PRELIMINARY COPY
Texas Capital Value Funds
Value & Growth Portfolio
1600 West 38th Street, Suite 412
Austin, TX 78731
Notice of Special Meeting
To the Shareholders of the Value & Growth Portfolio, a
portfolio of the Texas Capital Value Funds, Inc., for a Special
Meeting to be held by Proxy:
Notice is hereby given that a Special Meeting (the
"Meeting") of Shareholders of the Value & Growth Portfolio (the
"Fund"), will be held by proxy. You and other shareholders of
the Fund are being asked to consider and vote:
1. To approve or disapprove an Amendment to the
Investment Advisory and Administrative Contract between the
Fund and First Austin Capital Management, Inc., ("FACM")
pursuant to which FACM will provide investment advisory and
administrative services.
2. To elect a nominee to the Board of Directors of Texas
Capital Value Funds, Inc.
3. To approve or disapprove an amendment to the
distribution agreement between the Fund and Choice
Investments, Inc. ("Choice Investments"), which lowers
the expenses paid to Choice Investments for the
distribution of the Fund shares.
4. To adopt a fundamental investment restriction that
prohibits the Fund from investing in securities of other open-
end investment companies.
Shareholders of record at the close of business on July
31, 1996, are entitled to notice of, and to vote by proxy. Your
attention is called to the accompanying Proxy Statement. Please
complete, sign and return by August 15th, 1996, the enclosed
proxy card so that a quorum will be present and a maximum
number of shares may be voted.
By Order of the Board of Directors
Eric Barden
Acting Secretary
July 31, 1996
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act
of 1934 (Amendment No. )
Filed by the registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission [ ]
Definitive Proxy Statement only (as permitted by Rule 14a-
6(e)(2) [ ] Definitive
Additional Materials [ ] Soliciting Material Pursuant to Sec. 240-
14a-11(c) or
240.14a-12
Texas Capital Value Funds, Inc.
(Name of Registrant as Specified in Its Charter)
Texas Capital Value Funds
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)1(ii), 14a-6(I)(1), 14a-
6(I)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(I)(3) [ ] Fee computed on table below per
Exchange Act Rules 14a-6(I)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
Shares of beneficial interest, par value of
$.0001, Value & Growth
Portfolio
2) Aggregate number of securities to which
transaction applies: 101,684
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11; (Set
forth the amount on which filing fee is calculated and state how
it was determined): N/A
4) Proposed maximum aggregate value of
transaction: N/A
5) Total Fee Paid: N/A
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or
the Form or Schedule and date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Texas Capital Value Funds, Inc.
Value & Growth Portfolio
1600 West 38th Street, Suite 412
Austin, TX 78731
PROXY STATEMENT
This Proxy Statement is furnished by the Texas Capital
Value Funds, Inc. Value & Growth Portfolio to its shareholders
and on behalf of the Board of Directors of the Texas Capital
Value Funds, Inc. of which the Fund is a portfolio, in connection
with the Fund's solicitation of voting instructions for use at a
Special Meeting of Shareholders to be held by proxy, for the
purposes set forth below and in the accompanying Notice of
Special Meeting. The approximate mailing date of this Proxy
Statement is August 7th, 1996. At the meeting shareholders of
the Fund will be asked:
1. To approve or disapprove an Amendment to the
Investment Advisory and Administrative Contract between the
Fund and First Austin Capital Management, Inc., the advisor to
the Fund, ("FACM") pursuant to which FACM will act as
administrator and investment adviser with respect to the assets of
the Fund, to become effective upon shareholder approval.
2. To approve or disapprove a nominee to the
Board of Directors of the Company.
3. To approve or disapprove an amendment to the
distribution agreement between the Fund and Choice
Investments, Inc., which lowers the percentage of assets paid by
the Fund for the distribution of Fund shares.
4. To adopt a fundamental investment restriction
that prohibits the Fund from investing in securities of other open-
end investment companies.
The Fund will request broker-dealer firms, custodians,
nominees and fiduciaries to forward proxy materials to the
beneficial owners of shares of the Fund held of record by such
persons. The Adviser may reimburse such broker-dealer firms,
custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection with such proxy solicitation. In
addition to the solicitation of proxies by mail, officers and
employees of the Fund or the Company, without additional
compensation, may solicit proxies in person or by telephone. The
costs associated with this solicitation and the Meeting will be
borne by the Adviser and not by the Fund or the Company.
Shareholders of the Fund at the close of business on July
31, 1996, will be entitled to be present and vote at the Meeting.
As of that date, there were 103,191.377 shares of the Fund
outstanding and entitled to vote, representing total net assets of
approximately $1,000,000.00
To the knowledge of the Fund's management, as of July
31, 1996, the officers and directors of the Company and the
Adviser own, as a group, less than 25% of the shares of the Fund.
Principals of the Adviser, however, have the ability to direct the
voting of their shares in the Value & Growth Fund, which
constitute 22% of the Fund's outstanding shares as of the record
date, and it is expected that such shares will be voted in favor of
the proposal.
To the knowledge of the Fund's management, as of July
31, 1996, the persons owning beneficially more than 5% of the
outstanding shares of the Fund were as follows:
Mr. Mark Coffelt 12.8%
Mr. Jim Kaighin, 12.7%
Coffelt Family L.P. 9.7%
Mr. Eddie Harris 5.1%
The Fund is a portfolio or "series" of the Company, a
corporation organized under the laws of the State of Maryland.
The Company is registered, as an open-end management
investment company under the Investment Company Act of
1940. The Fund's investment adviser and administrator is
FACM, 1600 West 38th Street, Suite 412, Austin, Texas, 78731.
The Fund's principal underwriter is Choice Investments, Inc.
with offices at 5900 Balcones Drive, Suite 110, Austin, TX
78731.
The persons named in the accompanying proxy will vote
in each case as directed in the proxy, but in the absence of such
direction, they intend to vote FOR the proposal.
Proposal 1
APPROVAL OR DISAPPROVAL OF THE AMENDMENT TO
THE INVESTMENT ADVISORY AND ADMINISTRATIVE
CONTRACT BETWEEN THE FUND AND FACM.
Background
The proxy has been solicited for the purpose of
considering an Amendment to the Investment Advisory and
Administrative Contract for the Fund. Shareholders are being
asked to approve an amendment to the Advisory and
Administrative Agreement (the "Amendment") which embodies a
new expense schedule. The Company's Board of Directors, at an
in-person meeting held on March 22, 1996, approved the
Amendment, subject to approval by the shareholders of the
Fund, to become effective on the date of such approval.
Existing Advisory and Administrative Contract
FACM currently serves as adviser and administrator for
the Fund under an Investment Advisory and Administrative
Contract (the "Existing Advisory Agreement") dated August 15,
1995. Under the Existing Advisory Agreement, FACM is entitled
to receive from the Fund a monthly advisory fee based upon the
average daily net assets of the Fund at the annual rate of 1.00%.
For administrative services, FACM receives a fee equal
to the sum of (i) nine-tenths percent (0.90%) of the amount of
assets in the Fund between one dollar ($1.00) and five million
dollars ($5,000,000), inclusive plus (ii) three-tenths percent
(0.30%) of the amount of assets in the Fund between five million
and one dollars ($5,000,001.00) and thirty million dollars
($30,000,000), inclusive, plus (iii) twenty-eight hundredths
percent (0.28%) of the amount of assets in the Fund between
thirty million and one dollars ($30,000,001) and one-hundred
million dollars ($100,000,000), inclusive, plus (iv) twenty-five
hundredths percent (0.25%) of the amount of assets in the Fund
between one-hundred million and one dollars ($100,000,001) and
two-hundred million dollars ($200,000,000), inclusive, plus (v)
twenty hundredths percent (0.20%) of the amount of assets in the
Fund in excess of two hundred and one million dollars
($200,000,001), inclusive. Such fees shall be accrued daily and
be payable monthly in arrears on the first day of each calendar
month.
Amendment to the Advisory and Administrative Contract
A form of the Amendment to the Advisory and Administrative
Contract is attached to this Proxy Statement as Exhibit A, and
the description set forth in this Proxy Statement of the
Amendment is qualified in its entirety by reference to Exhibit A.
As compensation for its advisory services to the Fund,
under the Amendment to the Investment Advisory and
Administrative Contract, FACM will be entitled to receive from
the Fund fees identical to the fees received currently, in
accordance with the terms and conditions of the existing
Advisory and Administrative Contract.
As compensation for its administrative services to the
Fund, under the Amendment to the Investment Advisory and
Administrative Contract FACM shall receive a fee equal to the
sum of (i) seven-tenths percent (0.70%) of the amount of assets
in the Fund between one dollar ($1.00) and five million dollars
($5,000,000), inclusive plus (ii) five-tenths percent (0.50%) of
the amount of assets in the Fund between five million and one
dollars ($5,000,001.00) and thirty million dollars ($30,000,000),
inclusive, plus (iii) twenty-eight hundredths percent (0.28%) of
the amount of assets in the Fund between thirty million and one
dollars ($30,000,001) and one-hundred million dollars
($100,000,000), inclusive, plus (iv) twenty-five-hundredths
percent (0.25%) of the amount of assets in the Fund between one-
hundred million and one dollars ($100,000,001) and two-
hundred million dollars ($200,000,000), inclusive, plus (v)
twenty hundredths percent (0.20%) of the amount of assets in the
Fund in excess of two hundred and one million dollars
($200,000,001), inclusive. Such fees shall be accrued daily and
be payable monthly in arrears on the first day of each calendar
month.
The Amendment to the Investment Advisory and
Administrative Contract will have the net effect of reducing
administrative expenses by two-tenths of a percent (0.20%)(to
0.70% from 0.90%) on assets between one dollar ($1.00) and
five million dollars ($5,000,000), inclusive, and raising
administrative expenses to (0.50%)(to 0.50% from 0.30%) for the
amount of assets in the Fund between five million and one
dollars ($5,000,001) and thirty million dollars ($30,000,000),
inclusive.
Directors' Considerations
The Board of Directors of the Company believes that the terms of
the Amendment to the Investment Advisory and Administrative
Contract are fair to, and in the best interest of, the Fund and its
shareholders. The Board of Directors, including all of the non-
interested directors, recommend approval by the shareholders of
the Amendment to the Investment Advisory and Administrative
Contract between FACM and the Fund. In making this
recommendation, the Directors carefully evaluated the quality of
services FACM is expected to provide to the Fund, and have
given careful consideration to all factors deemed to be relevant to
the Fund, including, but not limited to: (1) the nature and
quality of the services expected to be rendered to the Fund by
FACM; (2) that the compensation payable to FACM by the Fund
under the proposed Amendment to the Investment Advisory and
Administrative Contract will currently be less than the rate of
compensation now payable by the Fund to FACM under the
existing Advisory and Administrative Contract; (3) and other
factors deemed relevant.
FACM has advised the Board of Directors that there will
be no diminution in the scope and quality of administrative
services provided to the Fund as a result of the Amendment to the
Investment Advisory and Administrative Contract.
Accordingly, the Board of Directors believes that the Fund will
receive administrative services under such Amendment equal or
superior to those it currently receives under the existing Advisory
and Administrative Agreement, at lower current fee levels.
Recommendation and Required Vote
Shareholders of the Fund will vote on the proposed
Amendment to the Investment Advisory and Administrative
Contract. The Board of Directors of the Fund recommends that
the shareholders approve the Amendment to the Investment
Advisory and Administrative Contract. The affirmative vote of
the holders of a majority of the outstanding shares of the Fund is
required to approve the Amendment to the Investment Advisory
and Administrative Contract. "Majority" for this purpose, under
the Investment Company Act, means more than 50% of such
outstanding shares.
THE BOARD OF TRUSTEES OF THE FUND RECOMMEND
THAT SHAREHOLDERS APPROVE THE AMENDMENT TO
THE ADVISORY AND ADMINISTRATIVE AGREEMENT.
Proposal 2
The nominee for election to the Board of Directors of
the Company, his age, and a description of his principal
occupation is listed in the table below.
- - - ----------------------------------------------------------------------------
Paul Martin,* Mr. Martin (42) is general director and chief
investment officer of Martin Capital Management (since
November, 1988). Prior to establishing Martin Capital
Management, Mr. Martin worked as a stockbroker in New York
City, managing investment accounts at Merrill Lynch and
Oppenheimer & Company. Subject to shareholder approval, he
will be the investment advisor of the Texas Opportunity Fund, a
series of the Texas Capital Value Funds, Inc. currently in
registration with the SEC. Mr. Martin served seven years active
duty with the United States armed services, and continues to
serve as a US Naval Reserve Officer. He has a BA degree in
liberal arts from St. John's College in Santa Fe, New Mexico.
- - - - ------------
* Indicates "interested person" of the Company as defined by the
1940 Act, by reason of his position as investment adviser of the
Texas Opportunity Fund
REQUIRED VOTE. In the election of each director, the
candidate must receive the affirmative vote of a plurality of the
votes cast for the election of the Board. Members will be elected,
provided a quorum is present.
THE BOARD OF DIRECTORS, INCLUDING ITS
INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE NOMINEE UNDER
PROPOSAL 2.
Proposal 3
APPROVAL OR DISAPPROVAL OF THE AMENDMENT TO
THE DISTRIBUTION AGREEMENT BETWEEN THE FUND
AND CHOICE INVESTMENTS, INC.
Existing Distribution Plan
The Company has adopted a distribution plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan") under which the Company
contracts with registered broker-dealers and their agents to
distribute shares of the Fund. Registered broker-dealers and their
agents who have previously signed service agreements with the
distributor are currently paid 0.25% of the average daily net
assets for those shareholders brought to a Fund for the period of
time those shareholders remain with the Fund. A distributor will
retain 0.10% of the total 0.35% Rule 12b-1 fee for such
shareholders.
The services provided by selected broker-dealers pursuant to
the Plan are primarily designed to promote the sale of shares of
each Fund, in the interest of reducing the administrative expense
to shareholders, and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the
Fund in servicing such shareholders.
For these services, the Fund currently pays a distribution
fee equal to thirty-five hundredths of a percent (0.35%) per
annum of the Fund's average daily net assets. Adoption of this
proposal reduces the distribution fee to twenty-five hundredths of
a percent (0.25%), thereby reducing the overall expense of the
Fund.
In addition to the compensation set forth above, for
shares sold with a sales charge, a distributor shall keep the
underwriting discount determined in accordance with the
payment schedule contained in the most recent prospectus of the
Fund as effected by the SEC.
New Form of Distribution Plan Pursuant to 12b-1
The Board of Directors has proposed a Distribution Plan
(the "Proposed Plan") pursuant to Section 12(b) of the 1940 Act
and Rule 12b-1 after having concluded that there is a reasonable
likelihood that the Proposed Plan would benefit the Fund and its
shareholders. Pursuant to such Proposed Plan, and as
compensation for the services performed and the expenses
incurred by a distributor under this Agreement (including the
commissions and other fees and expenses paid by a distributor for
the sale of Fund shares), the Fund shall pay to a distributor on a
monthly basis in arrears a distribution fee, accrued daily, equal to
25/100 of one percent (0.25%) per annum of the Fund's average
daily net assets. The expenses of the Fund to be paid by a
distributor from this compensation shall include a service fee to
each distributor, which service fee shall equal 15/100 of one
percent (0.15%) of the Fund's shares owned by investors for
whom such distributor is the holder or dealer of record.
In addition to the compensation set forth above, for
shares sold with a sales charge, a distributor shall keep the
underwriting discount determined in accordance with the
payment schedule contained in the most recent prospectus of the
Fund as effected by the SEC.
THE BOARD OF DIRECTORS, INCLUDING ITS
INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE AMENDMENT TO THE
DISTRIBUTION AGREEMENT UNDER PROPOSAL 3.
Proposal 4
APPROVAL OR DISAPPROVAL OF THE FUNDAMENTAL
INVESTMENT RESTRICTION ON THE PURCHASE OF
OTHER OPEN-END INVESTMENT COMPANIES (MUTUAL
FUNDS)
To register shares of the Fund for sale in the state of
California, the Fund had to undertake that it would adopt a
fundamental investment restriction on the purchase of shares of
other open-end investment companies. The intent of this
restriction is to preclude the Fund from investing in securities
that charge a management fee, effectively twice charging a
shareholder of the Fund.
THE BOARD OF DIRECTORS, INCLUDING ITS
INDEPENDENT BOARD MEMBERS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE AMENDMENT TO THE
DISTRIBUTION AGREEMENT UNDER PROPOSAL 4
Reports to Shareholders
The Fund will furnish, without charge, a copy of the most
recent Semi-Annual Report on request. Requests for such
reports should be directed to the Fund at the address and
telephone shown on the first page of this proxy statement or to
FACM at (800) 880-0324.
IN ORDER THAT THE PRESENCE OF A QUORUM
AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED
PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE.
Eric Barden
Acting Secretary
August 31st, 1996
<PAGE>
Proxy
Texas Capital Value Funds, Inc.
Special Meeting of Shareholders
August 31, 1996
Solicited on Behalf of the Board of Trustees
This Proxy Statement is furnished by the Texas Capital
Value Funds, Inc. Value & Growth Portfolio to its shareholders
and on behalf of the Board of Directors of the Texas Capital
Value Funds, Inc. of which the Fund is a portfolio, in connection
with the Fund's solicitation of voting instructions for use at a
Special Meeting of Shareholders to be held by proxy, for the
purposes set forth below and in the accompanying Notice of
Special Meeting. The approximate mailing date of this Proxy
Statement is September 7th, 1996. At the meeting shareholders
of the Fund will be asked to vote, as designated below, all shares
of the Fund, held by the undersigned at the close of business on
July 31, 1996. Capitalized terms used without definition have
the meanings given to them in the accompanying Proxy
Statement.
A SIGNED PROXY WILL BE VOTED IN FAVOR OF THE
PROPOSALS LISTED BELOW UNLESS YOU HAVE
SPECIFIED OTHERWISE. PLEASE SIGN, DATE AND
RETURN THIS PROXY PROMPTLY. YOU MAY VOTE
ONLY IF YOU HELD SHARES IN THE FUND AT THE
CLOSE OF BUSINESS ON JULY 31, 1996.
1. Approval of an Amendment to the Investment Advisory
and
Administrative Contract between the Fund and First Austin
Capital Management, Inc., the advisor to the Fund, ("FACM")
pursuant to which FACM will act as administrator and
investment adviser with respect to the assets of the Fund, to
become effective upon shareholder approval.
FOR [ ] AGAINST [ ] ABSTAIN
[ ]
2. Approval of Paul Martin to the Board of Directors of
the Company.
FOR [ ] AGAINST [ ] ABSTAIN
[ ]
3. Approval of an amendment to the distribution
agreement between the Fund and Choice Investments, Inc.,
which lowers the percentage of assets paid by the Fund for the
distribution of Fund shares.
FOR [ ] AGAINST [ ] ABSTAIN
[ ]
4. Approval of the adoption of a fundamental
investment restriction that prohibits the Fund from investing in
securities of other open-end investment
companies.
FOR [ ] AGAINST [ ] ABSTAIN
[ ]
Dated: _______________, 1996
- - - -------------------
Signature
- - - -------------------
Title
- - - -------------------
Signature (if held jointly)
- - - -------------------
Title (if applicable)
Please sign exactly as name or names appear on your shareholder
account statement. When signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate officer, please
give full title. If shares are held jointly, each shareholder should
sign.
