as
the basis thereof in Old Fund's hands immediately before the
Reorganization, and New Fund's holding period for the Assets will
include Old Fund's holding period therefor;
4.3.5. A shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the basis
for its Old Fund Shares to be constructively surrendered in exchange
for those New Fund Shares, and its holding period for those New Fund
Shares will include its holding period for those Old Fund Shares,
provided they are held as capital assets by the Shareholder at the
Effective Time; and
<PAGE>
4.3.7. For purposes of section 381 of the Code, New Fund
will be treated as if there had been no Reorganization. Accordingly,
the Reorganization will not result in the termination of Old Fund's
taxable year, Old Fund's tax attributes enumerated in section 381(c)
of the Code will be taken into account by New Fund as if there had
been no Reorganization, and the part of Old Fund's taxable year
before the Reorganization will be included in New Fund's taxable year
after the Reorganization;
4.4. Prior to the Closing, Trust's trustees shall have authorized the
issuance of, and New Fund shall have issued, one New Fund Share to Old Fund in
consideration of the payment of $1.00 for the purpose of enabling Corporation,
on behalf of Old Fund, to elect the Corporation's directors as Trust's
trustees (to serve without limit in time, except as they may resign or be
removed by action of Trust's trustees or shareholders), to ratify the
selection of Trust's independent certified public accountants, and to vote on
the matters referred to in paragraph 4.5; and
4.5. Trust (on behalf of and with respect to New Fund) shall have
entered into an investment management agreement, an administration agreement,
distribution agreement, transfer agency agreement, custodian agreement,
shareholder servicing plan and related agreements, and such other agreements
as are necessary for the New Fund's operation as a series of an open-end
investment company. Each such agreement shall have been approved by Trust's
trustees and, to the extent required by law, by such of those trustees who are
not "interested persons" thereof (as defined in the 1940 Act) and by
Corporation as the sole shareholder of the New Fund.
4.6. At any time prior to the Closing, any of the foregoing
conditions (except that set forth in paragraph 4.2) may be waived by the
directors/trustees of either Investment Company if, in their judgment, such
waiver will not have a material adverse effect on the interests of Old Fund's
shareholders.
5. Expenses.
Except as otherwise provided in subparagraph 3.3.3, all expenses
incurred in connection with the transactions contemplated by this Agreement
(regardless of whether they are consummated) will be borne by the parties as
they mutually agree.
6. Entire Agreement; Survival.
Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement between
the parties. The representations, warranties, and covenants contained herein
or in any document delivered pursuant hereto or in connection herewith shall
survive the Closing.
<PAGE>
7. Amendment.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
8. Termination.
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Old Fund's shareholders:
8.1. By either Fund (a) in the event of the other Fund's material
breach of any representation, warranty or covenant contained herein to be
performed at or prior to the Effective Time, or (b) if a condition to its
obligations has not been met and it reasonably appears that such condition
will not or cannot be met; or
8.2. By the parties' mutual agreement.
Except as otherwise provided in paragraph 5, in the event of termination under
paragraphs 8.1 or 8.2, there shall be no liability for damages on the part of
either Fund-or the directors or trustees, as the case may be, or officers of
either Investment Company-to the other Fund.
9. Miscellaneous.
9.1. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York; provided that, in the case of
any conflict between such laws and the federal securities laws, the latter
shall govern.
9.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
9.3. The execution and delivery of this Agreement have been
authorized by the Trust's trustees, and this Agreement has been executed and
delivered by authorized officers of Trust acting as such; neither such
authorization by such trustees nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually or to
impose any liability on any of them of any shareholder of Trust personally,
but shall bind only the assets and property of the New Fund, as provided in
Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed and delivered by its duly authorized officers as of the day and year
first written above.
<PAGE>
Attest: WATERHOUSE INVESTORS FAMILY
OF FUNDS, INC., on behalf of Waterhouse
Dow 30 Fund
By:
- ---------------------------- ------------------------------------
Title:
---------------------------------
Attest: TD WATERHOUSE TRUST
on behalf of TD Waterhouse Dow 30 Fund
By:
- ----------------------------- ------------------------------------
Title:
---------------------------------
<PAGE>
[to be used only if Telephone or Internet voting is available]
VOTE BY TOUCH-TONE PHONE OR THE INTERNET
- ----------------------------------------
[LOGO OF WATERHOUSE
DOW 30 FUND]
CALL TOLL-FREE: 1-800-___-____ [OR VISIT OUR WEBSITE
WWW.______.COM OR WWW.PROXYVOTE.COM]
12-DIGIT CONTROL NUMBER: (unavailable)
(See enclosed insert for further instructions to vote by phone/internet)
-Please detach at perforation before mailing-
WATERHOUSE DOW 30 FUND (THE "FUND")
PROXY SOLICITED BY THE BOARD OF DIRECTORS
By my signature below, I appoint ______________________,
______________________, and ______________________ as my attorneys to vote all
Fund shares that I am entitled to vote at the Special Meeting of Shareholders
to be held at [ PLACE ] on [ DATE ] , 1999 at [ TIME ] a.m., Eastern Time and
at any adjournments of the meeting. Any one or more of Messrs.
________________, _________________ and _______________ may vote my shares,
and they may appoint substitutes to vote my shares on their behalf. I instruct
Mr. Richard H. Neiman and Ms. Michele R. Teichner to vote this proxy as
specified on the reverse side, and I revoke any previous proxies that I have
executed. I acknowledge receipt of the Fund's Notice of Special Meeting of
Shareholders and proxy statement.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE IF
YOU ARE NOT VOTING BY PHONE OR
INTERNET.
Date: _______________
NOTE: Please sign exactly as
your name appears on this proxy.
When signing in a fiduciary
capacity, such as executor,
administrator, trustee,
attorney, guardian, etc., please
so indicate. Corporate and
partnership proxies should be
signed by an authorized person
indicating the person's title.
<PAGE>
------------------------------------------
------------------------------------------
Signature(s) (and Title(s), if applicable)
CONTINUED ON REVERSE SIDE
Please refer to the Proxy Statement discussion of this proposal.
THE PROXY WILL BE VOTED FOR THE PROPOSAL IF YOU DO NOT SPECIFY
OTHERWISE.
[We urge you to send in your instructions so that we may vote your securities
in accordance with your wishes. However, the Rules of the New York Stock
Exchange provide that if instructions are not received from you by the tenth
day before the meeting, the proxy may be given at discretion by the holder of
record of the securities, Waterhouse Securities, Inc., on the tenth day, if
proxy material was mailed at least 15 days prior to the meeting date; on the
fifteenth day if proxy material was mailed 25 days or more prior to the
meeting date. Waterhouse Securities, Inc. has advised the Fund that it intends
to vote any shares with respect to which instructions have not been received
"FOR" the proposal. If you are unable to communicate with us by such date, we
will, nevertheless follow your instructions, even if our discretionary vote
has already been given, provided your instructions are received prior to the
meeting date.]
Your appointed attorneys will vote any other matters that arise at the meeting
in accordance with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSAL:
- Please detach at perforation before mailing -
PLEASE VOTE BY CHECKING THE APPROPRIATE BOX(ES) BELOW
1. To approve an Agreement and Plan of Reorganization to reorganize the
Fund into a Delaware business trust, as more fully described in the
enclosed proxy statement .
Please indicate your proposal by firmly placing an "x" in the appropriate box
with blue or black ink only.
FOR / / AGAINST / / ABSTAIN / /
<PAGE>
2. Any other business properly brought before the meeting or any
adjournments of the meeting.
PLEASE SIGN ON REVERSE SIDE
