-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WduHRtVi/dN4AAmzA7R/WodN+6yHoYu1fYkYZ4zXRvVDxRG+zAJbPGXGuhz6BVhH zbp0yQRQKmm3rkZIW+UpLw== 0000897101-04-001340.txt : 20040712 0000897101-04-001340.hdr.sgml : 20040712 20040712151923 ACCESSION NUMBER: 0000897101-04-001340 CONFORMED SUBMISSION TYPE: N-CSR/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040712 EFFECTIVENESS DATE: 20040712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMARACK FUNDS TRUST CENTRAL INDEX KEY: 0001272950 IRS NUMBER: 00000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-21475 FILM NUMBER: 04910141 MAIL ADDRESS: STREET 1: 60 SOUTH SIXTH STREET CITY: MINNEAPOLIS STATE: MN ZIP: 55402 N-CSR/A 1 tam-fixequity043104s3_ncsra.txt - -------------------------------------------------------------------------------- OMB APPROVAL OMB Number: 3235-0570 Expires: October 31, 2006 Estimated average burden hours per response.......19.3 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR/A CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-21475 Tamarack Funds Trust 90 South Seventh Street, Minneapolis, MN 55402 BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219 (Name and address of agent for service) Registrant's telephone number, including area code: (614) 470-8000 Date of fiscal year end: 4/30/04 Date of reporting period: 4/30/04 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1). TAMARACK FUNDS Annual Report April 30, 2004 [PHOTO] GOVERNMENT INCOME FUND QUALITY FIXED INCOME FUND NORTH CAROLINA TAX-FREE BOND FUND [LOGO] TAMARACK FUNDS ================================================================================ ================================================================================ Tamarack Funds - -------------------------------------------------------------------------------- ABOUT YOUR ANNUAL REPORT This annual report includes detailed information regarding your Funds' performance. This report is provided to help answer your questions as a shareholder. Among these questions may be: How has my Fund performed against its benchmark both in the last year and over the last ten years (or since inception if less than ten years)? What are the annual expenses of my Fund? What are the significant accounting policies and procedures followed by my Fund? The Tamarack Funds compare their performance against widely used market indices, depending on the market sector or investment style of the particular fund. These indices include the S&P 500, Russell 2000 and S&P MidCap 400. We hope the financial information presented as well as the discussion and analysis from your portfolio manager(s) will help you evaluate your investment in the Tamarack Funds. We also encourage you to read your Fund's prospectus for further detail as to your Fund's investment policies and risk profile. Tamarack Funds prospectuses and performance information subsequent to the date of this report are available on our website at www.tamarackfunds.com. - -------------------------------------------------------------------------------- TABLE OF CONTENTS Shareholder Letter .......................................................... 1 Letter from the CIO of Fixed Income ......................................... 2 Performance Summary ......................................................... 4 Government Income Fund - Management Discussion and Analysis ...................................... 6 Quality Fixed Income Fund - Management Discussion and Analysis ...................................... 8 North Carolina Tax-Free Fund - Management Discussion and Analysis ...................................... 10 Financial Statements - Statement of Assets and Liabilities ..................................... 12 - Statement of Operations ................................................. 14 - Statement of Changes in Net Assets ...................................... 15 Financial Highlights (all Funds) ............................................ 18 Notes to Financial Statements ............................................... 24 Schedule of Investments ..................................................... 35 Auditors' Opinion ........................................................... 44 Management .................................................................. 45 Share Class Information ..................................................... 48 Supplemental Information .................................................... 49 ================================================================================ SHAREHOLDER LETTER ================================================================================ To Our Shareholders - -------------------------------------------------------------------------------- On April 16th, 2004 the reorganization into the new Tamarack Funds Trust of the Quality Fixed Income, Government Income and North Carolina Tax-Free Bond Funds (formerly known as the RBC Funds) was completed after being approved by shareholders. The new Tamarack Funds, which include 17 separate portfolios (fixed income, equity and money market)* also have a new year-end of September 30th. You may, therefore, be wondering why we are sending you a report with information including only these three former RBC Funds, with financial statements audited as of the former RBC Funds year-end of April 30th. We do not want to let 17 months pass between the annual audited financial statements we make available to you our shareholders. Therefore, we are providing to you an annual report one final time as of the former RBC Funds' April 30th year-end. You will also receive another report in approximately five months including all of the fixed income portfolios in the Tamarack Funds as of the new September 30th year-end. In the future you may then expect to receive regularly scheduled semi-annual and annual reports dated March 31 and September 30 for the Tamarack Funds. The past year has clearly been a time of significant change for your Funds. For example, as part of the reorganization, shareholders of the former Portfolio S and Portfolio L of D. L. Babson Bond Trust approved the combination of their funds into the Quality Fixed Income Fund, contributing to an increase in fund assets from $48 million on April 30th, 2003 to $129 million on April 30th, 2004. However, our commitment providing the best portfolio management services to you and all of our investors remains the same. While our first priority is managing your investment in the Tamarack Funds to maintain an appropriate balance between portfolio returns and risk (we won't seek the absolutely highest return if we deem the credit or market risk too great) we have also begun marketing our expanded fund family offerings to new investors. As part of this effort we have created a new website, www.tamarackfunds.com. We invite you to visit this site for information regarding both your fund(s) and other funds within the Tamarack family. We know that no matter what the dollar balance in your Tamarack Funds shareholder account, these assets are an important part of your overall investments. We appreciate and value the trust you have placed in us and will continue our efforts to provide you with solid risk-balanced returns. Sincerely, /s/ Jennifer Lammers Jennifer Lammers President, Tamarack Funds *TO REDUCE THE SIZE AND COMPLEXITY OF EACH ANNUAL REPORT, AND HOPEFULLY MAKE THEM EASIER FOR YOU AS A SHAREHOLDER TO USE, WE HAVE DIVIDED THE TAMARACK FUNDS INTO THREE GROUPS (FIXED INCOME, EQUITY, AND MONEY MARKET) FOR ANNUAL AND SEMI-ANNUAL REPORTING AS WELL AS PROSPECTUSES. THE FORMER RBC EQUITY FUNDS REPORT AS WELL AS THOSE OF THE OTHER TAMARACK FUNDS WILL BE AVAILABLE ON OUR WEBSITE. 1 ================================================================================ LETTER FROM THE CIO OF FIXED INCOME ================================================================================ - -------------------------------------------------------------------------------- Bonds should be an important part of the portfolio of investors seeking a balanced investment strategy. Bonds generate higher income than stocks, and their market value fluctuations are less volatile. In addition, the changes in bond prices are not closely linked to changes in stock prices, so a portfolio with a mix of stocks and bonds can be expected to experience less overall volatility than one with only equities or fixed income securities. Just what are bonds? Bonds (also known as fixed income securities) are debt securities issued by borrowers who promise to pay a fixed rate of interest twice a year and to repay the loan on a specific date. There is a huge variety of bonds available in the market. Among the largest issuers of bonds are the U.S Treasury, government agencies, corporations, municipalities, and pools of home mortgage bonds backed by government agencies. Maturities of these bonds range from overnight to 30 years or more. There is also a very wide range in the credit quality of borrowers who issue bonds. Although the concept of a bond is very simple, the wide variety of bonds available makes the bond market quite complex. The two main risks of bonds to investors are interest rate risk and credit risk. Bond prices move in the opposite direction of interest rates, so when interest rates rise the price of bonds declines, and vice versa. The longer the maturity of a bond, the greater the price volatility. Credit risk is the chance that a bond will not be repaid because the borrower cannot financially make the payment. Generally bondholders can earn higher interest rates for accepting higher risks of either type. Investors can add bond investments to their portfolio either by buying bonds directly or by buying bond mutual funds. Bond funds, such as the Tamarack Funds, are professionally managed portfolios of bonds. Funds are the most convenient way to add fixed income exposure to your portfolio. Funds can provide a portfolio that is diversified by issuers and maturities. Professional managers can utilize credit research and make informed judgments as to the most attractive bonds to add to the fund. Bond funds also offer good liquidity. Investors can sell their holdings at any time at the current fund value, which is available daily, unlike individual bonds for which it is often difficult to know the fair market value on any given day. In contrast to individual fixed income securities, however, bond funds do not mature on a fixed date and shareholders pay expenses for the management of the fund portfolio. The managers of the Tamarack bond funds strive to provide investors with funds that can meet various needs for the fixed income portion of their portfolios. The Tamarack Quality Fixed Income Fund invests in a wide variety of taxable bonds. The Tamarack Government Income Fund invests primarily in U.S. Treasury, government agency, and government agency mortgage-backed bonds. The Tamarack North Carolina Tax-Free Bond Fund invests primarily in municipal bonds that are exempt from federal and North Carolina income taxes. Our portfolio management team manages these various funds to meet the diverse fixed income needs and preferences of our investors. 2 ================================================================================ FIXED INCOME PORTFOLIO MANAGERS ================================================================================ - -------------------------------------------------------------------------------- Voyageur Asset Management employs a team approach to the management of each of the Fixed Income Funds. Each Fund's management team has access to Voyageur's investment research and other money management resources. The members of Voyageur's fixed income funds team are: - -------------------------------------------------------------------------------- RAYE C. KANZENBACH, CFA SENIOR MANAGING DIRECTOR, SENIOR PORTFOLIO MANAGER Raye Kanzenbach is the Senior Portfolio Manager for portfolios which invest in tax-exempt securities. He is also the Chief Investment Officer, Fixed Income Products for the Tamarack Funds. Raye has been with Voyageur and its predecessor firm, Insight Investment Management, since 1983. He has been in the investment industry since 1973. Raye received his MBA from the University of Michigan, his BA from Lawrence University and is a CFA charterholder. - -------------------------------------------------------------------------------- JAMES A. NORUNGOLO, CFA VICE PRESIDENT, SENIOR PORTFOLIO MANAGER James Norungolo's management emphasis is on core duration portfolios. He specializes in the corporate bond sector, and also lends the Voyageur taxable fixed income team his strength in asset-backed securities (ABS). James has been with Voyageur since 1993 and has been in the investment industry since 1987. James received his BA from the University of Virginia and is a CFA charterholder. - -------------------------------------------------------------------------------- SCOTT CABALKA VICE PRESIDENT, SENIOR PORTFOLIO MANAGER Scott Cabalka is responsible for all trading in the taxable portfolios of the Tamarack Money Market Funds. In addition, he oversees the approved issuer list for the Tamarack Funds. Scott has been with Voyageur and its predecessor firm, Insight Investment Management, since 1993. He has been in the investment industry since 1980. Scott received his MBA and BS from the University of Minnesota. - -------------------------------------------------------------------------------- RANDAL W. HARRISON, CFA VICE PRESIDENT, SENIOR PORTFOLIO MANAGER Randy Harrison's areas of expertise are the mortgage-backed and commercial mortgage-backed securities markets. Randy has been with Voyageur since 1993 and has been in the investment industry since 1990. Randy received his MBA from the University of Iowa, his BS from Miami University (Ohio) and is a CFA charterholder. 3 ================================================================================ PERFORMANCE SUMMARY ================================================================================ Total Returns as of April 30, 2004
- ----------------------------------------------------------------------------------------------------- TAMARACK GOVERNMENT INCOME FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales Charge of 3.75% -3.79% 3.68% 4.72% 5.33% 5.55% - - At Net Asset Value -0.05% 5.03% 5.53% 5.73% 5.85% Class C (b) - - Including Contingent Deferred Sales Charge of 1.00% -1.03% 5.02% 5.52% 5.73% 5.85% - - At Net Asset Value 0.07% 5.02% 5.52% 5.73% 5.85% Class I (a) 0.20% 5.29% 5.79% 6.01% 6.18% Class R (b) -0.06% 5.03% 5.52% 5.73% 5.85% Class S (b) 0.10% 5.26% 5.77% 6.00% 6.17% LB Intermediate Gov't. Index* 0.99% 5.77% 6.17% 6.58% 6.58% - ----------------------------------------------------------------------------------------------------- TAMARACK QUALITY INCOME FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales Charge of 3.75% -2.41% 3.35% N/A N/A 4.44% - - At Net Asset Value 1.39% 4.67% N/A N/A 5.25% Class C (b) - - Including Contingent Deferred Sales Charge of 1.00% 0.32% 4.62% N/A N/A 5.22% - - At Net Asset Value 1.26% 4.62% N/A N/A 5.22% Class I (a) 1.54% 4.88% N/A N/A 5.47% Class R (b) 1.28% 4.63% N/A N/A 5.23% Class S (b) 1.64% 4.92% N/A N/A 5.49% LB U.S. Aggregate Bond Index* 1.82% 6.65% N/A N/A 6.66% - ----------------------------------------------------------------------------------------------------- TAMARACK NORTH CAROLINA TAX-FREE BOND FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales Charge of 3.75% -3.49% 2.94% 3.09% 4.31% 4.37% - - At Net Asset Value 0.30% 4.26% 3.89% 4.71% 4.67% Class I (a) 0.55% 4.52% 4.15% 4.99% 5.00% LB 5-Yr. Muni-Bond Index* 1.72% 5.46% 5.13% 5.58% 5.58% - -----------------------------------------------------------------------------------------------------
Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. *Each of the comparative indices is a widely recognized market value weighted measure of the return on securi- ties. Index returns are calculated on a monthly basis, and include reinvestment of dividends and distributions, but do not include sales fees or operating expenses. You cannot invest directly in the indices. (a) The performance in the table reflects the performance of the former RBC Funds, the predecessors to the Tamarack Funds. The quoted performance of the Government Income Fund and the North Carolina Tax- Free Bond Fund includes the performance of a common trust fund ("CTF") account advised by the Adviser (including its predecessor) and managed the same as the Fund in all material respects, for periods dating prior to the Government Income Fund's and the North Carolina Tax-Free Fund's commencement of opera- tions on June 1, 1994, as adjusted to reflect the full contractual rate of expenses associated with the Fund at its inception. The CTF account was not registered with the SEC under the 1940 Act and therefore was not subject to the investment restrictions imposed by law on registered mutual funds. If the CTF account had been registered, the CTF account's performance may have been adversely affected. Fund performance reflects applicable fee waiver/expense reimbursements (which, if excluded, would cause performance to be lower). (b) Performance returns are annualized as classes represent new shares for the first time beginning April 19, 2004. 4 ================================================================================ ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 5 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Government Income Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY Bond prices and yields were quite volatile during the Fund's fiscal year, which ended April 30, 2004. In June 2003 bond yields dipped to their lowest levels in over 40 years. This was due to the sluggish economy and fear of possible deflation that caused the Federal Reserve to lower the overnight fed funds rate (the rate at which banks lend each other money overnight) to 1.00%. But during the summer interest rates rose abruptly, and bond prices fell. The yield on the 10-year maturity Treasury Note rose from 3.10% to 4.60% in just six weeks. Rates drifted lower for the next nine months, primarily because job growth was so sluggish and the Fed promised to keep short-term interest rates low for a considerable period. But in the last six weeks of the Fund's fiscal year, job growth began to accelerate, and interest rates rose again. Over the entire period the prices of Treasury securities fell and yields rose by about 0.5% to 1.0%, with the shortest maturities experiencing the largest yield rise. Mortgage-backed bonds performed less well than Treasuries and regular government agency securities because the market was concerned about heavy redemptions of these securities as homeowners refinanced the underlying mortgages. - -------------------------------------------------------------------------------- PERFORMANCE Class A shares of the Fund had a total return of -0.05% compared with the Fund's benchmark, the Lehman Brothers Intermediate Government Index, which had a total return of 0.99%. The Fund has been positioned for a rising interest rate environment by maintaining its duration (or interest rate risk) lower than the benchmark in order to reduce the price decline caused by rising interest rates. The Fund's income yield also was kept slightly higher than that of the benchmark in order to enhance returns. Nonetheless, the general rise in bond yields for the fiscal year eroded the market value of the Fund, which mostly offset the interest earned. - -------------------------------------------------------------------------------- OUTLOOK The bond market is quickly adjusting to an economic cycle that appears sustainable, and the increased likelihood of the Federal Reserve adopting a new, tighter monetary policy in the coming months. We expect that shorter term yields will rise faster than longer term yields as the Fed adjusts its target rate upward from its current level of 1.00%. As such, our strat- egy is to increase the reinvestment opportunities for the fund in order to capture what we believe will be higher market yields in the coming year. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE Relatively high current income consistent with relative stability of principal and safety. - -------------------------------------------------------------------------------- BENCHMARK Lehman Brothers Intermediate Government Index 6 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Government Income Fund - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) FHLMC 5.75%, 04/15/08 8.41% FHLB 2.750%, 03/14/08 6.18% FNMA 4.50%, 10/01/13 5.17% FHLMC 5.00%, 12/01/17 5.04% FNMA 6.00%, 05/15/08 4.90% GNMA 5.28%, 11/16/15 4.68% FNMA 7.125%, 03/15/07 4.56% FNMA 5.75%, 02/15/08 4.41% FHLB 5.75%, 05/15/12 4.34% FHLB 5.275%, 01/15/06 4.33% *A listing of all portfolio holdings can be found on page 35. - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) U.S. Government Investment Companies Agency Obligations 0.2% 98.9% [PIE CHART] Other Assets 0.9% - -------------------------------------------------------------------------------- GROWTH OF $10,000 INITIAL INVESTMENT OVER 10 YEARS [FLOW CHART] ---------------------------------------------------- LEHMAN BROTHERS CLASS INTERMEDIATE DATE A GOVERNMENT INDEX ---------------------------------------------------- 05/01/1994 9,625 10,000.00 ---------------------------------------------------- 10/31/1994 9,676 10,088.10 ---------------------------------------------------- 04/30/1995 10,098 10,616.51 ---------------------------------------------------- 10/31/1995 10,676 11,277.93 ---------------------------------------------------- 04/30/1996 10,722 11,416.52 ---------------------------------------------------- 10/31/1996 11,128 11,917.28 ---------------------------------------------------- 04/30/1997 11,265 12,128.59 ---------------------------------------------------- 10/31/1997 11,845 12,790.16 ---------------------------------------------------- 04/30/1998 12,190 13,180.76 ---------------------------------------------------- 10/31/1998 12,806 14,007.80 ---------------------------------------------------- 04/30/1999 12,846 14,018.67 ---------------------------------------------------- 10/31/1999 12,906 14,122.15 ---------------------------------------------------- 04/30/2000 13,068 14,312.33 ---------------------------------------------------- 10/31/2000 13,683 15,072.09 ---------------------------------------------------- 04/30/2001 14,508 15,979.61 ---------------------------------------------------- 10/31/2001 15,534 17,159.66 ---------------------------------------------------- 04/30/2002 15,419 17,143.34 ---------------------------------------------------- 10/31/2002 16,419 18,308.47 ---------------------------------------------------- 04/30/2003 16,817 18,723.16 ---------------------------------------------------- 10/31/2003 16,754 18,774.74 ---------------------------------------------------- 04/30/2004 16,809 18,907.74 ---------------------------------------------------- The graph reflects an initial investment of $10,000 over a 10 year period and is based on Class A shares at net asset value. The Fund's maximum sales charge is 3.75%. The Fund's total return includes reinvested dividends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 7 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Quality Fixed Income Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY Bond prices and yields were quite volatile during the Fund's fiscal year, which ended April 30, 2004. In June 2003 bond yields dipped to their lowest levels in over 40 years. This was due to the sluggish economy and fear of possible deflation that caused the Federal Reserve to lower the overnight fed funds rate (the rate at which banks lend each other money overnight) to 1.00%. But during the summer interest rates rose abruptly, and bond prices fell. The yield on the 10-year maturity Treasury note rose from 3.10% to 4.60% in just six weeks. Rates drifted lower for the next nine months, primarily because job growth was so sluggish and the Fed promised to keep short-term interest rates low for a considerable period. But in the last six weeks of the Fund's fiscal year, job growth began to accelerate, and interest rates rose again. Over the entire period bond prices fell and yields rose by about 0.5% to 1.0%, with the shortest maturities experiencing the largest yield rise. Corporate bonds significantly outperformed Treasury bonds during the year. - -------------------------------------------------------------------------------- PERFORMANCE Class A shares of the Fund had a return of 1.39% compared with the Fund's benchmark, the Lehman Brothers U.S. Aggregate Bond Index, which had a total return of 1.82%. The Fund's performance was helped by our maintaining its duration (or interest rate risk) below that of the benchmark as we anticipated rising rates as the economy recovered. Performance was also aided by the strong recovery of corporate bonds, but was hurt by mortgage-backed bonds, which underperformed the general market. - -------------------------------------------------------------------------------- OUTLOOK The economy is finally showing some real strength as jobs have grown strongly since March. The Federal Reserve is expected to begin raising short-term interest rates soon. This is likely to push longer-term interest rates somewhat higher, although this may be mitigated by the higher yields that are already available on longer maturity bonds. In this environment we expect to keep the average maturity of the portfolio below that of the benchmark in order to reduce the risk of price declines. We expect corporate bond prices to move in lock-step with Treasuries and their yield spreads over Treasuries to remain fairly stable. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE Current income and capital appreciation. - -------------------------------------------------------------------------------- BENCHMARK Lehman Brothers U.S. Aggregate Bond Index 8 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Quality Fixed Income Fund - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) GNMA 5.00%, 01/15/34 4.50% Wells Fargo Prime Investment Money Market Fund, Investor Class 3.55% Wells Fargo Government Institutional Money Market Fund, Investor Class 3.96% U.S. Treasury Bond 8.125%, 01/15/21 2.72% FNMA 4.50%, 12/01/17 2.61% FNCI 5.00%, 07/01/18 1.90% FNMA 5.00%, 09/01/33 1.74% JP Morgan Commercial Finance Corp. 6.51%, 10/15/35 1.48% BP Capital Markets PLC 2.75%, 12/29/06 1.29% Toyota Motor Credit Corp. 4.35%, 12/15/10 1.27% *A listing of all portfolio holdings can be found on page 36. - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) U.S. Government U.S. Treasury Bonds: 4.4% Agency Obligations 31.6% U.S. Treasury Notes: 1.3% Investment Companies: 7.5% [PIE CHART] Asset Backed Securities: 2.3% Collateralized Mortgage Obligations: 4.6% Commercial Mortgage Backs: 7.2% Common Stocks: 0.2% Corporate Bonds 43.3% - -------------------------------------------------------------------------------- GROWTH OF $10,000 INITIAL INVESTMENT SINCE INCEPTION (5/11/99) [FLOW CHART] ------------------------------------------------ LEHMAN BROTHERS U.S. CLASS AGGREGATE A BOND INDEX ------------------------------------------------ 05/11/1999 9,625 10,000.00 ------------------------------------------------ 10/31/1999 9,598 9,984.63 ------------------------------------------------ 04/30/2000 9,628 10,125.96 ------------------------------------------------ 10/31/2000 10,223 10,713.71 ------------------------------------------------ 04/30/2001 10,827 11,380.10 ------------------------------------------------ 10/31/2001 11,665 12,273.52 ------------------------------------------------ 04/30/2002 11,225 12,272.09 ------------------------------------------------ 10/31/2002 11,763 12,995.93 ------------------------------------------------ 04/30/2003 12,245 13,556.38 ------------------------------------------------ 10/31/2003 12,310 13,633.36 ------------------------------------------------ 04/30/2004 12,416 13,803.42 ------------------------------------------------ The graph reflects an initial investment of $10,000 since inception of 5/11/1999 and is based on Class A shares at net asset value. The Fund's maximum sales charge is 3.75%. The Fund's total return includes reinvested divi- dends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 9 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ North Carolina Tax-Free Bond Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY The bond market was quite volatile during the Fund's fiscal year, which ended April 30, 2004. In June of 2003 the Bond Buyer Index (BBI), which represents yields on investment grade 20-year maturity municipal bonds, dropped to 4.21%, its lowest level since 1968. This was due to the sluggish economy and fear of possible deflation that caused the Federal Reserve to lower the overnight fed funds rate (the rate at which banks lend each other money overnight) to 1.00%. But during the summer interest rates rose abruptly, and the BBI rose to 5.18%. Rates drifted lower for the next nine months, primarily because job growth was so sluggish and the Fed promised to keep short-term interest rates low for a considerable period. But in the last six weeks of the Fund's fiscal year, job growth began to accelerate, and interest rates rose again. Despite the volatility, the BBI had a rather small net rise from 4.58% to 4.95%, and bond prices declined modestly. - -------------------------------------------------------------------------------- PERFORMANCE The Class A Fund had a total return of 0.30% compared with the Fund's benchmark, the Lehman Brothers Five-Year Municipal Bond Index, which had a total return of 1.72%. The income component of the Fund is slightly less than the benchmark because of its holdings of relatively low-yielding North Carolina bonds. The Fund has been positioned for a rising interest rate environment by maintaining its duration (or interest rate risk) near the low end of its allowable range. Nevertheless, the rising yields caused a decline in the principal value of the bonds, which mostly offset the interest earned. - -------------------------------------------------------------------------------- OUTLOOK The economy finally appears to be gaining real strength, especially since jobs began to grow in earnest in March. The Federal Reserve is expected to start raising short-term interest rates from their exceptionally low levels. This is likely to push longer-term interest rates somewhat higher, although this may be mitigated by the higher yields that are already available on longer maturity bonds. We expect to keep the duration of the portfolio rather short in order to protect against rising yields. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE High current income that is free from federal income tax and North Carolina personal income tax, together with relative safety of principal. - -------------------------------------------------------------------------------- BENCHMARK Lehman Brothers Five-Year Municipal Bond Index 10 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ North Carolina Tax-Free Bond Fund - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) Centennial Authority Hotel Tax Revenue, 4.65%, 9/1/06 5.74% Fayetteville Public Works Commission Revenue, Series A, 5.25%, 03/01/08 5.69% Cumberland County CP, Series A, 6.20%, 12/01/07 5.68% Pitt County Public Facilities CP, Series A, 5.35%, 04/01/07 3.67% Wells Fargo National Tax-Free Money Market Fund, Investor Class 3.40% University of No. Carolina Greensboro Revenue, Series A, 4.63%, 04/01/13 3.09% North Carolina Medical Care Community Hospital Revenue, 5.75%, 06/01/13 3.08% North Carolina Municipal Power Agency, 5.25%, 01/01/09 2.97% Cumberland County Hospital Facilities Revenue, 5.25%, 10/01/10 2.96% Union County Enterprise System Revenue, 5.35%, 06/01/09 2.95%
*A listing of all portfolio holdings can be found on page 38. - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) North Carolina Investment Companies Municipal Obligations [PIE CHART] 3.4% 96.0% Other Assets 0.6% - -------------------------------------------------------------------------------- GROWTH OF $10,000 INITIAL INVESTMENT OVER 10 YEARS [FLOW CHART] ------------------------------------------------ LEHMAN BROTHERS 5 YR. CLASS MUNI BOND A INDEX ------------------------------------------------ 05/01/1994 9,625 10,000.00 ------------------------------------------------ 10/31/1994 9,517 10075.32 ------------------------------------------------ 04/30/1995 10,008 10546.70 ------------------------------------------------ 10/31/1995 10,535 11,112.85 ------------------------------------------------ 04/30/1996 10,557 11,270.40 ------------------------------------------------ 10/31/1996 10,857 11,619.38 ------------------------------------------------ 04/30/1997 11,054 11,795.13 ------------------------------------------------ 10/31/1997 11,652 12,352.50 ------------------------------------------------ 04/30/1998 11,896 12,588.50 ------------------------------------------------ 10/31/1998 12,493 13,157.80 ------------------------------------------------ 04/30/1999 12,604 13,403.84 ------------------------------------------------ 10/31/1999 12,297 13,289.60 ------------------------------------------------ 04/30/2000 12,459 13,452.80 ------------------------------------------------ 10/31/2000 13,016 14,062.89 ------------------------------------------------ 04/30/2001 13,461 14,676.12 ------------------------------------------------ 10/31/2001 14,136 15,439.99 ------------------------------------------------ 04/30/2002 14,219 15,684.78 ------------------------------------------------ 10/31/2002 14,799 16,347.60 ------------------------------------------------ 04/30/2003 15,209 16,921.29 ------------------------------------------------ 10/31/2003 15,304 17,206.87 ------------------------------------------------ 04/30/2004 15,255 17,213.15 ------------------------------------------------ The graph reflects an initial investment of $10,000 over a 10 year period and is based on Class A shares at net asset value. The Fund's maximum sales charge is 3.75%. The Fund's total return includes reinvested dividends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluc- tuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 11 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Assets and Liabilities - -------------------------------------------------------------------------------- APRIL 30, 2004
TAMARACK GOVERNMENT TAMARACK QUALITY TAMARACK NORTH CAROLINA INCOME FUND FIXED INCOME FUND TAX-FREE BOND FUND ------------- ------------- ------------- ASSETS: Investments, at value $ 24,176,843 $ 132,505,682 $ 18,352,437 (cost $24,569,048; $130,696,039; and $17,578,652, respectively) Cash 14,146 -- -- Interest and dividends receivable 246,987 1,201,041 220,254 Receivable for capital shares issued 52,172 3,683 -- Receivable for investments sold -- 267,322 -- ------------- ------------- ------------- Total Assets 24,490,148 133,977,728 18,572,691 ------------- ------------- ------------- LIABILITIES: Payable to custodian -- 17,199 201 Distributions payable 49,818 270,225 49,793 Payable for capital shares redeemed 16,688 83,004 54,206 Payable for investments purchased -- 4,100,129 -- Investment advisory fees 2,082 110,514 4,600 Administration fees 2,714 11,860 1,714 Distribution fees 1,240 258 1,042 Other 24,014 22,589 5,150 ------------- ------------- ------------- Total Liabilities 96,556 4,615,778 116,706 ------------- ------------- ------------- Net Assets $ 24,393,592 $ 129,361,950 $ 18,455,985 ============= ============= ============= NET ASSETS CONSIST OF: Capital 24,639,256 132,175,362 17,286,502 Distributions in excess of -- (108,656) (19,969) net investment income Accumulated net realized 146,541 (4,514,399) 415,667 gains (losses) from investment transactions Net unrealized appreciation (392,205) 1,809,643 773,785 (depreciation) on investments ------------- ------------- ------------- Net Assets $ 24,393,592 $ 129,361,950 $ 18,455,985 ============= ============= ============= NET ASSETS: Class A $ 6,063,209 $ 1,127,784 $ 5,065,506 Class I 18,320,651 30,990,300 13,390,479 Class C 3,244 3,247 -- Class R 3,244 3,247 -- Class S 3,244 97,237,372 -- ------------- ------------- ------------- Total $ 24,393,592 $ 129,361,950 $ 18,455,985 SHARES OUTSTANDING: Class A 586,984 116,881 497,200 Class I 1,774,093 3,212,483 1,314,484 Class C 314 337 -- Class R 314 337 -- Class S 314 10,078,226 -- ------------- ------------- ------------- Total 2,362,019 13,408,264 1,811,684 ============= ============= ============= NET ASSET VALUES: Class A(a) $ 10.33 $ 9.65 $ 10.19 ============= ============= ============= Class I $ 10.33 $ 9.65 $ 10.19 ============= ============= ============= Class C(b) $ 10.33 $ 9.65 -- ============= ============= ============= Class R $ 10.33 $ 9.65 -- ============= ============= ============= Class S $ 10.32 $ 9.65 -- ============= ============= =============
12 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Assets and Liabilities (cont.) - --------------------------------------------------------------------------------
TAMARACK GOVERNMENT TAMARACK QUALITY TAMARACK NORTH CAROLINA INCOME FUND FIXED INCOME FUND TAX-FREE BOND FUND ----------- ----------------- ------------------ MAXIMUM OFFERING PRICE PER SHARE: (100%/100%-maximum sales charge of net asset value adjusted to the nearest cent): Class A $10.73 $10.03 $10.59 ====== ====== ====== Maximum Sales Charge - Class A 3.75% 3.75% 3.75% ====== ====== ======
(a) For Class A shares, the redemption price per share is reduced by 1.00% for sales of shares within 12 months of purchase (only applicable on purchases of $1 million or more). (b) For Class C shares, the redemption price per share is reduced by 1.00% for sales of shares within 12 months of purchase. SEE NOTES TO FINANCIAL STATEMENTS. 13 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Operations - -------------------------------------------------------------------------------- FOR THE YEAR ENDED APRIL 30, 2004
TAMARACK GOVERNMENT TAMARACK QUALITY TAMARACK NORTH CAROLINA INCOME FUND FIXED INCOME FUND TAX-FREE BOND FUND ------------- ------------- ------------- INVESTMENT INCOME: Interest income $ 882,810 $ 2,153,719 $ 992,150 Dividend income 3,090 4,931 6,517 ----------- ----------- ----------- Total Investment Income 885,900 2,158,650 998,667 ----------- ----------- ----------- EXPENSES: Investment advisory fees 78,642 277,687 79,857 Administration Fees 38,912 62,570 33,917 Distribution fees - Class A 29,966 3,917 23,223 Distribution fees - Class B 4,638 1,081 2,815 Distribution fees - Class C 1 1 -- Accounting fees 34,108 43,191 34,890 Custodian fees 1,603 2,818 1,530 Insurance fees 3,547 5,858 2,914 Legal and Audit fees 28,226 38,159 26,752 Registration and filing fees 28,859 25,034 10,668 Shareholder reports 6,706 4,725 5,221 Transfer agent fees 31,582 30,971 21,274 Directors' fees 2,073 2,082 1,527 Other fees 5,540 7,026 5,141 ----------- ----------- ----------- Total expenses before 294,403 505,120 249,729 voluntary fee reductions Expenses voluntarily reduced by: Advisor (7,464) (8,407) (6,505) Distributor (16,143) (2,228) (12,315) ----------- ----------- ----------- Net Expenses 270,796 494,485 230,909 ----------- ----------- ----------- NET INVESTMENT INCOME 615,104 1,664,165 767,758 ----------- ----------- ----------- REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: Net realized gains from 1,567,509 (260,959) 675,415 investment transactions Change in unrealized (2,171,469) (1,540,439) (1,239,107) depreciation on investments ----------- ----------- ----------- Net realized/unrealized (603,960) (1,801,398) (563,692) losses from investments ----------- ----------- ----------- Change in net assets resulting $ 11,144 $ (137,233) $ 204,066 from operations =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS. 14 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK GOVERNMENT INCOME FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 FROM INVESTMENT ACTIVITIES: Operations: Net investment income $ 615,104 $ 1,225,319 Net realized gains (losses) from investment 1,567,509 1,061,545 transactions and other dispositions Net change in unrealized appreciation (2,171,469) 569,204 (depreciation) on investment transactions ------------ ------------ Change in net assets from operations 11,144 2,856,068 ------------ ------------ DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income (130,831) (204,394) From net realized gains from investment transactions (127,056) -- DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income (7,830) (16,464) From net realized gains from investment transactions (10,833) -- DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income (482,857) (1,004,461) From net realized gains from investment transactions (350,792) -- DISTRIBUTIONS TO CLASS C SHAREHOLDERS: From net investment income (1) -- DISTRIBUTIONS TO CLASS R SHAREHOLDERS: From net investment income (2) -- DISTRIBUTIONS TO CLASS S SHAREHOLDERS: From net investment income (2) -- ------------ ------------ Change in net assets from shareholder distributions (1,110,204) (1,225,319) ------------ ------------ CAPITAL TRANSACTIONS: Proceeds from shares issued 13,366,595 18,519,228 Proceeds from shares exchanged from Class B 414,882 -- Proceeds from shares issued in connection -- -- with merger Dividends reinvested 858,032 640,450 Cost of shares redeemed (19,928,660) (19,436,211) Cost of shares exchanged to Class A (414,882) -- ------------ ------------ Change in net assets from capital transactions (5,704,033) (276,533) ------------ ------------ Net increase (decrease) in net assets (6,803,093) 1,354,216 NET ASSETS: Beginning of year 31,196,685 29,842,469 ------------ ------------ End of year $ 24,393,592 $ 31,196,685 ============ ============ SHARE TRANSACTIONS: Issued 1,265,266 1,749,231 Issued in connection with exchange from Class B 38,956 -- Issued in connection with merger -- -- Reinvested 81,267 60,389 Redeemed (1,872,481) (1,829,882) Cost of shares exchanged to Class A (38,956) -- ------------ ------------ Change in shares transactions (525,948) (20,262) ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 15 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK QUALITY FIXED INCOME FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- FROM INVESTMENT ACTIVITIES: Operations: Net investment income $ 1,664,165 $ 2,325,888 Net realized gains (losses) from investment (260,959) 916,167 transactions and other dispositions Net change in unrealized appreciation (1,540,439) 1,645,732 (depreciation) on investment transactions ------------- ------------- Change in net assets from operations (137,233) 4,887,787 ------------- ------------- DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income (32,451) (21,149) From net realized gains from investment (32,077) (517) transactions DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income (3,859) (4,338) From net realized gains from investment (4,231) (128) transactions DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income (1,686,514) (2,445,484) From net realized gains from investment transactions (1,176,613) (61,931) DISTRIBUTIONS TO CLASS C SHAREHOLDERS: From net investment income (3) -- DISTRIBUTIONS TO CLASS R SHAREHOLDERS: From net investment income (4) -- DISTRIBUTIONS TO CLASS S SHAREHOLDERS: From net investment income (140,849) -- ------------- ------------- Change in net assets from shareholder distributions (3,076,601) (2,533,547) ------------- ------------- CAPITAL TRANSACTIONS: Proceeds from shares issued 12,337,231 14,829,282 Proceeds from shares exchanged from Class B 122,283 -- Proceeds from shares issued in connection 99,512,062 -- with merger Dividends reinvested 1,468,997 802,986 Cost of shares redeemed (29,015,385) (35,226,442) Cost of shares exchanged to Class A (122,283) -- ------------- ------------- Change in net assets from capital transactions 84,302,905 (19,594,174) ------------- ------------- Net increase (decrease) in net assets 81,089,071 (17,239,934) NET ASSETS: Beginning of year 48,272,879 65,512,813 ------------- ------------- End of year $ 129,361,950 $ 48,272,879 ============= ============= SHARE TRANSACTIONS: Issued 1,230,858 1,475,219 Issued in connection with exchange from Class B 12,253 -- Issued in connection with merger 10,207,207 -- Reinvested 147,778 79,935 Redeemed (2,877,062) (3,512,536) Cost of shares exchanged to Class A (12,253) -- ------------- ------------- Change in shares transactions 8,708,781 (1,957,382) ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 16 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK NORTH CAROLINA TAX-FREE BOND FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- FROM INVESTMENT ACTIVITIES: Operations: Net investment income $ 767,758 $ 1,012,731 Net realized gains (losses) from investment 675,415 276,307 transactions and other dispositions Net change in unrealized appreciation (1,239,107) 662,001 (depreciation) on investment transactions ------------ ------------ Change in net assets from operations 204,066 1,951,039 ------------ ------------ DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income (146,821) (152,357) From net realized gains from investment transactions (100,609) (17,628) DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income (7,557) (12,581) From net realized gains from investment transactions (5,786) (1,713) DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income (613,380) (847,793) From net realized gains from investment transactions (342,026) (91,581) DISTRIBUTIONS TO CLASS C SHAREHOLDERS: From net investment income -- -- DISTRIBUTIONS TO CLASS R SHAREHOLDERS: From net investment income -- -- DISTRIBUTIONS TO CLASS S SHAREHOLDERS: From net investment income -- -- ------------ ------------ Change in net assets from shareholder distributions (1,216,179) (1,123,653) ------------ ------------ CAPITAL TRANSACTIONS: Proceeds from shares issued 3,577,313 3,005,523 Proceeds from shares exchanged from Class B 279,994 -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested 493,419 279,172 Cost of shares redeemed (10,597,289) (9,055,257) Cost of shares exchanged to Class A (279,994) -- ------------ ------------ Change in net assets from capital transactions (6,526,557) (5,770,562) ------------ ------------ Net increase (decrease) in net assets (7,538,670) (4,943,176) NET ASSETS: Beginning of year 29,994,655 30,937,831 ------------ ------------ End of year $ 18,455,985 $ 25,994,655 ============ ============ SHARE TRANSACTIONS: Issued 339,762 283,408 Issued in connection with exchange from Class B 26,768 -- Issued in connection with merger -- -- Reinvested 47,068 26,293 Redeemed (1,005,051) (856,700) Cost of shares exchanged to Class A (26,742) -- ------------ ------------ Change in shares transactions (618,195) (546,999) ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 17 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack Government Income Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000 - ------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $ 10.80 $ 10.26 $ 10.14 $ 9.66 $ 10.03 INVESTMENT ACTIVITIES: Net Investment Income 0.23 0.38 0.51 0.56 0.50 Net Realized and Unrealized Gains/(Losses) (0.24) 0.54 0.12 0.48 (0.33) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations (0.01) 0.92 0.63 1.04 0.17 DISTRIBUTIONS: Net Investment Income (0.23) (0.38) (0.51) (0.56) (0.50) Net Realized Gain (0.23) -- -- -- (0.04) ---------- ---------- ---------- ---------- ---------- Total Distributions (0.46) (0.38) (0.51) (0.56) (0.54) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 10.33 $ 10.80 $ 10.26 $ 10.14 $ 9.66 Total Return* (0.05%) 9.07% 6.28% 11.01% 1.73% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 6,063 $ 6,233 $ 5,113 $ 5,139 $ 4,493 Ratio of Expenses to Average Net Assets 1.22% 1.08% 1.04% 0.93% 0.88% Ratio of Net Investment Income to 2.16% 3.55% 4.93% 5.61% 5.13% Average Net Assets Ratio of Expenses to Average Net Assets** 1.50% 1.33% 1.29% 1.18% 1.13% Portfolio Turnover*** 77% 67% 35% 103% 60% CLASS I 2004 2003 2002 2001 2000 - ------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $ 10.80 $ 10.26 $ 10.14 $ 9.66 $ 10.03 INVESTMENT ACTIVITIES: Net Investment Income 0.26 0.40 0.53 0.58 0.53 Net Realized and Unrealized Gains/(Losses) (0.24) 0.54 0.12 0.48 (0.33) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations 0.02 0.94 0.65 1.06 0.20 DISTRIBUTIONS: Net Investment Income (0.26) (0.40) (0.53) (0.58) (0.53) Net Realized Gain (0.23) -- -- -- (0.04) ---------- ---------- ---------- ---------- ---------- Total Distributions (0.49) (0.40) (0.53) (0.58) (0.57) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 10.33 $ 10.80 $ 10.26 $ 10.14 $ 9.66 Total Return 0.20% 9.34% 6.55% 11.29% 1.99% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 18,321 $ 24,375 $ 24,308 $ 33,859 $ 43,486 Ratio of Expenses to Average Net Assets 0.96% 0.83% 0.79% 0.68% 0.63% Ratio of Net Investment Income to 2.42% 3.82% 5.19% 5.87% 5.31% Average Net Assets Ratio of Expenses to Average Net Assets** 0.99% (c) (c) (c) (c) Portfolio Turnover*** 77% 67% 35% 103% 60%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. (a) Not annualized. (b) Annualized. (c) There were no waivers or reimbursements during the period. (d) For the period from April 19, 2004 (commencement of operations) to April 30, 2004. SEE NOTES TO FINANCIAL STATEMENTS. 18 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
CLASS C(d) 2004 * Excludes sales charge. - ---------- ---- ** During the period, certain fees were voluntarily reduced. If Net Asset Value, Beginning of Period $ 10.43 such voluntary fee reductions had not occurred, the ratio INVESTMENT ACTIVITIES: would have been as indicated. Net Investment Income -- *** Portfolio turnover is calculated on the basis of the fund as Net Realized and Unrealized Gains/(Losses) (0.10) a whole without distinguishing between the classes of shares Total From Investment Operations (0.10) issued. DISTRIBUTIONS: (a) Not annualized. Net Investment Income -- (b) Annualized. Net Realized Gain -- (c) There were no waivers or reimbursements during the period. Total Distributions -- (d) For the period from April 19, 2004 (commencement of Net Asset Value, End of Period $ 10.33 operations) to April 30,2004. Total Return* (0.92%)(a) RATIOS/SUPPLEMENTAL DATA: SEE NOTES TO FINANCIAL STATEMENTS. Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 2.02%(b) Ratio of Net Investment Income to 1.23%(b) Average Net Assets Ratio of Expenses to Average Net Assets** 2.25%(b) Portfolio Turnover*** 77% CLASS R(d) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 10.43 INVESTMENT ACTIVITIES: Net Investment Income 0.01 Net Realized and Unrealized Gains/(Losses) (0.10) Total From Investment Operations (0.09) DISTRIBUTIONS: Net Investment Income (0.01) Net Realized Gain -- Total Distributions (0.01) Net Asset Value, End of Period $ 10.33 Total Return (0.90%)(a) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.46%(b) Ratio of Net Investment Income to 1.75%(b) Average Net Assets Ratio of Expenses to Average Net Assets** 1.61%(b) Portfolio Turnover*** 77% CLASS S(d) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 10.42 INVESTMENT ACTIVITIES: Net Investment Income 0.01 Net Realized and Unrealized Gains/(Losses) (0.10) Total From Investment Operations (0.09) DISTRIBUTIONS: Net Investment Income (0.01) Net Realized Gain -- Total Distributions (0.01) Net Asset Value, End of Period $ 10.32 Total Return (0.89%)(a) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.01%(b) Ratio of Net Investment Income to 2.17%(b) Average Net Assets Ratio of Expenses to Average Net Assets** 1.23%(b) Portfolio Turnover*** 77%
19 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack Quality Fixed Income Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000(a) - ------- ---- ---- ---- ---- ------- Net Asset Value, Beginning of Period $ 10.27 $ 9.84 $ 10.06 $ 9.50 $ 10.00 INVESTMENT ACTIVITIES: Net Investment Income 0.38 0.41 0.51 0.58 0.50 Net Realized and Unrealized Gains/(Losses) (0.25) 0.47 (0.15) 0.58 (0.50) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations 0.13 0.88 0.36 1.16 -- DISTRIBUTIONS: Net Investment Income (0.41) (0.44) (0.52) (0.58) (0.50) Net Realized Gain (0.34) (0.01) (0.06) (0.02) -- ---------- ---------- ---------- ---------- ---------- Total Distributions (0.75) (0.45) (0.58) (0.60) (0.50) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 9.65 $ 10.27 $ 9.84 $ 10.06 $ 9.50 Total Return* 1.39% 9.09% 3.67% 12.46% 0.03%(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 1,128 $ 501 $ 493 $ 324 $ 240 Ratio of Expenses to Average Net Assets 1.42% 1.31% 1.22% 1.16% 1.34%(c) Ratio of Net Investment Income to 3.56% 4.03% 5.03% 5.88% 5.50%(c) Average Net Assets Ratio of Expenses to Average Net Assets** 1.68% 1.56% 1.47% 1.41% 1.59%(c) Portfolio Turnover*** 87% 79% 88% 130% 314% CLASS I 2004 2003 2002 2001 2000(a) - ------- ---- ---- ---- ---- ------- Net Asset Value, Beginning of Period $ 10.27 $ 9.84 $ 10.06 $ 9.50 $ 10.00 INVESTMENT ACTIVITIES: Net Investment Income 0.37 0.42 0.54 0.60 0.52 Net Realized and Unrealized Gains/(Losses) (0.21) 0.48 (0.15) 0.58 (0.50) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations 0.16 0.90 0.39 1.18 0.02 DISTRIBUTIONS: Net Investment Income (0.44) (0.46) (0.55) (0.60) (0.52) Net Realized Gain (0.34) (0.01) (0.06) (0.02) -- ---------- ---------- ---------- ---------- ---------- Total Distributions (0.78) (0.47) (0.61) (0.62) (0.52) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 9.65 $ 10.27 $ 9.84 $ 10.06 $ 9.50 Total Return 1.54% 9.33% 3.93% 12.74% 0.20%(c) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 30,990 $ 47,658 $ 64,912 $ 77,808 $ 69,558 Ratio of Expenses to Average Net Assets 1.18% 1.06% 0.97% 0.91% 1.09%(c) Ratio of Net Investment Income to 3.83% 4.30% 5.34% 6.10% 5.65%(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) (d) (d) (d) 1.11%(c) Portfolio Turnover*** 87% 79% 88% 130% 314%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. (a) For the period from May 11, 1999 (commencement of operations) to April 30, 2000. (b) Not annualized. (c) Annualized. (d) There were no waivers or reimbursements during the period. (e) For the period from April 19, 2004 (commencement of operations) to April 30, 2004. SEE NOTES TO FINANCIAL STATEMENTS. 20 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
CLASS C(e) 2004 * Excludes sales charge. - ---------- ---- ** During the period, certain fees were voluntarily reduced. If Net Asset Value, Beginning of Period $ 9.73 such voluntary fee reductions had not occurred, the ratio INVESTMENT ACTIVITIES: would have been as indicated. Net Investment Income 0.01 *** Portfolio turnover is calculated on the basis of the fund as a Net Realized and Unrealized Gains/(Losses) (0.08) whole without distinguishing between the classes of shares Total From Investment Operations (0.07) issued. (a) For the period from May 11, 1999 (commencement of operations) DISTRIBUTIONS: to April 30, 2000.(b) Not annualized. Net Investment Income (0.01) (c) Annualized. Net Realized Gain -- (d) There were no waivers or reimbursements during the period. Total Distributions (0.01) (e) For the period from April 19, 2004 (commencement of Net Asset Value, End of Period $ 9.65 operations) to April 30, 2004. Total Return* (0.72%)(b) RATIOS/SUPPLEMENTAL DATA: SEE NOTES TO FINANCIAL STATEMENTS. Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.69%(c) Ratio of Net Investment Income to 3.03%(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 87% CLASS R(e) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 9.73 INVESTMENT ACTIVITIES: Net Investment Income 0.01 Net Realized and Unrealized Gains/(Losses) (0.08) Total From Investment Operations (0.07) DISTRIBUTIONS: Net Investment Income (0.01) Net Realized Gain -- Total Distributions (0.01) Net Asset Value, End of Period $ 9.65 Total Return (0.71%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.13%(c) Ratio of Net Investment Income to 3.54%(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 87% CLASS S(e) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 9.73 INVESTMENT ACTIVITIES: Net Investment Income 0.01 Net Realized and Unrealized Gains/(Losses) (0.08) Total From Investment Operations (0.07) DISTRIBUTIONS: Net Investment Income (0.01) Net Realized Gain -- Total Distributions (0.01) Net Asset Value, End of Period $ 9.65 Total Return (0.58%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 97,237 Ratio of Expenses to Average Net Assets 0.68%(c) Ratio of Net Investment Income to 4.37%(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 87%
21 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack North Carolina Tax-Free Bond Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000 - ------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $ 10.70 $ 10.39 $ 10.30 $ 9.91 $ 10.45 INVESTMENT ACTIVITIES: Net Investment Income 0.33 0.36 0.38 0.40 0.38 Net Realized and Unrealized Gains/(Losses) (0.30) 0.35 0.19 0.39 (0.51) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations 0.03 0.71 0.57 0.79 (0.13) DISTRIBUTIONS: Net Investment Income (0.33) (0.36) (0.38) (0.40) (0.39) Net Realized Gain (0.21) (0.04) (0.10) -- (0.02) ---------- ---------- ---------- ---------- ---------- Total Distributions (0.54) (0.40) (0.48) (0.40) (0.41) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 10.19 $ 10.70 $ 10.39 $ 10.30 $ 9.91 Total Return* 0.30% 6.96% 5.64% 8.04% (1.15%) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 5,066 $ 4,301 $ 4,507 $ 4,225 $ 4,554 Ratio of Expenses to Average Net Assets 1.20% 1.12% 1.10% 1.00% 0.98% Ratio of Net Investment Income to 3.16% 3.41% 3.61% 3.88% 3.85% Average Net Assets Ratio of Expenses to Average Net Assets** 1.48% 1.39% 1.37% 1.28% 1.26% Portfolio Turnover*** 9% 2% 7% 13% 14% CLASS I 2004 2003 2002 2001 2000 - ------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $ 10.70 $ 10.39 $ 10.30 $ 9.91 $ 10.45 INVESTMENT ACTIVITIES: Net Investment Income 0.36 0.39 0.40 0.42 0.41 Net Realized and Unrealized Gains/(Losses) (0.30) 0.35 0.19 0.39 (0.51) ---------- ---------- ---------- ---------- ---------- Total From Investment Operations 0.06 0.74 0.59 0.81 (0.10) DISTRIBUTIONS: Net Investment Income (0.36) (0.39) (0.40) (0.42) (0.42) Net Realized Gain (0.21) (0.04) (0.10) -- (0.02) ---------- ---------- ---------- ---------- ---------- Total Distributions (0.57) (0.43) (0.50) (0.42) (0.44) ---------- ---------- ---------- ---------- ---------- Net Asset Value, End of Period $ 10.19 $ 10.70 $ 10.39 $ 10.30 $ 9.91 Total Return 0.55% 7.23% 5.90% 8.31% (0.90%) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 13,390 $ 21,251 $ 26,006 $ 29,223 $ 32,461 Ratio of Expenses to Average Net Assets 0.95% 0.87% 0.85% 0.75% 0.73% Ratio of Net Investment Income to 3.43% 3.66% 3.86% 4.13% 4.09% Average Net Assets Ratio of Expenses to Average Net Assets** 0.98% 0.89% 0.87% 0.77% 0.76% Portfolio Turnover*** 9% 2% 7% 13% 14%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. SEE NOTES TO FINANCIAL STATEMENTS. 22 ================================================================================ ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 23 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ April 30, 2004 - -------------------------------------------------------------------------------- 1. ORGANIZATION Tamarack Funds Trust ("Tamarack") is registered under the Investment Company Act of 1940 as an open-end management investment company. Tamarack was organized as a Delaware statutory trust on December 16, 2003. Effective April 16, 2004, and based on the approval of shareholders, seventeen separate investment portfolios were reorganized as separate investment portfolios of Tamarack. This annual report includes the following three investment portfolios ("Funds"): - - Tamarack Government Income Fund ("Government Income Fund") (formerly RBC Government Income Fund) - - Tamarack Quality Fixed Income Fund ("Quality Fixed Income Fund") (formerly RBC Quality Income Fund) - - Tamarack North Carolina Tax-Free Bond Fund ("North Carolina Tax-Free Bond Fund") (formerly RBC North Carolina Tax-Free Bond Fund) Each of the Funds offers five share classes: Class A, Class C, Class R, Class I and Class S shares. Class A shares are offered with a 3.75% maximum front-end sales charge. Class C shares are offered at net asset value (i.e., no front-end sales charge) but are subject to a contingent deferred sales charge ("CDSC") of 1.00% for redemptions within 12 months of purchase. Class R shares are not subject to either a front-end sales charge or CDSC. Class S and Class I shares are closed to new investors. Voyageur Asset Management Inc. ("Voyageur") acts as the investment advisor for the Tamarack Funds. The officers of the Tamarack Funds ("Fund Management") are also employees of Voyageur. - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES Summarized below are the significant accounting policies of the Funds. These policies conform to accounting principles generally accepted in the United States of America ("GAAP"). Fund management follows these policies when preparing financial statements. Management may also be required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITY VALUATION: Bonds and other fixed income securities (other than short-term obligations, but including listed issues) are valued on the basis of valuations furnished by pricing services approved by Tamarack's Board of Trustees (the "Board"). The pricing services utilize both dealer- supplied valuations and electronic data processing techniques that take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue and trading characteristics other than market data and without exclusive reliance upon quoted prices or exchanges or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Short-term debt obligations are valued at amortized cost, which approximates market value, unless Tamarack's Pricing Committee determines that amortized cost no longer approximates market value due to credit or other impairments of the issuer. In cases where a security price is unavailable from a pricing service or Tamarack's fund accounting agent believes that a price provided by a pricing service does not represent fair current market value, Tamarack has established procedures to estimate a security's fair value. 24 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ INVESTMENT TRANSACTIONS: Security transactions are accounted for on the date the security is bought or sold ("trade date"). Long-term investment transactions are recorded on a trade date plus one basis, except for on the last day of the annual or semi-annual financial reporting period, when they are recorded on trade date. Dividend income is recorded on the ex-dividend date. Securities gains and losses are calculated based on the costs of the specific security (also known as identified cost basis). Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premium or discount. Paydown gains and losses on mortgage and asset-backed securities are included in the financial statements as interest income. FUND EXPENSES: Each Fund pays the expenses that are directly related to its operations, such as trading costs or portfolio management fees. Expenses incurred by Tamarack on behalf of multiple Funds, such as audit or legal fees, are allocated proportionately among each of the Funds based either on the Funds' net assets or on another reasonable basis such as equally across all Funds, depending on the nature of the expense. Individual share classes within a Fund are charged expenses specific to that class, such as sales and distribution fees. FINANCIAL INSTRUMENTS: FUTURES CONTRACTS - The Funds may enter into futures contracts in an effort to hedge against market risks. A futures contract on a securities index is an agreement obligating either party to pay, and entitling the other party to receive, during the term of the contract, cash payments based on the level of a specified securities index. Put and call options on futures contracts would give the Fund the right (but not the obligation) to sell or to purchase for a specified price the underlying futures contract at any time during the option period. Futures transactions involve brokerage costs and require the Fund to segregate assets to cover contracts that would require it to purchase securities or currencies. A Fund may lose the expected benefit of futures transactions if interest rates, exchange rates or securities prices change in an unanticipated manner. However, such unanticipated changes may also result in lower overall performance than if the Fund had not entered into any futures transactions. Upon entering into a futures contract, a Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount. Subsequent payments are made or received by the Fund each day, depending on the daily fluctuations in fair value of the underlying index. The Funds recognize a gain or loss each day equal to the income received or paid. The Funds did not enter into futures contracts during the fiscal year ended April 30, 2004. WHEN-ISSUED TRANSACTIONS - The Funds may engage in when-issued (to be announced) transactions. A Fund would record when-issued securities on the actual trade date and maintain sufficient liquidity so that cash will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are valued daily and begin earning interest on the settlement date. HIGH-YIELD AND EMERGING MARKET SECURITIES - The investment objectives of the Quality Fixed Income Fund allow the Fund to invest up to 15% of the Fund's total assets in high-yield obligations and/or obligations of emerging market countries. High-yield obligations are debt securities which have a lower than investment-grade credit rating, but also pay a 25 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ higher rate of return due to the potentially higher risk of default. Fund management has determined that the Fund will not invest in any high-yield obligation with a credit rating lower than B as determined by the national rating agencies and that no more than 5% of the Fund's assets will be invested in securities with a B rating. Also, although the Fund may invest in obligations of emerging markets, Fund management does not want to expose Fund shareholders to currency fluctuation risk and therefore such emerging market obligations must be U.S. dollar-denominated. DISTRIBUTIONS TO SHAREHOLDERS: Each of the Funds pays out any income that it receives, less expenses, in the form of dividends to its shareholders. Income dividends and capital gains on each Fund are declared and paid at least annually. Distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions are calculated based on federal income tax regulations, which may differ from GAAP. These "book/tax" differences may be either temporary or permanent in nature. To the extent these differences are permanent in nature, they are reclassified within a Fund's capital accounts based on their federal tax basis treatment. - -------------------------------------------------------------------------------- 3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Tamarack, on behalf of Government Income Fund, Quality Fixed Income Fund, and North Carolina Tax-Free Bond Fund, has entered into an investment advisory agreement with Voyageur, under which Voyageur manages each Fund's assets and furnishes related office facilities, equipment, research and personnel. The agreement requires each of Government Income Fund, Quality Fixed Income Fund, and North Carolina Tax-Free Bond Fund to pay Voyageur a monthly fee based upon average daily net assets. Under the terms of the advi- sory contracts Voyageur is entitled to receive fees based on a percentage of the average daily net assets of each of the Funds as follows: Annual Rate ----------- Government Income Fund 0.30% Quality Fixed Income Fund 0.60% North Carolina Tax-Free Bond Fund 0.35% Voyageur has contractually agreed to waive fees and/or to make payments in order to keep total operating expenses of the Class S shares of Quality Fixed Income Fund to 0.68%. This expense limitation agreement is in place until May 1, 2005. Voyageur may voluntarily waive and/or reimburse operating expenses of any Fund from time to time. Any such voluntary program may be changed or eliminated at any time without notice. Voyageur serves as administrator to the Funds and BISYS Fund Services Limited Partnership ("BISYS") serves as sub-administrator and fund accounting agent. Services provided under the administrative services contract include providing day-to-day administration of matters related to the corporate existence of the Fund, maintenance of its records and the preparation of reports. Effective April 16, 2004 and under the terms of the administrative services contract, Voyageur receives from each Fund a fee, payable monthly, at the annual rate of 0.10% of each Fund's average daily net assets. For its services as sub-administrator, BISYS receives a fee payable by Voyageur out of Voyageur's own resources. Prior to April 16, 2004 the Funds paid BISYS an administrative fee equal to an annual rate of 0.15%. 26 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ - -------------------------------------------------------------------------------- 4. FUND DISTRIBUTION Each of the Funds has adopted a Master Distribution 12b-1 Plan (the "Plan") in which Tamarack Distributors Inc. (the "Distributor") acts as the Funds' distributor. The Distributor is an affiliate of Voyageur. The Plan permits each Fund to make payments for, or to reimburse the Distributor monthly for, distribution-related costs and expenses of marketing shares of each share class covered under the Plan. The following chart shows the maximum Plan fee rate for each class. Class A Class C Class R ------- ------- ------- 12b-1 Plan Fee 0.50%* 1.00% 0.50% Plan fees are based on average annual daily net assets of the applicable class. The Distributor, subject to applicable legal requirements, may waive a Plan fee voluntarily, in whole or in part. *The Distributor is currently voluntarily waiving 0.25% of the Plan fee for Class A. These voluntary waivers will continue until at least March 31, 2005. On March 24, 2004, all Class B shares of the predecessor funds to Government Income Fund, Quality Fixed Income Fund, and North Carolina Tax-Free Bond Fund were converted into Class A shares of the predecessor funds. During the fiscal year ended April 30, 2004, the distributor of the predecessor funds (Centura Funds Distributor, Inc., an affiliate of BISYS) received the proceeds of any CDSC imposed on redemptions of Class B shares of the predecessor funds. The following is a summary of the dealer commissions paid to Centura Funds Distributor, Inc. and reallocated to RBC Centura Securities, Inc. and RBC Dain Rauscher Inc. (both affiliates of Voyageur) for Class B shares of the predecessor funds for the year ended April 30, 2004.
RBC Centura RBC Dain Distributor Securities, Inc. Rauscher Inc. ----------- ---------------- ------------- Government Income Fund $ -- $133 $385 Quality Fixed Income Fund -- -- 1 North Carolina Tax-Free Bond Fund -- -- --
- -------------------------------------------------------------------------------- 5. CONCENTRATION OF CREDIT RISK The Tamarack North Carolina Tax-Free Bond Fund invests substantially all of its assets in a portfolio of tax-exempt debt obligations issued by the state of North Carolina and its authorities and agencies. The issuers' abilities to meet their obligations may be affected by economic or political developments in the state of North Carolina. - -------------------------------------------------------------------------------- 6. SECURITIES TRANSACTIONS The cost of securities purchased and proceeds from securities sold (excluding short-term securities) for the year ended April 30, 2004 were as follows:
Purchases (Excl. Sales Purchases of Sales of U.S. Govt.) (Excl. U.S. Govt.) U.S. Govt. U.S. Govt. ----------- ------------------ ---------- ---------- Government Income Fund $19,813,433 $25,629,606 Quality Fixed Income Fund $23,553,148 $39,578,826 $17,523,770 $20,068,017 North Carolina Tax-Free Bond Fund $ 1,949,881 $ 8,249,563
27 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ 7. CAPITAL SHARE TRANSACTIONS Tamarack is authorized to issue an unlimited number of shares of beneficial interest without par value. Transactions in shares of Government Income Fund, Quality Fixed Income Fund, and North Carolina Tax-Free Bond Fund are summarized below: TAMARACK GOVERNMENT INCOME FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 2,942,652 $ 3,854,740 Proceeds from shares exchanged from Class B 414,882 -- Dividends reinvested 256,506 198,234 Cost of shares redeemed (3,522,320) (3,207,198) ------------ ------------ Change in Class A $ 91,720 $ 845,776 ------------ ------------ CLASS B Proceeds from shares issued $- $ 291,402 Dividends reinvested 15,092 11,104 Cost of shares redeemed (180,998) (160,401) Cost of shares exchanged to Class A (414,882) -- ------------ ------------ Change in Class B $ (580,788) $ 142,105 ------------ ------------ CLASS I Proceeds from shares issued $ 10,414,118 $ 14,373,086 Dividends reinvested 586,434 431,112 Cost of shares redeemed (16,225,342) (16,068,612) ------------ ------------ Change in Class I $ (5,224,790) $ (1,264,414) ------------ ------------ CLASS C Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------ Change in Class C $ 3,275 $ -- ------------ ------------ CLASS R Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------ Change in Class R $ 3,275 $ -- ------------ ------------ CLASS S Proceeds from shares issued $ 3,275 $ -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------ Change in Class S $ 3,275 $ -- ------------ ------------ Net change from capital transactions $ (5,704,033) $ (276,533) ============ ============ SHARE TRANSACTIONS: CLASS A Issued 277,034 362,476 Issued in connection with exchange from Class B 38,956 -- Reinvested 24,275 18,678 Redeemed (330,203) (302,503) ------------ ------------ Change in Class A 10,062 78,651 ------------ ------------ CLASS B Issued -- 27,471 Reinvested 1,432 1,046 Redeemed (17,061) (15,032) Cost of shares exchanged to Class A (38,956) -- ------------ ------------ Change in Class B (54,585) 13,485 ------------ ------------
28 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CLASS I Issued 987,290 1,359,284 Reinvested 55,560 40,665 Redeemed (1,525,217) (1,512,347) ------------ ------------- Change in Class I (482,367) (112,398) ------------ ------------- CLASS C Issued 314 -- Reinvested -- -- Redeemed -- -- ------------ ------------- Change in Class C 314 -- ------------ ------------- CLASS R Issued 314 -- Reinvested -- -- Redeemed -- -- ------------ ------------- Change in Class R 314 -- ------------ ------------- CLASS S Issued 314 -- Issued in connection with merger -- -- Reinvested -- -- Redeemed -- -- ------------ ------------- Change in Class S 314 -- ------------ ------------- Net change from share transactions (525,948) (20,262) ============ ============= TAMARACK QUALITY FIXED INCOME FUND FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 1,355,528 $ 263,717 Proceeds from shares exchanged from Class B 122,283 -- Dividends reinvested 48,264 21,580 Cost of shares redeemed (840,755) (297,858) ------------ ------------- Change in Class A $ 685,320 $ (12,561) ------------ ------------- CLASS B Proceeds from shares issued $ 10,548 $ 3,599 Dividends reinvested 8,118 4,513 Cost of shares redeemed (6,903) (6,601) Cost of shares exchanged to Class A (122,283) -- ------------ ------------- Change in Class B $ (110,520) $ 1,511 ------------ ------------- CLASS I Proceeds from shares issued $ 10,946,331 $ 14,561,966 Dividends reinvested 1,412,615 776,893 Cost of shares redeemed (26,875,366) (34,921,983) ------------ ------------- Change in Class I $(14,516,420) $(19,583,124) ------------ ------------- CLASS C Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------- Change in Class C $ 3,275 $ -- ------------ ------------- CLASS R Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------- Change in Class R $ 3,275 $ -- ------------ -------------
29 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CLASS S Proceeds from shares issued $ 18,274 $ -- Proceeds from shares issued in connection with merger 99,512,062 -- Dividends reinvested -- -- Cost of shares redeemed (1,292,361) -- ------------ ------------ Change in Class S $ 98,237,975 $ -- ------------ ------------ Net change from capital transactions $ 84,302,905 $(19,594,174) ============ ============ SHARE TRANSACTIONS: CLASS A Issued 134,882 26,116 Issued in connection with exchange from Class B 12,253 -- Reinvested 4,842 2,146 Redeemed (83,824) (29,621) ------------ ------------ Change in Class A 68,153 (1,359) ------------ ------------ CLASS B Issued 1,033 354 Reinvested 814 449 Redeemed (694) (644) Cost of shares exchanged to Class A (12,253) -- ------------ ------------ Change in Class B (11,100) 159 ------------ ------------ CLASS I Issued 1,091,060 1,448,749 Reinvested 142,122 77,340 Redeemed (2,660,354) (3,482,271) ------------ ------------ Change in Class I (1,427,172) (1,956,182) ------------ ------------ CLASS C Issued 337 -- Reinvested -- -- Redeemed -- -- ------------ ------------ Change in Class C 337 -- ------------ ------------ CLASS R Issued 337 -- Reinvested -- -- Redeemed -- -- ------------ ------------ Change in Class R 337 -- ------------ ------------ CLASS S Issued 3,209 -- Issued in connection with merger 10,207,207 -- Reinvested -- -- Redeemed (132,190) -- ------------ ------------ Change in Class S 10,078,226 -- ------------ ------------ Net change from share transactions (8,708,781) (1,957,382) ============ ============ TAMARACK NORTH CAROLINA TAX-FREE BOND FUND FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 1,098,258 $ 54,693 Proceeds from shares exchanged from Class B 279,994 -- Dividends reinvested 219,859 157,897 Cost of shares redeemed (593,557) (551,453) ------------ ------------ Change in Class A $1,004,554 $(338,863) ------------ ------------
30 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CLASS B Proceeds from shares issued $ -- $ 31,404 Dividends reinvested 11,412 11,314 Cost of shares redeemed (168,615) (36,614) Cost of shares exchanged to Class A (279,994) -- ------------ ------------ Change in Class B $ (437,197) $ 6,104 ------------ ------------ CLASS I Proceeds from shares issued $ 2,479,055 $ 2,919,426 Dividends reinvested 262,148 109,961 Cost of shares redeemed (9,835,117) (8,457,190) ------------ ------------ Change in Class I $ (7,093,914) $ (5,437,803) ------------ ------------ Net change from capital transactions $ (6,526,557) $ (5,770,562) ============ ============ SHARE TRANSACTIONS: CLASS A Issued 104,369 5,152 Issued in connection with exchange from Class B 26,768 -- Reinvested 20,912 14,895 Redeemed (56,864) (51,739) ------------ ------------ Change in Class A 95,185 (31,692) ------------ ------------ CLASS B Issued -- 2,908 Reinvested 1,059 1,067 Redeemed (15,665) (3,482) Cost of shares exchanged to Class A (26,742) -- ------------ ------------ Change in Class B (41,348) 493 ------------ ------------ CLASS I Issued 235,393 275,348 Reinvested 25,097 10,331 Redeemed (932,522) (801,479) ------------ ------------ Change in Class I (672,032) (515,800) ------------ ------------ Net change from share transactions (618,195) (546,999) ============ ============
Class C, R, and S shares of the North Carolina Tax-Free Bond Fund were not offered during the periods stated above. 31 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ - -------------------------------------------------------------------------------- 8. FUND COMBINATIONS At a special meeting of shareholders on April 8, 2004, the shareholders of each of Portfolio S and Portfolio L of D.L. Babson Bond Trust approved agreements and plans of reorganization regarding the combination of Portfolio S and Portfolio L into RBC Quality Income Fund. Effective April 16, 2004, through a tax-free reorganization, Portfolio S and Portfolio L transferred all of their assets to RBC Quality Income Fund, which assumed all of the liabilities of Portfolio S and Portfolio L. Voyageur paid the costs associated with the reorganization. The shareholders of Portfolio S and Portfolio L received 2,733,144 and 7,474,063 Class S shares, respectively, ($9.75 per share) of the RBC Quality Income Fund, which had a total value of $99,512,062, in exchange for their shares of Portfolio S and Portfolio L ($9.60 and $1.53 per share, respectively), which also had a total value of $99,512,062. Portfolio S and Portfolio L shareholders received 0.985 and 0.157 Quality Income Fund Class S shares, respectively, for every 1.000 shares owned of Portfolio S or Portfolio L. - -------------------------------------------------------------------------------- 9. REORGANIZATION OF RBC FUNDS, INC. On December 2, 2003, the Board of Directors of RBC Funds, Inc. approved an agreement and plan of reorganization regarding the reorganization of each series of RBC Funds, Inc. (including RBC Government Income Fund, RBC Quality Income Fund and RBC North Carolina Tax-Free Bond Fund) as a series of Tamarack. At a special meeting of shareholders on April 8, 2004, the shareholders of each of RBC Government Income Fund, RBC Quality Income Fund and RBC North Carolina Tax-Free Bond Fund approved the agreement and plan of reorganization with respect to each fund. Effective April 16, 2004, pursuant to that agreement and plan of reorganization, RBC Government Income Fund, RBC Quality Income Fund and RBC North Carolina Tax-Free Bond Fund were reorganized, through a tax-free reorganization, as separate series of Tamarack (Government Income Fund, Quality Fixed Income Fund and North Carolina Tax-Free Bond Fund, respectively). - -------------------------------------------------------------------------------- 10. FEDERAL INCOME TAXES It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined under Subchapter M of the Internal Revenue Code, and to distribute substantially all of its net investment income and net realized capital gain. Therefore, no federal tax liability is recorded in the financial statements of each Fund. 32 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ The tax cost of securities differ from financial reporting cost by the amount of losses recognized for financial reporting purposes in excess of federal income tax purposes. As of April 30, 2004, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for each Fund were as follows:
Net Unrealized Tax Cost Unrealized Unrealized Appreciation of Securities Appreciation Depreciation (Depreciation) ------------- ------------ ------------ -------------- Government Income Fund $ 24,569,048 $ 71,785 $ (463,990) $ (392,205) Quality Fixed Income Fund 131,319,185 4,173,347 (2,363,704) 1,809,643 North Carolina Tax-Free Bond Fund 17,578,652 829,888 (56,103) 773,785
The tax character of distributions during the fiscal year ended April 30, 2004 was as follows (amounts in thousands): Distribution Paid From:
Net Inv. Net Long Term Total Taxable Tax-Exempt Total Dist. Income Capital Gains Distributions Distributions Paid ------ ------------- ------------- ------------- ---- Government Income Fund $ 645,785 $ 488,681 $ 1,143,466 $ -- $ 1,143,466 Quality Fixed Income Fund 2,037,101 941,576 2,978,677 -- 2,978,677 North Carolina Tax-Free Bond Fund 2,307 448,421 450,728 792,233 1,242,961
*Total distributions paid differ from Statement of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. As of April 30, 2004 the components of accumulated earnings/(deficit) on a tax basis was as follows (amounts in thousands):
Government Quality Fixed North Carolina Income Fund Income Fund Tax-Free Bond Fund ----------- ----------- ------------------ Undistributed Ordinary Income $ 49,817 $ 160,484 $ -- Undistributed Tax-Exempt Income -- -- 29,823 Undistributed Long-Term Capital 146,541 -- 415,667 Accumulated Earnings 196,358 160,484 445,490 Distribution Payable (49,818) (269,138) (49,792) Accumulated Capital and Other Losses -- (4,184,246) -- Unrealized Appreciation (Depreciation) (392,205) 1,479,487 773,785 Total Accumulated Earnings (Deficit) (245,665) (2.813,413) 1,169,483
As of the latest tax year end of April 30, 2004, the Quality Fixed Income Fund had additional net capital loss carryforwards, subject to certain limitations on availability, to offset future net capital gains, if any, as the successor of a merger. To the extent that these carryovers used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders: Capital Loss Quality Fixed Income Fund Carryforward Expires ------------ ------- $ 115,326 2009 482,219 2010 1,358,311 2011 1,229,732 2012 33 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ - -------------------------------------------------------------------------------- 11. DIVIDEND RECEIVED DEDUCTION For corporate shareholders no percentage of the total ordinary income distributions paid during the tax year ended April 30, 2004, qualified for the corporate dividend received deduction for the Funds. - -------------------------------------------------------------------------------- 12. CHANGE IN AUDITORS On December 2, 2003, the Board of Directors of RBC Funds, Inc. selected Deloitte & Touche ("Deloitte") as independent auditors of the RBC Funds for the fiscal year ending April 30, 2004. On March 11, 2004, the Tamarack Board of Trustees selected Deloitte as independent auditors of the Funds. Deloitte has confirmed to the Audit Committee of the Board of Trustees ("Audit Committee") that they are independent auditors with respect to the Funds. PricewaterhouseCoopers LLP ("PwC") served as independent auditors of the RBC Funds for the fiscal year ended April 30, 2003. In July and August 2003, a PwC affiliate in Canada provided certain prohibited non-audit services for the benefit of a Canadian subsidiary of Royal Bank of Canada, the ultimate parent company of Voyageur. As a result of the PwC affiliate in Canada's provision of these services, PwC resigned as the independent auditors of the RBC Funds effective October 8, 2003. During the RBC Funds' fiscal year ended April 30, 2003, PwC's audit reports concerning the RBC Funds contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principles. Further, in connection with its audits for the fiscal year ended April 30, 2003, and through October 8, 2003, there were no disagreements between the RBC Funds and PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of PwC would have caused it to make reference to the disagreements in its report on the financial statements for such periods. - -------------------------------------------------------------------------------- 13. MARKET TIMING Tamarack discourages attempts at market timing by Fund shareholders. Each Fund charges a redemption fee of 2% of the value of the shares redeemed or exchanged within 30 days of purchase. When assessed, the redemption fee is retained by the Fund, not by Fund management. This redemption fee is not charged in cases where the redemption results from an automatic reinvestment or asset re-allocation not specifically directed by the shareholder. Tamarack also reserves the right to reject any Fund purchase order made by persons deemed to be market timers. The Funds' prospectus contains a full description of Tamarack's policies on market timing and excessive trading. - -------------------------------------------------------------------------------- 14. SOFT DOLLARS The term soft dollars generally refers to arrangements in which services other than trade execution (such as research and brokerage services) are received from a broker-dealer. The federal securities laws permit a fund adviser to cause the Fund to pay higher commission charges if the adviser believes the charges are reasonable in relation to the brokerage and research services provided to the adviser or to the Fund. Voyageur has a fiduciary duty to the shareholders of the Funds to seek the best execution for all of the Funds' securities transactions. Fund management believes that using soft dollars to purchase brokerage and research services may, in certain circumstances, be in the Funds' best interest. 34 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Government Income Fund - -------------------------------------------------------------------------------- APRIL 30, 2004
SHARES VALUE - ------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 98.9% (a) See notes to financial statements for tax basis unrealized appreciation FANNIE MAE - 45.2% (depreciation) of securities. 75,000 3.88%, 3/15/05 $ 76,525 910,000 5.25%, 6/15/06 958,944 SEE NOTES TO FINANCIAL STATEMENTS. 650,000 2.63%, 11/15/06 646,363 1,000,000 5.00%, 1/15/07 1,051,933 1,000,000 7.13%, 3/15/07 1,111,991 500,000 4.25%, 7/15/07 514,950 500,000 6.63%, 10/15/07 553,126 1,000,000 5.75%, 2/15/08 1,076,549 1,100,000 6.00%, 5/15/08 1,194,283 500,000 3.38%, 12/15/08 489,109 700,000 5.38%, 11/15/11 731,544 400,000 6.13%, 3/15/12 435,594 1,256,005 4.50%, 10/1/13 1,261,805 930,725 4.50%, 5/1/33 932,535 ----------- 11,035,251 ----------- FEDERAL HOME LOAN BANK - 25.5% 475,000 5.13%, 3/6/06 498,383 1,000,000 2.50%, 3/15/06 1,002,426 1,000,000 5.38%, 5/15/06 1,056,688 650,000 4.13%, 11/15/06 670,090 1,550,000 2.75%, 3/14/08 1,506,731 1,000,000 5.75%, 5/15/12 1,057,629 250,000 4.50%, 11/15/12 244,205 200,000 3.88%, 6/14/13 185,090 ----------- 6,221,242 ----------- FREDDIE MAC - 19.5% 1,000,000 4.88%, 3/15/07 1,050,731 1,900,000 5.75%, 4/15/08 2,050,612 1,217,969 5.00%, 12/1/17 1,228,361 429,165 4.50%, 5/1/18 423,377 ----------- 4,753,081 ----------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 8.7% 1,095,000 5.28%, 11/16/15 1,142,838 986,418 4.36%, 2/16/30 978,008 ----------- 2,120,846 ----------- TOTAL U.S. GOVERNMENT AGENCY 24,130,420 OBLIGATIONS ----------- (Cost $24,522,625) INVESTMENT COMPANIES - 0.2% 46,423 Wells Fargo 100% Treasury 46,423 Money Market Fund, ----------- Investor Class TOTAL INVESTMENT COMPANIES 46,423 (Cost $46,423) ----------- TOTAL INVESTMENTS 24,176,843 (Cost $24,569,048)(a) - 99.1% Other assets in excess of liabilities - 0.9% 216,749 ----------- NET ASSETS - 100.0% $24,393,592 ===========
35 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund - -------------------------------------------------------------------------------- APRIL 30, 2004
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- ASSET BACKED SECURITIES - 2.3% 314,710 Vendee Mortgage Trust, Series 334,339 AUTOMOTIVE - 0.8% 1992-1, Class 2Z, 7.75%, 5/15/22 440,000 Capital Auto Receivables $ 442,320 1,085,334 Washington Mutual, Inc., 1,072,087 Asset Trust, Series 2003-1, Series 2003-S11, Class 1A, ---------- Class A2A, 2.27%, 1/17/06 5.00%, 11/25/33 344,432 Ford Credit Auto Owner Trust, 347,749 Series 2002-B, Class A3A, TOTAL COLLATERALIZED MORTGAGE 6,046,593 4.14%, 12/15/05 OBLIGATIONS ---------- 125,000 Ford Credit Auto Owner Trust, 125,511 (Cost $6,041,650) Series 2003-A, Class A3A, 2.20%, 7/17/06 COMMERCIAL MORTGAGE BACKED 129,945 MMCA Automobile Trust, 130,621 SECURITIES - 7.2% Series 2002-3, Class A3, ---------- BANKING & FINANCIAL SERVICES - 7.2% 2.97%, 3/15/07 617,036 ABN Amro Mortgage Corp., 596,189 1,046,201 Series 2003-12, Class 1A, ---------- 5.00%, 12/25/33 BANKING & FINANCIAL SERVICES - 1.1% 404,156 Banc of America Commercial 419,054 650,000 MBNA Master Credit Card Trust, 703,360 Mortgage, Inc., Series 2001-PB1, Series 1999-B, Class A, Class A1, 4.91%, 5/11/35 .90%, 8/15/11 642,305 Chase Commercial Mortgage 671,991 129,986 New Century Home Equity Loan 132,589 Securities Corp., Series 1996-1, rust, Series 1997-NC5, Class A6, Class A2, 7.60%, 3/18/06 6.70%, 10/25/28 867,960 Chase Mortgage Finance Corp., 848,587 550,000 Vanderbilt Mortgage Finance, 557,421 Series 2003-S11, Class 1A1, Series 2002-C, Class A2, ---------- 5.00%, 10/25/33 4.23%, 2/7/15 1,515,368 CS First Boston Mortgage 1,573,711 1,393,370 Securites Corp., Series 1997-C2, ---------- Class A2, 6.52%, 1/17/35 UTILITIES - 0.4% 755,293 GE Capital Commercial 783,323 500,000 Peco Energy Transition Trust, 555,017 Mortgage Corp., Series 2002-1A, Series 2001-A, Class A1, ---------- Class A1, 5.03%, 12/10/35 6.52%, 12/31/10 453,204 GMAC Commercial Mortgage 468,679 Securities, Inc., Series 1998-C1, TOTAL ASSET BACKED SECURITIES 2,994,588 Class A1, 6.41%, 5/15/30 (Cost $2,888,323) ---------- 290,197 GMAC Mortgage Corp. Loan 289,923 Trust, Series 2001-J5, Class A7, COLLATERALIZED MORTGAGE 6.75%, 11/25/31 OBLIGATIONS - 4.6% 70,860 GSR Mortgage Loan Trust, 72,134 BANKING & FINANCIAL SERVICES - 4.6% Series 2002-8F, Class 3AA1, 370,000 Bank of America Mortgage 378,094 6.50%, 9/25/32 Securities, Series 2004-4, 1,750,000 JP Morgan Commercial 1,916,329 Class 3A1, 5.00%, 5/25/19 Mortgage Finance Corp., 2,140,000 Countrywide Alternative Loan 2,162,069 Series 1999-C7, Class A2, Trust, Series 2004-12CB, 6.51%, 10/15/35 Class 1A-1, 5.00%, 7/25/19 500,000 LB-UBS Commercial Mortgage 469,064 75,048 Residential Accredit Loans, Inc., 74,951 Trust, Series 2004-C2, Class A4, Series 2000-QS8, Class A4, 4.37%, 3/1/36 8.00%, 7/25/30 176,546 Master Asset Securitization 180,680 152,318 Residential Accredit Loans, Inc., 155,037 Trust, Series 2002-6, Class 6A1, Series 2002-QS9, Class A3, 6.50%, 10/25/32 6.50%, 7/25/32 976,674 Master Asset Securitization 943,455 732,343 Structured Adjustable Rate 756,030 Trust, Series 2003-12, Class 6A1, Mortgage Loan Trust, Series 5.00%, 12/25/33 2004-2, Class 2A, 5.09%, 3/25/34 70,331 Morgan Stanley Mortgage Loan 72,078 327,791 Structured Asset Securities Corp., 338,604 Trust, Series 2004-2AR, Class 1A, ---------- Series 2002-11A, Class 2A1, 5.25%, 2/25/34 5.60%, 6/25/32 786,291 Structured Asset Securties Corp., 775,382 TOTAL COMMERCIAL MORTGAGE BACKED 9,305,197 Series 2003-30, Class 1A1, SECURITIES ---------- .50%, 10/25/33 (Cost $9,166,524)
36 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund (cont.) - --------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- COMMON STOCKS - 0.2% 230,000 Ford Motor Credit Co., 5.63%, 234,503 TELECOMMUNICATIONS - 0.2% 10/1/08 15,668 MCI, Inc. 222,172 145,000 Ford Motor Credit Co., 5.80%, 147,685 ---------- 1/12/09 TOTAL COMMON STOCKS 222,172 200,000 Ford Motor Credit Co., 7.38%, 213,865 (Cost $270,671) ---------- 2/1/11 240,000 Ford Motor Credit Co., 7.00%, 246,823 CORPORATE BONDS - 43.3% 10/1/13 AEROSPACE & DEFENSE - 0.3% 275,000 Franklin Resources, Inc., 3.70%, 271,424 365,000 Boeing Capital Corp., 7.10%, 388,675 4/15/08 9/27/05 ---------- 370,000 General Electric Capital Corp., 361,963 4.25%, 12/1/10 AIRLINES - 0.6% 500,000 General Motors Acceptance 519,718 500,000 American Airlines, Inc., Series 504,419 Corp., MTN, 8.38%, 2/22/05 1999-1, Class A-2, 7.02%, 700,000 General Motors Acceptance 769,909 10/15/09 Corp., 7.75%, 1/19/10 221,832 Atlas Air, Inc., Series 1999-1, 208,538 770,000 Goldman Sachs Capital I, 735,995 Class A1, 7.20%, 1/2/19 ---------- 6.35%, 2/15/34 712,957 470,000 Goldman Sachs Group, Inc., 469,963 ---------- 2.85%, 10/27/06 AUTOMOTIVE - 1.7% 250,000 Goldman Sachs Group, Inc., 284,791 1,095,000 DaimlerChrysler NA Holdings, 1,075,582 MTN, 7.35%, 10/1/09 4.05%, 6/4/08 75,000 Household Finance Corp., 74,968 280,000 Ford Motor Co., 6.63%, 251,542 4.13%, 12/15/08 2/15/28 165,000 Household Finance Corp., 179,023 280,000 Ford Motor Co., 6.38%, 243,349 6.38%, 10/15/11 2/1/29 600,000 Household Finance Corp., 646,100 125,000 General Motors Corp., 7.13%, 131,121 6.38%, 11/27/12 7/15/13 300,000 Jefferies Group, Inc., 7.50%, 336,540 95,000 General Motors Corp., 7.70%, 102,072 8/15/07 4/15/16 290,000 John Deere Capital Corp., 305,062 160,000 General Motors Corp., 8.25%, 171,229 5.13%, 10/19/06 7/15/23 550,000 JP Morgan Chase & Co., 551,474 150,000 General Motors Corp., 8.38%, 162,228 3.13%, 12/11/06 7/15/33 ---------- 500,000 KeyCorp, 6.75%, 3/15/06 538,128 2,137,123 200,000 KFW International Finance, Inc., 210,057 ---------- 4.75%, 1/24/07 BANKING & FINANCIAL SERVICES - 15.9% 300,000 Merrill Lynch & Co., 2.94%, 303,896 500,000 AIG SunAmerica, Inc., MTN, 531,257 1/30/06 5.75%, 2/16/09 500,000 Merrill Lynch & Co., 6.38%, 545,974 200,000 American Financial Group, 217,416 10/15/08 7.13%, 4/15/09 575,000 Merrill Lynch & Co., 4.13%, 573,676 275,000 American General Finance, 293,053 1/15/09 5.88%, 7/14/06 375,000 National Rural Utilities Corp., 370,719 230,000 Bank of America Corp., 224,072 4.38%, 10/1/10 3.25%, 8/15/08 160,000 National Rural Utilities Corp., 183,155 200,000 BankBoston NA, 7.38%, 221,305 7.25%, 3/1/12 9/15/06 25,000 National Rural Utilities Corp., 30,803 500,000 BB&T Corp., 6.38%, 6/30/05 523,410 8.00%, 3/1/32 150,000 Caterpillar Financial Service 149,246 1,030,000 NB Capital Trust IV, 8.25%, 1,146,505 Corp., 3.00%, 2/15/07 4/15/27 300,000 CIT Group, Inc., 4.13%, 2/21/06 307,589 310,000 North Fork Bancorp., 5.00%, 313,580 295,000 CIT Group, Inc., 7.38%, 4/2/07 327,374 8/15/12 195,000 CIT Group, Inc., 4.75%, 193,284 910,000 SLM Corp., 5.00%, 10/1/13 890,423 12/15/10 250,000 SunTrust Bank, Inc., 6.38%, 273,338 200,000 Countrywide Home Loan, 188,765 4/1/11 4.00%, 3/22/11 500,000 Synovus Financial Corp., 538,775 225,000 Fannie Mae, 6.63%, 11/15/30 249,977 7.25%, 12/15/05 500,000 Ford Motor Credit Co., 6.88%, 529,238 500,000 Textron Financial Corp., 494,308 2/1/06 2.69%,10/3/06
37 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund (cont.) - --------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- 1,650,000 Toyota Motor Credit Corp., 1,637,634 ELECTRIC (INTEGRATED) - 0.9% 4.35%, 12/15/10 135,000 American Electric Power Co., 143,568 500,000 Wachovia Corp., 7.45%, 530,398 Inc., 6.13%, 5/15/06 7/15/05 50,000 Carolina Power & Light, 5.13%, 49,901 840,000 Wachovia Corp., 3.63%, 823,495 9/15/13 2/17/09 150,000 Carolina Power & Light, 6.13%, 147,835 550,000 Washington Mutual, Inc., 549,945 9/15/33 2.40%, 11/3/05 450,000 Midamerican Energy Co., 450,090 200,000 Washington Mutual, Inc., 211,848 5.13%, 1/15/13 5.63%, 1/15/07 350,000 Transalta Corp., 5.75%, 345,636 240,000 Wells Fargo Financial, Inc., 256,994 12/15/13 ----------- 7.00%, 11/1/05 ----------- 1,137,030 20,729,443 ----------- ----------- ENERGY - 5.2% BUILDING & CONSTRUCTION - 0.9% 1,675,000 BP Capital Markets PLC, 1,675,224 200,000 D.R. Horton, Inc., 6.88%, 209,000 2.75%, 12/29/06 5/1/13 100,000 Buckeye Partners, 4.63%, 770,000 Lennar Corp., 1.86%, 3/19/09 769,069 7/15/13 94,921 155,000 Masco Corp., 6.75%, 3/15/06 166,223 295,000 Consolidated Natural Gas, 318,734 ----------- 6.25%, 11/1/11 1,144,292 155,000 Duke Energy Field Services, 179,182 CABLE - 1.9% ----------- 7.88%, 8/16/10 660,000 Comcast Cable Communications, 699,215 530,000 Enterprise Products Partners LP, 591,350 Inc., 6.38%, 1/30/06 7.50%, 2/1/11 135,000 Comcast Cable Communications, 149,617 590,000 Keyspan Gas East, 6.90%, 656,314 Inc., 7.13%, 6/15/13 1/15/08 250,000 Rogers Cable, Inc., 6.25%, 240,722 325,000 Kinder Morgan Energy 364,345 6/15/13 Partners LP, 7.13%, 3/15/12 250,000 Shaw Communications, Inc., 269,365 575,000 Kinder Morgan Energy 656,280 7.25%, 4/6/11 Partners LP, 7.75%, 3/15/32 825,000 TCI Communications, Inc., 881,311 250,000 NRG Energy, Inc.(c), 8.00%, 251,875 6.88%, 2/15/06 12/15/13 250,000 Videotron Ltee, 6.88%, 1/15/14 252,500 100,000 OAO Gazprom, 9.13%, 4/25/07 105,000 ----------- 100,000 Pemex Project Funding Master 110,250 2,492,730 Trust, 7.88%, 2/1/09 ----------- 200,000 Piedmont Natural Gas Co., 195,305 CHEMICALS - 0.6% 6.00%, 12/19/33 500,000 E.I. Du Pont de Nemours & Co., 561,224 750,000 Praxair, Inc., 6.50%, 3/1/08 822,979 8.25%, 9/15/06 800,000 Tosco Corp., 7.25%, 1/1/07 880,969 140,000 Ecolab, Inc., 6.88%, 2/1/11 153,889 ----------- ----------- 6,902,728 715,113 ----------- ----------- ENTERTAINMENT - 1.4% COMMERCIAL SERVICES - 0.5% 250,000 Boyd Gaming Corp., 7.75%, 265,000 200,000 Aramark Services, Inc., 8.15%, 210,604 12/15/12 5/1/05 210,000 Harrah's Operating Co., Inc.(c), 204,232 225,000 Aramark Services, Inc., 7.00%, 245,958 5.38%, 12/15/13 5/1/07 200,000 Intrawest Corp., 7.50%, 204,500 130,000 PHH Corp., 7.13%, 3/1/13 144,203 10/15/13 ----------- 535,000 Marriott International, 7.00%, 595,690 600,765 1/15/08 ----------- 250,000 Park Place Entertainment, Inc., 261,250 COMPUTER INDUSTRY - 0.4% 7.00%, 4/15/13 250,000 IBM Corp., 4.88%, 10/1/06 262,039 250,000 Penn National Gaming, Inc. (c), 251,250 285,000 Interactive Corp., 7.00%, 310,093 6.88%, 12/1/11 ----------- 1/15/13 ----------- 1,781,922 572,132 ----------- ----------- FOOD & BEVERAGES - 0.9% CONSUMER GOODS & SERVICES - 0.7% 500,000 Coca-Cola Enterprises, Inc., 528,471 715,000 First Brands Corp., 7.25%, 794,478 5.38%, 8/15/06 3/1/07 300,000 General Mills, Inc., 5.13%, 314,763 135,000 Newell Rubbermaid, Inc., 128,756 2/15/07 4.00%, 5/1/10 ----------- 923,234 -----------
38 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund (cont.) - --------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- 295,000 Supervalu, Inc., 7.50%, 5/15/12 333,945 RESEARCH & DEVELOPMENT - 0.2% ---------- 245,000 Science Applications Int'l. Corp., 270,994 1,177,179 7.13%, 7/1/32 ---------- ---------- RESTAURANTS - 0.4% FOREIGN AGENCIES - 0.8% 500,000 Darden Restaurants, Inc., 537,658 100,000 Federal Republic of Brazil, 97,000 8.38%, 9/15/05 ---------- 10.00%, 8/7/11 100,000 Federal Republic of Brazil, 93,000 RETAIL - 0.6% 11.00%, 8/17/40 600,000 Kroger Co., 7.45%, 3/1/08 674,995 250,000 Ontario Province, 5.50%, 266,413 40,000 Kroger Co., 6.75%, 4/15/12 43,930 10/1/08 ---------- 100,000 Republic of Columbia, 9.75%, 108,500 718,925 4/23/09 TELECOMMUNICATIONS - 3.1% ---------- 100,000 Republic of Panama, 9.38%, 113,000 100,000 British Telecom PLC, 8.38%, 119,029 7/23/12 12/15/10 100,000 Republic of Peru, 9.88%, 2/6/15 107,500 550,000 Deutsche Telekom International 649,867 50,000 Republic of Peru, 8.75%, 44,500 Finance, 8.50%, 6/15/10 11/21/33 50,000 France Telecom, 8.75%, 3/1/11 59,110 100,000 Republic of Philippines, 9.88%, 102,750 180,000 France Telecom, 9.50%, 3/1/31 230,841 1/15/19 121,000 MCI, Inc., 5.91%, 05/01/07, 119,639 100,000 United Mexican States, 9.88%, 122,650 121,000 MCI, Inc., 6.69%, 5/1/09 114,950 2/1/10 ---------- 103,000 MCI, Inc., 7.74%, 5/1/14 95,533 1,055,313 250,000 Nextel Communications, Inc., 259,688 ---------- 7.38%, 8/1/15 HEALTH CARE - 0.6% 250,000 Rogers Wireless, Inc. (c), 235,000 155,000 Eli Lilly & Co., 5.50%, 7/15/06 164,448 6.38%, 3/1/14 425,000 Humana, Inc., 7.25%, 8/1/06 462,387 85,000 SBC Communications, Inc., 90,081 150,000 Unitedhealth Group, Inc., 157,776 7.00%, 8/15/05 5.20%, 1/17/07 ---------- 784,611 250,000 SBC Communications, Inc., 261,572 ---------- 5.88%, 2/1/12 70,000 Sprint Capital Corp., 7.13%, 75,091 MACHINERY & EQUIPMENT - 0.3% 1/30/06 50,000 Crane Co., 5.50%, 9/15/13 50,251 670,000 Sprint Capital Corp., 6.88%, 657,765 345,000 Hutchison Whampoa Int'l., Ltd. 338,647 11/15/28 (c), 6.25%, 1/24/14 ---------- 388,898 660,000 US Cellular Corp., 6.70%, 644,835 ---------- 12/15/33 150,000 Verizon New England, Inc., 162,542 MEDIA - 1.0% 6.50%, 9/15/11 565,000 News America Holdings, Inc., 644,334 200,000 Verizon Virginia, Inc., 4.63%, 189,307 7.70%, 10/30/25 3/15/13 ---------- 400,000 Time Warner Communications, 441,510 3,964,850 Inc., 8.11%, 8/15/06 ---------- 140,000 Time Warner Entertainment, 167,351 TEXTILES - 0.6% Inc., 8.38%, 7/15/33 ---------- 1,253,195 210,000 Mohawk Industries, Inc., 226,803 ---------- 6.50%, 4/15/07 500,000 VF Corp., 8.10%, 10/1/05 539,316 PAPER & RELATED PRODUCTS - 1.2% ---------- 600,000 Avery Dennison Corp., 6.76%, 625,609 766,119 4/15/05 TRANSPORTATION & SHIPPING - 1.0% ---------- 250,000 Georgia Pacific Corp., 9.38%, 291,250 500,000 Burlington Northern Santa Fe 560,775 2/1/13 Corp., 9.25%, 10/1/06 550,000 Weyerhaeuser Co., 6.95%, 573,129 200,000 CHC Helicopter Corp.(c), 202,500 10/1/27 ---------- 7.38%, 5/1/14 1,489,988 454,019 Federal Express Corp., 7.50%, 500,942 ---------- 1/15/18 ---------- REITS - 0.8% 1,264,217 650,000 Kimco Realty Corp., 7.86%, 738,816 ---------- 11/1/07 245,000 Simon Property Group LP, 268,035 6.88%, 11/15/06 ---------- 1,006,851 ----------
39 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund (cont.) - --------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ----------------------------------------------------------- UTILITIES - 0.8% 92,081 6.00%, 2/1/18 96,206 500,000 Niagra Mohawk Power Co., 547,272 37,981 8.00%, 10/1/18 41,559 7.75%, 5/15/06 8,979 9.00%, 10/1/18 9,747 425,000 Republic Services, Inc., 6.75%, 468,095 520,000 5.20%, 3/5/19 500,772 8/15/11 ----------- 49,482 7.50%, 2/1/21 53,608 1,015,367 1,905 9.00%, 5/15/21 1,910 ----------- 1,000,000 5.50%, 2/15/26 1,041,063 TOTAL CORPORATE BONDS 55,932,309 250,000 7.00%, 8/15/29 266,972 (Cost $54,636,603) ----------- 646,768 7.50%, 2/1/30 697,195 155,562 7.50%, 2/1/30 167,103 U.S. GOVERNMENT AGENCY 185,098 7.50%, 1/1/31 198,830 OBLIGATIONS - 31.6% 36,615 7.00%, 9/1/31 38,667 FANNIE MAE - 11.8% 88,519 5.50%, 11/1/31 88,466 54,089 7.00%, 12/1/07 56,604 969,732 6.00%, 11/1/32 992,533 280,599 6.42%, 11/1/08 305,342 1,098,981 5.50%, 6/1/33 1,098,263 24,650 8.25%, 1/1/09 25,959 483,382 5.00%, 8/1/33 469,010 14,426 8.00%, 2/1/09 15,353 341,032 6.00%, 9/1/33 349,021 6,364 8.50%, 7/1/13 6,393 --------- 64,115 5.50%, 3/1/17 65,854 6,274,676 5,944 5.50%, 3/1/17 6,105 --------- 110,789 5.50%, 5/1/17 113,794 GOVERNMENT NATIONAL MORTGAGE 325,184 5.00%, 8/1/17 327,642 ASSOCIATION - 14.4% 594,427 5.50%, 8/1/17 610,548 5,881 7.50%, 3/15/07 6,224 432,971 5.50%, 11/1/17 444,587 5,755 7.50%, 3/15/07 6,091 3,419,458 4.50%, 12/1/17 3,371,871 35,465 7.50%, 7/15/07 37,538 278,263 5.00%, 3/1/18 280,223 47,849 8.00%, 10/15/07 50,913 25,864 9.50%, 6/25/18 28,750 699,187 8.00%, 11/15/09 746,187 653,005 4.50%, 9/1/18 643,585 69,637 7.50%, 10/15/11 74,795 13,576 9.25%, 10/1/20 15,158 6,797 7.50%, 10/15/11 7,301 620,700 7.00%, 2/1/26 658,080 69,382 7.50%, 11/15/11 74,522 152,396 6.50%, 5/1/29 158,820 6,481 9.50%, 4/15/16 7,292 318,470 7.50%, 9/1/29 341,240 296,857 3.31%, 4/16/17 296,808 45,020 7.00%, 10/1/29 47,629 19,390 9.50%, 1/15/19 21,847 56,494 7.00%, 12/1/29 59,768 1,217 9.50%, 9/15/19 1,371 648 7.00%, 1/1/30 685 351,000 6.11%, 11/16/21 376,465 12,267 7.00%, 2/1/30 12,968 40,751 8.00%, 5/15/22 44,834 873 7.00%, 2/1/30 924 22,956 8.00%, 12/15/22 25,256 104,502 7.00%, 2/1/30 110,471 210,000 5.15%, 6/16/23 216,468 48,614 7.00%, 2/1/30 51,390 18,034 6.50%, 8/15/23 18,951 1,097 7.00%, 2/1/30 1,160 96,986 6.50%, 9/15/23 101,915 259,809 6.50%, 11/1/32 270,531 14,719 6.50%, 11/15/23 15,467 586,198 5.00%, 4/1/33 568,366 11,932 6.50%, 12/15/23 12,538 42,085 5.00%, 5/1/33 40,805 66,683 6.50%, 12/15/23 70,072 412,163 5.50%, 5/1/33 411,523 21,136 6.50%, 2/15/24 22,166 741,771 5.50%, 6/1/33 740,620 245,371 6.50%, 3/15/24 257,326 854,601 5.50%, 7/1/33 853,274 760,784 7.00%, 3/15/24 813,911 584,262 6.00%, 7/1/33 597,959 84,990 7.00%, 5/15/24 90,925 642,116 5.00%, 8/1/33 622,584 282,198 6.50%, 6/15/24 295,947 1,193,733 5.00%, 9/1/33 1,157,421 53,584 8.00%, 11/15/26 58,639 2,318,946 5.00%, 9/1/33 2,248,405 885,610 8.00%, 12/15/26 969,153 ---------- 603,903 7.00%, 12/15/29 642,732 15,272,391 500,000 4.75%, 1/16/30 494,661 ---------- 498,141 4.36%, 2/16/30 493,894 FREDDIE MAC - 4.9% 10,621 6.00%, 5/15/31 10,893 17,230 7.75%, 4/1/08 18,424 92,045 6.50%, 5/15/31 96,173 7 8.25%, 7/1/08 7 92,415 6.50%, 7/15/31 96,555 7,790 7.75%, 11/1/08 8,215 11,650 6.50%, 8/15/31 12,172 3,231 8.00%, 8/1/09 3,322 122,291 6.00%, 9/20/31 125,266 20,424 8.25%, 10/1/10 21,452 14,364 6.50%, 11/15/31 15,008 68,321 8.00%, 1/1/12 73,444 129,922 6.00%, 2/15/32 133,294 34,895 9.00%, 6/1/16 38,887 44,321 6.50%, 4/15/32 46,311
40 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Quality Fixed Income Fund (cont.) - --------------------------------------------------------------------------------
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- TOTAL INVESTMENT CORPORATION 9,709,569 128,087 7.00%, 4/15/32 136,167 (Cost $9,709,569) ------------ 219,817 6.00%, 6/15/32 225,523 39,887 7.00%, 7/15/32 42,403 TOTAL INVESTMENTS 132,505,682 250,071 7.50%, 7/15/32 268,603 (Cost $130,696,039)(a) - 102.4% 169,210 6.00%, 8/15/32 173,603 Liabilities in excess of other (3,143,732) 45,493 7.00%, 8/15/32 48,363 assets - (2.4)% ------------ 157,006 6.50%, 9/15/32 164,055 336,887 6.00%, 10/20/32 345,211 NET ASSETS - 100.0% $129,361,950 593,383 6.00%, 1/15/33 608,382 ============ 246,211 6.00%, 3/15/33 252,572 113,540 6.00%, 4/15/33 116,474 (a) See notes to financial statements for tax basis unrealized 238,367 5.00%, 8/15/33 231,924 appreciation (depreciation) of securities. 838,483 5.00%, 8/15/33 815,818 (c) Rule 144A, Section 4(2) or other security, which is restricted 945,335 5.00%, 8/15/33 919,782 as to resale to qualified purchasers. 248,596 5.00%, 8/15/33 241,876 MTN - Medium Term Note 237,852 5.00%, 8/15/33 231,423 PLC - Public Limited Co. 782,863 5.00%, 8/15/33 761,701 5,984,666 5.00%, 1/15/34 5,821,692 SEE NOTES TO FINANCIAL STATEMENTS. 305,000 4.93%, 11/16/44 311,100 ------------ 18,604,553 ------------ NEW VALLEY GENERATION IV - 0.1% 97,478 4.69%, 1/15/22 93,917 ------------ SMALL BUSINESS ADMINISTRATION - 0.0% 21,027 9.80%, 7/1/08 22,564 3,095 10.05%, 8/1/08 3,338 9,796 10.05%, 4/1/09 10,696 ------------ 36,598 ------------ TENNESSEE VALLEY AUTHORITY - 0.4% 500,000 6.25%, 12/15/17, 543,028 Series E ------------ TOTAL U.S. GOVERNMENT AGENCY 40,825,163 OBLIGATIONS ------------ (Cost $40,672,435) U.S. TREASURY BONDS - 4.4% 2,650,000 8.13%, 5/15/21 3,522,429 400,000 6.25%, 8/15/23 444,469 610,000 5.50%, 8/15/28 619,794 500,000 5.25%, 11/15/28 491,348 170,000 6.13%, 8/15/29 187,704 465,000 5.38%, 2/15/31 471,103 ------------ TOTAL U.S. TREASURY BONDS 5,736,847 (Cost $5,539,359) ------------ U.S. TREASURY NOTES - 1.3% 440,000 3.00%, 7/15/12 492,526 1,290,000 3.88%, 2/15/13 1,240,718 ------------ TOTAL U.S. TREASURY NOTES 1,733,244 (Cost $1,770,905) ------------ INVESTMENT COMPANIES - 7.5% 4,589,152 Wells Fargo Government 4,589,152 Institutional Money Market Fund, Investor Class 5,120,418 Wells Fargo Prime Investment 5,120,417 Money Market Fund, ------------ Investor Class
41 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ North Carolina Tax-Free Bond Fund - -------------------------------------------------------------------------------- APRIL 30, 2004
SHARES VALUE SHARES VALUE - ------------------------------------------------------- ------------------------------------------------------------- NORTH CAROLINA MUNICIPAL 240,000 North Carolina Housing Finance 250,807 OBLIGATIONS - 96.0% Agency Home Ownership 500,000 Buncombe County CP, 5.00%, $528,445 Revenue, Series 4A, 4.45%, 10/1/15, Callable 10/1/13 @ 100, 7/1/07, AMT (AMBAC Insured) 250,000 North Carolina Housing Finance 259,140 500,000 Cabarrus County CP, 5.50%, 543,325 Agency Home Ownership 4/1/15, Callable 4/1/11 @ 102 Revenue, Series 13A, 4.95%, 335,000 Cabarrus County GO, 5.30%, 363,810 7/1/14, Callable 7/1/11 @ 100, AMT 2/1/08, Callable 2/1/07 @ 100.5, 500,000 North Carolina Infrastructure CP, 541,295 (MBIA Insured) 5.00%, 2/1/11 500,000 Catawba County Memorial 532,170 525,000 North Carolina Medical Care 568,859 Hospital Project Revenue, 4.40%, Community Hospital Revenue, 10/1/08, (AMBAC Insured) Southeastern Regional Medical 1,000,000 Centennial Authority Hotel Tax 1,060,229 Center Project, 5.75%, 6/1/13, Revenue, Arena Project, 4.65%, Callable 6/1/09 @ 102 9/1/06, (FSA Insured) 500,000 North Carolina Municipal Power 547,285 435,000 Charlotte GO, Series A, 4.75%, 462,631 Agency #1, Catawba Electric 2/1/10, Callable 2/1/08 @ 101 Revenue, 5.25%, 1/1/09, 250,000 Charlotte Water & Sewer System 256,778 (MBIA-IBC Insured) Revenue, Series A, 4.38%, 7/1/15 250,000 North Carolina State GO, 259,993 500,000 Charlotte-Mecklenburg Health 528,360 Series A, 4.75%, 4/1/14, Care Systems Revenue, Series A, Callable 4/1/08 @ 102 4.90%, 1/15/10, Callable 250,000 North Carolina State Public 262,238 1/15/07 @ 102 School Building GO, 4.60%, 1,000,000 Cumberland County CP, 1,048,889 4/1/13, Callable 4/1/09 @ 102 Series A, 6.20%, 12/1/07, 250,000 Pitt County Memorial Hospital 269,595 Prerefunded 12/1/04 @ 102, Revenue, 5.38%, 12/1/10, (AMBAC Insured) Callable 12/1/05 @ 102, 500,000 Cumberland County Hospital 545,505 Escrowed to Maturity Facilities Revenue, 5.25%, 625,000 Pitt County Public Facilities CP, 676,856 10/1/10, Callable 10/1/09 @ 101 Series A, 5.35%, 4/1/07, 500,000 Dare County CP, Series A, 500,047 (MBIA Insured) 4.50%, 5/1/04, (MBIA Insured) 500,000 Raleigh Durham Airport 543,805 500,000 Duplin County, 5.00%, 9/1/10, 543,365 Authority Revenue, Series A, (AMBAC Insured) 5.25%, 11/1/12, Callable 1,000,000 Fayetteville Public Works 1,049,389 5/1/11 @ 101, (FGIC Insured) Commission Revenue, Series A, 250,000 Stanly County GO, 4.60%, 260,900 5.25%, 3/1/08, Callable 2/1/14, Callable 2/1/11 @ 101.5 3/1/05 @ 102, (AMBAC Insured) (AMBAC Insured) 265,000 Gastonia GO, 3.40%, 4/1/11 264,025 500,000 Union County Enterprise System 544,940 250,000 High Point Water & Sewer 253,908 Revenue, 5.35%, 6/1/09, System GO, 4.50%, 6/1/16, Callable 6/1/06 @ 102, (MBIA Insured) Callable 6/1/12 @ 101, (MBIA Insured) 250,000 Union County GO School, 264,073 500,000 Iredell County Memorial 531,790 4.75%, 3/1/13, Callable 3/1/11 @ 101 Hospital Revenue, 5.10%, 545,000 University of North Carolina 570,283 10/1/11, Callable 10/1/07 @ 101, Greensboro Revenue, Series A, (AMBAC Insured) 4.63%, 4/1/13, Callable 4/1/11 @ 101, 250,000 Lincoln County GO, 4.70%, 255,898 (FSA Insured) 6/1/17, Callable 6/1/12 @ 101, 500,000 Wake County GO, Series A, 528,320 (FGIC Insured) 4.75%, 2/1/14, Callable 500,000 North Carolina Educational 528,645 2/1/11 @ 101.5 Facilities Finance Agency 500,000 Winston-Salem CP, Series A, 540,560 Revenue, Wake Forest University 5.30%, 6/1/09, Callable Project, 5.00%, 11/1/12, 6/1/06 @ 102 Callable 11/1/07 @ 102 500,000 Winston-Salem State University 529,080 500,000 North Carolina Housing Finance 508,780 Housing & Dining Systems ----------- Agency Home Ownership Revenue, Series B, 4.85%, 1/1/11, Revenue, Series A1, 4.75%, Callable 1/1/09 @ 101, (MBIA Insured) 1/1/05, AMT 17,724,018 -----------
42 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ North Carolina Tax-Free Bond Fund (cont.) - -------------------------------------------------------------------------------- SHARES VALUE - ------------------------------------------------------- TOTAL NORTH CAROLINA MUNICIPAL 17,724,018 OBLIGATIONS ----------- (Cost $16,950,233) INVESTMENT COMPANIES - 3.4% 628,419 Wells Fargo National Tax-Free 628,419 Money Market Fund, ----------- Investor Class TOTAL INVESTMENT COMPANIES 628,419 (Cost $628,419) ----------- TOTAL INVESTMENTS 18,352,437 (Cost $17,578,652) (a) - 99.4% Other assets in excess of liabilities - 0.6% 103,548 ----------- NET ASSETS - 100.0% $18,455,985 =========== (a) See notes to financial statements for tax basis unrealized appreciation (depreciation) of securities. AMBAC - AMBAC Indemnity Corp. AMT - Alternative Minimum Tax CP - Certificate of Participation FGIC - Financial Guaranty Insurance Corp. FSA - Financial Security Assurance GO - General Obligation MBIA - MBIA, Inc. SEE NOTES TO FINANCIAL STATEMENTS. 43 ================================================================================ AUDITORS' OPINION ================================================================================ Report of Independent Registered Public Accounting Firm - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of Tamarack Funds Trust We have audited the accompanying statements of assets and liabilities, including the schedules of portfolios of investments, of the portfolios of Tamarack Funds Trust, which include Quality Fixed Income Fund, North Carolina Tax-Free Bond Fund and Government Income Fund (collectively the "Funds") as of April 30, 2004, and the related statements of operations, statements of changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets and the financial highlights for the periods prior to April 30, 2004 were audited by other auditors whose report, dated June 17, 2003, expressed an unqualified opinion. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2004, by correspondence with the Funds' custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of April 30, 2004, the results of their operations, the changes in their net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Chicago, Illinois June 18, 2004 44 ================================================================================ MANAGEMENT ================================================================================ Independent Trustees(1) - -------------------------------------------------------------------------------- T. GERON BELL (62) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President of Twins Sports, Inc. (parent company of the Minnesota Twins and Victory Sports) (2002-present); prior thereto President of the Minnesota Twins Baseball Club Incorporated (1987-2002); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- LUCY HANCOCK BODE (51) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Healthcare consultant; Director, RBC Funds (1994-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- LESLIE H. GARNER JR. (53) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Cornell College; Director, RBC Funds (1994-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- RONALD JAMES (52) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, Center for Ethical Business Cultures (2000-present); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- JOHN A. MACDONALD (54) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Investment Officer, Hall Family Foundation; Trustee, J&B Funds (2001-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- H. DAVID RYBOLT (61) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Consultant, HDR Associates (management consulting); Director, Babson Funds (1992-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. - -------------------------------------------------------------------------------- 45 ================================================================================ MANAGEMENT ================================================================================ Independent Trustees(1) - -------------------------------------------------------------------------------- JAMES R. SEWARD (51) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Private investor (2000-present); Trustee, J&B Funds (2001-2004); Financial Consultant, Seward & Company, LLC (1998-2000); CFA. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- JAY H. WEIN (71) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Private investor (1989-present); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- Interested Trustees(1) - -------------------------------------------------------------------------------- MICHAEL T. LEE (41) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Operating Officer and Senior Vice President, Voyageur Asset Management Inc. (2003-present); Senior Portfolio Manager, Voyageur Asset Management Inc., (2000-present); Vice President, Senior Research Analyst and Equity Portfolio Manager, Voyageur Asset Management Inc. (1999-2003). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- Executive Officers(1) - -------------------------------------------------------------------------------- JENNIFER D. LAMMERS (43) POSITION HELD WITH FUND: President and Chief Executive Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, Voyageur Asset Management (2000-present); Mutual Fund Services Director, Voyageur Asset Management (2003-present); Chief Financial Officer, Great Hall Investment Funds, Inc. (2001-2003); Compliance Officer, Great Hall Investment Funds, Inc. (2000-2001); Director of Finance, Voyageur Asset Management (2000-2003); Vice President and Manager, Financial Reporting, RBC Dain Rauscher (1998-2000); President and Chief Executive Officer(2). - -------------------------------------------------------------------------------- CHRISTOPHER J. TOMAS (34) POSITION HELD WITH FUND: Treasurer, Chief Financial Officer, and Principal Accounting Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Finance Manager, RBC Dain Rauscher (2001-present); Compliance Officer, Great Hall Investment Funds, Inc. (2001- 2003); Senior Financial Analyst, RBC Dain Rauscher (1999-2001); Financial Analyst, RBC Dain Rauscher (1997-1999); Treasurer, Chief Financial Officer and Principal Accounting Officer(2). - -------------------------------------------------------------------------------- (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. (2) Great Hall Investment Funds, Inc., J&B Funds, Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson-Stewart Ivory International Fund, Inc., Babson Value Fund, Inc., David L. Babson Growth Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., Shadow Stock Fund, Inc., and Investors Mark Series Fund, Inc. 46 ================================================================================ MANAGEMENT ================================================================================ Executive Officers(1) - -------------------------------------------------------------------------------- MARTIN A. CRAMER (54) POSITION HELD WITH FUND: Vice President, Assistant Secretary, Chief Compliance Officer, and AML Compliance Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Mutual Fund Administration Manager, Voyageur Asset Management (2003-present); Legal and Regulatory Affairs Vice President, Compliance Officer and Secretary, J&B (mutual fund management and distribution company) (1993-2003); Vice President, Assistant Secretary, Compliance Officer and AML Compliance Officer(2), and formerly, Vice President, Compliance Officer and Secretary, Buffalo Fund Complex (1994-2003) and Secretary, Gold Bank Funds(3) (2001-2003). - -------------------------------------------------------------------------------- LAURA M. MORET (50) POSITION HELD WITH FUND: Secretary and Chief Legal Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Senior Associate Counsel, RBC Dain Rauscher (2002-present); Vice President and Group Counsel, American Express Financial Advisors (1995-2002); Secretary(2). - -------------------------------------------------------------------------------- RAYE C. KANZENBACH (55) POSITION HELD WITH FUND: Chief Investment Officer, Fixed Income Products; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Managing Director and Chief Investment Officer, Voyageur Asset Management; Chief Investment Officer, Great Hall Investment Funds, Inc. (1997-2004). - -------------------------------------------------------------------------------- (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. (2) Great Hall Investment Funds, Inc., J&B Funds, Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson-Stewart Ivory International Fund, Inc., Babson Value Fund, Inc., David L. Babson Growth Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., Shadow Stock Fund, Inc., and Investors Mark Series Fund, Inc. (3) The Buffalo Fund Complex consists of Buffalo Balanced Fund, Inc., Buffalo Large Cap Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap Fund, Inc., Buffalo USA Global Fund, Inc., and the Buffalo Funds, which is a series fund consisting of Buffalo Science & Technology Fund and Buffalo Mid Cap Fund. Gold Bank Funds is a series fund consisting of Gold Bank Equity and Gold Bank Money Market Fund. 47 ================================================================================ SHARE CLASS INFORMATION ================================================================================ - -------------------------------------------------------------------------------- The Tamarack Funds offer five share classes, three of which are currently authorized for sale to new investors. These three share classes are the A, C and R classes. - -------------------------------------------------------------------------------- A CLASS A Class shares are available for purchase primarily through investment advisors, broker- dealers, banks and other financial services intermediaries. A Class shares of the Tamarack Fixed Income Funds are subject to a maximum up-front sales charge of 3.75%. A Class shares include a 0.25% (25 bps) annual 12b-1 service and distribution fee. (The 12b-1 Plan allows for 50 bps, but the Funds' distributor is currently voluntarily waiving 25 bps of the fee, and will continue to do so until at least March 31, 2005.) A Class shares have a higher up front sales charge (load) than C Class shares, but a lower annual expense ratio. - -------------------------------------------------------------------------------- C CLASS C Class shares are also available for purchase primarily through investment advisors, broker-dealers, banks and other financial services intermediaries. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. (No CDSC will be charged on shares acquired through reinvestment of dividends or capital gains.) C Class shares expenses include a 1.00% (100 bps) annual 12b-1 service and distribution fee. C Class shares have a lower up-front sales charge (load) than A Class shares, but due to the higher service and distribution fee, have higher annual expenses than A Class shares. - -------------------------------------------------------------------------------- R CLASS R Class shares are available for purchase through employer-sponsored or 401k retirement plans. R Class shares have no upfront sales charge (load), but are subject to a 0.50% (50 bps) 12b-1 service and distribution fee. R Class shares currently have annual expenses between A Class and C Class share expenses. - -------------------------------------------------------------------------------- I CLASS I Class shares and S class shares are currently closed to new investors. Neither of these share classes charges a 12b-1 service and distribution fee. - -------------------------------------------------------------------------------- For an investor purchasing Tamarack Funds shares through a financial services intermediary, the question as to which share class, A or C, is the best choice is dependent on many factors, including the amount to be invested and the length of time an investor anticipates holding the shares. An investor should consult with his or her financial advisor about his or her personal financial situation to determine which share class is the best choice for his or her individual situation. 48 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ Shareholders Proxy Voting Results - -------------------------------------------------------------------------------- APRIL 8, 2004 On April 8, 2004 a Special Meeting of the shareholders of the RBC North Carolina Tax-Free Bond Fund, RBC Quality Income Fund and RBC Government Income Fund, each a separate portfolio of the RBC Funds, Inc. was held. The matters considered at the meeting, together with the actual vote tabulations realting to such matters are as follows: RBC Government Income Fund 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% LUCY HANCOCK BODE Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% LESLIE H. GARNER, JR. Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% RONALD JAMES Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% MICHAEL T. LEE Affirmative 1,435,504.080 59.240% 80.771% Withhold 341,745.000 14.103% 19.229% TOTAL 1,777,249.080 73.343% 100.000% JOHN A. MACDONALD Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% H. DAVID RYBOLT Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% JAMES R. SEWARD Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% JAY H. WEIN Affirmative 1,775,818.080 73.284% 99.919% Withhold 1,431.000 .059% .081% TOTAL 1,777,249.080 73.343% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. 49 - -------------------------------------------------------------------------------- SUPPLEMENTAL INFORMATION - -------------------------------------------------------------------------------- % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.B Borrowing Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.C Senior Securities Affirmative 1,566,278.410 64.637% 88.129% Against 12,270.670 .507% .691% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.D Underwriting Securities Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.E Real Estate Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.F Making Loans Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 50 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3.G Concentration of Investments % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 3.H Commodities Affirmative 1,578,549.080 65.144% 88.820% Against .000 .000% .000% Abstain 2,158.000 .089% .121% Broker Non-votes 196,542.000 8.111% 11.059% TOTAL 1,777,249.080 73.343% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 1,775,091.080 73.254% 99.879% Against .000 .000% .000% Abstain 2,158.000 .089% .121% TOTAL 1,777,249.080 73.343% 100.000% ** FUND TOTALS: SHARES RECORD TOTAL 2,423,185.532 VOTED SHARES 1,777,249.080 PERCENT PRESENT 73.343% - -------------------------------------------------------------------------------- RBC Quality Income Fund 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% LUCY HANCOCK BODE Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% LESLIE H. GARNER, JR. Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% RONALD JAMES Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% MICHAEL T. LEE Affirmative 2,340,710.040 63.512% 79.444% Withhold 605,642.000 16.433% 20.556% TOTAL 2,946,352.040 79.945% 100.000% 51 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- JOHN A. MACDONALD Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% H. DAVID RYBOLT Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% JAMES R. SEWARD Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% JAY H. WEIN Affirmative 2,946,352.040 79.945% 100.000% Withhold .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.B Borrowing Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.C Senior Securities Affirmative 2,569,125.993 69.710% 87.197% Against 34,742.047 .943% 1.179% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 52 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3.D Underwriting Securities % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.E Real Estate Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.F Making Loans Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.G Concentration of Investments Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 3.H Commodities Affirmative 2,603,868.040 70.653% 88.376% Against .000 .000% .000% Abstain .000 .000% .000% Broker Non-votes 342,484.000 9.293% 11.624% TOTAL 2,946,352.040 79.945% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 2,946,352.040 79.945% 100.000% Against .000 .000% .000% Abstain .000 .000% .000% TOTAL 2,946,352.040 79.945% 100.000% ** FUND TOTALS: SHARES RECORD TOTAL 3,685,452.214 VOTED SHARES 2,946,352.040 PERCENT PRESENT 79.945% 53 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ RBC North Carolina Tax-Free Bond Fund - -------------------------------------------------------------------------------- 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% LUCY HANCOCK BODE Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% LESLIE H. GARNER, JR. Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% RONALD JAMES Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% MICHAEL T. LEE Affirmative 1,470,116.400 67.449% 97.517% Withhold 37,437.000 1.718% 2.483% TOTAL 1,507,553.400 69.167% 100.000% JOHN A. MACDONALD Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% H. DAVID RYBOLT Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% JAMES R. SEWARD Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% JAY H. WEIN Affirmative 1,507,553.400 69.167% 100.000% Withhold .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. Affirmative 1,110,589.960 50.954% 73.668% Against .000 .000% .000% Abstain 137.440 .006% .009% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 54 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,109,602.960 50.909% 73.603% Against 987.000 .045% .065% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.B Borrowing Affirmative 1,109,602.960 50.909% 73.603% Against 987.000 .045% .065% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.C Senior Securities Affirmative 1,108,633.960 50.864% 73.539% Against 1,956.000 .090% .129% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.D Underwriting Securities Affirmative 1,109,602.960 50.909% 73.603% Against 987.000 .045% .065% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.E Real Estate Affirmative 1,109,602.960 50.909% 73.603% Against 987.000 .045% .065% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.F Making Loans Affirmative 1,108,633.960 50.864% 73.539% Against 987.000 .045% .065% Abstain 1,106.440 .051% .074% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 3.G Concentration of Investments Affirmative 1,110,589.960 50.954% 73.668% Against .000 .000% .000% Abstain 137.440 .006% .009% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 55 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3.H Commodities % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,109,602.960 50.909% 73.603% Against 987.000 .045% .065% Abstain 137.440 .006% .010% Broker Non-votes 396,826.000 18.206% 26.323% TOTAL 1,507,553.400 69.167% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 1,506,584.400 69.122% 99.936% Against 969.000 .045% .064% Abstain .000 .000% .000% TOTAL 1,507,553.400 69.167% 100.000% ** FUND TOTALS: SHARES RECORD TOTAL 2,179,596.067 VOTED SHARES 1,507,553.400 PERCENT PRESENT 69.167% 56 [PHOTO] --------------- Tamarack Funds | PRSRT STD | P.O. Box 219757 | U.S. POSTAGE | Kansas City, MO 64121-9757 | PAID | | PERMIT NO. 2891 | | KANSAS CITY MO. | --------------- 800-422-2766 WWW.TAMARACKFUNDS.COM TF AR 6/04 Tamarack Distributors Inc. 530963 (6/04) TAMARACK FUNDS Annual Report April 30, 2004 [PHOTO] LARGE CAP EQUITY MID CAP EQUITY SMALL CAP EQUITY [LOGO] TAMARACK FUNDS ================================================================================ ================================================================================ Tamarack Funds - -------------------------------------------------------------------------------- ABOUT YOUR ANNUAL REPORT This annual report includes detailed information regarding your Funds' performance. This report is provided to help answer your questions as a shareholder. Among these questions may be: How has my Fund performed against its benchmark both in the last year and over the last ten years (or since inception if less than ten years)? What are the annual expenses of my Fund? What are the significant accounting policies and procedures followed by my Fund? The Tamarack Funds compare their performance against widely used market indices, depending on the market sector or investment style of the particular fund. These indices include the S&P 500, Russell 2000 and S&P MidCap 400. We hope the financial information presented as well as the discussion and analysis from your portfolio manager(s) will help you evaluate your investment in the Tamarack Funds. We also encourage you to read your Fund's prospectus for further detail as to your Fund's investment policies and risk profile. Tamarack Funds prospectuses and performance information subsequent to the date of this report are available on our website at www.tamarackfunds.com. - -------------------------------------------------------------------------------- TABLE OF CONTENTS Shareholder Letter .......................................................... 1 Letter from the CIO of Equities ............................................. 2 Performance Summary ......................................................... 4 Large Cap Equity Fund - Management Discussion and Analysis ...................................... 6 Mid Cap Equity Fund - Management Discussion and Analysis ...................................... 8 Small Cap Equity Fund - Management Discussion and Analysis ...................................... 10 Financial Statements - Statement of Assets and Liabilities ..................................... 12 - Statement of Operations ................................................. 14 - Statement of Changes in Net Assets ...................................... 15 Financial Highlights ........................................................ 18 Notes to Financial Statements ............................................... 24 Schedule of Investments ..................................................... 34 Auditors' Opinion ........................................................... 37 Management .................................................................. 38 Share Class Information ..................................................... 41 Supplemental Information .................................................... 42 ================================================================================ SHAREHOLDER LETTER ================================================================================ To Our Shareholders - -------------------------------------------------------------------------------- On April 16th, 2004 the reorganization into the new Tamarack Funds Trust of the Large Cap Equity, Mid Cap Equity and Small Cap Equity Funds (formerly known as the RBC Funds) was completed after being approved by shareholders. The new Tamarack Funds, which include 17 separate portfolios (fixed income, equity and money market)* also have a new year-end of September 30th. You may, therefore, be wondering why we are sending you a report with information including only these three former RBC Funds, with financial statements audited as of the former RBC Funds year-end of April 30th. We do not want to let 17 months pass between the annual audited financial statements we make available to you our shareholders. Therefore, we are providing to you an annual report one final time as of the former RBC Funds' April 30th year-end. You will also receive another report in approximately five months including all of the equity portfolios in the Tamarack Funds as of the new September 30th year-end. In the future you may then expect to receive regularly scheduled semi-annual and annual reports dated March 31 and September 30 for the Tamarack Funds. The past year has clearly been a time of significant change for your Funds. For example, as part of the reorganization, shareholders of the former David L. Babson Growth Fund, Inc. approved the combination of their fund into the Large Cap Equity Fund, contributing to an increase in fund assets from $45 million on April 30th, 2003 to $230 million on April 30th, 2004. However, our commitment to providing the best portfolio management services to you and all of our investors remains the same. While our first priority is managing your investment in the Tamarack Funds to maintain an appropriate balance between portfolio returns and risk (we won't seek the absolutely highest return if we deem the credit or market risk too great) we have also begun marketing our expanded fund family offerings to new investors. As part of this effort we have created a new website, www.tamarackfunds.com. We invite you to visit this site for information regarding both your fund(s) and other funds within the Tamarack family. We know that no matter what the dollar balance in your Tamarack Funds shareholder account, these assets are an important part of your overall investments. We appreciate and value the trust you have placed in us and will continue our efforts to provide you with solid risk-balanced returns. Sincerely, /s/ Jennifer Lammers Jennifer Lammers President, Tamarack Funds * TO REDUCE THE SIZE AND COMPLEXITY OF EACH ANNUAL REPORT, AND HOPEFULLY MAKE THEM EASIER FOR YOU AS A SHAREHOLDER TO USE, WE HAVE DIVIDED THE TAMARACK FUNDS INTO THREE GROUPS (FIXED INCOME, EQUITY, AND MONEY MARKET) FOR ANNUAL AND SEMI-ANNUAL REPORTING AS WELL AS PROSPECTUSES. THE FORMER RBC FIXED INCOME FUNDS REPORT AS WELL AS THOSE OF THE OTHER TAMARACK FUNDS WILL BE AVAILABLE ON OUR WEBSITE. 1 ================================================================================ LETTER FROM THE CIO OF EQUITIES ================================================================================ - -------------------------------------------------------------------------------- The past five years have been a challenging period for investors. It seems that the only certainty of predicting the direction of markets is uncertainty. Before 2000, many investors had no idea it was possible to lose invested money; now most investors understand the possibility. With this in mind, the most important decision investors can make is their asset allocation mix. Diversification is achieved when different categories in a portfolio do not react in the same fashion during a market cycle. This phenomenon is known as low correlation. Without it, combining investments may do little good, particularly in the long run. The biggest challenge for investment managers is to provide a high return while keeping risk within acceptable parameters. This is where building a diversified portfolio becomes valuable. In the last decade, we have seen a decline in the correlation between small and large companies. From 1974-2002, the correlation between small cap stocks and large cap stocks was 0.9. In other words, 90% of the time, small and large firms performed similarly. However, from 1992-2003, the correlation dropped to 0.8, which suggests that returns of small and large firms have become less correlated. Therefore the volatility of a portfolio containing small, mid and large cap equities is likely to be muted. Small cap stocks have historically reaped higher rewards than mid and large cap stocks, but they also tend to have greater losses during bear markets. Larger cap equities have more tempered gains and losses. The power of diversification allows investors to "smooth the ride" in their portfolios. By combining equity funds that complement one another, the highs may not be as high, but the lows are not as low. Furthermore, investors can profit from what small, intermediate and large firms offer. The Tamarack small, mid and large cap equity funds provide good diversification across market cap ranges. In addition, growth stocks--such as those comprising these funds--tend to perform well in times of economic recovery. For example, from 1997-1999, growth stocks posted a 38.0% annualized return and dominated other investments. But as the technology bubble burst from March 2000-September 2002, growth stocks posted an annualized loss of -25.4%. Now that the economy is on the upswing, growth stocks are looking up. The future looks promising. We are keeping an eye out for potential risks to this growth, including higher energy costs, unexpected inflation, geopolitical crises and higher interest rates. Because the U.S. has entered a period of normalized returns, long-term investors may need to show patience. Our strategy is to buy and hold equity in high quality firms that demonstrate financial strength and consistent growth in earnings. Our goal is to balance acceptable risk and financial returns. 2 ================================================================================ EQUITY PORTFOLIO MANAGERS ================================================================================ - -------------------------------------------------------------------------------- Voyageur Asset Management employs a team approach to the management of Large Cap Equity Fund, Mid Cap Equity Fund and Small Cap Equity Fund, with no individual team member being solely responsible for investment decisions. The members of Voyageur's equity funds team are: - -------------------------------------------------------------------------------- DAVID J. COX, CFA MANAGING DIRECTOR, DIRECTOR OF EQUITY INVESTMENTS, SENIOR PORTFOLIO MANAGER David Cox has been in the investment industry since 1984. He received his MBA from Indiana University, his BS from the University of Illinois and is a CFA charterholder. David is a member of the Investment Analysts Society of Chicago and the Association for Investment Management and Research. - -------------------------------------------------------------------------------- NANCY M. SCINTO MANAGING DIRECTOR, DIRECTOR OF RESEARCH, SENIOR PORTFOLIO MANAGER Nancy Scinto leads the Voyageur growth equity research efforts as Director of Research. She is also the Chief Investment Officer, Equity Products for the Tamarack Funds. Nancy has been in the investment industry since 1984. She received her MBA from DePaul University and her BA from Governors State University. Nancy is a member of the Investment Analysts Society of Chicago. - -------------------------------------------------------------------------------- STEVEN A. RUSNAK, CFA VICE PRESIDENT, SENIOR PORTFOLIO MANAGER Steven Rusnak provides the Voyageur growth equity team with his skills in fundamental equity research over a diverse group of industries from financials to health care. He has been in the investment industry since 1985. Steven received his MBA and BA from the University of Michigan and is a CFA charterholder. He is a member of the Investment Analysts Society of Chicago and the Association for Investment Management and Research. - -------------------------------------------------------------------------------- KENNETH A. TYSZKO, CPA, CFA VICE PRESIDENT, SENIOR PORTFOLIO MANAGER Kenneth Tyszko has been the portfolio manager for the small cap growth equity product since its inception in 1995. He has been in the investment industry since 1984. Kenneth received his BS from the University of Illinois and is both a CFA charterholder and a Certified Public Accountant. He is a member of the Illinois CPA Society, the Investment Analysts Society of Chicago and the Association for Investment Management and Research. - -------------------------------------------------------------------------------- FORBES L. WATSON VICE PRESIDENT, PORTFOLIO MANAGER Forbes Watson serves as a portfolio manager for Voyageur's small cap growth equity strategy. He has been in the investment industry since 1981. Forbes received his MBA from Millsaps College and his BA from the University of North Texas. He is a member of the North Carolina Society for Financial Analysts and the Association for Investment Management and Research. 3 ================================================================================ PERFORMANCE SUMMARY ================================================================================ Total Returns as of April 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------------- TAMARACK LARGE CAP EQUITY FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales 13.35% -7.68% -5.68% 6.47% 7.64% Charge of 5.75% - - At Net Asset Value 20.29% -5.85% -4.56% 7.10% 8.11% Class C (b) - - Including Contingent Deferred 19.29% -5.85% -4.56% 7.10% 8.11% Sales Charge of 1.00% - - At Net Asset Value 20.29% -5.85% -4.56% 7.10% 8.11% Class I (a) 20.64% -5.63% -4.32% 7.42% 8.50% Class R (b) 20.29% -5.85% -4.56% 7.10% 8.11% Class S (b) 20.64% -5.63% -4.32% 7.42% 8.50% S&P 500 Index* 22.87% -2.36% -2.26% 11.36% 11.41% Russell 1000 Growth Index* 21.65% -5.93% -6.37% 9.61% N/A - ----------------------------------------------------------------------------------------------------------------------------------- TAMARACK MID CAP EQUITY FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales 21.22% 1.53% 6.07% 12.60% 13.62% Charge of 5.75% - - At Net Asset Value 28.65% 3.55% 7.34% 13.27% 14.13% Class C (b) - - Including Contingent Deferred 27.54% 3.52% 7.32% 13.26% 14.12% Sales Charge of 1.00% - - At Net Asset Value 28.54% 3.52% 7.32% 13.26% 14.12% Class I (a) 29.00% 3.80% 7.64% 13.56% 14.49% Class R (b) 28.65% 3.55% 7.34% 13.27% 14.13% Class S (b) 29.00% 3.80% 7.64% 13.56% 14.49% S&P Midcap 400 Index* 34.45% 5.73% 9.34% 14.47% 14.47% S&P Midcap 400/Barra Growth Index* 29.15% 2.18% 6.58% 13.75% 13.75% - ----------------------------------------------------------------------------------------------------------------------------------- TAMARACK SMALL CAP EQUITY FUND Since 1 Year 3 Year 5 Year 10 Year Inception ------ ------ ------ ------- --------- Class A (a) - - Including Maximum Sales 22.93% 2.95% 5.46% N/A 11.26% Charge of 5.75% - - At Net Asset Value 30.46% 5.01% 6.71% N/A 11.96% Class C (b) - - Including Contingent Deferred 29.46% 5.01% 6.71% N/A 11.96% Sales Charge of 1.00% - - At Net Asset Value 30.46% 5.01% 6.71% N/A 11.96% Class I (a) 30.73% 5.26% 6.96% N/A 12.28% Class R (b) 30.46% 5.01% 6.71% N/A 11.96% Class S (b) 30.73% 5.26% 6.96% N/A 12.28% Russell 2000 Index* 42.01% 6.28% 6.67% N/A 10.50% S&P Small Cap 600 Index* 39.94% 8.84% 10.92% N/A 13.21% Russell 2000 Growth Index* 41.57% -0.31% -0.44% N/A 6.15% - -----------------------------------------------------------------------------------------------------------------------------------
Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. *Each of the comparative indices is a widely recognized market value weighted measure of the return on securities. Index returns are calculated on a monthly basis, but do not include sales fees or operating expenses. You cannot invest directly in the indices. (a) The performance in the table reflects the performance of the former RBC Funds, the predecessors to the Tamarack Funds. The quoted performance of the Funds include the performance of a common trust fund ("CTF") account advised by the Adviser (including its predecessor) and managed the same as the Fund in all material respects, for periods dating prior to the Fund's commencement of operations (October 1, 1996 for the LC Equity Fund, June 1, 1994 for the MC Equity Fund, and May 2, 1997 for the SC Equity Fund), as adjusted to reflect the full contractual rate of expenses associated with the Fund at its inception. The CTF account was not registered with the SEC under the 1940 Act and therefore was not subject to the investment restrictions imposed by law on registered mutual funds. If the CTF account had been registered, the CTF account's performance may have been adversely affected. Fund performance reflects applicable fee waivers/expense reimbursements (which, if excluded, would cause performance to be lower). (b) Performance returns are annualized as classes represent new shares for the first time beginning April 19, 2004. 4 ================================================================================ LETTER FROM THE CIO OF EQUITIES ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 5 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Large Cap Equity Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY The last twelve months have certainly been eventful for equity markets. We saw the bear market, which gripped equities for the past three years, come to an end and the worst of the uncertainties surrounding the outlook for the U.S. economy dissipate. The fall of Saddam Hussein's regime and a raft of positive economic data soothed lingering investor concerns enabling markets to post sizeable gains for the calendar year 2003. It was the technology group that led all others as the market recovery gained momentum. Markets began 2004 by continuing to move to the upside. However, by mid-February 2004 the markets peaked and through April, a tug of war in equity markets has developed. On one side, strong corporate earnings growth announcements tried to pull prices higher, and on the other, fears of the Federal Reserve raising short-term interest rates together with increases in actual long-term rates, rising energy prices and escalating violence in the Middle East have pushed equity prices down. Smaller capitalization companies have been dominant, which if this trend continues would be for the sixth consecutive year. In addition, one of the key developments throughout the year was the outperformance of lower quality high beta stocks, which is very typical when emerging from a bear market environment. This trend does appear to be ending and as the twelve-month period concluded, stocks remained range bound. - -------------------------------------------------------------------------------- PERFORMANCE The Tamarack Large Cap Equity Fund's total return during the 12-month period ending April 30, 2004 was +20.3% (Class A shares). That compares to a total return of +22.9% for the S&P 500 Index and +21.7% for the Russell 1000 Growth Index. Our performance was helped by being overweight in the Consumer Discretionary and Information Technology sectors with performance above that of the index. Our holdings in Carnival Corp, Starbucks, Cisco, and Symantec were drivers of this strong performance in these sectors. The Fund held the same weight in the industrial sector as the index, but we had very strong performance from Apollo Group, Danaher, and United Technologies. Somewhat offsetting this strong performance in the Technology sector was weaker performance in the Financial sector. While the Fund was underweight compared to its benchmark in the Financial sector, our performance lagged in this sector as smaller capitalization, lower quality bank stocks outperformed our higher quality, higher capitalization holdings. - -------------------------------------------------------------------------------- OUTLOOK From a "big picture" point of view, the recent consolidation is not unusual and could ultimately prove to be an overall positive for the market. A number of potential risks remain, including economic slowdown as policy stimuli diminish, a sharper than expected interest rate increase by the Federal Reserve and disruptive geopolitical events. Still, we remain of the view that the cyclical 2003-2004 upward trend is the market's dominant feature and that the recent pressures are occurring within that upward trend. Our view is that the U.S. is entering a period of more normalized returns, so consequently long-term investors may need to continue to show patience in the current market environment. We believe that corporate profits are likely to decelerate in the second half of the year; therefore investors must now apply greater discernment in the stocks they own. We also feel we are re-entering a period when fundamental investment factors, such as quality and consistent earnings growth will once again be key to investment success. Given this backdrop, we remain highly selective when making new additions to the portfolio. The Fund continues to focus on high quality growth companies that offer the opportunity for long-term capital appreciation. 6 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Large Cap Equity Fund - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE Long-term capital appreciation. - -------------------------------------------------------------------------------- BENCHMARK S&P 500 Index - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) & TOP FIVE INDUSTRIES Common Stocks Investment Companies 98.9% 0.8% [PIE CHART] Other Assets 0.3% TOP FIVE INDUSTRIES Health Care 21.4% Banking & Financial Services 11.7% Retail 10.8% Computer Industry 9.7% Insurance 7.9% - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) Stryker Corp. 4.84% PepsiCo, Inc. 3.20% Symantec Corp. 4.16% Apollo Group, Inc. - Class A 3.18% SYSCO Corp. 3.50% Medtronic, Inc. 3.16% First Data Corp. 3.39% Cardinal Health 3.09% Pfizer, Inc. 3.26% AFLAC, Inc. 3.01% *A listing of all portfolio holdings can be found on page 34. - -------------------------------------------------------------------------------- GROWTH OF $10,000 INITIAL INVESTMENT OVER 10 YEARS [FLOW CHART] ----------------------------------------------- CLASS S&P 500 A INDEX ----------------------------------------------- 05/01/1994 9,425 10,000.00 ----------------------------------------------- 10/31/1994 9,726 10,631.81 ----------------------------------------------- 04/30/1995 10,493 11,743.62 ----------------------------------------------- 10/31/1995 11,493 13,439.53 ----------------------------------------------- 04/30/1996 12,959 15,288.32 ----------------------------------------------- 10/31/1996 14,010 16,675.89 ----------------------------------------------- 04/30/1997 15,163 19,129.08 ----------------------------------------------- 10/31/1997 17,724 22,028.64 ----------------------------------------------- 04/30/1998 19,767 26,984.36 ----------------------------------------------- 10/31/1998 19,265 26,877.65 ----------------------------------------------- 04/30/1999 23,638 32,874.59 ----------------------------------------------- 10/31/1999 24,955 33,775.13 ----------------------------------------------- 04/30/2000 27,097 36,201.70 ----------------------------------------------- 10/31/2000 25,756 35,827.89 ----------------------------------------------- 04/30/2001 22,426 31,507.95 ----------------------------------------------- 10/31/2001 18,437 26,910.75 ----------------------------------------------- 04/30/2002 18,418 27,532.87 ----------------------------------------------- 10/31/2002 15,494 22,848.18 ----------------------------------------------- 04/30/2003 15,559 23,869.83 ----------------------------------------------- 10/31/2003 17,651 27,597.51 ----------------------------------------------- 04/30/2004 18,715 29,327.89 ----------------------------------------------- The graph reflects an initial investment of $10,000 over a 10 year period and is based on Class A shares at net asset value. The Fund's maximum sales charge is 5.75%. The Fund's total return includes reinvested dividends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 7 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Mid Cap Equity Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY The last twelve months have certainly been eventful for equity markets. We saw the bear market, which gripped equities for the past three years, come to an end and the worst of the uncertainties surrounding the outlook for the U.S. economy dissipate. The fall of Saddam Hussein's regime and a raft of positive economic data soothed lingering investor concerns enabling markets to post sizeable gains for the calendar year 2003. It was the technology group that led all others as the market recovery gained momentum. Markets began 2004 by continuing to move to the upside. However, by mid-February 2004 the markets peaked and through April, a tug of war in equity markets has developed. On one side, strong corporate earnings growth announcements tried to pull prices higher, and on the other, fears of the Federal Reserve raising short-term interest rates together with increases in actual long-term rates, rising energy prices and escalating violence in the Middle East have pushed equity prices down. Smaller capitalization companies have been dominant, which if this trend continues would be for the sixth consecutive year. In addition, one of the key developments throughout the year was the outperformance of lower quality high beta stocks, which is very typical when emerging from a bear market environment. This trend does appear to be ending and as the twelve-month period concluded, stocks remained range bound. - -------------------------------------------------------------------------------- PERFORMANCE The Tamarack Mid Cap Equity Fund's total return during the 12-month period ending April 30, 2004 was +28.7% (Class A shares). That compares to a total return of +34.5% for the S&P MidCap 400 Index. With the market's focus on smaller, low quality company stocks, we were not able to keep pace with market indices for this period. Our focus on strong fundamentally driven, high quality stock selection allowed us to participate in the markets strength this past year, but not overcome the market's short-term bias. Our performance was helped by being overweight in the Health Care and Information Technology sectors with performance above the index. Our holdings in Varian Medical, Omnicare, and Symantec were drivers of this strong performance in these sectors. Other strong performers for the fund included Apollo Group, Whole Foods Market, and Plantronics. Offsetting this strong performance was the Consumer Discretionary sector in the fund, where fears of higher interest rates and gasoline prices have impacted these stocks. - -------------------------------------------------------------------------------- OUTLOOK From a "big picture" point of view, the recent consolidation is not unusual and could ultimately prove to be an overall positive for the market. A number of potential risks remain including economic slowdown as policy stimuli diminish, a sharper than expected interest rate increase by the Federal Reserve and disruptive geopolitical events. Still, we remain of the view that the cyclical 2003-2004 upward trend is the market's dominant feature and that the recent pressures are occurring within that upward trend. Our view is that the U.S. is entering a period of more normalized returns, so consequently long-term investors may need to continue to show patience in the current market environment. We believe that corporate profits are likely to decelerate in the second half of the year; therefore investors must now apply greater discernment in the stocks they own. We also feel we are re-entering a period when fundamental investment factors, such as quality and consistent earnings growth will once again be key to investment success. Given this backdrop, we remain highly selective when making new additions to the portfolio. The Fund continues to focus on high quality growth companies that offer the opportunity for long-term capital appreciation. 8 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Mid Cap Equity Fund - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE Long-term capital appreciation. - -------------------------------------------------------------------------------- BENCHMARK S&P Mid Cap 400 Index - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) & TOP FIVE INDUSTRIES Common Stocks Investment Companies 99.0% 0.8% [PIE CHART] Other Assets 0.2% TOP FIVE INDUSTRIES Health Care 20.9% Retail 17.7% Computer Industry 8.6% Banking & Financial Service 7.1% Distribution/Wholesale 5.0% - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) Ross Stores, Inc. 3.26% Omnicare, Inc. 3.01% Regis Corp. 3.25% Plantronics, Inc. 2.98% Expeditors Int'l. of Washington, Inc. 3.10% CDW Corp. 2.89% Varian Medical Systems, Inc. 3.08% Symantec Corp. 2.81% Whole Foods Market, Inc. 3.06% Gentex Corp. 2.81% *A listing of all portfolio holdings can be found on page 35. GROWTH OF $10,000 INITIAL INVESTMENT OVER 10 YEARS [FLOW CHART] ------------------------------------------------ CLASS S&P MIDCAP A 400 INDEX ------------------------------------------------ 05/01/1994 9,425 10,000.00 ------------------------------------------------ 10/31/1994 9,232 10,323.37 ------------------------------------------------ 04/30/1995 10,321 10,978.83 ------------------------------------------------ 10/31/1995 11,528 12,513.06 ------------------------------------------------ 04/30/1996 13,903 14,251.35 ------------------------------------------------ 10/31/1996 13,899 14,684.10 ------------------------------------------------ 04/30/1997 15,509 15,694.35 ------------------------------------------------ 10/31/1997 18,408 19,480.77 ------------------------------------------------ 04/30/1998 21,177 23,214.93 ------------------------------------------------ 10/31/1998 19,753 20,787.71 ------------------------------------------------ 04/30/1999 22,995 24,707.53 ------------------------------------------------ 10/31/1999 23,100 25,167.98 ------------------------------------------------ 04/30/2000 27,858 30,519.69 ------------------------------------------------ 10/31/2000 30,595 33,133.59 ------------------------------------------------ 04/30/2001 29,508 32,669.24 ------------------------------------------------ 10/31/2001 26,715 29,008.84 ------------------------------------------------ 04/30/2002 31,276 34,816.91 ------------------------------------------------ 10/31/2002 24,451 27,622.79 ------------------------------------------------ 04/30/2003 25,466 28,721.39 ------------------------------------------------ 10/31/2003 31,039 36,111.79 ------------------------------------------------ 04/30/2004 32,762 38,614.55 ------------------------------------------------ The graph reflects an initial investment of $10,000 over a 10 year period and is based on Class A shares at net asset value. The Fund's maximum sales charge is 5.75%. The Fund's total return includes reinvested dividends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 9 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Small Cap Equity Fund - -------------------------------------------------------------------------------- MARKET COMMENTARY The last twelve months have certainly been eventful for equity markets. We saw the bear market, which gripped equities for the past three years, come to an end and the worst of the uncertainties surrounding the outlook for the U.S. economy dissipate. The fall of Saddam Hussein's regime and a raft of positive economic data soothed lingering investor concerns enabling markets to post sizeable gains for the calendar year 2003. It was the technology group that led all others as the market recovery gained momentum. Markets began 2004 by continuing to move to the upside. However, by mid-February 2004 the markets peaked and through April, a tug of war in equity markets has developed. On one side, strong corporate earnings growth announcements tried to pull prices higher, and on the other, fears of the Federal Reserve raising short-term interest rates together with increases in actual long-term rates, rising energy prices and escalating violence in the Middle East have pushed equity prices down. Smaller capitalization companies have been dominant, which if this trend continues would be for the sixth consecutive year. In addition, one of the key developments throughout the year was the outperformance of lower quality high beta stocks, which is very typical when emerging from a bear market environment. This trend does appear to be ending and as the twelve-month period concluded, stocks remained range bound. - -------------------------------------------------------------------------------- PERFORMANCE The Tamarack Small Cap Equity Fund's total return during the 12-month period ending April 30, 2004 was +30.5% (Class A shares). That compares to a total return of +41.6% for the Russell 2000 Growth Index, +42.0% for the Russell 2000 Index, and +39.9% for the S&P SmallCap 600 Index. During the year, small cap stocks handily outperformed larger cap stocks. This was the fifth consecutive year that smaller capitalization stocks outperformed their larger cap peers. However, within the small cap indices, there was a significant performance difference between the higher quality small cap growth stocks owned by the Fund, and lower quality small cap stocks. Somewhat reminiscent of the stock market bubble of the late 1990's, investors once again began bidding up the prices of smaller cap companies that had far riskier financial characteristics than those that the Fund typically seeks to purchase. As such, those companies that were higher-beta, financially weaker, and had no profits, significantly outperformed the higher quality companies held by the Fund. This was especially evident in the Industrials, Health Care and Technology sectors. Scansource, Autodesk, Shuffle Master, Zebra Technologies and United Natural Foods were among the Fund's best performing stocks. - -------------------------------------------------------------------------------- OUTLOOK From a "big picture" point of view, the recent consolidation is not unusual and could ultimately prove to be an overall positive for the market. A number of potential risks remain including economic slowdown as policy stimuli diminish, a sharper than expected interest rate increase by the Federal Reserve and disruptive geopolitical events. Still, we remain of the view that the cyclical 2003-2004 upward trend is the market's dominant feature and that the recent pressures are occurring within that upward trend. Our view is that the U.S. is entering a period of more normalized returns, so consequently long-term investors may need to continue to show patience in the current market environment. We believe that corporate profits are likely to decelerate in the second half of the year; therefore investors must now apply greater discernment in the stocks they own. We also feel we are re-entering a period when fundamental investment factors, such as quality and consistent earnings growth will once again be key to investment success. Given this backdrop, we remain highly selective when making new additions to the portfolio. The Fund continues to focus on high quality growth companies that offer the opportunity for long-term capital appreciation. 10 ================================================================================ MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ Small Cap Equity Fund - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE Long-term capital appreciation. - -------------------------------------------------------------------------------- BENCHMARK Russell 2000 Index - -------------------------------------------------------------------------------- ASSET ALLOCATION (% OF FUND'S NET ASSETS) & TOP FIVE INDUSTRIES Common Stocks Investment Companies 96.8% 3.2% [PIE CHART] TOP FIVE INDUSTRIES Information Technology 24.9% Health Care 23.8% Consumer Discretionary 10.4% Financials 10.0% Industrials 8.6% - -------------------------------------------------------------------------------- TOP TEN HOLDINGS (AS OF 4/30/04) Wells Fargo Investment Money Market Fund, Investor Class 3.22% KV Pharmaceutical Co. - Class A 3.22% Zebra Technologies Corp. - Class A 3.16% United Natural Foods, Inc. 2.87% Cooper Cos., Inc. 2.85% Expeditors International of Washington, Inc. 2.72% Patterson Dental Co. 2.59% Knight Transportation, Inc. 2.49% RARE Hospitality International, Inc. 2.34% Simpson Manufacturing Co., Inc. 2.34% *A listing of all portfolio holdings can be found on page 36. - -------------------------------------------------------------------------------- GROWTH OF $10,000 INITIAL INVESTMENT OVER 10 YEARS [FLOW CHART] ------------------------------------------------- CLASS RUSSELL 2000 A INDEX ------------------------------------------------- 01/01/1995 9,425 10,000.00 ------------------------------------------------- 04/30/1995 10,172 10,694.31 ------------------------------------------------- 10/31/1995 10,767 12,010.28 ------------------------------------------------- 04/30/1996 12,381 14,222.43 ------------------------------------------------- 10/31/1996 12,910 14,004.59 ------------------------------------------------- 04/30/1997 13,175 14,229.58 ------------------------------------------------- 10/31/1997 18,015 18,112.32 ------------------------------------------------- 04/30/1998 21,263 20,263.43 ------------------------------------------------- 10/31/1998 17,334 15,967.64 ------------------------------------------------- 04/30/1999 19,551 18,388.40 ------------------------------------------------- 10/31/1999 20,183 18,341.65 ------------------------------------------------- 04/30/2000 23,455 21,775.60 ------------------------------------------------- 10/31/2000 24,431 21,534.37 ------------------------------------------------- 04/30/2001 23,355 21,153.12 ------------------------------------------------- 10/31/2001 21,193 18,799.49 ------------------------------------------------- 04/30/2002 25,263 22,565.50 ------------------------------------------------- 10/31/2002 19,911 16,624.68 ------------------------------------------------- 04/30/2003 20,731 17,880.59 ------------------------------------------------- 10/31/2003 25,919 23,833.98 ------------------------------------------------- 04/30/2004 27,047 25,392.90 ------------------------------------------------- The graph reflects an initial investment of $10,000 over a 10 year period and is based on Class A shares at net asset value. The Fund's maximum sales charge is 5.75%. The Fund's total return includes reinvested dividends and capital gains. The Fund's total return also includes operating expenses that reduce return, while the total return of the index does not. The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance quoted. Performance of other classes will vary due to differences in fee structures. 11 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Assets and Liabilities - -------------------------------------------------------------------------------- APRIL 30, 2004
TAMARACK LARGE CAP TAMARACK MID CAP TAMARACK SMALL CAP EQUITY FUND EQUITY FUND EQUITY FUND ----------- ----------- ----------- ASSETS: Investments, at value $229,473,415 $139,953,647 $21,599,730 (cost $208,983,617; $134,743,938; and $17,219,802, respectively) Cash -- -- 15,938 Interest and dividends receivable 66,283 9,644 490 Receivable for capital shares issued 12,572 41,715 23,230 Receivable for investments sold 3,300,249 4,979,069 -- ------------ ------------ ----------- Total Assets 232,852,519 144,984,075 21,639,388 ------------ ------------ ----------- LIABILITIES: Payable for capital shares redeemed 268,394 209,146 1,052 Payable for investments purchased 2,253,423 4,392,863 -- Accrued expenses and other payables: Investment advisory fees 202,783 77,695 13,042 Administration fees 20,593 15,675 2,427 Distribution fees 2,307 15,742 1,596 Other 42,994 73,667 27,855 ------------ ------------ ----------- Total Liabilities 2,790,494 4,784,788 45,972 ------------ ------------ ----------- Net Assets $230,062,025 $140,199,287 $21,593,416 ============ ============ =========== NET ASSETS CONSIST OF: Capital 269,805,105 120,400,011 17,260,536 Undistributed net investment income -- -- -- Accumulated net realized gains (60,232,878) 14,589,567 (47,048) (losses) from investment transactions Net unrealized appreciation on 20,489,798 5,209,709 4,379,928 investments ------------ ------------ ----------- Net Assets $230,062,025 $140,199,287 $21,593,416 ============ ============ =========== NET ASSETS: Class A $ 10,864,390 $ 74,150,209 $ 7,487,692 Class I 28,454,280 66,038,917 14,094,266 Class C 3,193 2,941 3,169 Class R 3,193 2,942 5,119 Class S 190,736,969 4,278 3,170 ------------ ------------ ----------- Total $230,062,025 $140,199,287 $21,593,416 ============ ============ =========== SHARES OUTSTANDING: Class A 1,083,902 6,095,139 567,519 Class I 2,814,162 5,322,958 1,051,834 Class C 319 242 240 Class R 319 242 388 Class S 18,864,319 345 237 ------------ ------------ ----------- Total 22,763,021 11,418,926 1,620,218 ============ ============ =========== NET ASSET VALUES: Class A (a) $10.02 $12.17 $13.19 ============ ============ =========== Class I $10.11 $12.41 $13.40 ============ ============ =========== Class C (b) $10.02 $12.16 $13.19 ============ ============ =========== Class R $10.02 $12.17 $13.19 ============ ============ =========== Class S $10.11 $12.41 $13.40 ============ ============ ===========
12 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Assets and Liabilities (cont.) - --------------------------------------------------------------------------------
TAMARACK LARGE CAP TAMARACK MID CAP TAMARACK SMALL CAP EQUITY FUND EQUITY FUND EQUITY FUND ----------- ----------- ----------- MAXIMUM OFFERING PRICE PER SHARE: (100%/100%-maximum sales charge of net asset value adjusted to the nearest cent): Class A $10.63 $12.91 $13.99 ============ ============ =========== Maximum Sales Charge - Class A 5.75% 5.75% 5.75% ============ ============ ===========
(a) For Class A shares, the redemption price per share is reduced by 1.00% for sales of shares within 12 months of purchase (only applicable on purchases of $1 million or more). (b) For Class C shares, the redemption price per share is reduced by 1.00% for sales of shares within 12 months of purchase. SEE NOTES TO FINANCIAL STATEMENTS. 13 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Operations - -------------------------------------------------------------------------------- FOR THE YEAR ENDED APRIL 30, 2004
TAMARACK LARGE CAP TAMARACK MID CAP TAMARACK SMALL CAP EQUITY FUND EQUITY FUND EQUITY FUND ----------- ----------- ----------- INVESTMENT INCOME: Dividend income $ 341,363 $ 991,701 $ 71,078 ----------- ----------- ---------- Total Investment Income 341,363 991,701 71,078 ----------- ----------- ---------- EXPENSES: Investment advisory fees 405,878 1,105,965 154,577 Administration fees 71,143 234,616 32,756 Distribution fees - Class A 42,594 312,516 27,348 Distribution fees - Class B 19,644 61,859 21,759 Distribution fees - Class C 1 1 1 Distribution fees - Class R -- -- 1 Accounting fees 27,944 52,037 32,164 Custodian fees 4,081 11,562 7,848 Insurance fees 5,119 17,303 2,693 Legal and Audit fees 17,846 108,375 25,438 Registration and filing fees 23,447 41,378 30,526 Shareholder reports 2,785 34,796 6,665 Transfer agent fees 57,404 179,443 43,442 Directors' fees 1,258 9,925 1,337 Other fees 7,090 23,849 4,947 ----------- ----------- ---------- Total expenses before 686,234 2,193,625 391,502 voluntary fee reductions Expenses voluntarily reduced by: Advisor (5,873) (14,066) -- Distributor (21,297) (156,257) (13,674) ----------- ----------- ---------- Net Expenses 659,064 2,023,302 377,828 ----------- ----------- ---------- NET INVESTMENT LOSS (317,701) (1,031,601) (306,750) ----------- ----------- ---------- REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: Net realized gains (losses) from 39,611,296 27,704,759 3,625,637 investment transactions and other dispositions Change in unrealized appreciation (35,261,897) 14,143,726 2,579,437 (depreciation) on investments ----------- ----------- ---------- Net realized/unrealized gains 4,349,399 41,848,485 6,205,074 from investments ----------- ----------- ---------- Change in net assets resulting (4,031,698) $40,816,884 $5,898,324 from operations ========== =========== ==========
SEE NOTES TO FINANCIAL STATEMENTS. 14 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK LARGE CAP EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- FROM INVESTMENT ACTIVITIES: Operations: Net investment income (loss) $ (317,701) $ 60,119 Net realized gains (losses) from investment transactions and 39,611,296 (27,566,941) other dispositions Net realized losses from futures contracts -- -- Change in unrealized appreciation (depreciation) on investments (35,261,897) 16,236,068 ------------ ------------ Change in net assets from operations 4,031,698 (11,270,754) ------------ ------------ DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income -- (7,430) From net realized gains from investment transactions and -- -- futures contracts DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income -- (84) From net realized gains from investment transactions and -- -- futures contracts DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income -- (102,196) From net realized gains from investment transactions and -- -- futures contracts ------------ ------------ Change in net assets from shareholder distributions -- (109,710) ------------ ------------ CAPITAL TRANSACTIONS: Proceeds from shares issued 15,996,157 11,064,718 Proceeds from shares exchanged from Class B 1,987,261 -- Proceeds from shares issued in connection with merger 196,009,945 -- Dividends reinvested -- 42,295 Cost of shares redeemed (31,125,993) (32,862,438) Cost of shares exchanged to Class A (1,987,261) -- ------------ ------------ Change in net assets from capital transactions 180,880,109 (21,755,425) ------------ ------------ Net increase (decrease) in net assets 184,911,807 (33,135,889) NET ASSETS: Beginning of year 45,150,218 78,286,107 ------------ ------------ End of year $230,062,025 $ 45,150,218 ============ ============ SHARE TRANSACTIONS: Issued 1,673,420 1,337,028 Issued in connection with exchange from Class B 202,575 -- Issued in connection with merger 18,955,270 -- Reinvested -- 4,865 Redeemed (3,262,576) (3,849,492) Cost of shares exchanged to Class A (211,862) -- ------------ ------------ Change in shares transactions 17,356,827 (2,507,599) ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 15 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK MID CAP EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- FROM INVESTMENT ACTIVITIES: Operations: Net investment income (loss) $ (1,031,601) $ (398,291) Net realized gains (losses) from investment transactions and 27,704,759 (11,194,364) other dispositions Net realized losses from futures contracts -- (964,999) Change in unrealized appreciation (depreciation) on investments 14,143,726 (22,484,146) ------------ ------------ Change in net assets from operations 40,816,884 (35,041,800) ------------ ------------ DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- (431,775) futures contracts DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- (91,773) futures contracts DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- (911,429) futures contracts ------------ ------------ Change in net assets from shareholder distributions -- (1,434,977) ------------ ------------ CAPITAL TRANSACTIONS: Proceeds from shares issued 45,286,486 61,900,000 Proceeds from shares exchanged from Class B 6,045,653 -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested -- 1,432,835 Cost of shares redeemed (96,598,044) (60,955,952) Cost of shares exchanged to Class A (6,045,653) -- ------------ ------------ Change in net assets from capital transactions (51,311,558) 2,376,883 ------------ ------------ Net increase (decrease) in net assets (10,494,674) (34,099,894) NET ASSETS: Beginning of year 150,693,961 184,793,855 ------------ ------------ End of year $140,199,287 $150,693,961 ============ ============ SHARE TRANSACTIONS: Issued 4,024,702 6,443,976 Issued in connection with exchange from Class B 506,336 -- Issued in connection with merger -- -- Reinvested -- 153,085 Redeemed (8,386,869) (6,461,774) Cost of shares exchanged to Class A (551,611) -- ------------ ------------ Change in shares transactions (4,407,442) (135,287) ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 16 ================================================================================ FINANCIAL STATEMENTS ================================================================================ Statement of Changes in Net Assets - -------------------------------------------------------------------------------- TAMARACK MID CAP EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- FROM INVESTMENT ACTIVITIES: Operations: Net investment income (loss) $ (306,750) $ (243,477) Net realized gains (losses) from investment transactions and 3,625,637 (3,444,713) other dispositions Net realized losses from futures contracts -- -- Change in unrealized appreciation (depreciation) on investments 2,579,437 (1,538,562) ------------ ------------ Change in net assets from operations 5,898,324 (5,226,752) ------------ ------------ DISTRIBUTIONS TO CLASS A SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- -- futures contracts DISTRIBUTIONS TO CLASS B SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- -- futures contracts DISTRIBUTIONS TO CLASS I SHAREHOLDERS: From net investment income -- -- From net realized gains from investment transactions and -- -- futures contracts ------------ ------------ Change in net assets from shareholder distributions -- -- CAPITAL TRANSACTIONS: Proceeds from shares issued 10,720,002 11,572,346 Proceeds from shares exchanged from Class B 2,202,168 -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested -- -- Cost of shares redeemed (18,175,934) (11,858,931) Cost of shares exchanged to Class A (2,202,168) -- ------------ ------------ Change in net assets from capital transactions (7,455,932) (286,585) ------------ ------------ Net increase (decrease) in net assets (1,557,608) (5,513,337) NET ASSETS: Beginning of year 23,151,024 28,664,361 ------------ ------------ End of year $ 21,593,416 $ 23,151,024 ============ ============ SHARE TRANSACTIONS: Issued 845,646 1,151,705 Issued in connection with exchange from Class B 170,843 -- Issued in connection with merger -- -- Reinvested -- -- Redeemed (1,494,087) (1,195,656) Cost of shares exchanged to Class A (181,547) -- ------------ ------------ Change in shares transactions (659,145) (43,951) ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 17 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack Large Cap Equity Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 8.33 $ 9.87 $ 12.02 $ 15.56 $ 13.81 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.07) -- (0.02) (0.04) (0.02) Net Realized and Unrealized Gains/(Losses) 1.76 (1.53) (2.13) (2.55) 2.03 ----------- ----------- ----------- ----------- ----------- Total From Investment Activities 1.69 (1.53) (2.15) (2.59) 2.01 DISTRIBUTIONS: Net Investment Income -- (0.01) (a) -- (0.01) Return of Capital -- -- (a) -- -- Net Realized Gains -- -- -- (0.95) (0.25) ----------- ----------- ----------- ----------- ----------- Total Distributions -- (0.01) -- (0.95) (0.26) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 10.02 $ 8.33 $ 9.87 $ 12.02 $ 15.56 Total Return* 20.29% (15.53%) (17.87%) (17.24%) 14.63% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 10,864 $ 7,686 $ 9,906 $ 14,126 $ 19,044 Ratio of Expenses to Average Net Assets 1.54% 1.46% 1.34% 1.25% 1.25% Ratio of Net Investment Income to (0.85%) (0.07%) (0.14%) (0.28%) (0.22%) Average Net Assets Ratio of Expenses to Average Net Assets** 1.79% 1.71% 1.59% 1.50% 1.50% Portfolio Turnover*** 264% 90% 33% 31% 63% CLASS I 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 8.38 $ 9.92 $ 12.07 $ 15.57 $ 13.80 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.07) 0.03 0.02 -- 0.01 Net Realized and Unrealized Gains/(Losses) 1.80 (1.55) (2.15) (2.55) 2.03 ----------- ----------- ----------- ----------- ----------- Total From Investment Activities 1.73 (1.52) (2.13) (2.55) 2.04 DISTRIBUTIONS: Net Investment Income -- (0.02) (0.01) (a) (0.02) Return of Capital -- -- (0.01) -- -- Net Realized Gains -- -- -- (0.95) (0.25) ----------- ----------- ----------- ----------- ----------- Total Distributions -- (0.02) (0.02) (0.95) (0.27) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 10.11 $ 8.38 $ 9.92 $ 12.07 $ 15.57 Total Return 20.64% (15.34%) (17.71%) (16.96%) 14.88% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 28,454 $ 35,379 $ 64,516 $ 149,839 $ 194,157 Ratio of Expenses to Average Net Assets 1.29% 1.21% 1.09% 1.00% 1.00% Ratio of Net Investment Income to (0.60%) 0.20% 0.11% (0.03%) 0.09% Average Net Assets Ratio of Expenses to Average Net Assets** 1.29% (d) (d) (d) (d) Portfolio Turnover*** 264% 90% 33% 31% 63%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. (a) Less than $0.01 per share. (b) Not annualized. (c) Annualized. (d) There were no waivers or reimbursements during the period. (e) For the period from April 19, 2004 (commencement of operations) to April 30, 2004. SEE NOTES TO FINANCIAL STATEMENTS. 18 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
CLASS C(e) 2004 * Excludes sales charge. - ---------- ---- ** During the period, certain fees were voluntarily Net Asset Value, Beginning of Period $ 10.28 reduced. If such voluntary fee reductions had not INVESTMENT ACTIVITIES: occurred, the ratio would have been as indicated. Net Investment Income/(Loss) -- *** Portfolio turnover is calculated on the basis Net Realized and Unrealized Gains/(Losses) (0.26) of the fund as a whole without distinguishing Total From Investment Operations (0.26) between the classes of shares issued. DISTRIBUTIONS: Net Investment Income -- (a) Less than $0.01 per share. Return of Capital (b) Not annualized. Net Realized Gain -- (c) Annualized. Total Distributions -- (d) There were no waivers or reimbursements during the Net Asset Value, End of Period $ 10.02 period. Total Return* (2.53%)(b) (e) For the period from April 19, 2004 (commencement RATIOS/SUPPLEMENTAL DATA: of operations) to April 30, 2004. Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.88%(c) Ratio of Net Investment Income to (1.15%)(c) SEE NOTES TO FINANCIAL STATEMENTS. Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 264% CLASS R(e) 2004 - ----------- ---- Net Asset Value, Beginning of Period $ 10.28 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) -- Net Realized and Unrealized Gains/(Losses) (0.26) Total From Investment Operations (0.26) DISTRIBUTIONS: Net Investment Income -- Return of Capital Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $ 10.02 Total Return (2.53%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.32%(c) Ratio of Net Investment Income to (0.63%)(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 264% CLASS S(e) 2004 - ----------- ---- Net Asset Value, Beginning of Period $ 10.37 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) -- Net Realized and Unrealized Gains/(Losses) (0.26) Total From Investment Operations (0.26) DISTRIBUTIONS: Net Investment Income -- Return of Capital Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $ 10.11 Total Return (2.51%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $190,737 Ratio of Expenses to Average Net Assets 0.85%(c) Ratio of Net Investment Income to (0.27%)(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 264%
19 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack Mid Cap Equity Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 9.46 $ 11.73 $ 11.99 $ 14.02 $ 15.33 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.08) (0.03) (0.01) 0.01 (0.02) Net Realized and Unrealized Gains/(Losses) 2.79 (2.15) 0.67 0.98 2.69 ----------- ----------- ----------- ----------- ----------- Total From Investment Activities 2.71 (2.18) 0.66 0.99 2.67 DISTRIBUTIONS: Net Investment Income -- -- (0.01) (0.01) -- Net Realized Gains -- (0.09) (0.91) (3.01) (3.98) ----------- ----------- ----------- ----------- ----------- Total Distributions -- (0.09) (0.92) (3.02) (3.98) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 12.17 $ 9.46 $ 11.73 $ 11.99 $ 14.02 Total Return* 28.65% (18.58%) 5.99% 5.92% 21.15% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 74,150 $ 48,806 $ 55,143 $ 28,312 $ 30,374 Ratio of Expenses to Average Net Assets 1.38% 1.40% 1.37% 1.31% 1.31% Ratio of Net Investment Income to (0.78%) (0.37%) (0.22%) 0.09% (0.17%) Average Net Assets Ratio of Expenses to Average Net Assets** 1.64% 1.65% 1.62% 1.56% 1.56% Portfolio Turnover*** 93% 28% 19% 66% 61% CLASS I 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 9.62 $ 11.91 $ 12.13 $ 14.14 $ 15.37 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.08) (0.01) 0.01 0.04 0.01 Net Realized and Unrealized Gains/(Losses) 2.87 (2.19) 0.69 0.99 2.74 ----------- ----------- ----------- ----------- ----------- Total From Investment Activities 2.79 (2.20) 0.70 1.03 2.75 DISTRIBUTIONS: Net Investment Income -- -- (0.01) (0.03) (a) Net Realized Gains -- (0.09) (0.91) (3.01) (3.98) ----------- ----------- ----------- ----------- ----------- Total Distributions -- (0.09) (0.92) (3.04) (3.98) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 12.41 $ 9.62 $ 11.91 $ 12.13 $ 14.14 Total Return 29.00% (18.46%) 6.34% 6.17% 21.67% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 66,039 $ 94,472 $ 115,032 $ 120,842 $ 84,905 Ratio of Expenses to Average Net Assets 1.15% 1.15% 1.12% 1.06% 1.06% Ratio of Net Investment Income to (0.50%) (0.12%) 0.10% 0.35% 0.10% Average Net Assets Ratio of Expenses to Average Net Assets** 1.16% (d) (d) (d) (d) Portfolio Turnover*** 93% 28% 19% 66% 61%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. (a) Less than $0.01 per share. (b) Not annualized. (c) Annualized. (d) There were no waivers or reimbursements during the period. (e) For the period from April 19, 2004 (commencement of operations) to April 30, 2004. SEE NOTES TO FINANCIAL STATEMENTS. 20 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
CLASS C(e) 2004 * Excludes sales charge. - ---------- ---- ** During the period, certain fees were voluntarily Net Asset Value, Beginning of Period $ 12.51 reduced. If such voluntary fee reductions had not INVESTMENT ACTIVITIES: occurred, the ratio would have been as indicated. Net Investment Income/(Loss) -- *** Portfolio turnover is calculated on the basis Net Realized and Unrealized Gains/(Losses) (0.35) of the fund as a whole without distinguishing Total From Investment Operations (0.35) between the classes of shares issued. DISTRIBUTIONS: Net Investment Income -- Net Realized Gain -- (a) Less than $0.01 per share. Total Distributions -- (b) Not annualized. Net Asset Value, End of Period $ 12.16 (c) Annualized. Total Return* (2.80%)(b) (d) There were no waivers or reimbursements during RATIOS/SUPPLEMENTAL DATA: the period. Net Assets, End of Period (000's) $ 3 (e) For the period from April 19, 2004 (commencement Ratio of Expenses to Average Net Assets 1.28%(c) of operations) to April 30, 2004. Ratio of Net Investment Income to (1.01%)(c) Average Net Assets SEE NOTES TO FINANCIAL STATEMENTS. Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 93% CLASS R(e) 2004 - ----------- ---- Net Asset Value, Beginning of Period $ 12.51 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) -- Net Realized and Unrealized Gains/(Losses) (0.34) Total From Investment Operations (0.34) DISTRIBUTIONS: Net Investment Income -- Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $ 12.17 Total Return (2.72%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 0.79%(c) Ratio of Net Investment Income to (0.56%)(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 93% CLASS S(e) 2004 - ----------- ---- Net Asset Value, Beginning of Period $ 12.76 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) -- Net Realized and Unrealized Gains/(Losses) (0.35) Total From Investment Operations (0.35) DISTRIBUTIONS: Net Investment Income -- Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $12.41 Total Return (2.74%)(b) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 4 Ratio of Expenses to Average Net Assets 0.25%(c) Ratio of Net Investment Income to (0.06%)(c) Average Net Assets Ratio of Expenses to Average Net Assets** (d) Portfolio Turnover*** 93%
21 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================ Tamarack Mid Cap Equity Fund - -------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED APRIL 30 (EXCEPT AS NOTED)
CLASS A 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 10.11 $ 12.32 $ 11.56 $ 12.50 $ 12.69 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.15) (0.12) (0.11) (0.11) (0.09) Net Realized and Unrealized Gains/(Losses) 3.23 (2.09) 1.04 0.08 2.31 Total From Investment Activities 3.08 (2.21) 0.93 (0.03) 2.22 DISTRIBUTIONS: Net Investment Income -- -- -- -- -- Net Realized Gains -- -- (0.17) (0.91) (2.41) ----------- ----------- ----------- ----------- ----------- Total Distributions -- -- (0.17) (0.91) (2.41) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 13.19 $ 10.11 $ 12.32 $ 11.56 $ 12.50 Total Return* 30.46% (17.94%) 8.17% (0.43%) 19.97% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 7,488 $ 4,359 $ 6,069 $ 5,870 $ 6,881 Ratio of Expenses to Average Net Assets 1.81% 1.70% 1.61% 1.49% 1.46% Ratio of Net Investment Income to (1.52%) (1.12%) (0.99%) (0.85%) (0.80%) Average Net Assets Ratio of Expenses to Average Net Assets** 2.06% 1.95% 1.86% 1.74% 1.71% Portfolio Turnover*** 40% 120% 31% 71% 258% CLASS I 2004 2003 2002 2001 2000 - ------- ----------- ----------- ----------- ----------- ----------- Net Asset Value, Beginning of Period $ 10.25 $ 12.45 $ 11.66 $ 12.57 $ 12.72 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.17) (0.09) (0.07) (0.06) (0.07) Net Realized and Unrealized Gains/(Losses) 3.32 (2.11) 1.03 0.06 2.33 Total From Investment Activities 3.15 (2.20) 0.96 -- 2.26 DISTRIBUTIONS: Net Investment Income -- -- -- -- -- Net Realized Gains -- -- (0.17) (0.91) (2.41) ----------- ----------- ----------- ----------- ----------- Total Distributions -- -- (0.17) (0.91) (2.41) ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period $ 13.40 $ 10.25 $ 12.45 $ 11.66 $ 12.57 Total Return 30.73% (17.67%) 8.36% (0.17%) 20.24% RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 14,094 $ 16,621 $ 19,113 $ 22,877 $ 20,645 Ratio of Expenses to Average Net Assets 1.55% 1.45% 1.36% 1.24% 1.21% Ratio of Net Investment Income to (1.23%) (0.87%) (0.72%) (0.60%) (0.51%) Average Net Assets Ratio of Expenses to Average Net Assets** (c) (c) (c) (c) (c) Portfolio Turnover*** 40% 120% 31% 71% 258%
* Excludes sales charge. ** During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratio would have been as indicated. *** Portfolio turnover is calculated on the basis of the fund as a whole without distinguishing between the classes of shares issued. (a) Not annualized. (b) Annualized. (c) There were no waivers or reimbursements during the period. (d) For the period from April 19, 2004 (commencement of operations) to April 30, 2004. SEE NOTES TO FINANCIAL STATEMENTS. 22 ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
CLASS C(d) 2004 * Excludes sales charge. - ---------- ---- ** During the period, certain fees were voluntarily Net Asset Value, Beginning of Period $ 13.63 reduced. If such voluntary fee reductions had not INVESTMENT ACTIVITIES: occurred, the ratio would have been as indicated. Net Investment Income/(Loss) (0.02) *** Portfolio turnover is calculated on the basis Net Realized and Unrealized Gains/(Losses) (0.42) of the fund as a whole without distinguishing Total From Investment Operations (0.44) between the classes of shares issued. DISTRIBUTIONS: Net Investment Income -- (a) Not annualized. Net Realized Gain -- (b) Annualized. Total Distributions -- (c) There were no waivers or reimbursements during Net Asset Value, End of Period $ 13.19 the period. Total Return* (3.23%)(a) (d) For the period from April 19, 2004 (commencement RATIOS/SUPPLEMENTAL DATA: of operations) to April 30, 2004. Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 2.49%(b) SEE NOTES TO FINANCIAL STATEMENTS. Ratio of Net Investment Income to (5.27%)(b) Average Net Assets Ratio of Expenses to Average Net Assets** (c) Portfolio Turnover*** 40% CLASS R(d) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 13.63 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.02) Net Realized and Unrealized Gains/(Losses) (0.42) Total From Investment Operations (0.44) DISTRIBUTIONS: Net Investment Income -- Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $ 13.19 Total Return (3.23%)(a) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 5 Ratio of Expenses to Average Net Assets 1.94% (b) Ratio of Net Investment Income to (5.14%) (b) Average Net Assets Ratio of Expenses to Average Net Assets** (c) Portfolio Turnover*** 40% CLASS S(d) 2004 - ---------- ---- Net Asset Value, Beginning of Period $ 13.84 INVESTMENT ACTIVITIES: Net Investment Income/(Loss) (0.02) Net Realized and Unrealized Gains/(Losses) (0.42) Total From Investment Operations (0.44) DISTRIBUTIONS: Net Investment Income -- Net Realized Gain -- Total Distributions -- Net Asset Value, End of Period $ 13.40 Total Return (3.18%)(a) RATIOS/SUPPLEMENTAL DATA: Net Assets, End of Period (000's) $ 3 Ratio of Expenses to Average Net Assets 1.47%(b) Ratio of Net Investment Income to (4.34%)(b) Average Net Assets Ratio of Expenses to Average Net Assets** (c) Portfolio Turnover*** 40%
23 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ April 30, 2004 - -------------------------------------------------------------------------------- 1. ORGANIZATION Tamarack Funds Trust ("Tamarack") is registered under the Investment Company Act of 1940 as an open-end management investment company. Tamarack was organized as a Delaware statutory trust on December 16, 2003. Effective April 16, 2004, and based on the approval of shareholders, seventeen separate investment portfolios were reorganized as separate investment portfolios of Tamarack. This annual report includes the following three investment portfolios ("Funds"): - - Tamarack Large Cap Equity Fund ("Large Cap Equity Fund") (formerly RBC Large Cap Equity Fund) - - Tamarack Mid Cap Equity Fund ("Mid Cap Equity Fund") (formerly RBC Mid Cap Equity Fund) - - Tamarack Small Cap Equity Fund ("Small Cap Equity Fund") (formerly RBC Small Cap Equity Fund) Each of the Funds offers five share classes: Class A, Class C, Class R, Class I and Class S shares. Class A shares are offered with a 5.75% maximum front-end sales charge. Class C shares are offered at net asset value (i.e., no front-end sales charge) but are subject to a contingent deferred sales charge ("CDSC") of 1.00% for redemptions within 12 months of purchase. Class R shares are not subject to either a front-end sales charge or CDSC. Class S and Class I shares are closed to new investors. Voyageur Asset Management Inc. acts as the investment advisor for the Tamarack Funds. The officers of the Tamarack Funds ("Fund Management") are also employees of Voyageur. - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING Summarized below are the significant accounting policies of the Funds. These policies POLICIES conform to accounting principles generally accepted in the United States of America ("GAAP"). Fund management follows these policies when preparing financial statements. Management may also be required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITY VALUATION: The value of an equity security traded on one or more U.S. exchanges shall be valued at the last available quoted sale price on the primary trading exchange for the security as of the Value Time on the Value Date. If there was no sale on the primary exchange on the Value Date, the last sale on a secondary exchange shall be used. In cases where neither bid prices or closing sale prices are available, Tamarack has established procedures to estimate a security's fair value. These procedures are also used to estimate the fair value of a security if a significant event occurs that materially affects the value of the security or prices quoted by the exchange do not accurately reflect the value of the security due to pricing changes after the U.S. markets have closed. This report presents information as of April 30, 2004. INVESTMENT TRANSACTIONS: Security transactions are accounted for on the date the security is bought or sold ("trade date"). Long-term investment transactions are recorded on a trade date plus one basis, except for on the last day of the annual or semi-annual financial reporting period, when they 24 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ are recorded on trade date. Dividend income is recorded on the ex-dividend date. Securities gains and losses are calculated based on the costs of the specific security (also known as identified cost basis). FUND EXPENSES: Each Fund pays the expenses that are directly related to its operations, such as trading costs or portfolio management fees. Expenses incurred by Tamarack on behalf of multiple Funds, such as audit or legal fees, are allocated proportionately among each of the Funds based either on the Funds' net assets or on another reasonable basis such as equally across all Funds, depending on the nature of the expense. Individual share classes within a Fund are charged expenses specific to that class, such as sales and distribution fees. FINANCIAL INSTRUMENTS: FUTURES CONTRACTS - The Funds may enter into futures contracts in an effort to hedge against market risks. A futures contract on a securities index is an agreement obligating either party to pay, and entitling the other party to receive, during the term of the contract, cash payments based on the level of a specified securities index. Put and call options on futures contracts would give the Fund the right (but not the obligation) to sell or to purchase for a specified price the underlying futures contract at any time during the option period. Futures transactions involve brokerage costs and require the Fund to segregate assets to cover contracts that would require it to purchase securities or currencies. A Fund may lose the expected benefit of futures transactions if interest rates, exchange rates or securities prices change in an unanticipated manner. However, such unanticipated changes may also result in lower overall performance than if the Fund had not entered into any futures transactions. Upon entering into a futures contract, a Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount. Subsequent payments are made or received by the Fund each day, depending on the daily fluctuations in fair value of the underlying index. The Funds recognize a gain or loss each day equal to the income received or paid. The Funds did not enter into futures contracts during the fiscal year ended April 30, 2004. DISTRIBUTIONS TO SHAREHOLDERS: Each of the Funds pays out any income that it receives, less expenses, in the form of dividends to its shareholders. Income dividends and capital gains on each Fund are declared and paid at least annually. Distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions are calculated based on federal income tax regulations, which may differ from GAAP. These "book/tax" differences may be either temporary or permanent in nature. To the extent these differences are permanent in nature, they are reclassified within a Fund's capital accounts based on their federal tax basis treatment. - -------------------------------------------------------------------------------- 3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Tamarack, on behalf of Large Cap Equity Fund, Mid Cap Equity Fund and Small Cap Equity Fund, has entered into an investment advisory agreement with Voyageur under which Voyageur manages each Fund's assets and furnishes related office facilities, equipment, research and personnel. The agreement requires each Fund to pay Voyageur a monthly fee based upon average daily net assets. Under the terms of the advisory contracts, Voyageur is entitled to receive fees based on a percentage of the average daily net assets of each of the Funds as follows: 25 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ Annual Rate ----------- Large Cap Equity Fund 0.70% Mid Cap Equity Fund 0.70% Small Cap Equity Fund 0.70% Voyageur has contractually agreed to waive fees and/or make payments in order to keep total operating expenses of the Class S shares of Large Cap Equity Fund to 0.85%. This expense limitation agreement is in place until May 1, 2005. Voyageur may also voluntarily waive and/or reimburse operating expenses of any Fund from time to time. Any such voluntary program may be changed or eliminated at any time without notice. Voyageur serves as administrator to the Funds and BISYS Fund Services Limited Partnership ("BISYS") serves as sub-administrator and fund accounting agent. Services provided under the administrative services contract include providing day-to-day administration of matters related to the corporate existence of the Fund, maintenance of its records and the preparation of reports. Effective April 16, 2004 and under the terms of the administrative services contract, Voyageur receives from each Fund a fee, payable monthly, at the annual rate of 0.10% of each Fund's average daily net assets. For its services as sub-administrator, BISYS receives a fee payable by Voyageur out of Voyageur's own resources. Prior to April 16, 2004 the Funds paid BISYS an administrative fee equal to an annual rate of 0.15%. - -------------------------------------------------------------------------------- 4. FUND DISTRIBUTION Each of the Funds has adopted a Master Distribution 12b-1 Plan (the "Plan") in which Tamarack Distributors Inc. (the "Distributor") acts as the Funds' distributor. The Distributor is an affiliate of Voyageur. The Plan permits each Fund to make payments for, or to reimburse the Distributor monthly for, distribution-related costs and expenses of marketing shares of each share class covered under the Plan. The following chart shows the maximum Plan fee rate for each class. Class A Class C Class R ------- ------- ------- 12b-1 Plan Fee 0.50%* 1.00% 0.50% Plan fees are based on average annual daily net assets of the applicable class. The Distributor, subject to applicable legal requirements, may waive a Plan fee voluntarily, in whole or in part. *The Distributor is currently voluntarily waiving 0.25% of the Plan fee for Class A. These voluntary waivers will continue until at least March 31, 2005. On March 24, 2004, all Class B shares of the predecessor funds to Large Cap Equity Fund, Mid Cap Equity Fund, and Small Cap Equity Fund were converted into Class A shares of the predecessor funds. During the fiscal year ended April 30, 2004, the distributor of the predecessor funds (Centura Funds Distributor, Inc., an affiliate of BISYS) received the proceeds of any CDSC imposed on redemptions of Class B shares of the predecessor funds. The following is a summary of the dealer commissions paid to Centura Funds Distributor, Inc. and reallocated to RBC Centura Securities, Inc. and RBC Dain Rauscher Inc. (both affiliates of Voyageur) for Class B shares of the predecessor funds for the year ended April 30, 2004. RBC Centura RBC Dain Distributor Securities, Inc. Rauscher Inc. ----------- ---------------- ------------- Large Cap Equity Fund $16 $1,063 $427 Mid Cap Equity Fund 19 1,044 1,297 26 Small Cap Equity Fund 62 382 155 26 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ - -------------------------------------------------------------------------------- 5. SECURITIES TRANSACTIONS The cost of securities purchased and proceeds from securities sold (excluding short-term securities) for the year ended April 30, 2004 were as follows: Purchases Sales --------- ----- Large Cap Equity Fund $149,503,332 $163,958,051 Mid Cap Equity Fund $139,093,094 $182,831,156 Small Cap Equity Fund $ 8,512,041 $ 15,942,850 - -------------------------------------------------------------------------------- 6. CAPITAL SHARE TRANSACTIONS Tamarack is authorized to issue an unlimited number of shares of beneficial interest without par value. Transactions in shares of the Large Cap Equity Fund, Mid Cap Equity Fund and Small Cap Equity Fund are summarized below: TAMARACK LARGE CAP EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 2,160,504 $ 1,538,621 Proceeds from shares exchanged from Class B 1,987,261 -- Dividends reinvested -- 7,313 Cost of shares redeemed (2,533,741) (2,281,945) ------------- ------------- Change in Class A $ 1,614,024 $ (736,011) ------------- ------------- CLASS B Proceeds from shares issued $ 18,891 $ 9,035 Dividends reinvested -- 83 Cost of shares redeemed (463,535) (1,176,765) Cost of shares exchanged to Class A (1,987,261) -- ------------- ------------- Change in Class B $ (2,431,905) $ (1,167,647) ------------- ------------- CLASS I Proceeds from shares issued $ 13,734,446 $ 9,517,062 Dividends reinvested -- 34,899 Cost of shares redeemed (27,086,490) (29,403,728) ------------- ------------- Change in Class I $ (13,352,044) $ (19,851,767) ------------- ------------- CLASS C Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------- ------------- Change in Class C $ 3,275 $ -- ------------- ------------- CLASS R Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------- ------------- Change in Class R $ 3,275 $ -- ------------- ------------- CLASS S Proceeds from shares issued $ 75,766 $ -- Proceeds from shares issued in connection with merger 196,009,945 -- Dividends reinvested -- -- Cost of shares redeemed (1,042,227) -- ------------- ------------- Change in Class S $ 195,043,484 $ -- ------------- ------------- Net change from capital transactions $ 180,880,109 $ (21,755,425) ============= ============= SHARE TRANSACTIONS: CLASS A Issued 225,968 185,996 Issued in connection with exchange from Class B 202,575 --
27 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- Reinvested -- 840 Redeemed (267,598) (267,940) ------------- ------------- Change in Class A 160,945 (81,104) ------------- ------------- CLASS B Issued 11,459 897 Reinvested -- 10 Redeemed (59,888) (144,837) Cost of shares exchanged to Class A (211,862) -- ------------- ------------- Change in Class B (260,291) (143,930) ------------- ------------- CLASS I Issued 1,429,324 1,150,135 Reinvested -- 4,015 Redeemed (2,838,108) (3,436,715) ------------- ------------- Change in Class I (1,408,784) (2,282,565) ------------- ------------- CLASS C Issued 319 -- Reinvested -- -- Redeemed -- -- ------------- ------------- Change in Class C 319 -- ------------- ------------- CLASS R Issued 319 -- Reinvested -- -- Redeemed -- -- ------------- ------------- Change in Class R 319 -- ------------- ------------- CLASS S Issued 6,031 -- Issued in connection with merger 18,955,270 -- Reinvested -- -- Redeemed (96,982) -- ------------- ------------- Change in Class S 18,864,319 -- ------------- ------------- Net change from share transactions 17,356,827 (2,507,599) ============= ============= TAMARACK MID CAP EQUITY FUND FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 23,573,624 $ 16,476,708 Proceeds from shares exchanged from Class B 6,045,653 -- Dividends reinvested -- 431,044 Cost of shares redeemed (18,710,085) (12,374,155) ------------- ------------- Change in Class A $ 10,909,192 $ 4,533,597 ------------- ------------- CLASS B Proceeds from shares issued $ 20,658 $ 101,052 Dividends reinvested -- 90,507 Cost of shares redeemed (3,028,018) (4,386,652) Cost of shares exchanged to Class A (6,045,653) -- ------------- ------------- Change in Class B $ (9,053,013) $ (4,195,093) ------------- ------------- CLASS I Proceeds from shares issued $ 21,681,784 $ 45,322,240 Dividends reinvested -- 911,284 Cost of shares redeemed (74,859,941) (44,195,145) ------------- ------------- Change in Class I $(53,178,157) $ 2,038,379 ------------- -------------
28 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CLASS C Proceeds from shares issued $ 3,025 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------- ------------- Change in Class C $ 3,025 $ -- ------------- ------------- CLASS R Proceeds from shares issued $ 3,025 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------- ------------- Change in Class R $ 3,025 $ -- ------------- ------------- CLASS S Proceeds from shares issued $ 4,370 $ -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------- ------------- Change in Class S $ 4,370 $ -- ------------- ------------- Net change from capital transactions $(51,311,558) $ 2,376,883 ============= ============= SHARE TRANSACTIONS: CLASS A Issued 2,096,445 1,732,854 Issued in connection with exchange from Class B 506,336 -- Reinvested -- 46,444 Redeemed (1,668,623) (1,317,376) ------------- ------------- Change in Class A 934,158 461,922 ------------- ------------- CLASS B Issued 47,063 10,344 Reinvested -- 10,494 Redeemed (343,358) (507,839) Cost of shares exchanged to Class A (551,611) -- ------------- ------------- Change in Class B (847,906) (487,001) ------------- ------------- CLASS I Issued 1,880,365 4,700,778 Reinvested -- 96,147 Redeemed (6,374,888) (4,636,559) ------------- ------------- Change in Class I (4,494,523) 160,366 ------------- ------------- CLASS C Issued 242 -- Reinvested -- -- Redeemed -- -- ------------- ------------- Change in Class C 242 -- ------------- ------------- CLASS R Issued 242 -- Reinvested -- -- Redeemed -- -- ------------- ------------- Change in Class R 242 -- ------------- ------------- CLASS S Issued 345 -- Issued in connection with merger -- -- Reinvested -- -- Redeemed -- -- ------------- ------------- Change in Class S 345 -- ------------- ------------- Net change from share transactions (4,407,442) 135,287 ============= =============
29 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ TAMARACK SMALL CAP EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CAPITAL TRANSACTIONS: CLASS A Proceeds from shares issued $ 2,106,017 $ 1,636,622 Proceeds from shares exchanged from Class B 2,202,168 -- Dividends reinvested -- -- Cost of shares redeemed (2,597,589) (2,189,243) ------------ ------------ Change in Class A $ 1,710,596 $ (552,621) ------------ ------------ CLASS B Proceeds from shares issued $ 3,067 $ 60,044 Dividends reinvested -- -- Cost of shares redeemed (540,799) (726,987) Cost of shares exchanged to Class A (2,202,168) -- ------------ ------------ Change in Class B $ (2,739,900) $ (666,943) ------------ ------------ CLASS I Proceeds from shares issued $ 8,599,093 $ 9,875,680 Dividends reinvested -- -- Cost of shares redeemed (15,037,546) (8,942,701) ------------ ------------ Change in Class I $ (6,438,453) $ 932,979 ------------ ------------ CLASS C Proceeds from shares issued $ 3,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------ Change in Class C $ 3,275 $ -- ------------ ------------ CLASS R Proceeds from shares issued $ 5,275 $ -- Dividends reinvested -- -- Cost of shares redeemed -- -- ------------ ------------ Change in Class R $ 5,275 $ -- ------------ ------------ CLASS S Proceeds from shares issued $ 3,275 $ -- Proceeds from shares issued in connection with merger -- -- Dividends reinvested -- -- Cost of shares redeemed -- -- Change in Class S $ 3,275 $ -- ------------ ------------ Net change from capital transactions $ (7,455,932) $ (286,585) ============ ============ SHARE TRANSACTIONS: CLASS A Issued 169,571 161,020 Issued in connection with exchange from Class B 170,843 -- Reinvested -- -- Redeemed (203,991) (222,587) ------------ ------------ Change in Class A 136,423 (61,567) ------------ ------------ CLASS B Issued 11,042 5,709 Reinvested -- -- Redeemed (55,956) (75,173) Cost of shares exchanged to Class A (181,547) -- ------------ ------------ Change in Class B (226,461) (69,464) ------------ ------------ CLASS I Issued 664,168 984,976 Reinvested -- -- Redeemed (1,234,140) (897,896) ------------ ------------ Change in Class I (569,972) 87,080 ------------ ------------
30 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================
FOR THE YEAR ENDED FOR THE YEAR ENDED APRIL 30, 2004 APRIL 30, 2003 -------------- -------------- CLASS C Issued 240 -- Reinvested -- -- Redeemed -- -- Change in Class C 240 -- CLASS R Issued 388 -- Reinvested -- -- Redeemed -- -- Change in Class R 388 -- CLASS S Issued 237 -- Issued in connection with merger -- -- Reinvested -- -- Redeemed -- -- Change in Class S 237 -- Net change from share transactions (659,145) (43,951)
- -------------------------------------------------------------------------------- 7. FUND COMBINATIONS At a special meeting of shareholders on April 8, 2004, the shareholders of the David L. Babson Growth Fund, Inc. ("Babson Growth Fund") approved an agreement and plan of reorganization regarding the combination of Babson Growth Fund into RBC Large Cap Equity Fund. Effective April 16, 2004, through a tax-free reorganization, the Babson Growth Fund transferred all of its assets to RBC Large Cap Equity Fund, which also assumed all of Babson Growth Fund's liabilities. Voyageur paid the costs associated with the reorganization. The shareholders of Babson Growth Fund received 18,955,270 Class S shares ($10.34 per share) of RBC Large Cap Equity Fund, which had a total value of $196,009,945, in exchange for their shares of Babson Growth Fund ($10.25 per share), which also had a total value of $196,009,945. Babson Growth Fund shareholders received 0.991 RBC Large Cap Equity Fund Class S shares for every 1.000 shares owned of Babson Growth Fund. - -------------------------------------------------------------------------------- 8. REORGANIZATION OF RBC FUNDS, INC. On December 2, 2003, the Board of Directors of RBC Funds, Inc. approved an agreement and plan of reorganization regarding the reorganization of each series of RBC Funds, Inc. (including RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund and RBC Small Cap Equity Fund) as a series of Tamarack. At a special meeting of shareholders on April 8, 2004, the shareholders of each of RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund and RBC Small Cap Equity Fund approved the agreement and plan of reorganization with respect to each fund. Effective April 16, 2004, pursuant to that agreement and plan of reorganization, RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund and RBC Small Cap Equity Fund were reorganized, through a tax-free reorganization, as separate series of Tamarack (Large Cap Equity Fund, Mid Cap Equity Fund and Small Cap Equity Fund, respectively). - -------------------------------------------------------------------------------- 9. FEDERAL INCOME TAXES It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined under Subchapter M of the Internal Revenue Code, and to distribute substantially all of its net investment income and net realized capital gain. Therefore, no federal tax liability is recorded in the financial statements of each Fund. 31 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ The tax cost of securities differ from financial reporting cost by the amount of losses recognized for financial reporting purposes in excess of federal income tax purposes. As of April 30, 2004, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for each Fund were as follows:
Net Unrealized Tax Cost Unrealized Unrealized Appreciation of Securities Appreciation Depreciation (Depreciation) ------------- ------------ ------------- -------------- Large Cap Equity Fund $214,632,964 $ 24,271,257 ($3,781,459) $ 20,489,798 Mid Cap Equity Fund $134,743,938 $ 12,304,917 ($7,095,208) $ 5,209,709 Small Cap Equity Fund $ 17,313,745 $ 4,903,776 ($ 523,848) $ 4,379,928
As of April 30, 2004 the components of accumulated earnings/(deficit) on a tax basis was as follows (amounts in thousands):
Large Cap Mid Cap Small Cap Equity Fund Equity Fund Equity Fund ----------- ----------- ----------- Undistributed Ordinary Income $ -- $ -- $ -- Undistributed Long-Term Capital Gains -- 14,589,567 46,894 Accumulated Earnings -- 14,589,567 46,894 Distribution Payable -- -- -- Accumulated Capital and Other Losses (54,583,531) -- -- Unrealized Appreciation (Depreciation) 14,840,451 5,209,709 4,285,985 Total Accumulated Earnings (Deficit) (39,743,082) 19,799,276 4,332,879
As of April 30, 2004, the following Funds had net capital loss carryforwards and deferred post-October losses to offset future net capital gains or net investment income, if any: Capital Loss Deferred Post- Carryforward Expires October Losses ------------ ------- -------------- Large Cap Equity Fund $3,895,359 2011 $ -- As of the latest tax year end of April 30, 2004, the following fund had additional net capital loss carryforwards, subject to certain limitations on availability, to offset future net capital gains, if any, as the successor of a merger. To the extent that these carryovers used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders: Capital Loss Carryforward Expires ------------ ------- Large Cap Equity Fund $36,107,652 2009 14,580,522 2010 - -------------------------------------------------------------------------------- 10. DIVIDEND RECEIVED DEDUCTION For corporate shareholders no percentage of the total ordinary income distributions paid during the tax year ended April 30, 2004, qualified for the corporate dividend received deduction for the Funds. - -------------------------------------------------------------------------------- 11. CHANGE IN AUDITORS On December 2, 2003, the Board of Directors of RBC Funds, Inc. selected Deloitte & Touche ("Deloitte") as independent auditors of the RBC Funds for the fiscal year ending April 30, 2004. On March 11, 2004, the Tamarack Boad of Trustees selected Deloitte as independent auditors of the Funds. Deloitte has confirmed to the Audit Committee of the Board of Trustees ("Audit Committee") that they are independent auditors with respect to the Funds. 32 ================================================================================ NOTES TO FINANCIAL STATEMENTS ================================================================================ PricewaterhouseCoopers LLP ("PwC") served as independent auditors of the RBC Funds for the fiscal year ended April 30, 2003. In July and August 2003, a PwC affiliate in Canada provided certain prohibited non-audit services for the benefit of a Canadian subsidiary of Royal Bank of Canada, the ultimate parent company of Voyageur. As a result of the PwC affiliate in Canada's provision of these services, PwC resigned as the independent auditors of the RBC Funds effective October 8, 2003. During the RBC Funds' fiscal year ended April 30, 2003, PwC's audit reports concerning the RBC Funds contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principles. Further, in connection with its audits for the fiscal year ended April 30, 2003, and through October 8, 2003, there were no disagreements between the RBC Funds and PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of PwC would have caused it to make reference to the disagreements in its report on the financial statements for such periods. - -------------------------------------------------------------------------------- 12. MARKET TIMING Tamarack discourages attempts at market timing by Fund shareholders. Each Fund charges a redemption fee of 2% of the value of the shares redeemed or exchanged within 30 days of purchase. When assessed, the redemption fee is retained by the Fund, not by Fund management. This redemption fee is not charged in cases where the redemption results from an automatic reinvestment or asset re-allocation not specifically directed by the shareholder. Tamarack also reserves the right to reject any Fund purchase order made by persons deemed to be market timers. The Funds' prospectus contains a full description of Tamarack's policies on market timing and excessive trading. - -------------------------------------------------------------------------------- 13. SOFT DOLLARS The term soft dollars generally refers to arrangements in which services other than trade execution (such as research and brokerage services) are received from a broker-dealer. The federal securities laws permit a fund adviser to cause the Fund to pay higher commission charges if the adviser believes the charges are reasonable in relation to the brokerage and research services provided to the adviser or to the Fund. Voyageur has a fiduciary duty to the shareholders of the Funds to seek the best execution for all of the Funds' securities transactions. Fund management believes that using soft dollars to purchase brokerage and research services may, in certain circumstances, be in the Funds' best interest. 33 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Large Cap Equity Fund APRIL 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------- SHARES VALUE SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS - 98.9% RESTAURANTS - 2.5% ADVERTISING - 1.5% 150,900 Starbucks Corp.(b) 5,863,974 43,200 Omnicom Group, Inc. $ 3,434,832 ------------- ------------- RETAIL - 10.8% BANKING & FINANCIAL SERVICES - 11.7% 79,600 Bed Bath & Beyond, Inc.(b) 2,954,752 86,000 Fifth Third Bancorp 4,614,760 76,700 eBay, Inc.(b) 6,122,194 172,000 First Data Corp. 7,807,080 90,300 Home Depot, Inc. 3,177,657 261,000 MBNA Corp. 6,363,180 97,200 Kohl's Corp.(b) 4,061,988 72,200 Northern Trust Corp. 3,052,616 135,100 Staples, Inc. 3,480,176 135,900 SLM Corp. 5,206,329 143,200 Walgreen Co. 4,937,536 ------------- ------------- 27,043,965 24,734,303 ------------- ------------- COMMERCIAL SERVICES - 4.0% SOFTWARE - 3.8% 101,150 Fiserv, Inc.(b) 3,698,044 79,300 Intuit, Inc.(b) 3,367,871 146,400 Paychex, Inc. 5,457,792 204,800 Microsoft Corp. 5,318,656 ------------- ------------- 9,155,836 8,686,527 ------------- ------------- COMPUTER INDUSTRY - 9.7% SPECIALTY CHEMICAL - 3.0% 284,400 Cisco Systems, Inc.(b) 5,935,428 230,000 Ecolab, Inc. 6,854,000 193,400 Dell, Inc.(b) 6,712,914 ------------- 212,600 Symantec Corp.(b) 9,577,630 TOTAL COMMON STOCKS 227,616,160 ------------- (Cost $207,126,362) ------------- 22,225,972 ------------- DISTRIBUTION/WHOLESALE - 3.5% INVESTMENT COMPANIES - 0.8% 210,500 SYSCO Corp. 8,051,625 1,857,255 Wells Fargo Prime Investment 1,857,255 ------------- Money Market Fund, ------------- Investor Class DIVERSIFIED OPERATIONS - 4.9% 73,800 Danaher Corp. 6,827,976 52,200 United Technologies Corp. 4,502,772 TOTAL INVESTMENT COMPANIES 1,857,255 ------------- (Cost $1,857,255) ------------- 11,330,748 ------------- EDUCATION - 3.2% TOTAL INVESTMENTS 229,473,415 80,400 Apollo Group, Inc.-Class A(b) 7,306,752 (Cost $208,983,617)(a)-99.7% ------------- Other assets in excess of liabilities - 0.3% 588,610 ------------- ELECTRONIC COMPONENTS/INSTRUMENTS - 2.8% 242,400 Jabil Circuit, Inc.(b) 6,396,936 NET ASSETS - 100.0% $230,062,025 ============= ============ FOOD & BEVERAGES - 3.2% (a) See notes to financial statements for tax basis unrealized 135,100 PepsiCo, Inc. 7,361,599 appreciation (depreciation) of securities. ------------- (b) Non-income producing security. HEALTH CARE - 21.4% SEE NOTES TO FINANCIAL STATEMENTS. 93,900 Amgen, Inc.(b) 5,283,753 96,900 Cardinal Health, Inc. 7,097,925 84,300 Express Scripts, Inc.(b) 6,519,762 86,500 Johnson & Johnson, Inc. 4,673,595 144,300 Medtronic, Inc. 7,281,378 209,800 Pfizer, Inc. 7,502,448 112,600 Stryker Corp. 11,139,518 ------------- 49,498,379 ------------- INSURANCE - 7.9% 164,000 AFLAC, Inc. 6,925,720 82,400 Ambac Financial Group, Inc. 5,685,600 79,018 American Intl. Group, Inc. 5,661,640 ------------- 18,272,960 ------------- LEISURE - 5.0% 125,600 Carnival Corp. 5,359,352 160,000 International Game Technology 6,038,400 ------------- 11,397,752 -------------
34 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Mid Cap Equity Fund APRIL 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------- SHARES VALUE SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS - 99.0% 40,000 Express Scripts, Inc.(b) 3,093,600 BANKING & FINANCIAL SERVICES - 7.1% 130,000 Health Mgmt. Associates, Inc. 3,006,900 70,000 Arthur J. Gallagher & Co. $ 2,256,100 50,000 Invitrogen Corp.(b) 3,611,500 48,700 Commerce Bancorp, Inc. 2,776,387 101,800 Omnicare, Inc. 4,222,664 31,000 Legg Mason, Inc. 2,853,860 32,000 Patterson Dental Co.(b) 2,358,400 50,000 Northern Trust Corp. 2,114,000 34,100 Quest Diagnostics, Inc. 2,876,335 ------------ 50,300 Varian Medical Systems, Inc.(b) 4,317,752 10,000,347 ------------ ------------ 29,477,601 ------------ BUSINESS EQUIPMENT & SERVICES - 3.3% 68,300 ChoicePoint, Inc.(b) 2,999,736 INDUSTRIALS - 3.5% 41,000 FactSet Research Systems, Inc. 1,630,160 60,000 Stericycle, Inc.(b) 2,869,200 ------------ 122,200 Tetra Tech, Inc.(b) 2,029,742 4,629,896 4,898,942 ------------ COMPUTER INDUSTRY - 8.6% 65,000 Cognos, Inc.(b) 2,049,450 RESTAURANTS - 4.2% 50,000 DST Systems, Inc.(b) 2,207,500 80,300 Brinker International, Inc.(b) 3,088,338 138,000 Microchip Technology, Inc. 3,866,760 67,300 Cheesecake Factory, Inc.(b) 2,850,155 87,400 Symantec Corp.(b) 3,937,370 5,938,493 ------------ ------------ 12,061,080 ------------ RETAIL - 17.7% CONSUMER DISCRETIONARY - 2.8% 38,000 Best Buy Co., Inc. 2,061,500 100,100 Gentex Corp. 3,936,933 112,400 Fred's, Inc. 2,087,268 ------------ 169,000 Hot Topic, Inc.(b) 3,761,940 75,000 O'Reilly Automotive, Inc.(b) 3,366,750 CONSUMER GOODS & SERVICES - 2.8% 89,000 Petsmart, Inc. 2,465,300 71,100 Fastenal Co. 3,901,257 105,000 Regis Corp. 4,559,100 ------------ 150,000 Ross Stores, Inc. 4,575,000 CONSUMER STAPLES - 3.1% 53,600 Tractor Supply Co.(b) 2,093,616 53,700 Whole Foods Market, Inc. 4,295,463 ------------ ------------ 24,970,474 ------------ DISTRIBUTION/WHOLESALE - 5.0% TELECOMMUNICATIONS EQUIPMENT - 3.0% 64,900 CDW Corp. 4,055,601 110,000 Plantronics, Inc.(b) 4,174,500 72,100 SCP Pool Corp.(b) 2,899,141 ------------ ------------ TRANSPORTATION & SHIPPING - 3.1% 6,954,742 108,000 Expeditors International of 4,340,520 ------------ Washington, Inc. ------------ DIVERSIFIED OPERATIONS - 3.5% 23,000 Danaher Corp. 2,127,960 TOTAL COMMON STOCKS 138,826,453 56,000 Roper Industries, Inc. 2,718,800 (Cost $133,616,744) ------------ ------------ 4,846,760 INVESTMENT COMPANIES - 0.8% ------------ 1,127,194 Wells Fargo Prime Investment 1,127,194 Money Market Fund, ------------ EDUCATION - 3.6% Investor Class 31,000 Apollo Group, Inc. - Class A(b) 2,817,280 75,000 DeVry, Inc.(b) 2,160,000 TOTAL INVESTMENT COMPANIES 1,127,194 ------------ (Cost $1,127,194) ------------ 4,977,280 ------------ TOTAL INVESTMENTS 139,953,647 ELECTRONIC COMPONENTS/INSTRUMENTS - 4.0% (Cost $134,743,938)(a) - 99.8% 140,000 Jabil Circuit, Inc.(b) 3,694,600 Other assets in excess of liabilities - 0.2% 245,640 155,000 Symbol Technologies, Inc. 1,860,000 ------------ ------------ NET ASSETS - 100.0% $140,199,287 5,554,600 ============ ------------ 99,500 Investors Financial Services 3,867,565 Corp. ------------ (a) See notes to financial statements for tax basis unrealized appreciation (depreciation) of securities. HEALTH CARE - 20.9% (b) Non-income producing security. 75,000 Apogent Technologies, Inc.(b) 2,431,500 90,100 Biomet, Inc. 3,558,950 SEE NOTES TO FINANCIAL STATEMENTS.
35 ================================================================================ SCHEDULE OF INVESTMENTS ================================================================================ Small Cap Equity Fund APRIL 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------- SHARES VALUE SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS - 96.81% INFORMATION TECHNOLOGY - 24.96% CONSUMER DISCRETIONARY - 10.42% 7,000 Actel Corp.(b) 139,440 10,600 Catalina Marketing Corp.(b) $175,748,200 8,200 Acxiom Corp. 189,748 5,900 Chico's FAS, Inc.(b) 240,307 13,200 American Mgmt. Systems, Inc.(b) 254,892 12,000 Gentex Corp. 471,960 10,800 ANSYS, Inc.(b) 400,140 18,500 RARE Hospitality Int'l., Inc.(b) 506,345 11,100 Autodesk, Inc. 371,850 14,900 Shuffle Master, Inc.(b) 487,975 4,600 Black Box Corp. 234,370 11,400 Sonic Corp.(b) 367,878 8,200 Cymer, Inc.(b) 262,236 ------------ 6,700 Global Payments, Inc. 321,466 2,250,213 7,900 Group 1 Software, Inc.(b) 179,804 ------------ 11,000 Kronos, Inc.(b) 401,280 10,800 Open Text Corp.(b) 293,436 CONSUMER STAPLES - 5.20% 12,100 Photronics, Inc.(b) 180,169 24,700 United Natural Foods, Inc.(b) 618,735 8,200 ScanSource, Inc.(b) 452,886 6,300 Whole Foods Market, Inc. 503,937 11,300 Serena Software, Inc.(b) 200,801 ------------ 14,400 TriQuint Semiconductor, Inc.(b) 79,056 1,122,672 33,300 Verisity Ltd.(b) 253,080 ------------ 25,700 Verity, Inc.(b) 318,680 18,800 Wind River Systems, Inc.(b) 175,968 ENERGY - 3.56% 9,300 Zebra Technologies Corp. 681,596 8,400 Newfield Exploration Co.(b) 442,512 Class A(b) ------------ 11,700 Patina Oil & Gas Corp. 325,260 5,390,898 ------------ ------------ 767,772 MATERIALS - 2.04% ------------ 9,700 Spartech Corp. 221,257 FINANCIALS - 10.00% 4,400 Valspar Corp. 218,460 10,400 HCC Insurance Holdings, Inc. 333,008 ------------ 13,100 Hilb, Rogal & Hamilton Co. 469,635 439,717 6,500 Hudson United Bancorp 232,245 ------------ 12,400 Investment Technology 177,692 RETAIL - 3.05% Group, Inc.(b) 17,750 Fred's, Inc. 329,618 9,100 Investors Financial Services Corp. 353,717 14,800 Hot Topic, Inc.(b) 329,448 14,900 Raymond James Financial, Inc. 374,288 ------------ 7,400 SEI Investments Co. 218,448 659,066 ------------ ------------ 2,159,033 TRANSPORTATION & SHIPPING - 5.21% ------------ 14,600 Expeditors International of 586,774 HEALTH CARE - 23.81% Washington, Inc. 6,750 Advanced Neuromodulation 183,938 20,900 Knight Transportation, Inc.(b) 538,384 Systems, Inc.(b) ------------ 9,800 ArthroCare Corp.(b) 230,398 1,125,158 7,000 Biosite, Inc.(b) 277,340 ------------ 11,400 Cooper Cos., Inc. (The) 615,600 TOTAL COMMON STOCKS 20,904,259 17,300 Exactech, Inc.(b) 358,283 (Cost $16,524,330) ------------ 24,700 HealthExtras, Inc.(b) 314,184 7,000 IDEXX Laboratories, Inc.(b) 428,820 INVESTMENT COMPANIES - 3.22% 28,950 KV Pharmaceutical Co. 695,379 695,471 Wells Fargo Prime Investment 695,471 Class A(b) Money Market Fund, ------------ 7,600 Patterson Dental Co.(b) 560,120 Investor Class Ltd.(b) 7,300 Pharmaceutical Product 215,861 INVESTMENT COMPANIES 695,471 Development, Inc.(b) (Cost $695,471) ------------ 5,100 Sunrise Senior Living, Inc.(b) 161,160 7,300 SurModics, Inc.(b) 163,374 TOTAL INVESTMENTS 21,599,730 7,900 Synovis Life Technologies, Inc.(b) 126,400 (Cost $17,219,801)(a) - 100.03% 5,300 Taro Pharmaceutical Industries 229,225 Liabilities in excess of other assets - (0.03%) (6,314) Ltd.(b) ------------ 8,400 Vistacare, Inc.(b) 211,596 NET ASSETS - 100.00% $ 21,593,416 10,600 Young Innovations, Inc. 369,940 ============ ------------ 5,141,618 (a) See notes to financial statements for tax basis unrealized ------------ appreciation (depreciation) of securities. INDUSTRIALS - 8.56% (b) Non-income producing security. 11,400 DRS Technologies, Inc.(b) 322,050 9,700 Simpson Manufacturing Co., Inc. 505,952 SEE NOTES TO FINANCIAL STATEMENTS. 7,600 Stericycle, Inc.(b) 363,432 9,000 Teleflex, Inc. 410,850 14,800 Tetra Tech, Inc.(b) 245,828 ------------ 1,848,112 ------------
36 ================================================================================ AUDITORS' OPINION ================================================================================ Report of Independent Registered Public Accounting Firm - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of Tamarack Funds Trust We have audited the accompanying statements of assets and liabilities, including the schedules of portfolios of investments, of the portfolios of Tamarack Funds Trust, which include Large Cap Equity Fund, Mid Cap Equity Fund and Small Cap Equity Fund (collectively the "Funds") as of April 30, 2004, and the related statements of operations, statements of changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets and the financial highlights for periods prior to April 30, 2004 were audited by other auditors whose report, dated June 17, 2003, expressed an unqualified opinion. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2004, by correspondence with the Funds' custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of April 30, 2004, the results of their operations, the changes in their net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Chicago, Illinois June 18, 2004 37 ================================================================================ MANAGEMENT ================================================================================ Independent Trustees(1) - -------------------------------------------------------------------------------- T. GERON BELL (62) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President of Twins Sports, Inc. (parent company of the Minnesota Twins and Victory Sports) (2002-present); prior thereto President of the Minnesota Twins Baseball Club Incorporated (1987-present); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- LUCY HANCOCK BODE (51) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Healthcare consultant; Director, RBC Funds (1994-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- LESLIE H. GARNER JR. (53) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Cornell College; Director, RBC Funds (1994-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- RONALD JAMES (52) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, Center for Ethical Business Cultures (2000-present); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- JOHN A. MACDONALD (54) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Investment Officer, Hall Family Foundation; Trustee, J&B Funds (2001-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- H. DAVID RYBOLT (61) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Consultant, HDR Associates (management consulting); Director, Babson Funds (1992-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. 38 ================================================================================ MANAGEMENT ================================================================================ Independent Trustees(1) - -------------------------------------------------------------------------------- JAMES R. SEWARD (51) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Private investor (2000-present); Trustee, J&B Funds (2001-2004); Financial Consultant, Seward & Company, LLC (1998-2000); CFA. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- JAY H. WEIN (71) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Private investor (1989-present); Director, Great Hall Investment Funds, Inc. (1993-2004); Trustee, J&B Funds (2003-2004); Director, Babson Funds (2003-2004). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- Interested Trustees(1) - -------------------------------------------------------------------------------- MICHAEL T. LEE (41) POSITION HELD WITH FUND: Trustee; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Operating Officer and Senior Vice President, Voyageur Asset Management Inc. (2003-present); Senior Portfolio Manager, Voyageur Asset Management Inc., (2000-present); Vice President, Senior Research Analyst and Equity Portfolio Manager, Voyageur Asset Management Inc. (1999-2003). NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN: 17 - -------------------------------------------------------------------------------- Executive Officers(1) - -------------------------------------------------------------------------------- JENNIFER D. LAMMERS (43) POSITION HELD WITH FUND: President and Chief Executive Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, Voyageur Asset Management (2000-present); Mutual Fund Services Director, Voyageur Asset Management (2003-present); Chief Financial Officer, Great Hall Investment Funds, Inc. (2001-2003); Compliance Officer, Great Hall Investment Funds, Inc. (2000-2001); Director of Finance, Voyageur Asset Management (2000-2003); Vice President and Manager, Financial Reporting, RBC Dain Rauscher (1998-2000); President and Chief Executive Officer(2). CHRISTOPHER J. TOMAS (34) POSITION HELD WITH FUND: Treasurer, Chief Financial Officer, and Principal Accounting Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Finance Manager, RBC Dain Rauscher (2001-present); Compliance Officer, Great Hall Investment Funds, Inc. (2001- 2003); Senior Financial Analyst, RBC Dain Rauscher (1999-2001); Financial Analyst, RBC Dain Rauscher (1997-1999); Treasurer, Chief Financial Officer and Principal Accounting Officer(2). - -------------------------------------------------------------------------------- (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. (2) Great Hall Investment Funds, Inc., J&B Funds, Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson-Stewart Ivory International Fund, Inc., Babson Value Fund, Inc., David L. Babson Growth Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., Shadow Stock Fund, Inc., and Investors Mark Series Fund, Inc. 39 ================================================================================ MANAGEMENT ================================================================================ Executive Officers(1) - -------------------------------------------------------------------------------- MARTIN A. CRAMER (54) POSITION HELD WITH FUND: Vice President, Assistant Secretary, Chief Compliance Officer, and AML Compliance Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Mutual Fund Administration Manager, Voyageur Asset Management (2003-present); Legal and Regulatory Affairs Vice President, Compliance Officer and Secretary, J&B (mutual fund management and distribution company) (1993-2003); Vice President, Assistant Secretary, Compliance Officer and AML Compliance Officer(2), and formerly, Vice President, Compliance Officer and Secretary, Buffalo Fund Complex (1994-2003) and Secretary, Gold Bank Funds(3) (2001- 2003). - -------------------------------------------------------------------------------- LAURA M. MORET (50) POSITION HELD WITH FUND: Secretary and Chief Legal Officer; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Senior Associate Counsel, RBC Dain Rauscher (2002-present); Vice President and Group Counsel, American Express Financial Advisors (1995-2002); Secretary(2). - -------------------------------------------------------------------------------- GORDON TELFER (38) POSITION HELD WITH FUND: Portfolio Strategist; Since March, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President and Portfolio Manager, Voyageur Asset Management (2003-present); Senior Portfolio Manager, Alliance Capital Management (2000-2003); Senior Vice President, Global Strategist, Scudder Kemper Investments (1997-2000). - -------------------------------------------------------------------------------- NANCY M. SCINTO (44) POSITION HELD WITH FUND: Chief Investment Officer, Equity Products; Since January, 2004 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director and Director of Research, Voyageur Asset Management. - -------------------------------------------------------------------------------- (1) Unless otherwise specified, the address of each trustee/officer is 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota 55402. (2) Great Hall Investment Funds, Inc., J&B Funds, Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson-Stewart Ivory International Fund, Inc., Babson Value Fund, Inc., David L. Babson Growth Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., Shadow Stock Fund, Inc., and Investors Mark Series Fund, Inc. (3) The Buffalo Fund Complex consists of Buffalo Balanced Fund, Inc., Buffalo Large Cap Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap Fund, Inc., Buffalo USA Global Fund, Inc., and the Buffalo Funds, which is a series fund consisting of Buffalo Science & Technology Fund and Buffalo Mid Cap Fund. Gold Bank Funds is a series fund consisting of Gold Bank Equity and Gold Bank Money Market Fund. 40 ================================================================================ SHARE CLASS INFORMATION ================================================================================ - -------------------------------------------------------------------------------- The Tamarack Funds offer five share classes, three of which are currently authorized for sale to new investors. These three share classes are the A, C and R classes. - -------------------------------------------------------------------------------- A CLASS A Class shares are available for purchase primarily through investment advisors, broker-dealers, banks and other financial services intermediaries. A Class shares of the Tamarack Equity Funds are currently subject to a maximum up-front sales charge of 5.75%. A Class shares currently include a 0.25% (25 bps) annual 12b-1 service and distribution fee. (The 12b-1 Plan allows for 50 bps, but the Funds' distributor is currently voluntarily waiving 25 bps.) A Class shares have a higher up front sales charge (load) than C Class shares, but a lower annual expense ratio. - -------------------------------------------------------------------------------- C CLASS C Class shares are also available for purchase primarily through investment advisors, broker-dealers, banks and other financial services intermediaries. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. (No CDSC will be charged on shares acquired through reinvestment of dividends or capital gains.) C Class shares expenses include a 1.00% (100 bps) annual 12b-1 service and distribution fee. C Class shares have a lower up-front sales charge (load) than A Class shares, but due to the higher service and distribution fee, have higher annual expenses than A Class shares. - -------------------------------------------------------------------------------- R CLASS R Class shares are available for purchase through employer-sponsored or 401k retirement plans. R Class shares have no upfront sales charge (load), but are subject to a 0.50% (50 bps) 12b-1 service and distribution fee. R Class shares currently have annual expenses between A Class and C Class share expenses. - -------------------------------------------------------------------------------- I CLASS I Class shares and S class shares are currently closed to new investors. Neither of these share classes charges a 12b-1 service and distribution fee. - -------------------------------------------------------------------------------- For an investor purchasing Tamarack Funds shares through a financial services intermediary, the question as to which share class, A or C, is the best choice is dependent on many factors, including the amount to be invested and the length of time an investor anticipates holding the shares. An investor should consult with his or her financial advisor about his or her personal financial situation to determine which share class is the best choice for his or her individual situation. 41 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ Shareholders Proxy Voting Results - -------------------------------------------------------------------------------- APRIL 8, 2004 On April 8, 2004 a Special Meeting of the shareholders of the RBC Small Cap Equity Fund, RBC Mid Cap Equity Fund and RBC Large Cap Equity Fund, each a separate portfolio of the RBC Funds, Inc. was held. The matters considered at the meeting, together with the actual vote tabulations realting to such matters are as follows: RBC Large Cap Equity Fund 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% LUCY HANCOCK BODE Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% LESLIE H. GARNER, JR. Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% RONALD JAMES Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% MICHAEL T. LEE Affirmative 3,033,699.639 68.163% 82.652% Withhold 636,760.591 14.307% 17.348% TOTAL 3,670,460.230 82.470% 100.000% JOHN A. MACDONALD Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% H. DAVID RYBOLT Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% JAMES R. SEWARD Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% JAY H. WEIN Affirmative 3,663,952.639 82.323% 99.823% Withhold 6,507.591 .147% .177% TOTAL 3,670,460.230 82.470% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. 42 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 2,850,530.993 64.047% 77.661% Against 8,228.170 .185% .225% Abstain 4,823.067 .108% .131% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification Affirmative 2,851,878.404 64.077% 77.698% Against 7,043.110 .159% .192% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.B Borrowing Affirmative 2,851,361.738 64.066% 77.684% Against 7,559.776 .170% .206% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.C Senior Securities Affirmative 2,850,792.404 64.053% 77.669% Against 8,129.110 .183% .221% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.D Underwriting Securities Affirmative 2,851,878.404 64.077% 77.698% Against 7,043.110 .159% .192% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.E Real Estate Affirmative 2,850,792.404 64.053% 77.669% Against 8,129.110 .183% .221% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.F Making Loans Affirmative 2,850,792.404 64.053% 77.669% Against 8,129.110 .183% .221% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 43 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3.G Concentration of Investments % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 2,851,878.404 64.077% 77.698% Against 7,043.110 .159% .192% Abstain 4,660.716 .104% .127% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 3.H Commodities Affirmative 2,851,444.642 64.068% 77.686% Against 7,275.145 .163% .199% Abstain 4,862.443 .109% .132% Broker Non-votes 806,878.000 18.129% 21.983% TOTAL 3,670,460.230 82.470% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 3,658,070.364 82.191% 99.662% Against 11,635.423 .262% .317% Abstain 754.443 .017% .021% TOTAL 3,670,460.230 82.470% 100.000% **FUND TOTALS: SHARES RECORD TOTAL 4,450,680.926 VOTED SHARES 3,670,460.230 PERCENT PRESENT 82.470% - -------------------------------------------------------------------------------- RBC Mid Cap Equity Fund 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 7,031,449.990 57.724% 99.470% Withhold 37,478.298 .307% .530% TOTAL 7,068,928.288 58.031% 100.000% LUCY HANCOCK BODE Affirmative 7,025,285.534 57.673% 99.383% Withhold 43,642.754 .358% .617% TOTAL 7,068,928.288 58.031% 100.000% LESLIE H. GARNER, JR. Affirmative 7,032,230.534 57.730% 99.481% Withhold 36,697.754 .301% .519% TOTAL 7,068,928.288 58.031% 100.000% RONALD JAMES Affirmative 7,032,230.534 57.730% 99.481% Withhold 36,697.754 .301% .519% TOTAL 7,068,928.288 58.031% 100.000% MICHAEL T. LEE Affirmative 6,029,674.611 49.500% 85.298% Withhold 1,039,253.677 8.531% 14.702% TOTAL 7,068,928.288 58.031% 100.000% 44 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- JOHN A. MACDONALD Affirmative 7,031,356.859 57.723% 99.468% Withhold 37,571.429 .308% .532% TOTAL 7,068,928.288 58.031% 100.000% H. DAVID RYBOLT Affirmative 7,032,749.611 57.734% 99.488% Withhold 36,178.677 .297% .512% TOTAL 7,068,928.288 58.031% 100.000% JAMES R. SEWARD Affirmative 7,032,102.175 57.729% 99.479% Withhold 36,826.113 .302% .521% TOTAL 7,068,928.288 58.031% 100.000% JAY H. WEIN Affirmative 7,032,622.503 57.733% 99.486% Withhold 36,305.785 .298% .514% TOTAL 7,068,928.288 58.031% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. Affirmative 6,204,985.636 50.939% 87.778% Against 18,130.499 .149% .257% Abstain 34,862.153 .286% .493% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification Affirmative 6,192,968.138 50.840% 87.608% Against 14,424.381 .119% .204% Abstain 50,585.769 .415% .716% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.B Borrowing Affirmative 6,189,676.805 50.813% 87.562% Against 19,029.714 .156% .269% Abstain 49,271.769 .405% .697% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.C Senior Securities Affirmative 6,176,108.803 50.702% 87.370% Against 27,969.716 .229% .395% Abstain 53,899.769 .443% .763% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 45 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3.D Underwriting Securities % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 6,188,689.455 50.805% 87.548% Against 15,238.064 .125% .215% Abstain 54,050.769 .444% .765% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.E Real Estate Affirmative 6,193,881.805 50.848% 87.621% Against 15,184.714 .124% .215% Abstain 48,911.769 .402% .692% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.F Making Loans Affirmative 6,190,500.981 50.820% 87.573% Against 16,887.538 .139% .239% Abstain 50,589.769 .415% .716% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.G Concentration of Investments Affirmative 6,188,009.805 50.800% 87.538% Against 15,929.714 .130% .226% Abstain 54,038.769 .444% .764% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 3.H Commodities Affirmative 6,190,535.805 50.820% 87.574% Against 17,053.714 .140% .241% Abstain 50,388.769 .414% .713% Broker Non-votes 810,950.000 6.657% 11.472% TOTAL 7,068,928.288 58.031% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 7,017,609.993 57.610% 99.274% Against 8,902.953 .073% .126% Abstain 42,415.342 .348% .600% TOTAL 7,068,928.288 58.031% 100.000% ** FUND TOTALS: SHARES RECORD TOTAL 12,181,234.990 VOTED SHARES 7,068,928.288 PERCENT PRESENT 58.031% 46 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ - -------------------------------------------------------------------------------- RBC Small Cap Equity Fund 1. To approve the election of the following individuals to the board of directors of the Company: % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- T. GERON BELL Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% LUCY HANCOCK BODE Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% LESLIE H. GARNER, JR. Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% RONALD JAMES Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% MICHAEL T. LEE Affirmative 1,297,589.305 73.056% 87.756% Withhold 181,039.000 10.193% 12.244% TOTAL 1,478,628.305 83.249% 100.000% JOHN A. MACDONALD Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% H. DAVID RYBOLT Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% JAMES R. SEWARD Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% JAY H. WEIN Affirmative 1,477,016.305 83.158% 99.891% Withhold 1,612.000 .091% .109% TOTAL 1,478,628.305 83.249% 100.000% 2. To approve an Agreement and Plan of Reorganization, pursuant to which the Fund would be reorganized as a separate portfolio of the Tamarack Funds Trust, a newly-created Delaware statutory trust. Affirmative 1,044,676.537 58.817% 70.652% Against 1,228.329 .069% .083% Abstain 2,695.439 .152% .182% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 47 ================================================================================ SUPPLEMENTAL INFORMATION ================================================================================ 3. To approve the modification of the Funds' fundamental investment policies/restrictions in order to update and standardize them and to increase the Funds' investment flexibility to react to future developments. 3.A Diversification % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,040,215.903 58.566% 70.350% Against 915.000 .051% .062% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.B Borrowing Affirmative 1,039,117.903 58.504% 70.276% Against 2,013.000 .113% .136% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.C Senior Securities Affirmative 1,040,215.903 58.566% 70.350% Against 915.000 .051% .062% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.D Underwriting Securities Affirmative 1,039,582.903 58.530% 70.307% Against 1,548.000 .087% .105% Against 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.E Real Estate Affirmative 1,040,215.903 58.566% 70.350% Against 915.000 .051% .062% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.F Making Loans Affirmative 1,038,162.903 58.450% 70.211% Against 2,968.000 .167% .201% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 3.G Concentration of Investments Affirmative 1,040,215.903 58.566% 70.350% Against 915.000 .051% .062% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 48 ================================================================================ ================================================================================ % of % of No. of Shares Outstanding Shares Shares Present ------------- ------------------ -------------- Affirmative 1,039,343.903 58.517% 70.291% Against 1,787.000 .100% .121% Abstain 7,469.402 .421% .505% Broker Non-votes 430,028.000 24.211% 29.083% TOTAL 1,478,628.305 83.249% 100.000% 4. To ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund for the current fiscal year. Affirmative 1,475,276.284 83.060% 99.773% Against 90.000 .005% .006% Abstain 3,262.021 .184% .221% TOTAL 1,478,628.305 83.249% 100.000% ** FUND TOTALS: SHARES RECORD TOTAL 1,776,152.906 VOTED SHARES 1,478,628.305 PERCENT PRESENT 83.249% 49 ================================================================================ ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 50 ================================================================================ ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 51 ================================================================================ ================================================================================ This Page Intentionally Left Blank - -------------------------------------------------------------------------------- 52 [PHOTO] --------------- Tamarack Funds | PRSRT STD | P.O. Box 219757 | U.S. POSTAGE | Kansas City, MO 64121-9757 | PAID | | PERMIT NO. 2891 | | KANSAS CITY MO. | --------------- TF AR 6/04 Tamarack Distributors Inc. 530972 (6/04) ITEM 2. CODE OF ETHICS. Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS. THIS CODE OF ETHICS IS INCLUDED AS EXHIBIT 11 (A)(1). The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 11(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE REGISTRANT'S CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS; THERE HAVE BEEN NO AMENDMENTS TO, NOR ANY WAIVERS GRANTED FROM, A PROVISION THAT RELATES TO ANY ELEMENT OF THE CODE OF ETHICS DEFINITION ENUMERATED IN PARAGRAPH (B) OF THIS ITEM 2. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) (1) Disclose that the registrant's board of directors has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. 3(a)(1) THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. 3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS JAY H. WEIN, WHO IS "INDEPENDENT" FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. 2003 $184,000 2004 $115,000 (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $6,654 2004 $6,000 Amount requiring approval of the registrant's audit committee is $0 and $0, respectively. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $0 2004 $0 Fees for both years relate to the review of the registrant's tax returns. Amount requiring approval of the registrant's audit committee is $0 and $0, respectively. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2002 $0 2003 $0 Amount requiring approval of the registrant's audit committee is $0 and $0, respectively. (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. The Audit Committee ("Committee") shall review and approve in advance any proposal (except as set forth in (1) through (3) below) that the Funds employ their auditor to render "permissible non-audit services" to the Funds. (A "permissible non-audit service" is defined as a non-audit service that is not prohibited by Rule 2-01(c)(4) of Regulation S-X or other applicable law or regulation.) The Committee shall also review and approve in advance any proposal (except as set forth in (1) through (3) below) that the Adviser, and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the Funds (an "Adviser-affiliated service provider"), employ the Funds' auditor to render non-audit services, if such engagement would relate directly to the operations and financial reporting of the Funds. As a part of its review, the Committee shall consider whether the provision of such services is consistent with the auditor's independence. (See also "Delegation" below.) Pre-approval by the Committee of non-audit services is not required so long as: (1) (A) with respect to the Funds, the aggregate amount of all such permissible non-audit services provided to the Funds constitutes no more than 5% of the total amount of revenues paid to the auditor by the Funds during the fiscal year in which the services are provided; (B) with respect to the Adviser and any Adviser-affiliated service provider, the aggregate amount of all such non-audit services provided constitutes no more than 5% of the total amount of revenues (of the type that would have to be pre-approved by the Committee) paid to the auditor by the Funds, the Adviser and any Adviser-affiliated service provider during the fiscal year in which the services are provided; (2) such services were not recognized by the Funds at the time of the engagement to be non-audit services; and (3) such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or its Delegate(s) (as defined below). (c) Delegation The Committee may delegate to one or more of its members ("Delegates") authority to pre-approve the auditor's provision of audit services or permissible non-audit services to the Funds, or the provision of non-audit services to the Adviser or any Adviser-affiliated service provider. Any pre-approval determination made by a Delegate shall be presented to the full Committee at its next meeting. The Committee shall communicate any pre-approval made by it or a Delegate to the Sub-Administrator, who will ensure that the appropriate disclosure is made in the Funds' periodic reports and other documents as required under the federal securities laws. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. 4 (b) 2003 100% 2004 100% Amount requiring approval of the registrant's audit committee is 100% and 100%, respectively. 4 (c) 2003 100% 2004 100% Amount requiring approval of the registrant's audit committee is 100% and 100%, respectively. 4 (d) 2003 100% 2004 100% Amount requiring approval of the registrant's audit committee is 100% and 100%, respectively. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. Not Applicable. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. 2003 $0 2004 $0 (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. Not Applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. NOT APPLICABLE. ITEM 6. SCHEDULE OF INVESTMENTS. File Schedule I - Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in ss. 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. NOT APPLICABLE. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. NOT APPLICABLE. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. NOT APPLICABLE. {NOTE - THIS IS REQUIRED BEGINNING WITH THE FIRST REPORTING PERIOD ENDING AFTER JANUARY 1, 2004. FOR PURPOSES OF THIS ITEM, ADOPTION OF PROCEDURES BY WHICH SHAREHOLDERS MAY RECOMMEND NOMINEES TO THE REGISTRANT'S BOARD OF DIRECTORS, WHERE THE REGISTRANT'S MOST RECENT PROXY DISCLOSURE (IN RESPONSE TO THE REQUIREMENTS OF ITEM 7(D)(2)(II)(G) OF SCHEDULE 14A (17 CFR 240.14A-101)), OR THIS ITEM, INDICATED THAT THE REGISTRANT DID NOT HAVE IN PLACE SUCH PROCEDURES, WILL CONSTITUTE A MATERIAL CHANGE.} ITEM 10. CONTROLS AND PROCEDURES. (a) Disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER HAVE CONCLUDED, BASED ON THEIR EVALUATION OF THE REGISTRANT'S DISCLOSURE CONTROLS AND PROCEDURES AS CONDUCTED WITHIN 90 DAYS OF THE FILING DATE OF THIS REPORT, THAT THESE DISCLOSURE CONTROLS AND PROCEDURES ARE ADEQUATELY DESIGNED AND ARE OPERATING EFFECTIVELY TO ENSURE THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE REGISTRANT ON FORM N-CSR IS (I) ACCUMULATED AND COMMUNICATED TO THE INVESTMENT COMPANY'S MANAGEMENT, INCLUDING ITS CERTIFYING OFFICERS, TO ALLOW TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE; AND (II) RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND EXCHANGE COMMISSION'S RULES AND FORMS. (b) Disclose any change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING THAT OCCURRED DURING THE REGISTRANT'S MOST RECENT FISCAL HALF-YEAR (THE REGISTRANT'S SECOND FISCAL HALF-YEAR IN THE CASE OF AN ANNUAL REPORT) THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING. ITEM 11. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2 IS ATTACHED HERETO. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO RULE 30A-2(A) ARE ATTACHED HERETO. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. NOT APPLICABLE. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference. CERTIFICATIONS PURSUANT TO RULE 30A-2(B) ARE FURNISHED HEREWITH. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Tamarack Funds, Inc. By (Signature and Title)* /s/ Jennifer Lammers -------------------------------------- Jennifer Lammers, President Date 7/8/04 -------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Jennifer Lammers -------------------------------------- Jennifer Lammers, President Date 7/8/04 -------------------------- By (Signature and Title)* /s/ Chris Tomas -------------------------------------- Chris Tomas, Treasurer Date 7/8/04 -------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 tam043104s3_ex99code.txt EXHIBIT 99.CODE ETH TAMARACK FUNDS TRUST CODE OF ETHICS UNDER THE SARBANES-OXLEY ACT (EFFECTIVE DATE: APRIL 16, 2004) I. INTRODUCTION The Board of Trustees of Tamarack Funds Trust (the "Trust") has established this Code of Ethics (the "Code") in accordance with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. This Code does not supersede or otherwise affect the separate codes of ethics that the Trust and its investment adviser, sub-advisers and a distributor have adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). This Code is designed to deter wrongdoing and promote: 1. honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; 2. full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trust files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Trust; 3. compliance with applicable governmental laws, rules, and regulations; 4. the prompt internal reporting of violations of the Code to an appropriate person or persons; and 5. accountability for adherence to the Code. The Code applies to the Trust's Chief Executive Officer and Chief Financial Officer ( "Covered Officers," each of whom is listed in Exhibit A). For the purposes of this Code, the Compliance Officer is Martin Cramer. II. PRINCIPLES OF HONEST AND ETHICAL CONDUCT A. General Objectives The Trust expects its Covered Officers to adhere to the highest possible standards of honest and ethical conduct. All Covered Officers are expected to handle actual or apparent conflicts of interest between personal and professional relationships in a manner that is above reproach, and to place the interests of the Fund above their own personal interests. B. Conflicts of Interest All Covered Officers should be scrupulous in avoiding a conflict of interest with regard to the interests of the Trust or any of its series ("Funds"). A conflict of interest occurs when an individual's private interest interferes in any way -- or even appears to interfere -- with the interests of the Trust or a Fund. A conflict situation can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his or her work for the Trust or a Fund objectively and effectively. Conflicts of interest also arise when a Covered Officer, or a member of his or her family, receives improper benefits as a result of his or her position with the Trust or a Fund, whether such benefits are received from the Trust or a Fund or a third party. Any conflict of interest that arises in a specific situation or transaction must be disclosed by the Covered Officer and resolved before taking any action. Conflicts of interest may not always be evident, and Covered Officers should consult with the Compliance Officer or the Trust's legal counsel if they are uncertain about any situation. Examples of possible conflicts of interest include: 1. Outside Employment or Activities Covered Officers may not engage in any outside employment or activity that interferes with their performance or responsibilities to the Trust or a Fund or is otherwise in conflict with or prejudicial to the Trust or a Fund. A Covered Officer must disclose to the Compliance Officer any outside employment or activity that may constitute a conflict of interest and obtain the Compliance Officer's approval before engaging in any such employment or activity. 2. Gifts Covered Officers may not accept gifts or other items of more than de minimis value from any person or entity that does business with or on behalf of the Trust or a Fund. 3. Other Situations Because other conflicts of interest may arise, it would be impractical to attempt to list all possible situations in this Code. If a proposed transaction or situation raises any questions or doubts, a Covered Officer should consult with the Compliance Officer or the Trust's counsel before engaging in the transaction or activity. C. Corporate Opportunities Covered Officers may not exploit for their own personal gain, or for the personal gain of their family members or relatives, opportunities that are discovered through the use of Trust property, information, or position, unless the opportunity is first disclosed fully in writing to the Board of Trustees and the Board of Trustees declines to pursue such opportunity. III. FULL, FAIR, ACCURATE, TIMELY, AND UNDERSTANDABLE DISCLOSURE IN DISCLOSURE AND REPORTING DOCUMENTS OF THE TRUST OR A FUND As a registered investment company, it is of critical importance that the Trust's public communications, reports, and SEC filings contain full, fair, accurate, timely, and understandable disclosure. Accordingly, the Trust's Covered Officers are expected to consider it central to their roles as officers of the Trust to promote full, fair, accurate, timely, and understandable disclosure in the Trust's public communications and reports, and in the documents that the Trust files with, or submits to, the SEC. Depending on his or her position with the Trust, a Covered Officer may be called upon to provide A-2 necessary information to make the Trust's public reports, communications, and SEC filings and submissions complete, fair, and understandable. The Trust expects its Covered Officers to take this responsibility very seriously and to provide prompt and accurate answers to inquiries related to the Trust's public disclosure requirements. Covered Officers may be asked to certify the accuracy of all responses and information provided for inclusion in the Trust's public reports, communications, and SEC filings and submissions. IV. COMPLIANCE WITH APPLICABLE GOVERNMENTAL RULES AND REGULATIONS As a registered investment company, the Trust is subject to regulation by the SEC and must comply with Federal securities laws and regulations, as well as other applicable laws. The Trust insists on strict compliance with the spirit and the letter of these laws and regulations. Each Covered Officer shall cooperate with Trust counsel, the Trust's independent accountants, and the Trust's other service providers with the goal of maintaining the Trust's material compliance with applicable governmental rules and regulations. The Trust expects its Covered Officers to comply with all laws, rules, and regulations applicable to the Trust's operations and business. Covered Officers should seek guidance whenever they are in doubt as to the applicability of any law, rule, or regulation, or regarding any contemplated course of action. Covered Officers should also make use of the various guidelines which the Trust and its service providers have prepared on specific laws and regulations. If in doubt on a course of action, a good guideline is "always ask first, act later" - -- if you are unsure of what to do in any situation, seek guidance before you act. Upon obtaining knowledge of any material violation of any applicable law, rule, or regulation by the Trust or a person acting with or on behalf of the Trust, a Covered Officer shall report such violation to the Compliance Officer, Trust counsel, or both. (See Section VI of the Code for a discussion of reporting Code violations.) Each Covered Officer shall cooperate or take such steps as may be necessary or appropriate to remedy any such material violation. V. CONFIDENTIALITY The Covered Officers must maintain the confidentiality of information entrusted to them by the Trust, except when disclosure is authorized by Trust counsel or required by laws or regulations. Whenever possible, Covered Officers should consult with Trust counsel if they believe they have a legal obligation to disclose confidential information. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Trust or its shareholders, if disclosed. The obligation to preserve confidential information continues even after employment as a Covered Officer ends. VI. PROMPT INTERNAL REPORTING OF VIOLATIONS OF THE CODE; EVALUATION OF POSSIBLE VIOLATIONS; DETERMINATION OF SANCTIONS A. Reporting to Compliance Officer A Covered Officer shall promptly report knowledge of, or information concerning, any material violation of this Code to the Compliance Officer. Any such report shall be in writing, and shall describe in reasonable detail the conduct that such Covered Officer believes to have violated this Code. The Compliance Officer shall also have the authority to draft a report of a suspected material violation of the Code, if no written report is made by a Covered Officer. A-3 B. Evaluation of Reports The Compliance Officer shall then consult with Trust counsel to the extent necessary to determine whether the reported conduct actually violates the Code. If it is determined that there has been a violation of the Code, the Compliance Officer will determine (in consultation with Trust counsel) whether the violation has had or may have, in the reasonable judgment of the Compliance Officer, a material adverse impact upon the Trust or a Fund. 1. No Material Adverse Impact on the Trust or a Fund If the Compliance Officer determines that the violation has not caused a material adverse impact upon the Trust or a Fund, the Compliance Officer shall determine what sanctions, if any, may be appropriate for the violation. (See Section VIII of the Code for a discussion of possible sanctions.) 2. Material Adverse Impact on the Trust or a Fund If the Compliance Officer determines that the violation has caused a material adverse impact upon the Trust or a Fund, the Compliance Officer shall promptly notify the Board of such violation. The Board shall be entitled to consult with independent legal counsel to determine whether the violation actually has had a material adverse impact upon the Trust or a Fund; to formulate sanctions, if any, appropriate for the violation; or for any other purpose that the Board, in its business judgment, determines to be necessary or advisable. (See Section VIII of the Code for a discussion of possible sanctions.) C. Periodic Reports by Compliance Officer to Board of Trustees The Compliance Officer shall report to Board at each regularly scheduled Board meeting all violations of this Code (whether or not they caused a material adverse impact upon the Trust or a Fund) and all sanctions imposed. VII. WAIVERS OF PROVISIONS OF THE CODE A. Waivers A Covered Officer may request a waiver of a provision of this Code if there is a reasonable likelihood that a contemplated action would be a material departure from a provision of the Code. Waivers will not be granted except under extraordinary or special circumstances. The process of requesting a waiver shall consist of the following steps: 1. The Covered Officer shall set forth a request for waiver in writing and submit such request to the Compliance Officer. The request shall describe the conduct, activity, or transaction for which the Covered Officer seeks a waiver, and shall briefly explain the reason for engaging in the conduct, activity, or transaction. 2. The determination with respect to the waiver shall be made in a timely fashion by the Compliance Officer, in consultation with Trust counsel, and submitted to the A-4 Board for ratification. 3. The decision with respect to the waiver request shall be documented and kept in the applicable Trust's records for the appropriate period mandated by applicable law or regulation. B. Disclosure of Waivers To the extent required by applicable law, waivers (including "implicit waivers") shall be publicly disclosed on a timely basis. An "implicit waiver" is defined as a Trust's failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an "executive officer" of the Trust. For this purpose, an "executive officer" of the Trust is its President or Chief Executive Officer, Vice President (who is in charge of a principal policymaking function), or any other person who performs similar policymaking functions for the Trust or a Fund. For the purpose of determining whether an "implicit waiver" has occurred, if a material departure from a provision of the Code is known only by the Covered Officer who has caused the material departure, the material departure will not be considered to have been made known to an executive officer of the Trust. VIII. ACCOUNTABILITY FOR ADHERENCE TO THE CODE The matters covered in this Code are of the utmost importance to the Trust and its shareholders, and are essential to the Trust's ability to conduct its business in accordance with its stated values. Covered Officers are expected to adhere to these rules in carrying out their duties for the Trust. The Trust will, if appropriate, take action against any of its Covered Officers whose actions are found to violate this Code. Sanctions for violations of the Code may include, among other things, a requirement that the violator undergo training related to the violation, a letter of sanction, the imposition of a monetary penalty, and/or suspension or termination of the employment of the violator. Where the Trust has suffered a loss because of violations of this Code or applicable laws, regulations, or rules, it may pursue its remedies against the individuals or entities responsible. IX. RECORDKEEPING A. General The Trust requires accurate recording and reporting of information in order to make responsible business decisions. The Trust's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the transactions of the Trust and each Fund, and must conform both to applicable legal requirements and to the Trust's system of internal controls. B. Code of Ethics Records A copy of this Code, any amendments hereto, and any reports or other records created in relation to waivers of or amendments to provisions of this Code shall be kept as records of the Trust for six years from the end of the fiscal year in which such document was created. Such records shall be furnished to the SEC or its staff upon request. X. AMENDMENTS TO THE CODE The Covered Officers and the Compliance Officer are encouraged to recommend improvements to A-5 this Code to the Board of Trustees. A Fund's Board may amend the Code in its discretion. In connection with any amendment to the Code, the Compliance Officer shall prepare a brief description of the amendment, in order that this description may be disclosed in accordance with applicable law and regulations. A-6 EXHIBIT A --------- COVERED OFFICERS Chief Executive Officer Chief Financial Officer - ----------------------- ----------------------- Jennifer Lammers Christopher Tomas A-7 EX-99.CERT 3 tam043104s3_ex99cert.txt EXHIBIT 99.CERT CERTIFICATIONS - -------------- I, Chris Tomas, certify that: 1. I have reviewed this report on Form N-CSR of the Tamarack Funds, Inc. (Formerly RBC Funds, Inc.) (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 7/7/04 /s/ Chris Tomas - ------------------------- --------------------------------------- Date Chris Tomas Treasurer CERTIFICATIONS I, Jennifer Lammers, certify that: 1. I have reviewed this report on Form N-CSR of the Tamarack Funds Inc. (Formerly RBC Funds, Inc.) (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 7/7/04 /s/ Jennifer Lammers - ------------------------- --------------------------------------- Date Jennifer Lammers President EX-99.906CERT 4 tam043104s3_ex99-906cert.txt EXHIBIT 99.906CERT This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.ss.1350, and accompanies the report on Form N-CSR for the period ended April 30, 2004 of the Tamarack Funds, Inc. (Formerly RBC Funds, Inc.) (the "Registrant"). I, Chris Tomas, the Treasurer of the Registrant, certify that, to the best of my knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. 7/7/04 - ------------------------------------ Date /s/ Chris Tomas - ------------------------------------ Chris Tomas Treasurer A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.ss.1350, and accompanies the report on Form N-CSR for the period ended April 30, 2004 of the Tamarack Funds, Inc. (Formerly RBC Funds, Inc.) (the "Registrant"). I, Jennifer Lammers, the President of the Registrant, certify that, to the best of my knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. 7/7/04 - ------------------------------------ Date /s/ Jennifer Lammers - ------------------------------------ Jennifer Lammers President A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----